Twin Disc Inc (TWIN) 2025 Q4 法說會逐字稿

Thank you for standing by. At this time, I would like to welcome everyone to the Twin Disc Inc. Fiscal fourth quarter and full year 2025 conference call. (Operator Instructions)

感謝您的支持。現在，我歡迎大家參加 Twin Disc Inc. 2025 財年第四季和全年電話會議。（操作員指示）

I would now like to turn your conference over to Jeff Knutson. You may begin.

現在我想將你們的會議交給 Jeff Knutson。你可以開始了。

Good morning, and thank you for joining us today to discuss our fiscal 2025 fourth quarter and full year results. On the call with me today is John Batten, Twin Disc's CEO.

早安，感謝您今天加入我們討論我們的 2025 財年第四季和全年業績。今天與我一起通話的是 Twin Disc 的執行長 John Batten。

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.

我想提醒大家，本次電話會議中所做的某些陳述，特別是表達對未來的希望、信念、期望或預測的陳述屬於前瞻性陳述。

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-K, copies of which may be obtained by contacting either the company or the SEC. Any 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.

重要的是要記住，公司的實際結果可能與此類前瞻性陳述中的預測有重大差異。有關可能導致實際結果與前瞻性陳述中的結果大不相同的因素的資訊包含在公司的 10-K 表年度報告中，您可以透過聯絡公司或美國證券交易委員會 (SEC) 取得該報告的副本。本次電話會議中所做的任何前瞻性陳述均基於今天的假設，本公司不承擔公開更新或修改這些陳述以反映後續事件或新資訊的義務。

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.

在今天的電話會議上，管理階層還將討論某些非公認會計準則財務指標。有關非公認會計準則 (non-GAAP) 財務指標的定義以及公認會計準則 (GAAP) 與非公認會計準則 (non-GAAP) 財務結果的對照表，請參閱今天早些時候發布的收益報告。

Now I'll turn the call over to John.

現在我將把電話轉給約翰。

Good morning, everyone, and welcome to our fiscal 2025 fourth quarter conference call.

大家早安，歡迎參加我們的 2025 財年第四季電話會議。

We closed out the fiscal year with our strongest quarter, an outcome that reflects our team's consistent execution and resilience in dynamic markets. I'm incredibly proud of how our global organization continues to deliver even in the ongoing global uncertainty, including tariff-related pressures and shifting demand patterns.

我們以最強勁的季度結束了本財年，這一結果反映了我們團隊在動態市場中的一貫執行力和韌性。我對我們的全球組織即使在持續的全球不確定性（包括關稅相關壓力和不斷變化的需求模式）中仍能繼續發揮作用感到無比自豪。

For the full year, we delivered top line growth of 15.5%, with sales reaching $340.7 million, supported by a broad-based demand and strong order activity across our portfolio. Although EBITDA margins were hampered by the impacts of nonoperating and noncash items, such as currency translation loss and stock-based compensation, we continue to generate consistent free cash flow of $8.8 million. In addition to our strong performance, this year marked a pivotal step forward in modernizing our operating model.

全年來看，我們的營業額成長了 15.5%，銷售額達到 3.407 億美元，這得益於我們整個產品組合的廣泛需求和強勁的訂單活動。儘管 EBITDA 利潤率受到貨幣折算損失和股票薪酬等非經營性和非現金項目的影響，但我們仍繼續產生 880 萬美元的穩定自由現金流。除了我們強勁的業績之外，今年還標誌著我們在現代化營運模式方面邁出了關鍵的一步。

We now manage the business across four product line business units led by Tim Batten in his new role as Executive Vice President, where he'll be leading our global business operations. This supports our agile global manufacturing and supply chain structure that allows us to scale effectively, seamlessly integrate acquisitions, all about expanding our fixed infrastructure. We also made meaningful progress on our strategic priorities including the integration of Katsa and Kobelt. The acquisitions have expanded our capabilities, broadened our customer base and strengthened our long term platform for growth. I am pleased with our progress to date and look forward to reaping the full benefit from this combined platform.

我們目前管理四個產品線業務部門的業務，由新任執行副總裁 Tim Batten 領導，他將領導我們的全球業務營運。這支持了我們敏捷的全球製造和供應鏈結構，使我們能夠有效地擴大規模，並無縫地整合收購，所有這些都是為了擴展我們的固定基礎設施。我們也在策略重點方面取得了有意義的進展，包括整合 Katsa 和 Kobelt。這些收購擴大了我們的能力，拓寬了我們的客戶群，並加強了我們的長期成長平台。我對我們迄今為止的進展感到滿意，並期待從這個聯合平台中獲得全部收益。

Turning to the fourth quarter. We closed the year with our strongest performance in the fiscal year as sales grew 14.5% year-over-year to $96.7 million. While organic net sales declined due to reduced activity in oil and gas markets, this was more than offset by continued strength in Marine and Propulsion Systems as well as ongoing demand for higher content transmissions. Order momentum remained healthy, and our 6-month backlog increased to $150.5 million, reflecting strength in government and hybrid marine programs.

轉向第四季。我們以本財年最強勁的業績結束了這一財年，銷售額年增 14.5%，達到 9,670 萬美元。雖然由於石油和天然氣市場活動的減少導致有機淨銷售額下降，但這被船舶和推進系統的持續強勁增長以及對更高內容傳輸的持續需求所抵消。訂單動能保持良好，我們的 6 個月積壓訂單增加至 1.505 億美元，反映了政府和混合海洋項目的強勁表現。

Looking ahead, we remain confident in our growth trajectory, particularly in the defense market, we are well positioned to capture robust end market demand, fueled by increased defense spending across both US and NATO budgets. Given this increased activity, we are seeing strong momentum for our marine transmissions, controls, and steering systems, propulsion systems, gearboxes and transfer case products across geographies as we serve as an approved supplier to end users such as the US Army, US Navy and NATO.

