TWIN DISC INC

TWIN DISC INC Annual Report - Clear Insights for Investors
Your plain-English guide to their year, like chatting with a trusted friend

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1. What They Do & This Year’s Snapshot

Twin Disc builds heavy-duty gears and power systems for construction equipment, yachts, and farm machinery – think "muscles" for industrial machines.

2024 Mixed Results:

• ✅ Sales growth: Revenue up 6% to $276M
• ⚠️ Surprise net loss: $1.6M (vs. $11.2M profit last year)
• 🔧 Big moves: Bought marine specialist Kobelt ($17.2M) and Finnish industrial company Katsa (€23.1M)

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2. Financial Health Check

The Good:

• 33% dividend increase – first consistent payout in years
• Equity grew 6% to $164M despite challenges

The Concerns:

• Cash flow drop: Day-to-day operations generated 29% less cash ($23.9M vs. $33.7M)
• New debt: Took $6.5M in loans while paying dividends
• Inventory pile-up: Parts stockpiles grew 16% to $152M (could signal slowing sales or preparation for future demand)

Spending Habits:

• Invested $15.1M in factory upgrades (vs. $8.7M last year)
• Spent $3M closing underused facilities

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3. Biggest Wins & Struggles

✅ Smart Plays:

• Acquisitions strengthen marine/industrial expertise
• Added cybersecurity monitoring + employee training

⚠️ Warning Lights:

• Currency swings + pension costs wiped out profits
• Cybersecurity spending up 230% in 2 years ($184K → $653K)
• 1% change in healthcare costs = million-dollar pension impacts

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4. 2025 Risks to Watch

• Cash tightrope: Can they fund growth + dividends + debt?
• Acquisition indigestion: Will Kobelt/Katsa integrations go smoothly?
• Global headaches: Currency swings + supply chain delays could hit margins

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Bottom Line for Investors

Twin Disc is betting big on marine/industrial growth but faces cash turbulence.

Reasons for Optimism:

• Strategic acquisitions in growing markets
• Factory upgrades suggest confidence in future demand
• First sustained dividends in years

Red Flags:

• Profit turned to loss despite revenue growth
• Operating cash flow down sharply
• Rising debt while expanding dividends

Your Move:
This stock suits cautious investors comfortable with turnaround plays. Watch next quarter’s cash flow closely – if it rebounds, the growth bets might pay off. If not, the dividend could be at risk. Proceed with a 3-5 year horizon and diversify accordingly.

Final Note: Twin Disc shared limited details about long-term debt management plans – something watchful investors should request more clarity on.

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