Fiscal Full Year 2026 Highlights
- Sales increased 11.9% year-over-year to
$381.3 million - Net income attributable to
Twin Disc was$27.1 million - EBITDA* of
$29.9 million , including a currency translation gain of$1.7 million - Operating cash flow of
$22.9 million and Free cash flow* of$9.2 million - Six-month backlog of
$178.3 million
Fiscal Fourth Quarter 2026 Highlights
- Sales increased 18.3% year-over-year to
$114.4 million - Net income attributable to
Twin Disc was$9.4 million - EBITDA* of
$11.1 million , including a currency translation gain of$0.8 million - Operating cash flow of
$20.6 million and Free cash flow* of$17.2 million
CEO Perspective
“Our six-month backlog remained level in the quarter despite strong shipments and a concerted effort to reduce past due backlog,”
“As we move into fiscal 2027, we are well positioned with strong demand, a healthy backlog and growing pipeline, and free cash flow to continue investing in the long-term growth of our business. We remain focused on the disciplined execution of our strategy and are highly encouraged by the growth opportunities ahead of us,”
Change in Inventory Accounting Method
During the fourth quarter of fiscal 2026, the Company elected to change its method of accounting for certain inventories from the last-in, first out (LIFO) method to the first-in, first out (FIFO) method. The change to the FIFO method of accounting for these inventories is preferable because it provides better matching of costs and revenues, conforms the Company's inventory to a single method of accounting and improves comparability with the Company's peers. The impact of the change in inventory accounting as reported under the FIFO method was a
Fourth Quarter and Full-Year Results
Sales for the fiscal 2026 fourth quarter increased 18.3% year-over-year to
Sales by product group (certain amounts have been reclassified from Marine and Propulsion to Other):
| Q4 FY26 Sales | Q4 FY25 Sales | Change (%) | ||||
| (Thousands of $): | ||||||
| Marine and | $ | 63,596 | $ | 53,010 | 20.00 | % |
| Land-Based Transmissions | 32,962 | 26,122 | 26.20 | % | ||
| Industrial | 12,934 | 13,141 | -1.60 | % | ||
| Other | 4,908 | 4,405 | 11.40 | % | ||
| Total | $ | 114,400 | $ | 96,678 | 18.30 | % |
| FY26 Sales | FY25 Sales | Change (%) | ||||
| (Thousands of $): | ||||||
| Marine and | $ | 227,675 | $ | 201,101 | 13.20 | % |
| Land-Based Transmissions | 89,698 | 80,192 | 11.90 | % | ||
| Industrial | 46,067 | 41,502 | 11.00 | % | ||
| Other | 17,830 | 17,943 | -0.60 | % | ||
| Total | $ | 381,270 | $ | 340,738 | 11.90 | % |
For fiscal 2026,
Considering the impact of the change to the FIFO method of accounting for inventory (an increase to prior year gross profit of approximately
Marketing, engineering and administrative (ME&A) expense decreased by
Considering the impact of the change to the FIFO method of accounting for inventory, net income attributable to
On a consolidated basis, the backlog of orders to be shipped over the next six months is approximately
CFO Perspective
Discussion of Results
About
Forward-Looking Statements
This press release may contain statements that are forward looking as defined by the Securities and Exchange Commission in its rules, regulations, and releases. The words “anticipates,” “believes,” “intends,” “estimates,” and “expects,” or similar anticipatory expressions, usually identify forward-looking statements. The Company intends that such forward-looking statements qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. All forward-looking statements are based on current expectations and are subject to certain risks and uncertainties that could cause actual results or outcomes to differ materially from current expectations. Such risks and uncertainties include the impact of general economic conditions and the cyclical nature of many of the Company’s product markets; foreign currency risks and other risks associated with the Company’s international sales and operations; the ability of the Company to successfully implement price increases to offset increasing commodity costs; the ability of the Company to generate sufficient cash to pay its indebtedness as it becomes due; and the possibility of unforeseen tax consequences and the impact of tax reform in the U.S. or other jurisdictions. These and other risks are described under the caption “Risk Factors” in Item 1A of the Company’s most recent Form 10-K filed with the Securities and Exchange Commission, as supplemented in subsequent periodic reports filed with the Securities and Exchange Commission. Accordingly, the making of such statements should not be regarded as a representation by the Company or any other person that the results expressed therein will be achieved. The Company assumes no obligation, and disclaims any obligation, to publicly update or revise any forward-looking statements to reflect subsequent events, new information, or otherwise.
