NASDAQ:TWIN Twin Disc Q4 2024 Earnings Report $7.00 +0.17 (+2.49%) Closing price 05/2/2025 04:00 PM EasternExtended Trading$7.54 +0.55 (+7.79%) As of 05/2/2025 07:12 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Twin Disc EPS ResultsActual EPS$0.32Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/ATwin Disc Revenue ResultsActual Revenue$84.42 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ATwin Disc Announcement DetailsQuarterQ4 2024Date8/15/2024TimeN/AConference Call DateThursday, August 15, 2024Conference Call Time9:00AM ETUpcoming EarningsTwin Disc's Q3 2025 earnings is scheduled for Wednesday, May 7, 2025, with a conference call scheduled at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Twin Disc Q4 2024 Earnings Call TranscriptProvided by QuartrAugust 15, 2024 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Welcome to the Twin Disc, Inc. Fiscal 4th Quarter and Full Year 2024 Conference Call. We will begin with introductory remarks from Jeff Knutson, Twin Disc's CFO. Please go ahead. Speaker 100:00:12Good morning and thank you for joining us today to discuss our fiscal 2024 Q4 and full year results. On the call with me today is John Batten, Twin Disc's CEO. I would like to remind everyone that certain statements made during this conference call, especially statements expressing hopes, beliefs, expectations or predictions for the future are forward looking statements. It is important to remember that the company's actual results could differ materially from those projected in such forward looking statements. Information concerning factors that could cause actual results to differ materially from those in the forward looking statements are contained in the company's Annual Report on Form 10 ks, copies of which may be obtained by contacting either the company or the SEC. Speaker 100:00:53Any forward looking statements that are made during this call are based on assumptions as of today, and the company undertakes no obligation to publicly update or revise these statements to reflect subsequent events or new information. During today's call, management will also discuss certain non GAAP financial measures. For a definition of non GAAP financial measures and a reconciliation of GAAP to non GAAP financial results, please see the earnings release issued earlier today. By now, you should have received the news release, which was issued this morning before the market opened. If you have not received a copy, please call our office at 262-638-4000 and we will send the release to you. Speaker 100:01:30Now I'll turn the call over to John. Speaker 200:01:32Good morning, everyone, and welcome to our fiscal 2024 Q4 conference call. To begin with, I'd like to walk through some of the quarter's highlights. We again delivered solid results in the 4th quarter capping a year consistent performance, which supported our execution of several key strategic priorities. As we continue to capture healthy demand for our products across end markets, sales increased 0.6% year over year for the 4th quarter and increased 6 0.6% year over year for fiscal 2024. We are also seeing the ongoing benefit from disciplined working capital management and other operational enhancements we've implemented across our businesses in recent years, helping drive historically strong cash generation for both Q4 and full year. Speaker 200:02:17Critically, in the Q4, we completed the acquisition of Casta Oi, a leading manufacturer of high quality power transmission components and gearboxes. We are confident that the addition of Casa will both broaden our global reach and accelerate cross selling opportunities across our business. Backed by our strong balance sheet and flexible financial profile, we will continue to focus on expanding our portfolio through strategic opportunities that will drive Twin Disc forward. Shifting to our product segment results. Our Marine and Propulsion Systems saw continued demand through the 4th through the year with our global commercial end markets showing sustained activity. Speaker 200:02:54Despite a challenging year over year comparison and softer demand in both the Canadian fishing market and pleasure graph business, we delivered a 3% increase in sales in the Q4. As noted last quarter, we continue to see a rise in government defense spending driven by recent geopolitical turmoil resulting in a surge of patrol boat projects. We saw a slight decrease in Vets backlog as we work through inventory to meet consistently solid demand. Vets continues to be an integral part of our Marine and Propulsion Systems segment. Veth's collaboration with Rollup and the development of our Elite Truster for yacht propulsion has also been performing well due to the strength in the luxury boating market during the quarter, further highlighting the importance of our strategic partnerships that have allowed us to tap into new markets and enhance our product offering. Speaker 200:03:42The demand we have seen for work boat marine transmissions continued this quarter with strength in the Asia Pacific market, partially driven by the need for coal tugboats in the transport of raw materials from Indonesia to China. On the land based side of our business, sales increased 9.3% year over year driven largely by ARFF. Our ARFF transmission demand remains robust reaching record levels of backlog in the quarter. Exports to oil and gas markets were flat. However, we continue to see meaningful activity both in Asia and North America. Speaker 200:04:15In the Industrial segment, sales declined 8.9% year over year. While demand has been largely sluggish through the year, we saw a slight recovery during the Q4. We continue to see lower agriculture and construction demand resulting in a weak market with softer demand for commoditized products. While