展望未來，我們對我們的成長軌跡仍然充滿信心，特別是在國防市場，我們已做好準備，抓住強勁的終端市場需求，這得益於美國和北約預算中國防開支的增加。鑑於這種活動的增加，我們看到我們的船用變速箱、控制裝置和轉向系統、推進系統、變速箱和分動箱產品在各個地區都呈現出強勁的發展勢頭，因為我們是美國陸軍、美國海軍和北約等最終用戶的認可供應商。

This is well illustrated in our total backlog as orders related to defense products grew approximately 45% versus fiscal '24, now making up nearly 15% of our total backlog. With $50 million to $75 million in defense-related pipeline, we have significant runway for growth. As we further capitalize on end market strength, execute on our clear path to broaden geographic reach and remain committed to disciplined capital deployment strategy, we are poised to build on this year's momentum and continue delivering value for our shareholders.

我們的總積壓訂單很好地說明了這一點，因為與國防產品相關的訂單比 24 財年增長了約 45%，現在占我們總積壓訂單的近 15%。我們擁有價值 5,000 萬至 7,500 萬美元的國防相關管道，擁有龐大的成長空間。隨著我們進一步利用終端市場實力，執行擴大地理覆蓋範圍的明確路徑，並繼續致力於嚴謹的資本配置策略，我們準備利用今年的勢頭，繼續為股東創造價值。

Let me walk you through the segment performance. In Marine and Propulsion Systems, sales grew 12.2% in the fourth quarter to $53 million, supported by robust activity in workboats, government contracts and Veth's ELITE thrusters products. Notably, we are seeing strong momentum for orders for unmanned US Navy vessels in the 300- to 400-foot range, autonomous platforms built for extended patrol periods. These orders signal a meaningful shift towards larger, persistent defense platforms and validate the investments that we've made in our marine transmissions and controls technology. And our backlog for Veth thrusters in the U.S. continues to grow both in Workboat and Cruise vessel segment.

讓我帶您了解該片段的表現。在船舶和推進系統方面，由於工作船、政府合約和 Veth 的 ELITE 推進器產品的強勁活動，第四季度的銷售額增長了 12.2%，達到 5300 萬美元。值得注意的是，我們看到美國海軍對 300 至 400 英尺範圍內無人艦艇的訂單勢頭強勁，這些自主平台專為長期巡邏而建造。這些訂單標誌著我們朝著更大、更持久的防禦平台邁出了有意義的轉變，並驗證了我們在船舶傳動和控制技術方面所做的投資。我們在美國的工作船和遊輪領域的 Veth 推進器積壓訂單持續成長。

Kobelt contributed as expected in this quarter, primarily within our commercial marine controls business, which is now fully integrated into our systems offering. Marine aftermarket also remained strong, driven by continued utilization of military and commercial fleets. Aftermarket revenue for the quarter totaled $4.7 million in Marine alone with a margin contribution exceeding 60%. In land-based transmissions, revenue rose 4.5% year-over-year to $26.1 million in the fourth quarter.

Kobelt 本季做出了預期的貢獻，主要體現在我們的商業船舶控制業務上，該業務現已完全融入我們的系統產品中。受軍用和商用船隊持續使用的推動，船舶售後市場也保持強勁。本季僅船舶售後市場收入就達 470 萬美元，利潤貢獻超過 60%。在陸基傳輸方面，第四季營收年增 4.5% 至 2,610 萬美元。

While oil and gas shipments into China declined, activity in North America and Asia remains stable. Our demand stayed strong. And in addition, we continue to see action on our new e-frac system with our first meaningful order for this segment, representing 14 units totaling 2.3 million. This validates our technical offering and supports a more optimistic medium-term outlook. Aftermarket sales in this segment were down year-over-year at $3 million compared to $5.5 million in the fourth quarter of fiscal '24, reflecting a lower rebuild volumes tied to idle fleets.

儘管對中國的石油和天然氣出口量下降，但北美和亞洲的石油和天然氣出口活動仍保持穩定。我們的需求依然強勁。此外，我們繼續看到我們的新電子壓裂系統採取行動，這是我們針對該領域的第一個有意義的訂單，代表 14 個單位，總計 230 萬。這驗證了我們的技術成果並支持更樂觀的中期前景。該部門售後市場銷售額年減 300 萬美元，而 24 財年第四季為 550 萬美元，反映出與閒置車隊相關的重建量較低。

Our Industrial segment saw strong sequential growth with fourth quarter sales rising 35% sequentially to $13.1 million. Year-over-year, our industrial products grew 82% in the fourth quarter. The improvement was broad-based across customers and supported by strength in industrial parts business. When excluding this acquisition, the Industrial segment grew 13% compared to the prior year period.

我們的工業部門實現了強勁的環比成長，第四季銷售額環比成長35%，達到1,310萬美元。與去年同期相比，第四季度，我國工業產品產量增加了82%。這項改善廣泛存在於客戶之中，並受到工業零件業務強勁成長的支持。若不計此次收購，工業部門較去年同期成長了 13%。

Lufkin also had a strong quarter, shipping $4.1 million in the fourth quarter versus $3.1 million average run rate, while the recovery is still early, we're encouraged by positive order trends and share gains. Our 6-month backlog rose to $150.5 million, up both sequentially and year-over-year. This reflects healthy demand and the benefit of the Katsa and Kobelt acquisitions. At the same time, we have continued to reduce inventory levels as a percentage of backlog, highlighting our focus on working capital discipline.

拉夫金本季表現強勁，第四季度出貨量為 410 萬美元，而平均運行率為 310 萬美元，雖然復甦仍處於初期階段，但我們對積極的訂單趨勢和份額增長感到鼓舞。我們 6 個月的積壓訂單增加至 1.505 億美元，較上季和年比均有成長。這反映了健康的需求以及收購 Katsa 和 Kobelt 的好處。同時，我們持續降低庫存佔積壓訂單的百分比，突顯了我們對營運資本紀律的關注。

In closing, I'd like to also address our long-term strategy before Jeff takes us through the financial overview. I remain committed to our strategy built on global footprint optimization, operational excellence and targeted acquisitions. Our recent purchases of Katsa and Kobelt are clear examples of how we're broadening engineering capabilities and market reach by unlocking meaningful synergies across our operations. These strategic additions complement our core expertise and accelerate our entry into higher-value uses, reinforcing our ability to deliver sustainable growth for customers, employees and shareholders.

