Twin Disc, Incorporated (TWIN): Business Model Canvas [Dec-2025 Updated]

You're digging into Twin Disc, Incorporated's core engine, and honestly, the numbers for fiscal year 2025 tell a story of strategic maneuvering: they brought in $340.7 million in sales, but you need to watch the cost side, where COGS was $248.01 million and ME&A expenses hit $82.4 million. As someone who's mapped out complex industrial models for years, I see a company actively integrating acquisitions and pushing R&D for electrification, all while depending on a global network of distributors to deliver their heavy-duty, reliable power transmission systems to defense and marine OEMs. This Business Model Canvas distills exactly how Twin Disc, Incorporated is structuring its value proposition, key activities, and revenue streams-which are heavily weighted toward Marine and Propulsion Systems at about 60%-so you can quickly assess where the next big opportunity or margin pressure point lies below.

Twin Disc, Incorporated (TWIN) - Canvas Business Model: Key Partnerships

You're looking at the structure that supports Twin Disc, Incorporated's (TWIN) current revenue of $340.7 million for the fiscal year 2025. Partnerships and strategic buys are clearly driving the top line, especially in the marine sector.

Strategic acquisitions like Katsa Oy and Kobelt Manufacturing

The integration of recent acquisitions has been a major factor in the financial results. For instance, the Marine and Propulsion segment saw a 17.1% increase in fiscal 2025 sales, partly due to these additions. The European market sales improvement of approximately 40% in fiscal 2025 specifically benefited from the addition of Katsa revenue.

Here's a breakdown of the financial impact from the most recent strategic moves:

Acquisition	Key Financial Data Point	Reported Value/Date
Katsa Oy	Contribution to Q2 FY2025 Sales	$10.0 million
Kobelt Manufacturing Co. Ltd.	Acquisition Closing Date	February 14, 2025
Kobelt Manufacturing Co. Ltd.	Revenue for the year ending December 31, 2024	Approximately $14 million
Kobelt Manufacturing Co. Ltd.	Contribution to Q1 FY2026 Sales	$3.1 million
Veth Propulsion	Acquisition Price (2018)	Approximately $58.6 million
Veth Propulsion	Expected 2018 Sales	$60 million

The Industrial products segment also saw a 61.8% increase in fiscal 2025, showing diversification benefits beyond the core marine business. The total six-month backlog at the end of fiscal 2025 stood at $150.5 million, supported by strong order activity across these integrated businesses.

Global network of authorized distributors and service dealers

The reach of Twin Disc, Incorporated is amplified through its established distribution channels. Kobelt, for example, brought longstanding relationships in 60 countries into the fold. This global footprint is essential for supporting the diverse end markets, which include construction, mining, and marine applications worldwide.

The company's geographical performance in fiscal 2025 shows this network in action:

• Sales to the U.S. and Canada improved by 10% in fiscal 2025.
• European market sales improved by approximately 40% in fiscal 2025.
• Sales in the Asia Pacific market decreased by 20% in fiscal 2025.

Key technology partners for hybrid and electric systems

Twin Disc, Incorporated is actively advancing its electrification strategy, which relies on collaboration for system integration. The Twin Disc MGE Series is specifically designed for electric and hybrid power systems, offering a purpose-built solution. The company aims to be a leading provider of these solutions, driven by deep relationships and close collaboration with major OEMs.

Partners mentioned in the context of technology and industry events include:

• Volvo Penta of the Americas.
• STEMMANN-TECHNIK GmbH.
• ACM Bearings.
• Danfoss Drives.
• Servogear.
• ZF.

The company's focus on controls and systems integration is a key strategic shift, enhancing its product portfolio in the hybrid electric sectors. The backlog for the first quarter of fiscal 2026 reached $163.3 million, supported by healthy ongoing demand, including securing wins in autonomous-vessel applications.

Original Equipment Manufacturers (OEMs) in core markets

OEM relationships are fundamental to the sales structure, with power transmission equipment consistently accounting for more than 90% of Twin Disc, Incorporated's revenues over the past three fiscal years. The robust growth in the Marine and Propulsion Systems segment in fiscal 2025, which increased by 17.1%, was supported by defense-driven demand for patrol boat projects. Also, the Land-Based Transmissions market saw growth, driven by strong demand for transmissions used in airport rescue and firefighting (ARFF) vehicles, tied to increased global airport development.

