Twin Disc to close Racine factory in July, will cut employees and other costs; Joy Global second quarter profit up 68 percent; Modine lost $47.1 million in fourth quarter; Nordco acquired by Canadian private equity investment firm
Twin Disc to close Racine factory in July, will cut employees and other costs
Racine-based Twin Disc Inc. announced that it will reduce operating expenses by $25 million through a number of corporate cost cutting initiatives, including plans to close its Racine factory during July.
Through a combination of an involuntary reduction in force and a voluntary separation program, the company will reduce its workforce by 16 salaried employees and 20 hourly employees at its Racine operations. It will also be implementing rolling layoffs for its Racine workforce throughout fiscal year 2010.
The company also plans to: reduce the annual base salaries of its salaried employees including all executive officers, remove the fiscal 2010 bonus/incentive plan, make changes to several benefit programs, and lower its marketing, advertising, travel and entertainment expenses.
These measures supplement additional layoffs and cost cutting measures being implemented at the company’s European operations in Belgium, Italy and Switzerland.
“Like many global manufacturing companies today, the breadth of the economic recession has impacted all facets of our business," said Michael E. Batten, Twin Disc chairman and CEO. "While it appears that the recession is beginning to moderate, the underlying market trend has softened and has resulted in slowing sales, order rates and backlog. We believe that proactively implementing these cost control initiatives will enable us to effectively address the global economic downturn and ensure a strong financial position in the future. We recognize that the layoffs will be difficult for the affected employees and their families. While we wish we didn’t have to take these difficult actions, they’re unfortunately necessary to secure Twin Disc’s short- and long-term stability and success. Even with the changes we’re making, the fundamentals of our business remain strong. We are confident in the long-term viability of our businesses and remain committed to our employees, customers and the markets in which we operate.”
Joy Global second quarter profit up 68 percent
Milwaukee-based mining equipment manufacturer Joy Global Inc., the parent company of P&H Mining Equipment Inc., reported fiscal year 2009 second quarter net income of $121 million, or $1.17 per diluted share, up 68 percent compared to second quarter 2008 net income of $72 million, or 66 cents per diluted share.
The company’s net sales for the quarter increased by 10 percent to $924 million compared to $843 million in the second quarter of last year. Operating income increased to $188 million, or 20 percent of net sales, in the second quarter versus $114 million, or 14 percent of net sales, in the second quarter of 2008.
“Our results for the second quarter were at record levels for revenues, operating profit margins and net earnings," said Mike Sutherlin, president and chief executive officer of Joy Global. "These accomplishments are the result of on-going efforts to reduce expenses, to achieve savings from effective management of our supply chain and to gain improvements from manufacturing processes through our operational excellence initiative. The momentum behind these efforts is beginning to have a positive and noticeable impact on our performance. The strength we are gaining in operational efficiency and financial performance will serve us well as we address the uncertainty and volatility that exists in the outlook for our markets.”
The company said that bookings in the second quarter were $635 million compared to $1.2 billion in last year’s second quarter. Current quarter bookings were reduced by $96 million of order cancellations, the company said. Of those cancellations, $46 million occurred in the Joy and Continental businesses and were mainly from customers in Central Appalachia, while $50 million occurred in the P&H business and were from customers in North American copper and iron ore.
New original equipment orders, before cancellations, declined 61 percent from last year’s second quarter, the company said.
Over the last three quarters, the company received $300 million of order cancellations which were concentrated in North American copper and iron ore, U.S. Central Appalachian coal and Russian coal. The company said that it now believes that its remaining original equipment backlog risk could be as much as $525 million.
The company said that it believes that over the near term, original equipment bookings will remain well below the record pace of last year and more in line with the rates of new orders received during the first two quarters of this year. Future original equipment orders over the near term will most likely come from the emerging markets, international coal, South American copper, and the oil sands.
The company now expects fiscal 2009 revenues to be between $3.5 billion and $3.6 billion and earnings per fully diluted share to be between $3.80 and $4.00.
“We have gained increased confidence in our fiscal 2009 and increased clarity into fiscal 2010,” Sutherlin said. “We have had intensive discussions with our customers as we worked closely with them to cancel and reschedule equipment necessary for their financial stability. I believe these discussions have generated substantial goodwill. The changes we have made in our backlog risk assessment have not changed our overall revenue expectations. In fact, they have provided greater certainty of those revenues. We still expect 2009 revenues to meet our original guidance, and we continue to expect 2010 revenues to be lower than 2009 unless our markets begin to improve in the interim. Therefore, during the second half of this year, we will begin to adjust costs consistent with the 2010 outlook. As a result, we expect to incur approximately $10 million of charges during the second half of fiscal 2009, primarily associated with severance benefits. If our markets remain at their current levels, we would expect 2011 to reach cycle trough conditions with revenues down as much as 40 percent from their peak.”
Modine lost $47.1 million in fourth quarter
Racine-based Modine Manufacturing Company‘s sales and profits have suffered significantly during the recession. The company reported last week that it lost $47.1 million (or $1.47 diluted loss per share) in the fourth quarter of fiscal 2009, and that it lost $108.6 million (or $3.38 diluted loss per share) for the entire 2009 fiscal year.
The company had net sales of $254.8 million for the fourth quarter, down 43.1 percent from $447.6 million in the fourth quarter of fiscal 2008.
For the full fiscal year the company’s sales dropped by 12 percent to $1.41 billion, down from $1.6 billion in the previous fiscal year.
“The global recession, with the lowest global vehicular OEM production rates in decades, continues to significantly challenge our business,” said Thomas A. Burke, Modine’s president and chief executive officer. “Responding to these unfavorable operating conditions, we continue to take aggressive actions using our four-point strategic framework to address our business performance, lower our underlying cost structure and preserve liquidity. We are actively refocusing our product portfolio and manufacturing footprint to ensure we provide technically advanced, high value solutions to our customers that ultimately will deliver the expected returns to our shareholders. Additionally, we are driving our Modine Operating System principles, which include a critical focus on leadership behaviors, throughout our organization to accelerate continuous process improvement. Collectively, these targeted actions are providing the momentum that will see us through the current economic crisis and ensure an advantaged position for Modine as the market volumes recover.”
Nordco acquired by Canadian private equity investment firm
Oak Creek-based Nordco Inc., a manufacturer of machinery and equipment used to maintain and build railroad tracks, has been sold to OMERS Private Equity, a Toronto, Ontario based private equity firm.
Nordo was previously owned by The Riverside Company, a global private equity firm focused on the smaller end of the middle market. Terms of the acquisition were not disclosed.
Nordo has more than 300 employees. It is headquartered in Oak Creek, with manufacturing operations there and in Arcola, Ill., Grandview, Mo., and Oshawa, Ontario.
The company is a supplier of spikers, spike pullers, tie exchangers, anchor applicators, rail lifters and snow removers/ballast regulators.
Nordco was acquired by The Riverside Company in 2003.