最後，在 Jeff 向我們介紹財務概況之前，我還想談談我們的長期策略。我將繼續致力於我們基於全球足跡優化、卓越營運和有針對性的收購的策略。我們最近收購 Katsa 和 Kobelt 就是一個明顯的例子，顯示我們如何透過在營運過程中發揮有意義的協同效應來拓展工程能力和市場範圍。這些策略性補充了我們的核心專業知識，加速了我們進入更高價值用途的步伐，增強了我們為客戶、員工和股東實現永續成長的能力。

And second cornerstone of our plan is to lead the industry in hybrid and electrification solutions. We are intensifying investment in controls and systems integration because these technologies multiply both content and margin potential on every vessel of the vehicle we serve. Growing customer interest in hybrid and fully electric propulsion, particularly within marine applications, positions us to capture new opportunities and our advanced Veth and Katsa platforms give us a tangible head start. We are already winning hybrid projects in commercial and defense markets and ongoing R&D and investment will ensure we remain the partner of choice as sustainability requirements tighten worldwide.

我們計劃的第二個基石是在混合動力和電氣化解決方案方面引領業界。我們正在增加對控制和系統整合的投資，因為這些技術可以增加我們所服務的每艘船舶的內容和利潤潛力。客戶對混合動力和全電動推進系統的興趣日益增長，特別是在船舶應用領域，這使我們能夠抓住新的機遇，而我們先進的 Veth 和 Katsa 平台則為我們提供了切實的領先優勢。我們已經在商業和國防市場贏得了混合項目，持續的研發和投資將確保我們在全球永續性要求越來越嚴格的情況下仍然是首選合作夥伴。

Operational resilience is equally critical. Our flexible global manufacturing network and organizational streamlining allows us to shift production swiftly in response to geopolitical dynamics and tariff regimes, preserving both service levels and cost competitiveness. We have quantified tariff exposure of roughly 1% of cost of goods sold and have pricing actions, alternative sourcing and surcharge mechanisms in place to offset any further impact. At the same time, a robust backlog of approximately $150 million provides clear visibility while continued inventory discipline and efficiency projects underpin margin expansion.

營運彈性同樣重要。我們靈活的全球製造網絡和組織精簡使我們能夠根據地緣政治動態和關稅制度迅速調整生產，同時保持服務水準和成本競爭力。我們已將關稅風險量化為銷售成本的約 1%，並已製定定價行動、替代採購和附加費機制來抵消任何進一步的影響。同時，約 1.5 億美元的強勁積壓訂單提供了清晰的透明度，而持續的庫存紀律和效率項目則支撐了利潤率的擴大。

Looking further ahead, we remain steadfast in achieving our 2030 objectives of about $500 million in revenue, 30% gross margins and consistent free cash flow conversion of at least 60%. The cash we generate will be reinvested in organic growth and further bolt-ons, ensuring we stay on the front foot while maintaining a prudent balance sheet.

展望未來，我們堅定不移地實現 2030 年的目標，即實現約 5 億美元的收入、30% 的毛利率和至少 60% 的持續自由現金流轉換。我們產生的現金將重新投資於有機成長和進一步的附加投資，確保我們保持領先地位，同時保持審慎的資產負債表。

With that, I'd like to now turn it over to Jeff to discuss the financials. Jeff?

說完這些，我現在想把話題交給傑夫討論財務問題。傑夫？

Thanks, John. Good morning, everyone.

謝謝，約翰。大家早安。

During the quarter, we delivered $96.7 million in sales for Q4, up 14.5% from $84.4 million in the prior year period. As John mentioned earlier, fiscal 2025 sales totaled $340.7 million compared to $295.1 million last year, an increase of 15.5%. On an organic basis, adjusting for M&A and FX, revenue declined approximately 8.4% in Q4, driven by reduced oil and gas activity, particularly in China. As a reminder, our fiscal fourth quarter factored in the full impact of the Kobelt acquisition.

本季度，我們的第四季銷售額為 9,670 萬美元，較去年同期的 8,440 萬美元成長 14.5%。正如約翰先前提到的，2025 財年的銷售額總計 3.407 億美元，而去年的銷售額為 2.951 億美元，成長了 15.5%。以有機基礎計算，經併購和外匯調整後，第四季營收下降約 8.4%，原因是石油和天然氣活動減少，尤其是在中國。提醒一下，我們的第四財季已經考慮到了 Kobelt 收購的全部影響。

For the full year, revenue increased 1% on an organic basis, driven by strength in the company's land-based transmission markets with healthy demand in marine and propulsion systems. Fourth quarter gross profit rose 19.7% to $30 million, and gross margin improved 130 basis points to 31%. The supported by a favorable product mix and onetime cost capitalization adjustments in our cost of inventory. Excluding the impact from this onetime inventory adjustment, gross margin was 28% for the quarter. For the full year, gross profit was $92.7 million or 27.2% of sales.

全年營收有機成長 1%，這得益於公司陸基傳輸市場的強勁成長以及船舶和推進系統需求的旺盛。第四季毛利成長19.7%至3,000萬美元，毛利率提高130個基點至31%。這得歸功於良好的產品組合和庫存成本的一次性成本資本化調整。不計此一次性庫存調整的影響，本季毛利率為28%。全年毛利為 9,270 萬美元，佔銷售額的 27.2%。

ME&A expenses were $24.6 million in Q4 compared to $20.4 million last year. The increase reflects the addition of Katsa and Kobelt as well as ongoing wage and professional services inflation. Fiscal full year M&A was $82.4 million versus $71.6 million in fiscal year '24. Net income attributable to Twin Disc for the quarter was $1.4 million or $0.10 per diluted share compared to $7.4 million or $0.53 per diluted share last year. Full year net loss was $1.9 million or $0.14 per share compared to net income of $11 million or $0.79 per share in fiscal '24. EBITDA was $7 million for the fourth quarter and $19 million for the full year versus $11.8 million and $26.5 million respectively in the prior year.

第四季的 ME&A 費用為 2,460 萬美元，而去年同期為 2,040 萬美元。這一增長反映了 Katsa 和 Kobelt 的加入以及持續的工資和專業服務通膨。全年財年併購額為 8,240 萬美元，而 24 財年為 7,160 萬美元。本季 Twin Disc 淨收入為 140 萬美元，即每股攤薄收益 0.10 美元，去年同期為 740 萬美元，即每股攤薄收益 0.53 美元。全年淨虧損為 190 萬美元，即每股 0.14 美元，而 24 財年的淨收入為 1,100 萬美元，即每股 0.79 美元。第四季 EBITDA 為 700 萬美元，全年 EBITDA 為 1,900 萬美元，而去年同期分別為 1,180 萬美元和 2,650 萬美元。

This fiscal 2025 full year EBITDA swing reflects nonoperating or noncash impacts of currency translation losses, stock-based compensation, inventory adjustments, defined pension, amortization and other items as shown in our press release issued earlier today. From a geographic perspective, sequential sales growth was led by the North American market, where strong demand from vet products contributed to an increased share of quarterly sales.

