Twin Disc Reports Strong Fourth Quarter & Full Year Results
Fiscal Fourth Quarter 2023 Highlights
- Sales increased 10.5% year-over-year to
$83.9 million - Net income attributable to
Twin Disc was$8.6 million and EBITDA* of$13.0 million - Significantly improved operating cash flow of
$16.0 million - Free cash flow* of
$14.9 million compared to$(3.4) million in the year-ago period - Strong six-month backlog of
$119.2 million supported by healthy ongoing demand
CEO Perspective
“Fiscal 2023 was a tale of two halves. After facing significant supply chain headwinds and cost increases in the first half of the year, our team maintained focus and executed exceptionally. Since the start of the year, we further streamlined shipments and caught up on past-due orders. The cumulative benefit of our pricing actions from earlier in the year and easing supply chain conditions, combined with operational excellence, contributed to sales growth, sequential gross margin expansion, and significant improvements to operating and free cash flow,” commented
“Global demand across product groups drove solid year-over-year sales growth for the quarter and full year. We also had several projects reactivated after being canceled during COVID. The macroeconomic and geopolitical environment remains uncertain though project visibility, customer inquiries, and after-market demand continue to fuel our cautiously optimistic outlook. As we look to fiscal 2024, we remain committed to maintaining our momentum, driving further growth, and delivering value to our stakeholders,” concluded
Fourth Quarter & Full-Year Results
Sales for the fiscal 2023 fourth quarter increased 10.5% year-over-year to
Sales by product group:
Q4 FY23 Sales |
Q4 FY22 Sales |
Change (%) |
||||
(Thousands of $): | ||||||
Marine and Propulsion Systems | 48,634 | 39,693 | 22.4% | |||
Land-Based Transmissions | 22,864 | 23,259 | (1.7)% | |||
Industrial | 7,928 | 9,800 | (19.1)% | |||
Other | 4,497 | 3,222 | 39.6% | |||
Total | 10.5% |
FY23 Sales |
FY22 Sales |
Change (%) |
||||
(Thousands of $): | ||||||
Marine and Propulsion Systems | 158,291 | 135,008 | 17.2% | |||
Land-Based Transmissions | 73,048 | 64,904 | 12.5% | |||
Industrial | 29,775 | 32,100 | (7.2)% | |||
Other | 15,846 | 10,901 | 45.4% | |||
Total | 14.0% |
For fiscal 2023,
Gross profit increased 2.3% to
Marketing, engineering and administrative (ME&A) expense decreased by
Net income attributable to
Earnings before interest, taxes, depreciation and amortization (EBITDA) of
On a consolidated basis, the backlog of orders to be shipped over the next six months is approximately
CFO Perspective
Other Updates
Twin Disc’s pension accounting method changed to modified mark-to-market during the fourth quarter of fiscal year 2023. The change in accounting method has been applied retroactively for the fourth quarter and full fiscal year results presented in this earnings release. The modified mark-to-market adjustment for fiscal year 2022 resulted in a
Discussion of Results
About
Forward-Looking Statements
This press release may contain statements that are forward looking as defined by the
*Non-GAAP Financial Information
Financial information excluding the impact of asset impairments, restructuring charges, foreign currency exchange rate changes and the impact of acquisitions, if any, in this press release are not measures that are defined in
Definitions
Earnings before interest, taxes, depreciation and amortization (EBITDA) is calculated as net earnings or loss excluding interest expense, the provision or benefit for income taxes, depreciation and amortization expenses.
Net debt is calculated as total debt less cash.
