Twin Disc Reports 23.2% Net Sales Increase in Q2 Fiscal 2025

Twin Disc, Incorporated reported its financial results for the second quarter of fiscal 2025, revealing a net sales increase of 23.2% to $89.9 million, compared to $73.0 million in the same quarter of the previous year. The company attributed this growth to the acquisition of Katsa Oy, which contributed $10.0 million in revenue, alongside a 20.8% increase in global sales of marine and propulsion products. However, the company faced challenges, including a decline in demand for oilfield transmissions, which negatively impacted revenue. The gross profit margin for the quarter was 24.1%, down from 28.3% a year earlier, primarily due to a non-cash inventory write-down of $1.6 million related to a product rationalization exercise.

For the first half of fiscal 2025, Twin Disc's net sales rose 19.2% to $162.8 million, driven by the Katsa acquisition, which added $19.2 million in revenue. The company also noted a 52.5% increase in shipments of industrial products. However, the distribution segment experienced a 6.8% decline in sales, reflecting weaker demand in North America and Asia. The company reported a net loss of $1.7 million for the first half, compared to a loss of $0.2 million in the same period last year. The effective tax rate for the first half was significantly high at 430.6%, influenced by a full domestic valuation allowance.

Operationally, Twin Disc's total assets decreased to $307.4 million as of December 27, 2024, down from $312.1 million at the end of the previous fiscal year. The company reported a decrease in cash reserves to $15.9 million, alongside a reduction in trade receivables and inventories. The backlog of orders to be shipped over the next six months was approximately $124.0 million, down from $133.7 million at the end of June 2024. The company’s manufacturing segment saw a 31.0% increase in sales, while the distribution segment's sales decreased by 6.1%.

Looking ahead, Twin Disc plans to continue focusing on improving its operational efficiencies and managing its inventory levels. The company expects to invest between $12 million and $15 million in capital assets during fiscal 2025, aimed at modernizing manufacturing processes. Despite the challenges faced in the distribution segment, management remains optimistic about the growth potential in the marine and industrial markets, particularly with the integration of Katsa and the ongoing demand for its Veth propulsion systems. The company continues to monitor market conditions and adjust its strategies accordingly to enhance profitability and shareholder value.