Twin Disc, Inc., Announces Fiscal 2011 Second-Quarter Financial Results
- Financial Results Continue to Improve Sequentially and Year-Over-Year
-
Diluted EPS of
$0.35 Up 46% Sequentially - Backlog at the Highest Level in Two Years
- Expect Continued Improvement in the Second Half
Sales for the fiscal 2011 second quarter were
Gross margin for the fiscal 2011 second-quarter was 31.6 percent, compared to 26.8 percent in last year's comparable period and 32.6 percent in the fiscal 2011 first quarter. The sequential decline in gross margin was a result of a shift in product and market mix versus the fiscal 2011 first quarter. The significant improvement in the fiscal 2011 second quarter gross margin compared to the same period last fiscal year was the result of increased sales volumes, improved manufacturing efficiency and absorption, and a more profitable mix of business. Year-to-date, gross margin was 32.1 percent, compared to 24.0 percent for the fiscal 2010 first half.
For the fiscal 2011 second quarter, marketing, engineering and
administrative (ME&A) expenses, as a percentage of sales, were 24.8
percent, compared to 27.0 percent for the fiscal 2010 second quarter.
ME&A expenses increased
The effective tax rate for the first six months of fiscal 2011 is 23.6
percent (11.5 percent for the fiscal 2011 second quarter), which is
significantly lower than the prior year's 37.6 percent (37.1 percent for
the fiscal 2010 second quarter). The current year rate includes a
Net earnings attributable to
Earnings before interest, taxes, depreciation and amortization (EBITDA)*
was
Commenting on the results,
Mr. Batten concluded: "Our six-month backlog at
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About
Forward-Looking Statements
This press release may contain statements that are forward looking as
defined by the
*Non-GAAP Financial Disclosures
Financial information excluding the impact of foreign currency exchange rate changes and the impact of acquisitions in this press release are not measures that are defined in U.S. Generally Accepted Accounting Principles ("GAAP"). These items are measures that management believes are important to adjust for in order to have a meaningful comparison to prior and future periods and to provide a basis for future projections and for estimating our earnings growth prospects. Non-GAAP measures are used by management as a performance measure to judge profitability of our business absent the impact of foreign currency exchange rate changes and acquisitions. Management analyzes the company's business performance and trends excluding these amounts. These measures, as well as EBITDA, provide a more consistent view of performance than the closest GAAP equivalent for management and investors. Management compensates for this by using these measures in combination with the GAAP measures. The presentation of the non-GAAP measures in this press release are made alongside the most directly comparable GAAP measures.
Definition — Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
The sum of, net earnings and adding back provision for income taxes, interest expense, depreciation and amortization expenses: this is a financial measure of the profit generated excluding the above mentioned items.
--Financial Results Follow--
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND | |||||||||||||||
COMPREHENSIVE INCOME | |||||||||||||||
(In thousands, except per-share data; unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
31-Dec |
25-Dec |
31-Dec |
25-Dec |
||||||||||||
Net sales | $ | 75,160 | $ | 55,186 | $ | 136,555 | $ | 102,243 | |||||||
Cost of goods sold | 51,403 | 40,400 | 92,775 | 77,710 | |||||||||||
Gross profit | 23,757 | 14,786 | 43,780 | 24,533 | |||||||||||
Marketing, engineering and administrative expenses |
18,639 | 14,895 | 33,416 | 27,673 | |||||||||||
Earnings (loss) from operations | 5,118 | (109 | ) | 10,364 | (3,140 | ) | |||||||||
Interest expense | 440 | 563 | 879 | 1,182 | |||||||||||
Other expense, net | 89 | 137 | 643 | 197 | |||||||||||
Earnings (loss) before income taxes and noncontrolling interest |
4,589 |
(809 |
) |
8,842 |
(4,519 |
) |
|||||||||
Income taxes | 529 | (300 | ) | 2,085 | (1,698 | ) | |||||||||
Net earnings (loss) | 4,060 | (509 | ) | 6,757 | (2,821 | ) | |||||||||
Less: Net (earnings) loss attributable to noncontrolling interest, net of tax |
(26 | ) | 19 | (67 | ) | (73 | ) | ||||||||
Net earnings (loss) attributable to Twin Disc | $ | 4,034 | $ | (490 | ) | $ | 6,690 | $ | (2,894 | ) | |||||
Earnings (loss) per share data: | |||||||||||||||
Basic earnings (loss) per share attributable to Twin Disc common shareholders |
$ |
0.36 |
$ |
(0.04 |
) |
$ |
0.59 |
$ |
(0.26 |
) |
|||||
Diluted earnings (loss) per share attributable to Twin Disc common shareholders |
$ |
0.35 |
$ |
(0.04 |
) |
$ |
0.59 |
$ |
(0.26 |
) |
|||||
Weighted average shares outstanding data: | |||||||||||||||
