Twin Disc, Inc. Announces Fiscal 2012 Fourth-Quarter and Full-Year Financial Results
- Fiscal 2012 Record Sales and Earnings
- Total Debt Decreased Significantly from Third Quarter
- Board of Directors Increases Share Repurchase Plan
Sales for the fiscal 2012 fourth quarter declined modestly to
Gross margin for the fiscal 2012 fourth quarter declined to 29.4 percent, compared to 37.1 percent in the fiscal 2011 fourth quarter and 34.6 percent in the fiscal 2012 third quarter. The year-over-year and sequential decline in the fiscal 2012 fourth-quarter gross margin was the result of a change in the mix of sales, primarily due to the impact of lower oil and gas transmission sales, and the unfavorable absorption impact due to the significant inventory reduction experienced in the fourth fiscal quarter. For fiscal 2012, gross margin was 34.2 percent, compared to 34.7 percent for fiscal 2011.
For the fiscal 2012 fourth quarter, marketing, engineering and
administrative (ME&A) expenses, as a percentage of sales, were 20.1
percent, compared to 23.1 percent for the fiscal 2011 fourth quarter.
ME&A expenses decreased
Three Months Ended |
||||||||||||||
(In thousands) |
|
|
Increase/ |
|||||||||||
Stock-Based Compensation | $ | (380) | $ | 2,860 | $ | (3,240) | ||||||||
Severance | 354 | - | 354 | |||||||||||
Domestic Pension Expense | 30 | 244 | (214) | |||||||||||
Incentive/Bonus Expense | 1,888 | 1,717 | 171 | |||||||||||
$ | (2,929) | |||||||||||||
Foreign Exchange Translation, Net | (585) | |||||||||||||
$ | (3,514) | |||||||||||||
All Other, Net | 356 | |||||||||||||
$ | (3,158) | |||||||||||||
The net remaining increase in ME&A expenses for the quarter primarily relates to increased research and development activities, wage inflation and additional headcount.
Fiscal 2012 ME&A expenses of
Year Ended | ||||||||||||||
(In thousands) |
|
|
Increase/ |
|||||||||||
Stock-Based Compensation | $ | 1,642 | $ | 6,148 | $ | (4,506) | ||||||||
Severance | 684 | - | 684 | |||||||||||
Domestic Pension Expense | 121 | 975 | (854) | |||||||||||
Incentive/Bonus Expense | 5,013 | 4,964 | 49 | |||||||||||
$ | (4,627) | |||||||||||||
Foreign Exchange Translation, Net | 342 | |||||||||||||
$ | (4,285) | |||||||||||||
All Other, Net | 4,409 | |||||||||||||
$ | 124 | |||||||||||||
The net remaining increase in ME&A expenses for the year primarily relates to increased research and development activities, wage inflation and additional headcount.
In connection with preparing its financial statements for fiscal 2012,
the Company concluded that it was required to take an impairment charge
in the fiscal 2012 fourth quarter for the write-down of goodwill for its
Italian operation due to softness in the Italian mega yacht market. As a
result, fiscal 2012 fourth-quarter and full-year results were impacted
by a
For the fiscal 2012 fourth quarter and full year, other (income) expense, net improved significantly to a current year income due primarily to favorable exchange movements relative to the Euro, Swiss Franc, Canadian Dollar and Japanese Yen.