Free cash flow is calculated as net cash provided (used) by operating activities less acquisition of fixed assets.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (In thousands, except per-share data; unaudited) |
||||||||||||||
For the Quarter Ended | For the Year Ended | |||||||||||||
2023 |
2022 (As Adjusted) |
2023 |
2022 (As Adjusted) |
|||||||||||
Net sales | $ | 83,923 | $ | 75,974 | $ | 276,960 | $ | 242,913 | ||||||
Cost of goods sold | 59,177 | 51,782 | 202,628 | 174,101 | ||||||||||
Gross profit | 24,747 | 24,192 | 74,332 | 68,812 | ||||||||||
Marketing, engineering and administrative expenses | 16,556 | 17,331 | 62,243 | 60,085 | ||||||||||
Restructuring expenses | (31 | ) | (569 | ) | 177 | 973 | ||||||||
Other operating income | (1 | ) | (325 | ) | (4,148 | ) | (3,282 | ) | ||||||
Income from operations |
8,222 | 7,754 | 16,060 | 11,036 | ||||||||||
Interest expense | (571 | ) | (534 | ) | (2,253 | ) | (2,128 | ) | ||||||
Other income (expense), net | 2,492 |
3,083 |
658 | 3,693 |
||||||||||
1,921 | 2,549 | (1,595 | ) | 1,565 | ||||||||||
Income before income taxes and noncontrolling interest | 10,144 | 10,304 | 14,465 | 12,601 | ||||||||||
Income tax expense | 1,439 | 66 | 3,788 | 1,823 | ||||||||||
Net income | 8,705 | 10,238 | 10,677 | 10,778 | ||||||||||
Less: Net earnings attributable to noncontrolling interest, net of tax | (110 | ) | (88 | ) | (297 | ) | (311 | ) | ||||||
Net income attributable to |
$ | 8,596 | $ | 10,150 | $ | 10,380 | $ | 10,467 | ||||||
Income per share data: | ||||||||||||||
Basic income per share attributable to |
$ | 0.64 | $ | 0.76 | $ | 0.77 | $ | 0.78 | ||||||
Diluted income per share attributable to |
$ | 0.62 | $ | 0.75 | $ | 0.75 | $ | 0.78 | ||||||
Weighted average shares outstanding data: | ||||||||||||||
Basic shares outstanding | 13,508 | 13,399 | 13,468 | 13,353 | ||||||||||
Diluted shares outstanding | 13,844 | 13,456 | 13,811 | 13,382 | ||||||||||
Comprehensive income | ||||||||||||||
Net income | $ | 8,704 | $ | 10,238 | $ | 10,677 | $ | 10,778 | ||||||
Benefit plan adjustments, net of income taxes of |
85 | (4,147 | ) | 667 | (2,635 | ) | ||||||||
Foreign currency translation adjustment | (2,483 | ) | (5,222 | ) | 634 | (11,593 | ) | |||||||
Unrealized gain on cash flow hedge, net of income taxes of |
81 | 501 | 54 | 2,250 | ||||||||||
Comprehensive income (loss) | 6,387 | 1,370 | 12,032 | (1,200 | ) | |||||||||
Less: Comprehensive income (loss) attributable to noncontrolling interest | (30 | ) | (59 | ) | 248 | 176 | ||||||||
Comprehensive income (loss) attributable to |
$ | 6,417 | $ | 1,429 | $ | 11,783 | $ | (1,376 | ) |
Note: Amounts may not foot due to rounding
RECONCILIATION OF CONSOLIDATED NET INCOME TO EBITDA | |||||||||
(In thousands; unaudited) | |||||||||
For the Quarter Ended | For the Year Ended | ||||||||
2023 |
2022 (As Adjusted) |
2023 |
2022 (As Adjusted) |
||||||
Net income attributable to |
$ | 8,596 | $ | 10,150 | $ | 10,380 | $ | 10,467 | |
Interest expense | 571 | 534 | 2,253 | 2,128 | |||||
Income tax expense | 1,439 | 66 | 3,788 | 1,823 | |||||
Depreciation and amortization | 2,423 | 2,230 | 9,359 | 9,547 | |||||
Earnings before interest, taxes depreciation and amortization | $ | 13,029 | $ | 12,980 | $ | 25,781 | $ | 23,965 | |
RECONCILIATION OF TOTAL DEBT TO NET DEBT | |||||
(In thousands; unaudited) | |||||
2023 |
2022 |
||||
Current maturities of long-term debt | $ | 2,010 | $ | 2,000 | |
Long-term debt | 16,617 | 34,543 | |||
Total debt | 18,627 | 36,543 | |||
Less cash | 13,263 | 12,521 | |||
Net debt | $ | 5,364 | $ | 24,022 |
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW | |||||||||||
(In thousands; unaudited) | |||||||||||
For the Quarter Ended | For the Year Ended | ||||||||||
2023 |
2022 |
2023 |
2022 |
||||||||
Net cash provided by operating activities | $ | 16,037 | $ | (1,090 | ) | $ | 22,898 | $ | (8,313 | ) | |
Acquisition of fixed assets | 1,108 | 2,358 | 7,918 | 4,729 | |||||||
Free cash flow | $ | 14,929 | $ | (3,448 | ) | $ | 14,980 | $ | (13,042 | ) | |
