Twin Disc (NasdaqGS:TWIN) Q2 2026 Earnings call February 04, 2026 09:00 AM ET Company ParticipantsJeff Knutson - CFOJohn Batten - CEOConference Call ParticipantsJoe Nolan - Associate AnalystOperatorWelcome to the Twin Disc Inc. fiscal second quarter 2026 conference call. We will begin with introductory remarks from Jeff Knutson, Twin Disc CFO.Jeff KnutsonGood morning, and thank you for joining us today to discuss our fiscal 2026 second quarter results. On the call with me today is John Batten, Twin Disc CEO ...

Twin Disc (NasdaqGS:TWIN) Q2 2026 Earnings call February 04, 2026 09:00 AM ET Company ParticipantsJeff Knutson - CFOJohn Batten - CEOConference Call ParticipantsJoe Nolan - Associate AnalystOperatorWelcome to the Twin Disc Inc. fiscal second quarter 2026 conference call. We will begin with introductory remarks from Jeff Knutson, Twin Disc CFO.Jeff KnutsonGood morning, and thank you for joining us today to discuss our fiscal 2026 second quarter results. On the call with me today is John Batten, Twin Disc CEO ...

Summary of Twin Disc FY Conference Call Company Overview - **Company**: Twin Disc (NASDAQ: TWIN) - **Industry**: Global power transmission manufacturing, focusing on gearboxes, control systems, and clutches for various applications including marine and land-based vehicles [8][9][10] Key Financials - **Revenue**: Finished the year at just under $341 million [9] - **Gross Margin**: Just over 27% [9] - **Employee Count**: Approximately 1,000 employees globally, with a significant presence in Europe [9] Market Dynamics - **Defense Spending**: Notable increase in defense spending, with a year-over-year increase of 13% and a 150% increase in NATO defense spending [15] - **Geographic Revenue Shift**: Historically dominated by North America, but recent acquisitions have shifted revenue distribution, with Europe and Asia now being significant contributors [10][11] Strategic Acquisitions - **Recent Acquisitions**: - Veth Propulsion (largest acquisition in company history) [12] - Katsa (Finland) and Kobelt (Canada) [13][31] - **Acquisition Strategy**: Focus on regional, family-owned companies with potential for global expansion through Twin Disc's network [27][30] Product Segments - **Marine and Propulsion**: Increased focus on marine products, particularly in the context of defense and autonomous vessels [15][16] - **Land-Based Applications**: Includes transmissions for airport rescue firefighting vehicles and specialty oil servicing rigs [14] Growth Strategy - **Revenue Target**: Aiming for $500 million in revenue by fiscal 2030, with a focus on organic growth and strategic acquisitions [16][33] - **Cash Flow Management**: Strong cash flow generation with a focus on debt reduction and maintaining dividends [32][33] Technological Advancements - **Hybrid and Electric Systems**: Significant push towards hybrid and electric propulsion systems, with ongoing projects in marine applications [16][18][22] - **Control Systems Development**: Long history in electronic controls, with recent acquisitions enhancing capabilities in hybrid control systems [21][22] Challenges and Considerations - **Supply Chain Issues**: Complications in sourcing batteries and motors for hybrid systems [18] - **Tariff Implications**: Ongoing tariffs affecting production strategies, with a shift towards more localized assembly to mitigate costs [45][46][47] Conclusion - **Market Position**: Twin Disc is well-positioned to capitalize on defense spending and the shift towards hybrid and electric systems, with a robust acquisition strategy and a diverse product portfolio [35][36]

Summary of Twin Disc (TWIN) FY Conference Call - August 27, 2025 Company Overview - **Company**: Twin Disc Inc - **Ticker**: TWIN - **Industry**: Power transmission provider, focusing on off-highway markets including marine and defense sectors - **Revenue**: Approximately $340 million with gross margins of 27.2% [6][19][20] Key Themes and Insights - **Market Diversification**: The company has shifted from a North America-centric model to a more diversified global presence, with Europe now being the largest market [7][8] - **Acquisitions**: Twin Disc has made three significant acquisitions in the last seven years, with a focus on integrating these companies into a unified operational model [4][19] - **Defense Market Growth**: There is a notable increase in defense-related projects, with a 15% contribution to the backlog, reflecting a 45% year-over-year growth [19][20] - **Hybridization Focus**: The company is investing in hybrid and electric solutions, positioning itself to meet the evolving demands of the marine and industrial markets [8][22][28] Financial Performance and Strategy - **Operational Efficiency**: The company has been enhancing margins and operational efficiencies post-COVID, aiming for a target of $500 million in revenue with 30% gross margins [25][43] - **Debt Management**: Twin Disc maintains a strong balance sheet with a debt-to-EBITDA ratio below 2, allowing for continued investment in acquisitions and organic growth [33][34] - **Market Positioning**: The company is seen as a leader in niche markets, providing solutions that larger competitors do not focus on [41][42] Acquisitions and Integration - **Recent Acquisitions**: The acquisitions of Katsa and Kobelt are expected to be accretive and strategically fit within the company's product offerings [33][36] - **Integration Success**: The integration of recent acquisitions has been smooth, with a focus on leveraging global sales and support networks to drive growth [37][46] Market Trends and Future Outlook - **Defense Spending**: The U.S. Department of Defense has increased spending by 13%, with NATO spending up 150%, creating a favorable environment for Twin Disc's products [19][20] - **Hybrid and Electric Market Potential**: The company anticipates significant growth in the hybrid and electric markets, with potential revenue increases of 5 to 10 times compared to traditional mechanical components [26][27] - **Operational Initiatives**: Continuous improvements in operational initiatives are expected to enhance margin performance and overall financial health [42][43] Additional Insights - **Seasonality**: The company experiences seasonal fluctuations, with the first fiscal quarter typically being the weakest due to shipping days and summer shutdowns in Europe [51][52] - **Global Manufacturing Footprint**: Twin Disc has a diverse manufacturing footprint, allowing flexibility in production to mitigate tariff impacts [31][32] - **Corporate Restructuring**: Efforts are underway to reduce corporate overhead by decentralizing management and increasing operational responsibility at the facility level [72] This summary encapsulates the key points discussed during the Twin Disc FY Conference Call, highlighting the company's strategic direction, market positioning, and financial outlook.