EX-99.1 2 ex_713584.htm EXHIBIT 99.1 ex_713584.htm

Exhibit 99.1

 

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Twin Disc Announces Fourth Quarter & Full Year Results

 

MILWAUKEE, Wis., August 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 at $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:

 

Product Group (certain amounts have been reclassified from marine to other):

 

 

   

 

   

 

 

(Thousands of $):

    Q4 FY24 Sales        Q4 FY23 Sales        Change (%)   

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

 

 

   

 

   

 

 

(Thousands of $):

     FY24 Sales        FY23 Sales        Change (%)  

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:

Riveron

TwinDiscIR@Riveron.com

 

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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 )

Loss 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