Executives at Racine-based Twin Disc Inc. said Tuesday they were “cautiously optimistic,” despite the company reporting a more than $11 million drop in sales and a widening of its second quarter loss.
John Batten, Twin Disc president and chief executive officer, said the manufacturer of marine and heavy-duty off-highway power transmission equipment continued to see challenging market condition during the quarter, but hoped that a stabilized and slowly improving oil and gas market would benefit second half results.
“We received our first order for new oil and gas transmissions in over two years in the quarter, and continue to experience increased quoting activity on new projects,” Batten said. “While these are encouraging signs, we need to experience sustained demand and build momentum before we declare a turn in the oil and gas market cycle.”
The company has seen its six-month backlog increase over the last year, but Batten also cautioned that Asian and offshore oil markets remain depressed or oversupplied.
“We can safely say this is the most optimistic we’ve seen our North American customers for new rig construction in a long time,” he said, noting spare part order activity and construction application reviews moved higher during the quarter and both are precursors to increased ordering.
Despite having the first transmission order in more than two years, there were no shipments and the company’s results were down.
Twin Disc reported a net loss of $2.9 million or 26 cents per diluted share, an increase from the $2.3 million loss, 21 cents per share, last year. Revenue was also down sharply to $33.7 million, a 24.9 percent drop.
“The initiatives we have implemented to improve operating and financial efficiencies have helped us navigate a weak environment across many of our end markets,” Batten said. “We remain focused on proactively adjusting our cost structure for changes in demand, working with customers to provide exceptional service, and developing next generation products that will drive higher market share once our markets recover.”