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DATE

Thursday, Aug. 20, 2026 at 9 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer-John Batten
• Vice President of Finance, Chief Financial Officer, Treasurer, and Secretary-Jeffrey Knutson

TAKEAWAYS

• Revenue -- $114.4 million in the fourth quarter, representing 18.3% growth driven by demand in land-based transmission markets and marine propulsion systems.
• Net Income -- $9.4 million, or $0.64 per diluted share, reflecting stronger operating income and a $0.17 per share benefit from an income tax adjustment.
• Operating Income -- $7.8 million for the quarter, an increase of 19.5% year over year.
• EBITDA -- $11.1 million, growing 35.1% compared to the prior year period.
• Free Cash Flow -- $17.2 million for the quarter, a significant improvement attributed to operational execution and shipment progress.
• Quarterly Dividend -- $0.05 per share, representing a 25% increase approved by the Board of Directors.
• Marine and Propulsion Systems Sales -- $63.6 million, an increase of 20% year over year due to strong demand for propulsion platforms and military transmissions.
• Land-Based Transmission Sales -- $33.0 million, representing a 26.2% increase driven by improved shipment volumes in oil and gas markets.
• Industrial Sales -- $12.9 million, a slight decrease of 1.6%, while management noted stabilization in North American construction and recycling markets.
• Six-Month Backlog -- $178.3 million, remaining level with the third quarter despite increased shipments and efforts to reduce past due orders.
• Defense Backlog -- 17% of total backlog as of fiscal year-end, representing a 56% increase year over year.
• Defense Pipeline -- $30 million to $50 million as of June 30, 2026, supported by projects for the U.S. Navy and NATO.
• Gross Margin -- 26.3%, a decrease from 32.3% in the prior year period due to product mix, tariff dilution, and a prior year $3 million favorable adjustment.
• ME&A Expenses -- $22.2 million, a 9.8% decrease, partially tied to lower bonus expenses and broad-based spending controls.
• Inventory Management -- 100% of backlog, an improvement from 107.2% in the third quarter as the company focuses on operational execution.
• Net Leverage Ratio -- 0.5 as of June 30, 2026, compared to 0.8 in the prior year, driven by reduced net debt and higher EBITDA.
• Fiscal 2027 CapEx Guidance -- North of $20 million, intended to fund a new facility in Finland and equipment for the Racine plant.
• Oil and Gas Revenue Share -- Over 10% of total quarterly revenue, doubling the average of the first three quarters of the fiscal year.
• Geographic Sales Distribution -- Europe accounted for 41% of fourth quarter sales, followed by North America at 29% and Asia Pacific at 22%.
• Total Debt -- $29.8 million at fiscal year-end, a decrease of 5.2% from the prior year.
• 2030 Financial Targets -- $500 million in revenue, 30% gross margins, and greater than 60% free cash flow conversion.
• Accounting Change -- Management transitioned inventory accounting from LIFO to FIFO to provide better matching of costs and revenues.

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RISKS

• Knutson stated, "Our margin in the quarter was also impacted by tariff dilution, which further decreased gross margin by 60 basis points," noting the impact of component costs from international sources.
• Batten warned that increasing capacity in Racine requires a temporary decrease in throughput as the company relocates product lines and reconfigures staffing for additional shifts.

SUMMARY

Twin Disc (TWIN -4.39%) management reported record quarterly revenue and significant growth in defense-related activities, which now represent a core structural driver for the enterprise. The company is executing a multiyear strategic shift to higher-margin verticals such as e-frac and autonomous military vessel programs while simultaneously optimizing its global manufacturing footprint. This optimization includes the expansion of testing and assembly capacity in Finland and the relocation of specific assembly operations to Texas to mitigate tariff exposures. The company remains committed to its 2030 financial targets, supported by a healthy backlog and a transition to more efficient inventory accounting methods.

• The company has broken ground on a new facility in Finland to support NATO demand, with Batten stating, "it really does increase the output of Katsa."
• Management is prioritizing e-frac opportunities in the energy segment, which are expected to enhance the long-term gross margin profile through a higher margin mix.
• The defense pipeline is expanding beyond existing programs to include fast patrol boats and new military vehicle components for Middle Eastern and Asian markets.
• The relocation of ARFF assembly to Lufkin, Texas, is intended to leverage a free trade zone and reduce tariff impacts on components sourced from India.
• Katsa has secured initial orders in the emerging data center vertical, which management identified as a fast-growing market segment.
• Operating leverage improved as ME&A expenses fell to 19.4% of sales, compared to 25.5% in the prior year period.

