[Executive Summary](index=1&type=section&id=1.%20Executive%20Summary) Twin Disc's fiscal year 2025 saw increased sales but a net loss, while Q4 showed sales growth and net income, with both periods impacted by currency and operating expenses [Fiscal Full Year 2025 Highlights](index=1&type=section&id=1.1.%20Fiscal%20Full%20Year%202025%20Highlights) Twin Disc reported a 15.5% increase in full-year sales to $340.7 million, driven by Land-Based Transmissions, Marine and Propulsion Systems, and Industrial segments, despite a net loss of ($1.9) million and a decrease in EBITDA to $19.0 million due to currency translation losses and other items - Sales increased **15.5%** year-over-year to **$340.7 million**[8](index=8&type=chunk) - Net loss attributable to Twin Disc was **($1.9) million**[8](index=8&type=chunk) - EBITDA of **$19.0 million**, including the impact from currency translation loss, stock based compensation, and other items[8](index=8&type=chunk) - Operating cash flow of **$24.0 million** and Free cash flow of **$8.8 million**[8](index=8&type=chunk) - Healthy six-month backlog of **$150.5 million** supported by strong ongoing order activity[8](index=8&type=chunk) [Fiscal Fourth Quarter 2025 Highlights](index=1&type=section&id=1.2.%20Fiscal%20Fourth%20Quarter%202025%20Highlights) The fourth quarter saw a 14.5% year-over-year sales increase to $96.7 million, with net income of $1.4 million, however, EBITDA decreased to $7.0 million due to increased currency translation losses, higher operating expenses, and stock-based compensation - Sales increased **14.5%** year-over-year to **$96.7 million**[8](index=8&type=chunk) - Net income attributable to Twin Disc was **$1.4 million**[8](index=8&type=chunk) - EBITDA of **$7.0 million**, including the impact from currency translation loss, stock based compensation, and other items[8](index=8&type=chunk) - Operating cash flow of **$16.4 million** and Free cash flow of **$8.7 million**[8](index=8&type=chunk) [CEO Perspective](index=1&type=section&id=1.3.%20CEO%20Perspective) CEO John H. Batten highlighted Q4 as the strongest, driven by robust defense-driven demand in Marine and Propulsion and steady recovery in Industrial, noting advancement in electrification, pricing discipline, and margin protection, with acquisitions expanding global footprint and diversifying end markets - Q4 was the strongest quarter, reflecting consistent execution and resilience in dynamic markets[4](index=4&type=chunk) - Marine and Propulsion led with robust defense-driven demand, while Industrial saw steady recovery[4](index=4&type=chunk) - Advanced electrification strategy with new e-frac activity, despite oil and gas challenges[4](index=4&type=chunk) - Maintained pricing discipline and protected margins amidst tariff noise and cost pressures[4](index=4&type=chunk) - Recent acquisitions expanded global footprint and diversified end markets[4](index=4&type=chunk) - Entering the new fiscal year in a stronger operational and strategic position, supported by a healthy backlog and greater organizational agility[5](index=5&type=chunk) - Committed to driving growth, maintaining disciplined operations, and executing on long-term value creation strategy[5](index=5&type=chunk) [CFO Perspective](index=3&type=section&id=1.4.%20CFO%20Perspective) CFO Jeffrey S. Knutson expressed satisfaction with financial performance, emphasizing disciplined execution, strong integration, a healthy cash position, well-positioned inventory, and ongoing global manufacturing optimization for efficient scaling and sustainable profitability - Pleased with financial performance, marked by disciplined execution and strong integration progress[14](index=14&type=chunk) - Inventory is well positioned to support demand heading into the new year[14](index=14&type=chunk) - Cash position remains healthy, providing flexibility to invest in growth while maintaining a strong balance sheet[14](index=14&type=chunk) - Continued progress on global manufacturing optimization to scale efficiently and support sustainable profitability[14](index=14&type=chunk) [Financial Results Analysis](index=1&type=section&id=2.%20Financial%20Results%20Analysis) Twin Disc reported significant sales growth for both Q4 and the full fiscal year 2025, primarily driven by Land-Based Transmissions, Marine and Propulsion Systems, and Industrial segments, though organic growth was much lower, indicating that acquisitions and foreign currency impacts were significant contributors to the reported growth [Sales Performance](index=1&type=section&id=2.1.%20Sales%20Performance) Twin Disc reported significant sales growth for both Q4 and the full fiscal year 2025, primarily driven by Land-Based Transmissions, Marine and Propulsion Systems, and Industrial segments, however, organic growth was much lower, indicating that acquisitions and foreign currency impacts were significant contributors to the reported growth [Overall Sales Growth](index=1&type=section&id=2.1.1.%20Overall%20Sales%20Growth) Sales for fiscal 2025 Q4 increased **14.5%** year-over-year to **$96.7 million**, with full-year sales up **15.4%** to **$340.7 million**, driven by Land-Based Transmissions, Marine and Propulsion Systems, and Industrial segments - Sales for the fiscal 2025 fourth quarter increased **14.5%** year-over-year to **$96.7 million**[6](index=6&type=chunk) - Fiscal 2025 full year sales increased **15.4%** to **$340.7 million** when compared to the prior year[6](index=6&type=chunk) - Sales growth was driven by demand for Land-Based Transmissions markets, with strength in Marine and Propulsion Systems and a stabilization in the Industrial segment[6](index=6&type=chunk) [Sales by Product Group](index=1&type=section&id=2.1.2.