Twin Disc Inc (TWIN) Q1 2025 Earnings Call Highlights: Navigating Growth Amidst Challenges

GuruFocus News
3 min read

In This Article:

  • Revenue: $72.9 million, up 14.7% from the prior year.

  • Net Loss: $2.8 million or 20 per diluted share.

  • Gross Profit Margin: Increased to 26.5% from 26.2% in the prior year.

  • EBITDA: $1.7 million, down 23% compared to the first quarter of fiscal '24.

  • Marine and Propulsion Segment Sales Growth: 22.9% year over year.

  • Industrial Segment Sales Growth: 61.3% year over year.

  • Land-Based Transmission Sales Decline: 7% due to softness in the Asian Pacific region.

  • Backlog Growth: Six-month backlog grew both sequentially and year over year.

  • Net Debt: Increased by $11.9 million to $13.1 million.

  • Cash Balance: $16.7 million, 18.2% lower than the prior year.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Twin Disc Inc (NASDAQ:TWIN) reported double-digit revenue growth in the first quarter, driven by strong demand in the marine and propulsion business.

  • The acquisition of CASA has broadened Twin Disc Inc (NASDAQ:TWIN)'s global reach and opened new cross-selling opportunities with European OEMs.

  • Sales in the marine and propulsion segment grew by 22.9% year over year, supported by sustained activity in commercial markets and the luxury yacht market.

  • The company is gaining traction with its elite clusters in new geographic markets, with strong demand from its largest North American distributor.

  • Twin Disc Inc (NASDAQ:TWIN) is capturing demand for hybrid and electric marine systems, winning significant orders that enhance its content offering.

Negative Points

  • Twin Disc Inc (NASDAQ:TWIN) experienced a 7% decline in sales in its land-based transmission business due to softness in the Asian Pacific region.

  • The company reported a net loss of $2.8 million for the first quarter, impacted by foreign currency loss and additional interest expenses.

  • EBITDA decreased by 23% compared to the first quarter of fiscal '24, reflecting challenges in profitability.

  • The oil and gas business contributed only 10% of revenue for the quarter, down from 15% in the previous year's Q1.

  • Twin Disc Inc (NASDAQ:TWIN) faced near-term shipment delays and supply chain challenges, impacting its operational efficiency.

Q & A Highlights

Q: Can you provide an outlook on free cash flow for the year given the negative free cash generation this quarter? A: Jeffrey Knutson, Chief Financial Officer - We expect to return to positive free cash flow as we focus on inventory reduction. The negative impact this quarter was due to significant year-end accrual payments and an unexpected inventory increase. We anticipate positive cash flow for the rest of the year, recovering some of the shortfall from this quarter.

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