Twin Disc, Inc. Announces Fiscal 2014 Third Quarter Financial Results
- Demand from Customers in Asia Continues at Record Levels
- Challenges in some North American and most European Markets Persist
-
Improving Outlook for
North American Oil and Gas -
Net Cash at
March 28, 2014 was$1,313,000 -
Six-Month Backlog at
March 28, 2014 up slightly to$57,599,000
Sales for the fiscal 2014 third quarter declined to
Commenting on the results,
Gross margin for the fiscal 2014 third quarter was 27.4 percent, compared to 25.9 percent in the fiscal 2013 third quarter. The increase in fiscal 2014 third quarter gross margin was the result of a more profitable mix of business. Year-to-date, gross margin was 29.3 percent, compared to 28.4 percent for the fiscal 2013 nine months.
For the fiscal 2014 third quarter, marketing, engineering and
administrative (ME&A) expenses, as a percentage of sales, were 27.8
percent, compared to 25.5 percent for the fiscal 2013 third quarter.
ME&A expenses decreased
The fiscal 2014 third quarter tax benefit on near break-even, pre-tax
results was impacted by a reduced effective rate driven by a change in
the jurisdictional mix of earnings along with provision to return
adjustments for the federal and various state tax returns filed in the
quarter. The fiscal 2013 third quarter tax expense was primarily
impacted by foreign tax credits following final settlement of an
The net loss attributable to
Earnings before interest, taxes, depreciation and amortization (EBITDA)*
were
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 OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) (In thousands, except per-share data; unaudited) |
||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
March 28,
2014 |
March 29,
2013 |
March 28,
2014 |
March 29,
2013 |
|||||||||||||
Net sales | $ | 60,705 | $ | 68,232 | $ | 190,343 | $ | 209,351 | ||||||||
Cost of goods sold | 44,095 | 50,558 | 134,522 | 149,949 | ||||||||||||
Gross profit | 16,610 | 17,674 | 55,821 | 59,402 | ||||||||||||
Marketing, engineering and | ||||||||||||||||
administrative expenses | 16,870 | 17,405 | 49,572 | 50,795 | ||||||||||||
Restructuring of operations | - | - | 1,094 | - | ||||||||||||
(Loss) earnings from operations | (260 | ) | 269 | 5,155 | 8,607 | |||||||||||
Interest expense |
220 | 366 | 697 | 1,001 | ||||||||||||
Other expense (income), net | 68 | (129 | ) | (85 | ) | (24 | ) | |||||||||
(Loss) earnings before income |
(548 |
) |
32 |
4,543 |
7,630 |
|||||||||||
Income taxes | (188 | ) | 640 | 2,973 | 3,552 | |||||||||||
Net (loss) earnings | (360 | ) | (608 | ) | 1,570 | 4,078 | ||||||||||
Less: Net earnings attributable to | ||||||||||||||||
noncontrolling interest, net of tax | (33 | ) | (149 | ) | (168 | ) | (243 | ) | ||||||||
Net (loss) earnings attributable to |
$ | (393 | ) | $ | (757 | ) | $ | 1,402 | $ | 3,835 | ||||||
(Loss) earnings per share data: | ||||||||||||||||
Basic (loss) earnings per share attributable |
$ |
(0.03 |
) |
$ |
(0.07 |
) |
$ |
0.12 |
$ |
0.34 |
||||||
Diluted (loss) earnings per share attributable |
$ |
(0.03 |
) |
$ |
(0.07 |
) |
$ |
0.12 |
$ |
0.34 |
||||||
Weighted average shares outstanding data: | ||||||||||||||||
Basic shares outstanding | 11,265 | 11,243 | 11,256 | 11,327 | ||||||||||||
Diluted shares outstanding | 11,265 | 11,243 | 11,262 | 11,400 | ||||||||||||
Dividends per share | $ | 0.09 | $ | 0.09 | $ | 0.27 | $ | 0.27 | ||||||||
Comprehensive income (loss): | ||||||||||||||||
Net (loss) earnings | $ | (360 | ) | $ | (608 | ) | $ | 1,570 | $ | 4,078 | ||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustment | 1,054 | (874 | ) | 4,053 | 2,520 | |||||||||||
Benefit plan adjustments, net | 528 | 676 | 1,506 | 1,996 | ||||||||||||
Comprehensive income (loss) | 1,222 | (806 | ) | 7,129 | 8,594 | |||||||||||
Comprehensive income attributable to |
(33 |
) |
(149 |
) |
|
(168 |
) |
(243 |
) |
|||||||
Comprehensive income (loss) attributable to |
$ |
1,189 |
$ |
(955 |
) |
$ |
6,961 |
$ |
8,351 |
|||||||
RECONCILIATION OF CONSOLIDATED NET (LOSS) EARNINGS TO EBITDA
(In thousands; unaudited) |
||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||
