Twin Disc Inc reported a record fourth-quarter revenue of $114.4 million for fiscal 2026, an 18.3% increase from the prior year and ahead of Wall Street’s $106.0 million estimate. Diluted earnings per share totaled $0.64, surpassing the $0.48 consensus by $0.16, while net income rose to $9.4 million from $2.6 million a year earlier.
Organic revenue growth reached 15.9% in the quarter, though gross profit fell 3.5% to $30.1 million as the gross margin contracted by 600 basis points to 26.3%. The decline reflected product mix shifts, tariff dilution, and a one-time adjustment in the prior-year period. Operating income increased 19.5% to $7.8 million, while EBITDA climbed 35.1% to $11.1 million, lifting the EBITDA margin to 9.7%.
For the full fiscal year, Twin Disc posted revenue of $381.3 million, a 4.6% organic increase, with net income of $27.1 million and diluted EPS of $1.86. The company generated $17.2 million in free cash flow during the quarter and reported a net leverage ratio of 0.5 as of June 30, 2026.
Defense-related backlog expanded 56% year-over-year to comprise 17% of the total $178.3 million six-month backlog, with a projected pipeline of $30 million to $50 million. Marine propulsion systems sales grew 20%, driven by demand for the Veth propulsion platform and military marine transmissions, while land-based transmission sales rose 26%, supported by oil and gas e-frac opportunities.
Twin Disc also announced a 25% increase in its quarterly dividend to $0.05 per share. Capital expenditures are projected to exceed $20 million in fiscal 2027, including investments in a new facility in Finland and the relocation of a product line to Lufkin, Texas, to mitigate tariff exposure. The company set long-term targets of $500 million in revenue, 30% gross margins, and free cash flow conversion above 60% by 2030.
CEO John H. Batten highlighted strong defense demand from the U.S. Navy and NATO as a structural growth driver, while CFO Jeff S. Knutson noted the gross margin compression was primarily due to product mix and tariff impacts.
