Note K - Business Segments and Foreign Operations

12 Months Ended

Jun. 30, 2025

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

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