Twin Disc (Nasdaq: TWIN) announced record full‑year fiscal 2026 revenue of $381 million, driven by strong performance in its marine propulsion and defense segments. EBIT climbed to roughly $30 million, a near‑50% year‑over‑year increase, while earnings per share reached $1.86, helped by the reversal of a full valuation allowance on tax items.
Free cash flow for the year totaled $92 million, including $17 million generated in the fourth quarter. The company reported a gross margin in the 27%‑28% range and a current ratio of 2.35. A new credit facility with BMO and JPMorgan provides about $60 million of available capacity. Twin Disc raised its quarterly cash dividend by 25% to $0.05 per share.
Shares have risen 87% over the past twelve months and are up 42% year‑to‑date, trading at $23.12 at the time of the conference. The firm posted a record backlog of $178 million, equivalent to a six‑month backlog or an annualized run rate of roughly $360 million. Past‑due backlog was trimmed by $8 million to $9 million in the fourth quarter.
Marine propulsion accounts for about 60% of Twin Disc's business, covering commercial vessels, tugboats, fishing boats, mega‑yachts, patrol craft, ferries and unmanned vessels. Land‑based and industrial products, including frac transmissions, airport rescue and firefighting (ARFF) vehicle transmissions, military transmissions and various industrial components, make up the remainder.
The oil‑and‑gas frac market now represents roughly 10% of revenue (about $11 million), up from 5%‑7% in prior quarters, and Twin Disc holds an estimated 30% share in frac transmissions, competing with Allison and Caterpillar. In the ARFF segment, the company supplies 80%‑90% of the non‑Oshkosh market, primarily through Rosenbauer and NAFFCO.
Defense orders contributed about 17% of the total backlog, roughly $30‑$40 million, and grew more than 50% year‑over‑year. The pipeline includes an additional $30‑$50 million of known projects tied to U.S. Navy modernization and unmanned vessel upgrades. Twin Disc notes it is the only North American manufacturer of transmissions in its horsepower range for unmanned naval vessels.
Acquisitions have expanded the company's product portfolio. Dutch azimuth thruster maker Veth was bought for about $60 million before the pandemic; its revenue has risen from $55 million to roughly $100 million. Finnish gearbox maker Katsa and Vancouver‑based industrial brakes firm Kobelt were also integrated, adding exposure to European military markets and industrial brake applications. Management indicated balance‑sheet capacity to pursue another $40‑$60 million acquisition, targeting privately held, family‑owned businesses rather than private‑equity targets.
Twin Disc operates manufacturing sites in Racine, Wisconsin; Texas; Vancouver; Finland; Belgium; the Netherlands; Italy; and Switzerland, with sales offices in Singapore, New Zealand, Australia and China. The Chinese market showed volume swings of 20%‑25% but remained steady, driven by energy‑independence initiatives rather than oil price movements.
Looking ahead, Twin Disc set 2030 targets of $500 million revenue, a 30% gross margin and a 60% EBITDA‑to‑free‑cash‑flow conversion rate, underscoring its focus on higher‑margin marine and defense opportunities.
