Twin Disc Reports 15.5% Revenue Growth to $340.7 Million for Fiscal Year Ending June 30, 2025

Twin Disc, Incorporated reported a significant increase in financial performance for the fiscal year ending June 30, 2025, with net sales rising 15.5% to $340.7 million, up from $295.1 million in the previous year. This growth was largely driven by the acquisitions of Katsa Oy and Kobelt Manufacturing Co. Ltd., which contributed $39.1 million and $4.9 million in incremental revenue, respectively. Excluding these acquisitions, revenue remained relatively flat, with strong performance in the Veth product line offset by declines in oil and gas transmission shipments to China and weaker demand in European markets. The company also benefited from favorable currency translation, which added $1.5 million to sales due to the strengthening euro.

In terms of profitability, gross profit increased by $9.4 million, or 11.3%, to $92.7 million, although the gross profit margin decreased to 27.2% from 28.2% in the prior year. The decline in margin was attributed to a less favorable product mix and amortization related to purchase accounting. Marketing, engineering, and administrative expenses rose by 15.1% to $82.4 million, primarily due to the integration of Katsa and Kobelt, as well as inflationary pressures on salaries and benefits. The company reported an effective tax rate of 190.4%, significantly higher than the previous year's 26.8%, largely due to valuation allowances on deferred tax assets.

Operationally, Twin Disc's order backlog increased to $150.5 million as of June 30, 2025, a 13% rise from $133.7 million a year earlier, reflecting strong demand for the Veth product and the addition of Kobelt's backlog. The company employed 980 individuals at the end of the fiscal year, up from 910 the previous year, indicating a commitment to expanding its workforce in line with its growth strategy. The company’s distribution segment saw an 8.6% decline in sales, primarily due to reduced demand for energy-related products in Asia and weaker domestic demand in North America.

Looking ahead, Twin Disc anticipates capital expenditures of approximately $17 million to $19 million for fiscal 2026, aimed at investing in modern equipment to enhance growth and operational efficiency. The company remains optimistic about its ability to generate sufficient cash flow to meet its financial obligations, supported by its recent credit agreement that provides increased borrowing capacity. However, management acknowledges potential risks, including fluctuations in commodity prices, currency exchange rates, and the cyclical nature of its markets, which could impact future performance.