Twin Disc Targets $500M as Defense, Electrification Drive Record Growth

Twin Disc reported record fiscal 2026 results, with revenue of $381 million, EBIT of approximately $30 million—up nearly 50% year over year—and a $178 million backlog. Defense is a growing opportunity, representing about 17% of backlog and supported by rising European and expected U.S. military spending, Katsa’s defense-transmission business and demand for unmanned naval vessels. The company is expanding through marine electrification and acquisitions while targeting $500 million in revenue by 2030; it also raised its quarterly dividend 25% to $0.05 per share.

Twin Disc Chief Financial Officer Jeff Knutson outlined the power-transmission company’s growth priorities, reporting record fiscal 2026 revenue and describing defense, marine electrification and acquisitions as major areas of opportunity. Knutson said Twin Disc operates globally across marine propulsion, land-based transmissions and industrial equipment markets. Marine propulsion accounts for about 60% of the company’s business and serves applications including tugboats, fishing vessels, mega yachts, patrol craft, ferries and river cruise vessels.

The company reported fiscal 2026 revenue of $381 million, a record fourth quarter and a record year of revenue, according to Knutson. EBIT was approximately $30 million, up nearly 50% from the prior year, while free cash flow totaled $9.2 million for the full year and $17 million in the fourth quarter. Backlog stood at $178 million, which Knutson said represents a six-month backlog under the company’s reporting convention.

Defense is becoming a larger component of Twin Disc’s outlook, Knutson said. Defense represented about 17% of backlog, or roughly $30 million to $40 million, and was up more than 50%. Customers have identified a pipeline of known defense projects in the $30 million to $50 million range, he said, while management expects the longer-term opportunity to extend beyond that amount. Knutson pointed to rising European military spending and expected U.S. naval investment as key demand drivers. The company’s Katsa acquisition in Finland provides exposure to military transmission applications, including transmissions used in Finnish-made defense vehicles. He said Finland’s military manufacturing base is drawing greater demand from European and NATO countries. The CFO also highlighted unmanned naval vessels as a potential source of growth. He said Twin Disc is the only North American and U.S. manufacturer of transmissions in its applicable horsepower range for those vessels. The company is working with Saronic, which has launched the Marauder autonomous vessel, according to Knutson. He said the company expects the primary addressable vessel range to be about 60 to 150 feet.

Twin Disc is also pursuing hybrid and electric propulsion opportunities, primarily in marine applications. Knutson said the company has supplied systems for electric ferries in Sydney, the electric Maid of the Mist vessel at Niagara Falls and an electric Picnic Boat for Hinckley Yachts. He said stricter requirements at some marinas, particularly in Europe, are increasing the need for electric propulsion systems. These projects can increase Twin Disc’s content per vessel because the company packages systems beyond transmissions and controls, including inverters and batteries sourced from other suppliers, Knutson said. While the market is relatively niche, he said small orders can be meaningful for Twin Disc and have helped position the company as a supplier for complex hybrid-electric projects. The company has completed three recent acquisitions: Veth, Kat...