Twin Disc swung from a fiscal fourth-quarter profit last year to a $5.5 million loss this year and also reported lower sales for the period.
The Wisconsin-based company said today that its loss for the quarter that ended June 30, which amounted to 49 cents a diluted share, compared with a profit of $437,000, or 4 cents a share, in the quarter last year.
Twin Disc said sales for the quarter totaled $42.6 million, compared with $67.3 million in the quarter last year. Sales for the full year were $166.3 million, compared with $265.8 million the previous year.
The company said the sales decline for the quarter and full year was the result of reduced demand for its oil- and gas-related products in North America and Asia, driven by a global decline in oil and natural gas production, along with softening demand in Asia for the company’s commercial marine products.
Twin Disc said demand from customers in Europe remained weak and that overall demand in North America was relatively stable for its commercial marine and non-oil and gas industrial products.
Currency had an unfavorable impact on fiscal 2016 sales, compared with the previous year, totaling $7.9 million for the full year because of a strengthening of the U.S. dollar against the euro and Asian currencies, the company said.
Twin Disc reported a full-year net loss of $13.1 million, or $1.17 a share, compared with a profit of $11.2 million, or 99 cents a diluted share, the previous year.
“Fiscal 2016 was a very challenging year,” president and CEO John H. Batten said in a statement. “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. We responded to this difficult cycle by restructuring our operations, implementing cost-reduction initiatives and lowering fixed costs. As a result of these actions we have eliminated more than $7,500,000 of costs from our operations.
“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.”
The company said that during the full fiscal year it recorded restructuring charges of $921,000, compared with $3.3 million the previous year.
The company said actions it took during the year are expected to generate more than $4.5 million in annualized savings through reductions in the base salaries of its corporate officers, the elimination of salaried positions, reductions in the base salaries and wages of salaried and hourly employees at the company’s headquarters and domestic manufacturing facilities, temporary layoffs at its Racine operation and headcount reductions at certain foreign subsidiaries.