more commoditized products have been experiencing continued weakness, demand for higher content, more sophisticated products remains resilient. As we move into fiscal 2025, we remain focused on what we can control, advancing partnerships with original Speaker 300:04:50equipment manufacturers and efforts to penetrate new markets in Speaker 200:04:50line with our long term strategy. Continue to increase our 6 month backlog both sequentially and year over year, while simultaneously reducing inventory. This uptick comes with the addition of Casa Ole, which represented $12,600,000 of backlog growth. Our continued trend of declining inventory as a percentage of backlog highlights both the impact of our disciplined inventory management and the resilience of our business in capturing sustained demand despite lingering macroeconomic uncertainty. In closing, I'd also like to address our long term strategy before Jeff takes us through our financial overview. Speaker 200:05:31We aim to become a leading provider of hybrid and electrification solutions for marine and off highway land based applications, driven by deep relationships and close collaboration with major OEM. Veth reach continues to expand on a global scale supported by successful collaboration with Woolworth. We are also continuing to rationalize and modernize our business, delivering improved shipments by lowering inventory costs, improving lead times and creating better results for all stakeholders. Our focus remains on controls and systems integration, shifting our business into new avenues that will bring us profitable growth. With regards to M and A, we are actively looking into the industrial marine technology sectors, both of which have ample opportunities for us to expand our offerings in the hybrid and electrification space. Speaker 200:06:18With that, I'll now turn it over to Jeff to discuss the financials. Jeff? Speaker 100:06:23Thanks, John. Good morning, everyone. We delivered sales of $84,400,000 for the quarter, up $500,000 or 0.6% from the prior year as overall demand continued to remain solid across our market. Sales for fiscal 2024 were $295,100,000 up 6.6 percent from fiscal 2023. Adjusting for the divestiture of the BCS business in 2024, full year 2024 revenue increased $26,000,000 or 9.5 percent over the prior year. Speaker 100:06:54I'd like to note that operating income for the full year was impacted by a $3,100,000 non cash loss on the sale of the Boat Management System product line and related inventory in the Q3 of this year. Additionally, we recorded a $4,100,000 gain on the sale of a Belgian facility in 2023. Adjusting for those two items, full year 2024 operating income was actually $2,700,000 higher than the prior year. Net income attributable to Twin Disc for the Q4 was $7,400,000 or $0.53 per diluted share compared to $8,600,000 or $0.62 per diluted share in the Q4 of fiscal 2023. Full year net income of $11,000,000 or $0.79 per diluted share is up from net income of $10,400,000 or $0.75 per diluted share in the prior year. Speaker 100:07:41Gross profit margin increased to 29.7% compared to 29.5% during the prior year and gross profit dollars increased 1.4 percent to $25,100,000 This increase is due to the benefits of incremental volume, a favorable product mix and the positive impact of cost reduction and operational efficiency initiatives. While we saw sequential growth in each of our product groups, we saw consistent demand in both marine and propulsion systems and land based transmissions throughout the year, supporting overall growth. As John mentioned, we also saw an improvement in the industrial segment that has been pressured by a softer market over the few quarters. Across our geographies, we saw another quarter of sales increase in our Asia Pacific and Middle Eastern markets and a pullback in North America. Strength in the Middle Eastern markets was supported by shipments to an ARPA manufacturer in Dubai. Speaker 100:08:32We remain committed to strengthening our balance sheet over the course of fiscal 2024. Twin Disca has maintained a net debt around $5,700,000 despite a near term increase in total debt due to the Costa acquisition. We ended the year with a cash balance of $20,100,000 51.1 percent higher than the prior year. We also improved the EBITDA by 2.9 percent to $26,500,000 generated positive free cash flow of $25,000,000 and maintained a net leverage ratio of 0.2 times. As we enter fiscal 2025 with a strong balance sheet, we are well positioned to navigate macroeconomic uncertainty prudently. Speaker 100:09:07With a healthy level of debt, we continue to monitor suitable bolt on M and A opportunities that align with our objectives of enhancing our innovative excellence and product offering. Gross margin increased approximately 150 basis points from the prior quarter period, primarily due to cost reduction activity, the impact of operational efficiencies and favorable product mix. Moving into fiscal 2025, we remain focused on maintaining this momentum as we further enhance profitability. Our capital allocation priorities remain unchanged with strong cash generation supporting a healthy balance sheet and low debt leverage. We are well positioned to act upon M and A opportunities that fit into our strategic framework. Speaker 100:09:49The priority for our business is driving innovation in the marine technology, industrial and hybrid electric sectors to enhance our product portfolio. We are also making internal investments to drive organic growth, including investments in R and D, geographic diversification and expansion and marketing. Speaker 200:10:07For us, Speaker 100:10:08this framework strikes an important balance toward maintaining financial prudence and flexibility while driving long term growth. As we