Power transmission equipment manufacturer Twin Disc, Inc. (TWIN) reported Monday a loss for its seasonally weak first quarter, as the economic downturn stifled sales and caused the company to temporarily shutdown its Italian, Belgian and Racine manufacturing facilities. The stock is losing in morning trade, currently down by over 12% on the Nasdaq.
For the first quarter, net loss attributable to Twin Disc was $2.40 million or $0.22 per share, compared to net income of $2.46 million or $0.22 per share in the previous year.
On average, three analysts polled by Thomson Reuters expected the company to report earnings of $0.17 per share in the first quarter. Analysts' estimates typically exclude special items.
Net sales for the period dropped to $47.06 million from $72.67 million in the first quarter of the prior fiscal year. Analysts were expecting revenue of $59.87 million in the first quarter.
The company elaborated that shipments to the mega yacht, industrial, and oil and gas markets remained weak during the quarter, partly offset by good demand from the airport, rescue and fire fighting market and steady demand from land and marine-based military, and Asian-Pacific commercial marine markets.
Gross margin was 20.7%, down from 27.6% in the year-ago period, hurt chiefly by closure of plants for the equivalent of two months at the European facilities and the closing for one month of the company's Racine, Wisconsin facilities, because of cost cutting measures.
Marketing, engineering and administrative expenses, reduced to $12.78 million from $16.32 million in the same period last year.
Commenting on the results, Michael Batten, Twin Disc's Chief Executive, said, "The global recession that we began to experience in the second half of fiscal 2009 continued to impact our results in the first quarter. As announced previously, we implemented temporary plant shutdowns along with government sponsored layoffs, in addition to normal seasonal actions, to adjust production levels to near term demand, which had a negative impact on absorption rates. Tight controls on spending and other cost reduction initiatives helped offset the impact of the decline in volume."
Batten added that the company's six-month backlog was $62.48 million as at September 25, 2009, down from $118.64 million a year ago. Demand from pleasure craft and industrial markets remains low, but trends in the commercial marine market, particularly in the Pacific Basin, was stable.
Further, the company revealed that orders from the airport rescue and fire fighting and land-based military sectors are steady, while orders received from the military patrol boat market is on the rise. The company also noted an increase in orders for pressure pumping transmissions and air clutches from the domestic and international oil and gas markets.
Twin Disc also declared a regular quarterly cash dividend of $0.07 per share payable on December 1, 2009, to shareholders of record on November 13.
TWIN is currently trading at $12.82, down $1.81 or 12.39%, on the NASDAQ.
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