Twin Disc(TWIN)2024-11-09 03:10Financial Data and Key Metrics Changes - The company reported sales of 9.3 million or 14.7% from the prior year, driven by the Katsa acquisition and healthy demand in global end markets [23] - Net loss attributable to the company was 0.20 per diluted share, compared to a net loss of 0.09 per diluted share in Q1 2024 [24] - Gross profit margin increased to 26.5% from 26.2% in the prior year, with gross profit rising 16.1% to 1.7 million in Q1 2025, down 23% compared to the same quarter in fiscal 2024 [28] Business Line Data and Key Metrics Changes - Marine and Propulsion segment sales grew 22.9% year-over-year, driven by strong demand and the Katsa acquisition [11] - Industrial segment sales increased 61.3% year-over-year, primarily due to the addition of Katsa and stabilization of end market demand [18] - Land-based transmission business saw a 7% decline in sales, mainly due to softness in the Asia Pacific region [15] Market Data and Key Metrics Changes - Sales in Europe increased due to the Katsa acquisition, with continued growth in sales from Middle Eastern markets [27] - The luxury yacht market backlog grew sequentially by 19% in the quarter, with incoming orders for Veth products reaching an all-time high [12] Company Strategy and Development Direction - The company aims to become a leading provider of hybrid electrification solutions, focusing on controls and systems integration to drive sustainable growth [21][22] - The strategic focus includes expanding offerings in hybrid and electrification space, with active projects on fully electric and hybrid applications [21] Management's Comments on Operating Environment and Future Outlook - Management noted that end market demand in the industrial business is stabilizing, and they expect to continue gaining share despite challenges in construction and agricultural markets [19] - The company is optimistic about capturing growth opportunities in the hybrid and electrification sectors, supported by heightened government defense spending [14] Other Important Information - The company’s backlog reached historical levels, with a six-month backlog growing both sequentially and year-over-year [20] - Net debt increased to $13.1 million, primarily due to the Katsa acquisition [27] Q&A Session Summary Question: What is the outlook for free cash flow given the sizable negative generation this quarter? - Management expects to return to generally positive free cash flow levels for the rest of the year, targeting around 60% of EBITDA [35] Question: Any update on the EFAC offering introduced a few quarters ago? - The prototype is still available, but there have been no purchases yet; customer focus is currently on traditional rigs [36] Question: How much did the oil and gas business contribute to this quarter? - Oil and gas represented about 10% of revenue for the quarter, down from 15% in the previous year [37]