Twin Disc Surges on Strong Q3, Eyes Growth in Marine and Defense

MILWAUKEE, WI – May 06, 2026 – Twin Disc, Inc. (NASDAQ: TWIN) today announced a significant financial turnaround in its third quarter fiscal 2026 results, posting robust sales growth and a return to profitability that handily beat revenue expectations and sent its stock price soaring in pre-market trading.

The Milwaukee-based manufacturer of power transmission equipment reported a 19.0% year-over-year increase in sales to $96.7 million, surpassing analyst projections of $94.7 million. This strong top-line performance fueled a dramatic swing in profitability, with the company reporting a net income attributable to Twin Disc of $3.3 million, or $0.23 per diluted share. This marks a stark contrast to the $1.5 million net loss, or ($0.11) per share, recorded in the same period last year.

“Our third quarter results marked the beginning of the strong second-half performance we anticipated,” commented John H. Batten, President and Chief Executive Officer of Twin Disc. “We delivered meaningful sales growth, margin expansion and improved free cash flow generation, driven by solid execution and healthy demand across our end markets.”

A Resounding Financial Turnaround

The impressive bottom-line improvement was underpinned by enhanced operational efficiency and higher sales volumes. Gross margin expanded by 134 basis points to 28.1%, reflecting successful margin improvement initiatives and the positive impact of incremental sales. Earnings before interest, taxes, depreciation, and amortization (EBITDA) surged an impressive 135.1% to $9.4 million, a clear indicator of the company’s strengthening operational leverage.

While the reported earnings per share of $0.23 came in just shy of analyst consensus forecasts of $0.25, the significant revenue beat and the powerful shift from loss to profit were viewed by the market as a testament to the company's successful execution of its strategic plan. The results also showcased strong cash generation, with $5.3 million in positive operating cash flow and $1.8 million in free cash flow for the quarter, a significant improvement from the prior-year period.

Marine and Defense Propel Growth

A deep dive into the company’s performance reveals that its Marine and Propulsion Systems segment was a primary engine of growth. Sales in this division climbed 20.0% to $59.1 million, largely fueled by sustained demand for its Veth products. Twin Disc acquired Veth Propulsion in 2018, a specialist in advanced azimuth rudder propellers, thrusters, and marine electronics that serve a wide range of commercial and government vessels. This technology appears to be a key differentiator, driving interest in higher-content propulsion solutions and integrated systems.

Beyond the commercial marine market, Twin Disc is solidifying its position as a critical supplier to the defense industry. Defense-related programs have become an increasingly durable and significant part of the business, now accounting for approximately 15% of the company's total backlog. This defense backlog grew by about 20% year-over-year, and the company has identified a future opportunity pipeline valued between $50 million and $75 million. This business spans marine transmissions, propulsion systems, and controls for programs like the U.S. Navy’s unmanned vessels, as well as gearboxes and transfer cases for NATO-related vehicle platforms in Europe.

Growth was also evident in other segments. Land-Based Transmissions saw sales increase by 22.2% to $21.7 million, while the Industrial group grew 15.2% to $11.2 million, partly benefiting from the recent acquisition of Kobelt.

Strategic Investments for Long-Term Gains

Twin Disc’s strong quarter is not just a story of current market demand but also of deliberate strategic positioning for the future. The company is making key investments to optimize its global footprint and expand its capacity to meet growing opportunities, particularly in the defense sector. The Board of Directors recently approved a facility expansion in Finland to add crucial test stand and assembly capacity, positioning the company to better support rising European defense demand.

Management is also actively navigating global trade complexities. The company is working to mitigate tariff exposure by adjusting its manufacturing strategy, including relocating certain assembly operations to its Lufkin, Texas, facility. This move is expected to improve operational flexibility and reduce financial headwinds from tariffs.

“Looking ahead, strong demand continues to support healthy order momentum and a growing, record backlog, including increased activity from our defense-related programs,” Mr. Batten concluded. “At the same time, we remain focused on advancing internal initiatives that optimize our manufacturing footprint and support future growth... these actions position Twin Disc well to capitalize efficiently on robust end market demand and drive long-term growth.”

Balancing the Books and Building for the Future

The company’s strategic moves, including the Kobelt acquisition, have impacted its balance sheet. Total debt increased to $45.1 million, leading to a net debt of $29.0 million. However, the company's net leverage ratio remains manageable, increasing only slightly from 1.0x to 1.1x last-twelve-months EBITDA, suggesting a disciplined approach to growth-oriented investments.

Underscoring the company’s forward momentum is a robust six-month backlog of orders totaling $179.5 million, up from the previous quarter and providing strong visibility into near-term revenue. This healthy order book, combined with improving profitability, has bolstered confidence within the company's leadership.

“Our third quarter results reflected strong year-over-year sales growth, improved profitability and higher free cash flow generation,” said Jeffrey S. Knutson, Vice President of Finance and Chief Financial Officer. “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.”

Those long-term targets are ambitious, reflecting a vision that extends far beyond the current fiscal year. Twin Disc has set its sights on achieving $500 million in revenue with 30% gross margins by fiscal year 2030. This strategy involves not only capturing market share in its traditional segments but also becoming a leading provider of hybrid and electric solutions for specialized marine and land-based applications, signaling a forward-thinking approach to an evolving industrial landscape.