%20Sales%20by%20Product%20Group) This section details sales performance across Marine and Propulsion Systems, Land-Based Transmissions, Industrial, and Other product groups for Q4 and the full fiscal year 2025 compared to 2024 | Product Group | Q4 FY25 Sales (Thousands of $) | Q4 FY24 Sales (Thousands of $) | Change (%) | FY25 Sales (Thousands of $) | FY24 Sales (Thousands of $) | Change (%) | | :-------------------------- | :----------------------------- | :----------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Marine and Propulsion Systems | 53,011 | 47,228 | 12.2% | 201,101 | 171,765 | 17.1% | | Land-Based Transmissions | 26,122 | 24,989 | 4.5% | 80,192 | 78,519 | 2.1% | | Industrial | 13,141 | 7,219 | 82.0% | 41,502 | 25,669 | 61.7% | | Other | 4,404 | 4,982 | -11.6% | 17,943 | 19,174 | (6.4%) | | Total | 96,678 | 84,418 | 14.5% | 340,738 | 295,127 | 15.5% | [Organic Sales Performance](index=1&type=section&id=2.1.3.%20Organic%20Sales%20Performance) Organic sales for Q4 FY25 decreased **8.4%** year-over-year, primarily due to reduced oil and gas transmission shipments to China, while full-year organic revenue increased **1.0%** - On an organic basis (excluding acquisitions and foreign currency exchange), fourth quarter revenue decreased **8.4%** year-over-year, due primarily to reduced shipments of oil and gas transmissions into China[6](index=6&type=chunk) - For the fiscal 2025 full year, revenue increased **1.0%** on an organic basis when compared to the prior year[6](index=6&type=chunk) | Metric | Q4 FY25 (Thousands of $) | Q4 FY24 (Thousands of $) | FY25 (Thousands of $) | FY24 (Thousands of $) | | :------------------------ | :----------------------- | :----------------------- | :-------------------- | :-------------------- | | Net Sales | 96,678 | 84,418 | 340,738 | 295,127 | | Less: Acquisitions/Divestitures | (16,457) | - | (43,973) | (2,556) | | Less: Foreign Currency Impact | (2,915) | - | (1,423) | - | | Organic Net Sales | 77,306 | 84,418 | 295,342 | 292,571 | [Geographical Sales Distribution](index=3&type=section&id=2.1.4.%20Geographical%20Sales%20Distribution) For fiscal 2025, Twin Disc achieved double-digit growth in European and Asia-Pacific regions, including acquisitions, with a shift towards a greater proportion of sales from Europe and less from Asia-Pacific - For the fiscal 2025 full year, Twin Disc delivered double-digit growth year-over-year in the European and Asia-Pacific regions including the impact of acquisitions[9](index=9&type=chunk) - The distribution of sales across geographical regions shifted, with a greater proportion of sales coming from Europe, and a lower proportion coming from the Asia-Pacific region[9](index=9&type=chunk) [Profitability Analysis](index=3&type=section&id=2.2.%20Profitability%20Analysis) While gross profit increased in both Q4 and FY25, gross margin improved in Q4 but declined for the full year, with ME&A expenses rising significantly due to acquisitions and inflationary pressures, leading to a substantial decrease in net income for Q4 and a net loss for the full year, and declining EBITDA primarily due to increased currency translation losses and higher operating costs [Gross Profit and Margin](index=3&type=section&id=2.2.1.%20Gross%20Profit%20and%20Margin) Gross profit increased **19.7%** to **$30.0 million** in Q4 FY25, with gross margin improving **130 basis points** to **31.0%**, while full-year gross profit increased **11.3%** to **$92.7 million**, but gross margin decreased **100 basis points** to **27.2%** - Gross profit increased **19.7%** to **$30.0 million** compared to **$25.1 million** for the fourth quarter of fiscal 2025[10](index=10&type=chunk) - Fourth quarter gross margin improved approximately **130 basis points** to **31.0%** from the prior year period, supported by a favorable product mix and one-time cost capitalization adjustments in Katsa inventory[10](index=10&type=chunk) - For the fiscal 2025 full year, gross profit increased **11.3%** to **$92.7 million**, and gross margin decreased approximately **100 basis points** to **27.2%**[10](index=10&type=chunk) [Operating Expenses (ME&A)](index=3&type=section&id=2.2.2.%20Operating%20Expenses%20%28ME%26A%29) Marketing, engineering, and administrative (ME&A) expenses increased **20.9%** to **$24.6 million** in Q4 FY25 and **15.1%** to **$82.4 million** for the full year, primarily due to acquisitions, professional fees, and inflationary impacts on wages and benefits - Marketing, engineering and administrative (ME&A) expenses increased by **$4.3 million**, or **20.9%**, to **$24.6 million** in Q4 FY25[11](index=11&type=chunk) - For the fiscal 2025 full year, ME&A expense increased **15.1%** to **$82.4 million**[11](index=11&type=chunk) - The increased ME&A expense was primarily driven by the addition of Katsa and Kobelt, an increase in professional fees, and an inflationary impact on wages and benefits[11](index=11&type=chunk) [Net Income (Loss) and EPS](index=3&type=section&id=2.2.3.%20Net%20Income%20%28Loss%29%20and%20EPS) Twin Disc reported a net income of **$1.4 million** in Q4 FY25, down from **$7.4 million** in Q4 FY24, and a full-year net loss of **($1.9 million)**, or **($0.14)** per diluted share, a significant decrease from FY24 | Metric | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :------------------------------------------ | :------ | :------ | :----- | :----- | | Net income (loss) attributable to Twin Disc | $1.4M | $7.4M | ($1.9M) | $11.0M | | Diluted EPS | $0.10 | $0.53 | ($0.14) | $0.79 | - For the fiscal 2025 full year, the Company generated a net loss attributable to Twin Disc of **($1.9 million)**, or **($0.14)** per diluted share, a decrease of **116.8%** and **116.5%**, respectively, from fiscal 2024 full year[12](index=12&type=chunk) [EBITDA Performance](index=3&type=section&id=2.2.4.