Twin Disc, Inc. Announces Fiscal 2011 Third-Quarter Financial Results
- Financial Results Continue to Improve Sequentially and Year-Over-Year
-
Diluted EPS of
$0.40 , Up 14% Sequentially - Backlog at All-Time Record, Up 18% Sequentially
- Anticipate Improved Fourth Quarter Financial Results
Sales for the fiscal 2011 third quarter were
Gross margin for the fiscal 2011 third quarter was 36.3 percent, compared to 27.1 percent in last year's comparable period and 31.6 percent in the fiscal 2011 second quarter. The fiscal 2011 third-quarter gross margin percentage was the highest for any quarter in the Company's history. The significant improvement in the fiscal 2011 third 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 33.6 percent, compared to 25.1 percent for the fiscal 2010 first nine months.
For the fiscal 2011 third quarter, marketing, engineering and
administrative (ME&A) expenses, as a percentage of sales, were 22.3
percent, compared to 23.9 percent for the fiscal 2010 third quarter.
ME&A expenses increased
The effective tax rate for the first nine months of fiscal year 2011 of
40.4 percent is significantly lower than the prior year of 52.4 percent.
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
The conference call will also be broadcast live over the Internet. To listen to the call via the Internet, access Twin Disc's website at http://www.twindisc.com/companyinvestor.aspx and follow the instructions at the web cast link. The archived web cast will be available shortly after the call on the Company's website.
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 (LOSS) (In thousands, except per-share data, unaudited) |
|||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
March 25, |
March 26, |
March 25, |
March 26, |
||||||||||||||||
Net sales | $ | 76,471 | $ | 60,977 | $ | 213,026 | $ | 163,220 | |||||||||||
Cost of goods sold | 48,689 | 44,472 | 141,464 | 122,182 | |||||||||||||||
Gross profit | 27,782 | 16,505 | 71,562 | 41,038 | |||||||||||||||
Marketing, engineering and administrative expenses |
17,054 | 14,555 | 50,470 | 42,228 | |||||||||||||||
Earnings (loss) from operations | 10,728 | 1,950 | 21,092 | (1,190 | ) | ||||||||||||||
Interest expense | 430 | 639 | 1,309 | 1,821 | |||||||||||||||
Other expense (income), net |
193 | (433 | ) | 836 | (236 | ) | |||||||||||||
Earnings (loss) before income taxes and noncontrolling interest |
10,105 |
1,744 |
18,947 |
(2,775 |
) |
||||||||||||||
Income taxes | 5,563 | 244 | 7,648 | (1,454 | ) | ||||||||||||||
Net earnings (loss) | 4,542 | 1,500 | 11,299 | (1,321 | ) | ||||||||||||||
Less: Net loss (earnings) attributable to noncontrolling interest, net of tax |
6 | (49 | ) | (61 | ) | (122 | ) | ||||||||||||
Net earnings (loss) attributable to Twin Disc | $ | 4,548 | $ | 1,451 | $ | 11,238 | $ | (1,443 | ) | ||||||||||
Earnings (loss) per share data: | |||||||||||||||||||
Basic earnings (loss) per share attributable to Twin Disc common shareholders |
$ |
0.40 |
$ |
0.13 |
$ |
0.99 |
$ |
(0.13 |
) |
||||||||||
Diluted earnings (loss) per share attributable to Twin Disc common shareholders |
$ |
0.40 |
$ |
0.13 |
$ |
0.98 |
$ |
(0.13 |
) |
||||||||||
Weighted average shares outstanding data: | |||||||||||||||||||
Basic shares outstanding | 11,344 | 11,065 | 11,308 | 11,062 | |||||||||||||||
Diluted shares outstanding | 11,474 | 11,150 | 11,419 | 11,062 | |||||||||||||||
Dividends per share | $ | 0.08 | $ | 0.07 | $ | 0.22 | $ | 0.21 | |||||||||||
Comprehensive income (loss): | |||||||||||||||||||
Net earnings (loss) | $ | 4,542 | $ | 1,500 | $ | 11,299 | $ | (1,321 | ) | ||||||||||
Benefit plan adjustments, net | 545 | 488 | 1,665 | 1,405 | |||||||||||||||
Other comprehensive income: | |||||||||||||||||||
Foreign currency translation adjustment | 4,551 | (7,124 | ) | 14,776 | (1,209 | ) | |||||||||||||
Comprehensive income (loss) | 9,638 | (5,136 | ) | 27,740 | (1,125 | ) | |||||||||||||
Comprehensive loss (income) attributable to noncontrolling interest |
6 |
(49 |
) |
|
(61 |
) |
(122 |
) |
|||||||||||
Comprehensive income (loss) attributable to Twin Disc |
$ |
9,644 |
$ |
(5,185 |
) |
$ |
27,679 |
$ |
(1,247 |
) |
|||||||||
RECONCILIATION OF CONSOLIDATED NET EARNINGS (LOSS) TO EBITDA (In thousands, unaudited) |
|||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||