正如我們今天早些時候發布的新聞稿中所示，2025 財年全年 EBITDA 波動反映了貨幣折算損失、股票薪酬、庫存調整、確定退休金、攤銷和其他項目的非營業或非現金影響。從地理角度來看，北美市場引領了連續的銷售成長，其中獸藥產品的強勁需求推動了季度銷售份額的增加。

On a year-over-year basis, the European market captured a greater proportion of total sales, reflecting the contributions from our recent acquisitions. For the full year, we delivered double-digit growth in both European and Asia Pacific regions. The overall sales mix shifted toward Europe, while Asia Pacific represented a smaller proportion of total sales compared to the prior year, in part due to regional market dynamics and our targeted expansion efforts in Europe. We remain focused on disciplined capital management throughout fiscal '25.

與去年同期相比，歐洲市場佔了總銷售額的更大比例，反映了我們近期收購的貢獻。全年我們在歐洲和亞太地區均實現了兩位數的成長。整體銷售結構向歐洲轉移，而亞太地區在總銷售額中所佔比例與上年相比有所下降，部分原因是區域市場動態以及我們在歐洲的目標擴張努力。在整個 25 財年，我們將繼續專注於嚴格的資本管理。

Net debt increased to $15.3 million, primarily reflecting our strategic acquisition of Kobelt. We ended the year with a cash balance of $16.1 million, down 19.7% from the prior year. We generated positive free cash flow of $8.8 million for the year and maintain a conservative net leverage ratio of 0.8x have made a challenging environment. Entering fiscal '26, we are well positioned to navigate macroeconomic uncertainty with flexibility and discipline.

淨債務增加至 1530 萬美元，主要反映了我們對 Kobelt 的策略性收購。截至年底，我們的現金餘額為 1,610 萬美元，比前一年下降 19.7%。我們今年創造了 880 萬美元的正自由現金流，並保持了 0.8 倍的保守淨槓桿率，這為我們帶來了充滿挑戰的環境。進入26財年，我們已做好準備，以靈活性和紀律性應對宏觀經濟的不確定性。

Our balance sheet supports our ongoing evaluation of targeted bolt-on acquisitions that complement our innovation strategy and expand our product portfolio. As stated previously, gross margin improved by approximately 130 basis points to 31% in the fourth quarter when compared to the prior year period, driven by the continued benefits of cost reduction initiatives, enhanced operational efficiencies and a more favorable product mix. When removing an inventory adjustment for Katsa, we achieved gross margin of 28%, demonstrating sequential improvement.

我們的資產負債表支持我們對有針對性的附加收購的持續評估，這些收購補充了我們的創新策略並擴大了我們的產品組合。如前所述，由於成本削減措施的持續效益、營運效率的提高和更有利的產品組合，第四季度毛利率與去年同期相比提高了約 130 個基點，達到 31%。當消除 Katsa 的庫存調整時，我們實現了 28% 的毛利率，顯示出連續的改善。

As we enter fiscal '26, we remain focused on sustaining this positive momentum by further optimizing our cost structure and driving margin-accretive growth across our portfolio. Strengthening profitability remains a key priority as we execute on our strategic initiatives. Our capital allocation priorities remain unchanged, grounded in a balanced approach to growth and value creation. We continue to pursue disciplined M&A opportunities that align with our core strengths in marine and industrial technologies while also investing in organic initiatives such as R&D, geographic expansion and innovation, particularly in hybrid and electrification solutions.

進入26財年，我們將繼續致力於維持這一積極勢頭，進一步優化成本結構，推動整個產品組合的利潤成長。在我們執行策略性措施時，提高獲利能力仍然是首要任務。我們的資本配置重點保持不變，以平衡成長和價值創造為基礎。我們將繼續尋求符合我們在海洋和工業技術領域核心優勢的嚴謹併購機會，同時投資於研發、地理擴張和創新等有機舉措，特別是在混合動力和電氣化解決方案方面。

With a healthy net leverage position and a clear strategic focus, we are well positioned to drive long-term sustainable growth.

憑藉健康的淨槓桿率和明確的策略重點，我們完全有能力推動長期永續成長。

I'll now turn the call back to John for his closing remarks.

現在我將把電話轉回給約翰，請他作最後發言。

As we look ahead to fiscal 2026, I'm encouraged by the foundation we've built. Our backlog is strong. Our global operations are aligned, and our leadership team is focused. We're beginning to see the returns on our efforts to streamline and modernize our business across commercial, operational and strategic dimensions. Demand in global defense art transmissions and hybrid solutions continue to outpace expectations. Our ongoing collaboration with major OEMs and system integrators places us at the forefront of next-generation propulsion and power solutions. Our focus remains on disciplined execution, profitable growth and long-term value creation for all stakeholders.

展望 2026 財年，我們已經建立的基礎令我感到鼓舞。我們的積壓訂單很多。我們的全球業務協調一致，我們的領導團隊專注於專注。我們開始看到在商業、營運和策略層面精簡和現代化業務的努力所帶來的回報。全球國防藝術傳動和混合解決方案的需求繼續超出預期。我們與主要 OEM 和系統整合商的持續合作使我們處於下一代推進和動力解決方案的前沿。我們始終專注於為所有利害關係人實現嚴格的執行、獲利成長和長期價值創造。

That concludes our prepared remarks. Jeff and I are now happy to take your questions.

我們的準備好的演講到此結束。傑夫和我現在很高興回答你們的問題。

(Operator Instructions)

（操作員指示）

David MacGregor, Longbow Research.

