Twin Disc, Inc., Announces Higher Fiscal 2006 First-Quarter Financial Results
RACINE, Wis.--Oct. 2, 20051, 2005--Twin Disc, Inc.-- First-Quarter Diluted EPS up 129.7% to $0.85 versus $0.37
-- First-Quarter Sales up 9.2% to $49,577,000
-- Management Optimistic about the Fiscal 2006 Outlook
Twin Disc, Inc. , today reported significantly improved financial results for the fiscal 2006 first quarter ended September 30, 2005. Sales and diluted earnings per share for the first three months of fiscal 2006 represented the best first quarter in the past 24 fiscal years.
Sales for the quarter ended September 30, 2005 improved 9.2 percent to $49,577,000 from $45,382,000 in the same period a year ago. The results for the current fiscal quarter were favorably impacted by continued strong demand across all the markets the Company serves, especially from its oil and military customers.
Gross margin as a percentage of sales increased 3.4 percent to 29.1 percent from 25.7 percent in last year's comparable period. This was the fourth sequential quarterly increase in gross margins as a result of the Company's previously announced cost reduction programs, shifting product mix to higher margined items, and selective price increases. Net earnings for the first quarter increased 130.8 percent, or $1,409,000 to $2,486,000, or $0.85 per diluted share, compared with $1,077,000, or $0.37 per diluted share, for the fiscal 2005 first quarter.
Commenting on the results, Michael E. Batten, Chairman and Chief Executive Officer, said, "We are extremely encouraged with how the 2006 fiscal year has started out. The bottom-line growth experienced in the quarter exceeded our expectations, as we were successful in increasing sales, managing costs, and improving margins. Our trailing 12-month earnings per diluted share now stands at $2.86, representing the positive sales and earnings momentum that started in the second half of fiscal year 2004."
Christopher J. Eperjesy, Vice President - Finance, Chief Financial Officer and Secretary, stated, "We remain focused on strengthening the Company's balance sheet to support our future growth. At the end of the first quarter, working capital was $52,298,000, an increase of $8,682,000 from the end of fiscal 2005. In the quarter, we invested $1,300,000 in capital expenditures, and, for the year, we expect to spend approximately $10,000,000 in investments in capital assets, compared to almost $12,000,000 in fiscal 2005. While inventories increased during the quarter as a result of our strong backlog and improved order rate, accounts receivable declined $3,556,000, or 9.4 percent. Shareholders' equity now stands at $69,438,000 an increase of 3.8 percent from $66,899,000 at fiscal year end."
Mr. Batten concluded, "We received a number of new contracts during the quarter, including one of the largest orders we have ever received for our 8500 Series Transmissions. More companies throughout the markets we serve are recognizing Twin Disc as a leading provider of innovative and highly reliable power transmission products. Our backlog of orders to be shipped over the next six months, including the backlog from Rolla, was $74,700,000. Based on our strong backlog, improving margins and favorable industry dynamics, Twin Disc is well positioned to continue to expand sales and earnings throughout the year."
Twin Disc designs, manufactures and sells heavy-duty off-highway power transmission equipment. Products offered include: marine transmissions, surface drives and propellers; power-shift transmissions; power take-offs and reduction gears; industrial clutches; and control systems. The Company sells its products to customers primarily in the marine, industrial equipment, government, energy and natural resources and agricultural 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,
2005 2004
---------- ---------
Net sales $49,577 $45,382
Cost of goods sold 35,173 33,730
---------- ---------
Gross profit 14,404 11,652
Marketing, engineering and
administrative expenses 10,147 9,509
Interest expense 316 219
Other income, net (54) (44)
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Earnings before income taxes
and minority interest 3,995 1,968
Income taxes 1,466 866
Minority interest (43) (25)
---------- ---------
Net earnings $2,486 $1,077
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Earnings per share:
Basic $0.87 $0.38
Diluted $0.85 $0.37
Average shares outstanding:
Basic 2,866 2,836
Diluted 2,921 2,888
Dividends per share $0.175 $0.175
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per-share data;unaudited)
September 30, June 30,
2005 2005
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $9,502 $11,614
Trade accounts receivable, net 34,195 37,751
Inventories, net 53,345 48,481
Deferred income taxes 5,807 5,514
Other 4,015 3,423
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Total current assets 106,864 106,783
Property, plant and equipment, net 39,957 40,331
Goodwill 12,764 12,854
Deferred income taxes 14,627 16,230
Other assets 8,932 9,097
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$183,144 $185,295
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $3,135 $3,522
Current maturities on long-term debt 2,849 2,849
Accounts payable 15,880 21,746
Accrued liabilities 32,702 35,050
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Total current liabilities 54,566 63,167
Long-term debt 20,277 14,958
Accrued retirement benefits 38,346 39,680
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113,189 117,805
Minority interest 517 591
Shareholders' equity:
Common stock 11,653 11,653
Retained earnings 91,297 89,316
Unearned Compensation (150) (203)
Accumulated other comprehensive loss (17,842) (17,567)
------------- -------------
84,958 83,199
Less treasury stock, at cost 15,520 16,300
------------- -------------
Total shareholders' equity 69,438 66,899
------------- -------------
$183,144 $185,295
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