*Non-GAAP Financial Information
Financial information excluding the impact of asset impairments, restructuring charges, foreign currency exchange rate changes and the impact of acquisitions, if any, in this press release are not measures that are defined in U.S. Generally Accepted Accounting Principles (“GAAP”). These items are measures that management believes are important to adjust for in order to have a meaningful comparison to prior and future periods and to provide a basis for future projections and for estimating our earnings growth prospects. Non-GAAP measures are used by management as a performance measure to judge profitability of our business absent the impact of foreign currency exchange rate changes and acquisitions. Management analyzes the company’s business performance and trends excluding these amounts. These measures, as well as EBITDA, provide a more consistent view of performance than the closest GAAP equivalent for management and investors. Management compensates for this by using these measures in combination with the GAAP measures. The presentation of the non-GAAP measures in this press release are made alongside the most directly comparable GAAP measures.
Definitions
Organic net sales is defined as net sales excluding the recent acquisition of Kobelt while adjusting for the effects of foreign currency exchange.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) is calculated as net earnings or loss excluding interest expense, the provision or benefit for income taxes, depreciation, and amortization expenses.
Net debt is calculated as total debt less cash.
Free cash flow is calculated as net cash provided (used) by operating activities less acquisition of fixed assets.
Investors:
IMS Investor Relations
twindisc@imsinvestorrelations.com
Source: Twin Disc, Incorporated
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND | ||||||||||||
| COMPREHENSIVE INCOME (LOSS) | ||||||||||||
| (In thousands, except per-share data; unaudited) | ||||||||||||
| For the Quarter Ended | For the Year Ended | |||||||||||
| As Adjusted | As Adjusted | |||||||||||
| Net sales | $ | 114,400 | $ | 96,678 | $ | 381,270 | $ | 340,738 | ||||
| Cost of goods sold | 84,273 | 65,463 | 278,710 | 245,236 | ||||||||
| Cost of goods sold - other | - | - | - | 1,579 | ||||||||
| Gross profit | 30,127 | 31,215 | 102,560 | 93,923 | ||||||||
| Marketing, engineering and administrative expenses | 22,157 | 24,621 | 84,455 | 82,431 | ||||||||
| Restructuring expenses | 57 | 52 | 366 | 408 | ||||||||
| Other operating income | 98 | - | (221 | ) | - | |||||||
| Income (loss) from operations | 7,815 | 6,542 | 17,960 | 11,084 | ||||||||
| Other income (expense): | ||||||||||||
| Interest expense | (715 | ) | (855 | ) | (3,078 | ) | (2,646 | ) | ||||
| Other income (expense), net | (168 | ) | (2,946 | ) | (1,286 | ) | (5,472 | ) | ||||
| (883 | ) | (3,801 | ) | (4,364 | ) | (8,118 | ) | |||||
| Income (loss) before income taxes and noncontrolling interest | 6,932 | 2,741 | 13,596 | 2,966 | ||||||||
| Income tax benefit (expense) | 2,477 | (47 | ) | 13,974 | (3,368 | ) | ||||||
| Net income (loss) | 9,409 | 2,694 | 27,570 | (402 | ) | |||||||
| Less: Net income (loss) attributable to noncontrolling interest, net of tax | 49 | 72 | 493 | 295 | ||||||||
| Net income (loss) attributable to | $ | 9,360 | $ | 2,622 | $ | 27,077 | $ | (697 | ) | |||
| Dividends per share | $ | 0.04 | $ | 0.04 | $ | 0.16 | $ | 0.16 | ||||
| Earnings (loss) per share data: | ||||||||||||
