TWIN DISC INC

(a)(1) Consolidated Financial Statements

See Index to Consolidated Financial Statements and Financial Statement Schedule, the Report of Independent Registered Public Accounting Firm and the Consolidated Financial Statements, all of which are incorporated by reference.

(a)(2) Consolidated Financial Statement Schedule

See Index to Consolidated Financial Statements and Financial Statement Schedule, and the Consolidated Financial Statement Schedule, all of which are incorporated by reference.

(a)(3) Exhibits. See Exhibit Index included as the last page of this form, which is incorporated by reference.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULE

Schedules, other than those listed, are omitted for the reason that they are inapplicable, are not required, or the information required is shown in the financial statements or the related notes.

To the Shareholders and the Board of Directors of Twin Disc, Incorporated

Opinion on the Internal Control Over Financial Reporting

We have audited Twin Disc Incorporated’s (the Company) internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of the Company and our report dated September 4, 2026 expressed an unqualified opinion.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanyingManagement’s Report on Internal Control over Financial Reporting in Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ RSM US LLP

Milwaukee, Wisconsin

September 4, 2026

To the Shareholders and the Board of Directors of Twin Disc, Incorporated

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Twin Disc, Incorporated and its subsidiaries (the Company) as of June 30, 2026 and 2025, the related consolidated statements of operations and comprehensive income (loss), changes in equity and cash flows for each of the two years in the period ended June 30, 2026, and the related notes to the consolidated financial statements and schedule (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated September 4, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Notes A, B and S to the consolidated financial statements, at June 30, 2026 the Company elected to change its method of accounting for certain inventories in the United States from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method for all years presented.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Deferred Tax Asset Realizability and Release of the Valuation Allowance

As described in Note N to the consolidated financial statements, the Company concluded that it was more likely than not that substantially all of its domestic deferred tax assets would be realized and, accordingly, released the full domestic valuation allowance of approximately $16,400,000 (as adjusted) during the quarter ended December 26, 2025.

The Company recognizes deferred tax assets and liabilities for the expected future income tax consequences of events that have been recognized in the Company’s financial statements. Valuation allowances are provided for deferred tax assets where it is considered more likely than not that the Company will not realize the benefit of such assets. In evaluating the realizability of deferred tax assets in future periods, the available positive and negative evidence, including historical book income or losses, projected future taxable income exclusive of reversing temporary differences, tax planning strategies and results of recent operations, are allowable sources of income that can be considered. In making the determination to release the full valuation allowance, management specifically considered recent financial history, including the three-year cumulative taxable income, and income tax planning strategies approved by management intended to facilitate the utilization of deferred tax assets and expiring tax attributes. Income tax planning strategies included contemplated tax accounting method changes and other actions designed to accelerate future taxable income and increase the utilization of the Company’s deferred tax assets and carryforwards, including its net operating losses and tax credits.

We identified management’s determination of the realizability of the Company’s deferred tax assets and the release of the full valuation allowance on domestic deferred tax assets as a critical audit matter as there is significant judgment required by management to conclude that it is more likely than not that the deferred tax assets will be realized in future periods. In particular, management’s conclusion involved significant judgment in evaluating whether the identified income tax planning strategies were prudent, feasible, and expected to be implemented. Three-year cumulative taxable income was considered as observable historical evidence, and management did not rely on forecasted future book income in reaching its conclusion. In addition, the auditing of these elements involved complex and subjective auditor judgment, including the need to involve personnel with specialized skill and knowledge.

Our audit procedures to evaluate management’s determination that it is more likely than not that the deferred tax assets will be realized and that the release of the valuation allowance was appropriate included the following, among others:

/s/RSM US LLP

We have served as the Company’s auditor since 2017.

Milwaukee, Wisconsin

September 4, 2026

June 30, 2026 and 2025

(In thousands except share amounts)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(In thousands)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS AND PER SHARE DATA)

A. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations‑‑Twin Disc, Incorporated (“Twin Disc”, or the “Company”) was incorporated under the laws of the state of Wisconsin in1918. Twin Disc designs, manufactures and sells marine and heavy duty off‑highway power transmission equipment. The Company has manufacturing locations in the United States, Belgium, Canada, Finland, Italy, the Netherlands, and Switzerland. In addition to these countries, it has distribution locations in Singapore, China, Australia, New Zealand and Japan. 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, controls 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.

On* February 14, 2025,*the Company completed the acquisition of 100% of the outstanding common stock of Kobelt Manufacturing Co. Ltd. (“Kobelt”). Based in Surrey, British Columbia, Canada, Kobelt is a manufacturer of controls, propulsion, steering, and braking systems to the marine, oil and gas, and industrial markets.

Basis of Presentations‑‑The consolidated financial statements and information included in this Annual Report on Form10-K (“Form10-K”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements have been prepared in accordance with Generally Accepted Accounting Principles of the United States of America. The Company’s fiscal year end is* June 30.*

Consolidation Principles‑‑The consolidated financial statements include the accounts of Twin Disc, Incorporated and its wholly-owned domestic and foreign subsidiaries. All significant intercompany transactions have been eliminated.

