Fiscal Third Quarter 2026 Highlights
Sales increased 19.0% year-over-year to $96.7 million
Gross margin of 28.1%, expanded 134 basis points over prior year
Net income attributable to Twin Disc was $3.3 million and EBITDA* of $9.4 million
Delivered positive Operating Cash Flow of $5.3 million and Free Cash Flow* of $1.8 million during the quarter
Robust six-month backlog of $179.5 million supported by healthy ongoing demand
Continued momentum in defense, supporting Finland facility expansion to deliver long-term growth
CEO Perspective
"Our third quarter results marked the beginning of the strong second-half performance we anticipated. We delivered meaningful sales growth, margin expansion and improved free cash flow generation, driven by solid execution and healthy demand across our end markets. Marine and propulsion systems remained a key driver of both top- and bottom-line expansion, supported by continued demand for our Veth products," commented John H. Batten, President and Chief Executive Officer of Twin Disc.
"Looking ahead, strong demand continues to support healthy order momentum and a growing, record backlog, including increased activity from our defense-related programs. At the same time, we remain focused on advancing internal initiatives that optimize our manufacturing footprint and support future growth, including relocating production to mitigate tariff exposure and adding capacity to support our expanding defense business. Together with improving profitability, these actions position Twin Disc well to capitalize efficiently on robust end market demand and drive long-term growth," Mr. Batten concluded.
Third Quarter ResultsSales for the fiscal 2026 third quarter increased 19.0% year-over-year to $96.7 million, driven largely by strength in the Company's Veth products in Marine and Propulsion Systems. On an organic basis*, which excludes the impacts of acquisitions and foreign currency exchange, fiscal third quarter 2026 sales increased 7.0% year-over-year.
Sales by product group (certain amounts have been reclassified from Marine and Propulsion to Other):
Product Group(Thousands of $):
Q3 FY26 Sales
Q3 FY25 Sales
Change (%)
Marine and Propulsion Systems
$59,146
$49,297
20.0%
Land-Based Transmissions
21,715
17,776
22.2%
Industrial
11,215
9,734
15.2%
Other
4,618
4,435
4.1%
Total
$96,684
$81,242
19.0%
Twin Disc delivered double-digit growth year-over-year in the North American region which drove a shift in the distribution of sales across geographical regions. A greater proportion of sales came from the North American region, with a lower proportion of sales coming from the Middle East and Asia Pacific.
Gross profit increased 25.0% to $27.1 million compared to $21.7 million for the third quarter of fiscal 2025. Third quarter gross margin increased approximately 134 basis points to 28.1% from the prior year period, reflecting the benefit of incremental volume and successful margin improvement initiatives.
Marketing, engineering and administrative (ME&A) expense increased by $1.5 million, or 7.6%, to $21.3 million, compared to $19.8 million in the prior year quarter. As a percentage of sales, ME&A expenses decreased by 234 basis points primarily driven by operational leverage, partially offset by the addition of Kobelt along with an inflationary impact on wages and benefits.
Net income attributable to Twin Disc for the third quarter of fiscal 2026 was $3.3 million, or $0.23 per diluted share, compared to net loss attributable to Twin Disc of ($1.5) million, or ($0.11) per diluted share for the third fiscal quarter of 2025. The year-over-year change was driven by an increase in operating income and a decrease in other expense when compared to the prior year period. Earnings before interest, taxes, depreciation, and amortization (EBITDA) were $9.4 million in the third quarter, up 135.1% compared to the third quarter of fiscal 2025.
Certain items impacting EBITDA for the third quarter 2026 include:
(Thousands of $):
Q3 FY26
Q3 FY25
Restructuring
$
309
$
287
Non-cash stock based compensation
748
1,004
Acquisition costs
-
396
Currency translation (gain)/loss
(1,036
)
1,301
Non-cash defined benefit pension amortization
690
231
On a consolidated basis, the backlog of orders to be shipped over the next six months is approximately $179.5 million, compared to $175.3 million at the end of the second quarter. As a percentage of six-month backlog, inventory decreased from 93.1% at the end of the second quarter, to 89.3% at the end of the third quarter. Compared to the third fiscal quarter of 2025, cash decreased 0.8% to $16.1 million, total debt increased 10.5% to $45.1 million, and net debt* increased $4.4 million to $29.0 million. The increase was primarily attributable to higher long-term debt related to the Kobelt acquisition.
CFO PerspectiveJeffrey S. Knutson, Vice President of Finance, Chief Financial Officer, Treasurer and Secretary stated, "Our third quarter results reflected strong year-over-year sales growth, improved profitability and higher free cash flow generation. Margin performance benefited from incremental volumes and stronger operating execution, while free cash flow generation improved significantly from the prior-year period due to effective inventory management and enhanced profitability. Moving forward, we remain focused on disciplined execution across the business, efficient backlog conversion and continued working capital improvements as we progress closer toward our long-term targets."
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 May 6, 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 May 7, 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 StatementsThis 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: Riveron[email protected]
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 Three Quarters Ended
March 27, 2026
March 28, 2025
March 27, 2026
March 28, 2025
Net sales
$
96,694
$
81,242
$
266,870
$
244,060
Cost of goods sold
69,563
59,536
194,438
179,773
Cost of goods sold - other
-
-
-
1,579
Gross profit
27,131
21,706
72,432
62,708
Marketing, engineering and administrative expenses
21,255
19,759
62,607
58,166
Other operating income
54
-
(320
)
-
Income (loss) from operations
5,822
1,947
10,145
4,542
Other income (expense):
Interest expense
(790
)
(660
)
(2,363
)
(1,791
)
Other income (expense), net
363
(1,567
)
(1,118
)
(2,525
)
(427
)
(2,227
)
(3,481
