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]

Core Viewpoint - The company confirms that all motors used in its industrial brake products, including drive devices like actuators, are produced in-house, ensuring performance and reliability for its products [2] Group 1: Product Manufacturing - The motors utilized in the company's drive devices are all self-manufactured, specifically asynchronous AC motors [2] - These motors are integral components of the brake products and are designed and integrated with the overall system [2] - The company does not sell these motors externally, as they are primarily focused on enhancing the performance of its own products [2] Group 2: Gearbox Applications - The gearbox is part of the mechanical transmission system and the company has the capability to develop gearbox products [2] - Some of the brake system products are equipped with self-researched and produced gearboxes [2]

Core Viewpoint - The company, Huawu Co., Ltd. (300095.SZ), emphasizes that all motors used in its industrial brake products, including drive devices like actuators, are produced in-house, ensuring performance and reliability [1] Group 1: Product Development - The motors utilized in the company's brake products are all asynchronous AC motors, which are integral components designed and integrated with the overall brake system [1] - The company has research and development capabilities for gear reducers, which are part of the mechanical transmission system, and has a certain level of technical reserves [1] - Some of the brake system products are equipped with self-developed gear reducers, showcasing the company's commitment to integrated product development [1]

Report Summary 1. Report Industry Investment Rating - No relevant information provided. 2. Core View of the Report - The company, Huawu Co., Ltd., is a leading enterprise in the industrial brake industry. In the first three quarters of 2025, it achieved good business results with revenue and net profit growth. The company will continue to focus on its main business, expand emerging markets such as overseas markets, mining trucks, and water conservancy projects, and is expected to maintain its leading position in the industry [21][22][23]. 3. Summary by Related Catalogs 3.1 Research Basic Situation - The research object is Huawu Co., Ltd., belonging to the general equipment industry. The reception time was on November 5, 2025, and the company's reception staff included the deputy general manager, board secretary Hu Rencou, and the securities affairs representative Su Weimin [16]. 3.2 Detailed Research Institutions - The research institutions include Century Securities, Baiyi Capital, Gengji Investment, CICC, Caitong Securities, Tianchuang Capital, Weixiang Capital, and Huaxin Securities, with different types such as securities companies, other institutions, investment companies, and venture - capital companies [17]. 3.3 Main Content Information 3.3.1 Company Introduction - Huawu Co., Ltd. was founded in 1992, focusing on the R & D, manufacturing, and sales of industrial brakes. Its products are widely used in various fields such as port machinery, wind power generation, rail transit, mining equipment, metallurgy, and marine engineering. In the first three quarters of 2025, the company's revenue reached 994 million yuan, a year - on - year increase of 16.55%, and the net profit attributable to shareholders of the listed company was 41.21 million yuan, a year - on - year increase of 70.84%. The main business of industrial brakes is the main profit - contributing sector, with the port and metallurgy sectors growing steadily and the wind power brake sector showing a recovery trend [21][22]. 3.3.2 Q&A Session - **Market Expansion and Product Innovation**: The company adheres to a customer - oriented approach, increases R & D investment, promotes the intelligence and digitalization of traditional products, and focuses on new business growth areas such as the mining truck brake market. It has established a special project team for mining truck brakes, aiming to achieve domestic substitution. In addition, it focuses on expanding overseas markets, strengthening the management of its Swiss subsidiary, and collaborating with domestic OEMs to develop the overseas after - market. The wind power market is expected to become a profit - growth support again in the next two years [23][24]. - **Customer Relationship Management**: The company maintains long - term customer relationships by co - developing core components with customers, ensuring product quality, providing comprehensive pre - sales, in - sales, and after - sales services, and adhering to the concept of "meeting customer needs and solving problems first" [25]. - **Environmental Protection and Social Responsibility**: The company is not a high - pollution enterprise, implements environmental protection measures as required, maintains good relationships with partners, suppliers, and employees, and engages in social welfare. In the future, it will continue to promote ESG construction [26].

