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 Group |
Q4 FY24 Sales |
Q4 FY23 Sales |
Change (%) |
|
(Thousands of $): |
|
Marine and Propulsion Systems |
$ |
47,228 |
$ |
45,662 |
3.4 |
% |
|
Land-Based Transmissions |
|
24,989 |
|
22,864 |
9.3 |
% |
|
Industrial |
|
7,219 |
|
7,928 |
(8.9 |
%) |
|
Other |
|
4,982 |
|
7,469 |
(33.3 |
%) |
|
Total |
$ |
84,418 |
$ |
83,923 |
0.6 |
% |
|
Product Group |
FY24 Sales |
FY23 Sales |
Change (%) |
|
(Thousands of $): |
|
Marine and Propulsion Systems |
$ |
171,765 |
$ |
147,825 |
16.2 |
% |
|
Land-Based Transmissions |
|
78,519 |
|
73,048 |
7.5 |
% |
|
Industrial |
|
25,669 |
|
29,775 |
(13.8 |
%) |
|
Other |
|
19,174 |
|
26,312 |
(27.1 |
%) |
|
Total |
$ |
295,127 |
$ |
276,960 |
6.6 |
% |
| |
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: RiveronTwinDiscIR@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 |
|
Twin Disc (NASDAQ:TWIN)
Historical Stock Chart
From Oct 2024 to Nov 2024
Twin Disc (NASDAQ:TWIN)
Historical Stock Chart
From Nov 2023 to Nov 2024