Veth Propulsion partnership for marine applications

The integration of Veth Propulsion, which became part of Twin Disc, Incorporated in 2018, significantly diversified the end-market penetration. This acquisition was expected to increase marine and propulsion systems to about 62% of Twin Disc's business at the time. The Veth product line continues to be a growth driver, as noted by the 40% year-over-year sales improvement in the European region for fiscal 2025, which was attributed to strong demand for Veth propulsion products. Veth innovations, such as the Hybrid Drive and Integrated L-Drive, enhance Twin Disc's engineering talent and product development capabilities, particularly in the marine sector.

Twin Disc, Incorporated (TWIN) - Canvas Business Model: Key Activities

You're looking at the core actions Twin Disc, Incorporated (TWIN) takes to run its business as of late 2025. These are the things they must do well to deliver value.

Design and manufacture heavy-duty power transmission equipment

The manufacturing and design focus remains on core product groups, which saw significant sales shifts in fiscal year 2025 and the first quarter of fiscal 2026.

For the fiscal full year 2025, Twin Disc, Incorporated reported total sales of $340.7 million, up 15.5% year-over-year. The gross margin for that full year was 27.2%. The fourth quarter of fiscal 2025 showed a gross margin improvement to 31.0%.

Here's how the sales broke down by product group for the fiscal full year 2025:

Product Group	FY25 Sales (Thousands of $)	FY24 Sales (Thousands of $)	Change (%)
Marine and Propulsion Systems	$201,101	$171,765	17.1%
Land-Based Transmissions	$80,192	$78,519	2.1%
Industrial	$41,502	$25,669	61.7%
Other	$17,943	$19,174	-6.4%
Total	$340,738	$295,127	15.5%

The first quarter of fiscal 2026 sales reached $80.0 million, with Marine and Propulsion Systems contributing $48,226 thousand.

Research and development (R&D) for electrification strategy

Twin Disc, Incorporated continued to advance its electrification strategy, noting new e-frac activity in the oil and gas segment during fiscal 2025. Specific R&D expenditure figures aren't detailed as a separate line item in the latest summaries, but strategic focus is clear.

The company is securing wins in autonomous-vessel applications within the Marine and Propulsion group, showing forward-looking product development. This focus is part of the long-term value creation strategy targeting fiscal 2030 revenue of $500 million.

Integration of recent acquisitions (e.g., Kobelt) to realize synergies

The integration of recent acquisitions, specifically Kobelt Manufacturing Co. Ltd., is a major current activity. Twin Disc, Incorporated completed the Kobelt acquisition for $16.5 million on February 14, 2025.

Kobelt contributed $4.9 million in incremental revenue during the latter part of fiscal 2025. For the year ending December 31, 2024, Kobelt delivered approximately $14 million of revenue. The acquisition was expected to be immediately accretive to U.S. GAAP earnings.

The increased Marketing, Engineering and Administrative (ME&A) expense for fiscal full year 2025 to $82.4 million was partly driven by the addition of Kobelt.

Key elements Kobelt brings to the activity set include:

• After-sales services, in-house foundry, and bronze die casting capabilities.
• Complementary brake, control, and steering systems.
• Relationships in over 60 countries.

Global sales and after-sales service support

Global sales support is evidenced by shifts in regional revenue contribution and a healthy order book. The six-month backlog stood at $150.5 million at the end of fiscal 2025, growing to $163.3 million by the end of the first quarter of fiscal 2026.

The company highlighted specific market strengths:

• Defense-related orders grew 45% year-over-year in fiscal 2025.
• Defense orders represented approximately 15% of the total backlog at the end of fiscal 2025.
• Double-digit growth was delivered in both the European and Asia-Pacific regions for fiscal 2025.

The distribution of sales shifted, with a greater proportion coming from Europe in fiscal 2025, and in Q1 FY2026, a greater proportion came from the North American region.

Maintaining disciplined operations to manage cost pressures

Managing costs and maintaining pricing discipline were stated priorities throughout fiscal 2025, despite tariff noise and inflationary impacts on wages and benefits. This discipline is necessary as the full-year fiscal 2025 EBITDA was $19.0 million, down from $26.5 million in fiscal 2024.

Operational metrics reflecting this discipline include:

• Fiscal 2025 Free cash flow was $8.8 million.
• Inventory as a percentage of six-month backlog decreased from 101.0% at the end of Q4 FY2025 to 96.9% at the end of Q1 FY2026.
• The company is focused on disciplined capital management.