enter the 2025 fiscal year, we are in a great position to update our medium term targets and establish new growth goals for Twin Disc. By 2,030, we believe that consistent execution of our long term strategy will deliver revenues of approximately $500,000,000 with gross margins of 30%. We also expect to deliver consistent free cash flow conversion of at least 60%. I'd now like to turn the call back to John to review our updated targets and share some closing remarks. Speaker 200:10:44Overall, the Q4 continued to trend the performance that we carried through the year. I'm very proud of our team's ability to deliver robust cash generation and solid margin expansion. As we enter 2025, the demand strength and sales momentum we experienced in the Q4 provides a solid foundation as evidenced by our healthy backlog, giving us encouragement for the year ahead. We expect the market conditions to remain largely consistent with what we saw throughout 2024. With a robust balance sheet strengthened by steady profitable growth and effective working capital management, we are well equipped to handle any market uncertainties and capitalize on strategic growth opportunities well into the future. Speaker 200:11:25That concludes our prepared remarks. And now Jeff and I will be happy to answer your questions. Operator00:11:31Thank you. We will now begin the question and answer session. And we will go first to Simon Wong, Gabelli Funds. Speaker 300:11:57Good morning, John and Jeff. Speaker 100:12:00Hey, Simon. Good morning, Simon. Speaker 300:12:02Good morning. Just want to get update on your eFAC offering. Can you I mean, any traction there in terms of the of your new offering there? Speaker 200:12:14So we're still it's I would say in testing and waiting mode with the 7,600. Again, I remain hopeful that we'll have an order for the 1st spread this calendar year. But a lot of it has gone back to traditional. They're rebuilding just traditional diesel engine frac rigs right now. So we've seen an uptick again in spare parts for diesel rigs, there are 8,500 and 7,600 that are used conventionally. Speaker 200:12:52Time I remain hopeful. Everyone down the line says that it's probably it's going to happen. It's just a question of when. Speaker 300:13:00Okay. On that note, can you provide I mean, how much of this revenue quarter's revenue was to the oil and gas sector? And then if you can break it down between equipment and consumer, would that be great too? Speaker 100:13:16Yes, that's a good question, Simon. I think it's been pretty consistent with previous quarters, and maybe that's something I can give you a little bit more detail offline. But I would say in terms of the mix between forward market, aftermarket and transmission units, it's been really consistent with primarily shipments into China for new units and North America with aftermarket at a consistent level. Speaker 300:13:47Okay. Okay. And then in the for the overall company, is there anything in the R and D pipeline that you can talk about? Speaker 200:13:58No, I would say not. I would say that the most notable thing that came out in the past, this past fiscal year was the hybrid system that Manitowoc showed, debuted at a show earlier this year for a hybrid electric crane. We have other there's other projects like that with OEMs that it's just it's too soon to announce because they have to go through their prototype testing. But as far as what we're working on internally, I would say there are more the elite thrusters that we that Rola and that worked on together for the mega yacht market, primarily in Italy, but it's now we're gaining success with the German and the Dutch yard. I would see things that we're working on expanding that range. Speaker 200:14:56And then really what we're doing, Simon, right now, our engineers were focused on Casa and some of the products that they had under development and how they fit into our line. So, I would say what you'd see from us in the next 18 to 24 months would be an expansion of the vet line, the elite thrusters. It would be some industrial components and transmission drop boxes coming out of Casa to the global front. So that's what we're focused on right now. And then we continue to develop the PTI, the gearboxes that go on our marine transmissions to make them hybrid ready or electric. Speaker 200:15:44So that's really what we're working on in a broad sense. But you'll see I think you'll see in the next year to 2 years a lot more specific models coming out expanding our range in those areas. Speaker 300:15:59Okay. Well, speaking of Akatsa, how much revenue did contribute to this quarter's results? Speaker 100:16:06Yes, none really Simon. It was essentially closed right at end of the quarter. So the only impact Casa brought into the quarter was their opening balance sheet and some costs related to closing and obviously costs related to the acquisition, but no P and L impact for the operation. Speaker 300:16:24Okay. I see you're guiding 25 to be in line with 24. Is that both on the revenue and EBITDA line? Speaker 100:16:34Sorry, I didn't Yes. Yes. So traditional Twin Discs, BIP, similar revenue in EBITDA adversely. Okay. Speaker 300:16:42But does it include contribution from Casa? No. Speaker 200:16:47Casa will take us up. I mean, if you when you add Casa in, we're obviously expecting a growth year on the revenue line. Speaker 300:16:55Okay. All right. Thanks for clarifying that. And then one more for me, the last one. Our CapEx, what's your CapEx outlook for 2025? Speaker 100:17:04It's going to be similar probably, hopefully a little bit higher than what we were able to do this year. Again, we struggle just a little bit with lead times as we invest in more significant machine tools. So something around $10,000,000 is what we're