Twin Disc, Inc. (NASDAQ: TWIN) today reported
results for the third quarter ended March 28, 2025.
Fiscal Third Quarter 2025 Highlights
- Sales increased 9.5% year-over-year to $81.2 million
- Net loss attributable to Twin Disc was ($1.5) million and
EBITDA* of $4.0 million
- Operating cash flow of $3.4 million
- Healthy six-month backlog of $133.7 million supported by strong
ongoing order activity
CEO Perspective
“Our third quarter results reflect another solid performance,
with sequential margin improvement and strong momentum exiting the
quarter. Strength across our core marine propulsion markets,
particularly in North America and Europe, supported results, while
order activity for Veth remained robust, continuing to be driven by
demand in the luxury yacht and riverboat vessels. Though the global
macro environment remains uncertain, our diversified geographic
footprint and mission-critical portfolio continue to provide
resiliency. Our six-month backlog grew meaningfully sequentially,
supported by sustained order activity across key markets along with
the addition of Kobelt,” commented John H. Batten, President and
Chief Executive Officer of Twin Disc.
“We remain focused on executing our long-term strategy,
including integrating recent acquisitions, driving operational
efficiencies, and positioning Twin Disc as a leader in hybrid and
electric marine solutions. Our ability to adapt to changing trade
dynamics, supported by a flexible global supply chain and
manufacturing network, enhances our confidence in delivering
long-term value,” concluded Mr. Batten.
Third Quarter ResultsSales for the fiscal 2025
third quarter increased 9.5% year-over-year to $81.2 million,
driven by the addition of Katsa Oy and Kobelt, along with strength
in the Company’s Marine and Propulsion Systems and Industrial
product segments. On an organic basis, which excludes the impacts
of acquisitions and foreign currency exchange, revenue increased
1.7%, due primarily to continued strength in Veth offset by reduced
shipments of oil and gas transmissions into China.
Sales by product group (certain amounts have been reclassified
from Marine and Propulsion to Other):
|
Product Group |
Q3 FY25 Sales |
Q3 FY24 Sales |
Change (%) |
|
(Thousands of $): |
|
Marine and Propulsion Systems |
|
$49,297 |
|
$44,530 |
10.7 |
% |
|
Land-Based Transmissions |
|
17,776 |
|
19,090 |
-6.9 |
% |
|
Industrial |
|
9,734 |
|
6,232 |
56.2 |
% |
|
Other |
|
4,435 |
|
4,309 |
2.9 |
% |
|
Total |
|
$81,242 |
|
$74,161 |
9.5 |
% |
Twin Disc delivered double-digit sales growth year-over-year in
the European region. With the acquisition of Katsa, the
distribution of sales across geographical regions shifted, with a
lower proportion of sales coming from the Non-European regions.
Gross profit increased 3.8% to $21.7 million compared to $20.9
million for the third quarter of fiscal 2024. Third quarter gross
margin decreased approximately 150 basis points to 26.7% from the
prior year period, reflecting the impact of an unfavorable product
mix, with reduced shipments of oil and gas transmissions into
China.
Marketing, engineering and administrative (ME&A) expense
increased by $2.3 million, or 13.2%, to $19.4 million, compared to
$17.2 million in the prior year quarter. The increased ME&A
expense was primarily driven by the addition of Katsa and Kobelt
and an increase to professional fees and an inflationary impact on
wages and benefits.
Net loss attributable to Twin Disc for the quarter was ($1.5
million), or ($0.11) per diluted share, compared to net income
attributable to Twin Disc of $3.8 million, or $0.27 per diluted
share, for the third fiscal quarter of 2024. The year-over-year
change was driven by reduced operating income, an increase in Other
Expense ($1.6 million) related to a currency loss ($1.1 million)
and an increase in the amortization of the net actuarial loss
related to the Company’s domestic defined benefit pension plan
($0.5 million). Earnings before interest, taxes, depreciation, and
amortization (EBITDA) were $4.0 million in the third quarter, down
42.7% compared to the third quarter of fiscal 2024. On a
consolidated basis, the backlog of orders to be shipped over the
next six months is approximately $133.7 million, compared to $124.0
million at the end of the second quarter. As a percentage of
six-month backlog, inventory decreased from 103.4% at the end of
the second quarter, to 103.2% at the end of the third quarter.
Compared to the third fiscal quarter of 2024, cash decreased 19.1%
to $16.2 million, total debt increased 139.3% to $40.8 million, and
net debt* increased $31.3 million to $24.5 million. The increase
was primarily attributable to higher long-term debt related to the
Katsa and Kobelt acquisitions.
