# EDGAR Filing Document

**Accession Number:** 0000100378
**File Stem:** 0001437749-26-002877
**Filing Date:** 2026-2
**Character Count:** 27999
**Document Hash:** a3a7aa5bb6842a40305f173dd1f3015e
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-26-002877.hdr.sgml**: 20260204

**ACCESSION NUMBER**: 0001437749-26-002877

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 16

**CONFORMED PERIOD OF REPORT**: 20260204

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Regulation FD Disclosure

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20260204

**DATE AS OF CHANGE**: 20260204

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** TWIN DISC INC
- **CENTRAL INDEX KEY:** 0000100378
- **STANDARD INDUSTRIAL CLASSIFICATION:** GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 390667110
- **STATE OF INCORPORATION:** WI
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-07635
- **FILM NUMBER:** 26596108

**BUSINESS ADDRESS:**
- **STREET 1:** 1328 RACINE ST
- **CITY:** RACINE
- **STATE:** WI
- **ZIP:** 53403
- **BUSINESS PHONE:** 2626384000

**MAIL ADDRESS:**
- **STREET 1:** 1328 RACINE STREET
- **CITY:** RACINE
- **STATE:** WI
- **ZIP:** 53403

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** TWIN DISC CLUTCH CO
- **DATE OF NAME CHANGE:** 19770217

?xml version='1.0' encoding='ASCII'? twin20260202c_8k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

**FORM 8-K**

Current Report Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported) **<u>February 4, 2026</u>**

<u>**TWIN DISC, INCORPORATED**</u>

(exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Wisconsin** | <u>**001-7635**</u> | **<u>39-0667110</u>** |
| (State or other jurisdiction | (Commission | (IRS Employer |
| of incorporation) | File Number) | Identification No.) |

---

**<u>222 East Erie Street, Suite 400</u>**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **<u>Milwaukee, Wisconsin 53202</u>**

(Address of principal executive offices)

Registrant's telephone number, including area code:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **<u>(262)638-4000</u>**

------

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Exchange Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock (No Par Value) | TWIN | The NASDAQ Stock Market LLC |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

------

**Item 2.02**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Results of Operations and Financial Condition**

Twin Disc, Incorporated (the "Company") has reported its second quarter 2026 financial results. The Company's press release dated February 4, 2026 announcing the results is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.

The information set forth in this Item 2.02 of Form 8-K, including Exhibit 99.1, is furnished pursuant to Item 2.02 and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

**Item 7.01**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Regulation FD Disclosure**

The information set forth under Item 2.02 of this report is incorporated herein by reference solely for the purposes of this Item 7.01.

The information set forth in this Item 7.01 of Form 8-K is furnished pursuant to Item 7.01 and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

FORWARD LOOKING STATEMENTS

The disclosures in this report on Form 8-K and in the documents incorporated herein by reference contain or may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believes," "expects," "intends," "plans," "anticipates," "hopes," "likely," "will," and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company (or entities in which the Company has interests), or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements. Certain factors that could cause the Company's actual future results to differ materially from those discussed are noted in connection with such statements, but other unanticipated factors could arise. Certain risks regarding the Company's forward-looking statement are discussed in the Company's filings with the Securities and Exchange Commission, including an extensive discussion of these risks in the Company's Annual Report on Form 10-K for the year ended June 30, 2025. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management's view only as of the date of this Form 8-K. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, conditions or circumstances.

------

**Item 9.01**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Financial Statements and Exhibits**

(d)&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;Exhibits

------

---

| | |
|:---|:---|
| EXHIBIT NUMBER | DESCRIPTION |
| 99.1 | [Press Release announcing second quarter 2026 financial results.](ex_915540.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

------

**SIGNATURE**

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| Date: February 4, 2026 | Twin Disc, Inc. |
|  | <u>/s/ JEFFREY S. KNUTSON</u> |
|  | Jeffrey S. Knutson |
|  | Vice President-Finance, Chief Financial Officer, Treasurer & Secretary |

---

## Exhibit 99.1

**Exhibit 99.1**

![logobig.jpg](logobig.jpg)

**Twin Disc Announces Second Quarter Results**

MILWAUKEE, Wis., February 4, 2026 (GLOBE NEWSWIRE) -- **Twin Disc, Inc. (NASDAQ: TWIN)** today reported results for the second quarter ended December 26, 2025.