The effective tax rate for the fourth quarter of fiscal 2012 was 81.1
percent, significantly higher than the prior year fourth quarter rate of
41.4 percent. The primary factor increasing the fiscal 2012 rate was the
impact of a non-deductible impairment charge of
Net earnings attributable to
Earnings before interest, taxes, depreciation and amortization (EBITDA)*
was
Commenting on the results,
"Over the past several years,
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://ir.twindisc.com/index.cfm 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, if any, 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 (LOSS) INCOME (In thousands, except per-share data, unaudited) |
||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
June 30, |
June 30, |
June 30, |
June 30, |
|||||||||||||
Net sales | $ | 96,109 | $ | 97,367 | $ | 355,870 | $ | 310,393 | ||||||||
Cost of goods sold | 67,863 | 61,246 | 234,238 | 202,710 | ||||||||||||
Gross profit | 28,246 | 36,121 | 121,632 | 107,683 | ||||||||||||
Marketing, engineering and administrative expenses |
19,339 | 22,497 | 73,091 | 72,967 | ||||||||||||
Impairment charge | 3,670 | 0 | 3,670 | 0 | ||||||||||||
Earnings from operations | 5,237 | 13,624 | 44,871 | 34,716 | ||||||||||||
Interest expense | 346 | 410 | 1,475 | 1,719 | ||||||||||||
Other (income) expense, net | (887) | 132 | (1,360) | 968 | ||||||||||||
Earnings before income taxes and noncontrolling interest |
5,778 | 13,082 | 44,756 | 32,029 | ||||||||||||
Income taxes | 4,688 | 5,416 | 18,727 | 13,064 | ||||||||||||
Net earnings | 1,090 | 7,666 | 26,029 | 18,965 | ||||||||||||
Less: Net earnings attributable to noncontrolling interest, net of tax |
(90) | (74) | (198) | (135) | ||||||||||||
Net earnings attributable to |
$ | 1,000 | $ | 7,592 | $ | 25,831 | $ | 18,830 | ||||||||
Earnings per share data: | ||||||||||||||||
Basic earnings per share attributable to |
$ |
0.09 |
$ |
0.67 |
$ |
2.26 |
$ |
1.66 |
||||||||
Diluted earnings per share attributable to |
$ |
0.09 |
$ |
0.66 |
$ |
2.24 |
$ |
1.64 |
||||||||
Weighted average shares outstanding data: | ||||||||||||||||
Basic shares outstanding | 11,384 | 11,355 | 11,410 | 11,319 | ||||||||||||
Diluted shares outstanding | 11,534 | 11,510 | 11,556 | 11,463 | ||||||||||||
Dividends per share | $ | 0.09 | $ | 0.08 | $ | 0.34 | $ | 0.30 | ||||||||
Comprehensive income (loss): | ||||||||||||||||
Net earnings | $ | 1,090 | $ | 7,666 | $ | 26,029 | $ | 18,965 | ||||||||
Foreign currency translation adjustment | (5,446) | 4,496 | (11,738) | 19,272 | ||||||||||||
Benefit plan adjustments, net | (12,993) | 9,841 | (11,690) | 11,506 | ||||||||||||
Comprehensive income (loss) | (17,349) | 22,003 | 2,601 | 49,743 | ||||||||||||
Comprehensive earnings attributable to noncontrolling interest |
(90) |
(74) |
|
(198) |
(135) |
|||||||||||
|
||||||||||||||||
Comprehensive income (loss) attributable to |
$ | (17,439) | $ | 21,929 | $ | 2,403 | $ | 49,608 | ||||||||
RECONCILIATION OF CONSOLIDATED NET EARNINGS TO EBITDA
(In thousands, unaudited) |
||||||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
June 30,
2012 |
June 30,
2011 |
June 30,
2012 |
June 30, 2011 |
|||||||||||||
Net earnings attributable to |
$ | 1,000 | $ | 7,592 | $ | 25,831 | $ | 18,830 | ||||||||
Interest expense | 346 | 410 | 1,475 | 1,719 | ||||||||||||
Income taxes | 4,688 | 5,416 | 18,727 | 13,064 | ||||||||||||
Depreciation and amortization | 2,746 | 2,921 | 10,756 | 9,904 | ||||||||||||
Earnings before interest, taxes, depreciation and amortization |
$ | 8,780 | $ | 16,339 | $ | 56,789 | $ | 43,517 | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
(In thousands; unaudited) | ||||||||||
|
June 30, | |||||||||
2012 | 2011 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash | $ | 15,701 | $ | 20,167 | ||||||