**Management Estimates--**The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual amounts could differ from those estimates.

Translation of Foreign Currencies‑‑The financial statements of the Company’s non-U.S. subsidiaries that use the local currency as their functional currency are translated to the functional currency of the reporting entity using the current exchange rate for assets and liabilities, the weighted-average exchange rate for the year for revenues and expenses, and the historical exchange rate for the year for equity. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss), which is included in equity. Gains and losses from foreign currency transactions are included in earnings. Included in other income (expense) are foreign currency transaction gain (losses) of $1,699 and ($4,825) in fiscal2026 and2025, respectively.

Business Combinations‑‑ In accordance with ASC805-10, “Business Combinations”, the Company accounts for all business combinations using the acquisition method of accounting. Under this method, the Company allocates the fair value of consideration transferred in a business combination to the estimated fair value at the acquisition date of the tangible and intangible assets acquired as well as the liabilities assumed. Acquisition costs are expensed as incurred. Any excess consideration transferred is recorded as goodwill and in instances where the fair value of consideration transferred is less than the estimated fair value of tangible and intangible assets acquired less liabilities assumed, such amounts are recorded as a gain on the bargain purchase.

Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up toone year, are recorded as adjustments to goodwill or the gain on the bargain purchase. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that the Company holds in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value.

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Cash--The Company considers all highly liquid investments with original maturities ofthree months or less to be cash equivalent. Under the Company’s cash management system, cash balances at certain banks are funded when checks are presented for payment. To the extent that checks issued, butnot yet presented for payment, exceed the balance on hand at the specific bank against which they were written, the amount of those un-presented checks is included in accounts payable. The Company maintains cash in bank accounts in excess of insured limits. The Company hasnot experienced any losses and doesnot believe that significant credit risk exists as a result of this practice.

Accounts Receivable, net--These represent trade accounts receivable and are stated net of an allowance for credit losses of $1,647 and $1,548 at* June 30, 2026and2025,* respectively. The Company records an allowance for credit losses based on expected credit losses over the contractual life of its receivables. Certain customers are evaluated individually when unique credit risk characteristics indicate heightened expected credit losses, while the remaining portfolio is evaluated collectively based on shared risk characteristics. The estimate incorporates historical collection experience, current conditions, and reasonable and supportable forecasts, including consideration of the aging of receivables, customer concentrations, customer creditworthiness, negotiated changes in payment terms, recent economic trends, and expected future economic conditions. Various factors* mayadversely impact a customer’s ability to access sufficient liquidity and capital to fund their operations, making the estimation of expected credit losses inherently uncertain. While the Company believes its allowance for credit losses is adequate, actual credit losses may*differ from estimated amounts due to changes in customer-specific factors, economic conditions, or other circumstances.

Fair Value of Financial Instruments--The carrying amount reported in the consolidated balance sheets for cash, trade accounts receivable and accounts payable approximate fair value because of the immediate short-term maturity of these financial instruments**.If measured at fair value, cash would be classified as Level1 and all other items listed above would be classified as Level2 in the fair value hierarchy, as defined in Note M, Pension and Other Postretirement Benefit Plans. The Company’s borrowings under the revolving loan agreement, which is classified as long-term debt and consists of loans that are routinely borrowed and repaid throughout the year, approximate fair value at June 30, 2026.The Company’s term loan borrowing, which is SOFR-based, approximates fair value at June 30, 2026.If measured at fair value in the financial statements, long-term debt (including any current portion) would be classified as Level2 in the fair value hierarchy.

Inventories, net‑‑Inventories are valued at the lower of cost or net realizable value, which includes an estimate for excess and obsolete inventory. Cost has been determined by the first‑in, first‑out (“FIFO”) basis or average cost methods. Management specifically identifies obsolete products and analyzes historical usage, forecasted production based on future orders, demand forecasts, and economic trends, among others, when evaluating the adequacy of the reserve for excess and obsolete inventory. Inventories include raw materials, work-in-process and finished goods. Certain completed sub-assemblies are classified as finished goods because they are separately marketable products that* maybe sold directly to customers as replacement parts or service components, although such items may*also be incorporated into the Company’s finished products.

Change in Accounting Method

During thefourth quarter of fiscal2026, the Company changed its method of accounting for inventories located in the United States from the last-in,first-out (“LIFO”) cost method to the FIFO cost method. The Company believes the FIFO method is preferable because it better reflects the current cost of inventory on the consolidated balance sheets, more closely aligns with the physical flow of inventory and the manner in which the Company manages its inventory, improves comparability with industry peers that generally use FIFO or average cost methods, and provides a more consistent basis for evaluating operating results across the Company’s global operations.

