TWIN - Earnings call transcript Q3 2024

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Operator

Thank you for standing by. My name is Alex, and I will be your conference operator today. At this time, I would like to welcome everyone to the fiscal 2024 Third Quarter Results Conference Call. [Operator Instructions]

I would now like to turn the call over to Jeff Knutson, Chief Financial Officer. ahead. go Please

Jeffrey Knutson

thank our and joining today us Good XXXX you third discuss fiscal quarter to morning, for results.

certain to On the Disc everyone conference like Twin for statements or expressing future John is during hopes, that call, remind beliefs, especially call with CEO. are me I forward-looking today statements this made predictions expectations Batten, the would statements.

projected obtained cause concerning to that materially forward-looking could Form results company from annual revise those which results these forward-looking factors differ new the assumptions differ Information to report based be of or on statements. information. could or contacting actual are undertakes company It publicly in company's remember of update call the the from statements and forward-looking is statements actual today, events in important no are to are on that such may as SEC. Any the subsequent or obligation the you made copies materially those by XX-K, contained company's statements to that during reflect to this

today's discuss financial certain also call, management measures. non-GAAP During will

non-GAAP the definition was this the earlier financial earnings morning now, the issued and have of GAAP a of which to please non-GAAP release a For today. By should market opened. you see news reconciliation release financial received results, measures before issued

send have received will you. at release the a we not you and to If copy, office please our XXX-XXX-XXXX call

Now I'll turn the to call over John.

John Batten

third fiscal conference our Good and XXXX quarter to morning, welcome everyone, call.

results the trends throughout seen begin today's some the continuing Let's third the quarter, delivered with We in call highlights. year. solid

tailwinds flow throughout in well operational support by long-term quarter disciplined capital to as overall to market improvements results underscore of ongoing performance. of as the provided working expansion well recent achieved generation. we've continue we consistent end another healthy capture made as as business we These As robust management years our free cash impact margin demand,

power have reach network pleased markets, as with Katsa's growth tap strategic generating opportunities on industrial into financial through our announced and sheet expanding in its focus we global flexible with for cross-selling service technology strong presence to the are based with global will in as achieved explore base a marine balance gearboxes OEMs, agreement will leading acquisition leading Twin similar and similar Disc Katsa components to This leveraged line Twin we we customer long-standing existing also acquire our of continue and and to Oy, the to transmission high-quality while drive relationships In sales, Katsa's Finland. that. With broaden distribution recent dynamics strategic we've sustained our profile, we our to opportunities Disc. European manufacturer

on in have to markets and by X% foundation remained year-over-year. propulsion for global strong sustained results marine Sales demand. The active, product. commercial a increased providing systems Moving

geopolitical government in leading activities to increase an to uptick to to tied continue fleet see and recent other petrol in an We turmoil, linked spending defense both readiness. projects

support to This increase solid growth at created both within the growth uptick which supporting backlog, strong. driving to inventory recent in continues mega Marina the the a X-month as propulsion Pet saw We well, remains in XX% perform build market and sequential underscores competitive partnership strength an markets. new roll and of has established demand. additional opportunities Twin rising for enduring vet unlocking by edge Disc additional the overall

tugs portion transporting utilized materials A for the in for demand for Asia inland the in We particularly region. the of resurgence also this is business to tugboats driven by workboat transmissions, projects increased region coal cold continue from Indonesia raw to and of capture marine solid China. to Pacific being for demand due

to still Asian for driven the to X% business. opportunities by the in exports further On to into continue tapping will position oil market. by year-over-year, a American demand sustained growth. part is oil Sales focus and and and remains to and sustainable on are business exploration gas activity gas gas North market. focus oil We transmission That the strong, encouraged regional if globally, land-based these the decreased in energy said, we even

quite positioned of demand of Katsa. will to to Industrial ARP This from be which increasing the strong, be range in last largely addition our better lower segment off, with even declining remains capture we Similar offer. sales demand can quarter, our remained dip reduced XX% the horsepower year-over-year. Additionally, our to attributed

relatively while more on experienced and allow our reach which synergies demand new crucial effectively. leverage for are remain higher focused us has products more continued have weakness, products advancing resilient. OEM our growth Additionally, to commoditized partnerships, sophisticated content and markets strategy We for long-term been

to Next, inventory I'll speak and backlog.