INDUSTRY GLOSSARY

• ARFF: Aircraft Rescue and Firefighting; specialized transmissions used in emergency response vehicles at airports.
• Azimuth Drives: A configuration of marine propellers that can be rotated to any horizontal angle, making a rudder unnecessary.
• E-frac: Electric hydraulic fracturing; a technology that uses electric motors instead of diesel engines to power fracturing pumps.
• FIFO: First-In, First-Out; an inventory valuation method where the oldest costs are recognized first.
• LIFO: Last-In, First-Out; an inventory valuation method where the most recent costs are recognized first.
• Propulsion Systems: The combination of an engine and a drive system (like a transmission or propeller) used to move a vessel or vehicle.

Full Conference Call Transcript

Operator: Welcome to the Twin Disc, Inc. Fiscal Fourth Quarter 2026 Conference Call. We will begin with introductory remarks from Jeff Knutson, Twin Disc's CFO. Please go ahead.

Jeffrey Knutson: Good morning, and thank you for joining us today to discuss our fiscal 2026 fourth quarter results. On the call with me today is John Batten, Twin Disc's CEO. 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. 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. 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. Now I'll turn the call over to John.

John Batten: Good morning, everyone, and welcome to our fiscal 2026 fourth quarter conference call. We closed out the fiscal year with record revenue in the fourth quarter of 2026 as we continue to build on the strong demand and order momentum that we saw throughout the fiscal year. Our 18% top line growth for the quarter resulted in operating income of $7.8 million, net income of $9.4 million, $11.1 million in EBITDA and free cash flow of $17.2 million. Defense activity is strong and continues to be a key structural growth driver for us, supported by increasing demand from customers that include the U.S. Navy and NATO. More to come on this.

Oil and gas also performed well in the quarter and is trending positively as we prioritize e-frac opportunities that drive a higher margin profile. While gross margins were down in the quarter, primarily related to product mix, tariff dilution and a prior year favorable adjustment, we continue to pursue higher-margin opportunities like e-frac that we expect to enhance our gross margins over the long term. Thanks to our strong order activity in the quarter, our 6-month backlog was level with the third quarter of 2026 at $178.3 million despite strong shipments and a concerted effort to reduce past due backlog.

Both our 6-month and total backlog remains strong and are supported by a robust project pipeline and considerable sales momentum in the markets we serve. Our cash flow improved meaningfully in the quarter to $17.2 million. As a result of this strong performance and our confidence in the business going forward, our Board recently approved a 25% increase in our quarterly dividend to $0.05 per share. Overall, our fourth quarter performance capped off a strong year of operational execution for Twin Disc, and we believe that we are well positioned with strong demand, a healthy backlog and robust project pipeline to continue this trend into fiscal 2027.

Before getting into our individual product groups, I'd like to provide an update on our defense-related business. As I mentioned before, defense is a key structural growth driver for our business and represents a significant long-term revenue opportunity. Our current defense customers include shipbuilders for the U.S. Navy for which we provide transmissions to be used in unmanned autonomous U.S. Navy vessel programs and NATO to whom we supply driveline components through our Finnish subsidiary, Katsa, for military vehicles across an expanding NATOwide order book. On that front, we've broken ground on our new facility in Finland to add test stand and assembly capacity and to further support expected growth in the European defense demand.

With global defense becoming more of a priority given the current geopolitical environment, we believe that we're well positioned to benefit from increased spending as defense budgets grow. As of year-end, defense comprises 17% of our total backlog, representing a 56% increase year-over-year. Sales momentum is also strong with defense-related projects contributing $30 million to $50 million to our pipeline as of June 30. Results have been encouraging. And looking ahead, we view defense as a reliable and durable multiyear growth driver for our business. Now let's get into our product groups. Sales in our Marine and Propulsion Systems grew 20% in the quarter when compared to the prior year period, primarily driven by strong demand for our propulsion platform.

