Twin Disc Inc. (TWIN, Financial) filed Quarterly Report for the period ended 2009-02-04.
TWIN DISC INC. designs manufactures and sells heavy duty off-highway power transmission equipment. Products offered include: hydraulic torqueconverters; power-shift transmissions; marine transmissions and surfacedrives; universal joints; gas turbine starting drives; power take-offs andreduction gears; industrial clutches; fluid couplings and control systems.Principal markets are: construction equipment industrial equipmentgovernment marine energy and natural resources and agriculture. Twin Disc Inc. has a market cap of $75.73 million; its shares were traded at around $7.14 with a P/E ratio of 4 and P/S ratio of 0.23. The dividend yield of Twin Disc Inc. stocks is 4.08%. Twin Disc Inc. had an annual average earning growth of 17.4% over the past 10 years.
Net sales for the first six months of fiscal 2009 decreased 0.8%, or $1.2 million, to $154.3 million from $155.5 million in the same period a year ago. Compared to the first six months of fiscal 2008, the Euro and Asian currencies strengthened, on average, against the U.S. dollar. The translation effect of this strengthening on foreign operations was to increase revenues by approximately $1.5 million versus the prior year, before eliminations. Adjusting for the impact of foreign currency translation, the net decrease of $2.7 million came in a number of the Company s product markets. The Company s North American manufacturing operations saw a continued softening in demand for the Company s oil and gas transmission products. This was partially offset by year-over-year increases in the Company s industrial product and commercial marine transmission sales. Overseas, the Company experienced particularly strong increases in sales at our distribution operations in Asia, which serve commercial marine markets. In addition, although experiencing some softening in the second fiscal quarter, year-to-date sales of propulsion and boat management systems for the mega yacht segment of the pleasure craft market showed improvement through six months. Although order activity remained relatively steady, land based transmission sales into the airport rescue and fire fighting and military markets were down somewhat versus the first six months of fiscal 2008.
Marketing, engineering, and administrative (ME&A) expenses were 3.9% higher compared to last year s first six months. As a percentage of sales, ME&A expenses were up 1.0 percentage points to 21.6% of sales versus 20.6% of sales in the first half of fiscal 2008. For fiscal 2009 s first six months, ME&A expenses benefited from a decrease in the Company s stock based compensation expense due to a decline in the Company s stock price versus the same period last year. Compared to fiscal 2008 s first six months, stock based compensation expense decreased $1.7 million. In addition, expenses related to the Company s corporate and domestic incentive programs decreased $0.9 million versus the first six months of fiscal 2008. These benefits were offset by severance costs of $1.3 million, increased IT costs of $1.1 million, including depreciation expense, associated with the Company s new ERP system and higher domestic pension expenses of $0.3 million. The net impact of foreign currency translation from overseas operations on ME&A expenses was negligible versus the first six months of fiscal 2008. The net year-to-date increase in ME&A expenses was primarily due to inflationary increases in salaries, wages and benefits as well as an increase in product development activities.
Net inventory increased by $0.3 million, or 0.3%, versus June 30, 2008 to $98.0 million. The effect of foreign currency translation due to the strengthening U.S. Dollar versus the Euro and Asian currencies was to decrease net inventories by just over $10 million versus the end of the prior fiscal year. The majority of the net increase, after the effect of foreign exchange, in inventory came at the Company s domestic manufacturing location and Asian distribution operation. The latter can be attributed to the timing of shipments to customers. On a consolidated basis, as of December 26, 2008, the Company s backlog of orders to be shipped over the next six months approximates $106.3 million, down 12% since the year began and compared with the same period a year ago. Of the $14.4 million decrease experienced since the beginning of the fiscal year, approximately $5.4 million can be attributed to the effect of foreign currency translation. The reduction of inventory levels at both the Company s manufacturing and distribution operations around the world continues to be a priority for the balance of fiscal 2009 and beyond.
Net property, plant and equipment (PP&E) decreased $3.6 million versus June 30, 2008. This includes the addition of $4.7 million in capital expenditures, primarily at the Company s domestic and Belgian manufacturing operations, which was offset by depreciation of $4.2 million. The net remaining decrease of $4.1 million is due to the effects of foreign currency translation. As a result of current external business factors, the Company has revised its capital expenditure projection for the year and now expects to invest between $10 and $12 million in capital assets in fiscal 2009, compared to its prior estimate of between $15 and $17 million. The quoted lead times on certain manufacturing equipment purchases may push some of the capital expenditures into the next fiscal year. This compares to $15.0 million in capital expenditures in fiscal 2008, $15.7 million in fiscal 2007 and $8.4 million in fiscal 2006. The Company s capital program is focusing on modernizing key core manufacturing, assembly and testing processes at its facilities around the world as well as the implementation of the global ERP system.
Total shareholders equity decreased by $14.5 million to a total of $115.2 million. Retained earnings increased by $4.3 million. The net increase in retained earnings included $5.9 million in net earnings reported year-to-date, offset by $1.6 million in dividend payments. Net unfavorable foreign currency translation of $18.5 million was reported as the U.S. Dollar strengthened against the Euro and Asian currencies during the first six months of fiscal 2009. The remaining movement of $0.9 million represents an adjustment for the amortization of net actuarial loss and prior service cost on the Company s pension plans.
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TWIN DISC INC. designs manufactures and sells heavy duty off-highway power transmission equipment. Products offered include: hydraulic torqueconverters; power-shift transmissions; marine transmissions and surfacedrives; universal joints; gas turbine starting drives; power take-offs andreduction gears; industrial clutches; fluid couplings and control systems.Principal markets are: construction equipment industrial equipmentgovernment marine energy and natural resources and agriculture. Twin Disc Inc. has a market cap of $75.73 million; its shares were traded at around $7.14 with a P/E ratio of 4 and P/S ratio of 0.23. The dividend yield of Twin Disc Inc. stocks is 4.08%. Twin Disc Inc. had an annual average earning growth of 17.4% over the past 10 years.
