Twin Disc, Inc. (NASDAQ: TWIN), today reported
results for the fiscal 2024 first quarter ended September 29, 2023.
Fiscal First Quarter 2024 Highlights
- Sales increased 13.7% year-over-year to $63.6 million
- Gross margin of 26.2%, expanded 240 basis points despite
one-time noncash charge of $3.1 million
- Net loss attributable to Twin Disc was ($1.2) million and
EBITDA* of $2.3 million
- Significantly improved operating cash flow of $9.8 million
compared to ($0.7) million in the year-ago period
- Free cash flow* of $6.1 million compared to ($2.9) million in
the year-ago period
- Robust six-month backlog of $122.5 million supported by healthy
ongoing demand
- Board reinstates quarterly cash dividend of $0.04 per
share
CEO Perspective“We delivered impressive results
in the first quarter, highlighted by double-digit revenue growth,
robust margin expansion, and solid cash generation, giving us the
confidence to reinstate our quarterly dividend. Thanks to the hard
work of our global teams, we are capturing stable demand across
product groups, boosted by increased activity in oil and gas
markets in what is seasonally our slowest quarter,” commented John
H. Batten, President and Chief Executive Officer of Twin Disc. “We
are encouraged by our strong performance and upward trend in
backlog this far in the fiscal year; however, the broader
macroeconomic environment remains volatile, which has somewhat
impacted our visibility. That said, our results have further
strengthened our overall financial profile, enabling us to navigate
through potential challenges while putting us on a path for
sustained growth. We look forward to keeping this momentum up as
the year moves on to create long-term value for all stakeholders,”
concluded Mr. Batten.
First Quarter ResultsSales for the fiscal 2024
first quarter increased 13.7% year-over-year to $63.6 million,
driven by demand for the Company’s Marine and Propulsion Systems
and Land-Based Transmissions markets, and favorable product
mix.
Sales by product group:
Product Group |
Q1 FY24 Sales |
Q1 FY23 Sales |
Change (%) |
(Thousands of $): |
Marine and Propulsion Systems |
$ |
36,463 |
$ |
29,336 |
24.3 |
% |
Land-Based Transmissions |
|
18,577 |
|
15,938 |
16.6 |
% |
Industrial |
|
5,685 |
|
7,031 |
-19.1 |
% |
Other |
|
2,829 |
|
3,608 |
-21.6 |
% |
Total |
$ |
63,554 |
$ |
55,913 |
13.7 |
% |
|
|
|
|
|
|
|
The company delivered 19% growth year-over-year in the Europe,
North America, and Asia-Pacific regions. The proportion of total
sales increased in the Europe and Asia-Pacific regions, with a
relative decrease in North America.
Gross profit increased 25.1% to $16.6 million compared to $13.3
million for the first fiscal quarter of 2023. First quarter gross
margin increased approximately 240 basis points sequentially to
26.2%, despite a one-time non-cash charge of $3.1 million related
to the sale of our boat management system product line. This
improvement reflects the benefit of prior pricing actions,
continued easing of supply chain headwinds, a favorable product mix
and successfully executing our operational playbook.
Marketing, engineering and administrative (ME&A) expense
increased by $1.8 million, or 12.2%, to $16.9 million, compared to
$15.1 million in the prior year quarter. The increased ME&A
expense was primarily driven by the investment in resources to
drive our hybrid electric strategy, the impact of inflation and
currency translation.
Net loss attributable to Twin Disc for the quarter was ($1.2)
million, or ($0.09) per diluted share, compared to net loss
attributable to Twin Disc of ($1.4) million, or ($0.11) per share,
for the first fiscal quarter of 2023. The year-over-year
improvement was driven by favorable operating results, partially
offset by the one-time non-cash charge related to the sale of a
product line.
Earnings before interest, taxes, depreciation, and amortization
(EBITDA) increased by $1.7 million to $2.3 million in the first
quarter, compared to $0.6 million in the first fiscal quarter of
2023.
On a consolidated basis, the backlog of orders to be shipped
over the next six months is approximately $122.5 million, compared
to $119.2 million at the end of the fourth fiscal quarter of 2023.
As a percentage of six-month backlog, inventory decreased from
111.0% at the end of the fourth quarter to 103% at the end of the
first fiscal quarter of 2024. Compared to the first fiscal quarter
of 2023, cash increased 54.6% to $20.4 million and net debt*
decreased $22.7 million to $1.2 million. The decrease was primarily
attributable to net payoff of long-term debt.