Other factors contributing to revenue growth include performance of the Kobelt product line as well as improved military demand for marine transmissions, improved commercial maritime demand in Asia and overall strong market conditions driving increased demand across the product group. Land-based transmission sales grew 26% year-over-year, primarily due to improved shipment volumes in the quarter. Specifically, oil and gas performed well as we continue to prioritize higher-margin e-frac opportunities. We expect this segment to be a key driver of our improved margin profile. We also took meaningful steps to reduce our tariff impact in the quarter as we work to relocate our ARFF assembly to Lufkin, Texas, which would help reduce tariff exposure on components sourced in India.

Similar to last quarter, land-based transmission also continues to benefit from strengthening demand trends across our core geographic markets in North America and Asia, increasing global demand for energy-related products and continued progress on next-generation electrified and hybrid solutions that support long-term demand. Additionally, improving sentiment from North American energy customers points to additional investment in frac rigs, both rebuilds and new units, positioning the company well for enhanced performance. While industrial sales decreased modestly compared with the prior year, we remain encouraged by the opportunities that we're seeing as this segment continues to stabilize.

The Kobelt product line provides considerable market opportunity and our Finnish subsidiary, Katsa, is positioned to be a strong near-term growth driver thanks to increasing global military and trade demand for defense vehicle components. We're also seeing consistent demand from North American construction and recycling markets, as well as stable underlying demand from industrial end markets. Also, we were pleased to see that Katsa has received orders in the emerging data center vertical. This opportunity represents a large part of the total backlog and is encouraged to see initial demand for our products in this fast-growing market segment.

Our six-month backlog at the end of the fourth quarter was approximately $178.3 million, which is consistent with the backlog at the end of the third quarter of $179.5 million. We are particularly pleased with this backlog, given that during the quarter, we made solid progress on shipment and continue to make a concerted effort to reduce past due backlog during the fourth quarter. In light of this, our backlog demonstrates the strength of our pipeline and demand across our product groups. Inventory as a percentage of backlog decreased to 100% in the quarter, and we expect inventory as a percentage of backlog to continue to improve as we focus on operational execution.

Looking ahead, we remain confident in our long-term strategy and are focused on driving profitable growth for our shareholders. Twin Disc is well established as a leading hybrid and electric solution provider for niche marine and land-based applications, and through organic growth, continued strategic acquisitions that expand our addressable market and ongoing disciplined capital allocation across the enterprise, we believe that we are well positioned to expand our footprint and to meet our stated 2030 full year targets of $500 million in revenue, 30% gross margins and greater than 60% free cash flow conversion. With that, I'll turn the call over to Jeff to discuss our financial results in greater detail.

Jeffrey Knutson: Thanks, John. Good morning, everyone. Sales in the fourth quarter of 2026 totaled $114.4 million, representing a record quarter and an 18.3% increase over the fourth quarter of fiscal 2025. Full year sales were $381.3 million. Revenue growth in both the fourth quarter and full year was primarily driven by increased demand in our land-based transmission markets in the fourth quarter, as well as strengthened marine and propulsion systems and stabilization in our industrial segment. On an organic basis, which adjusts for the impact of acquisitions and foreign currency exchange, revenue increased 15.9% in the quarter and 4.6% for the full year. Gross profit decreased slightly by 3.5% in the quarter to $30.1 million.

Gross margin decreased approximately 600 basis points to 26.3% from the prior year period, primarily related to product mix, tariff dilution, and a favorable adjustment of $3 million in the prior year fourth quarter related to one-time capitalization cost adjustments of cost of inventory. Excluding this adjustment in Q4 of last year, the comparable gross margin would have been 28%. For the full year, gross profit was $102.6 million or 26.9% of sales. ME&A expenses decreased 9.8% to $22.2 million compared to $24.6 million in the prior year period. As a percentage of sales, ME&A expense was 19.4% compared with 25.5% in the prior year, which continues to demonstrate our enhanced operating leverage on strengthened revenue.

Fiscal full year ME&A was $84.5 million or 22.2% of sales compared to $82.4 million or 24.2% of sales in full year 2025. Operating income in the fourth quarter of 2026 increased 19.5% to $7.8 million compared with $6.5 million in the prior year period. The full year operating income was $18 million compared with $11.1 million in full year 2025. We view operating income as an especially important metric for both the fourth quarter and full year, given that our bottom line has been impacted by an income tax benefit of $2.5 million in the fourth quarter and $14 million in the full year related to the reversal of the domestic valuation allowance.