%20EBITDA%20Performance) EBITDA decreased **40.4%** to **$7.0 million** in Q4 FY25 and **28.3%** to **$19.0 million** for the full fiscal year, driven by increased currency translation losses, higher operating expenses, stock-based compensation, and inventory adjustments | Metric | Q4 FY25 (Thousands of $) | Q4 FY24 (Thousands of $) | FY25 (Thousands of $) | FY24 (Thousands of $) | | :----- | :----------------------- | :----------------------- | :-------------------- | :-------------------- | | EBITDA | 7,031 | 11,803 | 19,019 | 26,533 | - EBITDA was **$7.0 million** in the fourth quarter, down **40.4%** compared to the fourth quarter of fiscal 2024[12](index=12&type=chunk) - Full year fiscal 2025 EBITDA decreased **28.3%** to **$19.0 million** from **$26.5 million** in fiscal 2024[12](index=12&type=chunk) - The year-over-year change was driven by increased currency translation losses, higher operating expenses, stock based compensation, and inventory adjustments[12](index=12&type=chunk) [Items Impacting EBITDA](index=3&type=section&id=2.2.5.%20Items%20Impacting%20EBITDA) This section details various items impacting EBITDA, including restructuring, non-cash stock-based compensation, strategic inventory write-downs, acquisition costs, bargain purchase gains, currency translation, and defined benefit pension amortization for Q4 and full fiscal year 2025 and 2024 | (Thousands of $) | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :-------------------------------- | :------ | :------ | :----- | :----- | | Restructuring | 52 | 11 | 408 | 218 | | Non-cash stock based compensation | 1,389 | 1,373 | 4,068 | 3,383 | | Non-cash strategic inventory write-down | - | - | 1,579 | 3,099 | | Acquisition costs | 40 | 488 | 839 | 856 | | Non-cash bargain purchase gain | - | (3,724) | - | (3,724) | | Currency translation (gain)/loss | 2,935 | (703) | 4,825 | (377) | | Non-cash defined benefit pension amortization | 191 | (258) | 885 | (1,076) | [Cash Flow and Financial Position](index=1&type=section&id=2.3.%20Cash%20Flow%20and%20Financial%20Position) Operating cash flow decreased for the full year, and free cash flow saw a significant reduction, while the backlog increased, the company's cash balance decreased, and total debt and net debt increased, primarily due to recent acquisitions [Operating and Free Cash Flow](index=1&type=section&id=2.3.1.%20Operating%20and%20Free%20Cash%20Flow) Net cash provided by operating activities was **$16.4 million** in Q4 FY25 and **$24.0 million** for the full year, while free cash flow was **$8.7 million** in Q4 and **$8.8 million** for the full year, a significant decrease from the prior year | Metric | Q4 FY25 (Thousands of $) | Q4 FY24 (Thousands of $) | FY25 (Thousands of $) | FY24 (Thousands of $) | | :---------------------------------- | :----------------------- | :----------------------- | :-------------------- | :-------------------- | | Net cash provided by operating activities | 16,448 | 11,499 | 23,979 | 33,716 | | Acquisition of property, plant, and equipment | (7,705) | (1,109) | (15,157) | (8,707) | | Free cash flow | 8,743 | 10,390 | 8,822 | 25,009 | [Backlog](index=1&type=section&id=2.3.2.%20Backlog) The six-month backlog of orders increased to approximately **$150.5 million** at the end of Q4, up from **$133.7 million** at the end of Q3, with inventory as a percentage of backlog decreasing to **101.0%** - The backlog of orders to be shipped over the next six months is approximately **$150.5 million** at the end of the fourth quarter, compared to **$133.7 million** at the end of the third quarter[13](index=13&type=chunk) - As a percentage of six-month backlog, inventory decreased from **103.2%** at the end of the third quarter, to **101.0%** at the end of the fourth quarter[13](index=13&type=chunk) [Debt and Cash](index=3&type=section&id=2.3.3.%20Debt%20and%20Cash) Cash decreased **19.7%** to **$16.1 million**, while total debt increased **21.8%** to **$31.4 million**, and net debt surged **167.1%** to **$15.3 million**, primarily due to higher long-term debt from the Katsa and Kobelt acquisitions | Metric | June 30, 2025 (Thousands of $) | June 30, 2024 (Thousands of $) | Change (%) | | :---------- | :------------------------------- | :------------------------------- | :--------- | | Cash | 16,109 | 20,070 | -19.7% | | Total debt | 31,446 | 25,811 | 21.8% | | Net debt | 15,337 | 5,741 | 167.1% | - The increase in total debt was primarily attributable to higher long-term debt related to the Katsa and Kobelt acquisitions[13](index=13&type=chunk) [Company Information](index=4&type=section&id=3.%20Company%20Information) This section provides an overview of Twin Disc's business, including its products, markets, and distribution, along with important disclaimers regarding forward-looking statements and associated risks [About Twin Disc](index=4&type=section&id=3.1.%20About%20Twin%20Disc) Twin Disc, Inc. designs, manufactures, and sells marine and heavy-duty off-highway power transmission equipment, serving diverse global markets through direct sales and a distributor network - Twin Disc, Inc. designs, manufactures, and sells marine and heavy-duty off-highway power transmission equipment[16](index=16&type=chunk) - Products offered include marine transmissions, azimuth drives, surface drives, propellers, boat management systems, power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, and control systems[16](index=16&type=chunk) - 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[16](index=16&type=chunk) - Worldwide sales to both domestic and foreign customers are transacted through a direct sales force and a distributor network[16](index=16&type=chunk) [Forward-Looking Statements](index=4&type=section&id=3.2.%20Forward-Looking%20Statements) This section serves as a disclaimer regarding forward-looking statements, identifying them by specific terms and noting that they are subject to risks and uncertainties that could cause actual results to differ materially, with the company disclaiming any obligation to update these statements - This press release may contain forward-looking statements, identified by words like 'anticipates,' 'believes,' 'intends,' 'estimates,' and 'expects'[17](index=17&type=chunk) - Such forward-looking statements qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995[17](index=17&type=chunk) - 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[17](index=17&type=chunk) - Risks include general economic conditions, foreign currency risks, ability to implement price increases, ability to generate sufficient cash to pay indebtedness, and unforeseen tax consequences[17](index=17&type=chunk) - The Company assumes no obligation, and disclaims any obligation, to publicly update or revise any forward-looking statements[17](index=17&type=chunk) [Non-GAAP Financial Measures & Definitions](index=5&type=section&id=4.