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TWIN Stock Up 6% Despite Incurring Loss in Q3 Due to High Expenses
TWINTwin Disc(TWIN) ZACKS·2025-05-13 19:05

Core Insights - Twin Disc, Incorporated (TWIN) shares have increased by 6.2% since the fiscal third quarter results, outperforming the S&P 500 index which rose by 0.6% during the same period [1] - The company reported a net loss of 11 cents per share in the fiscal third quarter, compared to a net income of 27 cents per share in the previous year [2] - Net sales increased by 9.5% year-over-year to 81.2million,drivenbytheMarineandPropulsionSystemsandIndustrialsegments,alongwithcontributionsfromrecentacquisitions[2]−Despiterevenuegrowth,profitabilitydeclinedsharplywithanetlossof81.2 million, driven by the Marine and Propulsion Systems and Industrial segments, along with contributions from recent acquisitions [2] - Despite revenue growth, profitability declined sharply with a net loss of 1.5 million compared to a net income of 3.8millionayearago[3]−EBITDAfellby42.73.8 million a year ago [3] - EBITDA fell by 42.7% to 4 million from 7million,attributedtoloweroperatingincome,foreigncurrencylosses,andhigherpension−relatedamortization[3]FinancialPerformance−Grossprofitroseto7 million, attributed to lower operating income, foreign currency losses, and higher pension-related amortization [3] Financial Performance - Gross profit rose to 21.7 million from 20.9million,butgrossmargindecreasedbyapproximately150basispointsto26.720.9 million, but gross margin decreased by approximately 150 basis points to 26.7% due to an unfavorable product mix [4] - Operating income dropped to 2 million from 3.6million,impactedbya13.23.6 million, impacted by a 13.2% increase in marketing, engineering, and administrative expenses [4] - The six-month order backlog increased to 133.7 million from 124million,indicatingstabledemandacrossproductcategories[6]RegionalandSegmentPerformance−EuropecapturedalargershareofrevenueaidedbytheKatsaacquisition,whileNorthAmericasawstrongdemandintheMarineandPropulsionsegment[5]−Industrialsalessurgedby56.2124 million, indicating stable demand across product categories [6] Regional and Segment Performance - Europe captured a larger share of revenue aided by the Katsa acquisition, while North America saw strong demand in the Marine and Propulsion segment [5] - Industrial sales surged by 56.2% to 9.7 million, while Land-Based Transmissions declined by 6.9% to 17.8million[5]ManagementInsights−TheCEOemphasizedsequentialmarginimprovementandstrengthincoremarinemarkets,particularlyinNorthAmericaandEurope[7]−TheCFOhighlightedpositiveoperatingcashflowof17.8 million [5] Management Insights - The CEO emphasized sequential margin improvement and strength in core marine markets, particularly in North America and Europe [7] - The CFO highlighted positive operating cash flow of 7.5 million and disciplined cost control efforts, despite foreign exchange volatility impacting earnings [8] Strategic Developments - Twin Disc completed the acquisition of Kobelt, aligning with its strategic goals to strengthen its industrial and marine technology portfolio [11] - The company's capital allocation strategy focuses on bolt-on acquisitions, debt reduction, and dividends, returning $1.7 million to shareholders during the quarter [11]