Racine-based Twin Disc Inc. today reported losses in its fiscal fourth quarter and for the full year, driven by the lagging oil and gas market reducing demand for its products.
The company, which manufactures marine and heavy-duty off-highway power transmission equipment, reported a net loss of $5.5 million, or 49 cents lost per share, in the fourth quarter, compared with a profit of $476,000, or 4 cents per share, in the fourth quarter of 2015.
Fourth quarter revenue was $42.6 million, down from $67.3 million in the same period a year ago.
Twin Disc’s operating loss was $9.7 million, compared with an operating profit of $74,000 in the fourth quarter of 2015. The company incurred a $7.6 million goodwill impairment charge in the most recent quarter, related to its domestic industrial and European propulsion businesses.
For the full year, Twin Disc reported a net loss of $13 million, or $1.17 per diluted share, compared with a profit of $11.2 million, or 99 cents per share, in 2015.
Full-year operating loss was $24.6 million, compared with an operating profit of $15.5 million last year.
Revenue totaled $166.3 million in 2016, down from $265.8 million in 2015.
The company attributed its poor results to softening demand for commercial marine products in Asia, as well as the decline in oil and natural gas production globally. European demand was also weak, while North American demand was stable for products not impacted by oil and gas.
Foreign currency exchange rates also impacted 2016 sales by $7.9 million compared to last year.
“Fiscal 2016 was a very challenging year,” said John Batten, president and chief executive officer of Twin Disc. “The decline in oil prices and subsequent collapse of North American oil production severely impacted demand for our oil and gas transmissions used in pressure-pumping applications. The impacts of lower oil prices spread to other markets as we experienced weaker demand from international customers, as well as lower demand from commercial marine customers that manufacture offshore crew boats.”
The company has been implementing cost reductions to make up for the slowdown, reducing operating expenses by $7.5 million.
“We continue to watch our markets closely, and evaluate our manufacturing costs and global footprint to align our cost structure with future volumes, while maintaining our ability to execute and to succeed when our markets eventually come back,” Batten said.