for One of X steadily our strength past increasing into months. over which company's the been the our in indicators backlog, key has

are downwards as well, We reflecting as backlog Critically, percentage sequentially a our to and basis. both operational ongoing that trend has continues grow year-over-year a backlog to pleased on report commitment continued of inventory to efficiency. to our

reduction to Jeff us XXXX inventory continue quarter the we before briefly anticipate cash of through takes during continued Looking supporting like we our work the ahead, financial our details. generation. I'd fourth as progress strategy long-term in backlog through to further address

at Our of to the commitment innovation long-term strategy. and forefront our adaptation is

steadfast solutions are to and expand our hybrid mission in presence the electrification for marine our land-based applications. and We in

efforts customers acquire demands develop our to that technologies of committed As to also demonstrated in are by cutting-edge only markets. global we but our our not Katsa, acquire the meet agreement to

partnerships our to strengthen global stakeholders. of focus expanding strategic protecting also will and our initiatives success further are ongoing Vet are unwavering boost streamlining dedication Moreover, hybrid solidifying in our operations, not responsiveness, on operational only an our portfolio. In our regions industrial product cater our edge, emerging as leader. our towards needs. By broadening our a opportunities success poised marine competitive to position sectors on geared underscore recent also line value we customers' capitalize by into continue and a we enhancing our to to and ability With keen untapped innovation, to all our with and closing, centric our operational focus augment footprint. and the but drive industry Our to deliver technology to those reach and rationalization and dedication and excellence efficiency our the exemplified markets

With the it turn Jeff? over to to that, I discuss financials. Jeff now will

Jeffrey Knutson

Thanks, period delivered prior quarter, million for the the quarter John. $X.X of overall Good fiscal million during increased increased million. Net basis XX was $XX.X gross as share per X.X% per to year profit to the or the the profit $X.X share sales period, diluted points to margin $X.XX $X.XX diluted for of to Gross $XXX,XXX and quarter from XX.X% third $XX.X up to demand XX.X% X compared compared year morning, in prior XXXX. everyone. We attributable or remains income solid. third million or

Systems X% This improvement of industrial headwinds growth, and XX%, and executing continued increases, of land-based reported transmission chain reflects Marine year previous while reported and X% the successfully playbook. realization a over declines respectively. price supply easing operational sales & Propulsion sales our of

continue proportion Looking geographies, demand, sales North increase Asia and top sales of across American line the distribution supported at Pacific by markets compared while prior regions robust to European declined. across in the the year, to

for We year-over-year also up the saw $X.X within Turkey, a drove best notable increased particular, increase in million which wind projects. offshore sales in Middle with sales sales East,

million $XX.X the balance in strong strengthen to million higher And sheet million cash same to amount $X.X to $X prior $XX.X prior the balance million compared the the by prior due We year to year reduced delivered debt period. $X.X our a third million, generation negative solid year quarter. We continue to with cash ended of remained period. EBITDA at the versus the compared during quarter approximately period.

an us decrease this while to in to excellent position putting negative X.Xx, quarter leverage growth our in opportunities. our business inorganic ratio continue to invest We executing

for margin operational basis again, efficiency. impacts profit XX.X%, period, initiatives third points the gross approximately expanding the and earlier, due to increased prior of noted As reduction quarter cost from year the to XXX

continued the cash we to due strength the said, results expect comparison we year That towards strong do quarter, Looking fourth in prior and margins historically period. the generation. delivered year-over-year in challenging anticipate

to allocation. align With for generation, ample those that our balance M&A, capital particularly cash by strengthened we on in explore opportunities areas our future. with solid to the Now for strategic continue vision sheet

