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Exhibit 99.1
NEWS RELEASE | |
Corporate Offices: | |
1328 Racine Street | |
Racine, WI 53403 | |
FOR IMMEDIATE RELEASE | |
Contact: Jeffrey S. Knutson | |
(262) 638-4242 |
TWIN DISC, INC. ANNOUNCES FISCAL 2018
FOURTH QUARTER FINANCIAL RESULTS
● Fourth quarter sales increased 37.7% to $73,774,000 versus fourth quarter FY17 |
● Gross profit percent improves 590-basis points from fourth quarter FY17 |
● Fourth quarter earnings per share improved to $0.51 versus $0.10 in the prior year |
● Fiscal 2018 EBITDA of $21,047,000 represents significant improvement versus a prior year loss |
● Six-Month backlog at $114,979,000 remains strong and increased 148% versus the prior year |
RACINE, WISCONSIN—August 6, 2018 —
Twin Disc, Inc. (NASDAQ: TWIN), today reported financial results for the fiscal 2018 fourth quarter ended June 30, 2018.
Sales for the fiscal 2018 fourth quarter were $73,774,000, compared to $53,591,000 for the same period last year. The 37.7% increase in 2018 fourth quarter sales was primarily due to improved demand for the Company’s 8500 series transmission systems from North American fracking customers, and higher sales of aftermarket components. In addition, global demand continued to improve year-over-year across many of the Company’s other markets. For the fiscal 2018 full year, sales were $240,733,000, compared to $168,182,000 for fiscal 2017, an increase of 43%. Currency movement contributed $1,670,000 and $5,269,000 to the fourth quarter and fiscal 2018 volume growth, respectively.
Commenting on the results, John H. Batten, President and Chief Executive Officer, said: “Fiscal 2018 fourth quarter financial results reflect positive momentum across many of our markets and the continued successful execution of our long-term strategic plan. I am pleased by the increase in profitability we achieved during the fourth quarter as a result of investments made to our global manufacturing processes, favorable sales mix, controlled expenses, and leveraging fixed costs. Gross profit percent during the fiscal 2018 fourth quarter was the second highest quarterly result in Twin Disc’s history. We are extremely excited with the acquisition of Veth Propulsion, which closed in early July. We anticipate this will be accretive to sales and cash earnings in the fiscal 2019 first half. The strategic acquisition expands Twin Disc’s position in the global marine industry at a time when demand is accelerating, while diversifying our markets, geographies, and products. Veth Propulsion enhances our future outlook and we expect fiscal 2019 to be another strong year.”
Gross profit percent for the fiscal 2018 fourth quarter was 37.3%, compared to 31.4% in the fiscal 2017 fourth quarter. The 590-basis point increase in gross profit percent for the fiscal 2018 fourth quarter compared to the fiscal 2017 fourth quarter was primarily due to higher volumes, a more profitable sales mix, improved operating efficiencies and a global reduction in fixed manufacturing costs. For the fiscal 2018 full year, gross profit was 33.3%, compared to 28.7% for the fiscal 2017 full year.
For the fiscal 2018 fourth quarter, marketing, engineering and administrative (ME&A) expenses increased $4,225,000 to $18,226,000, compared to $14,001,000 for the fiscal 2017 fourth quarter. The 30.2% increase in ME&A expenses in the quarter was primarily due to transaction costs related to the Veth acquisition, increased global bonus expense, additional stock compensation expense and a currency exchange impact. These items accounted for approximately $3,800,000 of the total increase in the fourth quarter. For the fiscal 2018 full year, ME&A expenses increased $9,136,000, or 17.3%, to $61,909,000, compared to $52,773,000 for the fiscal 2017 full year. As a percent of revenues, for the fiscal 2018 full year, ME&A expenses improved to 25.7%, compared to 31.4% for the fiscal 2017 full year.
Twin Disc recorded restructuring charges of $897,000 in the fiscal 2018 fourth quarter, compared to restructuring charges of $424,000 in the same period last fiscal year. Restructuring activities during the fiscal 2018 fourth quarter related primarily to cost reduction and productivity actions at the Company’s European operations. For the fiscal 2018 full year, the Company recorded restructuring charges of $3,398,000, compared to $1,791,000 for the fiscal 2017 full year.
The fiscal 2018 full year effective tax rate was 33.1%, compared to the fiscal 2017 rate of 35.8%. The fiscal 2018 rate was impacted by two significant discrete adjustments. During the first quarter of fiscal 2018, the Company recorded a tax benefit of $3,800,000 related to the reversal of a valuation allowance in a certain foreign jurisdiction that had been subject to a full valuation allowance. Improvement in operating results, along with a business reorganization which provided favorable tax planning opportunities, allowed for the reversal of this valuation allowance. During the second quarter of the current fiscal year, in compliance with the Tax Cuts and Jobs Act, the Company recorded a non-cash tax expense of $4,300,000, primarily due to a remeasurement of deferred tax assets and liabilities. In addition, a rate change in Belgium resulted in a $400,000 non-cash tax expense due to remeasurement of deferred tax assets and liabilities. The reduced domestic rate resulting from the Tax Cuts and Jobs Act, the mix of earnings by jurisdiction and smaller discrete adjustments explain the remaining movement in the Company’s effective tax rate.
Net income attributable to Twin Disc for the fiscal 2018 fourth quarter was $5,941,000, or $0.51 per diluted share, compared to $1,163,000 or $0.10 per diluted share, for the fiscal 2017 fourth quarter. Net income for the fiscal 2018 fourth quarter, included $1,679,000 of one-time expenses associated with the Company’s July 2018 acquisition of Veth Propulsion. For the fiscal 2018 full year, net income attributable to Twin Disc was $9,528,000, or $0.82 per diluted share, compared to a loss of ($6,294,000), or ($0.56) per share for the fiscal 2017 full year. Net income for the fiscal 2017 full year included a $2,646,000 non-cash impairment charge related primarily to goodwill associated with the Company’s domestic industrial business.
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA)* were $9,924,000 for the fiscal 2018 fourth quarter, compared to $3,357,000 for the fiscal 2017 fourth quarter. For the fiscal 2018 full year, EBITDA was $21,047,000 compared to ($2,388,000) for the fiscal 2017 full year.
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Ticker: TWIN
CIK: 100378
Form Type: 10-K Annual Report
Accession Number: 0001437749-18-016163
Submitted to the SEC: Mon Aug 27 2018 8:56:02 AM EST
Accepted by the SEC: Mon Aug 27 2018
Period: Saturday, June 30, 2018
Industry: General Industrial Machinery And Equipment