Therefore, we believe that operating income provides a more normalized snapshot of our business without the impact of income tax benefits that flow through to our net income and earnings per share. To that end, net income attributable to Twin Disc for the fourth quarter was $9.4 million, or $0.64 per diluted share, compared to $2.6 million, or $0.19 per diluted share in the prior year period. The increased earnings per share was related to stronger operating income as well as approximately $0.17 per diluted share related to the income tax benefit and lower other expense when compared to the fourth quarter of 2025.

Full year net income totaled $27.1 million, or $1.86 per diluted share, compared with a net loss of $697,000, or a loss of $0.05 per diluted share for fiscal 2025. EBITDA was $11.1 million in the fourth quarter, up 35.1% year-over-year. EBITDA margin increased 120 basis points to 9.7%. Full year EBITDA was $29.9 million. Geographically, Europe accounted for 41% of sales in the fourth quarter of 2026, followed by North America at 29% of sales and Asia Pacific at 22% of sales. Increased sales in Europe were primarily driven by contributions from our acquisitions, including Katsa, while North American sales continued to increase related to our addition of Kobelt and improving demand for our Veth products.

For the full year, Europe accounted for 42% of total sales, followed by North America at 30% and Asia Pacific at 19%. As John mentioned, gross margins decreased to 26.2% in the fourth quarter of 2026, compared with 32.3% in the prior year period. Gross margin contraction in the quarter was primarily related to product mix and tariff dilution, as well as the one-time $3 million favorable adjustment in Q4 of last year. Excluding the favorable adjustment, gross margin in the fourth quarter of 2025 would have been 28%. Our margin in the quarter was also impacted by tariff dilution, which further decreased gross margin by 60 basis points.

Excluding this impact, our gross margins would have been approximately 27% in the fourth quarter. We are confident about our ability to drive gross margin improvement, and our long-term strategy continues to focus on enhancing our margin profile and driving long-term profitability across our business with a stated target of 30% gross margins by 2030. We continue to monitor the situation with tariffs and are proactively working to mitigate the impacts on our business, including moving ARFF assembly to Lufkin, Texas. We generated strong free cash flow of $17.2 million in the quarter. We ended the quarter with cash of approximately $16.1 million. Total debt decreased to $31.4 million and net debt decreased to $13.8 million.

Our reduced net debt, coupled with enhanced trailing 12-month EBITDA of $29.9 million, provides us with a net leverage ratio of 0.5 as of June 30, 2026, compared with the ratio of 0.8 in the prior year. Before discussing our capital allocation framework, I wanted to provide an update on the change in our inventory accounting method that we implemented in Q4. We elected to change our method of accounting for certain inventories from the last-in-first-out method, or LIFO, to the first-in-first-out method, or FIFO.

The change to the FIFO method of accounting for these inventories is preferable because it provides better matching of costs and revenues and conforms our inventory to a single method of accounting as we continue to scale the business. Additionally, the change allowed us to utilize expiring tax credits contributing to the reversal of the valuation allowance in the second fiscal quarter. The impact of the change in inventory accounting as reported under the FIFO method was a $30 million increase in inventory for the fiscal year ended June 30, 2026, which is reflected in our quarterly and year-end results.

To provide historical information on a basis consistent with the change to FIFO, we have recast certain historical information to conform to the updated method of inventory accounting. Our capital allocation framework remains consistent with our stated goals and strategy. We continue to prioritize debt reduction alongside returning capital to shareholders through both our dividend and share repurchase program. At the same time, we're committed to funding organic growth investments, including R&D, geographic expansion, and marketing to support our long-term strategy. When it comes to M&A, we remain selective, evaluating both bolt-on and transformational acquisitions against clear criteria. Strategic fit, particularly opportunities that diversify our existing offerings and have the potential to serve as a platform for broader expansion.

This balanced approach allows us to invest in the business while maintaining the financial flexibility to act on opportunities as they arise. I'll now turn the call back to John for his closing remarks.

John Batten: Thanks, Jeff. In closing, our record fourth quarter capped off a year of meaningful progress for Twin Disc with continued gains in revenue, profitability, and cash flow. Demand across our core markets remained healthy throughout the year, and we ended fiscal 2026 with a strong backlog that reflects the sustained strength in marine and propulsion systems and land-based transmissions, along with a growing defense-related activity that we expect to be a durable driver of growth. Moving ahead to fiscal 2027, we remain focused on the same priorities that drove our progress this year, executing on our operational initiatives, optimizing our global footprint, and investing in the business to support long-term growth, all while maintaining a disciplined approach to capital allocation.

