• Twin Disc Announces Full Year & Fourth Quarter Results

    来源: Nasdaq GlobeNewswire / 15 8月 2024 07:00:00   America/Chicago

    MILWAUKEE, Aug. 15, 2024 (GLOBE NEWSWIRE) -- Twin Disc, Inc. (NASDAQ: TWIN) today reported results for the fourth quarter and full fiscal year 2024 ended June 30, 2024.

    Fiscal Full Year 2024 Highlights

    • Sales increased 6.6% year-over-year to $295.1 million
    • Net income attributable to Twin Disc was $11.0 million
    • EBITDA* increased 2.9% year-over-year to $26.5 million
    • Robust operating cash flow of $33.7 million
    • Free cash flow* of $25.0 million compared to $15.0 million in the year-ago period
    • Strong six-month backlog of $133.7 million supported by consistent end market demand

    Fiscal Fourth Quarter 2024 Highlights

    • Sales increased 0.6% year-over-year to $84.4 million
    • Net income attributable to Twin Disc was $7.4 million
    • Robust operating cash flow of $11.5 million
    • Free cash flow* of $10.4 million compared to $14.9 million in the year-ago period

    CEO Perspective

    “We closed fiscal 2024 on a strong note, maintaining our trend of solid results to deliver revenue growth along with robust margin expansion and free cash generation in the fourth quarter. While we faced an evolving macroeconomic environment throughout the year, we also captured healthy demand from our Land Based Transmissions and Marine businesses and are seeing signs of stabilization in Industrial,” commented John H. Batten, President and Chief Executive Officer of Twin Disc. “Our consistent performance helped us execute several strategic priorities during the fiscal year, including further expansion of our global industrial product line through the acquisition of Katsa Oy, as well as the reinstatement of our quarterly cash dividend.”

    “Looking ahead, we anticipate market conditions in fiscal 2025 to be fairly in-line with 2024. Supported by our reinforced balance sheet, we are entering the new fiscal year from a position of strength, giving us the confidence to provide updated medium-term targets which illustrate our growth potential in the coming years,” continued Mr. Batten. “We look forward to continuing along our trajectory of profitable growth, enabling sustained value generation for all stakeholders.”

    Fourth Quarter & Full-Year Results

    Sales for the fiscal 2024 fourth quarter increased 60 basis points year-over-year to $84.4 million and fiscal 2024 sales increased 6.6% to $295.1 million. Fourth quarter and full year sales growth were both driven by demand for the Company’s Land-Based Transmissions markets, with strength in Marine and Propulsion Systems supporting full year sales.

    Sales by product group (certain amounts have been reclassified from marine to other):

    Product GroupQ4 FY24 Sales
    		Q4 FY23 Sales
    		Change (%)
    (Thousands of $):
    Marine and Propulsion Systems$47,228$45,6623.4%
    Land-Based Transmissions 24,989 22,8649.3%
    Industrial 7,219 7,928(8.9%)
    Other 4,982 7,469(33.3%)
    Total$84,418$83,9230.6%


    Product GroupFY24 Sales
    		FY23 Sales
    		Change (%)
    (Thousands of $):
    Marine and Propulsion Systems$171,765$147,82516.2%
    Land-Based Transmissions 78,519 73,0487.5%
    Industrial 25,669 29,775(13.8%)
    Other 19,174 26,312(27.1%)
    Total$295,127$276,9606.6%
     

    For fiscal 2024, Twin Disc delivered double-digit growth year-over-year in the European and the Asia-Pacific regions. The distribution of sales across geographical regions shifted, with a greater proportion of sales coming from the Asia Pacific and Middle East regions, with a lower proportion coming from North America.

    Gross profit increased 1.4% to $25.1 million compared to $24.7 million for the fourth quarter of fiscal 2023. Fourth quarter gross margin increased approximately 20 basis points to 29.7% from the prior year period, reflecting the benefit of incremental volume, a favorable product mix and the positive impact of cost reduction and operational efficiency initiatives. For fiscal 2024, gross profit increased 12.1% to $83.3 million. For the fiscal 2024 full year, gross margin increased approximately 140 basis points to 28.2%.

    Marketing, engineering and administrative (ME&A) expense increased by $3.8 million, or 22.9%, to $20.4 million, compared to $16.6 million in the prior year quarter. The increased ME&A expense was primarily driven by an inflationary impact on wages and benefits, costs related to the Katsa acquisition, investments to drive our hybrid electric strategy and increased bonus and stock compensation expenses. For the fiscal 2024 full year, ME&A expense increased 15.1% to $71.6 million, primarily driven by the same factors driving the fourth quarter increase, noted above.

    Other income increased by $2.4 million, or 126%, to $4.3 million, compared to $1.9 million in the prior year quarter, driven by a bargain purchase gain of $3.7 million on the acquisition of Katsa. The purchase accounting on Katsa remains preliminary.

