Twin Disc announced sales and earnings declines in its fourth quarter, citing continued weakness in the North American pressure pumping sector.
Sales for the quarter that ended June 30 were $75.9 million, down from $96.1 million for the same period last year. For the full fiscal year, sales were $285.3 million, compared with a record $355.9 million the previous year.
The Wisconsin-based company reported a fourth-quarter profit of $47,000, or zero cents a diluted share, compared with $1.3 million, or 11 cents a share, for the quarter a year earlier. For the full fiscal year, Twin Disc said it earned $3.9 million, or 34 cents a diluted share, compared with $26.7 million, or $2.31 a share, the previous year.
The company said the anticipated decrease in sales was primarily the result of lower demand from customers in the pressure pumping sector of the North American oil and gas market and softness in sales to European customers.
Offsetting weakness in these markets was higher demand from customers in the North American and Asian commercial marine markets. Sales to customers serving the global megayacht market remained at historic lows throughout the fiscal year, but demand remained steady for equipment used in the airport rescue and firefighting, and military markets, the company said.
The fourth-quarter gross margin was 27.2 percent, compared with 29.4 percent in the quarter a year earlier and 25.9 percent in the third quarter of fiscal 2013. The company said the anticipated year-over-year decline in the fourth-quarter gross margin was the result of lower sales volumes and a less profitable mix of business. For fiscal 2013 the gross margin was 28.1 percent, compared with 34.2 percent in the prior year.
Fourth-quarter marketing, engineering and administrative expenses, as a percentage of sales, were 22.5 percent, compared with 20.1 percent for the quarter a year earlier. Marketing, engineering and administrative expenses decreased by $1.94 million from the prior year’s quarter.
"On many levels, fiscal 2013 was a transitional year for the company as we continued to build a solid foundation to support our long-term growth strategies,” Twin Disc chairman and CEO Michael E. Batten said in a statement.
“A key component of our strategic plan has been to enhance Twin Disc's position as a global company. For the sixth consecutive year, the majority of our sales have been to customers outside the U.S. We remain committed to marketing the Twin Disc brand internationally, with an expanding focus on emerging markets. As a result, China now represents 10 percent of overall sales and has become the second-largest market for sales after the U.S.”