staying payments. Overall, prudence emerging remain capitalize into our and sustainable capital and and share our we continued underscores strategy through shareholders aimed allocating towards of the marketing maintaining organic on excellence. our markets of and investments repurchases driving This the areas significant at capabilities operational substantial R&D their includes on dedication and expertise. Simultaneously, electric efforts to expansion financial committed to internal existing to opportunities these growth marine dividend we Our to and innovation are at driving and in technology, allocation present geographic focus balanced while reflects capital fostering approach potential growth upside forefront aimed industrial to investments capital the innovation and return Furthermore, the complement sector strengthening and market at hybrid innovation, foster penetration. to flexibility. consistently a drive

John call remarks. to back like his share turn now to to I'd the closing over

John Batten

Thanks, Jeff.

few highlight our the Before we line a key to open I'd takeaways for from quarterly questions, results. like

performance third generation. our Our margin by robust excellence, quarter continued marked cash a operational and notable expansion highlights

us Our working market strong uncertainties opportunities. growth to growth by positions strategic sheet, balance favorably of profitable management take bolstered and capital navigate consistent and solid advantage

Looking optimistic driven cautiously ahead, sustained outlook we maintain our by dynamics. demand

this market underscores our external dedication teams their shareholders. and only agility all but and hard for like quarter. our amid adaptability operational to challenges . I'd also work in not long-term of capturing performance supporting commitment to delivering resilient business our reflects and opportunities, reaffirms thank our Our our to prowess, value to our continued

the for forward forward drive As Disc we year, look growth the Twin end generate of journey long-term to and our shareholders. continuing approach as we fiscal we our value

our to prepared will I concludes your remarks. happy be That questions. Jeff and answer

Operator

the with Funds. question that Instructions] X comes line And from Wong have [Operator of we Simon Gabelli

Unknown Analyst

Simon filling between guess gas is the of is my I this what is from just And much new guess This I derived equipment and that question revenue oil first quarter's Maybe Rita today. and break customers? down consumables. for how here. in

Jeffrey Knutson

Yes, oil been would pretty good I quarter a normal say gas. it's and it's a question. for

XX% quarter. of terms doing math consumables some revenue and XX% around I'm the for to probably . quick evenly kind of between of units. split percentage In

Unknown Analyst

question, company maybe what American seeing frac and well, I North I -- -- seeing terms the in guess are second then And Okay. of what you guess, customers? my is

John Batten

what's going -- I'd our say say in I is think the happening that, is East, calendar the an Asia. limited some well I would year that year, in given in going Middle the I parts just mean, units calendar I would spare of as at we've up we're to uptick home pick here new John. But out. seen more and say through have activity will . this outlook see as orders, some probably we in the rest

Unknown Analyst

down XQ then you're percentage 'XX. for inventory How And -- of as guess we next inventory working think should XQ quarter? your a I about fiscal for Okay. year backlog

Jeffrey Knutson

-- to have down. not to continue going keep it's shift. ratchet We're to incredible think I going

the in seen we'll few think we've last I a like trajectory kind of quarters. see . what

Unknown Analyst

then just Finland's to And I closing close? question Okay. here. approval minister on acquisition? the any the does the update of acquisition And timing of guess, from my last Casa need economic

John Batten

Yes.

we and did to I around of get this the should week, closed. XX we be days . be that would the will So say, approval month XX within end closing,

Operator

Will the Heartland. from comes question next line Your of Nasgovitz with

Unknown Analyst

particularly in on I you stabilization your pickup be overall know would a you of on cash You ordering thoughts sequential generation. great Just segment Congratulations the the that curious just It's in industrial just -- I'm on kind flow signs seeing bucket? commented Industrial the in are had of of helpful. free there? quarter, in some a remarks, strong the industrial, industrial broader see. opening side. on to on

John Batten

say order U.S. -- the for it's kind But of have been and better markets that would that in far a pick the a big a been gearboxes the electronic past quarters. on horsepower And in the would as And few higher be past quarter I of lower little Europe as Again, in quarter bit. Yes, I quarter. of seen the some Australia, And both controls with us. we've in was broad-based best have up this the been quarter order this range, it much order. we has some

were. it's still but we ways got to to . a up, get we looking to it's again, go back -- where So

Unknown Analyst

the I some or recall, $XX color maybe is you customers? on company? that And around something a Okay. just useful. additional And the market, provide any margin the acquisition, And it like Can would perspective it then revenue be just additional of million in new new profile as was just end level.

