Twin Disc, Incorporated (NASDAQ:TWIN) Q2 2024 Results Conference Call February 7, 2024 9:00 AM ET Company Participants Jeff Knutson - VP of Finance, CFO, Treasurer and Secretary John Batten - CEO Conference Call Participants Simon Wong - Gabelli Funds Rand Gesing - Neuberger Operator Ladies and gentlemen, thank you for standing by. I would like to welcome everyone to the Twin Disc, Inc. Fiscal Second Quarter 2024 Conference Call. [Operator Instructions]. Thank you. I will now hand the call over to Mr. Jeff ...

For the quarter ended December 29, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-7635 TWIN DISC, INCORPORATED ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 ...

[Part I. FINANCIAL INFORMATION](index=2&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 FY2024, including balance sheet, operations, and cash flows, along with detailed notes on accounting policies and key financial items [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Twin Disc reported Q1 FY2024 net sales of $63.6 million, a net loss of $1.17 million, and improved operating cash flow of $9.8 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 29, 2023 (in thousands) | June 30, 2023 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $209,208 | $219,706 | | **Total Assets** | $277,981 | $289,181 | | **Total Current Liabilities** | $92,218 | $100,095 | | **Total Liabilities** | $137,806 | $143,664 | | **Total Equity** | $140,175 | $145,517 | Condensed Consolidated Statement of Operations (in thousands, except per share data) | Metric | Q1 FY2024 (ended Sep 29, 2023, in thousands) | Q1 FY2023 (ended Sep 30, 2022, in thousands) | | :--- | :--- | :--- | | Net Sales | $63,554 | $55,913 | | Gross Profit | $16,637 | $13,297 | | Loss from Operations | $(280) | $(1,793) | | Net Loss Attributable to Twin Disc | $(1,173) | $(1,422) | | Diluted Loss Per Share | $(0.09) | $(0.11) | Condensed Consolidated Statement of Cash Flows (in thousands) | Cash Flow Activity | Q1 FY2024 (ended Sep 29, 2023, in thousands) | Q1 FY2023 (ended Sep 30, 2022, in thousands) | | :--- | :--- | :--- | | Net cash provided (used) by operating activities | $9,802 | $(696) | | Net cash used by investing activities | $(3,645) | $(1,701) | | Net cash provided by financing activities | $643 | $717 | | **Net change in cash** | **$7,165** | **$693** | [Notes to Condensed Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail significant accounting policies, including a pension plan accounting change, inventory write-downs, segment performance, debt compliance, and assets held for sale - The company changed its accounting method for pension and postretirement benefit plans to recognize actuarial gains and losses immediately above a **20% threshold**, rather than amortizing them, with this change applied retrospectively[14](index=14&type=chunk)[15](index=15&type=chunk) - In Q1 FY2024, the company recognized a total inventory write-down of **$3.7 million** (**$2.1 million** in Italy and **$1.6 million** in the U.S.) related to its boat management system product line[20](index=20&type=chunk) Net Sales by Segment (in thousands) | Segment | Q1 FY2024 Sales (in thousands) | Q1 FY2023 Sales (in thousands) | | :--- | :--- | :--- | | Manufacturing | $54,537 | $48,997 | | Distribution | $32,853 | $24,307 | - The company is in compliance with its debt covenants, which include maintaining 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**[50](index=50&type=chunk)[54](index=54&type=chunk) - The company is actively marketing its former corporate headquarters and, in Q1 FY2024, entered an agreement to sell certain assets of its boat management systems product line, reclassifying them to '**Assets Held for Sale**'[66](index=66&type=chunk)[69](index=69&type=chunk) [Management's Discussion and Analysis (MD&A)](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 13.7% increase in net sales, improved gross margin, positive free cash flow, and strengthened liquidity, driven by strong product and regional performance [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q1 FY2024 net sales increased 13.7% to $63.6 million, driven by marine and off-highway products and strong Asia Pacific/Europe sales, with gross margin