TWIN DISC INC Segments Disclosure

K. BUSINESS SEGMENTS AND FOREIGN OPERATIONS

 

The Company and its subsidiaries are engaged in the manufacture and sale of marine and heavy duty off-highway power transmission equipment. 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 sells to both domestic and foreign customers in a variety of market areas, principally pleasure craft, commercial and military marine markets, energy and natural resources, government, and industrial markets.

 

Net sales by product group for the years ended June 30 is summarized as follows:

 

		2025				2024
Industrial		$	41,502			$	25,668
Land-based transmissions			80,192				78,518
Marine and propulsion systems			201,101				171,766
Other			17,943				19,175
Total		$	340,738			$	295,127

 

Industrial products include clutches, power take-offs and pump drives sold to the agriculture, recycling, construction and oil and gas markets. The land-based transmission products include applications for oil field and natural gas, military and airport rescue and firefighting. The marine and propulsion systems include marine transmission, azimuth drives, controls, surface drives, and propellers for the global commercial marine, pleasure craft and patrol boat markets. Other includes non-Twin Disc manufactured product sold through Company-owned distribution entities.

 

The Company has two reportable segments: manufacturing and distribution.  Its segment structure reflects the way the chief operating decision-maker (“CODM”) makes operating decisions and manages the growth and profitability of the business. It also corresponds with the CODM’s approach of allocating resources and assessing the financial performance of its segments. The Company’s CODM is the Chief Executive Officer, who reviews financial information presented on a consolidated basis. The accounting practices of the segments are the same as those described in the summary of significant accounting policies. Transfers among segments are at established inter-company selling prices.  The CODM evaluates the performance of its segments based on net sales, gross profit, operating income (loss), and net earnings (loss).

 

The following table presents the selected financial information with respect to the Company’s reportable segments for the year ended June 30, 2025:

 

		Manufacturing				Distribution				Corporate				Elimination and adjustments				Consolidated
Net sales:
Net sales		$	295,550			$	130,956			$	-			$	(85,768	)		$	340,738
Intra-segment sales			(7,213	)			(21,043	)			-				28,256				-
Inter-segment sales			(52,691	)			(4,821	)			-				57,512				-
Total consolidated net sales		$	235,646			$	105,092			$	-			$	-			$	340,738
Cost of goods sold:
Cost of goods sold		$	229,807			$	104,165			$	-			$	85,576			$	419,548
Intra-segment cost of goods sold			(7,213	)			(21,043	)			-				(28,256	)			(56,512	)
Inter-segment cost of goods sold			(52,691	)			(4,821	)			-				(57,512	)			(115,024	)
Total consolidated cost of goods sold		$	169,903			$	78,301			$	-			$	(192	)		$	248,012
Gross profit		$	65,743			$	26,791			$	-			$	192			$	92,726
Marketing, engineering and administrative expenses		$	41,388			$	14,796			$	26,247			$	-			$	82,431
Restructuring expenses			252				93				63				-				408
Operating income (loss)		$	24,103			$	11,902			$	(26,310	)		$	192			$	9,887
Other (income) expense:
Interest income		$	(1,045	)		$	(550	)		$	(1,801	)		$	3,329			$	(67	)
Interest expense			5,900				7				68				(3,329	)			2,646
Other (income) expense			14,725				6,537				(15,818	)			95				5,539
Total consolidated other (income) expense		$	19,580			$	5,994			$	(17,551	)		$	95			$	8,118
Pretax earnings (loss)		$	4,523			$	5,908			$	(8,759	)		$	97			$	1,769
Income tax expense (benefit)			1,476				2,151				(228	)			(31	)			3,368
Net earnings (loss)		$	3,047			$	3,757			$	(8,531	)		$	128			$	(1,599	)
Minority interest			-				(295	)			-				-				(295	)
Net earnings (loss) attributable to Twin Disc, Incorporated		$	3,047			$	3,462			$	(8,531	)		$	128			$	(1,894	)
Total consolidated assets		$	487,114			$	66,087			$	(186,291	)		$	(11,348	)		$	355,562
Depreciation and amortization		$	13,282			$	353			$	1,264			$	-			$	14,899
Expenditures for segment assets			11,590				1,902				1,665				-				15,157

 

The following table presents the selected financial information with respect to the Company’s reportable segments for the year ended June 30, 2024:

 

