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Twin Disc Announces Third Quarter Results

MILWAUKEE, April 30, 2024 (GLOBE NEWSWIRE) -- Twin Disc, Inc. (NASDAQ: TWIN), today reported results for the fiscal 2024 third quarter ended March 29, 2024.

Fiscal Third Quarter 2024 Highlights

  • Sales increased 50 basis points year-over-year to $74.2 million
  • Gross margin of 28.2%, expanded 210 basis points on a year-over-year basis
  • Net income attributable to Twin Disc was $3.8 million and EBITDA* of $7.0 million
  • Robust operating cash flow year to date of $22.3 million compared to $6.9 million in the year-ago period
  • Free cash flow* year to date of $14.7 million compared to breakeven in the year-ago period
  • Solid six-month backlog of $130.5 million bolstered by healthy ongoing demand

CEO Perspective

“We continued our trend of solid performance in the third quarter as we captured healthy end market demand in an evolving environment. Through our focus on operational discipline and working capital management, we delivered margin expansion, strong EBITDA generation, and impressive free cash generation despite lingering macroeconomic headwinds. Critically, these results highlight the impact of improvements we have made throughout our business in recent years, which we expect to serve as a tailwind well into the future,” commented John H. Batten, President and Chief Executive Officer of Twin Disc. “We are also pleased to have announced an agreement to acquire Katsa Oy earlier in the quarter, which will expand our global footprint and broaden our offerings within the industrial, marine and hybrid/electrification space. With our strong balance sheet and flexible financial profile, we will continue to explore similar opportunities to drive sustainable growth for Twin Disc while enabling long-term value creation for our stakeholders.”

Third Quarter Results

Sales for the fiscal 2024 third quarter increased 50 basis points year-over-year to $74.2 million, driven by continued demand for the Company’s Marine and Propulsion Systems market and favorable product mix. The Company saw total sales increase in Europe, decrease in North America, and remain flat in Asia-Pacific.

Sales by product group:

Product Group
(Thousands of $):
 Q3 FY24 Sales   Q3 FY23 Sales   Change (%)  
Marine and Propulsion Systems$45,244  $43,854   3.20% 
Land-Based Transmissions 19,089   19,574   -2.50% 
Industrial 6,232   7,303   -14.70% 
Other 3,596   3,041   18.30% 
Total$74,161  $73,772   0.50% 

Gross profit increased 8.7% to $20.9 million compared to $19.3 million for the third fiscal quarter of 2023. Third quarter gross margin increased approximately 210 basis points sequentially to 28.2%. This improvement reflects the benefit of prior pricing actions, continued easing of supply chain headwinds, a favorable product mix and successfully executing our operational playbook.

Marketing, engineering and administrative (ME&A) expense increased by $2.6 million, or 17.6%, to $17.2 million, compared to $14.6 million in the prior year quarter. The increased ME&A expense was primarily driven by the investment in resources to drive our hybrid electric strategy, the impact of inflation and currency translation.

Net income attributable to Twin Disc for the quarter was $3.8 million, or $0.27 per diluted share, compared to net income attributable to Twin Disc of $3.3 million, or $0.24 per share, for the third fiscal quarter of 2023. The year-over-year increase was driven by favorable operating results.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) remained strong at $7.0 million in the third quarter, compared to $7.0 million in the third fiscal quarter of 2023.

On a consolidated basis, the backlog of orders to be shipped over the next six months is approximately $130.5 million, compared to $125.2 million at the end of the second fiscal quarter of 2024. As a percentage of six-month backlog, inventory decreased from 105.3% at the end of the second quarter to 99.5% at the end of the third fiscal quarter of 2024. Compared to the third fiscal quarter of 2023, cash increased 70.0% to $23.8 million, total debt decreased 45.5% to $17.0 million and net debt* decreased $24.1 million to $(6.8) million. The improvement was primarily attributable to net payoff of long-term debt as a result of our strong cash from operations.

CFO Perspective
Jeffrey S. Knutson, Vice President of Finance, Chief Financial Officer, Treasurer, and Secretary stated, “Our solid results, underscored by profitable growth and healthy free cash flow, have continued to strengthen our balance sheet. We are seeing ongoing improvements in backlog, and believe there is even more runway for enhanced cash generation as we target additional inventory reductions in the fourth quarter. As we near the end of the fiscal year, we remain well-positioned to keep advancing our capital allocation priorities while making progress towards our strategic and financial goals.”

Discussion of Results
Twin Disc will host a conference call to discuss these results and to answer questions at 11:00 a.m. Eastern time on April 30, 2024. The live audio webcast will be available on Twin Disc’s website at To participate in the conference call, please dial (800) 715-9871 approximately ten minutes before the call is scheduled to begin. A replay of the webcast will be available at shortly after the call until April 29, 2025.

