Ladies and gentlemen, thank you for standing by, and welcome to the Twin Disc, Inc. Fiscal First Quarter 2024 Conference Call. [Operator Instructions] Thank you. Jeff Knutson, you may begin your conference.

Good morning, and thank you for joining us today to discuss our fiscal 2024 first 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. By now, you should have received the news release, which was issued this morning before the market opened. If you have not received a copy, please call our office at 262-638-4000 and we will send the release to you. Now I'll turn the call over to John.

Good morning, everyone, and welcome to our fiscal 2024 first quarter conference call. Let's begin today's call with some highlights. We had an impressive start to the new fiscal year, building off the positive momentum generated in the fourth quarter to deliver growth in many of our markets. Throughout the first fiscal quarter, our global teams worked to capture stable demand for our products, drive increased shipments and resulting in a 13.7% year-over-year sales growth. We also achieved robust gross margin expansion, improving 240 basis points to 26.2%, despite incurring a onetime charge of $3.1 million, along with significant increases in EBITDA and cash generation. Owing to our improved financial position, I am pleased to announce that the Board has approved reinstating a quarterly cash dividend in the amount of $0.04 per share. These results are largely due to hard work on the part of our team, taking a disciplined approach in executing on operational priorities. Our Singapore-based sales team performed exceptionally well to drive growth and further expand our presence in Chinese market, especially the oil and gas one. We ended the quarter with continued backlog growth, underscored by a record backlog in our airport rescue and firefighting transmission business, while inventories favorably declined. That also continues to perform strongly, driven by further growth beyond its core Northern European markets into North America and the Asia Pacific region. Shifting to our product group, we saw strong demand in our marine and propulsion systems, with increased activity in global commercial markets driving 24% growth in sales. Production at our Belgium facility is already at capacity this fiscal year with projects booked through August 2024. Patrol boat projects grew in line with increased government defense spending, a trend which we expect may continue due to ongoing geopolitical turmoil, an uptick in…

Thanks, John. Good morning, everyone. We delivered sales of $63.6 million for the quarter, up $7.6 million or 13.7% from the prior year as overall demand remained strong as shipments increased. Net loss attributable to Twin Disc for the quarter was $1.2 million or $0.09 per diluted share compared to a loss of $1.4 million or $0.11 per diluted share in the first quarter of fiscal '23. Gross profit margin increased to 26.2% compared to [indiscernible] for the same period of fiscal '23. Gross profit was negatively impacted by a $3.1 million noncash accounting item related to the sale of an asset during the quarter. Both marine and propulsion systems and land-based transmissions reported a double-digit growth, while industrial sales declined. Looking at top line distribution across geographies, sales increased significantly across the Asia Pacific and European regions compared to the prior year, supported by robust demand, while North American sales declined. We continue to strengthen our balance sheet through the solid cash generation delivered in the first quarter. We reduced net debt by approximately $4.1 million to $1.2 million and ended the quarter with a cash balance of $20.4 million, $7.2 million higher versus the prior quarter end. EBITDA is up significantly to $2.3 million from $600,000 during the same period last year due to higher revenues, favorable product mix, the impact of prior pricing actions and the successful execution of our operational playbook. Furthermore, we continued to decrease our leverage ratio this quarter to below 1x EBITDA. Gross profit margin of 26.2% increased approximately 240 basis points from the prior year period. Adjusting for the noncash impairment I previously mentioned, gross profit margin for the first quarter would be approximately 30%. This reflects the benefit of prior pricing actions, continued easing of supply chain headwinds, a favorable product mix and successful execution of our operational playbook. With regards to inflationary headwinds, commodities have largely stabilized, and we have also seen some reductions in freight and fuel surcharges. As John highlighted, we are pleased to be in a position to resume paying a quarterly cash dividend in the amount of $0.04 per share this quarter, payable on December 1 to shareholders of record on November 17. Consistent with the additional priorities outlined in our capital allocation framework, we are actively exploring acquisition opportunities, focusing on marine technology, industrial and the hybrid electric space. And currently, we will continue to make investments within the business in the form of research and development, geographic diversification and enhancement of our marketing initiatives. We will continue to evaluate our capital allocation strategy and priorities as the economic backdrop in our operating environment continue to evolve. I'd like to now turn the call back over to John to share some closing remarks.

Thanks, Jeff. Before we open the line for questions, I'd like to highlight a few key takeaways from our first quarter performance. In summary, we're seeing stable end market demand supporting our robust margin expansion and strong cash generation that supported the reinstatement of our quarterly dividend. Operationally, we continue to increase backlog by taking a disciplined approach to inventory management, with inventory as a percentage of backlog declining. Supply chain headwinds have generally subsided largely due to effective actions taken by management over the prior quarters. With all of these factors combined, we have enhanced our financial profile and strengthened our balance sheet, giving us the flexibility to manage through any challenges that may come along in this uncertain operating environment. We continue to make progress towards our target, solidifying our financial position and driving long-term value creation for our shareholders. That concludes our prepared remarks. Jeff and I will be happy to take your questions.

Thanks, Josh. We hope that Jeff and I have answered all of your questions today, if not, please feel free to reach out to us directly, and we look forward to talking to you in February after the close of our third quarter conference call. Thanks, Josh.

This concludes today's conference call. Thank you for joining. You may now disconnect.