Basic shares outstanding | 11,334 | 11,185 | 11,291 | 11,158 | |||||||||||
Diluted shares outstanding | 11,451 | 11,185 | 11,403 | 11,158 | |||||||||||
Dividends per share | $ | 0.07 | $ | 0.07 | $ | 0.14 | $ | 0.14 | |||||||
Comprehensive income: | |||||||||||||||
Net earnings (loss) | $ | 4,060 | $ | (509 | ) | $ | 6,757 | $ | (2,821 | ) | |||||
Adjustment for amortization of net actuarial loss and prior service cost, net of tax |
567 |
470 |
|
1,120 |
917 |
||||||||||
Other comprehensive income: | |||||||||||||||
Foreign currency translation adjustment | 2,830 | 2,987 | 10,225 | 5,915 | |||||||||||
Comprehensive income | 7,457 | 2,948 | 18,102 | 4,011 | |||||||||||
Comprehensive (income) loss attributable to noncontrolling interest |
(26 |
) |
19 |
|
(67 |
) |
(73 |
) |
|||||||
Comprehensive income attributable to Twin Disc |
$ |
7,431 |
$ |
2,967 |
$ |
18,035 |
$ |
3,938 |
|||||||
RECONCILIATION OF CONSOLIDATED NET EARNINGS (LOSS) TO EBITDA | ||||||||||||||
(In thousands; unaudited) | ||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||
31-Dec |
25-Dec |
31-Dec |
25-Dec |
|||||||||||
Net earnings (loss) attributable to Twin Disc | $ | 4,034 | $ | (490 | ) | $ | 6,690 | $ | (2,894 | ) | ||||
Interest expense | 440 | 563 | 879 | 1,182 | ||||||||||
Income taxes | 529 | (300 | ) | 2,085 | (1,698 | ) | ||||||||
Depreciation and amortization | 2,346 | 2,497 | 4,618 | 4,872 | ||||||||||
Earnings before interest, taxes, depreciation and amortization |
$ | 7,349 | $ | 2,270 | $ | 14,272 | $ | 1,462 | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands, unaudited) | |||||||
December 31, | June 30, | ||||||
2010 |
2010 |
||||||
ASSETS | |||||||
Current assets: | |||||||
Cash | $ | 26,239 | $ | 19,022 | |||
Trade accounts receivable, net | 42,300 | 43,014 | |||||
Inventories, net | 87,643 | 72,799 | |||||
Deferred income taxes | 6,107 | 5,224 | |||||
Other | 8,554 | 7,391 | |||||
Total current assets | 170,843 | 147,450 | |||||
Property, plant and equipment, net | 59,119 | 58,243 | |||||
Goodwill, net | 17,115 | 16,440 | |||||
Deferred income taxes | 23,679 | 24,029 | |||||
Intangible assets, net | 6,362 | 6,268 | |||||
Other assets | 6,852 | 6,626 | |||||
TOTAL ASSETS | $ | 283,970 | $ | 259,056 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Short-term borrowings and current maturities of long-term debt |
$ | 3,974 | $ | 3,920 | |||
Accounts payable | 28,997 | 23,842 | |||||
Accrued liabilities | 35,289 | 35,545 | |||||
Total current liabilities | 68,260 | 63,307 | |||||
Long-term debt | 28,649 | 27,211 | |||||
Accrued retirement benefits | 71,726 | 72,833 | |||||
Deferred income taxes | 3,914 | 3,914 | |||||
Other long-term liabilities | 4,588 | 2,472 | |||||
Total liabilities | 177,137 | 169,737 | |||||
Equity: | |||||||
Twin Disc shareholders' equity: |
9,767 |
10,667 |
|||||
Retained earnings | 152,542 | 147,438 | |||||
Accumulated other comprehensive loss | (30,783 | ) | (42,048 | ) | |||
131,526 | 116,057 | ||||||
Less treasury stock, at cost |
25,560 |
27,597 |
|||||
Total Twin Disc shareholders' equity | 105,966 | 88,460 | |||||
Noncontrolling interest | 867 | 859 | |||||
Total equity | 106,833 | 89,319 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 283,970 | $ | 259,056 | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In thousands, unaudited) | |||||||
Six Months Ended | |||||||
December 31, |
December 25, |
||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net earnings (loss) | $ | 6,757 | $ | (2,821 | ) | ||
Adjustments to reconcile to net earnings (loss) to cash provided by operating activities: |
|||||||
Depreciation and amortization | 4,618 | 4,872 | |||||
Other non-cash changes, net | 3,289 | 237 | |||||
Net change in working capital, excluding cash
|
(6,181 |
) |
13,773 |
||||
Net cash provided by operating activities | 8,483 | 16,061 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Acquisitions of fixed assets | (2,915 | ) | (1,664 | ) | |||
Proceeds from sale of fixed assets | 53 | 30 | |||||
Other, net | (293 | ) | (293 | ) | |||
Net cash used by investing activities | (3,155 | ) | (1,927 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from notes payable | 19 | 73 | |||||
Principal payments of notes payable | (67 | ) | - | ||||
Proceeds from (payment of) long-term debt | 1,474 | (9,232 | ) | ||||
Proceeds from exercise of stock options | 107 | 80 | |||||
Dividends paid to shareholders | (1,586 | ) | (1,567 | ) | |||
Dividends paid to noncontrolling interest | (139 | ) | (160 | ) | |||
Other | 188 | (468 | ) | ||||
Net cash used by financing activities | (4 | ) | (11,274 | ) | |||
Effect of exchange rate changes on cash | 1,893 | 636 | |||||
Net change in cash | 7,217 | 3,496 | |||||
Cash: | |||||||
Beginning of period | 19,022 | 13,266 | |||||
End of period | $ | 26,239 | $ | 16,762 |
Source:
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