Finance: draft 13-week cash view by Friday.

Twin Disc, Incorporated (TWIN) - Canvas Business Model: Key Resources

You're looking at the core assets that Twin Disc, Incorporated (TWIN) uses to deliver its value propositions. These aren't just things they own; they are the specialized capabilities that make their products better and their market position defensible. Honestly, looking at the recent acquisitions and technology investments, these resources are what you should be tracking closely.

One of the most tangible assets is the intellectual property, especially around their propulsion control. The QuickShift transmission system is a prime example of this proprietary technology.

• The patented GP valve allows clutch engagement in just 0.05 seconds, versus 0.75 seconds for a standard marine transmission.
• It achieves full torque in only 0.2 seconds, compared to the 2.0 seconds required by competitors.
• This translates to an in excess of 15 times faster clutch response and in excess of 10 times faster to full torque.
• The system is now hybrid-ready, featuring a power-take-in (PTI) for electric motor integration.

The company's physical reach and production capability form another critical layer of resources. Twin Disc, Incorporated maintains a global manufacturing and distribution footprint that supports its worldwide customer base.

Here's a snapshot of that global reach:

Geographic Coverage	Detail
Sales Offices/Subsidiaries	Asia, Europe, North America, Oceania, and South America
Distributor Sales & Service Locations	250 locations
Countries Served by Distribution	83 countries
FY2025 Sales Growth (Europe)	Improved by approximately 40%

The February 2025 acquisition of Kobelt brought in specialized manufacturing assets, specifically their in-house foundry and bronze die casting capabilities. This vertical integration is a big deal for quality control in certain components.

• The acquisition cost was $16.5 million.
• Kobelt delivered approximately $14 million in revenue for the year ending December 31, 2024.
• Kobelt operates 20 CNC machines for processing parts.
• The foundry features both manual & automated production capacity for die-casting bronze parts.

Underpinning the technology and manufacturing is deep engineering expertise in marine and off-highway applications. This expertise is evident in their product mix and recent strategic focus areas.

The product portfolio itself represents a resource base built on decades of engineering refinement:

Twin Disc, Incorporated's product offerings include:

• Marine transmissions, azimuth drives, surface drives, propellers, and boat management systems.
• Power-shift transmissions and hydraulic torque converters for land-based use.
• Industrial clutches and control systems.

Finally, the order book provides a forward-looking measure of the value of these resources. As of the fiscal year-end June 30, 2025, Twin Disc, Incorporated reported a $150.5 million six-month backlog supported by strong ongoing order activity. To be fair, by the first quarter of fiscal 2026 (ended September 26, 2025), this backlog had grown to $163.3 million.

For context on the scale of the business these resources support in fiscal year 2025:

Financial Metric (Fiscal Full Year 2025)	Amount
Total Sales	$340.7 million
Gross Profit	$92.7 million
Net (Loss) Income Attributable to TWIN	($1.9) million
Operating Cash Flow	$24.0 million

Finance: review the inventory-to-backlog ratio as of Q1 FY2026, which stood at 96.9%.

Twin Disc, Incorporated (TWIN) - Canvas Business Model: Value Propositions

Integrated power transmission and control systems for complex applications

Twin Disc, Incorporated (TWIN) offers a portfolio including marine transmissions, surface drives, propellers, boat management systems, power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, control systems, and braking systems. Product lines in power transmission equipment consistently accounted for more than 90% of Twin Disc, Incorporated (TWIN)'s revenues over the past three fiscal years. The company's total revenue for the fiscal full year 2025 ended June 30, 2025, was $340.7 million.

Heavy-duty, reliable equipment for harsh operating environments

The company's equipment is designed for demanding settings. For the fiscal full year 2025, sales to the U.S. and Canada improved by 10%. The European market sales improved by approximately 40% in fiscal 2025. The six-month backlog as of September 26, 2025, stood at $163.3 million.

Market/Segment Performance (FY 2025)	Year-over-Year Sales Change
Marine transmission and propulsion systems	17.1% increase
Off-highway transmission market	2.1% increase
Industrial products	61.8% increase

Solutions for meeting emissions standards via hybrid and electric systems

Twin Disc, Incorporated (TWIN) continued to advance its electrification strategy, noting new e-frac activity in fiscal 2025. The company saw its first order for its e-frac offerings. The oil and gas market share is projected to move from about 8% of revenue in fiscal 2025 to the mid-teens percentage range.