March 28,
2014 |
March 29,
2013 |
March 28,
2014 |
March 29,
2013 |
|||||||||||
Net (loss) earnings attributable to |
$ | (393 | ) | $ | (757 | ) | $ | 1,402 | $ | 3,835 | ||||
Interest expense | 220 | 366 | 697 | 1,001 | ||||||||||
Income taxes | (188 | ) | 640 | 2,973 | 3,552 | |||||||||
Depreciation and amortization | 2,742 | 2,680 | 7,940 | 8,025 | ||||||||||
Earnings before interest, taxes, |
$ | 2,381 | $ | 2,929 | $ | 13,012 | $ | 16,413 | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands, except share amounts; unaudited) | ||||||||
|
|
|||||||
2014 | 2013 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 26,360 | $ | 20,724 | ||||
Trade accounts receivable, net | 33,489 | 46,331 | ||||||
Inventories, net | 105,131 | 102,774 | ||||||
Deferred income taxes | 5,221 | 5,280 | ||||||
Other | 13,055 | 13,363 | ||||||
Total current assets | 183,256 | 188,472 | ||||||
Property, plant and equipment, net | 60,986 | 62,315 | ||||||
Goodwill, net | 13,526 | 13,232 | ||||||
Deferred income taxes | 6,322 | 7,614 | ||||||
Intangible assets, net | 2,947 | 3,149 | ||||||
Other assets | 8,891 | 10,676 | ||||||
TOTAL ASSETS | $ | 275,928 | $ | 285,458 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term borrowings and current maturities of long-term debt | $ | 3,625 | $ | 3,681 | ||||
Accounts payable | 19,665 | 20,651 | ||||||
Accrued liabilities | 32,496 | 39,171 | ||||||
Total current liabilities | 55,786 | 63,503 | ||||||
Long-term debt | 21,422 | 23,472 | ||||||
Accrued retirement benefits | 45,803 | 48,290 | ||||||
Deferred income taxes | 2,589 | 2,925 | ||||||
Other long-term liabilities | 3,881 | 3,706 | ||||||
Total liabilities | 129,481 | 141,896 | ||||||
|
11,676 |
13,183 |
||||||
Retained earnings | 182,467 | 184,110 | ||||||
Accumulated other comprehensive loss | (20,256 | ) | (25,899 | ) | ||||
173,887 | 171,394 | |||||||
Less treasury stock, at cost |
28,095 |
28,890 |
||||||
Total |
145,792 | 142,504 | ||||||
Noncontrolling interest | 655 | 1,058 | ||||||
Total equity | 146,447 | 143,562 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 275,928 | $ | 285,458 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands, unaudited) |
||||||||
Nine Months Ended | ||||||||
|
|
|||||||
2014 | 2013 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net earnings | $ | 1,570 | $ | 4,078 | ||||
Adjustments to reconcile to net earnings to cash provided | ||||||||
by operating activities: | ||||||||
Depreciation and amortization | 7,940 | 8,025 | ||||||
Restructuring of operations | 1,094 | - | ||||||
Other non-cash changes, net | 441 | 1,679 | ||||||
Net change in working capital, excluding cash | 6,742 | (2,980 | ) | |||||
Net cash provided by operating activities | 17,787 | 10,802 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisitions of fixed assets | (5,183 | ) | (5,118 | ) | ||||
Proceeds from sale of fixed assets | 121 | 181 | ||||||
Other, net | (244 | ) | (232 | ) | ||||
Net cash used by investing activities | (5,306 | ) | (5,169 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from notes payable | - | 38 | ||||||
Payments of notes payable | (59 | ) | (96 | ) | ||||
Payments of long-term debt | - | (95 | ) | |||||
Borrowings under revolving loan agreement | 48,550 | 65,200 | ||||||
Repayments under revolving loan agreement | (50,600 | ) | (62,500 | ) | ||||
Proceeds from exercise of stock options | - | 189 | ||||||
Dividends paid to shareholders | (3,045 | ) | (3,066 | ) | ||||
Acquisition of Treasury stock | - | (3,069 | ) | |||||
Dividends paid to noncontrolling interest | (487 | ) | (204 | ) | ||||
Excess tax benefits from stock compensation | 524 | 1,276 | ||||||
Payments of withholding taxes on stock compensation | (2,170 | ) | (1,700 | ) | ||||
Net cash used by financing activities | (7,287 | ) | (4,027 | ) | ||||
Effect of exchange rate changes on cash | 442 | (146 | ) | |||||
Net change in cash | 5,636 | 1,460 | ||||||
Cash: | ||||||||
Beginning of period | 20,724 | 15,701 | ||||||
End of period | $ | 26,360 | $ | 17,161 |
Source:
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