**<u>Fiscal Second Quarter 2026 Highlights</u>**

● *Sales increased 0.3% year-over-year to $90.2 million* 

● *Gross margin of 24.8%, expanded 70 basis points over prior year* 

● *Net income attributable to Twin Disc was $22.4 million and EBITDA\* of $4.7 million* 

● *Robust six-month backlog of $175.3 million supported by healthy ongoing demand* 

● *Delivered positive Operating Cash Flow of $4.6 million and Free Cash Flow\* of $1.2 million during the quarter* 

● *Continued momentum in defense, with accelerating orders and an expanding pipeline across U.S. and Europe* 

**<u>CEO Perspective</u>**

"Second quarter results reflected our continued focus on execution in an uneven operating environment, as tariff-related impacts affected shipment timing and near-term activity. Despite these headwinds, demand across our end markets remains strong as we delivered sequential sales growth and resilient order momentum. Orders reflected increased activity from our defense-related programs such as our Katsa product lines, along with strong interest for our hybrid propulsion systems as our leading reputation for innovation solidifies our presence in these growing markets. Our expanding presence is illustrated by our record backlog, which continues to grow and provides confidence as we move into the second half of the fiscal year," commented John H. Batten, President and Chief Executive Officer of Twin Disc.

"While macro-related uncertainty created short-term disruption, planned shipments in the quarter were delayed rather than lost and we are well equipped to adapt to revised timelines. Overall, we are well positioned to convert our record backlog into shipments as timing normalizes, with capacity in place across our existing manufacturing footprint to support this growth. Looking ahead, we remain focused on execution and delivering continued performance improvements," Mr. Batten concluded.

**<u>Second Quarter Results</u>**

Sales for the fiscal 2026 second quarter increased 0.3% year-over-year to $90.2 million, driven by the addition of Kobelt, along with strength of the Company's Veth products within Marine and Propulsion Systems, in addition to recovery in the Industrial product group. On an organic basis\*, which excludes the impacts of acquisitions and foreign currency exchange, fiscal second quarter 2026 sales decreased 7.9% year-over-year.

Sales by product group (certain amounts have been reclassified from Marine and Propulsion to Other):

---

| | | | |
|:---|:---|:---|:---|
| **Product Group**<br> **(Thousands of $):** | **Q2 FY26 Sales** | **Q2 FY25 Sales** | **Change (%)** |
| Marine and Propulsion Systems | $56707 | $56692 | 0.0% |
| Land-Based Transmissions | 17463 | 19010 | -8.1% |
| Industrial | 11539 | 9458 | 22.0% |
| Other | 4471 | 4761 | -6.1% |
| **Total** | $90180 | $89921 | 0.3% |

---

Twin Disc delivered year-over-year growth in the North American and European regions, resulting in a higher share of sales from those geographies, while the relative contribution from Latin America and Asia Pacific declined.

Gross profit increased 3.2% to $22.4 million compared to $21.7 million for the second quarter of fiscal 2026. Second quarter gross margin increased approximately 70 basis points to 24.8% from the prior year period, reflecting the absence of inventory-related charges recorded last year, partially offset by unfavorable product mix in the current quarter.

------

Marketing, engineering and administrative (ME&A) expense increased by $1.7 million, or 9.2%, to $20.7 million, compared to $18.9 million in the prior year quarter. The increased ME&A expense was primarily driven by the addition of Kobelt, along with an increase in commission expense and an inflationary impact on wages and benefits.

Net income attributable to Twin Disc for the second quarter of fiscal 2026 was $22.4 million, or $1.55 per diluted share, compared to net income attributable to Twin Disc of $919 thousand, or $0.07 per diluted share for the second fiscal quarter of 2025. The year-over-year change was driven by an income tax benefit of $21.8 million related to the reversal of the domestic valuation allowance. Earnings before interest, taxes, depreciation, and amortization (EBITDA) were $4.7 million in the second quarter, down 25.0% compared to the second quarter of fiscal 2025 due to higher ME&A expenses as a percentage of revenue.