The change in accounting method was applied retrospectively to all periods presented. Accordingly, prior-period consolidated financial statements have been adjusted as if the FIFO method had been used for the Company’s U.S. inventories in all periods presented. The retrospective application of the change increased the* July 1, 2024inventory balance and retained earnings by $30,937, net of tax. The change also affected previously reported inventory, noncurrent deferred income taxes, retained earnings, cost of goods sold, gross profit, income tax expense, net income, and earnings per share for the periods presented. The Consolidated Balance Sheets as of June 30, 2025,the Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended June 30, 2025,and the Consolidated Statements of Cash Flows for the year ended June 30, 2025have been retrospectively adjusted to reflect the change in accounting principle. The primary impact of the change was to eliminate the Company’s LIFO reserve and increase reported inventory and retained earnings, net of the related income tax effects. Because LIFO previously reflected the most recent inventory costs in cost of goods sold, the change to FIFO also affected comparative cost of goods sold, gross profit, income before income taxes, income tax expense, and net income for prior periods. The change didnot* affect cash flows from operations, investing activities, or financing activities, except for the related reclassification of noncash reconciling items within the Consolidated Statements of Cash Flows.

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See Note B, Inventories, net and Note S,2025 Impact of Accounting Method Change, for additional information regarding the effect of the change on the Company’s consolidated financial statements.

Property, Plant, and Equipment, net and Depreciation‑‑Assets are stated at cost. Expenditures for maintenance, repairs and minor renewals are charged against earnings as incurred. Expenditures for major renewals and betterments are capitalized and depreciated. Capital project costs are accumulated in construction-in-progress until completed, at which time the costs are transferred to the relevant asset and commence depreciation. Depreciation is provided on the straight‑line method over the estimated useful lives of the assets. The lives assigned to buildings and related improvements range from 10 to 40 years, and the lives assigned to machinery and equipment range from 5 to 15 years. Upon disposal of property, plant, and equipment, the cost of the asset and the related accumulated depreciation are removed from the accounts and the resulting gain or loss is reflected in earnings. Fully depreciated assets arenot removed from the accounts until physically disposed.

At* June 30, 2026and2025,* the Company ownedone permanently idled facility with a book value of $3.0 million. This facility is assessed for impairment quarterly and depreciation has ceased. This facility is accounted for within property, plant, and equipment.

Right of Use Lease Assets‑‑In accordance with ASC842, the Company’s leases, with lease periods longer thantwelve months, are recorded on the consolidated balance sheets. These leases primarily consist of office and warehouse facilities, as well as production and office equipment.

The Company determines if an arrangement is a lease at contract inception. The lease term begins upon lease commencement, which is when the Company takes possession of the asset, and* mayinclude options to extend or terminate the lease when it is reasonably certain that such options will be exercised. As its lease agreements typically donot* provide an implicit rate, the Company primarily uses an incremental borrowing rate based upon the information available at lease commencement. In determining the incremental borrowing rate, the Company considers its current borrowing rate, the lease period, and the economic environments where the lease activity is concentrated.

Impairment of Long-lived Assets--The Company reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets* may**not* be fully recoverable. When triggering events are identified, the Company performs undiscounted operating cash flow analyses to determine if an impairment exists for property, plant, and equipment and other long-lived assets, including intangible assets. If an impairment is determined to exist, any related impairment loss is calculated based on fair value. Fair value is primarily determined using discounted cash flow analyses; however, other methods* maybe used to determine the fair value, includingthird* party valuations when necessary.

Intangible Assets, net-- Intangible assets primarily consist of customer relationships, technology know-how, and tradenames, all of which are definite-lived. They were initially valued at fair value at acquisition, and are amortized over their respective useful lives on the basis of straight line or accelerated, as appropriate.

Goodwill-- The Company reviews goodwill for impairment on a reporting unit basis annually as of thefirst day of the Company’sfourth fiscal quarter, and whenever events or changes in circumstances (“triggering events”) indicate that the carrying value of goodwill* may**not* be recoverable.

A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators* may*include, among others: a significant decline in expected future cash flows; a sustained, significant decline in the Company’s stock price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on the Company’s consolidated financial statements.

Goodwill impairment charges are recorded using a simplifiedone-step approach. The fair value of a reporting unit, as defined, is compared to the carrying value of the reporting unit, including goodwill. The fair value is primarily determined using discounted cash flow analyses which is driven by projected growth rates, and which applies an appropriate market-participant discount rate; the fair value determined is also compared to the value obtained using a market approach from guideline public company multiples. If the carrying amount exceeds the fair value, that difference is recognized as an impairment loss.

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The Company conducted its annual assessment for goodwill impairment as of* June 30, 2026using updated inputs, including appropriate risk-based, country and company specific weighted average discount rates for the Company’s reporting unit with goodwill. The Company completed its impairment testing as of June 30, 2026and concluded there wereno* impairments.

