Twin Disc, Inc., Announces Fiscal 2003 First-Quarter Financial Results
RACINE, Wisc.--Oct. 18, 2002--Twin Disc, Inc. , today reported financial results for the fiscal 2003 first quarter ended September 30, 2002.For first-quarter 2003, revenues declined to $36,521,000 from the $40,631,000 reported a year ago. The company reported a net loss of $1.7 million, or $0.62 per share, compared with last year's net income of $272,000, or $0.10 per diluted share, attributable to softer-than-expected demand and vendor quality issues during the period, which compounded the typical seasonal sluggishness associated with summer plant shutdowns.
Commenting on the results, Chairman and Chief Executive Officer Michael E. Batten said, "For the quarter, all of our manufacturing operations and most of our distribution operations performed below expectations reflecting even softer economic conditions than predicted, with pleasure craft marine continuing to experience the greatest weakness. Also, extraordinary events occurring during the quarter delayed marine and powershift transmission shipments. Specifically, quality problems necessitated downtime in order to segregate non-conforming parts received from two key vendors.
"While our clients' production processes were able to proceed unimpeded," Batten said, "the delays at our facility pushed back scheduled production, contributing to the quarter's $4.1 million revenue shortfall and decline in operating efficiency. Entering the second fiscal quarter, production flow was normalized and we were working through our past-due backlog. We expect to be shipping according to the original schedule by the end of the current quarter. Enhanced pre-screening procedures are in place to prevent any reoccurrence and we are seeking compensation from these vendors, which will be recorded as an offset when received."
He continued, "Our backlog of orders to be shipped in the next six months increased to $36 million from $31 million at fiscal 2002 year-end. This increase, in addition to new orders, is attributable to past-due balances caused by the production delays experienced in the quarter.
"While lingering clouds on the economic horizon are expected to result in a loss for the fiscal second quarter, we are more encouraged by our intermediate-term outlook. Oilfield activity is holding up reasonably well, and our industrial products business, while still sluggish, is experiencing some relative improvement. Entering the fall season, order rates and backlog for our propulsion business are demonstrating modest increases, and we expect to see contributions from the initial shipments of our new line of high-performance QuickShift(TM) marine transmissions as well. Shipments of this well-received line, which provides instantaneous shifting that eliminates the delay present with current technology, commenced at the end of the first fiscal quarter.
"These factors notwithstanding, it is difficult to accurately predict the timing of the turnaround. We are facing a few difficult months due to an unfavorable product mix and lingering softness in most of our major markets, suggesting a less-than-robust recovery. Operations are currently expected to turn profitable in the second half, and we remain optimistic about our prospects beyond fiscal 2003," Batten concluded.
Twin Disc, Inc., designs, manufactures and internationally distributes heavy-duty off-highway power transmission equipment for the construction, industrial, government, marine, agricultural, and energy and natural resources markets.
This 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.
--Financial Results Follow--
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per-share data; unaudited)
Three Months Ended
September 30,
2002 2001
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Net sales $ 36,521 $ 40,631
Cost of goods sold 30,591 32,085
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Gross profit 5,930 8,546
Marketing, engineering and
administrative expenses 8,319 7,848
Interest expense 308 488
Other income, net (41) (305)
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Earnings (loss) before income taxes (2,656) 515
Income taxes (895) 220
Minority interest (30) 23
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Net earnings (loss) $ (1,731) $ 272
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Net earnings (loss) per share:
Basic $ (0.62) $ 0.10
Diluted $ (0.62) $ 0.10
Average shares outstanding:
Basic 2,808 2,808
Diluted 2,808 2,808
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Dividends per share $ 0.175 $ 0.175