Twin Disc (TWIN 22.97%), a global manufacturer of marine and heavy-duty off-highway power transmission systems, reported its fourth quarter and full-year results for fiscal 2025 on August 21, 2025. The headline news: GAAP revenue reached $96.7 million in Q4 FY2025, up 14.5% from the same period last year and ahead of the $93.3 million GAAP estimate for the quarter, driven by acquisitions. However, GAAP earnings per share came in much lower than expected, dropping to $0.10 against a $0.26 consensus for the quarter and down from $0.53 the previous year. Gross profit (GAAP) improved in the quarter, but profitability metrics were under pressure due to increased costs and integration expenses. Overall, the period showed growth bolstered by acquisitions, but also highlighted weakening organic sales and shrinking bottom-line results.
| Metric | Q4 2025 | Q4 2025 Estimate | Q4 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.10 | $0.26 | $0.53 | (81.1%) |
| Revenue (GAAP) | $96.7 million | $93.3 million | $84.4 million | 14.6% |
| Gross Profit | $30.0 million | $25.1 million | 19.7% | |
| EBITDA | $7.0 million | $11.8 million | -40.7% | |
| Free Cash Flow | $8.7 million | $10.4 million | (16.3%) |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Recent Focus Areas
Twin Disc is known for its engineering and production of power transmission equipment, primarily transmissions, clutches, and propulsion systems for the marine, oil and gas, industrial, and off-highway markets.
In recent years, Twin Disc has focused on expanding its presence through international acquisitions, product innovation, and supply chain optimization. Its strategic priorities include building a robust manufacturing and distribution footprint, pushing product development in new technologies such as electrification, and broadening its reach in defense and industrial end markets. Key success factors include the ability to integrate acquisitions, manage costs across a global footprint, and maintain competitive positioning against major rivals.
Quarter in Review: Results, Segment Trends, and Developments
During the quarter, reported sales increased 14.5% compared to the prior year, notably surpassing analyst expectations. The growth stemmed primarily from the integration of recent acquisitions, especially the addition of Katsa Oy in Finland. Organic revenue, which excludes acquisitions and foreign exchange effects, fell 8.4% year over year in the quarter. Management cited reduced shipments of oil and gas transmissions to China as the primary reason for this decline in core portfolio sales.
The Marine and Propulsion Systems product group led segment performance, with sales rising 12.2% to $53.0 million in Q4 FY2025. Land-Based Transmissions sales were up 4.5% to $26.1 million in Q4 FY2025 (GAAP), while Industrial sales grew sharply by 82.0% in the quarter due to acquisition-driven gains. Revenue from the 'Other' segment fell 11.6% in the quarter. Geographically, the company recorded double-digit revenue growth in both Europe and Asia-Pacific, largely due to acquisitions during FY2025, with a broadening in European market reach now apparent in the sales mix.
Profitability measures came under pressure during the period. Gross profit increased 19.7% year over year in the quarter, and the gross margin lifted 130 basis points to 31.0% in Q4 FY2025, benefiting from a mix shift and one-time cost adjustments in Katsa inventory. However, higher marketing, engineering, and administrative (ME&A) expenses, up 20.9% to $24.6 million in the quarter, offset this gross margin improvement. The increased ME&A spend was attributed mainly to the integration of acquisitions, increased professional service fees, and higher wages. EBITDA dropped 40.4% compared to the prior year in the quarter, impacted by these cost pressures as well as a $2.9 million foreign currency translation loss in the quarter.
The company’s backlog ended the quarter at $150.5 million, up from $133.7 million sequentially, supporting management’s comments on strong ongoing order activity, but was still below year-ago levels. Twin Disc ended the quarter with $16.1 million in cash and net debt of $15.3 million, both reflecting use of capital for recent acquisitions.
Product innovation remained a theme, with continued emphasis on electrification projects, including new electric hydraulic fracturing ("e-frac") activity and developments for defense marine propulsion systems, but mentioned that its “inventory is well positioned to support demand heading into the new year”.
Looking Ahead: Management Outlook and Investor Watchpoints
Twin Disc’s management did not provide explicit guidance for the coming quarter or fiscal year. Leadership described a healthy backlog and a cash position that provides flexibility for ongoing investments, but refrained from specifying targets for sales or margins.
Investors should monitor several key areas moving forward: Twin Disc’s ability to restore organic growth, especially in legacy oil and gas markets, as organic revenue increased 1.0% for FY2025; cost management efforts as ME&A expenses have climbed; and the impact of a more leveraged balance sheet following recent acquisitions. The expanding backlog and manufacturing footprint, particularly in Europe, may represent opportunities, but the company’s organic growth and margin trends will remain key focal points for future quarterly releases. The quarterly dividend was maintained at $0.04 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