Changes in circumstances, existing at the measurement date or at other times in the future, or in the numerous estimates associated with management’s judgments, assumptions and estimates made in assessing the fair value of goodwill, could result in an impairment charge in the future. The Company will continue to monitor all significant estimates and impairment indicators, and will perform interim impairment reviews, as necessary.

Derivative Financial Instruments-**-**The Company has written policies and procedures that place all financial instruments under the direction of the Company’s corporate treasury department and restrict all derivative transactions to those intended for hedging purposes. The use of financial instruments for trading purposes is prohibited. The Company uses derivative financial instruments to manage certain financial risks. The Company enters into forward contracts to reduce the earnings and cash flow impact of non-functional currency denominated receivables and payables. The Company uses interest rate swap contracts to reduce the exposure to variability in interest rates on floating debt borrowings. The Company designates certain financial instruments as cash flow hedges for accounting purposes. The Company designates certain financial instruments as net investment hedges to reduce the exposure in its foreign currency denominated net investments in wholly-owned subsidiaries. See Note R, Derivative Financial Instruments, for additional information.

Pension and Other Postretirement Benefits Plans-- The Company provides a wide range of benefits to employees and retired employees, including pensions and postretirement health care coverage. Plan assets and obligations are recorded annually based on the Company’s measurement date utilizing various actuarial assumptions such as discount rates, expected return on plan assets, compensation increases, retirement and mortality tables, and health care cost trend rates as of that date.

Income Taxes--The Company recognizes deferred tax assets and liabilities for the expected future income tax consequences of events that have been recognized in the Company’s financial statements. Under this method, deferred tax assets and liabilities are determined based on the temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which temporary differences are expected to reverse. Valuation allowances are provided for deferred tax assets where it is considered more likely thannot that the Company willnot realize the benefit of such assets. The Company evaluates its uncertain tax positions as new information becomes available. Tax benefits are recognized to the extent a position is more likely thannot to be sustained upon examination by the taxing authority.

Segment Reporting--Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. As of* June 30, 2026,*the Company identifiedtwo operating segments. Refer to Note J, Business Segments and Foreign Operations, of the notes to the consolidated financial statements for further information.

Revenue Recognition--Revenue from contracts with customers is recognized using afive-step model consisting of the following:

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Goods sold tothird party distributors are subject to an annual return policy, for which a provision is made at the time of shipment based upon historical experience. Goods sold under bill and hold arrangements are recorded as revenue when control has been transferred to the customer and when the reason for the arrangement is substantive, when the product is identified as the customer’s asset, when the product is ready for delivery to the customer, and when the Company cannot use the product or redirect the product to another customer. While significant customer deposits are collected at certain locations, the Company’s payment terms are generally short-term in nature; therefore, donot include a significant financing component.

At* June 30,*the Company reported the following contract assets and liabilities, which are presented within trade accounts receivable, net, other current assets and accrued liabilities on the consolidated balance sheets, respectively. Deferred revenue represents billings in excess of cost based on milestone billings in the contract and customer deposits represent cash received from customers before performance obligations are fulfilled.

The Company’s contracts are generally short-term in nature; therefore, the amount included in contract liabilities at the beginning of the year was recognized as revenue in the reporting period.

Shipping and Handling Fees and Costs--The Company records revenue from shipping and handling costs in net sales. The cost associated with shipping and handling of products is reflected in cost of goods sold.

Recently IssuedNot Yet Adopted Accounting Standards-- In* November 2024,the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures” (“ASU2024*-03”) to expand expense disclosures by requiring disaggregated disclosure of certain income statement expense line items, including those that contain purchases of inventory, employee compensation, depreciation, and amortization. ASU2024-03 is effective for fiscal years beginning after* December 15, 2026,or the Company’s fiscal2028,* and subsequent interim periods, with early adoption permitted. The amendments should be applied prospectively, but retrospective application is permitted. The company is currently assessing the impact of the requirements on our Consolidated Financial Statements.

Recently Adopted Accounting Standards-- In* November 2023,the FASB issued guidance ASU2023*-07, "Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures," which is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements. The Company adopted the new annual disclosures as required for fiscal2025 and adopted the interim disclosures as required beginning with thefirst quarter of fiscal2026.

In* December 2023,the FASB issued guidance ASU2023*-09, Improvements to Income Tax Disclosures (“ASU2023-09”), which includes requirements that an entity disclose specific categories in the rate reconciliation and provide additional information for reconciling items that are greater thanfive percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income rate. The standard also requires that entities disclose income (or loss) from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) disaggregated between domestic and foreign. ASU2023-09 is effective for annual periods beginning after* December 15, 2024.The Company has adopted ASU2023*-09 on a prospective basis for its2026 annual report filed on Form10-K, which will result in additional disclosures related to income tax butnot impact the Company’s results of operations or financial position.

