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Twin Disc, Inc. (NASDAQ: TWIN) today reported financial results for the fiscal 2012 second quarter ended December 30, 2011.
Sales for the fiscal 2012 second quarter improved to $82,941,000, from $75,160,000 for the same period last year. Year-to-date, sales were $164,271,000, compared to $136,555,000 for the fiscal 2011 first half. The improvement in sales was the result of strong demand from customers in the oil and gas markets. Stable to slightly increased sales continued in a majority of the Company’s other markets, including aftermarket, industrial, airport rescue and fire fighting (ARFF), land- and marine-based military, commercial marine, and pleasure craft markets.
Gross margin for the fiscal 2012 second quarter was 35.6 percent, compared to 31.6 percent in the fiscal 2011 second quarter and 37.8 percent in the fiscal 2012 first quarter. The significant year-over-year improvement in fiscal 2012 second-quarter gross margin was the result of higher sales volumes, improved manufacturing efficiency and absorption, and a more profitable mix of business. On a sequential basis, the gross margin was down from the all time high fiscal 2012 first-quarter gross margin, due to an anticipated shift in business mix. Year-to-date, gross margin was 36.7 percent, compared to 32.1 percent for the fiscal 2011 first half.
For the fiscal 2012 second quarter, marketing, engineering and administrative (ME&A) expenses, as a percentage of sales, were 24.2 percent, compared to 24.8 percent for the fiscal 2011 second quarter. ME&A expenses increased $1,458,000 versus the same period last fiscal year. Stock-based compensation expense increased $1,207,000 versus the prior year’s second fiscal quarter, primarily driven by the increase in the Company’s stock price in the second quarter of fiscal 2012. The remaining $251,000 increase primarily relates to increased research and development activities, and higher salaries and wages.
Year-to-date, ME&A expenses, as a percentage of sales, were 21.9 percent, compared to 24.5 percent for the fiscal 2011 first six months. For the fiscal 2012 first half, ME&A expenses increased $2,590,000 versus the same period last fiscal year. Stock based compensation expense in the fiscal 2012 first half of $2,406,000 increased $100,000 versus the same period a year ago. Year-to-date, movements in foreign exchange rates increased ME&A expenses by $986,000 versus the comparable period a year ago. The net remaining increase of $1,504,000 primarily relates to increased research and development activities, and higher salaries and wages.