Core Viewpoint - Jiangxi Huawu Brake Co., Ltd. (Huawu Co.) showcased significant growth in its performance for the first three quarters of 2025, driven by its core industrial brake business and new market opportunities in wind power and domestic substitution in heavy-duty truck brakes [1][3]. Financial Performance - For the first three quarters of 2025, Huawu Co. achieved operating revenue of 994 million yuan, a year-on-year increase of 16.55% - The net profit attributable to shareholders reached 41.21 million yuan, reflecting a substantial year-on-year growth of 70.84% - The industrial brake segment was the main profit contributor, with both revenue and net profit showing rapid growth [3]. Core Business Highlights - The company emphasized the strong customer loyalty in traditional sectors such as port and metallurgy, leveraging technological innovation and service upgrades to enhance product value - The wind power brake sector showed a notable recovery, with improving product gross margins contributing positively to profit growth - The focus on heavy-duty truck brake systems as a core area for domestic substitution is expected to open significant market opportunities, with plans to develop products that meet international standards [4]. Strategic Planning - Huawu Co. plans to continue focusing on its core industrial brake business while expanding into emerging markets such as overseas markets, heavy-duty trucks, and water conservancy projects - The company aims to maintain its industry-leading position through increased R&D investment and the smart upgrade of traditional products, alongside accelerating breakthroughs in new business technologies [5].

Group 1: Company Overview and Financial Performance - Jiangxi Huawu Brake Co., Ltd. has been engaged in the research, development, manufacturing, and sales of industrial brakes since its establishment in 1992, focusing on innovation and industry upgrades [1] - In the first three quarters of 2025, the company achieved a revenue of CNY 994 million, representing a year-on-year growth of 16.55%, and a net profit attributable to shareholders of CNY 41.21 million, up 70.84% [1] - The main revenue and profit contributions come from the industrial brake segment, particularly in the port and metallurgy sectors, which continue to show steady growth [1] Group 2: Market Expansion and Product Innovation - The company is focusing on customer-oriented strategies and increasing R&D efforts, particularly in smart and digital product innovations [2] - A dedicated project team has been established for the mining truck brake market, which has significant growth potential and currently faces limited domestic competition [2] - The company aims to enhance its overseas market presence, particularly through the optimization of its Swiss subsidiary and partnerships with domestic manufacturers for overseas aftermarket development [2] Group 3: Customer Relationship Management - The company maintains long-term relationships with customers by co-developing core components and ensuring technical support [3] - Emphasis is placed on product quality and comprehensive service throughout the sales process, with a focus on rapid response to customer needs [3] - The company prioritizes customer satisfaction and problem-solving over pricing considerations, ensuring alignment with customer demands [3] Group 4: Environmental and Social Responsibility - The company adheres to environmental protection requirements and implements necessary measures as per regulatory standards [4] - It maintains good relationships with partners, suppliers, and employees while engaging in social responsibility initiatives [4] - Future plans include advancing ESG (Environmental, Social, and Governance) initiatives, focusing on social responsibility and corporate governance [4]

Financial Performance - The company reported a net loss of 293 million yuan in 2024, a decrease of 585.32% year-on-year [2] - The main reasons for the loss include: - Significant decline in gross margin due to intense price competition in the wind brake business [2] - Provision for goodwill impairment of 224 million yuan, primarily related to Ande Technology [2] - Underperformance of subsidiaries such as Changsha Tianying and Huawu Rail Transit [2] - In Q1 2025, the company achieved a revenue of 278 million yuan, with a net profit attributable to shareholders of 9.88 million yuan [3] Strategic Focus - The management is committed to implementing strategic initiatives to focus on core industrial brake business and enhance reforms [2] - The company aims to strengthen traditional advantages while actively cultivating new growth points for high-quality development [2] Market Expansion - The company is prioritizing overseas market expansion, particularly in countries along the "Belt and Road" initiative [2] - Participation in major exhibitions and establishment of a spare parts warehouse and maintenance station in Singapore to enhance brand recognition [2] - Plans to improve global marketing network layout and increase overseas sales proportion in 2025 [2] Technological Innovation - The company emphasizes technological innovation to enhance market competitiveness, focusing on product integration, electrification, automation, and intelligence [3] - Continuous investment in R&D and collaboration with academic institutions to maintain technological leadership [3] Environmental Compliance - The company is not classified as a major air pollution discharge unit and will continue to comply with environmental regulations [3] - Regular audits to ensure compliance with environmental laws and effective management of pollution emissions [3] Product Development - The company is committed to developing new products with a focus on integration, intelligence, and digitalization [3] - New products are increasingly becoming the main supporting products for clients, enhancing core competitiveness [3] Raw Material Management - The company has implemented measures to mitigate the impact of raw material price fluctuations, including comprehensive budget management and cost control [3] - Monitoring of raw material price trends to optimize procurement timing and improve material utilization efficiency [3] Future Growth Points - Continued investment in R&D to integrate industrial brake systems with AI, enhancing product performance and reliability [4] - Focus on traditional sectors such as port machinery, metallurgy, and water conservancy, while also exploring new markets in robotics and other emerging fields [4]