improving to 26.2% Q1 FY2024 vs Q1 FY2023 Performance (in millions, except percentages) | Metric | Q1 FY2024 | Q1 FY2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $63.6M | $55.9M | +13.7% | | Gross Profit % | 26.2% | 23.8% | +2.4 p.p. | | Loss from Operations | $(0.3)M | $(1.8)M | +84.4% | - Sales growth was driven by strong performance in specific product lines and regions: - **Product Growth**: Marine/propulsion products (**+24.3%**), Off-highway transmission products (**+16.6%**) - **Regional Growth**: Asia Pacific (**+58.9%**), Europe (**+38.5%**) - **Decline**: Industrial products (**-19.1%**), North America sales (**-17.1%**)[97](index=97&type=chunk) - Gross margin improved to **26.2%**, and adjusted for a non-recurring **$3.1 million** inventory write-down, the gross profit percentage would have been **31.1%**[100](index=100&type=chunk) - The six-month order backlog increased to **$122.5 million** as of September 29, 2023, compared to **$108.9 million** at September 30, 2022[108](index=108&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=26&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) The company's financial condition strengthened with increased cash, reduced net debt, positive free cash flow, and compliance with debt covenants, projecting $9-11 million in FY2024 capital expenditures - The company generated positive free cash flow of **$6.1 million** (defined as operating cash flow less acquisitions of fixed assets) during the quarter[111](index=111&type=chunk) Key Balance Sheet Changes (Sep 29, 2023 vs June 30, 2023, in millions) | Account | Change | Reason | | :--- | :--- | :--- | | Cash | +$7.2M | Positive free cash flow | | Inventories | -$5.7M | Asset sale and increased shipments | | Total debt, net of cash | -$4.2M | Improved to $1.2M from $5.4M | - As of September 29, 2023, the company had approximately **$27.0 million** of available borrowings under its Credit Agreement[57](index=57&type=chunk) - The company expects to invest between **$9 million** and **$11 million** in capital assets in fiscal 2024, focusing on modernizing manufacturing, assembly, and testing processes[109](index=109&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company, as a Smaller Reporting Company, has opted not to provide quantitative and qualitative disclosure about market risk - Due to its status as a **Smaller Reporting Company**, the company has opted out of providing the quantitative and qualitative disclosure about market risk[122](index=122&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 29, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are **effective**[124](index=124&type=chunk) - **No material changes** were made to the company's internal control over financial reporting during the most recent fiscal quarter[125](index=125&type=chunk) [Part II. OTHER INFORMATION](index=29&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in product liability claims, which are either insured or not considered material to its financial condition - Ongoing product liability claims are **not expected to have a material impact** on the company's financial condition, as they are either insured or the amounts are not deemed material[126](index=126&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K - **No material changes** to the risk factors disclosed in the 2023 Annual Report on Form 10-K have occurred[127](index=127&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell unregistered equity or make open market purchases, but acquired 138,141 shares for tax obligations, with 315,000 shares authorized for repurchase - The company did not purchase any shares on the open market during the quarter, but **138,141 shares** were acquired from employees to cover withholding taxes on vested stock awards[131](index=131&type=chunk) - A board authorization to repurchase **315,000 shares** of common stock remains outstanding and has no expiration date[132](index=132&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications required by Sarbanes-Oxley Act and Inline XBRL financial data - The exhibits include required **CEO and CFO certifications** under the **Sarbanes-Oxley Act** and interactive data files (**Inline XBRL**)[138](index=138&type=chunk)