Special Note Regarding Smaller Reporting Company Status-- Under SEC Release33-10513; 34-83550, Amendments to Smaller Reporting Company Definition, the Company qualifies as a smaller reporting company based on its public float as of the last business day of thesecond quarter of fiscal2026. Accordingly, it has scaled some of its disclosures of financial and non-financial information in this annual report. The Company will continue to determine whether to provide additional scaled disclosures of financial or non-financial information in future quarterly reports, annual reports and/or proxy statements if it remains a smaller reporting company under SEC rules.

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B. INVENTORIES, NET

The major classes of inventories at* June 30*were as follows:

Thesecond quarter of fiscal year2025 includes the impact of a non-cash inventory write-down of $1,579. This write-down reflects the results of a product rationalization exercise of the Company’s industrial product line following the acquisition of Katsa.

The Company had reserves for inventory obsolescence of $16,190 and $16,016 at* June 30, 2026and2025,* respectively.

Inventories are valued at the lower of cost or net realizable value, which includes an estimate for excess and obsolete inventory. Cost is determined by the first‑in, first‑out (FIFO) basis or average cost methods. Management specifically identifies obsolete products and analyzes historical usage, forecasted production based on future orders, demand forecasts, and economic trends, among others, when evaluating the adequacy of the reserve for excess and obsolete inventory.

During thefourth quarter of2026, the Company changed its methodology for valuing the majority of inventories located in the United States to the FIFO cost method from the last-in,first-out (“LIFO”) cost method. The Company concluded that the FIFO basis of accounting is preferable as it provides a better matching of costs and revenues, more closely resembles the physical flow of inventory, better reflects the acquisition cost of inventory on the balance sheet, and results in improved comparability with industry peers.

The effects of this change in accounting method have been retrospectively applied to all periods presented and a cumulative effect adjustment was recorded to increase the* July 1, 2024inventory and retained earnings by $30,937, net of tax. The Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended June 30, 2025,Consolidated Statements of Cash Flows for the years ended June 30, 2025,and the Consolidated Balance Sheets as of June 30, 2025,*have been retrospectively adjusted to reflect the change in accounting principle. See Note S,2025 Impact of Accounting Method Change, of the notes to the consolidated financial statements for additional information.

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The following tables reflect the effect of the change in accounting method on the consolidated financial statements as of and for the year ended* June 30, 2026:*

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C. PROPERTY, PLANT, AND EQUIPMENT, NET

Property, plant, and equipment at* June 30*were as follows:

Included in the above amounts are finance lease right-of-use assets of $4,960 and $5,794 for the years ended* June 30, 2026and2025,* respectively.

Depreciation expense for the years ended* June 30, 2026and2025* was $10,538 and $10,042, respectively.

At* June 30, 2026and2025,* the Company ownedone permanently idle facility with a book value of $3.0 million. The asset is presented within property, plant, and equipment, net on the Consolidated Balance Sheets. No impairment losses were recorded in fiscal2026 or2025.

D. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill represents the excess of the consideration transferred net of the acquisition-date fair values of the identifiable assets acquired and the liabilities assumed.

As of* June 30, 2026,*changes in the carrying amount of goodwill is summarized as follows:

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At* June 30,*the following acquired intangible assets have definite useful lives and are subject to amortization:

Other intangibles consist mainly of computer software. Amortization is recorded on the basis of straight-line or accelerated, as appropriate, over the estimated useful lives of the assets.

The weighted average remaining useful life of the intangible assets included in the table above is approximately 7 years.

Intangible amortization expense for the years ended* June 30, 2026and2025* was $2,878 and $3,959, respectively. Estimated intangible amortization expense for each of the nextfive fiscal years is as follows:

E. ACCRUED LIABILITIES

Accrued liabilities at* June 30*were as follows:

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F. WARRANTY

The Company warrants all assembled products, parts (except component products or parts on which written warranties are issued by the respective manufacturers thereof and are furnished to the original customer, as to which the Company makesno warranty and assumesno liability) and service against defective materials or workmanship. Such warranty generally extends from periods ranging from 12 months to 24 months. The Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its suppliers. However, its warranty obligation is affected by product failure rates, the number of units affected by the failure and the expense involved in satisfactorily addressing the situation. The warranty reserve is established based on the Company’s best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. When evaluating the adequacy of the reserve for warranty costs, management takes into consideration the term of the warranty coverage, historical claim rates and costs of repair, knowledge of the type and volume of new products and economic trends. While the Company believes that the warranty reserve is adequate and that the judgment applied is appropriate, such amounts estimated to be due and payable in the future could differ materially from what actually transpires. The following is a listing of the activity in the warranty reserve during the years ended* June 30:*

The current portion of the warranty accrual ($4,210 and $4,174 at* June 30, 2026and2025,* respectively) is reflected in accrued liabilities, while the long-term portion ($994 and $1,083 at* June 30, 2026and2025,* respectively) is included in other long-term liabilities on the consolidated balance sheets.

