Twin Disc Inc ((TWIN)) has held its Q4 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Twin Disc Inc. recently held its earnings call, revealing a blend of robust sales growth and strategic advancements in key markets, despite facing challenges in the oil and gas sector and increased expenses. The company reported a net loss for the year, yet its expansion in the defense market and strategic integrations suggest a positive outlook for the future.
Strong Year-End Financial Performance
Sales for the fiscal year reached $340.7 million, marking a significant top line growth of 15.5%. The fourth quarter alone saw sales grow 14.5% year-over-year to $96.7 million, showcasing the company’s strong financial performance despite some market challenges.
Defense Market Expansion
Twin Disc Inc. has made notable strides in the defense sector, with orders related to defense products growing approximately 45% compared to fiscal ’24. This expansion now accounts for nearly 15% of the total backlog, with a promising defense-related pipeline valued between $50 million and $75 million.
Marine and Propulsion Systems Growth
The Marine and Propulsion Systems segment experienced a 12.2% increase in sales, reaching $53 million in the fourth quarter. This growth was driven by strong activity in workboats and government contracts, highlighting the segment’s robust performance.
Industrial Segment Growth
The Industrial segment demonstrated impressive growth, with fourth quarter sales rising 82% year-over-year. This surge was supported by the strength in Katsa’s industrial parts business, contributing significantly to the company’s overall performance.
Strategic Acquisitions
Twin Disc Inc. made meaningful progress in integrating the acquisitions of Katsa and Kobelt. These strategic moves have expanded the company’s capabilities and broadened its customer base, aligning with its long-term growth strategy.
Decline in Oil and Gas Activity
The company faced challenges in the oil and gas sector, with organic net sales declining due to reduced activity, particularly in China. Oil and gas revenue fell to around 8% of total revenue, impacting overall sales figures.
Increased ME&A Expenses
ME&A expenses rose to $24.6 million in Q4, up from $20.4 million last year. This increase reflects the addition of acquisitions and ongoing wage and professional services inflation, indicating higher operational costs.
Lower Aftermarket Sales in Land-Based Transmissions
Aftermarket sales in land-based transmissions decreased year-over-year, falling to $3 million compared to $5.5 million in the fourth quarter of fiscal ’24. This decline highlights a challenge in maintaining sales in this segment.
Net Loss for the Full Year
Twin Disc Inc. reported a full-year net loss of $1.9 million, contrasting with a net income of $11 million in fiscal ’24. This loss underscores the financial challenges faced by the company during the year.
Forward-Looking Guidance
Looking ahead, Twin Disc Inc. provided an optimistic guidance, emphasizing its growth trajectory, particularly in the defense market. The company aims to leverage its strategic acquisitions to expand capabilities and customer base, with a focus on disciplined capital management. Twin Disc is targeting its 2030 objectives of $500 million in revenue and consistent free cash flow conversion of at least 60%, supported by a robust backlog of approximately $150 million.
In conclusion, Twin Disc Inc.’s earnings call highlighted a mix of strong sales growth and strategic advancements, despite facing challenges in certain markets. The company’s positive outlook, driven by its defense market expansion and strategic acquisitions, suggests a promising future trajectory.