With a strong balance sheet and robust backlog providing solid visibility, we believe Twin Disc is well positioned to build on this year's momentum as we work toward our 2030 targets. Operator, please open the call for questions.

Operator: [Operator Instructions] Our first question comes from the line of Max Michaelis with Lake Street Capital Markets.

Maxwell Michaelis: Congrats on the quarter. A bunch of questions from me. I kind of want to start out here, just sort of a facility update. It sounds like Finland has broken ground. Anything else you guys can really provide there in terms of detail around sort of the time lines at the Finland facility? And then secondly, can you kind of give us an update on sort of the capacity, how that's looking at the Racine facility?

John Batten: Sure, Max. Thanks. It's John. I'm hoping that, you know, we will be enclosed and starting to move stuff in, you know, the end of the calendar year, but it's really, I would say that, you know, the impact of being fully operational is not going to be until, I would say, fiscal '28. A lot of work to do, but it's exciting. It really does increase the output of Katsa. The way we're situated right now, we don't have a facility in Finland that was built for assembly and test. We kind of have some make-do facilities that are in other plants or other facilities that really weren't meant for this.

So it's going to be a big step function for them once we get in. But we'll keep you updated. You know, the walls are up, roof's going on. Obviously, we'd like to be enclosed by the Finnish winter, that's for sure. And I think that will definitely happen. And then in Racine, obviously, we have a finished building that we've been in for 70 years. We're staffing up, adding machinists. We had two significant capital purchases that have come in, a 1.2-meter hob and a 1.2-meter grinder.

We've got more CapEx on the way, and we're trying to figure out how we can be more effective in our shift staffing, and honestly looking at expanding our second shift and adding a third shift. Because there's a lot of volume coming. And of course, there's a lot of pieces moving in the puzzle. To increase the capacity in Racine, we actually have to decrease it. And that's, you know, the tariffs gave us a good reason to relook at where we did the ARFF transmission.

So it's fantastic that Lufkin's in a free trade zone, so we're scrambling like crazy to get that volume down to Texas so that we have more capacity for the marine transmissions for the Navy and just the commercial marine markets in general, and oil and gas in Racine. So a lot of moving pieces and a lot of progress has been made in the last few months, but there's a lot of work to do between now and Christmas.

Maxwell Michaelis: Perfect. No, great. Moving on here, let's shift over to the defense side. Can you give any more details on the conversations you guys are having with some of these shipbuilders outside of Saronic and the speed that they're moving along at right now?

John Batten: Yes, so I would say that Saronic has set the benchmark on speed to market and everything that they were doing and the announcement of Port Alpha and all of this, but there are other builders as well that are moving pretty quickly with existing yards and reconfiguring and developing relationships. That's kind of the big thing that we've seen. You know, a lot of these shipyards, we've had decades-long relationships with them, and they've been building a certain type of vessel. Now they're partnering with different types of technology companies, forming alliances, and they're pretty fast to market too.

I can't say that, you know, Saronic certainly is getting all the headlines because they've had a lot of successes out in the field, but there are other players too. It's a pretty balanced, you know, I have to say that it doesn't look like the Department of Defense or the Navy is putting all their eggs in one basket. They are truly trying to bring back the shipbuilding industry in the U.S., and it's pretty exciting to see.

Maxwell Michaelis: And then I know you talked about sort of that $50 million to $75 million pipeline. I mean, can you give us any sort of detail on where that's at now, if that's increased or anything that can help?

John Batten: Yes, I think, Jeff, I believe it was 50% in the quarter.

Jeffrey Knutson: Yes, the backlog itself is up about 50%...

John Batten: In the quarter, and that is a mix of, I mean, the two main buckets continue to be marine transmissions built in Racine, Wisconsin, for the U.S. Navy. We have some marine transmissions that are built in Belgium that are for the U.S. Navy and other projects. Then we have obviously at Katsa, the number one is the trucks that Patria built for NATO. But they have been developing other customers in the Mid East and in Asia as well. Not sure the percentage, that's going to be a growing percentage. Then we have, it's been exciting to see our Arneson surface drive for fast patrol boats has been getting a lot of interest.