Global after-sales service and parts availability

The company operates globally with manufacturing facilities in the United States, Europe, and Asia, and distribution locations worldwide. Aftermarket demand was noted as healthy within the Marine and Propulsion product group in the first quarter of fiscal 2026. The fiscal full year 2025 sales increased by 15.5% year-over-year to $340.7 million.

High-performance products for defense and pleasure craft markets

Robust defense-driven demand was a key driver for Marine and Propulsion systems. Defense represented approximately 15% of the company's total backlog as of the end of fiscal 2025, which was a 45% year-over-year increase in that portion of the backlog. The pleasure craft market saw rebounding orders as the year progressed, setting up stronger results for 2026 deliveries.

• Fiscal Full Year 2025 Net Loss attributable to Twin Disc, Incorporated (TWIN): ($1.9 million).
• Fiscal Full Year 2025 EBITDA: $19.0 million.
• Fiscal Full Year 2025 Free cash flow: $8.8 million.
• Fiscal Fourth Quarter 2025 Gross Margin: 31.0%.

Twin Disc, Incorporated (TWIN) - Canvas Business Model: Customer Relationships

You're looking at how Twin Disc, Incorporated (TWIN) manages its connections with the people and businesses buying its power transmission equipment. It's a mix of direct selling and a wide dealer net, which is key for a company with a global footprint.

Dedicated direct sales force and distributor engagement

Twin Disc, Incorporated (TWIN) transacts worldwide sales to both domestic and foreign customers through a combination of its direct sales force and a distributor network. This dual approach helps cover diverse end-markets like pleasure craft, commercial and military marine, energy and natural resources, government, and industrial sectors. The scale of this network is substantial, with 250 distributors and service dealers across the world maintaining inventory of critical products and spare parts. This structure supports the company's total Fiscal Year 2025 net sales of $340.7 million.

The importance of these channels is clear when looking at recent performance shifts. For instance, in the first quarter of fiscal 2026 (period ended September 26, 2025), sales were $80.0 million, up 9.7% year-over-year, with double-digit growth in the North American region driving a shift in sales distribution.

The reliance on key customers is a factor to watch; the top ten customers accounted for a significant portion of sales in fiscal 2025, though the exact percentage isn't public.

Long-standing relationships with global OEMs and end-users

The relationships are built on a long history, which is evident in the sustained demand across segments. For example, in Fiscal Year 2025, sales to the U.S. and Canada improved by 10%, while the European market saw sales improve by approximately 40%, partly due to the integration of Katsa Oy revenue. Conversely, the Asia Pacific market saw a 20% decrease in sales in the same period due to softening demand in China.

The backlog reflects the strength of these ongoing ties. The six-month backlog stood at $150.5 million as of June 30, 2025, and grew to $163.3 million by the end of the first quarter of fiscal 2026 (period ended September 26, 2025).

The customer base is diverse, but specific market dynamics impact relationships:

• Marine and Propulsion systems saw a 17.1% increase in sales in Fiscal Year 2025.
• Industrial products saw a 61.8% increase in Fiscal Year 2025, driven by North American construction and recycling.
• The oil and gas market was a smaller contributor, around 8% of revenue in fiscal 2025, though management sees potential for it to move back to the mid-teens.

Providing technical consultation for custom solutions

Twin Disc, Incorporated (TWIN) application engineers use their global experience to help customers select the most appropriate product for their specific application. This consultative approach aims for the optimum combination of durability, productivity, and cost-effectiveness, whatever the operating parameters.

This is critical in emerging areas. The company secured an initial order for its e-frac solutions during the first quarter of fiscal 2026, representing 14 units totaling $2.3 million.

The company's application engineering support helps tailor solutions, as seen in the focus on higher content solutions reinforcing the mix in the Industrial business, which grew 13.2% year-over-year in Q1 FY2026.

Aftermarket support for long product lifecycles

The business model inherently supports long product lifecycles, necessitating robust aftermarket support. The global network of 250 distributors and service dealers is tasked with partnering with customers to review specific applications and recommend preventive and predictive maintenance programs.

Healthy aftermarket demand was noted as a driver for the Marine and Propulsion product group in the first quarter of fiscal 2026.

The company's focus on parts availability is a direct relationship stabilizer for long-term asset owners. In an emergency, the service team locates the nearest available inventory and uses after-hours capabilities to get customers back underway right away.