Certain items impacting EBITDA for the second quarter 2026 include:

---

| | | |
|:---|:---|:---|
| **(Thousands of $):** | **Q2 FY26**  | **Q2 FY25**  |
| Non-cash strategic inventory write down | $- | $1579 |
| Restructuring | - | 54 |
| Non-cash stock based compensation | 850 | 833 |
| Acquisition costs | - | 404 |
| Currency translation (gain)/loss | (109) | (547) |
| Non-cash defined benefit pension amortization | 690 | 231 |

---

On a consolidated basis, the backlog of orders to be shipped over the next six months is approximately $175.3 million, compared to $163.3 million at the end of the first quarter. As a percentage of six-month backlog, inventory decreased from 96.9% at the end of the first quarter, to 93.1% at the end of the second quarter. Compared to the second fiscal quarter of 2025, cash decreased 6.4% to $14.9 million, total debt increased 79.0% to $44.5 million, and net debt\* increased $20.7 million to $29.6 million. The increase was primarily attributable to higher long-term debt related to the Kobelt acquisition.

**<u>CFO Perspective</u>**

Jeffrey S. Knutson, Vice President of Finance, Chief Financial Officer, Treasurer and Secretary stated, "Margins were pressured in the quarter by tariff-related impacts that affected mix due in part to delayed shipments, as well as incremental costs associated with an isolated warranty replacement. Shipment delays also led to elevated inventory levels during the quarter; however, inventory as a percentage of backlog remains at typical levels given record activity. Despite industry-wide headwinds, we generated positive free cash flow in the quarter, reflecting improved operating performance and continued discipline around capital spending. While some pressures weighed on near-term results, they do not change our expectations of the business's earnings potential. Looking ahead, we remain focused on capitalizing on our robsut backlog as we continue our progress toward our long term profitability and cash objectives."

**<u>Discussion of Results</u>**

Twin Disc will host a conference call to discuss these results and to answer questions at 9:00 a.m. Eastern time on February 4, 2026. The live audio webcast will be available on Twin Disc's website at <u>https://ir.twindisc.com</u>. To participate in the conference call, please dial (646) 307-1963 approximately ten minutes before the call is scheduled to begin. A replay of the webcast will be available at <u>https://ir.twindisc.com</u> shortly after the call until February 4, 2027.

**<u>About Twin Disc</u>**

Twin Disc, Inc. designs, manufactures, and sells marine and heavy-duty off-highway power transmission equipment. Products offered include: marine transmissions, azimuth drives, surface drives, propellers, and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, control systems, and braking systems. The Company sells its products to customers primarily in the pleasure craft, commercial and military marine markets, as well as in the energy and natural resources, government, military and industrial markets. The Company's worldwide sales to both domestic and foreign customers are transacted through a direct sales force and a distributor network. For more information, please visit <u>www.twindisc.com</u>.

------

**<u>Forward-Looking Statements</u>**

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.

**<u>\*Non-GAAP Financial Information</u>**

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.

**<u>Definitions</u>**

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:

Riveron

<u>TwinDiscIR@Riveron.com</u>

![logosmall01.jpg](logosmall01.jpg)

