Twin Disc Announces Full Year and Fourth Quarter 2026 Results

MILWAUKEE, Aug. 20, 2026 (GLOBE NEWSWIRE) -- Twin Disc, Inc. (NASDAQ: TWIN) today reported results for the fourth quarter and full fiscal year ended June 30, 2026.

Fiscal Full Year 2026 Highlights

• Sales increased 11.9% year-over-year to $381.3 million
• Net income attributable to Twin Disc was $27.1 million
• EBITDA* of $29.9 million, including a currency translation gain of $1.7 million
• Operating cash flow of $22.9 million and Free cash flow* of $9.2 million
• Six-month backlog of $178.3 million
  

Fiscal Fourth Quarter 2026 Highlights

• Sales increased 18.3% year-over-year to $114.4 million
• Net income attributable to Twin Disc was $9.4 million
• EBITDA* of $11.1 million, including a currency translation gain of $0.8 million
• Operating cash flow of $20.6 million and Free cash flow* of $17.2 million

CEO Perspective

John H. Batten, President and Chief Executive Officer of Twin Disc, commented, “We closed fiscal 2026 with record fourth quarter revenue, solid profitability, and enhanced free cash flow generation, building on the strong demand and order momentum that we saw throughout the fiscal year. Fourth quarter 2026 sales grew 18%, reflecting the continued strength of our Marine and Propulsion products, accelerating Defense activity, and enhanced performance from Oil and Gas, which is trending positively as we prioritize higher margin e-frac opportunities. Defense in particular continues to be a key structural growth driver for us supported by increasing demand from customers including the US Navy and NATO.

“Our six-month backlog remained level in the quarter despite strong shipments and a concerted effort to reduce past due backlog,” Mr. Batten continued. “Our near-term outlook remains strong and continues to be supported by a robust project pipeline and momentum in the markets that we serve.

“As we move into fiscal 2027, we are well positioned with strong demand, a healthy backlog and growing pipeline, and free cash flow to continue investing in the long-term growth of our business. We remain focused on the disciplined execution of our strategy and are highly encouraged by the growth opportunities ahead of us,” Mr. Batten concluded.

Change in Inventory Accounting Method

During the fourth quarter of fiscal 2026, the Company elected to change its method of accounting for certain inventories from the last-in, first out (LIFO) method to the first-in, first out (FIFO) method. The change to the FIFO method of accounting for these inventories is preferable because it provides better matching of costs and revenues, conforms the Company's inventory to a single method of accounting and improves comparability with the Company's peers. The impact of the change in inventory accounting as reported under the FIFO method was a $32.1 million increase in inventory for the fiscal year ended June 30, 2025, and the amounts in this press release reflect the impact of this accounting change. To provide historical information on a basis consistent with the change to FIFO, the Company has recast certain historical information to conform to the updated method of inventory accounting in the financial tables of this press release.

Fourth Quarter and Full-Year Results

Sales for the fiscal 2026 fourth quarter increased 18.3% year-over-year to $114.4 million and fiscal 2026 sales increased 11.9% to $381.3 million. Fourth quarter and full year sales growth were both driven by demand for the Company’s Land-Based Transmissions markets, with strength in Marine and Propulsion Systems supporting full year sales, in addition to a stabilization in the Industrial segment. On an organic basis, which excludes the impacts of acquisitions and foreign currency exchange, revenue increased 15.9% in the quarter and increased 4.6% for the full year.

Sales by product group (certain amounts have been reclassified from Marine and Propulsion to Other):

Product Group	Q4 FY26 Sales		Q4 FY25 Sales		Change (%)
(Thousands of $):
Marine and Propulsion Systems	$	63,596	$	53,010	20.00	%
Land-Based Transmissions		32,962		26,122	26.20	%
Industrial		12,934		13,141	-1.60	%
Other		4,908		4,405	11.40	%
Total	$	114,400	$	96,678	18.30	%

          

Product Group	FY26 Sales		FY25 Sales		Change (%)
(Thousands of $):
Marine and Propulsion Systems	$	227,675	$	201,101	13.20	%
Land-Based Transmissions		89,698		80,192	11.90	%
Industrial		46,067		41,502	11.00	%
Other		17,830		17,943	-0.60	%
Total	$	381,270	$	340,738	11.90	%

For fiscal 2026, Twin Disc delivered double-digit sales growth year-over-year in the European and North American regions including the impact of acquisitions. The distribution of sales across geographical regions remained consistent, with the majority of sales coming from Europe, followed by North America, Asia Pacific, and Latin America.