CFO PerspectiveJeffrey S. Knutson, Vice
President of Finance, Chief Financial Officer, Treasurer and
Secretary, stated, “Twin Disc delivered improved margins and
positive free cash flow in the third quarter, driven by stronger
operational execution and disciplined cost control. Gross margins
remained strong at 26.7%, reflecting improvement through the
quarter, with Veth performance showing notable progress. While
foreign exchange volatility impacted results, core operational
trends were encouraging. As we continue to integrate Kobelt and
Katsa and identify further efficiencies across the business, we
remain focused on advancing our strategic priorities. Our ability
to generate cash and maintain a strong balance sheet positions us
well to support long-term growth and navigate ongoing macroeconomic
uncertainty.”
Discussion of Results
Twin Disc will host a conference call to discuss these results
and to answer questions at 9:00 a.m. Eastern time on May 7, 2025.
The live audio webcast will be available on Twin Disc’s website at
https://ir.twindisc.com. To participate in the conference call,
please dial (646) 307-1963 approximately ten minutes before the
call is scheduled to begin. A replay of the webcast will be
available at https://ir.twindisc.com shortly after the call until
May 6, 2026.
About Twin Disc
Twin Disc, Inc. designs, manufactures, and sells marine and
heavy-duty off-highway power transmission equipment. Products
offered include marine transmissions, azimuth drives, surface
drives, propellers, and boat management systems, as well as
power-shift transmissions, hydraulic torque converters, power
take-offs, industrial clutches, and control systems. The Company
sells its products to customers primarily in the pleasure craft,
commercial and military marine markets, as well as in the energy
and natural resources, government, and industrial markets. The
Company’s worldwide sales to both domestic and foreign customers
are transacted through a direct sales force and a distributor
network. For more information, please visit www.twindisc.com.
Forward-Looking Statements
This press release may contain statements that are forward
looking as defined by the Securities and Exchange Commission in its
rules, regulations, and releases. The words “anticipates,”
“believes,” “intends,” “estimates,” and “expects,” or similar
anticipatory expressions, usually identify forward-looking
statements. The Company intends that such forward-looking
statements qualify for the safe harbors from liability established
by the Private Securities Litigation Reform Act of 1995. All
forward-looking statements are based on current expectations and
are subject to certain risks and uncertainties that could cause
actual results or outcomes to differ materially from current
expectations. Such risks and uncertainties include the impact of
general economic conditions and the cyclical nature of many of the
Company’s product markets; foreign currency risks and other risks
associated with the Company’s international sales and operations;
the ability of the Company to successfully implement price
increases to offset increasing commodity costs; the ability of the
Company to generate sufficient cash to pay its indebtedness as it
becomes due; and the possibility of unforeseen tax consequences and
the impact of tax reform in the U.S. or other jurisdictions. These
and other risks are described under the caption “Risk Factors” in
Item 1A of the Company’s most recent Form 10-K filed with the
Securities and Exchange Commission, as supplemented in subsequent
periodic reports filed with the Securities and Exchange Commission.
Accordingly, the making of such statements should not be regarded
as a representation by the Company or any other person that the
results expressed therein will be achieved. The Company assumes no
obligation, and disclaims any obligation, to publicly update or
revise any forward-looking statements to reflect subsequent events,
new information, or otherwise.
*Non-GAAP Financial
Information
Financial information excluding the impact of asset impairments,
restructuring charges, foreign currency exchange rate changes and
the impact of acquisitions, if any, in this press release are not
measures that are defined in U.S. Generally Accepted Accounting
Principles (“GAAP”). These items are measures that management
believes are important to adjust for in order to have a meaningful
comparison to prior and future periods and to provide a basis for
future projections and for estimating our earnings growth
prospects. Non-GAAP measures are used by management as a
performance measure to judge profitability of our business absent
the impact of foreign currency exchange rate changes and
acquisitions. Management analyzes the company’s business
performance and trends excluding these amounts. These measures, as
well as EBITDA, provide a more consistent view of performance than
the closest GAAP equivalent for management and investors.
Management compensates for this by using these measures in
combination with the GAAP measures. The presentation of the
non-GAAP measures in this press release are made alongside the most
directly comparable GAAP measures.
Definitions
Organic net sales is defined respectively as net sales excluding
the recent acquisitions of Katsa Oy and Kobelt while adjusting for
the effects of foreign currency exchange.
