Twin Disc, Incorporated TWIN reported earnings per share (EPS) of 53 cents in the fourth quarter of fiscal 2024 compared with 62 cents in the prior-year period.

The company’s quarterly revenues rose slightly by 0.6% to $84.4 million, up from $83.9 million in the fourth quarter of 2023.

Overall, Twin Disc witnessed key strengths in specific segments during the fourth quarter of fiscal 2024 and strategic initiatives like the Katsa acquisition. However, the rise in operational expenses and challenges in the Industrial and Other segments may have acted as partial offsets.

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Key Business Metrics

Revenues by Segment

Revenue growth was driven primarily by the Marine and Propulsion Systems and Land-Based Transmissions segments. Marine and Propulsion Systems generated $47.2 million in the fourth quarter of 2024, a 3.4% increase from $45.7 million in the fourth quarter of 2023. Land-Based Transmissions saw a 9.3% increase, with revenues reaching $25 million, up from $22.9 million.

However, the Industrial segment witnessed a decline of 8.9%, with revenues falling from $7.9 million to $7.2 million. The "Other" segment, which includes sales reclassified from Marine to other categories, also decreased significantly by 33.3%, contributing $5 million, down from $7.5 million in the prior year.

Gross Profit and Margins

Twin Disc reported a gross profit of $25.1 million in the fourth quarter of fiscal 2024, up 1.4% from $24.7 million in the prior-year quarter. The gross margin improved 20 basis points to 29.7%, reflecting benefits from a favorable product mix, higher volumes and cost reduction initiatives.

Operating Expenses

The company's marketing, engineering and administrative (ME&A) expenses increased by 22.9% to $20.4 million in the fourth quarter of 2024 compared to $16.6 million in the fourth quarter of 2023. This rise was primarily due to inflationary pressures on wages and benefits, costs associated with the acquisition of Katsa Oy, investments in Twin Disc’s hybrid electric strategy, and higher bonus and stock compensation expenses.

Net Income and EBITDA

Net income attributable to Twin Disc for the fourth quarter of fiscal 2024 was $7.4 million compared to $8.6 million in the prior-year quarter. The year-over-year decline was driven by increased operating expenses, offset partially by favorable operating results and a bargain purchase gain from the Katsa acquisition.

EBITDA for the quarter was $11.8 million, down 9.1% from $13 million in the fourth quarter of 2023.

Balance Sheet (As of Jun 30, 2024)

Twin Disc reported a cash balance of $20.1 million, a significant increase compared to $13.3 million as of Jun 30, 2023. Total assets grew to $312.1 million, up from $289.2 million.

Long-term debt increased to $23.8 million from $16.6 million. Current maturities of long term amounted to $2 million.

Shareholders' equity also improved, rising to $154.7 million from $145.1 million,

Cash Flows

Operating cash flows for the fourth quarter of fiscal 2024 amounted to $11.5 million, down from $16 million in the same quarter of the previous year. Free cash flow also decreased, coming in at $10.4 million compared to $14.9 million in the fourth quarter of 2023.

Fiscal Year 2024 Update

Revenues increased by 6.6% to $295.1 million. For the fiscal year, Marine and Propulsion Systems showed the strongest growth at 16.2%, followed by Land-Based Transmissions at 7.5%. The Industrial and Other segments witnessed declines of 13.8% and 27.1%, respectively.

The gross profit increased by 12.1% to $83.3 million, with the gross margin expanding by 140 basis points to 28.2%.

Full-year net income attributable to Twin Disc was $11 million, representing a 5.9% increase from the previous year, while EBITDA increased by 2.9% to $26.5 million.

Management Guidance

CEO John H. Batten's comments indicate that Twin Disc anticipates market conditions in fiscal 2025 to be similar to 2024, with expectations of continued demand stability across key segments and ongoing strategic initiatives aimed at sustaining profitability and growth.

Other Developments

During the fourth quarter of 2024, Twin Disc completed the acquisition of Katsa Oy, a move that significantly strengthened its global industrial product offerings. The acquisition resulted in a $3.7 million bargain purchase gain. The purchase accounting remains preliminary, and the company expects this acquisition to provide long-term growth opportunities, particularly in the European and Asia-Pacific markets.

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