On August 15, 2024, Twin Disc Inc (TWIN, Financial) released its 8-K filing reporting the financial results for the fourth quarter and full fiscal year 2024, which ended on June 30, 2024. Twin Disc Inc is a United States-based firm engaged in the manufacture and sale of marine and heavy-duty off-highway power transmission equipment. The company operates its business through two reportable segments: Manufacturing and Distribution. Its product portfolio includes marine transmissions, surface drives, propellers, and boat management systems as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, and control systems.
Performance and Challenges
For the fiscal fourth quarter of 2024, Twin Disc Inc reported a slight increase in sales by 0.6% year-over-year to $84.4 million. The full fiscal year 2024 saw a 6.6% increase in sales, reaching $295.1 million. This growth was primarily driven by demand in the Land-Based Transmissions markets, with additional support from Marine and Propulsion Systems.
However, the company faced challenges with increased Marketing, Engineering, and Administrative (ME&A) expenses, which rose by 22.9% to $20.4 million in the fourth quarter. This increase was attributed to inflationary impacts on wages and benefits, costs related to the acquisition of Katsa Oy, investments in hybrid electric strategies, and higher bonus and stock compensation expenses.
Financial Achievements
Despite the rise in expenses, Twin Disc Inc achieved significant financial milestones. The gross profit for the fourth quarter increased by 1.4% to $25.1 million, with a gross margin improvement of 20 basis points to 29.7%. For the full fiscal year, gross profit rose by 12.1% to $83.3 million, and the gross margin increased by 140 basis points to 28.2%.
Key Financial Metrics
Net income attributable to Twin Disc for the fourth quarter was $7.4 million, or $0.53 per diluted share, compared to $8.6 million, or $0.62 per diluted share, in the same period last year. For the full fiscal year, net income was $11.0 million, or $0.79 per diluted share, reflecting a 5.9% decrease from the previous year.
EBITDA for the fourth quarter was $11.8 million, down 9.1% from the prior year, while full-year EBITDA increased by 2.9% to $26.5 million. The company's backlog of orders to be shipped over the next six months stood at $133.7 million, up from $130.5 million at the end of the third quarter.
| Product Group | Q4 FY24 Sales (Thousands of $) | Q4 FY23 Sales (Thousands of $) | Change (%) |
|---|---|---|---|
| Marine and Propulsion Systems | 47,228 | 45,662 | 3.4% |
| Land-Based Transmissions | 24,989 | 22,864 | 9.3% |
| Industrial | 7,219 | 7,928 | -8.9% |
| Other | 4,982 | 7,469 | -33.3% |
| Total | 84,418 | 83,923 | 0.6% |
CEO and CFO Perspectives
“We closed fiscal 2024 on a strong note, maintaining our trend of solid results to deliver revenue growth along with robust margin expansion and free cash generation in the fourth quarter. While we faced an evolving macroeconomic environment throughout the year, we also captured healthy demand from our Land Based Transmissions and Marine businesses and are seeing signs of stabilization in Industrial,” commented John H. Batten, President and Chief Executive Officer of Twin Disc.
“With continued strong demand across our product segments, this year has been marked by solid financial performance, underscored by our consistent margin expansion and operating cash generation. It is clear that our steadfast focus on operational execution and working capital improvement has paid off. We plan to keep this momentum up as we work towards achieving our updated financial targets and further position Twin Disc for long-term success,” stated Jeffrey S. Knutson, Vice President of Finance, Chief Financial Officer, Treasurer and Secretary.
Analysis and Conclusion
Twin Disc Inc's fiscal 2024 results highlight the company's ability to achieve revenue growth and margin expansion despite facing increased operational costs. The strategic acquisition of Katsa Oy and the reinstatement of the quarterly cash dividend are notable achievements that position the company for future growth. However, the rising ME&A expenses and the challenges in the Industrial segment indicate areas that require close monitoring.
Overall, Twin Disc Inc's performance in fiscal 2024 demonstrates resilience and strategic execution, making it a company to watch for value investors interested in the industrial products sector.
Explore the complete 8-K earnings release (here) from Twin Disc Inc for further details.