CFO PerspectiveJeffrey S. Knutson, Vice
President of Finance, Chief Financial Officer, Treasurer, and
Secretary stated, “Commercial strength, along with disciplined
management of inventory and backlog levels by our teams, helped
contribute to our results this quarter, underscored by strong gross
margin expansion despite the $3.1 million one-time noncash charge
related to an asset sale. As supply chain headwinds have largely
subsided and end market demand remains solid, we are
well-positioned to continue driving profitable growth for Twin
Disc, keeping us on track to meet our medium-term financial
targets. The reinstatement of the cash dividend this quarter is a
testament to the significant progress we have made toward those
objectives. Looking ahead, we remain focused on leveraging our
consistent free cash generation to advance our capital allocation
priorities while driving our business forward.”
Discussion of ResultsTwin Disc will host a
conference call to discuss these results and to answer questions at
9:00 a.m. Eastern time on November 2, 2023. The live audio webcast
will be available on Twin Disc’s website at
https://ir.twindisc.com. To participate in the conference call,
please dial (800) 715-9871 approximately ten minutes before the
call is scheduled to begin. A replay of the webcast will be
available at https://ir.twindisc.com shortly after the call until
November 1, 2024.
About Twin DiscTwin 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 words “anticipates,” “believes,”
“intends,” “estimates,” and “expects,” or similar anticipatory
expressions, usually identify forward-looking statements. The
Company intends that such forward-looking statements qualify for
the safe harbors from liability established by the Private
Securities Litigation Reform Act of 1995. All forward-looking
statements are based on current expectations, and are subject to
certain risks and uncertainties that could cause actual results or
outcomes to differ materially from current expectations. Such risks
and uncertainties include the impact of general economic conditions
and the cyclical nature of many of the Company’s product markets;
foreign currency risks and other risks associated with the
Company’s international sales and operations; the ability of the
Company to successfully implement price increases to offset
increasing commodity costs; the ability of the Company to generate
sufficient cash to pay its indebtedness as it becomes due; and the
possibility of unforeseen tax consequences and the impact of tax
reform in the U.S. or other jurisdictions. These and other risks
are described under the caption “Risk Factors” in Item 1A of the
Company’s most recent Form 10-K filed with the Securities and
Exchange Commission, as supplemented in subsequent periodic reports
filed with the Securities and Exchange Commission. Accordingly, 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. The Company assumes no
obligation, and disclaims any obligation, to publicly update or
revise any forward-looking statements to reflect subsequent events,
new information, or otherwise.
*Non-GAAP Financial
InformationFinancial 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.
DefinitionsEarnings before interest, taxes,
depreciation and amortization (EBITDA) is calculated as net
earnings or loss excluding interest expense, the provision or
benefit for income taxes, depreciation and amortization
expenses.
Net debt is calculated as total debt less cash.
Free cash flow is calculated as net cash provided (used) by
operating activities less acquisition of fixed assets.
Investors: RiveronTwinDiscIR@riveron.com
Source: Twin Disc, Incorporated
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS(In thousands,
except per-share data; unaudited) |