G. DEBT

Long-term debt consisted of the following at* June 30:*

Net carrying value of term loan at* June 30:*

Credit Agreement Debt:

Current Credit Agreement

On* June 30, 2026,Twin Disc, Incorporated (the “Company”) entered into a Credit Agreement (the “Credit Agreement”) among the Company, as Borrower; Kobelt Manufacturing Co. Ltd. ("Kobelt"), as Guarantor; Bank of Montreal, as a Lender, Administrative Agent, Swing Line Lender, and L/C Issuer; and JPMorgan Chase Bank, N.A. ("Chase"), as a Lender. The Credit Agreement refinanced and replaced the credit agreement dated February 14, 2025among the Company, Kobelt, and Bank of Montreal. Capitalized terms in this Annual Report that arenot* otherwise defined herein are defined in the Credit Agreement.

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Pursuant to the Credit Agreement, Bank of Montreal and Chase (the “Lenders”) made Term Loans to the Company in an aggregate principal amount of $30,000,000. The maturity date of the Term Loans is* June 30, 2031,and the Company is required to make principal installments on the Term Loans of at least $375,000 per quarter, increasing to $562,500 per quarter for the quarter ending on or about September 30, 2028,and $750,000 per quarter for the quarter ending on or about September 30, 2030.*

The Credit Agreement also allows the Company to enter into Revolving Loans with the Lenders from time to time prior to* June 30, 2031 (the “Revolving Credit Termination Date”) in amountsnot* to exceed $60,000,000 (the “Revolving Credit Commitment”). The Revolving Credit Commitment includes a $5,000,000 sublimit for Swing Loans and a $4,000,000 sublimit for Letters of Credit that* may*be requested by the Company from time to time until the Revolving Credit Termination Date. Each Swing Loan or Letter of Credit provided pursuant to the terms of the Credit Agreement shall be a Revolving Loan provided under the Revolving Credit Commitment.

Interest rates under the Credit Agreement are based on the secured overnight financing rate (“SOFR”), the euro interbank offered rate (the “EURIBO Rate”), the Canadian Overnight Repo Rate Average (the “CORRA”), or a Base Rate based on the highest of the prime rate, federal funds rate, or Term SOFR. Loans under the Credit Agreement are designated as either as SOFR Loans, which accrue interest at a Term SOFR plus an Applicable Margin; Base Rate Loans, which accrue interest at the Base Rate plus an Applicable Margin; Eurodollar Loans, which accrue interest at the EURIBO Rate plus an Applicable Margin; Term CORRA Loans, which accrue interest at an Adjusted Term CORRA plus an Applicable Margin; Daily Compounded CORRA Loans, which accrue interest at a Daily Compounded CORRA plus an Applicable Margin; or Canadian Prime Rate Loans, which accrue interest at the Canadian Prime Rate plus an Applicable Margin. The Applicable Margin for Loans is between 1.50% and 3.00%, and the Applicable Margin for the Unused Revolving Credit Commitment is between 0.15% and 0.30% (each depending on the Company’s Total Funded Debt to EBITDA ratio). The Term Loan has been designated as a SOFR Loan.

Borrowings under the Credit Agreement are secured by substantially all of the Company’s and Kobelt’s personal property, including accounts receivable, inventory, machinery and equipment, and intellectual property. The Company has also pledged 65% of its equity interests in certain foreign subsidiaries. To effect these security interests, the Company entered into an Amended and Restated Security Agreement, Amended and Restated IP Security Agreement, Amended and Restated Pledge Agreement, and Amended and Restated Perfection Certificate with the Administrative Agent, and the Company entered into an Amended and Restated Agreement as to Liens and Encumbrances and an Amended and Restated Negative Pledge Agreement with the Administrative Agent with regard to the Company’s real property.

Upon the occurrence of an Event of Default, the Administrative Agent* may*take the following actions upon written notice to the Company: (1) terminate the remaining Commitments and all obligations of the Lenders under the Credit Agreement; (2) declare the principal and accrued interest of all Loans outstanding under the Credit Agreement to be immediately due and payable; and (3) demand the Company to immediately Cash Collateralize the outstanding L/C Obligations in an amount equal to 105% of the aggregate L/C Obligations. If such Event of Default is due to the Company’s bankruptcy, the actions and obligations listed above shall occur without notice to the Company.

Prior Credit Agreement

On* February 14, 2025,the Company entered into an amended and restated Credit Agreement (the“2025* Credit Agreement”) with Bank of Montreal (the “Bank”) that refinanced and replaced the credit agreement dated as of* June 29, 2018,as amended, between the Company and BMO Harris Bank, N.A. (the“2018* Credit Agreement”).

Pursuant to the2025 Credit Agreement, the Bank made a Term Loan to the Company in the principal amount of $15.0 million, consisting of an assignment of a term loan under the2018 Credit Agreement from BMO to the Bank with a remaining principal of $8.5 million and an additional advance of $6.5 million. The maturity date of the Term Loan was* April 1, 2027,*and the Company was required to make principal installments on the Term Loan of at least $0.75 million per quarter.