%20Non-GAAP%20Financial%20Measures%20%26%20Definitions) This section explains Twin Disc's use of non-GAAP financial measures to provide a more meaningful comparison of performance and offers clear definitions for key non-GAAP metrics like Organic net sales, EBITDA, Net debt, and Free cash flow [Non-GAAP Financial Information](index=5&type=section&id=4.1.%20Non-GAAP%20Financial%20Information) Twin Disc uses non-GAAP financial measures, such as those excluding asset impairments, restructuring charges, foreign currency exchange rate changes, and acquisitions, as well as EBITDA, to provide a more meaningful comparison to prior and future periods, believing these measures offer a consistent view of performance and are used in conjunction with GAAP measures - Financial information excluding the impact of asset impairments, restructuring charges, foreign currency exchange rate changes and the impact of acquisitions are not measures defined in U.S. GAAP[18](index=18&type=chunk) - Management believes these non-GAAP measures 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 earnings growth prospects[18](index=18&type=chunk) - These measures, as well as EBITDA, provide a more consistent view of performance than the closest GAAP equivalent for management and investors, and are used in combination with GAAP measures[18](index=18&type=chunk) [Definitions](index=5&type=section&id=4.2.%20Definitions) This section provides clear definitions for key non-GAAP financial metrics used in the report: Organic net sales, Earnings before interest, taxes, depreciation, and amortization (EBITDA), Net debt, and Free cash flow - **Organic net sales** is defined as net sales excluding the recent acquisitions of Katsa and Kobelt while adjusting for the effects of foreign currency exchange[19](index=19&type=chunk) - **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[19](index=19&type=chunk) - **Net debt** is calculated as total debt less cash[20](index=20&type=chunk) - **Free cash flow** is calculated as net cash provided (used) by operating activities less acquisition of fixed assets[21](index=21&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=5.%20Condensed%20Consolidated%20Financial%20Statements) This section presents Twin Disc's key financial statements, including statements of operations, reconciliations for non-GAAP measures like EBITDA, net debt, and organic net sales, along with balance sheets and cash flow statements, providing a comprehensive overview of the company's financial performance and position [Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=5.1.%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) This statement presents the company's revenues, costs, and profits (or losses) for the fourth quarter and full fiscal year 2025 compared to 2024, detailing net sales, cost of goods sold, gross profit, operating expenses, and ultimately net income (loss) and comprehensive income (loss) attributable to Twin Disc | | For the Quarter Ended | | | For the Year Ended | | | :------------------------------------------ | :---------- | :---------- | :---------- | :---------- | | | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | | Net sales (Thousands of $) | $96,678 | $84,418 | $340,738 | $295,127 | | Gross profit (Thousands of $) | $30,018 | $25,086 | $92,726 | $83,319 | | Income from operations (Thousands of $) | $5,345 | $4,719 | $9,887 | $11,479 | | Net income (loss) attributable to Twin Disc, Incorporated (Thousands of $) | $1,424 | $7,410 | ($1,894) | $10,988 | | Diluted income (loss) per share | $0.10 | $0.53 | ($0.14) | $0.79 | | Comprehensive income attributable to Twin Disc, Incorporated (Thousands of $) | $13,814 | $9,053 | $8,741 | $9,653 | [Reconciliation of Net (Loss) Income to EBITDA](index=7&type=section&id=5.2.%20Reconciliation%20of%20Net%20%28Loss%29%20Income%20to%20EBITDA) This reconciliation details the adjustments made to convert net income (loss) attributable to Twin Disc to EBITDA for both the fourth quarter and full fiscal year 2025 and 2024, with key adjustments including adding back interest expense, income tax expense, and depreciation and amortization | | For the Quarter Ended | | | For the Year Ended | | | :------------------------------------------ | :---------- | :---------- | :---------- | :---------- | | | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | | Net income (loss) attributable to Twin Disc, Incorporated (Thousands of $) | $1,424 | $7,410 | ($1,894) | $10,988 | | Interest expense (Thousands of $) | 855 | 394 | 2,646 | 1,443 | | Income tax expense (Thousands of $) | 47 | 1,515 | 3,368 | 4,121 | | Depreciation and amortization (Thousands of $) | 4,705 | 2,484 | 14,899 | 9,981 | | EBITDA (Thousands of $) | $7,031 | $11,803 | $19,019 | $26,533 | [Reconciliation of Total Debt to Net Debt](index=7&type=section&id=5.3.%20Reconciliation%20of%20Total%20Debt%20to%20Net%20Debt) This reconciliation shows the calculation of net debt by subtracting cash from total debt as of June 30, 2025, and June 30, 2024, highlighting the increase in both total debt and net debt year-over-year | | June 30, 2025 (Thousands of $) | June 30, 2024 (Thousands of $) | | :-------------------------- | :------------------------------- | :------------------------------- | | Current maturities of long-term debt (Thousands of $) | $3,000 | $2,000 | | Long-term debt (Thousands of $) | 28,446 | 23,811 | | Total debt (Thousands of $) | 31,446 | 25,811 | | Less cash (Thousands of $) | 16,109 | 20,070 | | Net debt (Thousands of $) | $15,337 | $5,741 | [Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow](index=7&type=section&id=5.4.