Twin Disc (TWIN) 6 Nov 24 2025 Q1 Earnings call transcript

Twin Disc, Incorporated recently held its fiscal first quarter 2025 earnings call, highlighting a strong start to the year with double-digit revenue growth. The call was led by CFO Jeffrey Knutson and CEO John Batten, who discussed the company's performance, strategic initiatives, and financial results.

Financial Performance

Twin Disc reported a fiscal first quarter revenue of $72.9 million, a 14.7% increase from the previous year, with a significant portion of the growth attributed to the acquisition of Katsa Oy. The company's net loss for the quarter was $2.8 million, impacted by additional expenses related to the acquisition, foreign currency loss, and pension amortization. However, gross profit margin increased to 26.5%, reflecting the benefits of the Katsa acquisition and strong demand in the global end markets.

Strategic Focus and Initiatives

The call emphasized Twin Disc's strategic focus on becoming a leading provider of Hybrid and Electrification solutions. The acquisition of Katsa Oy is a significant step towards this goal, broadening the company's global reach and opening up new cross-selling opportunities. The addition of Katsa has also boosted demand for Veth products, particularly in the luxury yacht market and in applications for hybrid and electric marine systems.

Twin Disc is also capitalizing on the trend of increased government defense spending, which has led to inquiries for patrol boat projects. The company is well-positioned to capture growth in the hybrid and electrification space, with active projects focusing on fully electric and hybrid applications. Additionally, Twin Disc is streamlining and modernizing operations to enhance shipments and reduce inventory costs, positioning the company for long-term growth.

Challenges and Opportunities

Despite a 7% decline in sales in the Land-Based transmission business due to softness in the Asian Pacific region, Twin Disc is encouraged by record levels of backlog in the airport rescue and firefighting (ARFF) transmissions business. This segment represents roughly half of the company's revenue within land-based transmissions, underscoring its importance. Twin Disc is meeting demand for replacement parts for military vehicles and expects to continue growth in this segment due to ongoing geopolitical turmoil.

Future Outlook

Looking ahead to the second quarter, Twin Disc expects to continue gaining share in the construction and agricultural markets by leveraging its extensive engineering and applications experience. The company is also focusing on enhancing profitability through cost reduction activities and the integration of Katsa. Despite near-term challenges related to inflationary pressures and supply chain disruptions, Twin Disc remains confident in its ability to navigate through economic uncertainties and execute its growth strategy.

Conclusion

Twin Disc's fiscal first quarter 2025 earnings call painted a picture of a company well-positioned for long-term growth, particularly in the hybrid and electrification space. The acquisition of Katsa Oy has been a strategic move that has boosted revenue and expanded the company's global reach. With a robust financial profile and a focus on operational excellence, Twin Disc is poised to navigate through any economic challenges and deliver value to its shareholders.