麥格雷戈（David MacGregor），長弓研究公司（Longbow Research）。

Yes, good morning, everyone. Hey, let me. Hey, good morning. Good morning. Can I just start with the backlog. Obviously, very strong $150 million. You talked about the acquisitions as a contributing factor. You talked about defense. Can you just walk us through maybe where else across the mix, we maybe seeing particular strength? Is it broad-based, or is it particularly in these two verticals? And just a little more detail there would be helpful.

是的，大家早安。嘿，讓我來。嘿，早安。早安.我可以從積壓工作開始嗎？顯然，1.5億美元非常強勁。您談到收購是一個促成因素。您談到了防守。您能否向我們介紹一下，在混合體中我們還可能看到哪些特別的優點？它是廣泛的，還是特別在這兩個垂直領域？只要再多一點細節就會很有幫助。

Yes. I think it's at the 2 biggest. I think there's strength across the portfolio. I think even within oil and gas, we're starting to see some good improvements. I think we noted it's not in the year-end backlog, but we did get some initial frac orders as we rolled into fiscal '26. So quarter-over-quarter, most of that improvement was in the markets that you point out to defense. Propulsion continues to be really strong globally. Pleasure craft, that operation continues to look at sort of record levels quarter-over-quarter. So yes, a lot of strength in the markets.

是的。我認為它是最大的兩個。我認為整個投資組合都很強。我認為即使在石油和天然氣領域，我們也開始看到一些好的改善。我想我們注意到它不在年底的積壓訂單中，但是當我們進入 26 財年時，我們確實收到了一些初始壓裂訂單。因此，與上一季相比，大部分改善都發生在您指出的防禦市場。全球範圍內的推進力持續強勁。遊艇業務繼續保持季度環比創紀錄的水平。是的，市場確實非常強勁。

David, I'd only add, this is John, with the part that's beginning that's really picked up, I would say, in the last quarter is the defense. And it's for us, it's been in the marine for the U.S. It's been in the marine area. And in Europe, it's been in land-based transmission products for NATO all-wheel drive vehicles.

大衛，我只想補充一點，這是約翰，一開始真正被重視的部分，我想說，在最後一個季度是防守。對我們來說，它一直在美國海軍陸戰隊中。它一直在海洋區域。在歐洲，它已應用於北約全輪驅動車輛的陸基傳動產品。

And just maybe can you elaborate a little further around the defense. And I realize it's historically been maybe a smaller part of the overall business, but it sounds like the growth prospects there are improving rather dramatically. Just talk about how you plan to manage that and what the potential could look like.

能否進一步詳細說明防禦問題？我知道從歷史上看，它可能只佔整體業務的一小部分，但聽起來那裡的成長前景正在顯著改善。只需談論您計劃如何管理它以及其潛力是什麼樣的。

Well, it is basically making sure that we have the capacity to meet the demand. When we acquired Kobelt -- sorry, when we acquired Katsa in between the agreement and closing, Finland joined NATO and then Sweden joined NATO, and we've been blessed with approved supplier that is feeding a lot of the trucks in NATO and these programs are growing. So our Number one focus is making sure that we can meet the demand in Finland for these vehicles. And a lot of that's going to entail what products -- when we bought -- when we acquired Katsa, it was for their capability and also their product line that they developed. They were a parts supplier. They had fantastic machining capability but they were really in their infancy in supplying finished product like gearboxes.

嗯，這基本上是為了確保我們有能力滿足需求。當我們收購 Kobelt 時——抱歉，當我們在協議和結束之間收購 Katsa 時，芬蘭加入了北約，然後瑞典也加入了北約，我們很幸運地擁有了認可的供應商，為北約的許多卡車提供供貨，這些項目正在不斷發展。因此，我們的首要任務是確保能夠滿足芬蘭對這些車輛的需求。其中許多都與產品有關——當我們收購 Katsa 時，我們重視的是他們的能力以及他們開發的產品線。他們是一家零件供應商。他們擁有出色的加工能力，但在提供變速箱等成品方面仍處於起步階段。

It's a big time now. So it's going to be what can we take from Finland and assemble and build other places to make sure that we have the capacity to meet the and we do. And so that is -- it's exciting because there's a huge growth potential there as these vehicles -- as more and more of these vehicles are built and the more contracts coming. So it's going to be what do we offload and we have facilities depending on what the product is, but the tariff structures, but we can move assembly to Belgium to Italy, to Texas to meet that demand. And same for the marine transmissions for the U.S. Navy. This is really ramping up. And we have -- right now, we have -- we believe we have the capacity in Racine, but that's easily something that we could offload into Lufkin if we need help.

現在是一個重要時刻。所以，我們要考慮的是，我們可以從芬蘭拿走什麼，然後在其他地方組裝和建造，以確保我們有能力滿足這一需求，而我們確實做到了。這是令人興奮的，因為隨著這些車輛數量的不斷增加和合約數量的增加，這些車輛具有巨大的成長潛力。因此，我們要卸載什麼，我們根據產品類型提供設施，但關稅結構不同，我們可以將組裝轉移到比利時、義大利、德克薩斯以滿足需求。美國海軍的海上拉動系統也是如此。這確實在加速發展。而且我們——現在，我們有——我們相信我們在拉辛擁有這樣的產能，但如果我們需要幫助，我們可以輕鬆地將其轉移到拉夫金。

Good. Sounds pretty encouraging. I wanted to maybe just ask you, you talked about some of the commercial synergies and the cross-selling. You noted in the press release that integration efforts are creating more commercial opportunities. I was just wondering if you could expand on that.

好的。聽起來相當令人鼓舞。我可能只是想問您一下，您談到了一些商業協同效應和交叉銷售。您在新聞稿中指出，整合努力正在創造更多的商業機會。我只是想知道您是否可以詳細說明這一點。

Yes. So it's 2 different scenarios really with so Veth -- when we acquired Veth, they had sales agents around the world, didn't really have distributors, what we would think of as distributors in our industry, something like what Twin Disc would have or Caterpillar or where you have dedicated workshops, train mechanics, spare parts on the shelf locally. And that's what we brought to vet. And we had a delay in the growth because of COVID and then we had supply chain issues. But now that those are mostly behind us. We're really starting to see the Veth product take off in other geographies. And I think right now, North America might be, if it's not Number one, it's Number two in their backlog.