Earnings before interest, taxes, depreciation, and amortization
(EBITDA) is calculated as net earnings or loss excluding interest
expense, the provision or benefit for income taxes, depreciation,
and amortization expenses.
Net debt is calculated as total debt less
cash.
Investors: RiveronTwinDiscIR@Riveron.com
Source: Twin Disc, Incorporated
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND |
|
COMPREHENSIVE LOSS |
|
(In thousands, except per-share data; unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Three Quarters Ended |
|
|
|
March 28, 2025 |
|
March 29, 2024 |
|
March 28, 2025 |
|
March 29, 2024 |
|
Net sales |
$ |
81,242 |
|
$ |
74,161 |
|
$ |
244,060 |
|
$ |
210,709 |
|
|
Cost of goods sold |
|
59,536 |
|
|
53,221 |
|
|
179,773 |
|
|
149,377 |
|
|
Cost of goods sold - Other |
|
- |
|
|
- |
|
|
1,579 |
|
|
3,099 |
|
|
Gross profit |
|
21,706 |
|
|
20,940 |
|
|
62,708 |
|
|
58,233 |
|
|
|
|
|
|
|
|
|
|
Marketing, engineering, and administrative expenses |
|
19,472 |
|
|
17,199 |
|
|
57,811 |
|
|
51,268 |
|
|
Restructuring expenses |
|
287 |
|
|
139 |
|
|
355 |
|
|
207 |
|
|
Income from operations |
|
1,947 |
|
|
3,602 |
|
|
4,542 |
|
|
6,758 |
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
Interest expense |
|
(660 |
) |
|
(263 |
) |
|
(1,791 |
) |
|
(1,049 |
) |
|
Other (expense) income, net |
|
(1,567 |
) |
|
959 |
|
|
(2,525 |
) |
|
649 |
|
|
|
|
(2,227 |
) |
|
696 |
|
|
(4,316 |
) |
|
(400 |
) |
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes and noncontrolling interest |
|
(280 |
) |
|
4,298 |
|
|
226 |
|
|
6,358 |
|
|
Income tax expense |
|
1,142 |
|
|
398 |
|
|
3,320 |
|
|
2,606 |
|
|
Net (loss) income |
|
(1,422 |
) |
|
3,900 |
|
|
(3,094 |
) |
|
3,752 |
|
|
Less: Net earnings attributable to noncontrolling interest, net of
tax |
|
(50 |
) |
|
(78 |
) |
|
(223 |
) |
|
(173 |
) |
|
Net (loss) income attributable to Twin Disc, Incorporated |
$ |
(1,472 |
) |
$ |
3,822 |
|
$ |
(3,317 |
) |
$ |
3,579 |
|
|
|
|
|
|
|
|
|
|
Dividends per share |
$ |
0.04 |
|
$ |
0.04 |
|
$ |
0.12 |
|
$ |
0.08 |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income per share data: |
|
|
|
|
|
|
|
Basic (loss) income per share attributable to Twin Disc,
Incorporated common shareholders |
$ |
(0.11 |
) |
$ |
0.28 |
|
$ |
(0.24 |
) |
$ |
0.26 |
|
|
Diluted (loss) income per share attributable to Twin Disc,
Incorporated common shareholders |
$ |
(0.11 |
) |
$ |
0.27 |
|
$ |
(0.24 |
) |
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding data: |
|
|
|
|
|
|
|
Basic shares outstanding |
|
13,895 |
|
|
13,742 |
|
|
13,841 |
|
|
13,663 |
|
|
Diluted shares outstanding |
|
13,895 |
|
|
13,904 |
|
|
13,841 |
|
|
13,852 |
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
|
|
|
|
|
|
Net (loss) income |
$ |
(1,422 |
) |
$ |
3,900 |
|
$ |
(3,094 |
) |
$ |
3,752 |
|
|
Benefit plan adjustments, net of income taxes of ($5), $10, ($3)
and $2, respectively |
|
201 |
|
|
(191 |
) |
|
(1,245 |
) |
|
(470 |
) |
|
Foreign currency translation adjustment |
|
4,152 |
|
|
(3,084 |
) |
|
74 |
|
|
(930 |
) |
|
Unrealized (loss) gain on hedges, net of income taxes of $0, $0, $0
and $0, respectively |
|
(653 |
) |
|
196 |
|
|
(360 |
) |
|
(73 |
) |
|
Comprehensive income (loss) |
|
