Twin Disc, Inc. (NASDAQ: TWIN) today reported
financial results for the fiscal 2023 second quarter and first half
ended December 30, 2022.
Sales for the fiscal 2023 second quarter were
$63.4 million, compared to $59.9 million for the same period last
year. The 5.8% increase in fiscal 2023 second quarter net sales was
primarily due to improving demand within the Company’s global oil
and gas, industrial and marine markets compared to the same period
last fiscal year. The positive impact of improving market
conditions has been partially offset by significant global supply
chain challenges, which continued to limit sales growth in the
quarter. Foreign currency exchange had a $5.0 million negative
impact on fiscal 2023 second quarter sales and a $9.9 million
negative impact on fiscal 2023 year-to-date sales. Year-to-date
sales increased 10.8% to $119.3 million, compared to $107.7 million
for the fiscal 2022 first half. Excluding the unfavorable impact of
foreign currency translation, sales improved 14.2% for the quarter
and 20.0% for the first half.
John H. Batten, President and Chief Executive
Officer, commented: “Positive demand across our global markets
continued to support sales and backlog growth during the fiscal
2023 second quarter. The progress we are making is encouraging as
we remain focused on navigating supply chain challenges and higher
component costs. This is a testament to the hard work and
dedication of our global team members. Profitability at our
European operations increased significantly during the second
quarter as pricing and efficiencies improved, which combined with a
favorable mix of sales, increased gross profit dollars by 26.3%
during the second quarter from the same period a year ago.”
“Our six-month backlog at December 30, 2022, was
$124.0 million, compared to $98.9 million at December 31, 2021, and
$101.2 million at June 30, 2022. Bookings at our Veth operation
were particularly strong, as we gain traction for new applications
and our presence grows in geographies not traditionally served by
Veth prior to our July 2018 acquisition. While demand for
aftermarket oil and gas components strengthened during the second
quarter, we have not yet seen significant orders for new
transmission systems from North American pressure pumping
operators. We continue to anticipate renewed investments from North
American pressure pumping operators will benefit our financial
results during fiscal year 2023. While the economic environment
remains extremely fluid, I am pleased by the progress we are making
and we continue to believe fiscal 2023 will be a year of sales
growth and higher profitability,” concluded Mr. Batten.
Gross profit percent for the fiscal 2023 second
quarter was 26.9%, compared to 22.5% for the same period last year
and 23.8% for the fiscal 2023 first quarter. The 440-basis point
year-over-year increase in gross profit margin percentage was
primarily due to improved efficiencies, prudent selling price
adjustments to offset higher raw material prices, and a more
profitable mix of sales. Year-to-date, gross margin was 25.4%
compared to 25.0% for the fiscal 2022 first half.
For the fiscal 2023 second quarter, marketing,
engineering and administrative (ME&A) expenses increased by
$0.7 million to $16.0 million, compared to $15.3 million for the
fiscal 2022 second quarter. The 4.7% increase in ME&A expenses
in the quarter was primarily due to the incremental impact of prior
year COVID subsidies in the Netherlands ($0.7 million), increased
spending on professional fees ($0.5 million) and an inflationary
impact on wages and salaries ($0.2 million). These increases were
partially offset by a currency translation reduction of
approximately ($0.8 million). As a percentage of revenues, ME&A
expenses improved to 25.2% for the fiscal 2023 second quarter,
compared to 25.5% for the same period last fiscal year.
Year-to-date, ME&A expenses were $31.1 million, compared to
$28.4 million for the fiscal 2022 first half. As a percent of
revenues, ME&A expenses were 26.0% for the fiscal 2023 first
half, compared to 26.3% for the same period last fiscal year.
During the fiscal 2023 second quarter, Twin Disc
completed the sale of a real estate property located in Nivelles,
Belgium for net proceeds of $7.2 million, which resulted in a gain
of $4.2 million and was recorded in other operating income for the
fiscal 2023 second quarter.