targeting. Speaker 300:17:18All right, great. Thanks guys. Speaker 100:17:21Thanks, Operator00:17:29We'll move next to Barry Hymes at Sage Asset Management. Speaker 400:17:34Thanks very much. I had a couple of questions. One is just on the $25,000,000 free cash flow, which is a great number. Was any of that non recurring? And if so, could you just identify kind of what's recurring, what's non recurring? Speaker 400:17:48That's the first question, but I had a couple more. Speaker 100:17:51Yes. Not really. I mean, I think what we benefited from a little bit quite honestly is a little bit of over inventory levels at a level higher than we would have liked historically. So some low hanging fruit in terms of bringing inventory down, but really no true one off adjustments that we would point to that were non recurring. Speaker 400:18:17So was the inventory rightsizing just to size it was that $5,000,000 $10,000,000 just ballpark? Speaker 100:18:26Yes, something like that around yes, in that range. And I think we do still have some more room to improve on the inventory level. And I think we started to get good traction through the year and actually accelerating as we close out the year. So we're hopeful that while the fruit isn't hanging as low as it was, maybe we still have some good opportunity there. Speaker 400:18:51Okay, great. The second question is, I'm assuming industrial for the new fiscal year is probably going to be down. Correct me if you think I'm wrong on that. And if so, where do you see the positive offsets that would get you to flat or better as you point out maybe with the cost of business? Speaker 200:19:11Yes. Barry, this is John. I would say that I would say flat would be of the worst case scenario. Certainly, the overall markets could be down again, But we have been getting traction. So I would say, as I mentioned in my comments, it's more of the smaller mechanical PTOs that are used in irrigation and some pretty basic construction and ag equipment. Speaker 200:19:39But we've been getting a lot of good traction with our more expenses HPTOs and we have some hybrid systems that for us are industrial. So we think that we have an opportunity to grow just our traditional core, comparing apples to apples to what we did in 2024. But certainly when you add Casa in and we're broadening our industrial line. And again, may not register in sales this year, but we think we'd have a chance to speed up our growth curve in industrial. Obviously, with adding Casa, which is about they're probably a third of their business. Speaker 200:20:21Let's just say for a round number of $40,000,000 a third of their business is industrial. So, and almost 100% in the Northern European market. So certainly taking their product line around the world is going to Speaker 100:20:36help us accelerate our industrial growth. Speaker 400:20:40Got it. And then just last question. Within marine, could you just segment the customers a little bit? So if commercial, you mentioned the high end yacht and if there are any other big buckets, what's just rough if we did the pie chart on that segment, what would that look like? Thanks so much. Speaker 200:21:04So I would so if you take it as the 100% pie chart, commercial marine is going to be the biggest bucket and it's depending upon the year or the quarter, 1 and 2 for us are going to be North America and Asia and a smaller percentage of that is going to be Europe. And then the next biggest bucket now in its growing is I would say pleasure crafts with best expansion into the mega yacht market. And then again that can flip flop based on the quarters with military and government. So those are our the 3 biggest markets, but commercial revenue generating vessels is by far and away our number one market in marine, whether it's marine transmissions that we build traditional twin disc or vest thrusters, revenue generating vessels are the number one market. Speaker 400:22:11Right. And is the pleasure craft just at the very high end or is it go up and down in terms of size? Speaker 200:22:18It goes up and down. We probably start the bottom end of our pleasure craft market is probably going to be in a 50 foot yacht, twin engine diesel, everything below that is pretty much now outboard for Volvo IPS. And as you go up from 50 feet, we just get stronger and stronger as you get up 50 to 80 feet to 100 That's our core business. And it could be sport fish boats built in the Outer Banks. It could be boats like Maritimo and Riviera in Australia, Grand Banks, things that are in that 50 to 70 foot range and above, that's our sweet spot. Speaker 400:23:10Great. Thanks so much. Good luck in the new fiscal. Speaker 200:23:13Thank you very much. Operator00:23:16And this concludes the question and answer session and today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallTwin Disc Q4 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) Twin Disc Earnings HeadlinesComparing INLIF (NASDAQ:INLF) & Twin Disc (NASDAQ:TWIN)May 4 at 1:41 AM | americanbankingnews.comTwin Disc Announces Details of Fiscal 2025 Third Quarter Earnings Release, Webcast, and Conference CallApril 22, 2025 | markets.businessinsider.comHere’s How to Claim Your Stake in Elon’s Private Company, xAIEven though xAI is a private company, tech legend and angel investor Jeff Brown found a way for everyday folks like you… To partner with Elon on what he believes will be the biggest AI project of the century… Starting with as little as $500.May 4, 2025 | Brownstone Research (Ad)Longbow Research Initiates Coverage of Twin Disc (TWIN) with Buy RecommendationApril 17, 2025 | msn.comThis Twin Disc Analyst Begins Coverage On A Bullish Note; Here Are Top 5 Initiations For ThursdayApril 17, 2025 | benzinga.comTwin Disc Shares Hammered By Trade Uncertainties And Nervous InvestorsApril 16, 2025 | seekingalpha.comSee More Twin Disc Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Twin Disc? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Twin Disc and other key companies, straight to your email. Email Address About Twin DiscTwin Disc (NASDAQ:TWIN) engages in the design, manufacture, and sale of marine and heavy duty off-highway power transmission equipment in the United States, the Netherlands, China, Australia, Italy, and internationally. The company operates in two segments, Manufacturing and Distribution. Its principal products include marine transmissions, azimuth drives, surface drives, propellers, and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, and controls systems. The company also provides third-party manufactured products. It sells its products through a direct sales force and distributor network to customers primarily in the pleasure craft, commercial marine, patrol, and military marine markets, as well as in the energy and natural resources, government, agriculture, recycling, construction, oil and gas, and industrial markets. The company was incorporated in 1918 and is headquartered in Milwaukee, Wisconsin.View Twin Disc ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback PlanMicrosoft Crushes Earnings, What’s Next for MSFT Stock?Qualcomm's Earnings: 2 Reasons to Buy, 1 to Stay AwayAMD Stock Signals Strong Buy Ahead of Earnings Upcoming Earnings Palantir Technologies (5/5/2025)Vertex Pharmaceuticals (5/5/2025)Realty Income (5/5/2025)Williams Companies (5/5/2025)CRH (5/5/2025)Advanced Micro Devices (5/6/2025)American Electric Power (5/6/2025)Constellation Energy (5/6/2025)Marriott International (5/6/2025)Energy Transfer (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 5 speakers on the call. Operator00:00:00Welcome to the Twin Disc, Inc. Fiscal 4th Quarter and Full Year 2024 Conference Call. We will begin with introductory remarks from Jeff Knutson, Twin Disc's CFO. Please go ahead. Speaker 100:00:12Good morning and thank you for joining us today to discuss our fiscal 2024 Q4 and full year results. On the call with me today is John Batten, Twin Disc's CEO. I would like to remind everyone that certain statements made during this conference call, especially statements expressing hopes, beliefs, expectations or predictions for the future are forward looking statements. It is important to remember that the company's actual results could differ materially from those projected in such forward looking statements. Information concerning factors that could cause actual results to differ materially from those in the forward looking statements are contained in the company's Annual Report on Form 10 ks, copies of which may be obtained by contacting either the company or the SEC. Speaker 100:00:53Any forward looking statements that are made during this call are based on assumptions as of today, and the company undertakes no obligation to publicly update or revise these statements to reflect subsequent events or new information. During today's call, management will also discuss certain non GAAP financial measures. For a definition of non GAAP financial measures and a reconciliation of GAAP to non GAAP financial results, please see the earnings release issued earlier today. By now, you should have received the news release, which was issued this morning before the market opened. If you have not received a copy, please call our office at 262-638-4000 and we will send the release to you. Speaker 100:01:30Now I'll turn the call over to John. Speaker 200:01:32Good morning, everyone, and welcome to our fiscal 2024 Q4 conference call. To begin with, I'd like to walk through some of the quarter's highlights. We again delivered solid results in the 4th quarter capping a year consistent performance, which supported our execution of several key strategic priorities. As we continue to capture healthy demand for our products across end markets, sales increased 0.6% year over year for the 4th quarter and increased 6 0.6% year over year for fiscal 2024. We are also seeing the ongoing benefit from disciplined working capital management and other operational enhancements we've implemented across our businesses in recent years, helping drive historically strong cash generation for both Q4 and full year. Speaker 200:02:17Critically, in the Q4, we completed the acquisition of Casta Oi, a leading manufacturer of high quality power transmission components and gearboxes. We are confident that the addition of Casa will both broaden our global reach and accelerate cross selling opportunities across our business. Backed by our strong balance sheet and flexible financial profile, we will continue to focus on expanding our portfolio through strategic opportunities that will drive Twin Disc forward. Shifting to our product segment results. Our Marine and Propulsion Systems saw continued demand through the 4th through the year with our global commercial end markets showing sustained activity. Speaker 200:02:54Despite a challenging year over year comparison and softer demand in both the Canadian fishing market and pleasure graph business, we delivered a 3% increase in sales in the Q4. As noted last quarter, we continue to see a rise in government defense spending driven by recent geopolitical turmoil resulting in a surge of patrol boat projects. We saw a slight decrease in Vets backlog as we work through inventory to meet consistently solid demand. Vets continues to be an integral part of our Marine and Propulsion Systems segment. Veth's collaboration with Rollup and the development of our Elite Truster for yacht propulsion has also been performing well due to the strength in the luxury boating market during the quarter, further highlighting the importance of our strategic