2,278 |
|
|
821 |
|
|
(4,625 |
) |
|
2,279 |
|
|
Less: Comprehensive income attributable to noncontrolling
interest |
|
(82 |
) |
|
(34 |
) |
|
(340 |
) |
|
(224 |
) |
|
Comprehensive income (loss) attributable to Twin Disc,
Incorporated |
$ |
2,196 |
|
$ |
787 |
|
$ |
(4,965 |
) |
$ |
2,055 |
|
|
|
|
|
|
|
|
RECONCILIATION OF CONSOLIDATED NET INCOME TO
EBITDA |
|
(In thousands; unaudited) |
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Three Quarters Ended |
|
|
March 28, 2025 |
|
March 29, 2024 |
|
March 28, 2025 |
|
March 29, 2024 |
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Twin Disc |
$ |
(1,472 |
) |
|
$ |
3,822 |
|
|
$ |
(3,317 |
) |
|
$ |
3,579 |
|
|
Interest expense |
|
660 |
|
|
|
263 |
|
|
|
1,791 |
|
|
|
1,049 |
|
|
Income tax expense |
|
1,142 |
|
|
|
398 |
|
|
|
3,320 |
|
|
|
2,606 |
|
|
Depreciation and amortization |
|
3,659 |
|
|
|
2,474 |
|
|
|
10,194 |
|
|
|
7,497 |
|
|
Earnings before interest, taxes, depreciation and amortization
(EBITDA) |
$ |
3,989 |
|
|
$ |
6,957 |
|
|
$ |
11,988 |
|
|
$ |
14,731 |
|
|
|
|
RECONCILIATION OF TOTAL DEBT TO NET DEBT |
|
(In thousands; unaudited) |
|
|
|
|
|
|
|
March 28, 2025 |
|
March 29, 2024 |
|
|
|
|
|
|
Current maturities of long-term debt |
$ |
3,000 |
|
|
$ |
2,000 |
|
|
Long-term debt |
|
37,774 |
|
|
|
15,042 |
|
|
Total debt |
|
40,774 |
|
|
|
17,042 |
|
|
Less cash |
|
16,245 |
|
|
|
23,843 |
|
|
Net debt |
$ |
24,529 |
|
|
$ |
(6,801 |
) |
|
|
|
RECONCILIATION OF REPORTED NET SALES TO ORGANIC NET
SALES |
|
(In thousands; unaudited) |
|
|
|
|
|
March 28, 2025 |
|
March 29, 2024 |
|
|
|
|
|
|
Net Sales |
$ |
81,242 |
|
|
$ |
74,161 |
|
|
Less: Acquisitions/Divestitures |
|
(8,346 |
) |
|
|
- |
|
|
Less: Foreign Currency Impact |
|
2,534 |
|
|
|
- |
|
|
Organic Net Sales |
$ |
75,430 |
|
|
$ |
74,161 |
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(In thousands; except share amounts, unaudited) |
|
|
|
|
|
|
|
|
|
March 28, 2025 |
|
June 30, 2024 |
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash |
$ |
16,245 |
|
$ |
20,070 |
|
|
Trade accounts receivable, net |
|
57,315 |
|
|
52,207 |
|
|
Inventories,net |
|
137,957 |
|
|
130,484 |
|
|
Other current assets |
|
20,451 |
|
|
16,870 |
|
|
Total current assets |
|
231,968 |
|
|
219,631 |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
63,659 |
|
|
58,074 |
|
|
Right-of-use assets operating lease assets |
|
17,016 |
|
|
16,622 |
|
|
Goodwill |
|
2,107 |
|
|
- |
|
|
Intangible assets, net |
|
12,930 |
|
|
12,686 |
|
|
Deferred income taxes |
|
2,497 |
|
|
2,339 |
|
|
Other noncurrent assets |
|
2,705 |
|
|
2,706 |
|
|
Total assets |
$ |
332,882 |
|
$ |
312,058 |
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Current maturities of long-term debt |
$ |
3,000 |
|
$ |
2,000 |
|
|
Current maturities of right-of use operating lease obligations |
|
3,155 |
|
|
2,521 |
|
|
Accounts payable |
|
31,568 |
|
|
32,586 |
|
|
Accrued liabilities |
|
72,134 |
|
|
62,409 |
|
|
Total current liabilities |
|
109,857 |
|
|
99,516 |
|
|
Long-term debt |
|
37,774 |
|
|
23,811 |
|
|
Right-of-use lease obligations |
|
14,349 |
|
|
14,376 |
|
|
Accrued retirement benefits |
|
9,610 |
|
|
7,854 |
|
|
Deferred income taxes |
|
4,768 |
|
|
5,340 |
|
|