Highlight of Business Operations:
Marketing, engineering, and administrative (ME&A) expenses were 2.1% lower compared to last year s second fiscal quarter. As a percentage of sales, ME&A expenses were down 0.4 percentage points to 20.8% of sales versus 21.2% of sales in the second quarter of fiscal 2008. For the fiscal 2009 second quarter, ME&A expenses benefited from a decrease in the Company s stock based compensation expense due to a decline in the Company s stock price versus the same period last year. Compared to fiscal 2008 s second quarter, stock based compensation expense decreased $1.7 million in the quarter. In addition, expenses related to the Company s corporate and domestic incentive programs decreased $0.8 million versus the second quarter of fiscal 2008. These benefits were partially offset by severance costs of $1.3 million, increased IT costs of $0.5 million, including depreciation expense, associated with the Company s new ERP system and higher domestic pension expenses of $0.2 million. The net impact of foreign currency translation from overseas operations reduced ME&A expenses by approximately $0.6 million when compared to the same period last fiscal year.Net sales for the first six months of fiscal 2009 decreased 0.8%, or $1.2 million, to $154.3 million from $155.5 million in the same period a year ago. Compared to the first six months of fiscal 2008, the Euro and Asian currencies strengthened, on average, against the U.S. dollar. The translation effect of this strengthening on foreign operations was to increase revenues by approximately $1.5 million versus the prior year, before eliminations. Adjusting for the impact of foreign currency translation, the net decrease of $2.7 million came in a number of the Company s product markets. The Company s North American manufacturing operations saw a continued softening in demand for the Company s oil and gas transmission products. This was partially offset by year-over-year increases in the Company s industrial product and commercial marine transmission sales. Overseas, the Company experienced particularly strong increases in sales at our distribution operations in Asia, which serve commercial marine markets. In addition, although experiencing some softening in the second fiscal quarter, year-to-date sales of propulsion and boat management systems for the mega yacht segment of the pleasure craft market showed improvement through six months. Although order activity remained relatively steady, land based transmission sales into the airport rescue and fire fighting and military markets were down somewhat versus the first six months of fiscal 2008.
Marketing, engineering, and administrative (ME&A) expenses were 3.9% higher compared to last year s first six months. As a percentage of sales, ME&A expenses were up 1.0 percentage points to 21.6% of sales versus 20.6% of sales in the first half of fiscal 2008. For fiscal 2009 s first six months, ME&A expenses benefited from a decrease in the Company s stock based compensation expense due to a decline in the Company s stock price versus the same period last year. Compared to fiscal 2008 s first six months, stock based compensation expense decreased $1.7 million. In addition, expenses related to the Company s corporate and domestic incentive programs decreased $0.9 million versus the first six months of fiscal 2008. These benefits were offset by severance costs of $1.3 million, increased IT costs of $1.1 million, including depreciation expense, associated with the Company s new ERP system and higher domestic pension expenses of $0.3 million. The net impact of foreign currency translation from overseas operations on ME&A expenses was negligible versus the first six months of fiscal 2008. The net year-to-date increase in ME&A expenses was primarily due to inflationary increases in salaries, wages and benefits as well as an increase in product development activities.
Net inventory increased by $0.3 million, or 0.3%, versus June 30, 2008 to $98.0 million. The effect of foreign currency translation due to the strengthening U.S. Dollar versus the Euro and Asian currencies was to decrease net inventories by just over $10 million versus the end of the prior fiscal year. The majority of the net increase, after the effect of foreign exchange, in inventory came at the Company s domestic manufacturing location and Asian distribution operation. The latter can be attributed to the timing of shipments to customers. On a consolidated basis, as of December 26, 2008, the Company s backlog of orders to be shipped over the next six months approximates $106.3 million, down 12% since the year began and compared with the same period a year ago. Of the $14.4 million decrease experienced since the beginning of the fiscal year, approximately $5.4 million can be attributed to the effect of foreign currency translation. The reduction of inventory levels at both the Company s manufacturing and distribution operations around the world continues to be a priority for the balance of fiscal 2009 and beyond.
Net property, plant and equipment (PP&E) decreased $3.6 million versus June 30, 2008. This includes the addition of $4.7 million in capital expenditures, primarily at the Company s domestic and Belgian manufacturing operations, which was offset by depreciation of $4.2 million. The net remaining decrease of $4.1 million is due to the effects of foreign currency translation. As a result of current external business factors, the Company has revised its capital expenditure projection for the year and now expects to invest between $10 and $12 million in capital assets in fiscal 2009, compared to its prior estimate of between $15 and $17 million. The quoted lead times on certain manufacturing equipment purchases may push some of the capital expenditures into the next fiscal year. This compares to $15.0 million in capital expenditures in fiscal 2008, $15.7 million in fiscal 2007 and $8.4 million in fiscal 2006. The Company s capital program is focusing on modernizing key core manufacturing, assembly and testing processes at its facilities around the world as well as the implementation of the global ERP system.
Total shareholders equity decreased by $14.5 million to a total of $115.2 million. Retained earnings increased by $4.3 million. The net increase in retained earnings included $5.9 million in net earnings reported year-to-date, offset by $1.6 million in dividend payments. Net unfavorable foreign currency translation of $18.5 million was reported as the U.S. Dollar strengthened against the Euro and Asian currencies during the first six months of fiscal 2009. The remaining movement of $0.9 million represents an adjustment for the amortization of net actuarial loss and prior service cost on the Company s pension plans.
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