Twin Disc Inc ((TWIN)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Twin Disc’s recent earnings call painted a balanced picture, highlighting significant sales growth in certain segments while also addressing challenges such as declining gross profit margins. The company’s performance was buoyed by strong demand and strategic acquisitions, although financial pressures remain a concern.
Double-Digit Sales Growth
The second quarter saw Twin Disc’s sales reach $89.3 million, marking a 23.2% year-over-year increase. This impressive growth was primarily driven by robust performances in the marine propulsion and industrial segments.
Marine Propulsion Segment Growth
The marine propulsion segment reported a 23.9% increase in sales compared to the previous year. This growth was fueled by strong demand in North American projects and the luxury yacht market.
Industrial Segment Growth
The industrial segment experienced remarkable growth, with a 44.8% increase year-over-year. This was supported by the acquisition of Casa and a resurgence in Lufkin orders.
Improved Cash Flow
Twin Disc’s operating cash flow was strong, generating $4.3 million in the quarter. Additionally, EBITDA rose to $6.3 million, a 13.5% increase compared to the same period in 2024.
Gross Profit Margin Decline
Despite the sales growth, Twin Disc faced a decline in gross profit margin, which fell to 24.1% from the previous year’s 28.3%. This was attributed to inventory write-downs and an unfavorable product mix.
Oil and Gas Segment Decline
The oil and gas segment saw a downturn, with revenues down 24% year-over-year. This segment now comprises less than 8% of Twin Disc’s total revenue.
Increased Net Debt
Net debt increased by $12.3 million to reach $9 million, mainly due to the Casa acquisition. The cash balance also saw a 24.3% decrease compared to the previous year.
Forward-Looking Guidance
Looking ahead, Twin Disc anticipates continued growth, focusing on strategic acquisitions and operational efficiencies. The company is advancing its technology portfolio, particularly in hybrid and electric propulsion systems, to sustain long-term growth and value creation. Despite a decline in gross profit margins, Twin Disc maintains a healthy backlog and is poised to leverage high shipments and foreign exchange impacts to its advantage.
In conclusion, Twin Disc’s earnings call revealed a company navigating both opportunities and challenges. While sales growth is promising, especially in key segments, issues such as decreased profit margins and increased debt highlight areas needing attention. Nevertheless, Twin Disc’s strategic focus on technology and acquisitions positions it well for future growth.
