RACINE, Wis. - Marine transmission manufacturer Twin Disc, Inc., said its sales for the fiscal 2005 third quarter rose 16.1 percent but its gross margin as a percentage of sales fell slightly during the same span in a release this morning.
For the three months ended March 31, sales increased $7,830,000, to $56,436,000 compared with $48,606,000 in the same period last fiscal year. Year-to-date, sales increased $27,606,000, or 21.4 percent to $156,549,000 from $128,943,000 in the fiscal 2004 nine-month period.
For the fiscal 2005 third quarter, gross margin as a percentage of sales decreased to 25.0 percent from 26.6 percent in the fiscal 2004 third quarter. The company said that decline results principally from the inability to offset higher prices for steel, shipping and energy; as well as, the unfavorable impact of producing pleasure craft marine transmissions in Euros at its Belgium facility and selling them in US dollars to the North American market.
Twin Disc said management had taken measures to offset the higher raw material costs through pricing actions to be effective in the fourth quarter.
Year-to-date gross margin; however, improved to 25.5 percent from 25.2 percent in the same period a year ago, which is a result of the higher level of profitability recorded during the first two quarters of the 2005 fiscal year.
Net earnings for the fiscal 2005 third quarter declined to $1,218,000, or $0.42 per diluted share from $1,776,000, or $0.62 per diluted share in the fiscal 2004 third quarter. Year-to-date, net income has increased to $3,544,000, or $1.22 per diluted share from $2,455,000, or $0.86 per diluted share a year ago. The year-to-date results include the effect of the company's acquisition of Rolla SP Propellers SA (Rolla), which was acquired at the end of the prior fiscal year.
"We are very impressed by the breadth and size of our incoming orders,” said Michael E. Batten, chairman and CEO. “Further, the backlog of orders to be shipped over the next six months, which does not include any business booked from Rolla, was $62,700,000 at March 31, up 27.0 percent since the year began and up 20.0 percent compared with the same period a year ago and is the highest six-month backlog since the third quarter of fiscal 1998. Thus, we see business expanding well into next year.
“For fiscal 2005, our net income will compare favorably with the prior year, while we will be challenged during the fourth quarter to beat last year's impressive fourth quarter earnings. Looking forward to fiscal 2006, we are expecting another good year."
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