RACINE, Wis. – Twin Disc, Inc. has reported record sales and net earnings for fiscal 2007, the marine equipment manufacturer reported in a release today that covered its financial results for the fiscal 2007 fourth quarter and fiscal year ended June 30, 2007.
Sales for the quarter ended June 30, 2007 improved 25.2 percent to $90,782,000 from $72,534,000 in the same period a year ago. Sales for fiscal 2007 increased 30.4 percent to $317,200,000 from $243,287,000 for fiscal 2006, the company said.
Twin Disc’s acquisition of the BCS Group in 2006 contributed $11,116,000 to net sales in the fiscal 2007 fourth quarter and $33,118,000 to full-year sales. The net year-over-year translation effect of the change in foreign currency exchange rates was to increase sales by $1,986,000 in the fiscal 2007 fourth quarter and $7,515,000 for the full year when compared to the same periods in fiscal 2006.
Sales continued to benefit from strong demand across all the markets the company serves, especially from its oil, commercial marine, propulsion systems and military customers.
Net earnings for the fiscal 2007 fourth quarter decreased 11.6 percent to $5,001,000, or $0.83 per diluted share, compared with $5,660,000, or $0.95 per diluted share, for the fiscal 2006 fourth quarter.
Net earnings for the quarter were unfavorably impacted by the following items: (1) an after-tax restructuring charge at the Company's Belgian operation of $1,751,000, or $0.29 per diluted share, (2) an after-tax write-off of an impaired intangible asset of $366,000, or $0.06 per diluted share, and (3) an after-tax increase in the company's accrual for executive stock-based compensation versus the fourth quarter of fiscal 2006 of $740,000, or $0.12 per diluted share, primarily due to an increase in the company's stock price in the fiscal fourth quarter of 2007. These items were somewhat offset by a favorable tax benefit booked in the quarter of $877,000, or $0.15 per diluted share, as a result of a research and development tax credit project completed by the company in fiscal 2007.
Year-to-date, earnings increased 51.2 percent to $21,852,000, or $3.68 per diluted share, from last year's $14,453,000, or $2.43 per diluted share. Net earnings for the full fiscal year were unfavorably impacted by the following items: (1) an after-tax restructuring charge at the company's Belgian operation of $1,751,000, or $0.29 per diluted share, (2) an after-tax write-off of an impaired intangible asset of $366,000, or $0.06 per diluted share, and (3) an after-tax increase in the company's accrual for executive stock-based compensation versus fiscal year 2006 of $1,347,000, or $0.23 per diluted share, primarily due to an increase in the company's stock price in fiscal 2007. These items were somewhat offset by a favorable tax benefit booked in the third and fourth quarters of $1,077,000, or $0.18 per diluted share, as a result of a research and development tax credit project completed by the company in fiscal 2007.
"Fiscal 2007 represented the best operating year in the company's 88-year history,” said Michael E. Batten, chairman, president and CEO of Twin Disc. “We are proud of this achievement and of the hard work all of our associates have accomplished over the past year. The fiscal 2007 fourth quarter represents the 14th consecutive quarter of year-over-year quarterly increases in sales. Although there were a number of unfavorable items that impacted our net earnings for fiscal 2007, we are pleased with the company's ability to drive profitable growth. The positive contribution of the BCS Group companies exceeded our expectations and we are working hard to strengthen our Belgian manufacturing operation. We are optimistic the Belgian operation can achieve annual pre-tax savings between $1,000,000 - $1,200,000 within the next three years, as a result of the previously announced fourth quarter restructuring.
"With our six-month backlog at $110,357,000 (which includes backlog of $10,898,000 from BCS), the preliminary outlook for fiscal 2008 is encouraging. The reduction in the six-month backlog versus the end of the third fiscal quarter can partially be attributed to the reduction we were able to achieve in our past due backlog at our domestic manufacturing operation. Historically, a seasonal decrease in the last quarter of the fiscal year is not unusual. While we expect our growth rates to moderate somewhat for fiscal 2008, we remain optimistic that we will continue to see positive trends in the marine- and land-based oil and gas, defense, and mega-yacht markets."
Twin Disc will be hosting a conference call today to discuss these results and to answer questions at 2:00 p.m. EDT. To participate in the conference call, please dial 888-339-9446 five to 10 minutes before the call is scheduled to begin. A replay will be available from 5:00 p.m. July 31 until midnight on Aug. 7. The number to hear the teleconference replay is 800-406-7325. The access code for the replay is 3758696.
The conference call will also be broadcast live over the Internet. To listen to the call via the Internet, access Twin Disc's Web site at www.twindisc.com/companyinvestor.aspx and follow the instructions at the Web cast link. The archived Web cast will be available shortly after the call on the company's Web site.
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