So, you know, the backlog increased 53%. And I would say the main driver of that was the projects we've already been talking about. But what's in the pipeline is going to cast a much wider net that we'll see in the quarters coming on different products for different customers.

Maxwell Michaelis: So the defense side of the backlog grew 53% in the quarter, correct?

John Batten: Yes.

Maxwell Michaelis: Okay, great. And then last one for me, and I'll hang up. Can you sort of give us an idea of the pipeline of new defense programs? I know we talked about kind of the shipbuilders and Katsa, is there anything else kind of that you guys are eyeing for fiscal year '27 that could make a big splash?

John Batten: I would say the biggest ones, and we're under NDAs, but the biggest ones are going to be fast patrol boats with Arneson and Rolla propellers. It will be similar product that is going into the Patria trucks, but different for different truck builders and different militaries in the Mid East and Asia. And in the U.S., I think you'll see continuation on with BAE on the M88, the Hercules, the tank retriever. Those would be the big ones. And then there's some smaller ones, but I think the ones that are going to be exciting and meaningful are the ones that I just mentioned.

Operator: [Operator Instructions] Our next question comes from the line of Simon Wong with Gabelli Funds.

Tze-Kiang Wong: Just on the oil and gas part of your business, how big is that now? How much revenue did you do there this quarter and how did it compare to last year?

Jeffrey Knutson: Yes, it's ramping up, Simon. So it was, in terms of percentage of revenue, it's the biggest since fiscal '24. And in terms of pure dollars, because obviously everything else grew as well, in terms of pure dollars, the biggest since Q4, fiscal '24. They doubled the average of what we did the first three quarters, so definitely ramped up at the end of the year. It was about 10%, a little over 10% of overall revenue in the quarter.

Tze-Kiang Wong: Great. You've referenced in your presentation and your press release about higher opportunities, I'm going to say higher margin e-frac opportunities. Did you sell any units in the quarter for e-fracs?

John Batten: Yes, the short answer is yes. I can't give you an exact number because some of them might have been in the third quarter, first calendar quarter. But there's probably, you know, two spreads that have been delivered and more coming.

Tze-Kiang Wong: Okay, great. Looks like you're gaining traction there. That's good news. And then, I know you talked about the military pipeline, the $50 million, $60 million, $70 million pipeline of opportunity. How do you see that? I mean, how much of that do you think you can win in orders?

John Batten: All of that, we're pretty conservative when we put it in the pipeline. We think that we have a better than 50-50 shot of winning those. Yes, Simon, so with the military, I would say we're very good at predicting our confidence of winning. It's just when the project starts. Typically, these projects take longer to materialize when they're going to order, but we're pretty confident on winning them. It's just, you know, I don't want to give you, like, it's going to happen next quarter in six months because I'll jinx it and then it will be nine months or 12 months.

Tze-Kiang Wong: Okay, that's fair. And for my reference, how big was the military business in the fourth quarter or in fiscal '26?

Jeffrey Knutson: Yes, we don't have a great number to give you there. I mean, it was definitely up. It's something that we'll do a better job of tracking and reporting. It's just so fragmented because it's across all of our products in all of our regions and a lot of it going through distribution. So we need to do a better job analytically of pulling that together as it becomes a bigger and bigger part of the business.

Tze-Kiang Wong: Okay. One more from me. You talked about facility additions. What is your CapEx for '27?

Jeffrey Knutson: So the number that we put out or will put out is going to be north of $20 million. It's obviously with a new facility going up in Finland, that's a big investment, movement of a significant product line down to Lufkin, and some of the machine tools that John just referenced, a lot more behind that. So there's a good level of investment going in to fund the growth that we see. And, you know, as we start this fiscal year, we're in great shape with a new credit agreement and plenty of financial horsepower to deliver that. So, yes, it's an exciting time for us.

Operator: Thank you. And at this time, we have no further questions. I would like to turn the call back over to the management for closing remarks.

John Batten: Thank you for your continued interest in Twin Disc, and we hope that we've answered all of your questions. If not, please feel free to reach out to either Jeff or myself, and we'll try to answer those questions for you as soon as possible. Have a great rest of your day, and we look forward to talking to you after our fiscal '27 first quarter results.

Operator: This concludes today's conference call. You may now disconnect. Have a great day.