Summary of Twin Disc Conference Call (October 08, 2025) Company Overview - **Company**: Twin Disc (NasdaqGS:TWIN) - **Industry**: Global transmission power technology - **Headquarters**: Wisconsin, USA - **Established**: 1918 - **Employees**: Approximately 1,000 globally - **Revenue**: Just under $341 million with a gross margin of 27.2% [3][4][22] Key Points Market Position and Strategy - Twin Disc has been a leader in transmission power technology for 100 years, focusing on hybrid and electric solutions [2][22] - The company is well-positioned to benefit from increased defense spending, particularly in NATO countries and the U.S. Navy [2][10] - The company has made significant acquisitions, including Veth in the Netherlands, Katsa Oy in Finland, and Kobelt in Canada, to diversify its offerings and enhance cash flow [3][6][19] Financial Performance - The backlog has increased by 15% year-over-year, with defense-related backlog up 45% year-over-year [10][22] - The company aims to grow its industrial business to match the scale of its marine transmission and propulsion business, currently at 12% of total revenue [14][19] Product Segments - The largest end market is Europe, driven by acquisitions and growth in marine business [4][10] - Marine products account for approximately 60% of the business, while land-based transmission systems make up 24% [4][5] - The company is focusing on hybrid and electric solutions, particularly in marine applications, due to regulatory pressures and market demand [11][35] Defense and Government Programs - The company sees significant growth potential in defense spending, particularly for autonomous vessels and military applications [10][32] - The focus has shifted from oil and gas to more stable markets, reducing reliance on cyclical industries [19][28] Acquisitions and Integration - Recent acquisitions are progressing well, with successful integration strategies in place [24][27] - The company is focused on leveraging its global service network to enhance the growth of acquired companies [19][20] Challenges and Risks - Supply chain issues, particularly related to battery and motor components, are hindering the rollout of hybrid solutions [11][12] - Tariffs are creating uncertainty in the U.S. market, affecting order placements and inventory management [31] Future Outlook - The company anticipates growth across all markets, with defense and marine sectors expected to lead [30][32] - Twin Disc is committed to investing in organic growth and further acquisitions to enhance its market position [20][21] Conclusion - Twin Disc is strategically positioned to capitalize on market trends in defense and hybrid technology, with a strong focus on integrating recent acquisitions and expanding its product offerings [22][38]