Racine-based Twin Disc today announced fiscal third quarter net loss of $757,000, or 7 cents per share, compared with net earnings of $9.9 million, or 86 cents per share, in the same period a year ago.
The company’s quarterly net sales dropped to $68.2 million from $95.4 million a year earlier.
The firm attributed the decline in sales to lower demand from customers in the North American oil and gas pressure pumping market. Sales also softened in Europe and among customers serving the global mega yacht market.
Twin Disc’s marketing, engineering and administrative expenses also rose in the quarter, making up 25.5 percent of sales, up from 18.6 percent a year ago.
However, Twin Disc saw higher demand from the commercial marine markets in both North America and Asia. The airport rescue and firefighting and military markets’ demand remained steady.
“Our financial results continue to be impacted by the previously forecasted decline in market activity in North America for our pressure pumping transmissions,” said Michael Batten, chairman and chief executive officer of Twin Disc. “Also impacting our results is a difficult operating environment in Europe. Amplifying the decline in sales and profitability were the record financial results we achieved last fiscal year as demand was at historic highs in several of our key markets. This demonstrates the cyclicality of our end markets. As we have learned from previous cycles, these markets do come back and our strategy is to plan proactively to take full advantage of an inevitable rebound. In addition, we are looking at markets where demand remains strong as evidenced by increasing sales and orders in Asia for pressure pumping transmissions and commercial marine products. The diversity of our geographies and end markets is helping us achieve financial results that compare favorably to previous trough periods.”
The outlook for the remainder of the year looks fairly positive, Batten said.
“Our six-month backlog at March 29, 2013, was $64,879,000 compared to $68,230,000 at Dec. 28, 2012, and $131,375,000 at March 30, 2012,” he said. “Our backlog is in the process of bottoming and reflects continued weakness in demand from the North American oil and gas market and a depressed European market. However, we are seeing initial and encouraging indications that demand and orders are improving in Asia and North America. We continue to manage the business conservatively. Maintaining a strong balance sheet with ample liquidity provides us the flexibility to manage the business through the softness we are experiencing in several markets and take advantage of opportunities as they occur. We are well positioned to capitalize on the long-term trends of our markets and remain committed to investing in product development, our distribution network, and our global manufacturing operations.”