Twin Disc Posts Record Q4 Sales as Marine and Land-Based Segments Accelerate

The Tip Desk · August 20, 2026 · 4 min read

The power-transmission equipment maker reported $114.4 million in fourth-quarter revenue, a record for the period, as organic sales growth surged to 15.9%.

Twin Disc Inc. (TWIN), a manufacturer of marine and industrial power-transmission equipment, closed its fiscal year with record fourth-quarter revenue of $114.4 million, an 18.3% increase from a year earlier, capping a period in which both its marine and land-based transmission divisions accelerated sharply.

The quarter marked a decisive shift in the company's trajectory. After posting just 0.3% year-over-year sales growth in the second quarter, Twin Disc generated 19.0% growth in the third quarter and matched that pace in the fourth. On an organic basis — stripping out the Kobelt acquisition and foreign-exchange effects — fourth-quarter revenue grew 15.9%, dwarfing the full-year organic rate of 4.6%, underscoring how momentum built as the year progressed.

Marine and Propulsion Systems, the company's largest segment, drove much of the gain. Fourth-quarter sales in the division rose 20.0% to $63.6 million, matching the prior quarter's growth rate after a flat second quarter. Land-Based Transmissions posted even stronger momentum, with sales climbing 26.2% to $33.0 million, a sharp reversal from the 8.1% decline recorded in the second quarter. The Industrial segment was the lone soft spot, with sales slipping 1.6% to $12.9 million after two quarters of double-digit gains.

Profitability told a more complicated story. Gross margin in the fourth quarter fell roughly 600 basis points year-over-year to 26.3%, a reversal from the expansion logged in the second and third quarters. The company attributed the contraction to product mix and noted that the year-ago period had benefited from a $3.0 million favorable adjustment. For the full year, gross margin narrowed about 70 basis points to 26.9%, pressured by mix and tariff dilution, even as gross profit rose 9.2% to $102.6 million.

Operating discipline partially offset the margin pressure. Selling, general and administrative expense fell 10.0% in the quarter to $22.2 million, driven by lower bonus accruals, reduced depreciation and amortization, and tighter spending controls. That contrasted with the prior two quarters, when SG&A had risen 7.6% and 9.2%, respectively.

The combination of higher revenue and lower overhead lifted fourth-quarter EBITDA 35.1% to $11.1 million. For the full fiscal year, EBITDA climbed 48.0% to $29.9 million. Net income attributable to Twin Disc reached $9.4 million, or $0.64 per diluted share, in the fourth quarter, compared with $2.6 million, or $0.19 a share, a year earlier. The full-year picture was further brightened by a $14.0 million income-tax benefit from the reversal of a domestic valuation allowance, which helped swing the company to net income of $27.1 million, or $1.86 a share, from a net loss of $697,000 in fiscal 2025.

Cash generation strengthened meaningfully. Fourth-quarter free cash flow nearly doubled to $17.2 million from $8.7 million a year earlier, with operating cash flow rising to $20.6 million from $16.4 million. For the full year, free cash flow edged up to $9.2 million from $8.8 million.

The company's six-month backlog stood at $178.3 million at the end of the fiscal year, essentially flat with the $179.5 million recorded at the end of the third quarter despite the quarter's robust shipments. Inventory as a percentage of that backlog improved to 99.9% from 107.2% at the prior quarter-end, signaling better alignment between production and demand.

Twin Disc also bolstered its balance sheet during the year. Total debt fell 5.2% to $29.8 million, and net debt declined $1.5 million to $13.8 million. The company secured a new $90 million credit facility with BMO and JP Morgan, adding capacity for future investment. Separately, Twin Disc switched its inventory accounting method from LIFO to FIFO during the fourth quarter, a change that increased prior-year inventory by $32.1 million; all historical figures were recast to reflect the new method.

With organic growth accelerating through the year and a backlog holding near record levels, the company enters fiscal 2027 with its two largest segments firing and its balance sheet carrying more flexibility than it has had in recent years.