Twin Disc Inc. (TWIN, Financial) filed Annual Report for the period ended 2009-09-10.
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 $143.3 million; its shares were traded at around $12.99 with a P/E ratio of 12.4 and P/S ratio of 0.5. The dividend yield of Twin Disc Inc. stocks is 2.2%. Twin Disc Inc. had an annual average earning growth of 17.4% over the past 10 years.
Engineering and development costs include research and development expenses for new product development and major improvements to existing products, and other charges for ongoing efforts to refine existing products. Research and development costs charged to operations totaled $2,636,000, $2,788,000 and $3,329,000 in fiscal 2009, 2008
and 2007, respectively. Total engineering and development costs were $9,142,000, $9,025,000 and $9,327,000 in fiscal 2009, 2008 and 2007, respectively.
Any failure to meet our debt obligations and satisfy financial covenants could adversely affect our business and financial condition. Throughout 2008 and continuing into 2009, general worldwide economic conditions have experienced a downturn due to the combined effects of the subprime lending crisis, general credit market crisis, collateral effects on the finance and banking industries, slower economic activity, decreased consumer confidence, reduced corporate profits and capital spending, adverse business conditions and liquidity concerns. These conditions make it difficult for customers, vendors and the Company to accurately forecast and plan future business activities, and cause U.S. and foreign businesses to slow spending on products, which delay and lengthen sales cycles. These conditions led to declining revenues in several of the Company s divisions in fiscal 2009. The Company s amended revolving credit facility and senior notes agreements require it to maintain specified quarterly financial covenants such as a minimum consolidated net worth, minimum EBITDA for the most recent four fiscal quarters of $11,000,000 and a funded debt to EBITDA ratio of 3.0 or less. At June 30, 2009, the Company was in compliance with these financial covenants with a four quarter EBITDA total of $30,020,000 and a funded debt to EBITDA ratio of 1.69. The minimum net worth covenant fluctuates based upon actual earnings and is subject to adjustment for certain pension accounting adjustments to equity. As of June 30, 2009, the minimum net worth requirement was $100,614,000 compared to an actual result of $140,988,000 after all required adjustments. In the fourth fiscal quarter of 2009, the Company announced $25 million of cost avoidance and savings actions in light of softening that was anticipated in many of its key markets. Based on its annual financial plan, which reflects these actions and the softening forecast, the Company believes that it will generate sufficient EBITDA levels throughout fiscal 2010 in order to maintain compliance with its financial covenants. However, as with all forward-looking information, there can be no assurance that the Company will achieve the planned results in future periods especially due to the significant uncertainties flowing from the current economic environment. If the Company is not able to achieve these objectives and to meet the required covenants under the agreements, the Company may require forbearance from its existing lenders in the form of waivers and/or amendments of its credit facilities or be required to arrange alternative financing. Failure to obtain relief from covenant violations or to obtain alternative financing,
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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 $143.3 million; its shares were traded at around $12.99 with a P/E ratio of 12.4 and P/S ratio of 0.5. The dividend yield of Twin Disc Inc. stocks is 2.2%. Twin Disc Inc. had an annual average earning growth of 17.4% over the past 10 years.
Highlight of Business Operations:
Unfilled open orders for the next six months of $60,583,000 at June 30, 2009 compares to $120,774,000 at June 30, 2008. The Company s domestic manufacturing operation saw an increase in backlog for airport rescue and fire fighting and military vehicular transmissions. This was more than offset by decreases in the six-month backlogs for marine and oil and gas transmissions, industrial products and propulsion systems, due to continued softening in the end markets for these products. The Company s European manufacturing operations saw a net decrease in their six-month backlogs, primarily for products serving the Italian and global mega yacht markets. Since orders are subject to cancellation and rescheduling by the customer, the six-month order backlog is considered more representative of operating conditions than total backlog. However, as procurement and manufacturing "lead times" change, the backlog will increase or decrease; and thus it does not necessarily provide a valid indicator of the shipping rate. Cancellations are generally the result of rescheduling activity and do not represent a material change in backlog.Engineering and development costs include research and development expenses for new product development and major improvements to existing products, and other charges for ongoing efforts to refine existing products. Research and development costs charged to operations totaled $2,636,000, $2,788,000 and $3,329,000 in fiscal 2009, 2008
and 2007, respectively. Total engineering and development costs were $9,142,000, $9,025,000 and $9,327,000 in fiscal 2009, 2008 and 2007, respectively.
Any failure to meet our debt obligations and satisfy financial covenants could adversely affect our business and financial condition. Throughout 2008 and continuing into 2009, general worldwide economic conditions have experienced a downturn due to the combined effects of the subprime lending crisis, general credit market crisis, collateral effects on the finance and banking industries, slower economic activity, decreased consumer confidence, reduced corporate profits and capital spending, adverse business conditions and liquidity concerns. These conditions make it difficult for customers, vendors and the Company to accurately forecast and plan future business activities, and cause U.S. and foreign businesses to slow spending on products, which delay and lengthen sales cycles. These conditions led to declining revenues in several of the Company s divisions in fiscal 2009. The Company s amended revolving credit facility and senior notes agreements require it to maintain specified quarterly financial covenants such as a minimum consolidated net worth, minimum EBITDA for the most recent four fiscal quarters of $11,000,000 and a funded debt to EBITDA ratio of 3.0 or less. At June 30, 2009, the Company was in compliance with these financial covenants with a four quarter EBITDA total of $30,020,000 and a funded debt to EBITDA ratio of 1.69. The minimum net worth covenant fluctuates based upon actual earnings and is subject to adjustment for certain pension accounting adjustments to equity. As of June 30, 2009, the minimum net worth requirement was $100,614,000 compared to an actual result of $140,988,000 after all required adjustments. In the fourth fiscal quarter of 2009, the Company announced $25 million of cost avoidance and savings actions in light of softening that was anticipated in many of its key markets. Based on its annual financial plan, which reflects these actions and the softening forecast, the Company believes that it will generate sufficient EBITDA levels throughout fiscal 2010 in order to maintain compliance with its financial covenants. However, as with all forward-looking information, there can be no assurance that the Company will achieve the planned results in future periods especially due to the significant uncertainties flowing from the current economic environment. If the Company is not able to achieve these objectives and to meet the required covenants under the agreements, the Company may require forbearance from its existing lenders in the form of waivers and/or amendments of its credit facilities or be required to arrange alternative financing. Failure to obtain relief from covenant violations or to obtain alternative financing,
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