v3.26.1
Note J - Business Segments and Foreign Operations
 12 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Segment Reporting [Text Block]

J. 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:

 

  

June 30, 2026

  

June 30, 2025

 

Industrial

 $46,067  $41,502 

Land-based transmissions

  89,698   80,192 

Marine and propulsion systems

  227,675   201,101 

Other

  17,830   17,943 

Total

 $381,270  $340,738 

 

 

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 products sold through Company-owned distribution entities.

 

The Company has two reportable segments: manufacturing and distribution.  Its segment structure reflects the way 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 for the two reportable segments. 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 (loss), 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, 2026:

 

  

Manufacturing

  

Distribution

  

Corporate

  

Elimination and

adjustments

  

Consolidated

 

Net sales:

                    

Net sales

 $340,456  $115,720  $-  $(74,906) $381,270 

Intra-segment sales

  (8,559)  (13,941)  -   22,500   - 

Inter-segment sales

  (47,736)  (4,670)  -   52,406   - 

Total consolidated net sales

  284,161   97,109   -   -   381,270 
                     

Cost of goods sold:

                    

Cost of goods sold

  262,298   91,736   -   (75,324)  278,710 

Intra-segment cost of goods sold

  (8,559)  (13,941)  -   22,500   - 

Inter-segment cost of goods sold

  (47,736)  (4,670)  -   52,406   - 

Total consolidated cost of goods sold

  206,003   73,125   -   (418)  278,710 
                     

Gross profit

  78,158   23,984   -   (418)  102,560 
                     

Marketing, engineering and administrative expenses

  43,729   15,373   25,353   -   84,455 
        Restructuring expense  366   -   -   -   366 

Other operating income

  152   -   (373)  -   (221)

Operating income (loss)

  33,911   8,611   (24,980)  (418)  17,960 
                     

Other income (expense):

                    

Interest income

  1,567   542   1,880   (3,956)  33 

Interest expense

  (6,958)  (9)  (67)  3,956   (3,078)

Other income (expense)

  (13,214)  (6,713)  18,711   (103)  (1,319)

Total consolidated other income (expense)

  (18,605)  (6,180)  20,524   (103)  (4,364)
                     

Pretax earnings (loss)

  15,306   2,431   (4,456)  (521)  13,596 
                     

Income tax benefit (expense)

  (14,085)  (2,132)  30,229   (38)  13,974 

Net income (loss)

  1,221   299   25,773   (559)  27,570 
                     

Minority interest

  -   493   -   -   493 

Net income (loss) attributable to Twin Disc, Incorporated

 $1,221  $(194) $25,773  $(559) $27,077 
                     
                     

Total consolidated assets

 $521,842  $78,369  $(142,599) $(56,367) $401,245 
                     

Depreciation and amortization

 $11,925  $396  $1,425  $-  $13,746 

Expenditures for segment assets

  10,452   1,003   2,258   -   13,713 

 

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

  

As Adjusted
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

  228,610   104,165   -   (85,960)  246,815 

Intra-segment cost of goods sold

  (7,213)  (21,043)  -   28,256   - 

Inter-segment cost of goods sold

  (52,691)  (4,821)  -   57,512   - 

Total consolidated cost of goods sold

  168,706   78,301   -   (192)  246,815 
                     

Gross profit

  66,940   26,791   -   (192)  93,923 
                     

Marketing, engineering and administrative expenses

  41,388   14,796   26,247   -   82,431 

       Restructuring expenses

  252   93   63   -   408 

Operating income (loss)

  25,300   11,902   (26,310)  (192)  11,084 
                     

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)

  5,720   5,908   (8,759)  (287)  2,966 
                     

Income tax benefit (expense)

  (1,476)  (2,151)  228   31   (3,368)

Net income (loss)

  4,244   3,757   (8,531)  (256)  (402)
                     

Minority interest

  -   (295)  -   -   (295)

Net income (loss) attributable to Twin Disc, Incorporated

 $4,244  $3,462  $(8,531) $(256) $(697)
                     
                     

Total consolidated assets

 $519,247  $66,087  $(186,291) $(11,347) $387,696 
                     

Depreciation and amortization

 $13,281  $353  $1,265  $-  $14,899 

Expenditures for segment assets

  11,590   1,902   1,665   -   15,157 

 

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:

 

  

2026

  

2025

 

Net sales

        

United States

 $106,207  $87,549 

Netherlands

  61,888   52,735 

Finland

  32,695   24,618 

China

  29,100   28,666 

Australia

  20,356   22,358 

Italy

  13,111   10,420 

Other countries

  117,913   114,392 

Total

 $381,270  $340,738 

 

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

 

2026

  

2025

 

United States

 $36,324  $39,949 

Netherlands

  10,400   11,426 

Finland

  16,561   15,660 

Belgium

  7,563   8,184 

Canada

  4,870   5,952 

Other Countries

  9,326   8,411 

Total

 $85,044  $89,582 

 

 

No one customer accounted for 10% of consolidated net sales in fiscal year 2026 and 2025.

 

Disaggregated revenue:

 

The following tables present details deemed most relevant to the users of the financial statements for the years ended June 30, 2026 and June 30, 2025.

 

Net sales by product group for the year ended June 30, 2026 is summarized as follows:

 

          

Elimination of

     
  

Manufacturing

  

Distribution

  

Intercompany Sales

  

Total

 

Industrial

 $45,622  $4,265  $(3,820) $46,067 

Land-based transmissions

  84,879   19,973   (15,154)  89,698 

Marine and propulsion systems

  209,955   71,702   (53,982)  227,675 

Other

  -   19,780   (1,950)  17,830 

Total

 $340,456  $115,720  $(74,906) $381,270 

 

 

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