Trade accounts receivable, net | 63,438 | 61,007 | ||||||||
Inventories, net | 103,178 | 99,139 | ||||||||
Deferred income taxes | 6,154 | 5,765 | ||||||||
Other | 8,690 | 9,090 | ||||||||
Total current assets | 197,161 | 195,168 | ||||||||
Property, plant and equipment, net | 66,356 | 65,791 | ||||||||
Goodwill, net | 13,116 | 17,871 | ||||||||
Deferred income taxes | 14,335 | 16,480 | ||||||||
Intangible assets, net | 4,996 | 6,439 | ||||||||
Other assets | 7,868 | 7,371 | ||||||||
TOTAL ASSETS | $ | 303,832 | $ | 309,120 | ||||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities: | ||||||||||
Short-term borrowings and current maturities of long-term debt | $ | 3,744 | $ | 3,915 | ||||||
Accounts payable | 23,550 | 38,372 | ||||||||
Accrued liabilities | 39,612 | 41,673 | ||||||||
Total current liabilities | 66,906 | 83,960 | ||||||||
Long-term debt | 28,401 | 25,784 | ||||||||
Accrued retirement benefits | 64,009 | 50,063 | ||||||||
Deferred income taxes | 3,340 | 4,170 | ||||||||
Other long-term liabilities | 4,171 | 7,089 | ||||||||
Total liabilities | 166,827 | 171,066 | ||||||||
|
||||||||||
Common shares authorized: 30,000,000; | ||||||||||
Issued: 13,099,468; no par value | 12,759 | 10,863 | ||||||||
Retained earnings | 184,802 | 162,857 | ||||||||
Accumulated other comprehensive loss | (34,797) | (11,383) | ||||||||
162,764 | 162,337 | |||||||||
Less treasury stock, at cost (1,794,981 and 1,739,574 shares, respectively) |
26,781 |
25,252 |
||||||||
Total |
135,983 | 137,085 | ||||||||
Noncontrolling interest | 1,022 | 969 | ||||||||
Total equity | 137,005 | 138,054 | ||||||||
TOTAL LIABILITIES AND EQUITY | $ | 303,832 | $ | 309,120 | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited) |
||||||||||
Twelve Months Ended | ||||||||||
June 30, |
June 30, |
|||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
Net earnings | $ | 26,029 | $ | 18,965 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||||
Depreciation and amortization | 10,756 | 9,904 | ||||||||
Loss on sale of plant assets | 315 | 120 | ||||||||
Impairment charge | 3,670 | - | ||||||||
Stock compensation expense | 1,642 | 6,148 | ||||||||
Provision for deferred income taxes | 7,486 | 1,354 | ||||||||
Changes in operating assets and liabilities: | ||||||||||
Trade accounts receivable, net | (5,982) | (13,605) | ||||||||
Inventories, net | (9,563) | (17,258) | ||||||||
Other assets | (915) | (1,736) | ||||||||
Accounts payable | (13,279) | 11,839 | ||||||||
Accrued liabilities |
(1,992) |
6,713 | ||||||||
Accrued/prepaid retirement benefits |
(3,723) |
(8,584) | ||||||||
Net cash provided by operating activities | 14,444 | 13,860 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
Proceeds from sale of plant assets | 116 | 296 | ||||||||
Acquisitions of plant assets | (13,733) | (12,028) | ||||||||
Other, net | (293) | (293) | ||||||||
Net cash used by investing activities | (13,910) | (12,025) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
Proceeds from notes payable | 3 | 84 | ||||||||
Payments of notes payable | (145) | (83) | ||||||||
Proceeds from (payments of) long-term debt | 2,590 | (1,405) | ||||||||
Proceeds from exercise of stock options | 169 | 322 | ||||||||
Acquisition of treasury stock | (2,425) | - | ||||||||
Dividends paid to shareholders | (3,886) | (3,411) | ||||||||
Dividends paid to noncontrolling interest | (131) | (138) | ||||||||
Excess tax benefits from stock compensation | 535 | 317 | ||||||||
Other | (184) | 136 | ||||||||
Net cash used by financing activities | (3,474) | (4,178) | ||||||||
Effect of exchange rate changes on cash | (1,526) | 3,488 | ||||||||
Net change in cash | (4,466) | 1,145 | ||||||||
Cash: | ||||||||||
Beginning of year | 20,167 | 19,022 | ||||||||
End of year | $ | 15,701 | $ | 20,167 | ||||||
Source:
News Provided by Acquire Media