March 25, |
March 26, |
March 25, |
March 26, |
||||||||||||||
Net earnings (loss) attributable to Twin Disc | $ | 4,548 | $ | 1,451 | $ | 11,238 | $ | (1,443 | ) | ||||||||
Interest expense | 430 | 639 | 1,309 | 1,821 | |||||||||||||
Income taxes | 5,563 | 244 | 7,648 | (1,454 | ) | ||||||||||||
Depreciation and amortization | 2,365 | 2,466 | 6,983 | 7,338 | |||||||||||||
Earnings before interest, taxes, depreciation and amortization |
$ | 12,906 | $ | 4,800 | $ | 27,178 | $ | 6,262 | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
(In thousands, unaudited) | ||||||||||||
March 25, | June 30, | |||||||||||
2011 |
2010 |
|||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash | $ | 18,499 | $ | 19,022 | ||||||||
Trade accounts receivable, net | 55,416 | 43,014 | ||||||||||
Inventories, net | 93,311 | 72,799 | ||||||||||
Deferred income taxes | 6,212 | 5,224 | ||||||||||
Other | 9,275 | 7,391 | ||||||||||
Total current assets | 182,713 | 147,450 | ||||||||||
Property, plant and equipment, net | 59,396 | 58,243 | ||||||||||
Goodwill, net | 17,476 | 16,440 | ||||||||||
Deferred income taxes | 21,868 | 24,029 | ||||||||||
Intangible assets, net | 6,400 | 6,268 | ||||||||||
Other assets | 6,774 | 6,626 | ||||||||||
TOTAL ASSETS | $ | 294,627 | $ | 259,056 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Short-term borrowings and current maturities of long-term debt | $ | 3,973 | $ | 3,920 | ||||||||
Accounts payable | 32,238 | 23,842 | ||||||||||
Accrued liabilities | 35,336 | 35,545 | ||||||||||
Total current liabilities | 71,547 | 63,307 | ||||||||||
Long-term debt | 26,831 | 27,211 | ||||||||||
Accrued retirement benefits | 70,857 | 72,833 | ||||||||||
Deferred income taxes | 4,225 | 3,914 | ||||||||||
Other long-term liabilities | 5,054 | 2,472 | ||||||||||
Total liabilities | 178,514 | 169,737 | ||||||||||
Equity: | ||||||||||||
Twin Disc shareholders' equity: | ||||||||||||
Common stock authorized: 30,000,000; | ||||||||||||
Issued: 13,099,468; no par value | 10,170 | 10,667 | ||||||||||
Retained earnings | 156,182 | 147,438 | ||||||||||
Accumulated other comprehensive loss | (25,722 | ) | (42,048 | ) | ||||||||
140,630 | 116,057 | |||||||||||
Less treasury stock, at cost (1,760,774 and 2,070,124 shares, respectively) |
25,415 |
27,597 |
||||||||||
Total Twin Disc shareholders' equity |
115,215 | 88,460 | ||||||||||
Noncontrolling interest | 898 | 859 | ||||||||||
Total equity | 116,113 | 89,319 | ||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 294,627 | $ | 259,056 | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited) |
||||||||||||
Nine Months Ended | ||||||||||||
March 25, |
March 26, |
|||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net earnings (loss) | $ | 11,299 | $ | (1,321 | ) | |||||||
Adjustments to reconcile to net earnings (loss) to cash provided by operating activities: |
||||||||||||
Depreciation and amortization | 6,983 | 7,338 | ||||||||||
Other non-cash changes, net | 5,537 | 270 | ||||||||||
Net change in working capital, excluding cash | (19,753 | ) | 16,827 | |||||||||
Net cash provided by operating activities | 4,066 | 23,114 | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Acquisitions of fixed assets |
(4,099 |
) |
(2,791 |
) |
||||||||
Proceeds from sale of fixed assets |
58 |
|
30 |
|
||||||||
Other, net |
(293 |
) |
(293 |
) |
||||||||
Net cash used by investing activities | (4,334 | ) | (3,054 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Proceeds from notes payable | 19 | 89 | ||||||||||
Payments of notes payable | (82 | ) | (531 | ) | ||||||||
Payments of long-term debt | (352 | ) | (15,244 | ) | ||||||||
Proceeds from exercise of stock options | 203 | 80 | ||||||||||
Dividends paid to shareholders |
|
(2,494 |
) |
(2,352 |
) |
|||||||
Dividends paid to noncontrolling interest |
(137 |
) |
(160 |
) |
||||||||
Other | 223 |
(466 |
) | |||||||||
Net cash used by financing activities | (2,620 | ) | (18,584 | ) | ||||||||
Effect of exchange rate changes on cash | 2,365 | (209 | ) | |||||||||
Net change in cash | (523 | ) | 1,267 | |||||||||
Cash: | ||||||||||||
Beginning of period | 19,022 | 13,266 | ||||||||||
End of period | $ | 18,499 | $ | 14,533 | ||||||||
Source:
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