Twin Disc, Inc. Announces Fiscal 2013 First Quarter Financial Results
- First Quarter Sales and Profitability Decline Compared to Record 2012 First Quarter
- Management Cautious for Fiscal 2013 as Slowdown in Pressure Pumping Sector Continues
- Balance Sheet Remains Strong
Sales for the first three months of fiscal 2013, seasonally the weakest
quarter of the fiscal year, declined to
Gross margin for the fiscal 2013 first quarter was 28.2 percent, compared to a record 37.8 percent in the fiscal 2012 first quarter. The anticipated decline in fiscal 2013 first quarter gross margin was the result of lower sales volumes and a less profitable mix of business.
For the fiscal 2013 first quarter, marketing, engineering and
administrative (ME&A) expenses, as a percentage of sales, were 24.2
percent, compared to 19.6 percent for the fiscal 2012 first quarter.
ME&A expenses increased
The effective tax rate for the first quarter of fiscal 2013 is 45.6 percent, which is significantly higher than the prior year rate of 35.3 percent. The current year rate was unfavorably impacted by an existing valuation allowance in certain foreign jurisdictions during the current first quarter. The remaining increase relates to the expiration of the credit for research and development, a reduced domestic production activities credit, and a change in the mixture of domestic and foreign earnings.
Net earnings attributable to
Earnings before interest, taxes, depreciation and amortization (EBITDA)*
was
Commenting on the results,
The conference call will also be broadcast live over the Internet. To
listen to the call via the Internet, access
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 COMPREHENSIVE INCOME | ||||||||
(In thousands, except per-share data; unaudited) |
||||||||
Three Months Ended |
||||||||
September 28, |
September 30, |
|||||||
Net sales | $ | 68,793 | $ | 81,330 | ||||
Cost of goods sold | 49,377 | 50,562 | ||||||
Gross profit | 19,416 | 30,768 | ||||||
Marketing, engineering and administrative expenses |
16,620 |
15,909 |
||||||
Earnings from operations | 2,796 | 14,859 | ||||||
Interest expense | 306 | 359 | ||||||
Other expense (income), net | 127 | (394 | ) | |||||
Earnings before income taxes and noncontrolling interest |
2,363 |
14,894 |
||||||
Income taxes | 1,077 | 5,259 | ||||||
Net earnings | 1,286 | 9,635 | ||||||
Less: Net earnings attributable to noncontrolling interest, net of tax |
(35 |
) |
(54 |
) |
||||
Net earnings attributable to |
$ | 1,251 | $ | 9,581 | ||||
Earnings per share: | ||||||||
Basic earnings per share attributable to |
$ |
0.11 |
$ |
0.84 |
||||
Diluted earnings per share attributable to |
$ |
0.11 |
$ |
0.83 |
||||
Weighted average shares outstanding: | ||||||||
Basic | 11,368 | 11,396 | ||||||
Diluted | 11,446 | 11,541 | ||||||
Dividends per share | $ | 0.09 | $ | 0.08 | ||||
Net earnings | $ | 1,286 | $ | 9,635 | ||||
Other comprehensive income: | ||||||||
Foreign currency translation adjustment | 1,264 | (2,275 | ) | |||||
Benefit plan adjustments, net | 668 | 474 | ||||||
Other comprehensive income (loss), net | 1,932 | (1,801 | ) | |||||
Comprehensive income |
3,218 |
7,834 |
||||||
Less: comprehensive income attributable to noncontrolling interest |
(35 |
) |
(54 |
) |
||||
Comprehensive income attributable to |
$ |
3,183 |
$ |
7,780 |
||||
RECONCILIATION OF CONSOLIDATED NET EARNINGS TO EBITDA | ||||||
(In thousands; unaudited) |
||||||
Three Months Ended |
||||||
September 28, |
September 30, |
|||||
Net earnings attributable to |
$ | 1,251 | $ | 9,581 | ||
Interest expense | 306 | 359 | ||||
Income taxes | 1,077 | 5,259 | ||||