partnerships that have allowed us to tap into new markets and enhance our product offering. Speaker 200:03:42The demand we have seen for work boat marine transmissions continued this quarter with strength in the Asia Pacific market, partially driven by the need for coal tugboats in the transport of raw materials from Indonesia to China. On the land based side of our business, sales increased 9.3% year over year driven largely by ARFF. Our ARFF transmission demand remains robust reaching record levels of backlog in the quarter. Exports to oil and gas markets were flat. However, we continue to see meaningful activity both in Asia and North America. Speaker 200:04:15In the Industrial segment, sales declined 8.9% year over year. While demand has been largely sluggish through the year, we saw a slight recovery during the Q4. We continue to see lower agriculture and construction demand resulting in a weak market with softer demand for commoditized products. While more commoditized products have been experiencing continued weakness, demand for higher content, more sophisticated products remains resilient. As we move into fiscal 2025, we remain focused on what we can control, advancing partnerships with original Speaker 300:04:50equipment manufacturers and efforts to penetrate new markets in Speaker 200:04:50line with our long term strategy. Continue to increase our 6 month backlog both sequentially and year over year, while simultaneously reducing inventory. This uptick comes with the addition of Casa Ole, which represented $12,600,000 of backlog growth. Our continued trend of declining inventory as a percentage of backlog highlights both the impact of our disciplined inventory management and the resilience of our business in capturing sustained demand despite lingering macroeconomic uncertainty. In closing, I'd also like to address our long term strategy before Jeff takes us through our financial overview. Speaker 200:05:31We aim to become a leading provider of hybrid and electrification solutions for marine and off highway land based applications, driven by deep relationships and close collaboration with major OEM. Veth reach continues to expand on a global scale supported by successful collaboration with Woolworth. We are also continuing to rationalize and modernize our business, delivering improved shipments by lowering inventory costs, improving lead times and creating better results for all stakeholders. Our focus remains on controls and systems integration, shifting our business into new avenues that will bring us profitable growth. With regards to M and A, we are actively looking into the industrial marine technology sectors, both of which have ample opportunities for us to expand our offerings in the hybrid and electrification space. Speaker 200:06:18With that, I'll now turn it over to Jeff to discuss the financials. Jeff? Speaker 100:06:23Thanks, John. Good morning, everyone. We delivered sales of $84,400,000 for the quarter, up $500,000 or 0.6% from the prior year as overall demand continued to remain solid across our market. Sales for fiscal 2024 were $295,100,000 up 6.6 percent from fiscal 2023. Adjusting for the divestiture of the BCS business in 2024, full year 2024 revenue increased $26,000,000 or 9.5 percent over the prior year. Speaker 100:06:54I'd like to note that operating income for the full year was impacted by a $3,100,000 non cash loss on the sale of the Boat Management System product line and related inventory in the Q3 of this year. Additionally, we recorded a $4,100,000 gain on the sale of a Belgian facility in 2023. Adjusting for those two items, full year 2024 operating income was actually $2,700,000 higher than the prior year. Net income attributable to Twin Disc for the Q4 was $7,400,000 or $0.53 per diluted share compared to $8,600,000 or $0.62 per diluted share in the Q4 of fiscal 2023. Full year net income of $11,000,000 or $0.79 per diluted share is up from net income of $10,400,000 or $0.75 per diluted share in the prior year. Speaker 100:07:41Gross profit margin increased to 29.7% compared to 29.5% during the prior year and gross profit dollars increased 1.4 percent to $25,100,000 This increase is due to the benefits of incremental volume, a favorable product mix and the positive impact of cost reduction and operational efficiency initiatives. While we saw sequential growth in each of our product groups, we saw consistent demand in both marine and propulsion systems and land based transmissions throughout the year, supporting overall growth. As John mentioned, we also saw an improvement in the industrial segment that has been pressured by a softer market over the few quarters. Across our geographies, we saw another quarter of sales increase in our Asia Pacific and Middle Eastern markets and a pullback in North America. Strength in the Middle Eastern markets was supported by shipments to an ARPA manufacturer in Dubai. Speaker 100:08:32We remain committed to strengthening our balance sheet over the course of fiscal 2024. Twin Disca has maintained a net debt around $5,700,000 despite a near term increase in total debt due to the Costa acquisition. We ended the year with a cash balance of $20,100,000 51.1 percent higher than the prior year. We also improved the EBITDA by 2.9 percent to $26,500,000 generated positive free cash flow of $25,000,000 and maintained a net leverage ratio of 0.2 times. As we enter fiscal 2025 with a strong balance sheet, we are well positioned to navigate macroeconomic uncertainty prudently. Speaker 100:09:07With a healthy level of debt, we continue to monitor suitable bolt on M and A opportunities that align with our objectives of enhancing our innovative excellence and product offering. Gross margin increased approximately 150 basis points from the prior