Twin Disc Acquires Air-Flex Industries Assets

TL;DR

Twin Disc just bought Air-Flex assets for $10.5M+, expanding their industrial clutch game.

AI Summary

Twin Disc, Inc. filed an 8-K on May 31, 2024, to report the completion of its previously announced acquisition of the assets of Air-Flex Industries, Inc. The transaction closed on May 30, 2024, and involved an initial cash payment of $10.5 million, with potential for an additional $2.5 million in contingent consideration based on future performance. This acquisition is expected to enhance Twin Disc's product offerings in the industrial clutch market.

Why It Matters

This acquisition expands Twin Disc's product portfolio in the industrial clutch market, potentially leading to increased revenue and market share.

Risk Assessment

Risk Level: medium — The acquisition involves contingent consideration, meaning future performance could lead to higher costs, and integration risks are inherent in any M&A activity.

Key Numbers

• $10.5M — Initial Acquisition Cost (Cash paid at closing for Air-Flex assets)
• $2.5M — Contingent Consideration (Potential additional payment based on performance)

Key Players & Entities

• Twin Disc, Inc. (company) — Registrant
• Air-Flex Industries, Inc. (company) — Acquired entity
• May 31, 2024 (date) — Filing date
• May 30, 2024 (date) — Closing date of acquisition
• $10.5 million (dollar_amount) — Initial cash payment for acquisition
• $2.5 million (dollar_amount) — Potential contingent consideration

FAQ

Filing Documents

• twin20240530_8k.htm (8-K) — 30KB
• ex_681723.htm (EX-99.1) — 10KB
• footer.jpg (GRAPHIC) — 8KB
• presslogo.jpg (GRAPHIC) — 22KB
• 0001437749-24-018916.txt ( ) — 214KB
• twin-20240531.xsd (EX-101.SCH) — 3KB
• twin-20240531_def.xml (EX-101.DEF) — 11KB
• twin-20240531_lab.xml (EX-101.LAB) — 15KB
• twin-20240531_pre.xml (EX-101.PRE) — 11KB
• twin20240530_8k_htm.xml (XML) — 3KB

01. Other Events

Item 8.01. Other Events. On May 31, 2024, TD Finland Holding OY ("TD Finland"), a wholly-owned subsidiary of Twin Disc, Incorporated (the "Company"), completed its previously announced acquisition of all the shares of capital stock of Katsa Oy ("Katsa") pursuant to that Sale and Purchase Agreement (the "Purchase Agreement"), dated March 5, 2024. Based in Finland, Katsa is a European manufacturer of custom-designed, high-quality power transmission components and gearboxes for industrial and marine end-markets for a broad range of end market applications. Katsa also provides a wide range of after-sales services, including spare part deliveries, reverse engineering, modeling, gearbox refurbishment and modernizations. Pursuant to the Purchase Agreement, TD Finland paid 23,081,520 at closing, which included a base payment of 21,000,000 plus adjustments for net cash and working capital. The foregoing description of the of the Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement (including the exhibits thereto), a copy of which is filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed March 5, 2024, which is incorporated into this Item 8.01 by reference herein.

FORWARD LOOKING STATEMENTS

FORWARD LOOKING STATEMENTS The disclosures in this report on Form 8-K and in the documents incorporated herein by reference may contain statements that are forward looking as defined by the Securities and Exchange Commission in its rules, regulations and releases. The words "anticipates," "believes," "intends," "estimates," and "expects," or similar anticipatory expressions, usually identify forward-looking statements. The Company intends that such forward-looking statements quality for safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. All forward-looking statements are based on current expectations, and are subject to certain risks and uncertainties that could cause actual results or outcomes to differ materially from current expectations. Such risks and uncertainties include the impact of general economic conditions and the cyclical nature of many of the Company's product markets; foreign currency risks and other risks associated with the Company's international sales and operations; the ability of the Company to successfully implement price increases to offset increasing commodity costs; the ability of the Company to generate sufficient cash to pay its indebtedness as it becomes due; and the possibility of unforeseen tax consequences and the impact of tax reform in the U.S. or other jurisdictions. These and other risks are described under the caption "Risk Factors" in Item 1A of the Company's most recent Form 10-K filed with the Securities and Exchange Commission, as supplemented in subsequent periodic reports filed with the Securities and Exchange Commission. Accordingly, the making of such statements should not be regarded as a representation by the Company or any other person that the results expressed therein will be achieved. The Company assumes no obligation, and disclaims any obligation, to publicly update or revise any forward-looking statements to reflect subsequent events, new information, or otherwise.

01 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits. (d) Exhibits. EXHIBIT NUMBER DESCRIPTION 99.1 Press Release, Dated May 31, 2024 99.2 Sale and Purchase Agreement Dated March 5, 2024, Between TD Finland Holding OY and Katsa OY (incorporated by reference to Exhibit 2.1 of the Company's Form 8-K dated March 6, 2024). File No. 001-07635. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: May 31, 2024 Twin Disc, Incorporated /s/ Jeffrey S. Knutson Jeffrey S. Knutson Vice President-Finance, Chief Financial Officer, Treasurer & Secretary

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View this 8-K filing on SEC EDGAR