Twin Disc, Inc. Announces Fiscal 2013 Third Quarter Financial Results
- Sales and Earnings Decline due to Continued Weakness in North American Pressure Pumping Sector
-
Increasing Demand from Customers in
Asia - Balance Sheet Remains Strong
Sales for the fiscal 2013 third quarter were
Gross margin for the fiscal 2013 third quarter was 25.9 percent, compared to 34.6 percent in the fiscal 2012 third quarter and 30.8 percent in the fiscal 2013 second quarter. The anticipated year-over-year decline in the fiscal 2013 third quarter gross margin was the result of lower sales volumes and a less profitable mix of business. Year-to-date, gross margin was 28.4 percent, compared to 36.0 percent for the fiscal 2012 nine months.
For the fiscal 2013 third quarter, marketing, engineering and
administrative (ME&A) expenses, as a percentage of sales, were 25.5
percent, compared to 18.6 percent for the fiscal 2012 third quarter.
ME&A expenses decreased
Three Months Ended | |||||||||
(In thousands) |
2013 |
2012 |
Increase/ (Decrease) |
||||||
Stock-Based Compensation | $ | 1,488 | $ | (385) | $ | 1,873 | |||
Incentive/Bonus Expense | 74 | 1,129 | (1,055) | ||||||
$ | 818 | ||||||||
Foreign Exchange Translation, Net | (36) | ||||||||
$ | 782 | ||||||||
All Other, Net | (1,123) | ||||||||
$ | (341) | ||||||||
The year-over-year net remaining decrease in ME&A expenses of
Year-to-date, ME&A expenses, as a percentage of sales, were 24.3
percent, compared to 20.7 percent for the fiscal 2012 first nine months.
For the fiscal 2013 nine-month period, ME&A expenses decreased
Nine Months Ended | |||||||||
(In thousands) |
2013 |
2012 |
Increase/ (Decrease) |
||||||
Stock-Based Compensation | $ | 2,412 | $ | 2,022 | $ | 390 | |||
Incentive/Bonus Expense | 203 | 3,128 | (2,925) | ||||||
$ | (2,535) | ||||||||
Foreign Exchange Translation, Net | (805) | ||||||||
$ | (3,340) | ||||||||
All Other, Net | 383 | ||||||||
$ | (2,957) | ||||||||
The net remaining year-to-date increase in ME&A expenses for the year primarily relates to increased research and development activities, wage inflation and additional headcount in the first half of the fiscal year offset by global reductions in ME&A expenses in the third fiscal quarter.
The third fiscal quarter tax expense on break-even, pre-tax results
primarily relates to a true-up of foreign tax credits (
The Company reported a net loss 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 OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (In thousands, except per-share data; unaudited) |
||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||
2013 |
2012(*) |
2013 |
2012(*) |
|||||||||
Net sales | $ | 68,232 | $ | 95,490 | $ | 209,351 | $ | 259,761 | ||||
Cost of goods sold | 50,558 | 62,434 | 149,949 | 166,375 | ||||||||
Gross profit | 17,674 | 33,056 | 59,402 | 93,386 | ||||||||
Marketing, engineering and administrative expenses |
17,405 | 17,746 | 50,795 | 53,752 | ||||||||
Earnings from operations | 269 | 15,310 | 8,607 | 39,634 | ||||||||
Interest expense | 366 | 389 | 1,001 | 1,129 | ||||||||
Other (income) expense, net | (129) | 71 | (24) | (473) | ||||||||
Earnings before income taxes and noncontrolling interest |
32 |
14,850 |
7,630 |
38,978 |
||||||||
Income taxes | 640 | 4,821 | 3,552 | 13,390 | ||||||||
Net (loss) earnings | (608) | 10,029 | 4,078 | 25,588 | ||||||||
Less: Net earnings attributable to noncontrolling interest, net of tax |
(149) | (45) | (243) | (108) | ||||||||
Net (loss) earnings attributable to |
$ | (757) | $ | 9,984 | $ | 3,835 | $ | 25,480 | ||||
(Loss) earnings per share data: | ||||||||||||
Basic (loss) earnings per share attributable to |
$ |
(0.07) |
$ |
0.87 |
$ |
0.34 |
$ |
2.23 |
||||
Diluted (loss) earnings per share attributable to |
$ |
(0.07) |
$ |
0.86 |
$ |
0.34 |
$ |
2.20 |
||||
Weighted average shares outstanding data: | ||||||||||||
Basic shares outstanding | 11,243 | 11,426 | 11,327 | 11,410 | ||||||||
Diluted shares outstanding | 11,243 | 11,572 | 11,400 | 11,555 | ||||||||
Dividends per share | $ | 0.09 | $ | 0.09 | $ | 0.27 | $ | 0.25 | ||||
Comprehensive (loss) income: | ||||||||||||
Net (loss) earnings | $ | (608) | $ | 10,029 | $ | 4,078 | $ | 25,588 | ||||
Other comprehensive (loss) income: Foreign currency translation adjustment |
(874) |
2,241 |
|
2,520 |
(6,292) |
|||||||
Benefit plan adjustments, net | 676 | 418 | 1,996 | 1,303 | ||||||||
Comprehensive (loss) income | (806) | 12,688 | 8,594 | 20,599 | ||||||||
Comprehensive income attributable to noncontrolling interest |
(149) |
(45) |
|
(243) |
(108) |
|||||||
Comprehensive (loss) income attributable to |
$ |
(955) |
$ |
12,643 |
$ |
8,351 |
$ |
20,491 |
||||
(*) Includes revisions to correct previously reported amounts. The
Company's review of its reserve for uncertain tax positions identified
errors that affected prior periods. The effect of the errors was not
material to any previously issued financial statements, however, the
cumulative effect of correcting the errors in the current year would
have been material to fiscal year 2013. Therefore, the Company revised
its prior period financial statements. As part of this revision, the
Company recorded other previously disclosed out-of-period adjustments,
which were immaterial, in the periods in which the errors originated.
