TWIN DISC INC Q1 FY2025 earnings call

• Strong start to fiscal 2025 with double-digit revenue growth, driven by Casa Hoye acquisition and growth in marine/propulsion and industrial businesses.
• Marine and propulsion segment saw 22.9% y/y growth, luxury yacht backlog up 19% sequentially, elite thrusters in high demand.
• Industrial segment grew due to Casa acquisition, with demand for higher content products resilient.
• Casa integration progressing ahead of schedule, broadening global reach and cross-selling opportunities.
• Long-term strategy focuses on hybrid and electrification solutions, streamlining operations to enhance shipment and reduce costs.

Marine and propulsion segment sales grew 22.9% year over year, driven by commercial markets and Casa acquisition; luxury yacht backlog grew 19% sequentially. Land-based transmission saw a 7% decline in sales, primarily due to softness in Asia-Pacific, but ARF transmission backlog was at record levels. Industrial segment sales increased 61.3% year over year, mainly due to Casa acquisition and end market stabilization. Revenue contribution: Marine and propulsion, industrial, and land-based transmission each had their respective performances as detailed.

• Expect free cash flow to be positive, around 60% of EBITDA level for the rest of the year, with improvement quarter by quarter.
• Anticipate inflationary and supply chain headwinds to ease during the fiscal year.
• Continue evaluating acquisitions to accelerate growth in core markets and make internal investments for organic growth.

• Near-term shipment delays with some suppliers.
• Unfavorable product mix due to reduced oilfield shipments into China.

Q: What's the outlook for free cash flow generation for the year?

A: It's still positive, expecting to get back to generally positive, 60% of the EBITDA level free cash flow for the rest of the year, quarter by quarter.

Q: Any update on the eFAC offering?

A: It's still in the prototype stage, and currently, we have not had any takers on buying a fleet, with customers focusing on traditional rigs.

Q: How much did the oil and gas business contribute to this quarter?

A: Oil and gas was about 10% of revenue for the quarter, down from around 15% in the prior year's first quarter, contributing to the unfavorable mix impact.