For the fiscal 2023 second quarter and first
half, Twin Disc recorded other expense of $0.8 million and $1.0
million, respectively, primarily attributable to translation losses
related to Euro denominated liabilities. For the fiscal 2022 second
quarter and first half, Twin Disc recorded other income of $0.5
million and $0.1 million, respectively, also attributable to
currency translation movements related to Euro denominated
liabilities.
For the six months ended December 30, 2022 and
December 31, 2021, the Company’s effective income tax rate was
175.9% and -131.1%, respectively. The current and prior year rate
was significantly impacted by a full domestic valuation allowance
along with the mix of foreign earnings by jurisdiction.
Net income attributable to Twin Disc for the
fiscal 2023 second quarter was $1.1 million, or $0.08 per diluted
share, compared to a net loss attributable to Twin Disc of ($3.8
million), or ($0.29) per share, for the fiscal 2022 second quarter.
Year-to-date, the net loss attributable to Twin Disc was ($0.9
million), or ($0.07) per share, compared to a net loss attributable
to Twin Disc of ($1.9 million), or ($0.14) per share for the fiscal
2022 first half.
Earnings before interest, taxes, depreciation
and amortization (EBITDA)* were $6.3 million for the fiscal 2023
second quarter, compared to a loss of ($0.2 million) for the fiscal
2022 second quarter. For the fiscal 2023 first half, EBITDA was
$6.3 million, compared to $5.2 million for the fiscal 2022
comparable period.
Jeffrey S. Knutson, Vice President – Finance,
Chief Financial Officer, Treasurer and Secretary stated, “We
continue to pursue strategies that strengthen our balance sheet and
improve our fixed cost structure. The progress we have made during
fiscal 2023 is encouraging as we successfully monetize several of
our under-utilized assets including our facility in Belgium during
the fiscal 2023 second quarter. These actions, combined with
positive operating cash flow during the fiscal 2023 second quarter,
continued to strengthen our balance sheet and at December 30, 2022,
our net debt* (total debt less cash) improved by 23.4% from June
30, 2022. Unfortunately, challenging supply chain and shipping
conditions continued to impact inventory levels during the second
quarter, and reducing inventory remains a key priority during the
second half of fiscal 2023. As our growing backlog converts to
sales, we believe we will generate higher levels of positive
operating cash flow throughout the remainder of fiscal 2023,
further strengthening our balance sheet.”
Twin Disc will be hosting a conference call to
discuss these results and to answer questions at 11:00 a.m. Eastern
Time on February 3, 2023. To participate in the conference call,
please dial 877-407-9039 five to ten minutes before the call is
scheduled to begin. A replay will be available from 2:00 p.m.
Eastern Time February 3, 2023, until midnight February 10, 2023.
The number to hear the teleconference replay is 844-512-2921. The
access code for the replay is 13735510.
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 and follow the
instructions at the web cast link. The archived webcast will be
available shortly after the call on the Company's website.
About Twin Disc, Inc. Twin Disc, Inc. designs,
manufactures and sells marine and heavy-duty off-highway power
transmission equipment. Products offered include marine
transmissions, azimuth drives, surface drives, propellers and boat
management systems, as well as power-shift transmissions, hydraulic
torque converters, power take-offs, industrial clutches and control
systems. The Company sells its products to customers primarily in
the pleasure craft, commercial and military marine markets, as well
as in the energy and natural resources, government and industrial
markets. The Company’s worldwide sales to both domestic and foreign
customers are transacted through a direct sales force and a
distributor network. For more information, please visit
www.twindisc.com.
Forward-Looking StatementsThis press release may
contain statements that are forward looking as defined by the
Securities and Exchange Commission in its rules, regulations and
releases. The Company intends that such forward-looking statements
be subject to the safe harbors created thereby. All forward-looking
statements are based on current expectations regarding important
risk factors including those identified in the Company’s most
recent periodic report and other filings with the Securities and
Exchange Commission. Accordingly, actual results may differ
materially from those expressed in the forward-looking statements,
and the making of such statements should not be regarded as a
representation by the Company or any other person that the results
expressed therein will be achieved. Risk factors also include the
effects of the COVID-19 pandemic, and any impact the COVID-19
pandemic may have on the Company’s business operations, as well as
its impact on general economic and financial market conditions.
