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TWIN DISC, INC., ANNOUNCES SIGNIFICANTLY HIGHER FISCAL 2004 THIRD-QUARTER AND
NINE-MONTHS EARNINGS
Third-Quarter EPS $0.62 versus $0.18
Nine-Months EPS $0.86 versus Loss of $1.54
Trailing 12 Months EPS $1.56 versus Loss of $1.05
Management Sees Improving Earnings Trend Continuing
RACINE, WISCONSIN-April 16, 2004-Twin Disc, Inc. (NYSE: TDI), today announced
financial results for the fiscal 2004 third quarter and the nine-month period
ended March 31, 2004. For the fifth consecutive quarter, earnings improved
year-over-year and for the third consecutive quarter the backlog of orders to
be shipped in the next six months increased.
Net sales for the third-quarter of fiscal 2004 increased 3.0 percent to
$48,606,000 from $47,177,000 for the same period last year. Sales were
positively impacted by net favorable currency exchange rates, primarily the
stronger Euro and Australian dollar in relation to the U.S. Dollar, of
approximately $3.0 million when compared to the same quarter last year. The
Company's joint venture agreement governing its subsidiary in Japan was amended
effective in the fiscal first quarter. The effect of this change had no impact
on net earnings during this quarter. Last year's fiscal third quarter results
however, included $3.5 million in sales for certain territories that are no
longer recognized by the joint venture. If this were excluded, sales in the
fiscal 2004 third quarter would have been 11.5 percent higher than the same
period last year.
For the fiscal 2004 third quarter, net income was $1,776,000 or $0.62 per
diluted share, compared with last year's net income of $509,000, or $0.18 per
diluted share. Earnings in the quarter continued to improve because of a
significantly higher gross margin due to the implementation of cost reduction
programs, a restructuring program undertaken last year, a better product mix
and the absence of manufacturing inefficiencies. The gross margin in the fiscal
2004 third quarter improved 448 basis points over the same period last year.
Net sales for the 2004 fiscal nine months were up 2.0 percent to $128,943,000
compared with last year's $126,491,000. Included in the 2004 nine month sales
were net favorable currency exchange rate benefits of approximately $8.3 million
when compared to the same period last year.
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The prior year's fiscal nine months included $9.5 million in sales from the
Japanese distribution subsidiary that are no longer recognized in accordance
with the amended agreement discussed previously. This change had no impact on
net earnings. Net income for the 2004 first nine months was $2,455,000 or $0.86
per diluted share compared with last year's net loss of $4,309,000 or $1.54 per
share.
As previously announced, the Company sold its 25.0 percent minority interest in
Palmer Johnson Distributors, LLC (PJD) for $3,900,000 in cash to the majority
holder, PJD, Inc. in January 2004. As a result it did not contribute to
earnings during the quarter and the sale approximated the net book value of the
investment.
Chairman and Chief Executive Officer Michael E. Batten said, "Management is
quite pleased with the progress of the turnaround. Our sales during the past
three months were the highest for any quarter this year and we are seeing this
improving trend continuing into the fourth quarter. Further, our trailing 12
month earnings are now $1.56 per diluted share.
"Our backlog of orders to be shipped over the next six months is $52,300,000.
This is an increase of 10.0 percent from the prior quarter and up over 70.0
percent since the start of the fiscal year. We are encouraged by this growth
and continue to work closely with our vendors to make sure of timely deliveries
of supplies so that we will meet all scheduled shipment dates."
Twin Disc, Inc., designs, manufactures and internationally distributes
heavy-duty off-highway power transmission equipment for the construction,
industrial, government, marine, agricultural, and energy and natural resources
markets.
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 Company intends that such forward-looking statements be subject to the safe
harbors created thereby. All forward-looking statements are based on current
expectations regarding important risk factors including those identified in the
Company's most recent periodic report and other filings with the Securities and
Exchange Commission. Accordingly, actual results may differ materially from
those expressed in the forward-looking statements, and 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.
- --Financial Results Follow--
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per-share data; unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2004 2003 2004 2003
---- ---- ---- ----
Net sales $48,606 $47,177 $128,943 $126,491
Cost of goods sold 35,689 36,752 96,409 103,457
------ ------ ------- -------
Gross profit 12,917 10,425 32,534 23,034
Marketing, engineering and
administrative expenses 9,520 9,041 27,156 26,331
Restructuring of operations 0 0 0 2,042
------ ------ ------ -------
Operating income 3,397 1,384 5,378 (5,339)
Interest expense 272 350 835 983
Other (income) expense, net (42) (133) (227) (238)
------ ------ ------ -------
Earnings (loss) before income
taxes and minority interest 3,167 1,167 4,770 (6,084)
Income taxes 1,393 650 2,298 (1,781)
------ ------ ------ -------
Earnings (loss) before minority
Interest 1,774 517 2,472 (4,303)
Minority interest, net of income
Taxes 2 (8) (17) (6)
------ ------ ------ -------
Net earnings (loss) $ 1,776 $ 509 $ 2,455 $ (4,309)
Earnings (loss) per share:
Basic $ 0.63 $ 0.18 $ 0.87 $ (1.54)
Diluted $ 0.62 $ 0.18 $ 0.86 $ (1.54)
Average shares outstanding:
Basic 2,819 2,806 2,811 2,807
Diluted 2,848 2,806 2,832 2,807
Dividends per share $ 0.175 $ 0.175 $ 0.525 $ 0.525
Contact: Twin Disc, Inc.
Christopher J. Eperjesy (262-638-4343