quarter period, primarily due to cost reduction activity, the impact of operational efficiencies and favorable product mix. Moving into fiscal 2025, we remain focused on maintaining this momentum as we further enhance profitability. Our capital allocation priorities remain unchanged with strong cash generation supporting a healthy balance sheet and low debt leverage. We are well positioned to act upon M and A opportunities that fit into our strategic framework. Speaker 100:09:49The priority for our business is driving innovation in the marine technology, industrial and hybrid electric sectors to enhance our product portfolio. We are also making internal investments to drive organic growth, including investments in R and D, geographic diversification and expansion and marketing. Speaker 200:10:07For us, Speaker 100:10:08this framework strikes an important balance toward maintaining financial prudence and flexibility while driving long term growth. As we enter the 2025 fiscal year, we are in a great position to update our medium term targets and establish new growth goals for Twin Disc. By 2,030, we believe that consistent execution of our long term strategy will deliver revenues of approximately $500,000,000 with gross margins of 30%. We also expect to deliver consistent free cash flow conversion of at least 60%. I'd now like to turn the call back to John to review our updated targets and share some closing remarks. Speaker 200:10:44Overall, the Q4 continued to trend the performance that we carried through the year. I'm very proud of our team's ability to deliver robust cash generation and solid margin expansion. As we enter 2025, the demand strength and sales momentum we experienced in the Q4 provides a solid foundation as evidenced by our healthy backlog, giving us encouragement for the year ahead. We expect the market conditions to remain largely consistent with what we saw throughout 2024. With a robust balance sheet strengthened by steady profitable growth and effective working capital management, we are well equipped to handle any market uncertainties and capitalize on strategic growth opportunities well into the future. Speaker 200:11:25That concludes our prepared remarks. And now Jeff and I will be happy to answer your questions. Operator00:11:31Thank you. We will now begin the question and answer session. And we will go first to Simon Wong, Gabelli Funds. Speaker 300:11:57Good morning, John and Jeff. Speaker 100:12:00Hey, Simon. Good morning, Simon. Speaker 300:12:02Good morning. Just want to get update on your eFAC offering. Can you I mean, any traction there in terms of the of your new offering there? Speaker 200:12:14So we're still it's I would say in testing and waiting mode with the 7,600. Again, I remain hopeful that we'll have an order for the 1st spread this calendar year. But a lot of it has gone back to traditional. They're rebuilding just traditional diesel engine frac rigs right now. So we've seen an uptick again in spare parts for diesel rigs, there are 8,500 and 7,600 that are used conventionally. Speaker 200:12:52Time I remain hopeful. Everyone down the line says that it's probably it's going to happen. It's just a question of when. Speaker 300:13:00Okay. On that note, can you provide I mean, how much of this revenue quarter's revenue was to the oil and gas sector? And then if you can break it down between equipment and consumer, would that be great too? Speaker 100:13:16Yes, that's a good question, Simon. I think it's been pretty consistent with previous quarters, and maybe that's something I can give you a little bit more detail offline. But I would say in terms of the mix between forward market, aftermarket and transmission units, it's been really consistent with primarily shipments into China for new units and North America with aftermarket at a consistent level. Speaker 300:13:47Okay. Okay. And then in the for the overall company, is there anything in the R and D pipeline that you can talk about? Speaker 200:13:58No, I would say not. I would say that the most notable thing that came out in the past, this past fiscal year was the hybrid system that Manitowoc showed, debuted at a show earlier this year for a hybrid electric crane. We have other there's other projects like that with OEMs that it's just it's too soon to announce because they have to go through their prototype testing. But as far as what we're working on internally, I would say there are more the elite thrusters that we that Rola and that worked on together for the mega yacht market, primarily in Italy, but it's now we're gaining success with the German and the Dutch yard. I would see things that we're working on expanding that range. Speaker 200:14:56And then really what we're doing, Simon, right now, our engineers were focused on Casa and some of the products that they had under development and how they fit into our line. So, I would say what you'd see from us in the next 18 to 24 months would be an expansion of the vet line, the elite thrusters. It would be some industrial components and transmission drop boxes coming out of Casa to the global front. So that's what we're focused on right now. And then we continue to develop the PTI, the gearboxes that go on our marine transmissions to make them hybrid ready or electric. Speaker 200:15:44So that's really what we're working on in a broad sense. But you'll see I think you'll see in the next year to 2 years a lot more specific models coming out expanding our range in those areas. Speaker 300:15:59Okay. Well, speaking of Akatsa, how much revenue did contribute to this quarter's results? Speaker 100:16:06Yes, none really Simon. It was essentially closed right at end of the quarter. So the only impact Casa brought into the quarter was their opening balance sheet and some costs