Under the2025 Credit Agreement, the Company was able to enter into Revolving Loans in amountsnot to exceed, in the aggregate and subject to a Borrowing Base, $50.0 million (the “Revolving Credit Commitment”). The Borrowing Base is the sum of (a)85% of outstanding unpaid Eligible Receivables and (b) the lesser of $40.0 million for each fiscal month ending on or prior to* August 31, 2025 (reduced to $35.0 million for each fiscal month ending on or prior to August 31, 2026,and further reduced to $32.5 million for each fiscal month ending thereafter) and 60% of Eligible Inventory for each fiscal month ending on or prior to August 31, 2025 (reduced to 55% of Eligible Inventory for each fiscal month ending on or prior to February 28, 2026,and 50% of Eligible Inventory for each fiscal month ending thereafter). The2025* Credit Agreement allowed the Company to obtain Letters of Credit from the Bank, which if drawn upon by the beneficiary thereof and paid by the Bank, became Revolving Loans. Under the2025 Credit Agreement, the Company couldnot pay cash dividends on its common stock in excess of $5.0 million in any fiscal year. The term of the Revolving Loans under the2025 Credit Agreement ran through* April 1, 2027.*

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The Company used the increased borrowing capacity under the2025 Credit Agreement to help finance its acquisition of Kobelt. Kobelt was included as a Borrower under the2025 Credit Agreement, and was permitted to borrow directly under the2025 Credit Agreement up to the lesser of the Revolving Credit Commitment or $25.0 million. For purposes of determining the Borrowing Base under the2025 Credit Agreement, Eligible Receivables and Eligible Inventory of Kobelt were included.

Interest rates under the2025 Credit Agreement are based on the secured overnight financing rate (“SOFR”), the euro interbank offered rate (the “EURIBO Rate”), or the Canadian Overnight Repo Rate (the “CORRA”). Loans under the2025 Credit Agreement were designated as either as “SOFR Loans,” which accrued interest at an Adjusted Term SOFR plus an Applicable Margin; “Eurodollar Loans,” which accrued interest at the EURIBO Rate plus an Applicable Margin; “Term CORRA Loans,” which accrued interest at an Adjusted Term CORRA plus an Applicable Margin; “Daily Compounded CORRA Loans,” which accrued interest at a Daily Compounded CORRA plus an Applicable Margin; or Canadian Prime Rate Loans,” which accrued interest at the Canadian Prime Rate plus an Applicable Margin. The Applicable Margins were between 2% and 3.5% for Revolving Loans and Letters of Credit;2.125% and 3.625% for Term Loans; and.15% and.3% for the Unused Revolving Credit Commitment (each depending on the Company’s Total Funded Debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio).

The2025 Credit Agreement required the Company to meet certain financial covenants. Specifically, the Company’s Total Funded Debt to EBITDA ratio couldnot exceed 3.50 to1.00, and the Company’s Fixed Charge Coverage Ratio couldnot be less than 1.10 to1.00. In determining whether the Company is in compliance with its Total Funded Debt/EBITDA Ratio, the Company’s EBITDA will included transaction expenses of up to $0.6 million for each of the Company’s Kobelt Acquisition and the Company’s prior Katsa acquisition, as well as pro-forma EBITDA of Katsa and Kobelt as permitted by the Bank. The Company’s Tangible Net Worth couldnot be less than $100.0 million plus50% of positive Net Income for each fiscal year ending on or after* June 30, 2024.*

Borrowings under the2025 Credit Agreement were secured by substantially all of the Company’s and Kobelt’s personal property, including accounts receivable, inventory, machinery and equipment, and intellectual property. The Company also pledged 65% of its equity interests in certain foreign subsidiaries. To effect these security interests, the Company entered into various amendment and assignment agreements that consented to the assignment to the Bank of certain agreements previously entered into between the Company and the Bank in connection with an* April 22, 2016credit agreement between the Company and the Bank, and further amended such agreements pursuant to the terms of the2025* Credit Agreement. Specifically, the Company amended and agreed to the assignment to the Bank of a Security Agreement, IP Security Agreement, Pledge Agreement, Perfection Certificate, and Assignment as to Liens and Encumbrances. The Company also amended and assigned to the Bank a Negative Pledge Agreement, pursuant to which it agreednot to sell, lease or otherwise encumber real estate that it owns except as permitted by the2025 Credit Agreement and the Negative Pledge Agreement. The Company also entered into a Collateral Assignment of Rights under Purchase Agreement for its acquisition of Kobelt. Borrowings under the2025 Credit Agreement were also required to be guaranteed by each U.S. subsidiary of the Company.