|
|
|
|
|
|
As Adjusted |
|
|
|
September 29, 2023 |
|
|
September 30, 2022 |
Net sales |
|
$ |
63,554 |
|
|
$ |
55,913 |
|
Cost of
goods sold |
|
|
43,818 |
|
|
|
42,616 |
|
Cost
of goods sold - Sale of boat management system product line and
related inventory |
|
|
3,099 |
|
|
|
- |
|
Gross
profit |
|
|
16,637 |
|
|
|
13,297 |
|
|
|
|
|
|
Marketing, engineering, and administrative expenses |
|
|
16,917 |
|
|
|
15,090 |
|
Loss
from operations |
|
|
(280 |
) |
|
|
(1,793 |
) |
|
|
|
|
|
|
|
Other
Income (expense): |
|
|
|
|
|
|
Interest expense |
|
|
(394 |
) |
|
|
(566 |
) |
Other
income, net |
|
|
137 |
|
|
|
347 |
|
|
|
|
(257 |
) |
|
|
(219 |
) |
Loss before income taxes and
noncontrolling interest |
|
|
(537 |
) |
|
|
(2,012 |
) |
|
|
|
|
|
|
|
Income
tax expense (benefit) |
|
|
546 |
|
|
|
(688 |
) |
Net
loss |
|
|
(1,083 |
) |
|
|
(1,324 |
) |
Less:
Net loss attributable to noncontrolling interest, net of tax |
|
|
(90 |
) |
|
|
(98 |
) |
Net loss
attributable to Twin Disc |
|
$ |
(1,173 |
) |
|
$ |
(1,422 |
) |
|
|
|
|
|
Loss per
share data: |
|
|
|
|
Basic loss per share attributable to Twin Disc common
shareholders |
|
$ |
(0.09 |
) |
|
$ |
(0.11 |
) |
Diluted loss per share attributable to Twin Disc common
shareholders |
|
$ |
(0.09 |
) |
|
$ |
(0.11 |
) |
|
|
|
|
|
Weighted
average shares outstanding data: |
|
|
|
|
Basic shares outstanding |
|
|
13,527 |
|
|
|
13,407 |
|
Diluted shares outstanding |
|
|
13,527 |
|
|
|
13,407 |
|
|
|
|
|
|
Comprehensive income (loss) |
|
|
|
|
Net loss |
|
$ |
(1,083 |
) |
|
$ |
(1,324 |
) |
Benefit plan adjustments, net of income taxes of $5 and $9,
respectively |
|
|
(171 |
) |
|
|
(89 |
) |
Foreign currency translation adjustment |
|
|
(3,036 |
) |
|
|
(6,290 |
) |
Unrealized (loss) gain on hedges, net of income taxes of $0 and $0,
respectively |
|
|
(216 |
) |
|
|
793 |
|
Comprehensive loss |
|
|
(4,506 |
) |
|
|
(6,910 |
) |
Less: Comprehensive income attributable to noncontrolling
interest |
|
|
151 |
|
|
|
136 |
|
Comprehensive loss attributable to Twin Disc |
|
$ |
(4,657 |
) |
|
$ |
(7,046 |
) |
|
|
|
|
|
|
|
|
RECONCILIATION OF CONSOLIDATED NET INCOME TO
EBITDA(In thousands; unaudited) |
|
|
For the Quarter Ended |
|
September 29, 2023 |
|
September 30, 2022 |
|
|
|
|
Net loss attributable to Twin Disc |
$ |
(1,173 |
) |
|
$ |
(1,422 |
) |
Interest expense |
|
394 |
|
|
|
566 |
|
Income tax expense |
|
546 |
|
|
|
(688 |
) |
Depreciation and amortization |
|
2,488 |
|
|
|
2,140 |
|
Earnings
before interest, taxes, depreciation, and amortization
(EBITDA) |
$ |
2,255 |
|
|
$ |
596 |
|
|
RECONCILIATION OF TOTAL DEBT TO NET DEBT(In
thousands; unaudited) |
|
|
September 29, 2023 |
|
June 30, 2023 |
|
|
|
|
Current maturities of long-term debt |
$ |
2,002 |
|
|
$ |
2,010 |
|
Long-term debt |
|
19,655 |
|
|
|
16,617 |
|
Total
debt |
|
21,657 |
|
|
|
18,627 |
|
Less
cash |
|
20,428 |
|
|
|
13,263 |
|
Net
debt |
$ |
1,229 |
|
|
|
5,364 |
|
|
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES
TO FREE CASH FLOW(In thousands; unaudited) |
|
|
For the Quarter Ended |
|
September 29, 2023 |
|
September 30, 2022 |
Net cash provided (used) by operating activities |
$ |
9,802 |
|
|
$ |
(696 |
) |
Acquisition of fixed assets |
|
(3,690 |
) |
|
|
(2,237 |
) |
Free
cash flow |
$ |
6,112 |
|
|
$ |
(2,933 |
) |
|
CONDENSED CONSOLIDATED BALANCE SHEETS(In
thousands; except share amounts, unaudited) |
|
|
|
September 29, 2023 |
|
|
June 30, 2023 |
ASSETS |
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash |
$ |
20,428 |
|
|
$ |
13,263 |
|
Trade accounts receivable, net |
|
39,756 |
|
|
|
54,760 |
|
Inventories |
|
126,236 |
|
|
|
131,930 |
|
Assets held for sale |
|
4,559 |
|
|
|
2,968 |
|
Prepaid expenses |
|
9,466 |
|
|
|
8,459 |
|
Other |