About Twin Disc
Twin Disc, Inc. designs, manufactures and sells marine and heavy-duty off-highway power transmission equipment. Products offered include marine transmissions, azimuth drives, surface drives, propellers and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches and control systems. The Company sells its products to customers primarily in the pleasure craft, commercial and military marine markets, as well as in the energy and natural resources, government and industrial markets. The Company’s worldwide sales to both domestic and foreign customers are transacted through a direct sales force and a distributor network. For more information, please visit

Forward-Looking Statements
This press release may contain statements that are forward looking as defined by the Securities and Exchange Commission in its rules, regulations and releases. The words “anticipates,” “believes,” “intends,” “estimates,” and “expects,” or similar anticipatory expressions, usually identify forward-looking statements. The Company intends that such forward-looking statements qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. All forward-looking statements are based on current expectations, and are subject to certain risks and uncertainties that could cause actual results or outcomes to differ materially from current expectations. Such risks and uncertainties include the impact of general economic conditions and the cyclical nature of many of the Company’s product markets; foreign currency risks and other risks associated with the Company’s international sales and operations; the ability of the Company to successfully implement price increases to offset increasing commodity costs; the ability of the Company to generate sufficient cash to pay its indebtedness as it becomes due; and the possibility of unforeseen tax consequences and the impact of tax reform in the U.S. or other jurisdictions. These and other risks are described under the caption “Risk Factors” in Item 1A of the Company’s most recent Form 10-K filed with the Securities and Exchange Commission, as supplemented in subsequent periodic reports filed with the Securities and Exchange Commission. Accordingly, the making of such statements should not be regarded as a representation by the Company or any other person that the results expressed therein will be achieved. The Company assumes no obligation, and disclaims any obligation, to publicly update or revise any forward-looking statements to reflect subsequent events, new information, or otherwise.

*Non-GAAP Financial Information
Financial information excluding the impact of asset impairments, restructuring charges, foreign currency exchange rate changes and the impact of acquisitions, if any, in this press release are not measures that are defined in U.S. Generally Accepted Accounting Principles (“GAAP”). These items are measures that management believes are important to adjust for in order to have a meaningful comparison to prior and future periods and to provide a basis for future projections and for estimating our earnings growth prospects. Non-GAAP measures are used by management as a performance measure to judge profitability of our business absent the impact of foreign currency exchange rate changes and acquisitions. Management analyzes the company’s business performance and trends excluding these amounts. These measures, as well as EBITDA, provide a more consistent view of performance than the closest GAAP equivalent for management and investors. Management compensates for this by using these measures in combination with the GAAP measures. The presentation of the non-GAAP measures in this press release are made alongside the most directly comparable GAAP measures.

Earnings before interest, taxes, depreciation and amortization (EBITDA) is calculated as net earnings or loss excluding interest expense, the provision or benefit for income taxes, depreciation and amortization expenses.

Net debt is calculated as total debt less cash.

Free cash flow is calculated as net cash provided (used) by operating activities less acquisition of fixed assets.


Source: Twin Disc, Incorporated

(In thousands, except per-share data; unaudited)
  For the Quarter Ended   For the Three Quarters Ended  
      As Adjusted       As Adjusted  
  March 29,
   March 31,
   March 29,
   March 31,
Net sales$74,161  $73,772  $210,709  $193,036  
Cost of goods sold 53,221   54,507   149,377   143,451  
Cost of goods sold - Sale of boat management
system product line and related inventory
 -   -   3,099   -  
Gross profit 20,940   19,265   58,233   49,585  
Marketing, engineering, and administrative
 17,199   14,626   51,268   45,688  
Restructuring expenses 139   33   207   208  
Other operating income -   1   -   (4,149) 
Income from operations 3,602   4,605   6,758   7,838  
Other expense (income):                
Interest expense 263   522   1,049   1,682  
Other expense (income), net (959)  178   (649)  13  
  (696)  700   400   1,695  
Income before income taxes and
noncontrolling interest
 4,298   3,905   6,358   6,143  
Income tax expense 398   548   2,606   2,350  
Net income 3,900   3,357   3,752   3,793  
Less: Net earnings attributable to
noncontrolling interest, net of tax
 (78)  (76)  (173)  (188) 
Net income attributable to Twin Disc$3,822  $3,281  $3,579  $3,605  
Dividends per share$0.04  $-  $0.08  $-  
Income per share data:                
Basic income per share attributable to Twin
Disc common shareholders
$0.28  $0.24  $0.26  $0.27  
Diluted income per share attributable to Twin
Disc common shareholders
$0.27  $0.24  $0.26  $0.26  
Weighted average shares outstanding data:                
Basic shares outstanding 13,742   13,504   13,663   13,455  
Diluted shares outstanding 13,904   13,662   13,852   13,608  
Comprehensive income                
Net income$3,900  $3,357  $3,752  $3,793  
Benefit plan adjustments, net of income taxes
of $10, $(1), $2 and $(5), respectively
 (191)  (29)  (470)  (1,240) 
Foreign currency translation adjustment (3,084)  1,014   (930)  3,116  
Unrealized gain (loss) on cash flow hedge, net
of income taxes of $0, $0, $0 and $0,
 196   (224)  (74)  (26) 
Comprehensive income 821   4,118   2,278   5,643  
Less: Comprehensive income attributable to
noncontrolling interest
 34   67   224   277  
Comprehensive income attributable to Twin
$787  $4,051  $2,054  $5,366  