是的。因此，對於 Veth 來說，這實際上有兩種不同的情況——當我們收購 Veth 時，他們在世界各地都有銷售代理，實際上沒有分銷商，我們所認為的行業分銷商類似於 Twin Disc 或 Caterpillar 所擁有的，或者在當地有專門的車間、火車機械師和貨架上的備件。這就是我們帶去獸醫那裡檢查的東西。由於新冠疫情，我們的成長出現延遲，然後又出現了供應鏈問題。但現在這些都已成為過去。我們確實開始看到 Veth 產品在其他地區起飛。我認為現在北美即使不是第一，在積壓訂單中也可能排在第二位。

And it's across it's river cruise ships. It's workboats, and so it took some time, but now it's starting to happen, and we're starting to see that momentum build in Asia. We've had projects in Australia. It's the same thing we're going to do with Katsa, very similar, had 1 external agent, and so we're starting to bring that global support to their product line, and we've integrated 1 of their hydraulic PTOs into our product line. And so they had no real distribution around the world. Kobelt does have a lot of dealers around the world, and this is going to be a different integration and synergy because some of their dealers, we feel could be very influential in helping us sell some of our products.

河對岸有遊輪。這是工作船，所以需要一些時間，但現在它開始發生了，我們開始看到這種勢頭在亞洲增強。我們在澳洲有專案。這與我們與 Katsa 合作做的事情非常相似，有 1 個外部代理，因此我們開始為他們的產品線提供全球支持，並且我們已將他們的 1 個液壓 PTO 整合到我們的產品線中。因此它們在世界各地並沒有真正的分佈。Kobelt 在全球確實有許多經銷商，這將是一次不同的整合和綜效，因為我們覺得他們的一些經銷商可能會對幫助我們銷售某些產品產生很大的影響。

And vice versa, we think in some regions where we have company-owned subsidiaries in Asia and Australia. We think we're going to be very strong in growing their products in different regions. But we're really excited about both acquisitions bring new products, new customers, but it's something that we can plug into our system, particularly with Kobelt. Their industrial brake line, which they've had some good success with in parts of North America and different applications. We think that we can really take that business globally.

反之亦然，我們認為在亞洲和澳洲的某些地區我們有公司自營的子公司。我們認為我們將能夠非常有力地在不同地區推廣他們的產品。但我們真的很高興這兩次收購能帶來新產品、新客戶，但這是我們可以融入我們系統的東西，尤其是 Kobelt。他們的工業煞車管路在北美部分地區和不同應用領域取得了一些成功。我們認為我們確實可以將該業務推向全球。

We talked before about, as you sort of enter some of these new markets, there's pressures on margins just associated with getting the brand and the product and the engineering reputation seeded in that market. But the expectation, of course, was that once you were in that market, you established yourselves that you'd start to see some margin improvement. Do you feel like we're at sort of an inflection point there and as you ended the 2026 these businesses sounds like they're getting well seated and well situated that you're going to see that margin improvement, or is that maybe a little longer...

我們之前談過，當你進入一些新市場時，利潤率會面臨壓力，這僅僅與在該市場中建立品牌、產品和工程聲譽有關。但當然，我們的預期是，一旦進入該市場，你就會看到利潤率提高。您是否覺得我們正處於一個轉折點，正如您在 2026 年結束時所說，這些業務聽起來已經站穩了腳跟，處於有利地位，您將看到利潤率的提高，或者這可能需要更長的時間......

Yes, I do. I think we've the supply chain disruption it lingered as far as suppliers not making it in different areas, and you're having to change quickly. And it's not really about the price. It's we just need this part. So we're going to pay what we have to pay again in parts, so we can ship the product. That's starting to dissipate. We're also we have a large section of our supply in India, and we're moving suppliers in India to get a lower price.

是的，我願意。我認為我們的供應鏈中斷問題仍然存在，因為不同地區的供應商無法生產，所以你必須迅速做出改變。這其實與價格無關。我們只是需要這部分。因此，我們將分批支付我們需要支付的款項，以便我們能夠發貨。這種感覺開始消散了。我們的供應量很大一部分來自印度，我們正在轉移印度的供應商以獲得更低的價格。

And so the acquisition in Katsa is absolutely helping us lower the way they manufacture gears is a very effective way to do it with the bar stock and internal heat treat. So that is something that we're learning. They're doing more of our internal gear supply for other operations. So I do think we're an inflection point. We're also being a little bit more disciplined in products that we don't want to make any more and get those out of our portfolio and every product has the right to die and we're being more vigorous on that and focusing on the products with where we can succeed and have a higher margin.

因此，對 Katsa 的收購絕對有助於我們降低齒輪製造成本，這是一種利用棒料和內部熱處理來實現這一目標的非常有效的方法。這就是我們正在學習的東西。他們正在為其他業務提供更多的內部裝備供應。所以我確實認為我們正處於一個轉捩點。我們對不再生產的產品也更加嚴格，將這些產品從我們的產品組合中剔除，每種產品都有消亡的權利，我們對此更加積極，並專注於那些我們能夠成功並獲得更高利潤的產品。

Just a couple more for me quickly. The marketing, engineering and administration that was up in the quarter. I might feel that some of this is variable, of course, but what level of revenue growth can you support with the existing ME&A spend?

很快我就可以再得到一些了。本季的營銷、工程和管理均有所提升。當然，我可能會覺得其中有些是可變的，但現有的 ME&A 支出可以支持什麼水準的收入成長？

I think we have -- that infrastructure can support well north of $400 million. I think we don't see the need to add any significant investment at that layer. Most of what the increase within the quarter was sort of a full run rate of Kobelt. We have some purchase accounting amortization flowing through there. So I would say Q4 wouldn't be what we would expect a run rate to be going forward. And I think the run rate that we'll have will support from $400 million to $500 million without any really meaningful increase.

我認為我們已經擁有了——該基礎設施可以支持超過 4 億美元的資金。我認為我們認為沒有必要在該層面增加任何重大投資。本季的大部分成長都是 Kobelt 的全面運作率。我們有一些購買會計攤銷流經那裡。因此我想說第四季的運行率不會達到我們預期的水平。我認為我們的運行率將從 4 億美元增加到 5 億美元，而不會出現任何真正有意義的成長。

Good, good. And then I guess, just looking forward to 2026, your sort of high-level thoughts around the balance sheet and free cash flow. How are you thinking about leverage, how you're thinking about cash flow conversion in '26?