%20Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Free%20Cash%20Flow) This reconciliation illustrates how free cash flow is derived from net cash provided by operating activities by deducting the acquisition of property, plant, and equipment for both the fourth quarter and full fiscal year 2025 and 2024, showing a significant decrease in free cash flow for FY25 | | For the Quarter Ended | | | For the Year Ended | | | :---------------------------------- | :---------- | :---------- | :---------- | :---------- | | | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | | Net cash provided by operating activities (Thousands of $) | $16,448 | $11,499 | $23,979 | $33,716 | | Acquisition of property, plant, and equipment (Thousands of $) | (7,705) | (1,109) | (15,157) | (8,707) | | Free cash flow (Thousands of $) | $8,743 | $10,390 | $8,822 | $25,009 | [Reconciliation of Reported Net Sales to Organic Net Sales](index=8&type=section&id=5.5.%20Reconciliation%20of%20Reported%20Net%20Sales%20to%20Organic%20Net%20Sales) This reconciliation adjusts reported net sales by removing the impacts of acquisitions/divestitures and foreign currency exchange to arrive at organic net sales for both the fourth quarter and full fiscal year 2025 and 2024, highlighting that a significant portion of reported sales growth was non-organic | | For the Quarter Ended | | | For the Year Ended | | | :------------------------ | :---------- | :---------- | :---------- | :---------- | | | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | | Net Sales (Thousands of $) | $96,678 | $84,418 | $340,738 | $295,127 | | Less: Acquisitions/Divestitures (Thousands of $) | (16,457) | - | (43,973) | (2,556) | | Less: Foreign Currency Impact (Thousands of $) | (2,915) | - | (1,423) | - | | Organic Net Sales (Thousands of $) | $77,306 | $84,418 | $295,342 | $292,571 | [Condensed Consolidated Balance Sheets](index=9&type=section&id=5.6.%20Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of Twin Disc's assets, liabilities, and equity as of June 30, 2025, and June 30, 2024, showing increases in total assets, total liabilities, and total equity year-over-year, with notable changes in cash, inventories, and debt | | June 30, 2025 (Thousands of $) | June 30, 2024 (Thousands of $) | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Total assets (Thousands of $) | $355,562 | $312,058 | | Total liabilities (Thousands of $) | $191,171 | $157,004 | | Total equity (Thousands of $) | $164,391 | $155,054 | | Cash (Thousands of $) | $16,109 | $20,070 | | Inventories, net (Thousands of $) | $151,951 | $130,484 | | Total debt (Current + Long-term) (Thousands of $) | $31,446 | $25,811 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=5.7.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details the cash inflows and outflows from operating, investing, and financing activities for the fiscal years ended June 30, 2025, and 2024, revealing a decrease in net cash provided by operating activities and a significant increase in cash used by investing activities, primarily due to acquisitions | | June 30, 2025 (Thousands of $) | June 30, 2024 (Thousands of $) | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Net cash provided by operating activities (Thousands of $) | $23,979 | $33,716 | | Net cash used by investing activities (Thousands of $) | ($32,899) | ($32,069) | | Net cash (used) provided by financing activities (Thousands of $) | ($965) | $2,754 | | Net change in cash (Thousands of $) | ($3,961) | $6,807 | | Cash, end of period (Thousands of $) | $16,109 | $20,070 |

Core Insights - Twin Disc, Inc. reported strong financial performance for the fourth quarter and full fiscal year 2025, with significant sales growth driven by demand in Marine and Propulsion Systems [4][6][8]. Fiscal Full Year 2025 Highlights - Total sales for fiscal year 2025 increased by 15.5% year-over-year to $340.7 million, with notable growth in Marine and Propulsion Systems [6][9]. - The company experienced a net loss of $1.9 million for the fiscal year, a significant decline from a net income of $10.99 million in the previous year [12][24]. - EBITDA for the fiscal year decreased by 28.3% to $19.0 million, primarily due to increased currency translation losses and higher operating expenses [12][25]. Fiscal Fourth Quarter 2025 Highlights - Sales for the fourth quarter increased by 14.5% year-over-year to $96.7 million, with strong performance in Marine and Propulsion Systems [6][9]. - Net income for the fourth quarter was $1.4 million, down from $7.4 million in the same quarter of the previous year [12][24]. - Gross profit for the fourth quarter rose by 19.7% to $30.0 million, with a gross margin improvement to 31.0% [10][12]. Sales by Product Group - Marine and Propulsion Systems sales increased by 12.2% to $53.0 million in Q4 FY25 [7]. - Industrial segment sales surged by 82.0% to $13.1 million in Q4 FY25, reflecting a strong recovery [7]. - For the full year, Marine and Propulsion Systems sales grew by 17.1% to $201.1 million [9]. Operational Insights - The company maintained a healthy backlog of $150.5 million at the end of Q4, supported by strong ongoing order activity [14]. - Marketing, engineering, and administrative expenses increased by 20.9% in Q4, driven by acquisitions and inflationary wage impacts [11]. - The company is focused on driving growth and maintaining disciplined operations as it enters the new fiscal year [5]. Geographical Sales Distribution - Twin Disc experienced double-digit sales growth in the European and Asia-Pacific regions during fiscal year 2025 [9]. - The sales distribution shifted, with a greater proportion coming from Europe and a lower proportion from the Asia-Pacific region [9].