|
8,763 |
|
|
|
8,326 |
|
Total current assets |
|
209,208 |
|
|
|
219,706 |
|
|
|
|
Property, plant and equipment, net |
|
40,065 |
|
|
|
38,650 |
|
Right-of-use assets operating leases |
|
12,093 |
|
|
|
13,133 |
|
Intangible assets, net |
|
11,517 |
|
|
|
12,637 |
|
Deferred
income taxes |
|
2,204 |
|
|
|
2,244 |
|
Other
assets |
|
2,894 |
|
|
|
2,811 |
|
Total assets |
$ |
277,981 |
|
|
$ |
289,181 |
|
|
|
|
LIABILITIES AND EQUITY |
|
|
Current
liabilities: |
|
|
Current maturities of long-term debt |
$ |
2,002 |
|
|
$ |
2,010 |
|
Accounts payable |
|
29,584 |
|
|
|
36,499 |
|
Accrued liabilities |
|
60,632 |
|
|
|
61,586 |
|
Total current liabilities |
|
92,218 |
|
|
|
100,095 |
|
. |
|
|
Long-term debt |
|
19,655 |
|
|
|
16,617 |
|
Lease
obligations |
|
9,896 |
|
|
|
10,811 |
|
Accrued
retirement benefits |
|
7,138 |
|
|
|
7,608 |
|
Deferred
income taxes |
|
3,150 |
|
|
|
3,280 |
|
Other
long-term liabilities |
|
5,749 |
|
|
|
5,253 |
|
Total
liabilities |
|
137,806 |
|
|
|
143,664 |
|
|
|
|
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 |
|
39,439 |
|
|
|
42,855 |
|
Retained
earnings |
|
119,126 |
|
|
|
120,299 |
|
Accumulated other comprehensive loss |
|
(8,621 |
) |
|
|
(5,570 |
) |
|
|
149,944 |
|
|
|
157,584 |
|
Less
treasury stock, at cost (674,354 and 814,734 shares,
respectively) |
|
10,343 |
|
|
|
12,491 |
|
|
|
|
Total
Twin Disc shareholders' equity |
|
139,601 |
|
|
|
145,093 |
|
|
|
|
Noncontrolling interest |
|
574 |
|
|
|
424 |
|
Total
equity |
|
140,175 |
|
|
|
145,517 |
|
|
|
|
Total liabilities and
equity |
$ |
277,981 |
|
|
$ |
289,181 |
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands; unaudited) |
|
|
For the Quarters Ended |
|
|
|
|
|
As Adjusted |
|
|
September 29, 2023 |
|
|
September 30, 2022 |
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
Net loss |
$ |
(1,083 |
) |
|
$ |
(1,324 |
) |
Adjustments to reconcile net loss to net cash provided (used) by
operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
2,488 |
|
|
|
2,140 |
|
Gain on sale of assets |
|
(16 |
) |
|
|
(42 |
) |
Loss on sale of boat management product line and related
inventory |
|
3,099 |
|
|
|
|
Restructuring expenses |
|
(57 |
) |
|
|
(68 |
) |
Provision for deferred income taxes |
|
97 |
|
|
|
(1,623 |
) |
Stock compensation expense and other non-cash changes, net |
|
1,140 |
|
|
|
864 |
|
Net change in operating assets and liabilities |
|
4,134 |
|
|
|
(643 |
) |
|
|
|
|
|
|
Net cash
provided (used) by operating activities |
|
9,802 |
|
|
|
(696 |
) |
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
Acquisition of property, plant, and equipment |
|
(3,690 |
) |
|
|
(2,237 |
) |
Proceeds from sale of fixed assets |
|
- |
|
|
|
2 |
|
Other, net |
|
45 |
|
|
|
534 |
|
|
|
|
|
|
|
Net cash
used by investing activities |
|
(3,645 |
) |
|
|
(1,701 |
) |
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
Borrowings under revolving loan arrangements |
|
27,184 |
|
|
|
20,221 |
|
Repayments of revolving loan arrangements |
|
(23,423 |
) |
|
|
(18,685 |
) |
Repayments of other long-term debt |
|
(508 |
) |
|
|
(519 |
) |
Payments of finance lease obligations |
|
(847 |
) |
|
|
(132 |
) |
Payments of withholding taxes on stock compensation |
|
(1,763 |
) |
|
|
(168 |
) |
|
|
|
|
|
|
Net cash
provided by financing activities |
|
643 |
|
|
|
717 |
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash |
|
365 |
|
|
|
2,373 |
|
|
|
|
|
|
|
Net
change in cash |
|
7,165 |
|
|
|
693 |
|
|
|
|
|
|
|
Cash: |
|
|
|
|
|
Beginning of period |
|
13,263 |
|
|
|
12,521 |
|
|
|
|
|
|
|
End
of period |
$ |
20,428 |
|
|
$ |
13,214 |
|
Twin Disc (NASDAQ:TWIN)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Twin Disc (NASDAQ:TWIN)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024