好，好。然後我想，展望 2026 年，您對資產負債表和自由現金流有一些高層次的想法。您如何看待槓桿？您如何看待 26 年的現金流轉換？

Yes. I mean we stated our target is to deliver 60% of EBITDA to free cash flow. I think we've done a reasonable job in the second half of fiscal '25, getting back on track in terms of generating free cash flow. I think we have inventory at a pretty high level as we enter fiscal '26 given the orders on the books and the demand that we've got coming at us. I don't see that continuing to grow. I think we'll get some good cash flow coming out of inventory as we work through the year.

是的。我的意思是，我們的目標是將 60% 的 EBITDA 轉化為自由現金流。我認為我們在 25 財年下半年做得還不錯，在產生自由現金流方面重回正軌。考慮到訂單量和需求量，我認為在進入 26 財年時我們的庫存處於相當高的水平。我不認為它會繼續增長。我認為，隨著我們全年的工作，我們將從庫存中獲得一些良好的現金流。

Maybe it stays flat, maybe it comes down. But I think we're on a good growth pattern. So I think operating cash will improve in the year. We like to see our leverage ratio come down because we want to do more Katsa and Kobelt type of actions. We've seen what that can do for the company. So that's a priority for us. And part of that is getting the balance sheet back to a position where we can do that comfortably.

它也許會保持平穩，也許會下降。但我認為我們正處於良好的成長模式。所以我認為今年的營運現金將會增加。我們希望看到我們的槓桿率下降，因為我們想採取更多 Katsa 和 Kobelt 類型的行動。我們已經看到了這對公司能帶來什麼好處。所以這對我們來說是優先事項。其中一部分就是讓資產負債表恢復到我們可以舒適地做到這一點的位置。

I guess that sort of begs the question, is '26 a year of integration or additional acquisitions possible?

我想這不禁讓人產生疑問，一年 26 年的整合或額外收購是否可能？

I mean I think they can both happen right? I think our integration team is well along the path of all the activities that John mentioned, getting the training done, getting the product in the right channels with the right partners. But in the meantime, I think we continue to look for what the next step is. I wouldn't say we're going to continue to do two acquisitions a year. That was a bit of an acceleration for us. But I think we want to continue working that side of the equation and making sure we're developing both sides of the growth puzzle.

我的意思是我認為它們都有可能發生，對嗎？我認為我們的整合團隊正在順利完成約翰所提及的所有活動，完成培訓，並透過正確的管道與正確的合作夥伴推出產品。但同時，我認為我們會繼續尋找下一步的行動。我不會說我們會繼續每年進行兩次收購。這對我們來說是一個小小的加速。但我認為，我們希望繼續努力解決這個等式的一邊，並確保我們正在發展成長難題的兩邊。

Yes, I guess, David, let me just follow on a little bit with some color. Yes, so when we have the businesses aligned in verticals. And the industrial business is being led by a guy from Katsa, and the transmission business is being run by a guy out of a scene where most of the transmissions, marine is being run by a gentleman who he doesn't have any plans to reporting directly to him, but he has multiple products. He has products on from multiple plants in propulsion. He's got the whole plant there. And Kobelt right now is being run as a separate business unit as we really haven't just begun the integration. But I would say we haven't done a lot of acquisitions in our history.

是的，我想，大衛，讓我繼續講一些相關內容。是的，當我們的業務垂直排列時。工業業務由 Katsa 的一個人領導，傳動業務由一個來自其他領域的人員負責，其中大部分傳動業務、船舶業務由一位先生負責，他沒有計劃直接向這位先生匯報，但他有多種產品。他擁有多家推進系統工廠的產品。他把整個工廠安置在那裡。目前，Kobelt 作為一個獨立的業務部門運營，因為我們實際上才剛開始整合。但我想說，我們歷史上並沒有進行過很多收購。

And when we did Veth, we quickly ran into COVID, and it was, I would say, a little bit more difficult integration. But once we got through that, it integrated pretty quickly. But my point is that we have we think we have Katsa pretty well integrated after a year of getting them on SEC reporting, getting the IT and everything buttoned up. But I'm really impressed with how quickly we've been able to integrate them operationally. And now we have one gentleman there who's running our industrial business. And the other person there is -- he has the traditional manufacturing operations, Twin Disc manufacturing operations reporting in Finland. So this one this has just been, for us, I think it's been a huge success, Katsa.

當我們開發 Veth 時，我們很快就遇到了 COVID，我想說，整合起來有點困難。但一旦我們解決了這個問題，它就會很快融合。但我的觀點是，我們認為，經過一年的努力，我們已經將 Katsa 納入了 SEC 報告體系，完成了 IT 工作，並且所有一切都安排妥當，我們已經將 Katsa 很好地整合在一起了。但我對我們能夠如此快速地將它們整合到營運中感到非常印象深刻。現在我們有一位先生在那裡管理我們的工業業務。還有另一個人——他負責傳統製造業務，即在芬蘭的 Twin Disc 製造業務報告。所以，對我們來說，我認為這是一個巨大的成功，Katsa。

Great, thanks for that Keller John. Congratulations on all the progress.

太好了，謝謝 Keller John。祝賀你取得的所有進展。

Simon Wong, Gabelli Funds.

Simon Wong，Gabelli Funds 基金經理人。

Looks like you between the two acquisition and the growth in defense, you've done a good job in diversifying away from the oil and gas business. So I guess my first question is how big is your oil and gas business now for the company?

看起來，在兩次收購和國防業務的成長之間，您在擺脫對石油和天然氣業務的依賴方面做得很好。所以我想我的第一個問題是，你們的石油和天然氣業務現在對公司來說有多大？

Yes. I mean it was a difficult year as we -- I think we pointed out in terms of demand coming out of China for a variety of reasons. So it was down as a percent of revenue for the year, it was around 8%, which compares -- that's about half of what it was a few years ago in terms of percent of total revenue. So part of that is growing, obviously, the other pieces of revenue, but revenue within that particular market was also down year-over-year.