Other long-term liabilities |
|
6,335 |
|
|
6,107 |
|
|
Total liabilities |
|
182,693 |
|
|
157,004 |
|
|
Twin Disc, Incorporated shareholders' equity: |
|
|
|
|
|
Preferred shares authorized: 200,000; issued: none; no par
value |
|
- |
|
|
- |
|
|
Common shares authorized: 30,000,000; issued: 14,632,802; no par
value |
|
40,927 |
|
|
41,798 |
|
|
Retained earnings |
|
124,572 |
|
|
129,592 |
|
|
Accumulated other comprehensive loss |
|
(8,554 |
) |
|
(6,905 |
) |
|
|
|
156,945 |
|
|
164,485 |
|
|
Less treasury stock, at cost (485,141 and 637,778 shares,
respectively) |
|
7,448 |
|
|
9,783 |
|
|
Total Twin Disc, Incorporated shareholders' equity |
|
149,497 |
|
|
154,702 |
|
|
Noncontrolling interest |
|
692 |
|
|
352 |
|
|
Total equity |
|
150,189 |
|
|
155,054 |
|
|
Total liabilities and equity |
$ |
332,882 |
|
$ |
312,058 |
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(In thousands; unaudited) |
|
|
|
|
|
|
|
|
|
For the Three Quarters Ended |
|
|
|
March 28, 2025 |
|
|
March 29, 2024 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net (loss) income |
$ |
(3,094 |
) |
|
$ |
3,752 |
|
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
10,194 |
|
|
|
7,497 |
|
|
(Gain) loss on sale of assets |
|
(72 |
) |
|
|
(87 |
) |
|
Loss on write-down of industrial product inventory |
|
1,579 |
|
|
|
- |
|
|
Loss on sale of boat management product line and related
inventory |
|
- |
|
|
|
3,099 |
|
|
Restructuring expenses |
|
238 |
|
|
|
128 |
|
|
(Benefit) provision for deferred income taxes |
|
(790 |
) |
|
|
239 |
|
|
Stock compensation expense and other non-cash changes, net |
|
3,124 |
|
|
|
2,242 |
|
|
Net change in operating assets and liabilities |
|
(3,648 |
) |
|
|
5,403 |
|
|
Net cash provided by operating activities |
|
7,531 |
|
|
|
22,273 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
Acquisition of property, plant, and equipment |
|
(7,452 |
) |
|
|
(7,598 |
) |
|
Acquisition of Kobelt, less cash acquired |
|
(16,346 |
) |
|
|
- |
|
|
Proceeds from sale of property, plant, and equipment |
|
102 |
|
|
|
- |
|
|
Other, net |
|
(274 |
) |
|
|
(167 |
) |
|
Net cash used by investing activities |
|
(23,970 |
) |
|
|
(7,765 |
) |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
Borrowings under long-term debt agreement |
|
6,500 |
|
|
|
- |
|
|
Borrowings under revolving loan arrangements |
|
95,727 |
|
|
|
66,661 |
|
|
Repayments of revolving loan arrangements |
|
(86,434 |
) |
|
|
(66,661 |
) |
|
Repayments of other long-term debt |
|
(1,000 |
) |
|
|
(1,510 |
) |
|
Dividends paid to shareholders |
|
(1,702 |
) |
|
|
(1,119 |
) |
|
Payments of right-of-use finance lease obligations |
|
(1,646 |
) |
|
|
(663 |
) |
|
Payments of withholding taxes on stock compensation |
|
(1,256 |
) |
|
|
(1,791 |
) |
|
Net cash provided (used) by financing activities |
|
10,189 |
|
|
|
(5,083 |
) |
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
2,425 |
|
|
|
1,155 |
|
|
Net change in cash |
|
(3,825 |
) |
|
|
10,580 |
|
|
Cash: |
|
|
|
|
|
|
Beginning of period |
|
20,070 |
|
|
|
13,263 |
|
|
End of period |
$ |
16,245 |
|
|
$ |
23,843 |
|
Twin Disc (NASDAQ:TWIN)
Historical Stock Chart
From May 2025 to Jun 2025
Twin Disc (NASDAQ:TWIN)
Historical Stock Chart
From Jun 2024 to Jun 2025