| Basic earnings (loss) per share attributable to | $ | 0.66 | $ | 0.19 | $ | 1.92 | $ | (0.05 | ) | |||
| Diluted earnings (loss) per share attributable to | $ | 0.64 | $ | 0.19 | $ | 1.86 | $ | (0.05 | ) | |||
| Weighted average shares outstanding data: | ||||||||||||
| Basic shares outstanding | 14,199 | 13,897 | 14,119 | 13,856 | ||||||||
| Diluted shares outstanding | 14,666 | 13,938 | 14,586 | 13,856 | ||||||||
| Comprehensive income (loss) | ||||||||||||
| Net income (loss) | $ | 9,409 | $ | 2,694 | $ | 27,570 | $ | (402 | ) | |||
| Benefit plan adjustments, net of income taxes of | 959 | (2,153 | ) | 2,708 | (3,399 | ) | ||||||
| Foreign currency translation adjustment | (1,566 | ) | 15,885 | (6,129 | ) | 15,924 | ||||||
| Unrealized gain (loss) on hedges, net of income taxes of ( | (416 | ) | (1,491 | ) | (155 | ) | (1,851 | ) | ||||
| Comprehensive income (loss) | 8,386 | 14,935 | 23,994 | 10,272 | ||||||||
| Less: Comprehensive income (loss) attributable to noncontrolling interest | (123 | ) | (6 | ) | 359 | 334 | ||||||
| Comprehensive income (loss) attributable to | $ | 8,509 | $ | 14,941 | $ | 23,635 | $ | 9,938 | ||||
| RECONCILIATION OF CONSOLIDATED NET INCOME TO EBITDA | ||||||||||||||
| (In thousands; unaudited) | ||||||||||||||
| For the Quarter Ended | For the Year Ended | |||||||||||||
| As Adjusted | As Adjusted | |||||||||||||
| Net income (loss) attributable to | $ | 9,360 | $ | 2,622 | $ | 27,077 | $ | (697 | ) | |||||
| Interest expense | 715 | 855 | 3,078 | 2,646 | ||||||||||
| Income tax expense (benefit) | (2,477 | ) | 47 | (13,974 | ) | 3,368 | ||||||||
| Depreciation and amortization | 3,520 | 4,705 | 13,746 | 14,899 | ||||||||||
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | $ | 11,118 | $ | 8,229 | $ | 29,927 | $ | 20,216 | ||||||
| RECONCILIATION OF NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES TO FREE CASH FLOW | |||||||||||||||
| (In thousands; unaudited) | |||||||||||||||
| For the Quarter Ended | For the Years Ended | ||||||||||||||
| Net cash provided (used) by operating activities | $ | 20,562 | $ | 16,448 | $ | 22,899 | $ | 23,979 | |||||||
| Acquisition of capital expenditures | (3,407 | ) | (7,705 | ) | (13,713 | ) | (15,157 | ) | |||||||
| Free cash flow | $ | 17,155 | $ | 8,743 | $ | 9,186 | $ | 8,822 | |||||||
| RECONCILIATION OF TOTAL DEBT TO NET DEBT | ||||||
| (In thousands; unaudited) | ||||||
| Current maturities of long-term debt | $ | 1,500 | $ | 3,000 | ||
| Long-term debt | 28,310 | 28,446 | ||||
| Total debt | 29,810 | 31,446 | ||||
| Less cash | 16,029 | 16,109 | ||||
| Net debt | $ | 13,781 | $ | 15,337 | ||
| RECONCILIATION OF REPORTED NET SALES TO ORGANIC | |||||
| (In thousands; unaudited) | |||||
| For the Year Ended | |||||
| $ | 381,270 | $ | 340,738 | ||
| Less: Acquisition | 7,550 | - | |||
| Less: Foreign Currency Impact | 17,225 | - | |||
| Organic | $ | 356,495 | $ | 340,738 | |
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
| (In thousands; except share amounts, unaudited) | ||||
| As Adjusted | ||||
| ASSETS | ||||
| Current assets: | ||||
| Cash | $ | 16,029 | $ | 16,109 |
| Trade accounts receivable, net | 66,761 | 58,941 | ||
| Inventories, net | 178,028 | 184,085 | ||
| Other current assets | 17,397 | 19,914 | ||
| Total current assets | 278,215 | 279,049 | ||
| Property, plant and equipment, net | 68,094 | 69,576 | ||
| Right-of-use assets operating lease assets | 14,730 | 17,250 | ||
| 2,772 | 2,892 | |||
| Intangible assets, net | 14,121 | 13,361 | ||
| Deferred income taxes | 21,093 | 2,812 | ||
