Twin Disc(US:TWIN)2025-02-05 15:54Financial Data and Key Metrics Changes - The company reported sales of $89.9 million for Q2 2025, reflecting a 23.2% year-over-year increase, driven by a $10 million incremental benefit from the Casa acquisition [4][17] - Net income attributable to Twin Disc was $900,000 or $0.07 per diluted share, compared to a net loss of $900,000 or $0.07 per diluted share in Q2 2024 [18] - Gross profit margin decreased to 24.1% from 28.3% in the prior year, with gross profit increasing 5% to $21.7 million [19][21] - EBITDA increased to $6.3 million in Q2, up 13.5% compared to Q2 2024 [21] Business Line Data and Key Metrics Changes - Marine propulsion segment sales grew 23.9% year-over-year, driven by strong demand for VET products [6][19] - Land-based transmission sales increased 19.8% year-over-year, supported by strong demand in airport rescue and firefighting transmission [8][19] - The industrial segment grew 44.8% year-over-year, driven by the addition of Casa and a rebound in Lufkin orders [11][19] Market Data and Key Metrics Changes - The company experienced a decline in oil and gas exports, which accounted for a little under 8% of revenue for the quarter, down about 24% year-over-year [34] - Increased sales were noted in Europe due to the Casa acquisition and a larger proportion of sales from North America, particularly in VET projects [20] Company Strategy and Development Direction - The company is focused on integrating Casa to enhance engineering capabilities and market reach, particularly in Europe and North America [5][14] - There is a commitment to capitalizing on cross-selling opportunities, optimizing shared cost efficiencies, and maintaining strong execution [5][15] - The company aims to balance disciplined external investments with internal initiatives to ensure sustained growth and shareholder value creation [24][27] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing strength in shipments of VET products and a healthy backlog across all end markets [6][10] - The company is optimistic about the stabilization of its industrial business and anticipates momentum in oil and gas as quoting activity increases [10][12] - Management emphasized a focus on higher-margin products and services while maintaining pricing discipline [22][27] Other Important Information - The company is committed to generating consistent cash flow and maintaining leverage within a comfortable range [23] - There is a focus on research and development to drive innovation and expand market presence [24] Q&A Session Summary Question: Can you quantify how much your oil and gas business is this quarter and how much was it down year over year? - The oil and gas business accounted for a little under 8% of revenue for the quarter, down about 24% compared to the prior year Q2 [34] Question: Is the quoting activity primarily from North America or Asia? - The quoting activity is from both North America and Asia, as well as some South American activity [36] Question: Can you refresh your CapEx outlook for the year and your free cash flow target? - The company targets to convert 60% of EBITDA to free cash flow, with Q2 free cash flow at about $6.4 million. CapEx is projected to be in the range of $12 to $14 million for the second half of the year [41][43] Question: Any new products or technologies being commercialized this year? - There are no specific new products or technologies ready to be discussed, but the company continues to focus on the hybrid electric market [45] Question: Any updates on the electric track fleet product? - The electric track fleet product remains stable, with no significant news to report for the quarter [49]