The massive EPS beat and strong free cash flow generation are clear positives, but the 600bps gross margin compression and tariff headwinds warrant monitoring. With a healthy backlog and a new $90M credit facility providing financial flexibility, the company is well-positioned for FY2027. Traders should watch for margin recovery commentary on the earnings call and any updates on defense contract momentum.
Price Chart
Executive Summary
Twin Disc reported a strong fiscal Q4 2026 with revenue of $114.4M (+18.3% YoY) and diluted EPS of $0.64, significantly beating the consensus estimate of $0.23. Full-year sales grew 11.9% to $381.3M, and the company generated $17.2M in free cash flow in the quarter. However, gross margin contracted ~600bps to 26.3% due to product mix and tariff dilution, partially offsetting the top-line strength. The company also changed its inventory accounting method from LIFO to FIFO, which boosted prior-year inventory by $32.1M and complicates year-over-year comparisons.
Key Financial Metrics
Key Facts
- Q4 FY2026 revenue of $114.4M, up 18.3% YoY and above $100.3M consensus
- Diluted EPS of $0.64 vs $0.23 consensus (178.3% beat)
- Full-year FY2026 revenue of $381.3M, up 11.9% YoY
- Full-year net income attributable to Twin Disc of $27.1M vs a loss of $697K in FY2025
- Q4 EBITDA of $11.1M, up 35.1% YoY
- Q4 free cash flow of $17.2M, nearly double the prior year
- Six-month backlog of $178.3M, roughly flat sequentially
- Gross margin declined ~600bps to 26.3% in Q4 due to product mix and tariff dilution
- Total debt decreased 5.2% to $29.8M; net debt reduced to $13.8M
- Company changed inventory accounting from LIFO to FIFO, increasing FY2025 inventory by $32.1M
Financial Impact
Q4 revenue beat consensus by $14.1M (14.1%); EPS beat by $0.41 (178.3%). Full-year net income swung from a $697K loss to $27.1M profit.
Risk Factors
- Gross margin compression from product mix and tariff dilution
- Flat backlog sequentially despite strong shipments suggests potential demand normalization
- Inventory accounting change complicates year-over-year financial comparisons
- Foreign currency translation losses of $6.1M for the full year
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001437749-26-028596 |
| Document: twin20260818c_8k.htm | 0001437749-26-028596 |
| Document: 0001437749-26-028596-index-headers.html | 0001437749-26-028596 |
| Document: 0001437749-26-028596-index.html | 0001437749-26-028596 |
| Document: 0001437749-26-028596.txt | 0001437749-26-028596 |
| 8-K Data (Synthetic) | 0001437749-26-028596 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Sep 14, 2026 6w ago | DEFA14A | $24.10 $26.25 | ▲ +8.92% | ▲ +6.66% | $25.24 (+4.71%) |
Aug 20, 2026 9w ago | 8-K | $24.47 $24.88 | ▲ +1.68% | ▲ +1.68% | $25.24 (+3.13%) |
Aug 20, 2026 9w ago | 8-K | $24.47 $24.88 | ▲ +1.68% | ▲ +1.68% | $25.24 (+3.13%) |
Aug 20, 2026 9w ago | Press Release | $24.47 $24.88 | ▲ +1.68% | ▲ +1.68% | $25.24 (+3.13%) |
Aug 7, 2026 11w ago | Press Release | $24.14 $23.85 | ▼ −1.20% | ▼ −0.80% | $25.24 (+4.54%) |
May 6, 2026 24w ago | 8-K | $18.09 $18.01 | ▼ −0.44% | ▼ −3.22% | $25.24 (+39.50%) |
May 6, 2026 24w ago | 8-K | $18.09 $18.01 | ▼ −0.44% | ▼ −3.22% | $25.24 (+39.50%) |
May 6, 2026 24w ago | Press Release | $18.09 $18.01 | ▼ −0.44% | ▼ −3.22% | $25.24 (+39.50%) |
US Market Status
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