是的。我的意思是，正如我們所指出的，這是艱難的一年，出於各種原因，中國的需求不斷下降。因此，它佔全年收入的百分比是下降的，約為 8%，相比之下，就總收入百分比而言，這大約是幾年前的一半。因此，顯然，其他部分的收入都在成長，但該特定市場的收入也較去年同期下降。

Yes. It's definitely a difficult year. It's encouraging to see or hear that you got your first order for the E-frac. If I recall correctly, you were your offering in E-frac is pretty differentiated from what's on the market. Can you remind me what's your E-frac offering is?

是的。這無疑是艱難的一年。看到或聽到您收到了第一份 E-frac 訂單，我們感到非常鼓舞。如果我沒記錯的話，你們提供的 E-frac 產品與市場上的產品有很大不同。您能提醒我您提供的 E-frac 產品是什麼嗎？

Yes. So we used our standard geared transmission, 70 place off to 7,600. And the big difference is that so you have just regular motor, electric motor and you shift the speed with our transmission versus doing a variable frequency drive. And we think that our solution is not only less expensive, it's more robust and will last longer. And it's a better solution to drive the pump.

是的。因此我們使用了標準齒輪傳動裝置，從 70 位元減至 7,600 位元。最大的區別在於，您只需要普通的馬達和電動機，然後使用我們的變速箱來改變速度，而不是使用變頻驅動器。我們認為我們的解決方案不僅成本更低，而且更加強大且使用壽命更長。這是驅動泵的更好的解決方案。

And yes, so we thankfully, we've worked very hard at this, and we got our first spread order after the fiscal year closed. But I'd also draw out Simon that we have -- we've been working on modifying the 7600 as well to work with some pure natural gas engines. So we think that that is also going to be a big opportunity for us in the coming fiscal year and particularly more in fiscal '27. But yes, we think this was probably the lowest -- looking back and looking forward, fiscal '26 is probably going to be our lowest year for oil and gas as a percentage of sales.

是的，值得慶幸的是，我們為此付出了很大的努力，並且在財政年度結束後我們收到了第一份利差訂單。但我還要提到西蒙，我們一直在努力修改 7600，使其能夠與一些純天然氣引擎配合使用。因此，我們認為這對我們下一財年，尤其是 27 財年來說也將是一個巨大的機會。但是的，我們認為這可能是最低的——回顧和展望，26 財年可能是我們石油和天然氣銷售額佔比最低的一年。

Would you the oil and gas can go back to as a percentage you talk...

您是否可以把石油和天然氣的百分比恢復到您所說的水平…

I could see it getting back to 15%.

我看到它回升至 15%。

Okay. Great.

好的。偉大的。

Yes. There's a lot -- there's more activity. I mean, we have orders for North America. We have orders for South America. We have orders for China. So we think the outlook is certainly better than it was in fiscal '26.

是的。有很多——還有更多活動。我的意思是，我們有北美的訂單。我們有南美的訂單。我們有針對中國的訂單。因此我們認為前景肯定比 26 財年更好。

Okay. All right. And then just a housekeeping question really quick. What's your CapEx for '26?

好的。好的。然後只是一個簡單的日常問題。您 26 年的資本支出是多少？

Yes. I think with the additional acquisitions and Katsa being a very machine-intensive kind of operation, it will be a little bit higher than what we've been seeing. So I think in the $12 million to $14 million range.

是的。我認為，隨著額外的收購以及 Katsa 成為一種機器密集型運營，其收入將比我們所看到的略高一些。所以我認為價格在 1200 萬美元到 1400 萬美元之間。

Okay, all right. Great. Okay, that's it for me, guys. Thank you.

好的，好的。偉大的。好的，夥計們，我的講完了。謝謝。

Thanks Simon.

謝謝西蒙。

David MacGregor, Longbow Research.

麥格雷戈（David MacGregor），長弓研究公司（Longbow Research）。

Yeah. Can you hear me okay?

是的。你聽見我說話嗎？

Yes.

是的。

Yes, David.

是的，大衛。

I just wanted to come back on with one quick one, and we've talked before about some of the businesses in North America that maybe are playing at a lower margin level, but that there's a fairly good opportunity to improved margins there? And I guess I'm just thinking 2026, it sounds like you've got very strong order book across lot of these businesses. Is the margin improvement at this point really just volume related and the order book would portend a pretty substantial improvement there, or are there other factors that we should be thinking through?

我只是想快速地再問一個問題，我們之前討論過北美的一些企業，它們的利潤率可能較低，但那裡是否有相當好的機會來提高利潤率？我想我只是在想 2026 年，聽起來您在許多這些業務中都有非常強大的訂單。此時利潤率的提高是否真的僅與數量有關，而訂單量是否預示著相當可觀的改善，或者有其他因素需要考慮？

Yes. Well, it's certainly volume related. It is as I've said, Katsa has shown that they are more effective in certain gear production costs, so moving gears to Katsa and lower more focus on different lower-cost countries and then moving within suppliers in India. So we have all of that going on. And then certainly, the CapEx that we've put in, in TwinCo which is our North American operations and in Belgium. So it's a lot of everything. It's focused on lean, it's focused on part quality. There are several initiatives that are making that up. But certainly, volume there's no substitute for volume and that really helps.

是的。嗯，這肯定與音量有關。正如我所說的，Katsa 已經證明他們在某些齒輪生產成本方面更有效率，因此將齒輪轉移到 Katsa 並降低對不同低成本國家的關注，然後在印度的供應商內部轉移。所以這一切都在進行中。當然，我們在 TwinCo（北美業務）和比利時投入了資本支出。所以一切都很多。它注重精益，注重零件品質。有幾項舉措正在實現這一目標。但可以肯定的是，音量是無可取代的，而且音量確實有幫助。

I'm seeing no further questions. I would now like to turn the call back over to John Batten for closing remarks.

我沒有其他問題。現在我想將電話轉回給約翰·巴頓，請他作最後發言。

Thanks, Demi. And again, thank you for your continued interest in Twin Disc. If you have any follow-up questions, please contact either Jeff or myself, and we look forward to speaking with you in November for our fiscal '26 first quarter call. And Demi, I'll turn it back over to you.

謝謝，黛米。再次感謝您對 Twin Disc 的持續關注。如果您有任何後續問題，請聯絡 Jeff 或我本人，我們期待在 11 月與您進行 26 財年第一季電話會議。黛米，我把它交還給你。

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

女士們、先生們，今天的電話會議到此結束。感謝大家的加入。您現在可以斷開連線。