Twin Disc's Q3 2025 Earnings Call: Key Contradictions on Tariffs, Market Activity, and Revenue Streams

Tariff exposure and pricing actions, oil & gas market activity, order patterns and backlog, tariff exposure and pricing actions, and Katsa revenue contribution are the key contradictions discussed in Twin Disc's latest 2025Q3 earnings call.



Revenue Growth and Strategic Acquisitions:
- Twin Disc reported $81.2 million in sales for the fiscal 2025 third quarter, up 10% over the prior period.
- Revenue growth was driven by contributions from recent acquisitions, such as Katsa and Kobelt, and strong performance in key product segments like Veth and marine-related projects.

Marine and Propulsion Segment Performance:
- Sales in the Marine and Propulsion segment increased by 10.7%, primarily due to the acquisitions of Katsa and Kobelt.
- The demand remained robust, supported by consistent strength in the Veth product line and notable strength in the commercial marine market in North America and European luxury yachts.

Gross Margin Improvement:
- Twin Disc achieved gross margins of 26.7%, up from 24.1% the previous quarter.
- Improvements were due to favorable comparisons from inventory write-downs in the previous quarter, enhanced operational efficiencies, and an improved product mix.

Order Backlog and Market Conditions:
- The company's backlog strengthened sequentially to approximately $134 million, reflecting sustained robust demand across product lines.
- Operational improvements, disciplined inventory management, and increased production efficiency contributed to positive cash flow during the quarter.