*Non-GAAP Financial Disclosures 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 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)Net earnings or loss excluding interest
expense, the provision or benefit for income taxes, 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) |
|
|
For the Quarter Ended |
|
For the Two Quarters Ended |
|
December 30,2022 |
|
December 31,2021 |
|
December 30,2022 |
|
December 31,2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
63,351 |
|
|
$ |
59,889 |
|
|
$ |
119,264 |
|
|
$ |
107,650 |
|
Cost of goods sold |
|
46,328 |
|
|
|
46,407 |
|
|
|
88,944 |
|
|
|
80,721 |
|
Gross profit |
|
17,023 |
|
|
|
13,482 |
|
|
|
30,320 |
|
|
|
26,929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing, engineering
and administrative expenses |
|
15,983 |
|
|
|
15,267 |
|
|
|
31,063 |
|
|
|
28,357 |
|
Restructuring expenses |
|
164 |
|
|
|
1,190 |
|
|
|
174 |
|
|
|
1,238 |
|
Other operating (income)
loss |
|
(4,150 |
) |
|
|
45 |
|
|
|
(4,150 |
) |
|
|
(2,894 |
) |
Income (loss) from
operations |
|
5,026 |
|
|
|
(3,020 |
) |
|
|
3,233 |
|
|
|
228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
594 |
|
|
|
574 |
|
|
|
1,160 |
|
|
|
1,104 |
|
Other (income) expense,
net |
|
789 |
|
|
|
(466 |
) |
|
|
1,049 |
|
|
|
(110 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes and noncontrolling interest |
|
3,643 |
|
|
|
(3,128 |
) |
|
|
1,024 |
|
|
|
(766 |
) |
Income tax expense |
|
2,489 |
|
|
|
622 |
|
|
|
1,801 |
|
|
|
1,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
1,154 |
|
|
|
(3,750 |
) |
|
|
(777 |
) |
|
|
(1,770 |
) |
Less: Net earnings
attributable to noncontrolling interest, net of tax |
|
(15 |
) |
|
|
(86 |
) |
|
|
(112 |
) |
|
|
(144 |
) |
Net income (loss) attributable
to Twin Disc |
$ |
1,139 |
|
|
$ |
(3,836 |
) |
|
$ |
(889 |
) |
|
$ |
(1,914 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share
data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share attributable to Twin Disc common
shareholders |
$ |
0.08 |
|
|
$ |
(0.29 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.14 |
) |
Diluted income (loss) per share attributable to Twin Disc
common shareholders |
$ |
0.08 |
|
|
$ |
(0.29 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic shares outstanding |
|
13,460 |
|
|
|
13,296 |
|
|
|
13,434 |
|
|
|
13,288 |
|
Diluted shares outstanding |
|
13,699 |
|
|
|
13,296 |
|
|
|
13,434 |
|
|
|
13,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
1,154 |
|
|
$ |
(3,750 |
) |
|
$ |
(777 |
) |
|
$ |
(1,770 |
) |
Benefit plan adjustments, net of taxes of $1, $(115), $3, and $2,
respectively |
|
(515 |
) |
|
|
623 |
|
|
|
3 |
|
|
|
1,007 |
|
Foreign currency translation adjustment |
|
8,392 |
|
|
|
(1,701 |
) |
|
|
2,064 |
|
|
|
(3,639 |
) |
Unrealized gain on cash flow hedge, net of income taxes of $0,
$(63), $0, and $0, respectively |
|
(595 |
) |
|
|
735 |
|
|
|
197 |
|
|
|
939 |
|
Comprehensive income (loss) |
|
8,436 |
|
|
|
(4,093 |
