Megayacht market demand high, says Twin Disc
RACINE, Wis. – High demand from the megayacht and commercial marine segments helped Twin Disc, Inc.’s (NASDAQ: TWIN) performance during the fiscal 2009 first quarter ended Sept. 26, despite lower oil and gas transmission sales, the company reported in a statement today.
Sales for the fiscal 2009 first quarter were $72,671,000, compared to $73,613,000 for the fiscal 2008 first quarter. For the fiscal 2009 first quarter, foreign currency translation favorably impacted sales by $3,961,000, according to the company.
The 1.3 percent decrease in first-quarter sales was the result of lower oil and gas transmission sales in the fiscal 2009 first quarter, compared to very robust oil and gas transmission sales in the fiscal 2008 first quarter, Twin Disc reported. However, the company said it has seen a recent increase in order activity from this market compared to the same period last year. In addition, during the 2009 first quarter, the company implemented its new ERP system at its domestic manufacturing operations, which caused delays in its shipments during July and August. Twin Disc began shipping at normal rates in September.
Gross margin, as a percentage of fiscal 2009 first-quarter sales, was 27.6 percent, compared to 32.4 percent in last year’s comparable period. Profitability for fiscal 2009 first quarter was impacted by lower volumes, unfavorable product mix, higher material costs, and higher pension expense, partially offset by higher pricing and expanded outsourcing, according to Twin Disc. In addition, one-time shipping delays related to the implementation of the ERP system also negatively impacted gross margins during the fiscal 2009 first quarter, primarily due to the impact of lower volumes on absorption and manufacturing productivity, the company reported.
Net earnings for the fiscal 2009 first quarter were $2,465,000, compared with $5,106,000, for the fiscal 2008 first quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA) was $6,814,000 for the fiscal 2009 first quarter, compared to $10,842,000 for the fiscal 2008 first quarter.
“Our business remains strong, in spite of the recent turmoil in the financial markets,” said Michael E. Batten, chairman and CEO. “Sales for the fiscal 2009 first quarter were the second highest first quarter in the company’s history despite an adverse comparison in oil field transmission sales and the delayed shipments experienced due to issues encountered with our domestic ERP implementation.
“Our international operations performed very well and partially offset the results we experienced at our domestic operation. Our Asian and European operations had strong quarters due to continued strength in the commercial marine transmission and mega yacht markets. While some of these increases were partially due to foreign currency exchange, the vast majority were real volume increases.”
Batten said the company is “cautiously optimistic that fiscal 2009 will be another good year” as it continues to have “strong orders in most of our marine markets and industrial orders continue to show improvement over year ago levels.”
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