		Manufacturing				Distribution				Corporate				Elimination and adjustments				Consolidated
Net sales:
Net sales		$	250,934			$	148,919			$	-			$	(104,726	)		$	295,127
Intra-segment sales			(6,974	)			(15,661	)			-				22,635				-
Inter-segment sales			(77,978	)			(4,113	)			-				82,091				-
Total consolidated net sales		$	165,982			$	129,145			$	-			$	-			$	295,127
Cost of goods sold:
Cost of goods sold		$	196,140			$	122,505			$	-			$	102,615			$	421,260
Intra-segment cost of goods sold			(6,974	)			(15,661	)			-				(22,635	)			(45,270	)
Inter-segment cost of goods sold			(77,978	)			(4,113	)			-				(82,091	)			(164,182	)
Total consolidated cost of goods sold		$	111,188			$	102,731			$	-			$	(2,111	)		$	211,808
Gross profit		$	54,794			$	26,414			$	-			$	2,111			$	83,319
Marketing, engineering and administrative expenses		$	31,801			$	15,340			$	24,481			$	-			$	71,622
Restructuring expenses			149				41				28				-				218
Operating income (loss)		$	22,844			$	11,033			$	(24,509	)		$	2,111			$	11,479
Other (income) expense:
Interest income		$	(335	)		$	(344	)		$	-			$	615			$	(64	)
Interest expense			1,987				11				60				(615	)			1,443
Other (income) expense			(4,285	)			1,341				(3,812	)			1,489				(5,267	)
Total consolidated other (income) expense		$	(2,633	)		$	1,008			$	(3,752	)		$	1,489			$	(3,888	)
Pretax earnings (loss)		$	25,477			$	10,025			$	(20,757	)		$	622			$	15,367
Income tax expense			1,244				2,164				311				402				4,121
Net earnings (loss)		$	24,233			$	7,861			$	(21,068	)		$	220			$	11,246
Minority Interest			-				(258	)			-				-				(258	)
Net earnings (loss) attributable to Twin Disc, Incorporated		$	24,233			$	7,603			$	(21,068	)		$	220			$	10,988
Total consolidated assets		$	456,731			$	58,351			$	(194,730	)		$	(8,296	)		$	312,058
Depreciation and amortization		$	8,606			$	341			$	1,034			$	-			$	9,981
Expenditures for segment assets			7,304				730				673				-				8,707

 

Corporate expenses pertain to certain costs that are not allocated to the reportable segments, primarily consisting of corporate overhead costs, including administrative functions and global functional expenses.

 

Geographic information about the Company for the years ended June 30 is summarized as follows:

 

		2025				2024
Net sales
United States		$	87,549			$	79,823
Netherlands			52,735				46,162
China			28,666				45,527
Finland			24,618				-
Australia			22,358				17,790
Italy			10,420				16,814
Other countries			114,392				89,011
Total		$	340,738			$	295,127

 

Net sales by geographic region are based on product shipment destination.

 

Long-lived assets primarily pertain to property, plant and equipment and exclude goodwill, other intangibles, and deferred income taxes. They are summarized as follows:

 

Long-lived assets		2025				2024
United States		$	39,949			$	39,475
Netherlands			11,426				10,270
Finland			15,660				14,362
Belgium			8,184				5,746
Canada			5,952				-
Other Countries			8,412				7,549
Total		$	89,583			$	77,402

 

No one customer accounted for 10% of consolidated net sales in fiscal year 2025 and 2024.

 

Disaggregated revenue:

 

The following tables present details deemed most relevant to the users of the financial statements for the years ended June 30, 2025 and June 30, 2024.

 

Net sales by product group for the year ended June 30, 2025 is summarized as follows:

 

										Elimination of
		Manufacturing				Distribution				Intercompany Sales				Total
Industrial		$	40,717			$	5,176			$	(4,391	)		$	41,502
Land-based transmissions			76,171				16,621				(12,600	)			80,192
Marine and propulsion systems			178,553				90,196				(67,648	)			201,101
Other			109				18,963				(1,129	)			17,943
Total		$	295,550			$	130,956			$	(85,768	)		$	340,738

 

Net sales by product group for the year ended June 30, 2024 is summarized as follows:

 

										Elimination of
		Manufacturing				Distribution				Intercompany Sales				Total
Industrial		$	23,656			$	5,163			$	(3,151	)		$	25,668
Land-based transmissions			71,464				40,693				(33,639	)			78,518
Marine and propulsion systems			152,855				86,202				(67,291	)			171,766
Other			2,959				16,861				(645	)			19,175
Total		$	250,934			$	148,919			$	(104,726	)		$	295,127