Focus on being an integrated systems supplier

Twin Disc, Incorporated (TWIN) designs its products to work seamlessly together, offering power managed through smooth shifting, exacting speed control, and driveline protection. The recent acquisitions of Katsa Oy and Kobelt Manufacturing Co. Ltd. in fiscal 2025 are part of a strategy to enhance the product portfolio and deepen engineering capabilities, positioning the company as a more integrated supplier. The integration of Veth continues to yield synergies, positioning the company for hybrid and electric propulsion applications with hybrid marine transmissions and control systems.

The integration efforts are explicitly cited as creating new commercial opportunities across regions and segments as the company enters the new fiscal year following its Fiscal Year 2025 performance of $340.7 million in sales.

The following table summarizes key financial and operational metrics relevant to the customer base and sales structure for the latest reported periods:

Metric	Value (FY 2025 End June 30, 2025)	Value (Q1 FY2026 End Sept 26, 2025)
Net Sales (TTM)	$340.7 million	$80.0 million (Q1 Sales)
Six-Month Backlog	$150.5 million	$163.3 million
European Sales Growth (FY 2025 vs FY 2024)	Approx. 40% increase	N/A
Asia Pacific Sales Change (FY 2025 vs FY 2024)	20% decrease	N/A
Total Employees	980	N/A

Finance: review the impact of the 1% to 3% tariff impact expected on Q2 FY2026 cost of sales against current backlog pricing assumptions by end of January 2026.

Twin Disc, Incorporated (TWIN) - Canvas Business Model: Channels

You're looking at how Twin Disc, Incorporated (TWIN) gets its products-marine transmissions, industrial clutches, and now Kobelt systems-to the end-user as of late 2025. It's a mix of direct engagement and a wide partner net.

The company's worldwide sales to both domestic and foreign customers are transacted through a direct sales force and a distributor network.

The integration of Kobelt Manufacturing, finalized in February 2025 for $16.5 million, immediately expanded the channel footprint. Kobelt brought established relationships in approximately 60 countries into the Twin Disc structure. This acquisition contributed to the 9.7% year-over-year sales increase to $80.0 million in the first quarter of fiscal 2026.

Here's a breakdown of the primary channel components:

Channel Component	Primary Function/Reach	Relevant Financial/Statistical Data
Direct Sales Force	Large OEM and government contracts engagement	Contributed to $340.7 million in fiscal full year 2025 sales.
Authorized Distributor Network	Broad global product distribution and sales support	Sales growth in Q4 2025 driven by strength in Marine and Propulsion Systems.
Acquired Channels (Kobelt)	Complementary product sales and expanded international reach	Kobelt delivered approximately $14 million in revenue for the year ending December 31, 2024. Kobelt has established relationships in 60 countries.
Service Dealers/Aftermarket	Parts and maintenance support	Kobelt brought extensive after-sales services, including in-house foundry capabilities.

The direct sales force is key for securing large, often defense-related, contracts. The backlog of orders to be shipped over the next six months stood at approximately $163.3 million as of the end of Q1 2026, supported by healthy demand across these core channels.

For parts and maintenance, the network includes service dealers, which are now augmented by Kobelt's capabilities in after-sales services, foundry work, and precision machining.

The digital component supports the physical network:

• Digital platforms for product information access.
• Customer support resources available via the company website, www.twindisc.com.
• Webcasts for investor and customer communication, such as the Q4 2025 earnings call access point at https://ir.twindisc.com.

The integration efforts post-acquisitions are creating new commercial opportunities across regions and segments, leveraging the combined global sales and service team.

Finance: draft 13-week cash view by Friday.

Twin Disc, Incorporated (TWIN) - Canvas Business Model: Customer Segments

You're looking at the core customer base for Twin Disc, Incorporated as of late 2025, based on their fiscal year 2025 performance. The business model clearly relies on a diversified set of end-markets, though some are clearly outpacing others right now.

Twin Disc, Incorporated reported total sales of $340.7 million for the fiscal year 2025, showing a 15.5% increase year-over-year, partly driven by strategic acquisitions like Katsa and Kobelt Manufacturing Co..

Military and government defense markets (accelerating orders)

This segment is a clear growth driver. The CEO noted robust defense-driven demand leading the Marine and Propulsion Systems segment. The company highlighted its strong positioning here, with defense representing approximately 15% of the total backlog as of the end of fiscal 2025, which was a 45% year-over-year increase in that backlog portion. You should also note the external tailwind: the company cited a 13% year-over-year increase in 2026 US Defense Spending projections.