Company Overview - Twin Disc, Inc. designs, manufactures, and sells marine and heavy-duty off-highway power transmission equipment [3] - The product range includes marine transmissions, azimuth drives, surface drives, propellers, boat management systems, power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, and control systems [3] - The company serves customers in pleasure craft, commercial and military marine markets, as well as energy, natural resources, government, and industrial sectors [3] Recent Events - Twin Disc's CEO John Batten and CFO Jeff Knutson will present at the Three Part Advisors Midwest IDEAS Conference in Chicago on August 27 at 7:55 am Central [1] - The event will include one-on-one meetings with registered investors [1] - The presentation will be streamed live via a webcast on the company's Investor Presentations section of its website [2]

Company Overview - Twin Disc, Inc. designs, manufactures, and sells marine and heavy-duty off-highway power transmission equipment [3] - The product range includes marine transmissions, azimuth drives, surface drives, propellers, boat management systems, power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, and control systems [3] - The company serves customers in pleasure craft, commercial and military marine markets, as well as energy, natural resources, government, and industrial markets [3] Upcoming Financial Results - Twin Disc will release its fiscal 2025 fourth-quarter results on August 21, 2025, at approximately 8:00 am Eastern [1] - A webcast and conference call to discuss the results will be held at 9:00 am Eastern, followed by a Q&A session with the investment community [1] Participation Details - The live audio webcast will be available on Twin Disc's website [2] - To participate in the conference call, interested parties should dial (646) 307-1963 approximately ten minutes before the call begins [2] - A replay of the webcast will be accessible shortly after the call until August 21, 2026 [2]

Core Insights - Twin Disc, Incorporated (TWIN) shares have increased by 6.2% since the fiscal third quarter results, outperforming the S&P 500 index which rose by 0.6% during the same period [1] - The company reported a net loss of 11 cents per share in the fiscal third quarter, compared to a net income of 27 cents per share in the previous year [2] - Net sales increased by 9.5% year-over-year to $81.2 million, driven by the Marine and Propulsion Systems and Industrial segments, along with contributions from recent acquisitions [2] - Despite revenue growth, profitability declined sharply with a net loss of $1.5 million compared to a net income of $3.8 million a year ago [3] - EBITDA fell by 42.7% to $4 million from $7 million, attributed to lower operating income, foreign currency losses, and higher pension-related amortization [3] Financial Performance - Gross profit rose to $21.7 million from $20.9 million, but gross margin decreased by approximately 150 basis points to 26.7% due to an unfavorable product mix [4] - Operating income dropped to $2 million from $3.6 million, impacted by a 13.2% increase in marketing, engineering, and administrative expenses [4] - The six-month order backlog increased to $133.7 million from $124 million, indicating stable demand across product categories [6] Regional and Segment Performance - Europe captured a larger share of revenue aided by the Katsa acquisition, while North America saw strong demand in the Marine and Propulsion segment [5] - Industrial sales surged by 56.2% to $9.7 million, while Land-Based Transmissions declined by 6.9% to $17.8 million [5] Management Insights - The CEO emphasized sequential margin improvement and strength in core marine markets, particularly in North America and Europe [7] - The CFO highlighted positive operating cash flow of $7.5 million and disciplined cost control efforts, despite foreign exchange volatility impacting earnings [8] Strategic Developments - Twin Disc completed the acquisition of Kobelt, aligning with its strategic goals to strengthen its industrial and marine technology portfolio [11] - The company's capital allocation strategy focuses on bolt-on acquisitions, debt reduction, and dividends, returning $1.7 million to shareholders during the quarter [11]

Company Overview - Twin Disc, Inc. designs, manufactures, and sells marine and heavy-duty off-highway power transmission equipment [2] - The product range includes marine transmissions, azimuth drives, surface drives, propellers, boat management systems, power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, and control systems [2] - The company serves customers in pleasure craft, commercial and military marine markets, as well as energy and natural resources, government, and industrial markets [2] - Sales are conducted through a direct sales force and a distributor network, targeting both domestic and foreign customers [2] Recent Developments - Twin Disc's CEO John Batten and CFO Jeff Knutson will attend the D. Boral Inaugural Global Conference on May 14 in New York City [1] - Executives from Twin Disc will be available for one-on-one meetings with registered investors during the conference [1]

Financial Data and Key Metrics Changes - The company reported sales of $81.2 million, an increase of approximately 10% compared to the prior period, with strong gross margins reaching 26.7% [6][17] - On an organic basis, revenue increased by 1.7%, reflecting continued strength in the Veth product line, despite softened oil and gas shipments to China [6][17] - Net loss attributable to the company for the quarter was $1.5 million, or a loss of $0.11 per diluted share, compared to net income of $3.8 million, or $0.27 per diluted share in the prior year [17][18] - Gross profit margin improved sequentially from 24.1% last quarter to 26.7% this quarter, driven by operational efficiencies and an improved product mix [18] Business Line Data and Key Metrics Changes - Marine and Propulsion segment sales increased by 10.7%, largely due to acquisitions and robust demand in commercial marine and luxury yacht markets [10] - The industrial segment showed stable performance, supported by contributions from CASA and initial contributions from COBELT, with a strong backlog of approximately $134 million [12][13] - The oil and gas sector experienced muted newbuild activity, but the aftermarket business remained resilient due to fleet aging and ongoing maintenance needs [11][12] Market Data and Key Metrics Changes - Geographic sales growth was notable in European markets, benefiting from recent acquisitions and continued strength in marine-related projects [18] - The company anticipates approximately $500,000 of tariff-related impact for the upcoming fourth quarter, representing roughly 1% of the cost of goods sold [8][9] Company Strategy and Development Direction - The company continues to execute its long-term strategy of global footprint optimization, operational excellence, and strategic acquisitions [14] - Recent acquisitions of Katsa and Cobalt are aimed at expanding engineering capabilities and enhancing market reach [14][20] - The company is strategically positioned to capitalize on growing customer interest in electrification and hybrid propulsion systems [11][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory, supported by a robust backlog and disciplined capital allocation [21] - The company remains vigilant in managing potential tariff impacts and global market uncertainties, leveraging operational flexibility [21] - Management highlighted ongoing investments in technology and innovation to drive sustainable growth [21] Other Important Information - The company ended the quarter with a cash balance of $16.2 million, maintaining adequate liquidity [19] - Operating cash flow generation was positive, totaling approximately $3.4 million, positioning the company for a strong fourth quarter [19] Q&A Session Summary Question: Order patterns and backlog stability - Management noted that there have been no significant cancellations in marine orders, with a strengthening trend in order rates [27][28] Question: Mitigating circumstances around tariffs and pricing initiatives - Management indicated proactive measures regarding pricing and sourcing strategies to mitigate tariff impacts, expecting minimal impact on Q4 margins [31][32] Question: Growth potential of COBELT and replication of Veth's success - Management expressed optimism about replicating the success of previous acquisitions, with significant growth potential in various markets [34][36] Question: Enhanced operational efficiencies and margin improvements - Management highlighted efforts in improving assembly processes and sourcing strategies to drive profitability in high-demand products [40][41]

