Twin Disc, Incorporated

What they do

Twin Disc manufactures marine transmissions, azimuth and surface drives, propellers, boat management systems, power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, controls and braking systems. It produces at plants in the United States, Belgium, Canada, Finland, Italy, the Netherlands and Switzerland, with distribution operations in Belgium, Singapore, China, Australia, New Zealand and Japan. Products go to pleasure craft, commercial and military marine markets and to energy, natural resources, government and industrial markets through a direct sales force and distributor network. The February 2025 acquisition of Kobelt Manufacturing Co. Ltd. added controls, propulsion, steering and braking systems for marine, oil and gas and industrial markets.

Revenue drivers

• Marine and Propulsion Systems — Largest product group at $227.7 million in fiscal 2026, up 13.2% from $201.1 million, driven by Veth propulsion, commercial marine and improved military marine demand.
• Land-Based Transmissions — Fiscal 2026 sales of $89.7 million, up 11.9% from $80.2 million, with fourth-quarter growth of 26.2% on improved ARFF shipments and oil and gas demand.
• Industrial — Fiscal 2026 and fourth-quarter Industrial sales were roughly flat, with Q4 at $12.9 million versus $13.1 million a year ago, reflecting the stabilization cited by management.
• Distribution segment — Distribution sales fell 11.6%, or $15.2 million, in fiscal 2026, with North America down 32.0% and Europe down 19.0% on weaker marine demand and tariffs.

Recent performance

Fiscal 2026 net sales rose 11.9%, or $40.5 million, to $381.3 million, with about $7.6 million from Kobelt and $17.2 million of favorable currency translation. Fourth-quarter sales increased 18.3% year-over-year to $114.4 million on organic growth of 15.9%. Reported net income was $34.5 million and net income attributable to Twin Disc was $27.1 million, with Q4 net income attributable to Twin Disc of $9.4 million. Operating cash flow was $22.9 million for the year and $20.6 million in the fourth quarter, and six-month backlog was $178.3 million versus $150.5 million a year earlier.

Strategy

Management is prioritizing higher-margin e-frac opportunities in oil and gas while defense remains a key structural growth driver, supported by demand from the US Navy and NATO. The company acquired Kobelt in February 2025 and is integrating its controls, propulsion, steering and braking product lines into the broader portfolio. In the fourth quarter of fiscal 2026 Twin Disc changed its inventory accounting for certain inventories from LIFO to FIFO, which it says improves cost and revenue matching, conforms inventories to a single method and improves peer comparability. It continues to invest through research and development, which totaled $2.9 million in fiscal 2026, and in production and market penetration for Veth and Katsa products. Headcount rose to 1,087 at June 30, 2026 from 980 a year earlier, including Kobelt.

Risks

• Currency exposure — A significant portion of sales and operating costs are realized in euros and other foreign currencies, and a major dollar-euro move could hurt profitability.
• Oil and gas cyclicality — Some products are used directly or indirectly in oil exploration and drilling, so lower oil prices and reduced energy capital spending pressure sales.
• Tariffs — Management attributed softer Belgian marine demand and weaker North American distribution marine sales from the European operations partly to tariffs.
• Customer concentration and competition — The top ten customers were approximately 36% of consolidated net sales in fiscal 2026, and the company competes with parts divisions of some major customers.

Outlook

CEO John H. Batten said near-term outlook remains strong, supported by a robust project pipeline and momentum in the served markets. He cited continuing Defense demand from customers including the US Navy and NATO and oil and gas trending positively as higher-margin e-frac opportunities are prioritized. The six-month backlog of $178.3 million remained level in the quarter despite strong shipments and efforts to reduce past-due backlog. Management said it enters fiscal 2027 with demand, backlog and free cash flow to continue investing in long-term growth.