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 Quarter Ended | For the Two Quarters Ended | For the Two Quarters Ended |
|  | December 26, 2025 | December 27, 2024 | December 26, 2025 | December 27, 2024 |
| Net sales | $90180 | $89921 | $170176 | $162818 |
| Cost of goods sold | 67813 | 66662 | 124875 | 120237 |
| Cost of goods sold - other |  | 1579 |  | 1579 |
| Gross profit | 22367 | 21680 | 45301 | 41002 |
| Marketing, engineering and administrative expenses | 20654 | 18920 | 41352 | 38407 |
| Other operating income | (374) |  | (374) |  |
| Income (loss) from operations | 2087 | 2760 | 4323 | 2595 |
| Other income (expense): |  |  |  |  |
| Interest expense | (772) | (495) | (1572) | (1131) |
| Other income (expense), net | (617) | 386 | (1482) | (958) |
|  | (1389) | (109) | (3054) | (2089) |
| Income (loss) before income taxes and noncontrolling interest | 698 | 2651 | 1269 | 506 |
| Income tax benefit (expense) | 21780 | (1552) | 20797 | (2179) |
| Net income (loss) | 22478 | 1099 | 22066 | (1673) |
| Less: Net income (loss) attributable to noncontrolling interest, net of tax | 107 | 180 | 213 | 173 |
| Net income (loss) attributable to Twin Disc, Incorporated | $22371 | $919 | $21853 | $(1846) |
| Dividends per share | $0.04 | $0.04 | $0.08 | $0.08 |
| Earnings (loss) per share data: |  |  |  |  |
| Basic earnings (loss) per share attributable to Twin Disc, Incorporated common shareholders | $1.58 | $0.07 | $1.56 | $(0.13) |
| Diluted earnings (loss) per share attributable to Twin Disc, Incorporated common shareholders | $1.55 | $0.07 | $1.53 | $(0.13) |
| Weighted average shares outstanding data: |  |  |  |  |
| Basic shares outstanding | 14165 | 13868 | 14051 | 13818 |
| Diluted shares outstanding | 14389 | 14058 | 14275 | 13818 |
| Comprehensive income (loss) |  |  |  |  |
| Net income (loss) | $22478 | $1099 | $22066 | $(1673) |
| Benefit plan adjustments, net of income taxes of $1, $13, $0, and $2, respectively | 640 | (1668) | 1272 | (1447) |
| Foreign currency translation adjustment | 1029 | (11369) | (1402) | (4078) |
| Unrealized gain (loss) on hedges, net of income taxes of $31, $0, $7 and $0, respectively | (131) | 1146 | (33) | 293 |
| Comprehensive income (loss) | 24016 | (10792) | 21903 | (6905) |
| Less: Comprehensive income (loss) attributable to noncontrolling interest | 80 | 122 | 271 | 258 |
| Comprehensive income (loss) attributable to Twin Disc, Incorporated | $23936 | $(10914) | $21632 | $(7163) |

---

------

**RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) TO EBITDA**

(In thousands; unaudited)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | For the Quarter Ended | For the Quarter Ended | For the Two Quarters Ended | For the Two Quarters Ended |
|  | December 26, 2025 | December 27, 2024 | December 26, 2025 | December 27, 2024 |
| Net income (loss) attributable to Twin Disc, Incorporated | $22371 | $919 | $21853 | $(1846) |
| Interest expense | 772 | 495 | 1572 | 1131 |
| Income tax expense | (21780) | 1552 | (20797) | 2179 |
| Depreciation and amortization | 3336 | 3296 | 6801 | 6534 |
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | $4699 | $6262 | $9429 | $7998 |

---

**RECONCILIATION OF TOTAL DEBT TO NET DEBT**

(In thousands; unaudited)

---

| | | |
|:---|:---|:---|
|  | December 26, 2025 | December 27, 2024 |
| Current maturities of long-term debt | $3000 | $2000 |
| Long-term debt | 41515 | 22873 |
| Total debt | 44515 | 24873 |
| Less cash | 14889 | 15906 |
| Net debt | $29626 | $8967 |

---

**RECONCILIATION OF NET CASH PROVIDED (USED) BY OPERATING**<br> **ACTIVITIES TO FREE CASH FLOW**

(In thousands; unaudited)

---

| | | |
|:---|:---|:---|
|  | For the Quarter Ended | For the Quarter Ended |
|  | December 26, 2025 | December 27, 2024 |
| Net cash provided (used) by operating activities | $4555 | $8658 |
| Acquisition of property, plant, and equipment | (3320) | (2780) |
| Free cash flow | $1235 | $5878 |

---

------

**RECONCILIATION OF REPORTED NET SALES TO ORGANIC NET SALES**

(In thousands; unaudited)

---

| | | |
|:---|:---|:---|
|  | For the Quarter Ended | For the Quarter Ended |
|  | December 26, 2025 | December 27, 2024 |
| Net Sales | $90180 | $89921 |
| Less: Acquisition | (3191) |  |
| Less: Foreign Currency Impact | (4149) |  |
| Organic Net Sales | $82840 | $89921 |