(In thousands; unaudited)
 For the Quarter Ended For the Three Quarters Ended 
 March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023 
Net income attributable to Twin Disc$3,822 $3,281 $3,579 $3,605 
Interest expense 263  522  1,049  1,682 
Income tax expense 398  548  2,606  2,350 
Depreciation and amortization 2,474  2,670  7,497  6,936 
Earnings before interest, taxes,
depreciation, and amortization (EBITDA)
$6,957 $7,021 $14,731 $14,573 

(In thousands; unaudited)
  March 29, 2024   March 31, 2023  
Current maturities of long-term debt$2,000  $2,000  
Long-term debt 15,042   29,276  
Total debt 17,042   31,276  
Less cash 23,843   14,024  
Net debt$(6,801) $17,252  

(In thousands; unaudited)
  For the Quarter Ended  
  March 29, 2024   March 31, 2023  
Net cash provided by operating activities$22,273  $6,859  
Acquisition of fixed assets (7,598)  (6,783) 
Free cash flow$14,675  $     (76) 

(In thousands; except share amounts, unaudited)
  March 29, 2024   June 30, 2023  
Current assets:        
Cash$23,843  $13,263  
Trade accounts receivable, net 40,950   54,760  
Inventories 129,845   131,930  
Assets held for sale 2,968   2,968  
Prepaid expenses 10,471   8,459  
Other 10,451   8,326  
      Total current assets 218,528   219,706  
Property, plant and equipment, net 40,606   38,650  
Right-of-use assets operating leases 14,498   13,133  
Intangible assets, net 10,157   12,637  
Deferred income taxes 2,210   2,244  
Other assets 2,755   2,811  
Total assets$288,754  $289,181  
Current liabilities:        
Current maturities of long-term debt$2,000  $2,010  
Accounts payable 33,230   36,499  
Accrued liabilities 63,406   61,586  
      Total current liabilities 98,636   100,095  
Long-term debt 15,042   16,617  
Lease obligations 12,638   10,811  
Accrued retirement benefits 6,707   7,608  
Deferred income taxes 2,965   3,280  
Other long-term liabilities 5,822   5,253  
Total liabilities 141,810   143,664  
Twin Disc shareholders' equity:        
Preferred shares authorized: 200,000; issued: none; no par value -   -  
Common shares authorized: 30,000,000; issued: 14,632,802; no
par value
 40,428   42,855  
Retained earnings 122,759   120,299  
Accumulated other comprehensive loss (7,094)  (5,570) 
  156,093   157,584  
Less treasury stock, at cost (638,712 and 814,734 shares,
 9,797   12,491  
Total Twin Disc shareholders' equity 146,296   145,093  
Noncontrolling interest 648   424  
Total equity 146,944   145,517  
Total liabilities and equity$288,754  $289,181  

(In thousands; unaudited)
  For the Quarters Ended  
      As Adjusted  
  March 29, 2024   March 31, 2023  
Net income$3,752  $3,793  
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 7,497   6,936  
Gain on sale of assets (87)  (4,237) 
Loss on sale of boat management product line and related
 3,099   -  
Provision for deferred income taxes 239   (1,462) 
Stock compensation expense and other non-cash
changes, net
 2,242   2,355  
Net change in operating assets and liabilities 5,531   (526) 
Net cash provided by operating activities 22,273   6,859  
Acquisition of property, plant, and equipment (7,598)  (6,783) 
Proceeds from sale of fixed assets -   7,177  
Other, net (167)  199  
Net cash (used) provided by investing activities (7,765)  593  
Borrowings under revolving loan arrangements 66,661   65,862  
Repayments of revolving loan arrangements (66,661)  (69,823) 
Repayments of other long-term debt (1,510)  (1,534) 
Dividends paid to shareholders (1,119)  -  
Payments of finance lease obligations (663)  (231) 
Payments of withholding taxes on stock compensation (1,791)  (463) 
Net cash used by financing activities (5,083)  (6,189) 
Effect of exchange rate changes on cash 1,155   240  
Net change in cash 10,580   1,503  
Beginning of period 13,263   12,521  
End of period$23,843  $14,024  

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