Twin Disc, Inc. (NASDAQ:TWIN) reported better-than-expected fourth-quarter results on Thursday, supported by strong demand across its Land-Based Transmissions and Marine and Propulsion Systems businesses.
Adjusted earnings per share came in at $0.64, comfortably ahead of the analyst consensus of $0.48. Revenue reached $114.4 million, beating expectations of $106 million and rising 18.3% from $96.7 million in the same quarter last year.
Despite the earnings and revenue beat, Twin Disc shares showed little movement following the announcement, edging just 0.72% higher in after-hours trading.
Marine and land-based transmission sales drive growth
Fourth-quarter growth was led by several of Twin Disc’s key end markets.
Sales from Land-Based Transmissions increased 26.2% year on year to $33.0 million, while Marine and Propulsion Systems revenue climbed 20.0% to $63.6 million.
Higher activity in the defence and oil and gas markets also contributed to the company’s stronger quarterly revenue.
Net income attributable to Twin Disc increased substantially to $9.4 million, equivalent to $0.64 per diluted share, compared with $2.6 million, or $0.19 per diluted share, in the fourth quarter of fiscal 2025.
The latest result benefited from a $2.5 million income tax gain associated with the reversal of the company’s domestic valuation allowance.
EBITDA rises despite pressure on gross margin
Twin Disc generated EBITDA of $11.1 million during the quarter, representing a 35.1% increase from $8.2 million a year earlier.
However, gross margin contracted by approximately 600 basis points to 26.3%. The decline reflected product mix as well as the comparison with a $3.0 million favourable adjustment recorded in the prior-year fourth quarter.
Cost controls provided some support to profitability. Marketing, engineering and administrative expenses declined 10.0% to $22.2 million, helped by lower global bonus expenses and broader spending discipline.
“We closed fiscal 2026 with record fourth quarter revenue, solid profitability, and enhanced free cash flow generation,” said John H. Batten, President and Chief Executive Officer.
Defence demand remains an important growth driver
Twin Disc highlighted defence as a particularly significant source of longer-term growth, with demand from customers including the U.S. Navy and NATO supporting the outlook.
“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.”
The company’s six-month backlog remained broadly stable at $178.3 million, compared with $179.5 million at the end of the fiscal third quarter, providing continued visibility into near-term demand.
Free cash flow nearly doubles
Cash generation also strengthened considerably during the quarter.
Twin Disc produced free cash flow of $17.2 million, almost double the $8.7 million generated in the corresponding period last year.
The combination of record fourth-quarter revenue, stronger earnings, rising EBITDA and improved free cash flow demonstrates solid operating momentum, although weaker gross margins remain an area for investors to monitor.
Twin Disk stock price