Considering the impact of the change to the FIFO method of accounting for inventory (an increase to prior year gross profit of approximately $1.2 million), gross profit decreased 3.5% to $30.1 million compared to $31.2 million for the fourth quarter of fiscal 2025. Fourth quarter gross margin decreased approximately 600 basis points to 26.3% from the prior year period, primarily related to product mix and a favorable adjustment of $3.0 million in the prior year fourth quarter. For fiscal 2026, gross profit increased 9.2% to $102.6 million. For the fiscal 2026 full year, gross margin decreased approximately 70 basis points to 26.9%, primarily related to product mix and tariff dilution.

Marketing, engineering and administrative (ME&A) expense decreased by $2.5 million, or 10.0%, to $22.2 million, compared to $24.6 million in the prior year quarter. The decreased ME&A expense was primarily driven by reduced global bonus expense, lower depreciation, and amortization, and the favorable impact of broad-based spending controls. For the fiscal 2026 full year, ME&A expense increased 2.5% to $84.5 million, as positive operational leverage and cost controls were partially offset by the addition of Kobelt, a currency impact, and inflationary impact on wages and benefits.

Considering the impact of the change to the FIFO method of accounting for inventory, net income attributable to Twin Disc for the quarter was $9.4 million, or $0.64 per diluted share, compared to net income attributable to Twin Disc of $2.6 million, or $0.19 per diluted share, for the fourth fiscal quarter of 2025. The year-over-year increase was driven by increased operating income, an income tax benefit of $2.5 million, or approximately $0.17 per diluted share, related to the reversal of the domestic valuation allowance, and lower other expense in the fourth quarter of 2026 compared to the fourth quarter of 2025. For fiscal 2026, the Company generated net income attributable to Twin Disc of $27.1 million, or $1.86 per diluted share, compared with a net loss attributable to Twin Disc of $697,000, or a loss of $0.05 per diluted share for fiscal 2025. Included in net income attributable to Twin Disc in fiscal 2026 was an income tax benefit of $14.0 million related to the reversal of the domestic valuation allowance. Earnings before interest, taxes, depreciation, and amortization (EBITDA) were $11.1 million in the fourth quarter, up 35.1% compared to the fourth quarter of fiscal 2025. Full year fiscal 2026 EBITDA increased 48.0% to $29.9 million from $20.2 million in fiscal 2025.

On a consolidated basis, the backlog of orders to be shipped over the next six months is approximately $178.3 million at the end of the fourth quarter of 2026, compared to $179.5 million at the end of the third quarter. Considering the impact of the change to the FIFO method of accounting for inventory, as a percentage of six-month backlog, inventory decreased from 107.2% at the end of the third quarter, to 99.9% at the end of the fourth quarter. Compared to the end of fiscal 2025, cash decreased 0.6% to $16.0 million, total debt decreased 5.2% to $29.8 million, and net debt* decreased $1.5 million to $13.8 million. The decrease in total debt was primarily attributable to positive free cash flow.

CFO Perspective

Jeffrey S. Knutson, Vice President of Finance, Chief Financial Officer, Treasurer, and Secretary, stated, “Our fourth quarter results capped off a year of strong sales performance, profitability, and cash flow generation that were aligned with our long-term goals and targets. EBITDA grew 35% over the fourth quarter of last year, and we recognized strong free cash flow of $17.2 million in the quarter. While our fourth quarter operating margin was consistent with the fourth quarter of 2025, gross margins were lower primarily related to product mix, tariff dilution and a prior year favorable adjustment. We remain confident that gross margins will improve over the long-term as we continue to diversify our end markets and recognize enhanced operating leverage. Looking ahead, we believe that we are well positioned to drive backlog conversion, margin improvement, and strong free cash flow generation, and our new $90 million credit facility with BMO and JP Morgan provides us with the financial flexibility to capitalize on growth opportunities as we continue to expand into high margin verticals.”

Discussion of Results

Twin Disc will host a conference call to discuss these results and to answer questions at 9:00 a.m. Eastern time on August 20, 2026. The live audio webcast will be available on Twin Disc’s website at https://ir.twindisc.com. To participate in the conference call, please dial (646) 307-1963 approximately ten minutes before the call is scheduled to begin. A replay of the webcast will be available at https://ir.twindisc.com shortly after the call until August 21, 2027.

About Twin Disc

Twin Disc, Inc. designs, manufactures, and sells marine and heavy-duty off-highway power transmission equipment. Products offered 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, control systems, and braking systems. The Company sells its products to customers primarily in the pleasure craft, commercial and military marine markets, as well as in the energy and natural resources, government, military and industrial markets. The Company’s worldwide sales to both domestic and foreign customers are transacted through a direct sales force and a distributor network. For more information, please visit www.twindisc.com.

Forward-Looking Statements

This press release 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 qualify for the 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.

