Twin Disc, Inc., Announces Financial Results for Fiscal 1999 2Q
18 January 1999
Twin Disc, Inc., Announces Financial Results for Fiscal 1999 Second Quarter and First Half
RACINE, Wis.--Jan. 15, 1999--Twin Disc, Inc., today announced financial results for the second quarter and six months ended December 31, 1998.Net sales for the fiscal 1999 second quarter were $40,108,000, compared with the $53,994,000 reported for the same quarter last year. The decline in net sales primarily resulted from the completion of a major contract with a European truck manufacturer in January 1998. Sales of Twin Disc's line of transmission products were further affected by customers' reduced production of farm equipment and commercial boats. In addition, fewer shipments of replacement parts in the second quarter were due to market demand, inventory adjustments by customers, and improved order turnaround by Twin Disc.
Because of the lower sales volume, especially in higher-margin aftermarket parts, the Company reported a net loss of $291,000, or $0.10 per diluted share, for the fiscal 1999 second quarter. Further contributing to the loss in the quarter was a special pre-tax charge of $375,000, or $0.08 per diluted share after tax. The special charge relates to severance packages and outplacement services for 31 salaried employees laid off during the quarter. For the fiscal 1998 second quarter, net earnings were $2,116,000, or $0.73 per diluted share.
Michael E. Batten, the Company's Chairman and Chief Executive Officer, said, "Our second-quarter results, although disappointing, were in line with our expectations. We currently are experiencing an industrywide softening of market conditions in all of our business sectors. An indication of this trend, our backlog of orders to be shipped in the next six months was $45 million at the end of December without the acquisitions' order backlogs, compared with $54 million at September 30, 1998. In addition, because business conditions in Japan have worsened, our Niigata Converter joint venture is operating at a greater loss. These developments have tempered our short-term outlook, and currently we are evaluating ways to bring our operations further in line with our expected shipment levels for the balance of fiscal 1999. As a result, we expect sales and, in particular, earnings to be seriously affected by these factors in the second half of fiscal 1999."
For the first six months of fiscal 1999, net sales were $80,733,000, compared with $101,874,000 for the same period last year. First-half net earnings were $297,000, or $0.10 per diluted share, versus $3,472,000, or $1.21 per diluted share, for the year-ago period.
Mr. Batten concluded, "We remain optimistic about our longer-term outlook, however. We continue to see solid growth potential worldwide as a niche manufacturer in the global market for industrial, marine and vehicular transmissions, and we are working to expand our market coverage. For example, the acquisitions of Technodrive and Rockford Powertrain's line of industrial products enhance our market position in power take-offs and lower horsepower marine transmissions. We remain focused on building our business now so that we are poised to grow when market demand returns."
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.
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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
____ ____ ____ ____
Net sales $40,108 $53,994 $80,733 $101,874
Cost of goods sold 30,833 41,744 62,239 79,688
______ ______ ______ ______
Gross profit 9,275 12,250 18,494 22,186
Marketing, engineering
and administrative
expenses 8,964 8,797 16,815 16,227
Interest expense 375 383 752 759
Other (income) and
expenses, net 148 (497) 30 (609)
___ ____ __ ____
Earnings before income tax (212) 3,567 897 5,809
Income taxes 79 1,451 600 2,337
__ _____ ___ _____
Net earnings ($ 291) $ 2,116 $ 297 $ 3,472
________ ________ _________ _________
________ ________ _________ _________
Earnings per share:
Basic ($ 0.10) $ 0.75 $ 0.10 $ 1.23
Diluted ($ 0.10) $ 0.73 $ 0.10 $ 1.21
Average shares outstanding:
Basic 2,835 2,834 2,835 2,822
Diluted 2,845 2,899 2,853 2,879
Dividends per share $ 0.21 $ 0.19 $ 0.42 $ 0.38