Jeffrey Knutson

Sure.

we going product low U.S. But that the product -- us really a so So falls business, in to are. heavily where going say -- their were component is invested XXs the off very supplier, to would of line much build right it's Netherlands, I great kind they've margin machining X/X Will. complex profile they I drive we in of our their they're as for vehicles. military a upon to space product supplier XXs. there's it's in into the around high with been on would do getting they Depending last all-wheel there, gears to it life, line, the They're in do in whether for They be centers so specialty and say gears. industrial started the marine transfer cases Italy, and the it's the in gears, gearbox for bounce

Sweden. Until recently, But Mato, gotten orders joined it as Germany has just was again, and then Finland. Finland they've from

market some on And These European product, we if so potential have bring to much heavily Twin been Scandinavian all it's pretty that and market where they global again, that at real feel understand, on into you Disc. are So market a market. there's the expansion. we the see the horsepower of we just they them good customers top right that but focused markets look and have the out range

the our products all Marine to the global bit hold of get whether the or they're they're of and a Katsa to So business, guys, them at introduce industrial the in customers. chomping transmission the business, the business

Unknown Analyst

end take is for X just guess the electrification, John, comments, wondering if just et back hand perspective markets? there's us you you you this know-how just us transmission here opening our and now could frame off to apply steeped opportunity frame hybrid, on final just technology, innovation, you you for the electrification the how as just Jeff, to about -- I the talking before and it my I'm opportunity. in continue to cetera. to to Obviously, any traditional you hybrid on can

John Batten

Yes.

OEM huge it's it off-highway, or opportunity marine in the the there's them. our Will, to together RF, is for package putting help space, and it's or a really So whether construction

-- product, if you a think of it's we or drive whether mechanical heart transmission, hybrid. our kind So the have it's about pump of

again, to applications That's look a are the sell content, sell on we're put propulsion engine $XXX,XXX. allows of sorts the to $XXX,XXX at some crane for that the almost put the system hybrid a The we let's also system, wiring. But parts hybrid for entire can input in to our it is has other it's that inverter, just in we're OEM Twin X the things, battery. vessel. an a or big And a just would able of marine are the crew. to gearbox, And multiplier. premium So application, the quoting $XX,XXX. that be ago, few there brain. upon that But for -- the all a And coming relying lot considerable other then electric over say, We crane doing. together traditional cost that we motor We're of have systems the crane. years ICE system, a system but $X that depending of single it's from would been control a million, $XXX,XXX if be

solution. the we're and to ourselves our have we proving technological that customers So

waiting to through and things they the performance play the Now how get testing extra these far of emissions. for we're market If for spend this of, is I say, market. type in to in this would as seeing as profile out just willing type just

Now government-funded some of completely these or they're that go electric cases, hybrid. mandating in vessels in California, some

Xx quickly. things, big easily quickly. In your just very building pretty from seeing some some market. a our content it's then wins the markets, well question, can see. or up and of So whether go coming the up X in we it's they other it's -- can to to construction accepted equipment see a answer They're are other But how and the wait

Operator

That conference for concludes session. turn I Batten back John now Q&A over the closing remarks. to will our

John Batten

you to Thanks, Alex. our thank year-end and Again, call. you, for August we'd QX . fiscal our everyone. conference look like call with 'XX forward you participating in for QX speaking to and Thank in

Operator

joining. Thank call. all concludes you Ladies that and today's for gentlemen,

disconnect. now may You

Twin Disc (TWIN) 30 Apr 242024 Q3 Earnings call transcript