| Other noncurrent assets | 2,220 | 2,756 | ||
| Total assets | $ | 401,245 | $ | 387,696 |
| LIABILITIES AND EQUITY | ||||
| Current liabilities: | ||||
| Current maturities of long-term debt | $ | 1,500 | $ | 3,000 |
| Current maturities of right-of-use operating lease obligations | 3,527 | 3,393 | ||
| Accounts payable | 30,809 | 38,745 | ||
| Accrued liabilities | 82,739 | 80,655 | ||
| Total current liabilities | 118,575 | 125,793 | ||
| Long-term debt | 28,310 | 28,446 | ||
| Right-of-use lease obligations | 11,691 | 14,357 | ||
| Accrued retirement benefits | 10,429 | 11,832 | ||
| Deferred income taxes | 4,480 | 4,320 | ||
| Other long-term liabilities | 7,824 | 6,423 | ||
| Total liabilities | 181,309 | 191,171 | ||
| Preferred shares authorized: 200,000; issued: none; no par value | - | - | ||
| Common shares authorized: 30,000,000; issued: 14,632,802; no par value | 40,252 | 42,269 | ||
| Retained earnings | 182,340 | 157,548 | ||
| Accumulated other comprehensive income (loss) | 288 | 3,730 | ||
| 222,880 | 203,547 | |||
| Less treasury stock, at cost (209,975 and 482,181 shares, respectively) | 3,226 | 7,402 | ||
| 219,654 | 196,145 | |||
| Noncontrolling interest | 282 | 380 | ||
| Total equity | 219,936 | 196,525 | ||
| Total liabilities and equity | $ | 401,245 | $ | 387,696 |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (In thousands; unaudited) | |||||||
| For the Year Ended | |||||||
| As Adjusted | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
| Net income (loss) | $ | 27,570 | $ | (402 | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: | |||||||
| Depreciation and amortization | 13,746 | 14,899 | |||||
| Gain on sale of assets | (200 | ) | (98 | ) | |||
| Loss on write-down of industrial product inventory | - | 1,579 | |||||
| Restructuring charges | 139 | 39 | |||||
| Provision for deferred income taxes | (18,046 | ) | (1,581 | ) | |||
| Stock compensation expense and other non-cash changes, net | 3,322 | 5,333 | |||||
| Net change in operating assets and liabilities | (3,632 | ) | 4,210 | ||||
| Net cash provided (used) by operating activities | 22,899 | 23,979 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
| Acquisition of capital expenditures | (13,713 | ) | (15,157 | ) | |||
| Acquisition of | - | (17,236 | ) | ||||
| Proceeds from sale of property, plant, and equipment | 235 | 147 | |||||
| Other, net | (671 | ) | (653 | ) | |||
| Net cash provided (used) by investing activities | (14,149 | ) | (32,899 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
| Borrowings under long-term debt agreement | 30,000 | 6,500 | |||||
| Borrowings under revolving loan arrangements | 114,526 | 122,264 | |||||
| Repayments of revolving loan arrangements | (131,941 | ) | (122,264 | ) | |||
| Repayments of other long-term debt | (13,500 | ) | (2,500 | ) | |||
| Payments of right-of-use finance lease obligations | (1,246 | ) | (1,119 | ) | |||
| Dividends paid to shareholders | (2,285 | ) | (2,284 | ) | |||
| Dividends paid to noncontrolling interest | (457 | ) | (306 | ) | |||
| Cash used in net share settlement of restricted stock units | (11 | ) | - | ||||
| Payments of withholding taxes on stock compensation | (1,675 | ) | (1,256 | ) | |||
| Net cash provided (used) by financing activities | (6,589 | ) | (965 | ) | |||
| Effect of exchange rate changes on cash | (2,241 | ) | 5,924 | ||||
| Net change in cash | (80 | ) | (3,961 | ) | |||
| Cash: | |||||||
| Beginning of period | 16,109 | 20,070 | |||||
| End of period | $ | 16,029 | $ | 16,109 | |||