Commercial and pleasure craft marine customers

The Marine and Propulsion Systems segment saw significant growth, with sales increasing by 17.1% in fiscal 2025. This strength was supported by Veth products, which continued to see record orders globally in response to demand for electric, hybrid, and conventional propulsion systems. Pleasure craft orders, while slow in the first half of 2025, rebounded strongly toward the end of the year, setting up better results for 2026.

Energy and natural resources (oil and gas, though declining)

This market remained challenged throughout fiscal 2025. The oil and gas sector represented only about 8% of Twin Disc, Incorporated's revenue in fiscal 2025. Management believes this segment could move back to the mid-teens percentage of revenue, which was more typical before recent downturns. Still, the company advanced its electrification strategy here with new e-frac activity.

Industrial markets (e.g., construction, mining, fire & rescue)

The Industrial segment showed a definite stabilization and recovery late in the year. Industrial products sales saw a massive 61.8% increase, driven by demand in North American construction and recycling markets. Separately, the off-highway transmission market saw a 2.1% increase, largely due to high demand for ARFF (Aircraft Rescue and Fire Fighting) transmissions. The Industrial segment stock grew 44.8% year-over-year in the second quarter of fiscal 2025, driven by a rebound in Lufkin orders.

Global OEMs requiring specialized power train components

The acquisitions of Katsa and Kobelt expanded the customer base and capabilities, which directly supports serving global OEMs with specialized components. The overall sales growth across all product lines indicates broad OEM engagement, though specific OEM revenue percentages aren't broken out separately from the segment data. The company operates globally with manufacturing in the United States, Europe, and Asia.

Here's a quick look at the geographic sales performance that underpins these customer segments for fiscal year 2025:

Geography/Market Area	Fiscal Year 2025 Sales Change vs. Prior Year	Noteworthy Detail
Marine Transmission & Propulsion Systems (Overall)	17.1% increase	Reflected strong market conditions and easing supply chain constraints.
Industrial Products	61.8% increase	Driven by demand in North American construction and recycling.
Off-Highway Transmission Market	2.1% increase	Primarily due to high demand for ARFF transmissions.
European Market Sales	Approximately 40% improvement	Driven by Veth propulsion products and Katsa revenue addition.
U.S. and Canada Sales	10% improvement	Reflecting healthy end-market demand.
Asia Pacific Market Sales	20% decrease	Attributed to softening demand in China.

The customer base is clearly shifting, with defense and industrial segments showing strong momentum, while the traditional energy segment is a smaller piece of the pie for now. If onboarding takes 14+ days, churn risk rises, but the backlog of $150.5 million suggests strong near-term commitment across these segments.

Finance: draft 13-week cash view by Friday.

Twin Disc, Incorporated (TWIN) - Canvas Business Model: Cost Structure

The cost structure for Twin Disc, Incorporated centers heavily on the direct costs of production, followed by significant overhead related to growth initiatives and market presence. You see the scale of the operation reflected in these large expense categories.

The High Cost of Goods Sold (COGS) represents the largest single drain on revenue. For the fiscal year ended June 30, 2025, COGS was reported at $248.01 million. This figure, against total sales of $340.7 million for the same period, resulted in a gross margin of 27.2%.

Next, you have the Significant Marketing, Engineering, and Administrative (ME&A) expenses. For the full fiscal year 2025, ME&A totaled $82.4 million, marking an increase of 15.1% over the prior year. This increase was largely driven by the inclusion of the recently acquired Katsa and Kobelt businesses, plus inflationary impacts on wages and benefits, and higher professional fees.

Here's a quick look at the major cost components from the full fiscal year 2025:

Cost Component	FY2025 Amount (in millions)	Percentage of Sales (Approx.)
Cost of Goods Sold (COGS)	$248.01	72.8%
Marketing, Engineering, and Administrative (ME&A)	$82.4	24.2%
Total Operating Expenses (COGS + ME&A)	$330.41	97.0%
Gross Profit	$92.73	27.2%

Costs associated with acquisition integration and debt servicing are also material factors influencing the bottom line. The integration of Katsa at the start of fiscal 2025 and Kobelt later in the year contributed to the rise in ME&A. Furthermore, the company carried debt, with total debt increasing to $43.7 million by the end of the first quarter of fiscal 2026, largely due to the Kobelt acquisition, which implies ongoing debt servicing costs.