Financial Data and Key Metrics Changes - The company reported sales of $81.2 million, an increase of approximately 10% compared to the prior period, with strong gross margins reaching 26.7% [5][16] - On an organic basis, revenue increased by 1.7%, driven by continued strength in the Veth product line, despite softened oil and gas shipments to China [5][6] - The net loss attributable to the company for the quarter was $1.5 million, or a loss of $0.11 per diluted share, compared to net income of $3.8 million, or $0.27 per diluted share in the prior year [16][17] - Gross profit margin improved sequentially from 24.1% to 26.7%, reflecting enhanced operational efficiencies and an improved product mix [17] Business Line Data and Key Metrics Changes - The Marine and Propulsion segment saw sales increase by 10.7%, largely due to acquisitions and robust demand in commercial marine and luxury yacht markets [8][10] - The Industrial segment showed stable performance, supported by positive contributions from recent acquisitions, with a backlog strengthening to approximately $134 million [11][12] - The land-based transmission business remained strong, driven by demand in the airport and firefighting markets [10] Market Data and Key Metrics Changes - Geographic sales growth was notable in European markets, benefiting from recent acquisitions and continued strength in marine-related projects [17] - The company noted stable volumes in China, although tariff uncertainties have led to a more measured pace in new build activity [11] Company Strategy and Development Direction - The company continues to execute its long-term strategy of global footprint optimization, operational excellence, and strategic acquisitions [13] - Recent acquisitions of Katsa and Cobalt are aimed at expanding engineering capabilities and enhancing market reach [13] - The company is strategically positioned to capitalize on growing customer interest in electrification and hybrid propulsion systems [10][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory, supported by a robust backlog and disciplined capital allocation [20] - The company remains vigilant in managing potential tariff impacts and global market uncertainties, leveraging operational flexibility [20] - Management anticipates continued positive margin trends driven by product mix and ongoing operational improvements [18] Other Important Information - The company estimates approximately $500,000 of tariff-related impact for the upcoming fourth quarter, representing roughly 1% of the cost of goods sold [7] - The company is actively evaluating alternative sourcing options to limit potential exposure to tariffs [7] Q&A Session Summary Question: Order patterns and backlog stability - Management noted that there have been no significant cancellations in marine orders, with order rates showing a strengthening trend [26][27] - The backlog was reported to be stable, with expectations of increasing orders in North America and Europe, particularly for patrol boats and military applications [27][28] Question: Mitigating circumstances around pricing and tariffs - Management indicated proactive measures regarding pricing and sourcing strategies to mitigate tariff impacts, with expectations of minimal impact on Q4 margins [30][31] Question: Insights on CoBelt acquisition - Management expressed optimism about replicating the success of previous acquisitions, with significant growth potential identified in CoBelt's product offerings [33][34] Question: Enhanced operational efficiencies - Management highlighted efforts in improving assembly processes and sourcing strategies to drive profitability, particularly for high-demand products [39][40]

[Part I. FINANCIAL INFORMATION](index=2&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements for Q3 and nine months ended March 28, 2025, with notes on acquisitions, segments, and debt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 28, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$332,882** | **$312,058** | | Total Current Assets | $231,968 | $219,631 | | **Total Liabilities** | **$182,693** | **$157,004** | | Total Current Liabilities | $109,857 | $99,516 | | Long-term Debt | $37,774 | $23,811 | | **Total Equity** | **$150,189** | **$155,054** | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q3 2025 | Q3 2024 | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $81,242 | $74,161 | $244,060 | $210,709 | | Gross Profit | $21,706 | $20,940 | $62,708 | $58,233 | | Income from Operations | $1,947 | $3,602 | $4,542 | $6,758 | | Net (Loss) Income Attributable to Twin Disc | $(1,472) | $3,822 | $(3,317) | $3,579 | | Diluted (Loss) Income Per Share | $(0.11) | $0.27 | $(0.24) | $0.26 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended March 28, 2025 | Nine Months Ended March 29, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,531 | $22,273 | | Net cash used by investing activities | $(23,970) | $(7,765) | | Net cash provided (used) by financing activities | $10,189 | $(5,083) | | **Net change in cash** | **$(3,825)** | **$10,580** | - The company completed the acquisition of **100%** of the outstanding common stock of Kobelt Manufacturing Co. Ltd. on February 14, 2025, a Canadian manufacturer of controls, propulsion, steering, and braking systems[14](index=14&type=chunk)[22](index=22&type=chunk) [Note B: Acquisition of Kobelt Manufacturing Co. Ltd.](index=7&type=section&id=B.%20Acquisition%20of%20Kobelt%20Manufacturing%20Co.%20Ltd.) Details the February 14, 2025 acquisition of Kobelt Manufacturing for **$16.6 million**, including financing and provisional purchase price allocation - The acquisition of Kobelt was completed on February 14, 2025, for an aggregate cash payment of approximately **$16,586 thousand**[22](index=22&type=chunk)[23](index=23&type=chunk) - The acquisition was partially financed through a new **$6,500 thousand** credit agreement with BMO Harris Bank N.A[24](index=24&type=chunk) Preliminary Purchase Price Allocation (in thousands) | Account | Amount | | :--- | :--- | | Total consideration | $16,960 | | Total identified net assets acquired | $14,829 | | **Goodwill** | **$2,131** | [Note F: Business Segments](index=11&type=section&id=F.