Twin Disc, Incorporated (NASDAQ:TWIN) Q1 2024 Earnings Conference Call November 2, 2023 8:30 AM ET Company Participants Jeff Knutson - VP of Finance, CFO, Treasurer and Secretary John Batten - CEO Conference Call Participants Operator Ladies and gentlemen, thank you for standing by, and welcome to the Twin Disc, Inc. Fiscal First Quarter 2024 Conference Call. [Operator Instructions] Thank you. Jeff Knutson, you may begin your conference. Jeff Knutson Good morning, and thank you for joining us today to discu ...

Financial Performance - Net sales for fiscal 2023 increased by 14.0%, or $34.1 million, to $277.0 million from $242.9 million in fiscal 2022[76] - Gross profit improved by $5.5 million, or 8.0%, to $74.3 million, but gross profit as a percentage of sales decreased to 26.8% from 28.3%[81] - Distribution segment sales rose by 14.3%, or $15.2 million, with North American operations experiencing significant growth of 35.7%[78] - The manufacturing segment saw a sales increase of 12.2%, or $26.6 million, with the Veth propulsion operation in the Netherlands achieving a 17.1% increase despite a $3.2 million unfavorable currency translation impact[77] Order Backlog and Future Expectations - As of June 30, 2023, the backlog of orders was $119.2 million, an 18% increase from $101.2 million as of June 30, 2022[90] - The Company expects capital expenditures to be approximately $9 million to $11 million in fiscal 2024[104] Cash Flow and Working Capital - Net cash provided by operating activities totaled $22.9 million, an improvement of $31.2 million from the prior fiscal year[91] - Net working capital decreased by $3.8 million, or 3.0%, during fiscal 2023, with the current ratio decreasing from 2.5 to 2.2[103] - Cash of $13.3 million is primarily held at overseas operations, available for repatriation with some restrictions[102] Tax and Restructuring - The effective tax rate for fiscal 2023 was 26.2%, compared to 14.5% for fiscal 2022[88] - The Company incurred $0.2 million in restructuring charges during fiscal 2023, down from $1.0 million in fiscal 2022[85] Capital and Liquidity - The Company has 315,000 shares remaining under its authorized stock repurchase plan[94] - The Company had approximately $33.0 million of available borrowings under the Credit Agreement as of June 30, 2023[102] - The Company has no material off-balance-sheet arrangements and continues to maintain sufficient liquidity for near-term needs[102] Pension and Medical Claims - The Company anticipates contributing $0.6 million to its defined benefit pension plans in fiscal 2024, which is the minimum required contribution[102] - The Company expects to pay $0.7 million in postretirement medical claims in fiscal 2024 based on actuarial estimates[105] Trade Payables and Liabilities - Trade payables increased by $8.0 million and accrued liabilities by $11.0 million, driven by growing demand and supply chain imbalances[103] Borrowings and Agreements - The Company has entered into various agreements to secure borrowings, including pledging 100% of equity interests in certain domestic subsidiaries[98] - The Company has a full domestic valuation allowance of $22.3 million recognized as of June 30, 2023, due to the likelihood of not realizing deferred tax assets[118]

Twin Disc, Incorporated (NASDAQ:TWIN) Q4 2023 Earnings Call Transcript August 16, 2023 9:00 AM ET Company Participants Jeff Knutson - VP of Finance, CFO, Treasurer and Secretary John Batten - CEO Conference Call Participants Simon Wong - Gabelli Funds Operator Good day, and welcome to the Twin Disc Fiscal Fourth Quarter 2023 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instruction ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-7635 TWIN DISC, INCORPORATED (Exact name of registrant as specified in its charter) (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) Wis ...

Twin Disc Incorporated (NASDAQ:TWIN) Q3 2023 Results Conference Call April 28, 2023 11:00 AM ET Company Participants Jeffrey Knutson - VP of Finance, CFO, Treasurer & Secretary John Batten - President, CEO & Director Conference Call Participants Simon Wong - Gabelli Funds Operator Greetings, and welcome to Twin Disc Fiscal Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeff Knutson, Vice Pre ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q TWIN DISC, INCORPORATED (Exact name of registrant as specified in its charter) Wisconsin 39-0667110 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 1328 Racine Street, Racine, Wisconsin 53403 (Address of principal executive offices) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended December 30, 2022 ☐ TRANSITION RE ...

Twin Disc, Incorporated (NASDAQ:TWIN) Q2 2023 Earnings Conference Call February 3, 2023 11:00 AM ET Company Participants Stan Berger - President, SM Berger & Company John Batten - Chief Executive Officer Jeff Knutson - Vice President, Finance and Chief Financial Officer Conference Call Participants Operator Greetings, and welcome to Twin Disc Inc. Fiscal Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this confere ...