Twin Disc Inc (TWIN) Reports Solid Q2 FY2024 Results with Revenue and Gross Margin Growth
Revenue: Increased by 15.2% year-over-year to $73.0 million.
Gross Margin: Improved to 28.3%, expanding 140 basis points year-over-year.
Net Income: Attributable to Twin Disc was $0.9 million, with EBITDA of $5.5 million.
Operating Cash Flow: Significantly improved to $16.0 million.
Free Cash Flow: A positive swing to $10.6 million from ($4.7) million in the prior year.
Backlog: Robust six-month backlog of $125.2 million, indicating healthy ongoing demand.
Balance Sheet: Cash increased by 55.4% to $21.0 million, while total debt decreased by 44.6%.
On February 7, 2024, Twin Disc Inc (NASDAQ:TWIN) released its 8-K filing, announcing the results for the fiscal 2024 second quarter ended December 29, 2023. Twin Disc Inc, a leading manufacturer of marine and heavy-duty off-highway power transmission equipment, reported a 15.2% increase in sales to $73.0 million, compared to the same period last year. This growth was primarily driven by strong demand in the Marine and Propulsion Systems and Land-Based Transmissions markets.
Performance and Financial Highlights
The company's gross margin saw a notable increase to 28.3%, a 140 basis point improvement year-over-year, reflecting the benefits of pricing actions, supply chain improvements, and a favorable product mix. Net income attributable to Twin Disc was reported at $0.9 million, with earnings per diluted share of $0.07. This represents a decrease from the $1.8 million net income, or $0.13 per share, in the second fiscal quarter of 2023, primarily due to the prior year's gain on the sale of the Belgian facility.
Operating cash flow for the quarter was significantly improved at $16.0 million, and free cash flow was a positive $10.6 million, compared to a negative $4.7 million in the year-ago period. The company's backlog remained robust at $125.2 million, supported by healthy ongoing demand, which is a positive indicator for future revenue.
Financial Position and Outlook
Twin Disc's balance sheet strengthened with a 55.4% increase in cash to $21.0 million, while total debt decreased by 44.6% to $17.7 million. The net debt position improved by $21.7 million to a net cash position of $(3.3) million, primarily due to the net payoff of long-term debt as a result of strong cash operations.
"We delivered another excellent quarter, continuing our momentum of double-digit revenue growth and expanded margins while generating historically high cash from operations," said John H. Batten, President and Chief Executive Officer of Twin Disc. "Despite lingering challenges in our broader operating environment, we are cautiously optimistic moving into the second half of the fiscal year and look forward to maintaining this trend of sustained value creation well into the future."
Jeffrey S. Knutson, Vice President of Finance, Chief Financial Officer, Treasurer, and Secretary, added, "Our robust cash generation has further strengthened our balance sheet, giving us the flexibility to drive continued investment in both organic and inorganic growth opportunities while we keep debt at appropriate levels and return capital to shareholders."
Investor and Analyst Perspectives
Twin Disc will host a conference call to discuss these results and to answer questions, providing an opportunity for investors and analysts to delve deeper into the company's performance and strategies moving forward.
Overall, Twin Disc's Q2 FY2024 results demonstrate the company's ability to navigate a volatile macroeconomic landscape successfully, with a focus on operational efficiency and strategic growth initiatives. The company's performance is particularly noteworthy for value investors interested in the Industrial Products sector, as it underscores Twin Disc's resilience and potential for sustained value creation.
For more detailed information on Twin Disc's financial performance, please visit the 8-K filing and the company's website at www.twindisc.com.
Explore the complete 8-K earnings release (here) from Twin Disc Inc for further details.
This article first appeared on GuruFocus.