) |
|
|
1,487 |
|
|
|
(3,463 |
) |
Less: Comprehensive income (loss) attributable to noncontrolling
interest |
|
74 |
|
|
|
(61 |
) |
|
|
210 |
|
|
|
(197 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to Twin Disc |
$ |
8,510 |
|
|
$ |
(4,154 |
) |
|
$ |
1,697 |
|
|
$ |
(3,660 |
) |
|
RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) TO
EBITDA(In thousands; unaudited) |
|
|
For the Quarter Ended |
For the Two Quarters Ended |
|
December 30,2022 |
|
December 31,2021 |
|
December 30,2022 |
|
December 31,2021 |
Net income (loss) attributable to Twin Disc |
$ |
1,139 |
|
$ |
(3,836 |
) |
|
$ |
(889 |
) |
|
$ |
(1,914 |
) |
Interest expense |
|
594 |
|
|
574 |
|
|
|
1,160 |
|
|
|
1,104 |
|
Income taxes |
|
2,489 |
|
|
622 |
|
|
|
1,801 |
|
|
|
1,004 |
|
Depreciation and amortization |
|
2,126 |
|
|
2,461 |
|
|
|
4,266 |
|
|
|
5,011 |
|
Earnings (loss) before
interest, taxes, depreciation and amortization |
$ |
6,348 |
|
$ |
(179 |
) |
|
$ |
6,338 |
|
|
$ |
5,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF TOTAL DEBT TO NET DEBT(In
thousands; unaudited) |
|
|
For the Quarter Ended |
|
December 30,2022 |
|
June 30,2022 |
Current maturities of long-term debt |
$ |
2,000 |
|
$ |
2,000 |
Long-term debt |
|
29,927 |
|
|
34,543 |
Total debt |
|
31,927 |
|
|
36,543 |
Less cash |
|
13,528 |
|
|
12,521 |
|
|
|
|
|
|
Net debt |
$ |
18,399 |
|
$ |
24,022 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS(In
thousands; except share amounts, unaudited) |
|
|
|
|
|
|
|
|
|
|
December 30, |
|
|
June 30, |
|
2022 |
|
|
2022 |
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash |
$ |
13,528 |
|
|
$ |
12,521 |
|
Trade accounts receivable, net |
|
39,392 |
|
|
|
45,452 |
|
Inventories |
|
136,810 |
|
|
|
127,109 |
|
Assets held for sale |
|
2,968 |
|
|
|
2,968 |
|
Prepaid expenses |
|
10,871 |
|
|
|
7,756 |
|
Other |
|
7,228 |
|
|
|
8,646 |
|
|
|
|
|
|
|
|
|
Total current assets |
|
210,797 |
|
|
|
204,452 |
|
|
|
|
|
|
|
|
|
Property, plant and equipment,
net |
|
39,683 |
|
|
|
41,615 |
|
Right-of-use assets operating
leases |
|
12,807 |
|
|
|
12,685 |
|
Intangible assets, net |
|
11,798 |
|
|
|
13,010 |
|
Deferred income taxes |
|
2,403 |
|
|
|
2,178 |
|
Other assets |
|
2,766 |
|
|
|
2,583 |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
280,254 |
|
|
$ |
276,523 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Current maturities of long-term debt |
$ |
2,000 |
|
|
$ |
2,000 |
|
Accounts payable |
|
28,906 |
|
|
|
28,536 |
|
Accrued liabilities |
|
55,939 |
|
|
|
50,542 |
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
86,845 |
|
|
|
81,078 |
|
|
|
|
|
|
|
|
|
Long-term debt, less current
maturities |
|
29,927 |
|
|
|
34,543 |
|
Lease obligations |
|
10,278 |
|
|
|
10,575 |
|
Accrued retirement
benefits |
|
10,587 |
|
|
|
9,974 |
|
Deferred income taxes |
|
3,506 |
|
|
|
3,802 |
|
Other long-term
liabilities |
|
5,346 |
|
|
|
5,363 |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
146,489 |
