Dip in megayacht market hits Twin Disc

RACINE, Wis. – Sales of Twin Disc, Inc. (NASDAQ: TWIN) for the fiscal 2009 third quarter ended March 27 were $69,292,000, compared to $85,838,000 for the fiscal 2008 third quarter. Year-to-date sales were $223,562,000 compared to $241,345,000 for the fiscal 2008 nine months, the company reported in a statement this morning.

The decline in sales for the fiscal 2009 third quarter was primarily due to lower sales of products to customers in the megayacht, oil and gas, and industrial markets, the company reported. This was partially offset by higher sales to customers in the commercial marine, land-based military and airport rescue fire fighting (ARFF) markets. For the fiscal 2009 third quarter, foreign currency translations negatively impacted sales by $2,906,000.

Net earnings for the fiscal 2009 third quarter were $2,850,000, compared with $7,929,000 for the fiscal 2008 third quarter. Year-to-date, earnings were $8,748,000, compared to $17,243,000 for the fiscal 2008 nine months.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $6,292,000 for the fiscal 2009 third quarter, compared to $13,271,000 for the fiscal 2008 third quarter. For the fiscal 2009 nine months, EBITDA was $21,532,000, compared to $33,680,000 for the fiscal 2008 comparable period.

“Going into the third quarter, we knew that Twin Disc was not immune from the challenges facing the global economy and while we saw signs of softening in certain markets as early as the first quarter, our overall business remained firm,” said Michael E. Batten, chairman and CEO. “However, beginning in February and accelerating during the remainder of the third quarter, we experienced significant slowdown in volumes and orders throughout certain markets such as the megayacht and industrial markets that we had not experienced during the fiscal 2009 first half. As the slowdown developed in these markets, we began the process of aligning our global cost structure with perceived business levels, which included slowing production primarily at our European operations, which are closely tied to the megayacht marine markets and adjusting our inventory and employee levels at our subsidiaries. We will continue to take the appropriate actions to manage our cost structure and maintain a level of profitability that we feel the company can achieve despite slowing sales.

“Our diverse and niche market focus has helped somewhat insulate Twin Disc from the impacts of the global slowdown as certain of our markets experienced growth during the third quarter. Sales to military and commercial marine customers were up during the quarter, and while orders have slowed, they have not experienced, nor do we anticipate them to experience, the accelerated level of decline that we saw in the megayacht marine markets.”

Batten also pointed out that Twin Disc has developed three new products that will be introduced throughout fiscal 2010, including “a hybrid-ready transmission that helps lower the environmental and noise pollution boats emit when they are operating at low RPM as they enter and leave a port; and a joystick control system that will complement our existing QuickShift transmission technology.”

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