Twin Disc (NASDAQ:TWIN) reported a substantial jump in fiscal second-quarter net income, though the headline figure was primarily inflated by a one-time tax benefit that masked underlying pressure from tariff-related shipping delays.
The Milwaukee-based manufacturer of marine and heavy-duty power transmission equipment posted net income of $22.4 million, or $1.55 per share, for the quarter ended Dec. 26, 2025.
This compares to just $919,000 in the same period a year ago.
However, the surge was almost entirely due to a $21.8 million income tax benefit from the reversal of a valuation allowance.
When adjusted for pretax gains and one-time items, earnings stood at 4 cents per share, missing the $0.21 analyst consensus.
Revenue for the period was essentially flat at $90.2 million, up 0.3% year-over-year but below the $93 million expected by Wall Street.
The company faced a 7.9% decline in organic sales as customer concerns over tariff timing led to deferred shipments, particularly in the land-based transmission segment.
Despite these timing issues, Twin Disc’s backlog climbed to a record $175.3 million, signaling robust future demand in its marine and defense units.
Chief Executive Officer John H. Batten remained optimistic, noting that while the operating environment is "uneven," the company’s strategic exposure to NATO defense programs and the recent acquisition of Kobelt have strengthened its long-term pipeline.
Meanwhile, marine and industrial segments showed resilience, with industrial sales rising 22% to $11.5 million, providing a buffer against more cautious spending in the North American oil and gas markets.