Depreciation and amortization | 2,632 | 2,573 | ||||
Earnings before interest, taxes,
depreciation and amortization |
$ | 5,266 | $ | 17,772 | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands; unaudited) | ||||||||
|
June 30, | |||||||
2012 | 2012 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 21,493 | $ | 15,701 | ||||
Trade accounts receivable, net | 47,115 | 63,438 | ||||||
Inventories, net | 112,811 | 103,178 | ||||||
Deferred income taxes | 3,870 | 3,745 | ||||||
Other | 11,050 | 11,099 | ||||||
Total current assets | 196,339 | 197,161 | ||||||
Property, plant and equipment, net | 65,315 | 66,356 | ||||||
Goodwill, net | 13,135 | 13,116 | ||||||
Deferred income taxes | 12,377 | 14,335 | ||||||
Intangible assets, net | 4,840 | 4,996 | ||||||
Other assets | 8,093 | 7,868 | ||||||
TOTAL ASSETS | $ | 300,099 | $ | 303,832 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term borrowings and current maturities of long-term debt | $ | 3,656 | $ | 3,744 | ||||
Accounts payable | 25,923 | 23,550 | ||||||
Accrued liabilities | 29,845 | 39,331 | ||||||
Total current liabilities | 59,424 | 66,625 | ||||||
Long-term debt | 35,338 | 28,401 | ||||||
Accrued retirement benefits | 60,315 | 64,009 | ||||||
Deferred income taxes | 3,235 | 3,340 | ||||||
Other long-term liabilities | 2,200 | 4,171 | ||||||
Total liabilities | 160,512 | 166,546 | ||||||
|
||||||||
Common shares authorized: 30,000,000; | ||||||||
Issued: 13,099,468; no par value | 11,929 | 12,759 | ||||||
Retained earnings | 185,308 | 185,083 | ||||||
Accumulated other comprehensive loss | (32,903 | ) | (34,797 | ) | ||||
164,334 | 163,045 | |||||||
Less treasury stock, at cost | ||||||||
(1,689,722 and 1,794,981 shares, respectively) | 25,638 | 26,781 | ||||||
Total |
138,696 | 136,264 | ||||||
Noncontrolling interest | 891 | 1,022 | ||||||
Total equity | 139,587 | 137,286 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 300,099 | $ | 303,832 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands; unaudited) |
||||||||
Three Months Ended | ||||||||
September 28, |
September 30, |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net earnings | $ | 1,286 | $ | 9,635 | ||||
Adjustments to reconcile net earnings to net cash provided | ||||||||
(used) by operating activities: | ||||||||
Depreciation and amortization | 2,632 | 2,573 | ||||||
Other non-cash changes, net | 155 | 2,505 | ||||||
Net change in working capital,
excluding cash and debt, and other |
(1,991 |
) |
(16,354 |
) |
||||
Net cash provided (used) by operating activities | 2,082 | (1,641 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisitions of fixed assets | (1,337 | ) | (3,587 | ) | ||||
Proceeds from sale of fixed assets | 31 | - | ||||||
Other, net | (293 | ) | (293 | ) | ||||
Net cash used by investing activities | (1,599 | ) | (3,880 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Principal payments of notes payable | (88 | ) | (53 | ) | ||||
Proceeds from long-term debt | 6,935 | 11,164 | ||||||
Proceeds from exercise of stock options | 129 | 169 | ||||||
Dividends paid to shareholders | (1,026 | ) | (914 | ) | ||||
Dividends paid to noncontrolling interest | (204 | ) | (132 | ) | ||||
Excess tax benefits from stock compensation | 1,316 | 445 | ||||||
Other | (1,700 | ) | (183 | ) | ||||
Net cash provided by financing activities | 5,362 | 10,496 | ||||||
Effect of exchange rate changes on cash | (53 | ) | (444 | ) | ||||
Net change in cash | 5,792 | 4,531 | ||||||
Cash: | ||||||||
Beginning of period | 15,701 | 20,167 | ||||||
End of period | $ | 21,493 | $ | 24,698 | ||||
Source:
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