Twin Disc(US:TWIN)2025-08-21 14:00Financial Data and Key Metrics Changes - For the full year, the company achieved a top line growth of 15.5%, with sales reaching $340.7 million, compared to $295.1 million in the previous year [4][18] - In Q4, sales grew 14.5% year over year to $96.7 million, while organic net sales declined approximately 8.4% due to reduced activity in oil and gas markets [6][18] - EBITDA for Q4 was $7 million, down from $11.8 million in the prior year, reflecting non-operating impacts [21][24] - Net income for Q4 was $1.4 million or $0.10 per diluted share, compared to $7.4 million or $0.53 per diluted share last year [20] Business Line Data and Key Metrics Changes - Marine and propulsion systems sales grew 12.2% in Q4 to $53 million, driven by strong activity in work boats and government contracts [9] - Land-based transmissions revenue rose 4.5% year over year to $26.1 million in Q4, despite a decline in oil and gas shipments to China [10] - The industrial segment saw a significant increase, with Q4 sales rising 35% sequentially to $13.1 million, and 82% year over year [12] Market Data and Key Metrics Changes - The North American market led sequential sales growth, while the European market captured a greater proportion of total sales year over year [21][22] - Orders related to defense products grew approximately 45% versus fiscal 2024, now making up nearly 15% of the total backlog [7][22] Company Strategy and Development Direction - The company is focused on global footprint optimization, operational excellence, and targeted acquisitions to drive sustainable growth [14][24] - There is a commitment to lead in hybrid and electrification solutions, with ongoing investments in controls and systems integration [14][15] - The company aims to achieve $500 million in revenue and 30% gross margins by 2030, with a disciplined capital deployment strategy [16][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, particularly in the defense market, fueled by increased defense spending [7][26] - The company is well-positioned to navigate macroeconomic uncertainty with flexibility and discipline, supported by a strong backlog of approximately $150 million [22][23] - Management noted that the supply chain disruptions are dissipating, which should support margin improvement moving forward [44] Other Important Information - The company generated positive free cash flow of $8.8 million for the year and maintained a conservative net leverage ratio of 0.8 times [22][24] - The company is focused on reducing inventory levels as a percentage of backlog, highlighting a commitment to working capital discipline [13] Q&A Session Summary Question: Can you walk us through where else across the mix we may be seeing particular strength? - Management indicated strength across the portfolio, particularly in defense and propulsion, with improvements noted in oil and gas markets as well [30][32] Question: Can you elaborate on the growth prospects in defense? - Management emphasized the need to ensure capacity to meet demand, particularly in light of NATO expansions and increased contracts for vehicles [34][36] Question: What are the commercial synergies from recent acquisitions? - Management highlighted the integration of sales agents and distributors to enhance market presence and drive growth in various regions [38][40] Question: Is margin improvement primarily volume-related? - Management confirmed that volume is a significant factor, along with cost reductions and operational efficiencies [69]