Twin Disc(US:TWIN)2025-02-05 15:00Financial Data and Key Metrics Changes - The company reported second quarter sales of $89.3 million, reflecting a 23.2% year-over-year increase [4] - Net income attributable to the company was $900,000 or $0.07 per diluted share, compared to a net loss of $900,000 or $0.07 per diluted share in the same quarter of the previous year [13] - Gross profit margin decreased to 24.1% from 28.3% in the prior year, with gross profit increasing by 5% to $21.7 million [14][16] Business Line Data and Key Metrics Changes - Marine and Propulsion segment sales grew 23.9% year-over-year, driven by strong demand for Veth products [5][6] - Land Based Transmission sales increased by 19.8% year-over-year, supported by strong demand in the airport rescue and firefighting transmission business [8] - The Industrial segment saw a significant growth of 44.8% year-over-year, aided by the addition of Casa and a rebound in Lufkin orders [9][10] Market Data and Key Metrics Changes - The company experienced a decline in Oil and Gas exports, down about 24% year-over-year, accounting for a little under 8% of revenue for the quarter [24] - Sales in Europe increased due to the acquisition of Casa, while North American markets benefited from strength in Veth projects [15] Company Strategy and Development Direction - The company is focused on capitalizing on cross-selling opportunities, optimizing shared cost efficiencies, and maintaining strong execution [5] - The integration of Casa is expected to enhance engineering capabilities and market reach, particularly in Europe and North America [11] - The company aims to balance disciplined external investments with internal initiatives to ensure sustained growth and shareholder value creation [18] Management's Comments on Operating Environment and Future Outlook - Management noted a healthy backlog across all end markets and expressed optimism about the continued stabilization of the industrial business [5][10] - The company is committed to disciplined inventory management and optimizing costs to enhance profitability [17] - Management highlighted a renewed level of activity in the Oil and Gas market, although it is still early to draw definitive conclusions [27] Other Important Information - The company reported a cash balance of $15.9 million, which is 20.4% lower than the prior year [16] - Operating cash generation was strong at $4.3 million for the quarter, with EBITDA increasing to $6.3 million, up 13.5% year-over-year [16] Q&A Session Summary Question: Can you quantify how much your Oil and Gas business is this quarter? - The Oil and Gas business accounted for a little under 8% of revenue for the quarter and was down about 24% year-over-year [24] Question: Is the quoting activity primarily from North America or Asia? - Quoting activity is from both North America and Asia, as well as some South American activity [25] Question: Are you seeing a renewed level of activity in the Oil and Gas market? - There has been an increased level of activity and some new potential projects, indicating a renewed level of activity in that market [27] Question: What is your CapEx outlook for the year? - The company is targeting a CapEx range of $12 million to $14 million for the second half of the year [29] Question: Are you still targeting to convert 60% of your EBITDA to free cash flow? - The company aims to convert 60% of EBITDA to free cash flow, with Q2 showing a bounce back in free cash flow above $6.4 million [28] Question: Is there anything new being commercialized this year that will contribute to growth? - The focus remains on the hybrid electric market, with ongoing development and increasing traction, but no specific new products were ready to be discussed [31] Question: Any updates on the electric frac fleet pilot? - The electric frac fleet pilot is stable and ongoing, with no significant news to report for the quarter [34]