The company is actively investing in its future capacity and technology, which shows up in capital spending. While the actual fiscal 2025 capital expenditures aren't explicitly detailed as a total, the forward-looking plan for manufacturing capacity and R&D investment for fiscal 2026 is projected to be between $17 million and $19 million.

You also need to factor in external pressures impacting margins, specifically supply chain and tariff noise costs. Management noted that they managed through tariff noise throughout the year. Supply chain issues manifested as shipping delays at the end of fiscal 2025, which contributed to an increase in inventory of $21.5 million for the year.

Key cost drivers and related financial impacts include:

• COGS as a percentage of sales for FY2025 was approximately 72.8%.
• ME&A expenses increased by $4.3 million, or 20.9%, in the fourth quarter alone, driven by acquisitions.
• A $1.6 million inventory write-down related to the Katsa acquisition impacted gross profit margin in Q2 2025.
• Inventory increased by $21.5 million during fiscal 2025.
• The company generated a net loss attributable to Twin Disc of ($1.9) million for the full fiscal year 2025.

Finance: draft 13-week cash view by Friday.

Twin Disc, Incorporated (TWIN) - Canvas Business Model: Revenue Streams

You're looking at the core ways Twin Disc, Incorporated generates its top line, which is heavily reliant on selling complex power transmission equipment globally. For the fiscal year ending June 30, 2025, the total consolidated sales for Twin Disc, Incorporated were $340.7 million. This represented a significant increase of 15.5% year-over-year from the prior fiscal year. Still, it's important to note that on an organic basis-meaning stripping out the effects of acquisitions and currency-the revenue growth for the full year 2025 was only 1.0%, so most of that top-line expansion came from recent deals.

The revenue streams are segmented across the core product lines. The Sale of Marine and Propulsion Systems is a foundational piece, which the outline suggests accounts for approximately 60% of the product breakdown. This segment showed strength, with sales increasing by 17.1% in fiscal 2025. The other major components are the Sale of Land-Based Transmissions and Industrial products. Growth in the Land-Based Transmissions markets was a key driver for the full-year sales increase. To give you a snapshot of the recent momentum, in the fourth quarter of fiscal 2025, the Industrial segment saw a massive jump of 61.8% year-over-year, while Land-Based Transmissions grew 4.5%.

The third key stream is the Aftermarket sales of parts, service, and repairs. While a specific percentage of the $340.7 million total isn't explicitly broken out in the latest reports, this stream is crucial for recurring revenue and margin stability, especially given the acquisition of Kobelt, which brought complementary after-sales services. Overall, the company's core power transmission equipment consistently accounts for more than 90% of total revenues over the last three fiscal years.

The growth in the revenue base was definitely helped by recent strategic moves. The Revenue from recent acquisitions like Kobelt and Katsa defintely drove growth. The acquisition of Katsa Oy, completed in May 2024, added to European market expansion, and the Kobelt Manufacturing acquisition, finalized in February 2025 for about $16.5 million, added an established revenue base. For context on the acquisition impact, Kobelt reported approximately $14 million in revenue for the year ending December 31, 2024.

Here's a quick look at the segment performance drivers from the most recent quarter and the known acquisition contributions:

Revenue Driver/Segment	FY2025 Full Year Performance Metric	Q4 FY2025 Value (Millions USD)
Total Consolidated Sales	$340.7 million	$96.7 million
Marine & Propulsion Systems Growth	+17.1% YoY	$53.0 million
Industrial Products Growth	+61.8% YoY	$13.1 million
Land-Based Transmissions Growth	Driven growth driver	$26.1 million
Kobelt Acquisition Contribution (FY2024 Revenue)	Added to FY2025 base	~$14.0 million (FY2024)

You can see the mix shifting, with Industrial showing massive percentage growth, even as Marine remains the largest single product line. The overall revenue picture for Twin Disc, Incorporated in FY2025 was one of expansion driven by M&A, though organic growth was modest.

The composition of the revenue streams can be further detailed by looking at the end markets that contribute to the sales figures:

• Marine transmission and propulsion systems sales increased 17.1% in fiscal 2025.
• Industrial products revenue grew by 61.8%.
• Sales to the U.S. and Canada improved by 10% in fiscal 2025.
• European market sales improved by approximately 40%, helped by Katsa revenue.
• Oil & gas represented approximately 8% of fiscal 2025 revenue.

Finance: draft 13-week cash view by Friday.