related to closing and obviously costs related to the acquisition, but no P and L impact for the operation. Speaker 300:16:24Okay. I see you're guiding 25 to be in line with 24. Is that both on the revenue and EBITDA line? Speaker 100:16:34Sorry, I didn't Yes. Yes. So traditional Twin Discs, BIP, similar revenue in EBITDA adversely. Okay. Speaker 300:16:42But does it include contribution from Casa? No. Speaker 200:16:47Casa will take us up. I mean, if you when you add Casa in, we're obviously expecting a growth year on the revenue line. Speaker 300:16:55Okay. All right. Thanks for clarifying that. And then one more for me, the last one. Our CapEx, what's your CapEx outlook for 2025? Speaker 100:17:04It's going to be similar probably, hopefully a little bit higher than what we were able to do this year. Again, we struggle just a little bit with lead times as we invest in more significant machine tools. So something around $10,000,000 is what we're targeting. Speaker 300:17:18All right, great. Thanks guys. Speaker 100:17:21Thanks, Operator00:17:29We'll move next to Barry Hymes at Sage Asset Management. Speaker 400:17:34Thanks very much. I had a couple of questions. One is just on the $25,000,000 free cash flow, which is a great number. Was any of that non recurring? And if so, could you just identify kind of what's recurring, what's non recurring? Speaker 400:17:48That's the first question, but I had a couple more. Speaker 100:17:51Yes. Not really. I mean, I think what we benefited from a little bit quite honestly is a little bit of over inventory levels at a level higher than we would have liked historically. So some low hanging fruit in terms of bringing inventory down, but really no true one off adjustments that we would point to that were non recurring. Speaker 400:18:17So was the inventory rightsizing just to size it was that $5,000,000 $10,000,000 just ballpark? Speaker 100:18:26Yes, something like that around yes, in that range. And I think we do still have some more room to improve on the inventory level. And I think we started to get good traction through the year and actually accelerating as we close out the year. So we're hopeful that while the fruit isn't hanging as low as it was, maybe we still have some good opportunity there. Speaker 400:18:51Okay, great. The second question is, I'm assuming industrial for the new fiscal year is probably going to be down. Correct me if you think I'm wrong on that. And if so, where do you see the positive offsets that would get you to flat or better as you point out maybe with the cost of business? Speaker 200:19:11Yes. Barry, this is John. I would say that I would say flat would be of the worst case scenario. Certainly, the overall markets could be down again, But we have been getting traction. So I would say, as I mentioned in my comments, it's more of the smaller mechanical PTOs that are used in irrigation and some pretty basic construction and ag equipment. Speaker 200:19:39But we've been getting a lot of good traction with our more expenses HPTOs and we have some hybrid systems that for us are industrial. So we think that we have an opportunity to grow just our traditional core, comparing apples to apples to what we did in 2024. But certainly when you add Casa in and we're broadening our industrial line. And again, may not register in sales this year, but we think we'd have a chance to speed up our growth curve in industrial. Obviously, with adding Casa, which is about they're probably a third of their business. Speaker 200:20:21Let's just say for a round number of $40,000,000 a third of their business is industrial. So, and almost 100% in the Northern European market. So certainly taking their product line around the world is going to Speaker 100:20:36help us accelerate our industrial growth. Speaker 400:20:40Got it. And then just last question. Within marine, could you just segment the customers a little bit? So if commercial, you mentioned the high end yacht and if there are any other big buckets, what's just rough if we did the pie chart on that segment, what would that look like? Thanks so much. Speaker 200:21:04So I would so if you take it as the 100% pie chart, commercial marine is going to be the biggest bucket and it's depending upon the year or the quarter, 1 and 2 for us are going to be North America and Asia and a smaller percentage of that is going to be Europe. And then the next biggest bucket now in its growing is I would say pleasure crafts with best expansion into the mega yacht market. And then again that can flip flop based on the quarters with military and government. So those are our the 3 biggest markets, but commercial revenue generating vessels is by far and away our number one market in marine, whether it's marine transmissions that we build traditional twin disc or vest thrusters, revenue generating vessels are the number one market. Speaker 400:22:11Right. And is the pleasure craft just at the very high end or is it go up and down in terms of size? Speaker 200:22:18It goes up and down. We probably start the bottom end of our pleasure craft market is probably going to be in a 50 foot yacht, twin engine diesel, everything below that is pretty much now outboard for Volvo IPS. And as you go up from 50 feet, we just get stronger and stronger as you get up 50 to 80 feet to 100 That's our core business. And it could be sport fish boats built in the Outer Banks. It could be boats like Maritimo and Riviera in Australia, Grand Banks, things that are in that 50 to 70 foot range and above, that's our sweet spot. Speaker 400:23:10Great. Thanks so much. Good luck in the new fiscal. Speaker 200:23:13Thank you very much. Operator00:23:16And this concludes the question and answer session and today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by