The aggregate impact was to increase net earnings for the three months
ended
RECONCILIATION OF CONSOLIDATED NET (LOSS) EARNINGS TO EBITDA
(In thousands; unaudited) |
||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||
2013 |
2012(*) |
2013 |
2012(*) |
|||||||||
Net (loss) earnings attributable to |
$ | (757) | $ | 9,984 | $ | 3,835 | $ | 25,480 | ||||
Interest expense |
366 |
389 | 1,001 | 1,129 | ||||||||
Income taxes | 640 | 4,821 | 3,552 | 13,390 | ||||||||
Depreciation and amortization | 2,680 | 2,699 | 8,025 | 8,010 | ||||||||
Earnings before interest, taxes, depreciation and amortization |
$ | 2,929 | $ | 17,893 | $ | 16,413 | $ | 48,009 | ||||
(*) Includes revisions to previously reported amounts.
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(In thousands; unaudited) | ||||||
|
|
|||||
2013 | 2012(*) | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash | $ | 17,161 | $ | 15,701 | ||
Trade accounts receivable, net | 44,204 | 63,438 | ||||
Inventories, net | 113,009 | 103,178 | ||||
Deferred income taxes | 4,797 | 3,745 | ||||
Other | 10,949 | 11,099 | ||||
Total current assets | 190,120 | 197,161 | ||||
Property, plant and equipment, net | 64,299 | 66,356 | ||||
Goodwill, net | 13,312 | 13,116 | ||||
Deferred income taxes | 12,753 | 14,335 | ||||
Intangible assets, net | 4,643 | 4,996 | ||||
Other assets | 10,002 | 7,868 | ||||
TOTAL ASSETS | $ | 295,129 | $ | 303,832 | ||
LIABILITIES AND EQUITY | ||||||
Current liabilities: | ||||||
Short-term borrowings and current maturities of long-term debt | $ | 3,693 | $ | 3,744 | ||
Accounts payable | 21,165 | 23,550 | ||||
Accrued liabilities | 32,462 | 39,331 | ||||
Total current liabilities | 57,320 | 66,625 | ||||
Long-term debt | 31,009 | 28,401 | ||||
Accrued retirement benefits | 59,717 | 64,009 | ||||
Deferred income taxes | 3,767 | 3,340 | ||||
Other long-term liabilities | 3,485 | 4,948 | ||||
Total liabilities | 155,298 | 167,323 | ||||
|
||||||
Common shares authorized: 30,000,000; | ||||||
Issued: 13,099,468; no par value | 12,401 | 12,759 | ||||
Retained earnings | 185,074 | 184,306 | ||||
Accumulated other comprehensive loss | (30,244) | (34,797) | ||||
167,231 | 162,268 | |||||
Less treasury stock, at cost (1,855,984 and 1,794,981 shares, respectively) |
28,423 |
26,781 |
||||
Total |
138,808 | 135,487 | ||||
Noncontrolling interest | 1,023 | 1,022 | ||||
Total equity | 139,831 | 136,509 | ||||
TOTAL LIABILITIES AND EQUITY | $ | 295,129 | $ | 303,832 | ||
(*) Includes revisions to correct previously reported amounts resulting
in an increase of
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited) |
||||||||
Nine Months Ended | ||||||||
2013 |
2012(*) |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net earnings | $ | 4,078 | $ | 25,588 | ||||
Adjustments to reconcile to net earnings to cash provided (used) by operating activities: |
||||||||
Depreciation and amortization | 8,025 | 8,010 | ||||||
Other non-cash changes, net | 1,679 | 4,557 | ||||||
Net change in working capital, excluding cash and debt, and other | (2,980 | ) | (41,964 | ) | ||||
Net cash provided (used) by operating activities | 10,802 | (3,809 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisitions of fixed assets | (5,118 | ) | (10,560 | ) | ||||
Proceeds from sale of fixed assets | 181 | 95 | ||||||
Other, net | (232 | ) | (293 | ) | ||||
Net cash used by investing activities | (5,169 | ) | (10,758 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from notes payable | 38 | - | ||||||
Principal payments of notes payable | (96 | ) | (109 | ) | ||||
Proceeds from long-term debt | 2,605 | 15,543 | ||||||
Proceeds from exercise of stock options | 189 | 169 | ||||||
Dividends paid to shareholders | (3,067 | ) | (2,857 | ) | ||||
Dividends paid to noncontrolling interest | (205 | ) | (130 | ) | ||||
Purchase of treasury stock | (3,069 | ) | - | |||||
Excess tax benefits from stock compensation | 1,276 | 535 | ||||||
Other | (1,698 | ) | (185 | ) | ||||
Net cash (used) provided by financing activities | (4,027 | ) | 12,966 | |||||
Effect of exchange rate changes on cash | (146 | ) | (938 | ) | ||||
Net change in cash | 1,460 | (2,539 | ) | |||||
Cash: | ||||||||
Beginning of period | 15,701 | 20,167 | ||||||
End of period | $ | 17,161 | $ | 17,628 |
(*) Includes corrections to previously reported amounts, resulting in a reclassification within Net cash used by operating activities.
Source:
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