Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: How much of this quarter's revenue is derived from oil and gas customers, and can you break that down between new equipment and consumables?
A: (Jeffrey Knutson - CFO, VP - Finance, Treasurer, Secretary) Approximately 10% to 15% of the revenue for the quarter came from oil and gas, split fairly evenly between consumables and units.
Q: What is the company seeing in terms of North American frac customers?
A: (John Batten - President, CEO, Director) There's been an uptick in new spare part orders and some limited unit sales. The outlook suggests increased activity through the rest of the calendar year, influenced by geopolitical events.
Q: How should we think about inventory as a percentage of backlog for fiscal year 4Q '24?
A: (Jeffrey Knutson - CFO, VP - Finance, Treasurer, Secretary) Inventory as a percentage of backlog is expected to continue decreasing, following the trajectory seen in the last two quarters.
Q: Any update on the timing of closing of the Katsa acquisition? Does the acquisition need approval from Finland's Economic Minister to close?
A: (John Batten - President, CEO, Director) The acquisition has received necessary approvals and is expected to close within 30 to 40 days.
Q: Thoughts on the industrial segment and its recent performance?
A: (John Batten - President, CEO, Director) The past quarter has shown the best order quarter in a few quarters, with a broad-based pickup, particularly in the lower horsepower range across Europe, the US, and Australia.
Q: Can you provide perspective on the margin profile of Katsa and the new markets or customers it might bring?
A: (John Batten - President, CEO, Director) Katsa's margin profile aligns with Twin Disc's, fluctuating from high 20s to low 30s. Katsa will be a key supplier for Twin Disc across various global locations, and its integration is expected to open up new markets, particularly in Europe.
Q: Could you frame the opportunity for Twin Disc in hybrid and electrification markets?
A: (John Batten - President, CEO, Director) The shift to hybrid and electrification represents a significant opportunity, with potential for a 4-8 times increase in content per application. This transition is particularly relevant in off-highway applications like marine and construction.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