    Net income attributable to Twin Disc for the quarter was $7.4 million, or $0.53 per diluted share, compared to net income attributable to Twin Disc of $8.6 million, or $0.62 per diluted share, for the fourth fiscal quarter of 2023. The year-over-year change was driven by the increased level of ME&A expense in the quarter, partially offset by favorable operating results and the bargain purchase gain related to the Katsa acquisition. For fiscal 2024, the Company generated net income attributable to Twin Disc of $11.0 million, or $0.79 per diluted share, an increase of 5.9% and 5.4%, respectively, from fiscal 2023. Earnings before interest, taxes, depreciation, and amortization (EBITDA) of $11.8 million in the fourth quarter, were down 9.1% compared to the fourth quarter of fiscal 2023. Full year fiscal 2024 EBITDA increased 2.9% to $26.5 million from $25.8 million in fiscal 2023.

    On a consolidated basis, the backlog of orders to be shipped over the next six months is approximately $133.7 million, compared to $130.5 million at the end of the third quarter. As a percentage of six-month backlog, inventory decreased slightly from 99.5% at the end of the third quarter to 97.6% at the end of the fourth quarter. Compared to the end of fiscal 2023, cash increased 51.3% to $20.1 million, total debt increased 38.6% to $25.8 million, and net debt* increased $0.4 million to $5.7 million. The increase was primarily attributable to higher long-term debt related to the Katsa acquisition.

    CFO Perspective

    Jeffrey S. Knutson, Vice President of Finance, Chief Financial Officer, Treasurer and Secretary stated, “With continued strong demand across our product segments, this year has been marked by solid financial performance, underscored by our consistent margin expansion and operating cash generation. It is clear that our steadfast focus on operational execution and working capital improvement has paid off. We plan to keep this momentum up as we work towards achieving our updated financial targets and further position Twin Disc for long-term success.”

    Discussion of Results

    Twin Disc will host a conference call to discuss these results and to answer questions at 9:00 a.m. Eastern time on August 15, 2024. 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 August 14, 2025.

    About Twin Disc

    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 Statements

    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 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 Information

    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.

    Definitions

    Earnings 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:
    Riveron
    TwinDiscIR@Riveron.com

    Source: Twin Disc, Incorporated


    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
    (In thousands; except share amounts, unaudited)
     
      For the Quarter Ended For the Year Ended
             
      June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
    Net sales$84,418 $83,923 $295,127 $276,960 
    Cost of goods sold 59,332  59,177  208,709  202,628 
    Cost of goods sold - Sale of boat management system product line and related inventory -  -  3,099  - 
    Gross profit 25,086  24,746  83,319  74,332 
             
    Marketing, engineering, and administrative expenses 20,356  16,556  71,622  62,243 
    Restructuring expenses 11  (31) 218  177 
    Other operating income -  (1) -  (4,148)
    Income from operations 4,719  8,222  11,479  16,060 
             
    Other expense (income):        
    Interest expense 394  571  1,443  2,253 
    Bargain purchase gain (3,724) -  (3,724) - 
    Other expense (income), net (961) (2,492) (1,607) (658)
      (4,291) (1,921) (3,888) 1,595 
    Income before income taxes and noncontrolling interest 9,010  10,143  15,367  14,465 
             
    Income tax expense 1,515  1,439  4,121  3,788 
    Net income 7,495  8,704  11,246  10,677 
    Less: Net earnings attributable to noncontrolling interest, net of tax (85) (110) (258) (297)
    Net income attributable to Twin Disc$7,410 $8,594 $10,988 $10,380 
             
    Dividends per share$0.04 $- $0.12 $- 
    Income per share data:        
    Basic income per share attributable to Twin Disc common shareholders$0.54 $0.64 $0.80 $0.77 
    Diluted income per share attributable to Twin Disc common shareholders$0.53 $0.62 $0.79 $0.75 
             
    Weighted average shares outstanding data:        
    Basic shares outstanding 13,748  13,508  13,683  13,468 
    Diluted shares outstanding 13,911  13,844  13,877  13,811 
             
    Comprehensive income        
    Net income$7,495 $8,704 $11,246 $10,677 
    Benefit plan adjustments, net of income taxes (191) 85  (2,114) 666 
    Foreign currency translation adjustment 1,587  (2,483)  657  635 
    Unrealized gain on hedges, net of income taxes 120  81  46  54 
    Comprehensive income 9,011  6,387  9,835  12,032 
    Less: Comprehensive income attributable to noncontrolling interest (42) (30)  183  248 
    Comprehensive income attributable to Twin Disc$9,053 $6,417 $9,652 $11,784 
             


    RECONCILIATION OF CONSOLIDATED NET INCOME TO EBITDA
    (In thousands; unaudited)
     