---

------

**CONDENSED CONSOLIDATED BALANCE SHEETS**

(In thousands; except share amounts, unaudited)

---

| | | |
|:---|:---|:---|
|  | December 26, 2025 | June 30, 2025 |
| ASSETS |  |  |
| Current assets: |  |  |
| Cash | $14889 | $16109 |
| Trade accounts receivable, net | 53621 | 58941 |
| Inventories, net | 163177 | 151951 |
| Other current assets | 20190 | 19914 |
| Total current assets | 251877 | 246915 |
| Property, plant and equipment, net | 71405 | 69576 |
| Right-of-use assets operating lease assets | 15879 | 17250 |
| Goodwill | 2878 | 2892 |
| Intangible assets, net | 12192 | 13361 |
| Deferred income taxes | 27551 | 2812 |
| Other noncurrent assets | 2233 | 2756 |
| Total assets | $384015 | $355562 |
| LIABILITIES AND EQUITY |  |  |
| Current liabilities: |  |  |
| Current maturities of long-term debt | $3000 | $3000 |
| Current maturities of right-of-use operating lease obligations | 3446 | 3393 |
| Accounts payable | 36659 | 38745 |
| Accrued liabilities | 75430 | 80655 |
| Total current liabilities | 118535 | 125793 |
| Long-term debt | 41515 | 28446 |
| Right-of-use lease obligations | 12922 | 14357 |
| Accrued retirement benefits | 11651 | 11832 |
| Deferred income taxes | 5632 | 4320 |
| Other long-term liabilities | 8581 | 6423 |
| Total liabilities | 198836 | 191171 |
| Twin Disc, Incorporated shareholders' equity: |  |  |
| Preferred shares authorized: 200,000; issued: none; no par value |  |  |
| Common shares authorized: 30,000,000; issued: 14,632,802; no par value | 38139 | 42269 |
| Retained earnings | 146130 | 125414 |
| Accumulated other comprehensive income (loss) | 3509 | 3730 |
|  | 187778 | 171413 |
| Less treasury stock, at cost (211,144 and 482,181 shares, respectively) | 3250 | 7402 |
| Total Twin Disc, Incorporated shareholders' equity | 184528 | 164011 |
| Noncontrolling interest | 651 | 380 |
| Total equity | 185179 | 164391 |
| Total liabilities and equity | $384015 | $355562 |

---

------

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

(In thousands; unaudited)

---

| | | |
|:---|:---|:---|
|  | For the Two Quarters Ended | For the Two Quarters Ended |
|  | December 26, 2025 | December 27, 2024 |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
| Net income (loss) | $22066 | $(1673) |
| Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: |  |  |
| Depreciation and amortization | 6801 | 6534 |
| Gain on sale of assets |  | (39) |
| Loss on write-down of industrial product inventory |  | 1579 |
| Provision for deferred income taxes | (20700) | (363) |
| Stock compensation expense and other non-cash changes, net | 1778 | 1625 |
| Net change in operating assets and liabilities | (12914) | (3348) |
| Net cash provided (used) by operating activities | (2969) | 4315 |
| CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |
| Acquisition of property, plant, and equipment | (6750) | (5142) |
| Proceeds from sale of property, plant, and equipment |  | 39 |
| Other, net | (67) | (76) |
| Net cash provided (used) by investing activities | (6817) | (5179) |
| CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |
| Borrowings under revolving loan arrangements | 66495 | 54824 |
| Repayments of revolving loan arrangements | (52648) | (54824) |
| Repayments of other long-term debt | (750) | (500) |
| Dividends paid to shareholders | (1137) | (1136) |
| Payments of finance lease obligations | (581) | (1017) |
| Cash used in net share settlement of restricted stock units | (11) |  |
| Payments of withholding taxes on stock compensation | (1675) | (1256) |
| Net cash provided (used) by financing activities | 9693 | (3909) |
| Effect of exchange rate changes on cash | (1127) | 609 |
| Net change in cash | (1220) | (4164) |
| Cash: |  |  |
| Beginning of period | 16109 | 20070 |
| End of period | $14889 | $15906 |

---