*Non-GAAP Financial Information

Financial information excluding the impact of asset impairments, restructuring charges, foreign currency exchange rate changes and the impact of acquisitions, if any, in this press release are not measures that are defined in U.S. Generally Accepted Accounting Principles (“GAAP”). These items are measures that management believes are important to adjust for in order to have a meaningful comparison to prior and future periods and to provide a basis for future projections and for estimating our earnings growth prospects. Non-GAAP measures are used by management as a performance measure to judge profitability of our business absent the impact of foreign currency exchange rate changes and acquisitions. Management analyzes the company’s business performance and trends excluding these amounts. These measures, as well as EBITDA, provide a more consistent view of performance than the closest GAAP equivalent for management and investors. Management compensates for this by using these measures in combination with the GAAP measures. The presentation of the non-GAAP measures in this press release are made alongside the most directly comparable GAAP measures.

Definitions

Organic net sales is defined as net sales excluding the recent acquisition of Kobelt while adjusting for the effects of foreign currency exchange.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) is calculated as net earnings or loss excluding interest expense, the provision or benefit for income taxes, depreciation, and amortization expenses.

Net debt is calculated as total debt less cash.

Free cash flow is calculated as net cash provided (used) by operating activities less acquisition of fixed assets.

Investors:

IMS Investor Relations

twindisc@imsinvestorrelations.com 

Source: Twin Disc, Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(In thousands, except per-share data; unaudited)
		For the Quarter Ended						For the Year Ended
					As Adjusted						As Adjusted
		June 30, 2026			June 30, 2025			June 30, 2026			June 30, 2025
Net sales	$	114,400		$	96,678		$	381,270		$	340,738
Cost of goods sold		84,273			65,463			278,710			245,236
Cost of goods sold - other		-			-			-			1,579
Gross profit		30,127			31,215			102,560			93,923
Marketing, engineering and administrative expenses		22,157			24,621			84,455			82,431
Restructuring expenses		57			52			366			408
Other operating income		98			-			(221	)		-
Income (loss) from operations		7,815			6,542			17,960			11,084
Other income (expense):
Interest expense		(715	)		(855	)		(3,078	)		(2,646	)
Other income (expense), net		(168	)		(2,946	)		(1,286	)		(5,472	)
		(883	)		(3,801	)		(4,364	)		(8,118	)
Income (loss) before income taxes and noncontrolling interest		6,932			2,741			13,596			2,966
Income tax benefit (expense)		2,477			(47	)		13,974			(3,368	)
Net income (loss)		9,409			2,694			27,570			(402	)
Less: Net income (loss) attributable to noncontrolling interest, net of tax		49			72			493			295
Net income (loss) attributable to Twin Disc, Incorporated	$	9,360		$	2,622		$	27,077		$	(697	)
Dividends per share	$	0.04		$	0.04		$	0.16		$	0.16
Earnings (loss) per share data:
Basic earnings (loss) per share attributable to Twin Disc, Incorporated common shareholders	$	0.66		$	0.19		$	1.92		$	(0.05	)
Diluted earnings (loss) per share attributable to Twin Disc, Incorporated common shareholders	$	0.64		$	0.19		$	1.86		$	(0.05	)
Weighted average shares outstanding data:
Basic shares outstanding		14,199			13,897			14,119			13,856
Diluted shares outstanding		14,666			13,938			14,586			13,856
Comprehensive income (loss)
Net income (loss)	$	9,409		$	2,694		$	27,570		$	(402	)
Benefit plan adjustments, net of income taxes of $146, ($5), $145, and ($3), respectively		959			(2,153	)		2,708			(3,399	)
Foreign currency translation adjustment		(1,566	)		15,885			(6,129	)		15,924
Unrealized gain (loss) on hedges, net of income taxes of ($90), $0, ($83) and $0, respectively		(416	)		(1,491	)		(155	)		(1,851	)
Comprehensive income (loss)		8,386			14,935			23,994			10,272
Less: Comprehensive income (loss) attributable to noncontrolling interest		(123	)		(6	)		359			334
Comprehensive income (loss) attributable to Twin Disc, Incorporated	$	8,509		$	14,941		$	23,635		$	9,938

RECONCILIATION OF CONSOLIDATED NET INCOME TO EBITDA
(In thousands; unaudited)
	For the Quarter Ended							For the Year Ended
					As Adjusted							As Adjusted
	June 30, 2026				June 30, 2025			June 30, 2026				June 30, 2025
Net income (loss) attributable to Twin Disc, Incorporated	$	9,360			$	2,622		$	27,077			$	(697	)
Interest expense		715				855			3,078				2,646
Income tax expense (benefit)		(2,477	)			47			(13,974	)			3,368
Depreciation and amortization		3,520				4,705			13,746				14,899
Earnings before interest, taxes, depreciation and amortization (EBITDA)	$	11,118			$	8,229		$	29,927			$	20,216

