Twin Disc (TWIN) investor relations material

Executive summary

• Fiscal Q1 2026 began with strong momentum, delivering profitable growth and margin expansion, supported by a diversified portfolio and strategic acquisitions, especially in hybrid/electric systems.

• Net sales increased 9.7% year-over-year to $80.0 million, driven by marine propulsion, defense, and the Kobelt acquisition.

• Defense market momentum accelerated, now representing about 15% of total backlog, with a significant pipeline and robust demand across all core product groups.

• Backlog reached $163.3 million, up year-over-year and sequentially, providing strong visibility for future growth.

• Net loss attributable to shareholders was $518,040, or $(0.04) per share, a significant improvement from a $2.8 million loss last year.

Financial highlights

• Sales grew 9.7% year-over-year to $80 million, with organic net sales up 1.1%.

• Gross profit rose 18.7% to $22.9 million, with gross margin expanding 220 basis points to 28.7%.

• EBITDA was $4.7 million, up 172% year-over-year, driven by expanded sales and profitability.

• Operating income was $2.2 million, up from a loss of $0.2 million in the prior year.

• Backlog reached $163.3 million, up 13% year-over-year and 9% sequentially.

Outlook and guidance

• Tariff impact on cost of sales expected to rise to 1–3% in Q2, then return to 1% for the remainder of the year.

• Defense-related business expected to double in volume over the next year, with 50% growth in key programs anticipated annually for the next few years.

• Targeting double-digit EBITDA margin (11% for the year) and 60%+ free cash flow as a percent of EBITDA.

• Capital expenditures for fiscal 2026 are expected to be $15–$17 million, focused on modernization and efficiency.

• Management expects available cash, credit facilities, and operations to fund requirements for the foreseeable future.