     For the Quarter Ended For the Year Ended
     June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
            
    Net income attributable to Twin Disc$7,410 $8,594 $10,988 $10,380
    Interest expense 394  571  1,443  2,253
    Income tax expense 1,515  1,439  4,121  3,788
    Depreciation and amortization 2,528  2,423  9,981  9,359
    Earnings before interest, taxes, depreciation, and amortization (EBITDA)$11,847 $13,027 $26,533 $25,780


    RECONCILIATION OF TOTAL DEBT TO NET DEBT
    (In thousands; unaudited)
     
     June 30, 2024 June 30, 2023
        
    Current maturities of long-term debt$2,000 $2,000
    Long-term debt 23,811  16,627
    Total debt 25,811  18,627
    Less cash 20,070  13,263
    Net debt$5,741 $5,364


    RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
    (In thousands; unaudited)
     
     For the Quarter Ended For the Year Ended
     June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
    Net cash provided by operating activities$11,499  $16,037  $33,716  $22,898 
    Acquisition of fixed assets (1,109)  (1,108)  (8,707)  (7,918)
    Free cash flow$10,390  $14,929  $25,009  $14,980 


    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands; except share amounts, unaudited)
     
      June 30, 2024 June 30, 2023
    ASSETS    
    Current assets:    
    Cash$20,070 $13,263 
    Trade accounts receivable, net 52,207  54,760 
    Inventories 130,484  131,930 
    Assets held for sale -  2,968 
    Prepaid expenses 8,656  8,459 
    Other 8,214  8,326 
    Total current assets 219,631  219,706 
         
    Property, plant and equipment, net 58,074  38,650 
    Right-of-use assets operating leases 16,622  13,133 
    Intangible assets, net 12,686  12,637 
    Deferred income taxes 2,339  2,244 
    Other assets 2,706  2,811 
    Total assets$312,058  289,181 
         
    LIABILITIES AND EQUITY    
    Current liabilities:    
    Current maturities of long-term debt$2,000 $2,010 
    Accounts payable 32,586  36,499 
    Accrued liabilities 64,930  61,586 
    Total current liabilities 99,516  100,095 
    .    
    Long-term debt 23,811  16,617 
    Lease obligations 14,376  10,811 
    Accrued retirement benefits 7,854  7,608 
    Deferred income taxes 5,340  3,280 
    Other long-term liabilities 6,107  5,253 
    Total liabilities 157,004  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 41,798  42,855 
    Retained earnings 129,592  120,299 
    Accumulated other comprehensive loss (6,905) (5,570)
      164,485  157,584 
    Less treasury stock, at cost (638,712 and 814,734 shares, respectively) 9,783  12,491 
         
    Total Twin Disc shareholders' equity 154,702  145,093 
         
    Noncontrolling interest 352  424 
    Total equity 155,054  145,517 
         
    Total liabilities and equity$312,058 $289,181 


    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands; unaudited)
     
      June 30, 2024  June 30, 2023
    CASH FLOWS FROM OPERATING ACTIVITIES:     
    Net income$11,246  $10,677 
    Adjustments to reconcile net income to net cash provided by operating activities:     
    Depreciation and amortization 9,981   9,359 
    Gain on sale of assets (91)  (4,264)
    Loss on sale of boat management product line and related
    inventory    		 3,099   - 
    Gain on Katsa acquisition (3,724)  - 
    Restructuring (82)  137 
    Provision for deferred income taxes (560)  (634)
    Stock compensation expense and other non-cash changes, net 3,836   3,197 
    Net change in operating assets and liabilities 10,011   4,426 
    Net cash provided by operating activities 33,716   22,898 
          
    CASH FLOWS FROM INVESTING ACTIVITIES:     
    Acquisition of property, plant, and equipment (8,707)  (7,918)
    Acquisition of Katsa, less cash acquired (23,178)  - 
    Proceeds from sale of fixed assets -   7,177 
    Other, net (184)  333 
    Net cash used by investing activities (32,069)  (408)
          
    CASH FLOWS FROM FINANCING ACTIVITIES:     
    Borrowings under revolving loan arrangements 90,534   81,620 
    Repayments of revolving loan arrangements (81,109)  (97,774)
    Repayments of other long-term debt (2,010)  (2,037)
    Dividends paid to shareholders (1,695)  - 
    Dividends paid to noncontrolling interest (254)  (236)
    Payments of finance lease obligations (921)  (621)
    Payments of withholding taxes on stock compensation (1,791)  (463)
    Net cash provided (used) by financing activities 2,754   (19,511)
    Effect of exchange rate changes on cash 2,406   (2,237)
    Net change in cash 6,807   742 
    Cash:     
    Beginning of period 13,263   12,521 
    End of period$20,070  $13,263 

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