Note: Amounts may not foot due to rounding
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands; except share amounts, unaudited) | |||||||
2023 | 2022 (As Adjusted) |
||||||
ASSETS | |||||||
Current assets: | |||||||
Cash | $ | 13,263 | $ | 12,521 | |||
Trade accounts receivable, net | 54,760 | 45,452 | |||||
Inventories | 131,930 | 127,109 | |||||
Assets held for sale | 2,968 | 2,968 | |||||
Prepaid expenses | 8,459 | 7,756 | |||||
Other | 8,326 | 8,646 | |||||
Total current assets | 219,706 | 204,452 | |||||
Property, plant and equipment, net | 38,650 | 41,615 | |||||
Right-of-use assets operating leases | 13,133 | 12,685 | |||||
Intangible assets, net | 12,637 | 13,010 | |||||
Deferred income taxes | 2,244 | 2,178 | |||||
Other assets | 2,811 | 2,583 | |||||
TOTAL ASSETS | $ | 289,181 | $ | 276,523 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Current maturities of long-term debt | $ | 2,010 | $ | 2,000 | |||
Accounts payable | 36,499 | 28,536 | |||||
Accrued liabilities | 61,586 | 50,542 | |||||
Total current liabilities | 100,095 | 81,078 | |||||
Long-term debt, less current maturities | 16,617 | 34,543 | |||||
Lease obligations | 10,811 | 10,575 | |||||
Accrued retirement benefits | 7,608 | 9,974 | |||||
Deferred income taxes | 3,280 | 3,802 | |||||
Other long-term liabilities | 5,253 | 5,363 | |||||
Total liabilities | 143,664 | 145,335 | |||||
Preferred shares authorized: 200,000; issued: none; no par value | - | - | |||||
Common shares authorized: 30,000,000; issued: 14,632,802; no par value | 42,855 | 42,551 | |||||
Retained earnings | 120,299 | 109,919 | |||||
Accumulated other comprehensive loss | (5,570 | ) | (6,974 | ) | |||
157,584 | 145,496 | ||||||
Less treasury stock, at cost (960,459 and 984,139 shares, respectively) | 12,491 | 14,720 | |||||
Total |
145,093 | 130,776 | |||||
Noncontrolling interest | 424 | 412 | |||||
Total equity | 145,517 | 131,188 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 289,181 | $ | 276,523 | |||
Note: Amounts may not foot due to rounding
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands; unaudited) |
|||||||
For the Year Ended | |||||||
2023 |
2022 (As Adjusted) |
||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 10,677 | $ | 10,778 | |||
Adjustments to reconcile net income to net cash provided (used) by operating activities: | |||||||
Depreciation and amortization | 9,359 | 9,547 | |||||
Gain on sale of assets | (4,264 | ) | (3,126 | ) | |||
Restructuring expenses | 137 | (1,328 | ) | ||||
Provision for deferred income taxes | (634 | ) | (849 | ) | |||
Stock compensation expense and other non-cash charges, net | 2,996 | 2,428 | |||||
Other | 201 | 201 | |||||
Net change in operating assets and liabilities | 4,426 | (25,964 | ) | ||||
Net cash provided by operating activities | 22,898 | (8,313 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Acquisition of property, plant, and equipment | (7,918 | ) | (4,729 | ) | |||
Proceeds from sale of fixed assets | 7,177 | 9,455 | |||||
Proceeds on note receivable | - | 500 | |||||
Other, net | 333 | 675 | |||||
Net cash (used) provided by investing activities | (408 | ) | 5,901 | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Borrowings under revolving loan arrangements | 81,620 | 104,473 | |||||
Repayments of revolving loan arrangements | (97,774 | ) | (95,704 | ) | |||
Repayments of other long-term debt | (2,037 | ) | (3,081 | ) | |||
Payments of finance lease obligations | (621 | ) | (933 | ) | |||
Payments of withholding taxes on stock compensation | (463 | ) | (486 | ) | |||
Dividends paid to noncontrolling interest | (236 | ) | (214 | ) | |||
Net cash (used) provided by financing activities | (19,511 | ) | 4,055 | ||||
Effect of exchange rate changes on cash | (2,237 | ) | (1,462 | ) | |||
Net change in cash | 742 | 181 | |||||
Cash: | |||||||
Beginning of period | 12,521 | 12,340 | |||||
End of period | $ | 13,263 | $ | 12,521 | |||
Note: Amounts may not foot due to rounding
Investors:
Riveron
TwinDiscIR@Riveron.com
Source:
Source: Twin Disc, Incorporated