|
|
|
145,335 |
|
|
|
|
|
|
|
|
|
Twin Disc shareholders’
equity: |
|
|
|
|
|
|
|
Preferred shares authorized:
200,000; issued: none; no par value |
|
- |
|
|
|
- |
|
Common shares authorized:
30,000,000; issued: 14,632,802; no par value |
|
41,444 |
|
|
|
42,551 |
|
Retained earnings |
|
134,141 |
|
|
|
135,031 |
|
Accumulated other
comprehensive loss |
|
(29,880 |
) |
|
|
(32,086 |
) |
|
|
145,705 |
|
|
|
145,496 |
|
Less treasury stock, at cost (819,398 and 960,459 shares,
respectively) |
|
12,562 |
|
|
|
14,720 |
|
|
|
|
|
|
|
|
|
Total Twin Disc shareholders' equity |
|
133,143 |
|
|
|
130,776 |
|
|
|
|
|
|
|
|
|
Noncontrolling interest |
|
622 |
|
|
|
412 |
|
Total equity |
|
133,765 |
|
|
|
131,188 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY |
$ |
280,253 |
|
|
$ |
276,523 |
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands; unaudited) |
|
|
|
|
|
|
|
For the Two Quarters Ended |
|
December 30,2022 |
|
December 31,2021 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net (loss) |
$ |
(777 |
) |
|
$ |
(1,770 |
) |
Adjustments to reconcile net (loss) to net cash provided (used) by
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
4,266 |
|
|
|
5,011 |
|
Gain on sale of assets |
|
(4,203 |
) |
|
|
(2,939 |
) |
Restructuring expenses |
|
(1 |
) |
|
|
(111 |
) |
Provision for deferred income taxes |
|
(1,105 |
) |
|
|
(1,156 |
) |
Stock compensation expense and other non-cash charges, net |
|
1,564 |
|
|
|
1,848 |
|
Net change in operating assets and liabilities |
|
288 |
|
|
|
(1,932 |
) |
|
|
|
|
|
|
|
|
Net cash provided (used) by
operating activities |
|
32 |
|
|
|
(1,049 |
) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Acquisition of property, plant, and equipment |
|
(4,734 |
) |
|
|
(1,750 |
) |
Proceeds from sale of fixed assets |
|
7,152 |
|
|
|
9,152 |
|
Proceeds on note receivable |
|
- |
|
|
|
500 |
|
Other, net |
|
385 |
|
|
|
140 |
|
|
|
|
|
|
|
|
|
Net cash provided by investing
activities |
|
2,803 |
|
|
|
8,042 |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Borrowings under revolving loan arrangements |
|
42,898 |
|
|
|
51,410 |
|
Repayments of revolving loan arrangements |
|
(46,628 |
) |
|
|
(55,552 |
) |
Repayments of other long-term debt |
|
(839 |
) |
|
|
(2,541 |
) |
Payments of withholding taxes on stock compensation |
|
(463 |
) |
|
|
(487 |
) |
|
|
|
|
|
|
|
|
Net cash (used) by financing
activities |
|
(5,032 |
) |
|
|
(7,170 |
) |
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash |
|
3,204 |
|
|
|
(1,040 |
) |
|
|
|
|
|
|
|
|
Net change in cash |
|
1,007 |
|
|
|
(1,217 |
) |
|
|
|
|
|
|
|
|
Cash: |
|
|
|
|
|
|
|
Beginning of period |
|
12,521 |
|
|
|
12,340 |
|
|
|
|
|
|
|
|
|
End of period |
$ |
13,528 |
|
|
$ |
11,123 |
|
|
|
|
|
|
|
|
|
Contact: Jeffrey S. Knutson(262) 638-4242
Twin Disc (NASDAQ:TWIN)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Twin Disc (NASDAQ:TWIN)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024