%20Business%20Segments) Analyzes Manufacturing and Distribution segments, noting Q3 FY2025 sales and net income changes Net Sales by Segment (in thousands) | Segment | Q3 2025 | Q3 2024 | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Manufacturing | $72,484 | $62,640 | $212,265 | $175,545 | | Distribution | $30,138 | $37,022 | $95,448 | $107,117 | Net Income (Loss) by Segment (in thousands) | Segment | Q3 2025 | Q3 2024 | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Manufacturing | $1,574 | $5,662 | $6,574 | $9,298 | | Distribution | $1,738 | $3,248 | $3,918 | $7,427 | Total Net Sales by Product Group - Q3 2025 (in thousands) | Product Group | Total Net Sales | | :--- | :--- | | Industrial | $9,734 | | Land-based transmissions | $17,776 | | Marine and propulsion systems | $49,298 | | Other | $4,434 | | **Total** | **$81,242** | [Note K: Long-term Debt](index=18&type=section&id=K.%20Long-term%20Debt) Details the increase in long-term debt to **$40.8 million** for acquisitions and the terms of the new **$50 million** credit agreement Long-term Debt Composition (in thousands) | Debt Component | March 28, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Revolving loans | $25,751 | $16,288 | | Term loan | $15,000 | $9,500 | | **Subtotal** | **$40,774** | **$25,811** | - On February 14, 2025, the company entered into a new credit agreement that refinanced and replaced the prior agreement, increasing the term loan to **$15 million** and the revolving credit commitment to **$50 million**[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - The credit agreement requires the company to maintain a Total Funded Debt to EBITDA ratio not exceeding **3.50 to 1.00** and a Fixed Charge Coverage Ratio of at least **1.10 to 1.00**[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes financial performance, highlighting **9.5%** Q3 net sales growth from acquisitions, gross margin decline, and liquidity changes [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Examines Q3 FY2025 net sales growth of **9.5%** to **$81.2 million** from acquisitions and a gross margin decline to **26.7%** Q3 Fiscal 2025 vs Q3 Fiscal 2024 (in thousands) | Metric | Q3 2025 | Q3 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $81,242 | $74,161 | +9.5% | | Gross Profit | $21,706 | $20,940 | +3.7% | | Gross Margin | 26.7% | 28.2% | -1.5 p.p. | | Income from Operations | $1,947 | $3,602 | -46.0% | - The acquisitions of Katsa Oy and Kobelt contributed **$7.1 million** and **$1.2 million** of additional revenue in the quarter, respectively[121](index=121&type=chunk) - The decline in gross profit percentage is primarily attributed to a less favorable product mix and purchase accounting amortization related to the recent acquisitions[124](index=124&type=chunk) - For the first nine months of FY2025, net sales increased **15.8%** to **$244.1 million**, with acquisitions contributing **$27.5 million** in revenue[128](index=128&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=32&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) Assesses financial position, noting cash decrease, debt increase for acquisitions, and stable order backlog - Total borrowings and long-term debt increased by **$15.0 million** to **$40.8 million**, mainly to finance the Kobelt acquisition[141](index=141&type=chunk) - Inventories increased by **$7.5 million (5.7%)** to **$138.0 million**, with the Kobelt acquisition accounting for a **$6.0 million** increase[138](index=138&type=chunk) - The company's order backlog to be shipped over the next six months is approximately **$133.7 million**, consistent with the level at June 30, 2024[138](index=138&type=chunk) - Management believes existing liquidity sources are adequate to fund the company's cash and capital requirements for the foreseeable future[162](index=162&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 28, 2025, with no material changes to internal control - The CEO and CFO concluded that the company's disclosure controls and procedures are effective in ensuring timely and accurate reporting[167](index=167&type=chunk) - No material changes were made to the company's internal control over financial reporting during the most recent fiscal quarter[168](index=168&type=chunk) [Part II. OTHER INFORMATION](index=38&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) Discusses ongoing product liability claims, which management deems not material to the company's financial condition - Ongoing product liability claims are not expected to have a material impact on the company's business or financial condition[170](index=170&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) Identifies new risk factor concerning tariffs and trade policies, potentially impacting operations, costs, and margins - The company has identified a new risk related to tariffs and trade policies, which could materially and adversely impact business operations, costs, and margins[172](index=172&type=chunk)[173](index=173&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no unregistered equity sales or share repurchases, with **315,000** shares remaining authorized for buyback - No shares were purchased under the company's stock repurchase program during the quarter[176](index=176&type=chunk) - As of March 28, 2025, **315,000** shares remain authorized for purchase under the company's stock buyback plans, which have no expiration date[176](index=176&type=chunk)

Financial Performance - Sales 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 Marine and Propulsion Systems and Industrial product segments [5]. - Gross profit increased 3.8% to $21.7 million, while gross margin decreased approximately 150 basis points to 26.7% due to an unfavorable product mix [7]. - Net loss attributable to Twin Disc was ($1.5) million, or ($0.11) per diluted share, compared to net income of $3.8 million, or $0.27 per diluted share, for the same quarter last year [10]. - EBITDA for the third quarter was $4.0 million, down 42.7% compared to the third quarter of fiscal 2024 [10]. - Organic net sales for the quarter ended March 28, 2025, were $75,430 thousand, a slight increase from $74,161 thousand in the same quarter of 2024 [26]. Order Backlog and Market Activity - The six-month backlog of orders increased to approximately $133.7 million, compared to $124.0 million at the end of the second quarter [11]. - The company reported a healthy six-month backlog supported by strong ongoing order activity across key markets [9]. - Strong order activity for Veth continues to be driven by demand in the luxury yacht and riverboat vessels [3]. Expenses and Cash Flow - Marketing, engineering, and administrative expenses increased by $2.3 million, or 13.2%, to $19.4 million, primarily due to the addition of Katsa and Kobelt [8]. - Cash provided by operating activities for the three quarters ended March 28, 2025, was $7,531 thousand, down from $22,273 thousand for the same period in 2024 [30]. - The company incurred depreciation and amortization expenses of $10,194 thousand for the three quarters ended March 28, 2025, compared to $7,497 thousand for the same period in 2024 [30]. - Cash at the end of the period was $16,245 thousand, down from $20,070 thousand at the beginning of the period [30]. Debt and Liabilities - Cash decreased 19.1% to $16.2 million, while total debt increased 139.3% to $40.8 million, primarily due to higher long-term debt related to acquisitions [11]. - Total debt increased to $40,774 thousand as of March 28, 2025, from $17,042 thousand as of March 29, 2024 [24]. - Total liabilities increased to $182,693 thousand as of March 28, 2025, from $157,004 thousand as of June 30, 2024 [28]. Acquisitions and Strategic Focus - The company remains focused on integrating recent acquisitions and advancing its strategic priorities in hybrid and electric marine solutions [4]. - The company acquired Kobelt, resulting in an investment of $16,346 thousand during the three quarters ended March 28, 2025 [30]. Inventory and Write-downs - The company reported a loss on the write-down of industrial product inventory amounting to $1,579 thousand for the three quarters ended March 28, 2025 [30].