RECONCILIATION OF NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands; unaudited)
	For the Quarter Ended								For the Years Ended
	June 30, 2026				June 30, 2025				June 30, 2026				June 30, 2025
Net cash provided (used) by operating activities	$	20,562			$	16,448			$	22,899			$	23,979
Acquisition of capital expenditures		(3,407	)			(7,705	)			(13,713	)			(15,157	)
Free cash flow	$	17,155			$	8,743			$	9,186			$	8,822

	RECONCILIATION OF TOTAL DEBT TO NET DEBT
	(In thousands; unaudited)
		June 30, 2026			June 30, 2025
	Current maturities of long-term debt	$	1,500		$	3,000
	Long-term debt		28,310			28,446
	Total debt		29,810			31,446
	Less cash		16,029			16,109
	Net debt	$	13,781		$	15,337

RECONCILIATION OF REPORTED NET SALES TO ORGANIC NET SALES
(In thousands; unaudited)
	For the Year Ended
	June 30, 2026			June 30, 2025
Net Sales	$	381,270		$	340,738
Less: Acquisition		7,550			-
Less: Foreign Currency Impact		17,225			-
Organic Net Sales	$	356,495		$	340,738

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands; except share amounts, unaudited)
				As Adjusted
		June 30, 2026		June 30, 2025
ASSETS
Current assets:
Cash	$	16,029	$	16,109
Trade accounts receivable, net		66,761		58,941
Inventories, net		178,028		184,085
Other current assets		17,397		19,914
Total current assets		278,215		279,049
Property, plant and equipment, net		68,094		69,576
Right-of-use assets operating lease assets		14,730		17,250
Goodwill		2,772		2,892
Intangible assets, net		14,121		13,361
Deferred income taxes		21,093		2,812
Other noncurrent assets		2,220		2,756
Total assets	$	401,245	$	387,696
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	1,500	$	3,000
Current maturities of right-of-use operating lease obligations		3,527		3,393
Accounts payable		30,809		38,745
Accrued liabilities		82,739		80,655
Total current liabilities		118,575		125,793
Long-term debt		28,310		28,446
Right-of-use lease obligations		11,691		14,357
Accrued retirement benefits		10,429		11,832
Deferred income taxes		4,480		4,320
Other long-term liabilities		7,824		6,423
Total liabilities		181,309		191,171
Twin Disc, Incorporated shareholders' equity:
Preferred shares authorized: 200,000; issued: none; no par value		-		-
Common shares authorized: 30,000,000; issued: 14,632,802; no par value		40,252		42,269
Retained earnings		182,340		157,548
Accumulated other comprehensive income (loss)		288		3,730
		222,880		203,547
Less treasury stock, at cost (209,975 and 482,181 shares, respectively)		3,226		7,402
Total Twin Disc, Incorporated shareholders' equity		219,654		196,145
Noncontrolling interest		282		380
Total equity		219,936		196,525
Total liabilities and equity	$	401,245	$	387,696

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands; unaudited)
	For the Year Ended
						As Adjusted
		June 30, 2026				June 30, 2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	27,570			$	(402	)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation and amortization		13,746				14,899
Gain on sale of assets		(200	)			(98	)
Loss on write-down of industrial product inventory		-				1,579
Restructuring charges		139				39
Provision for deferred income taxes		(18,046	)			(1,581	)
Stock compensation expense and other non-cash changes, net		3,322				5,333
Net change in operating assets and liabilities		(3,632	)			4,210
Net cash provided (used) by operating activities		22,899				23,979
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of capital expenditures		(13,713	)			(15,157	)
Acquisition of Kobelt, less cash acquired		-				(17,236	)
Proceeds from sale of property, plant, and equipment		235				147
Other, net		(671	)			(653	)
Net cash provided (used) by investing activities		(14,149	)			(32,899	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under long-term debt agreement		30,000				6,500
Borrowings under revolving loan arrangements		114,526				122,264
Repayments of revolving loan arrangements		(131,941	)			(122,264	)
Repayments of other long-term debt		(13,500	)			(2,500	)
Payments of right-of-use finance lease obligations		(1,246	)			(1,119	)
Dividends paid to shareholders		(2,285	)			(2,284	)
Dividends paid to noncontrolling interest		(457	)			(306	)
Cash used in net share settlement of restricted stock units		(11	)			-
Payments of withholding taxes on stock compensation		(1,675	)			(1,256	)
Net cash provided (used) by financing activities		(6,589	)			(965	)
Effect of exchange rate changes on cash		(2,241	)			5,924
Net change in cash		(80	)			(3,961	)
Cash:
Beginning of period		16,109				20,070
End of period	$	16,029			$	16,109