Upon the occurrence of an Event of Default, the Bank could take the following actions upon written notice to the Company: (1) terminate its remaining obligations under the2025 Credit Agreement; (2) declare all amounts outstanding under the2025 Credit Agreement to be immediately due and payable; and (3) demand the Company to immediately Cash Collateralize L/C Obligations in an amount equal to 105% of the aggregate L/C Obligations or a greater amount if the Bank determined a greater amount was necessary. If such Event of Default were due to the Company’s bankruptcy, the Bank could take thethree actions listed above without notice to the Company.

During fiscal year2026, the average interest rate was 6.46% on the Term Loan, and 5.21% on the Revolving Loans under the2025 Credit Agreement.

The Company’s borrowings described above approximates fair value at* June 30, 2026and June 30, 2025.If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level2* in the fair value hierarchy.

The Company’s interest rate swap matured on* March 4, 2026,and wasnot* renewed. The Company hadno interest rate swaps designated as cash flow hedges outstanding at* June 30, 2026.The maturity didnot* have a material impact on our consolidated financial statements.

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On* June 30, 2026,*the Company refinanced and replaced its Credit Agreement. As part of the refinance of the credit agreement the Revolving Loan designated in euro was paid in full.

The aggregate scheduled maturities of outstanding long-term debt obligations in subsequent years are as follows:

Other lines of credit:

The Company has established unsecured lines of credit, which* maybe withdrawn at the option of the banks. Under these arrangements, the Company has unused and available credit lines of $4,725 with a weighted average interest rate of 2.77% as of June 30, 2026,and $4,531 with a weighted average interest rate of 3.03% as of June 30, 2025.*

H. LEASE OBLIGATIONS

The following table provides a summary of leases recorded on the consolidated balance sheet at* June 30.*

The components of lease expense for the years ended* June 30*were as follows:

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Other information related to leases was as follows:

Approximate future minimum rental commitments under non-cancellable leases as of* June 30, 2026*were as follows:

I. SHAREHOLDERS' EQUITY

The total number of shares of common stock outstanding at* June 30, 2026and2025* was 14,423,539 and 14,150,581, respectively. At* June 30, 2026and2025,* treasury stock consisted of 209,263 and 482,181 shares of common stock, respectively. The Company issued 272,918 and 155,597 shares of treasury stock in fiscal2026 and2025, respectively, to fulfill its obligations under its incentive compensation plans. The Company also recorded forfeitures of 2,195 and 0 shares of previously issued restricted stock in fiscal2026 and2025, respectively. The difference between the cost of treasury shares and the option price is recorded in common stock.

Under an authorization given by the Board of Directors on* July 27, 2012,the Company is permitted to make open market purchases of its common stock. The Company didnot make any open market purchases during thetwo* most recent fiscal years. As of* June 30, 2026and2025,* 315,000 shares remain authorized for purchase.

Cash dividends per share were $0.16 and $0.16 in fiscal2026 and2025.

The Company is authorized to issue 200,000 shares of preferred stock, none of which have been issued. The Company has designated 150,000 shares of the preferred stock as Series A Junior Preferred Stock.

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The components of accumulated other comprehensive income (loss) included in equity as of* June 30, 2026and2025* are as follows:

A reconciliation for the changes in accumulated other comprehensive income (loss), net of tax, by component for the years ended* June 30, 2026and June 30, 2025*is as follows:

Reconciliation for the changes in benefit plan adjustments, net of tax for the year ended* June 30, 2026*is as follows:

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Reconciliation for the changes in benefit plan adjustments, net of tax for the year ended* June 30, 2025*is as follows:

J. BUSINESS SEGMENTS AND FOREIGN OPERATIONS

The Company and its subsidiaries are engaged in the manufacture and sale of marine and heavy duty off-highway power transmission equipment. Principal products 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 and controls systems. The Company sells to both domestic and foreign customers in a variety of market areas, principally pleasure craft, commercial, and military marine markets, energy and natural resources, government, and industrial markets.

Net sales by product group for the years ended* June 30*is summarized as follows:

Industrial products include clutches, power take-offs and pump drives sold to the agriculture, recycling, construction and oil and gas markets. The land-based transmission products include applications for oil field and natural gas, military, and airport rescue and firefighting. The marine and propulsion systems include marine transmission, azimuth drives, controls, surface drives, and propellers for the global commercial marine, pleasure craft, and patrol boat markets. Other includes non-Twin Disc manufactured products sold through Company-owned distribution entities.

The Company hastwo reportable segments: manufacturing and distribution. Its segment structure reflects the way chief operating decision-maker (“CODM”) makes operating decisions and manages the growth and profitability of the business. It also corresponds with the CODM’s approach of allocating resources and assessing the financial performance of its segments. The Company’s CODM is the Chief Executive Officer, who reviews financial information for thetwo reportable segments. The accounting practices of the segments are the same as those described in the summary of significant accounting policies. Transfers among segments are at established inter-company selling prices. The CODM evaluates the performance of its segments based on net sales, gross profit (loss), operating income (loss), and net earnings (loss).

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The following table presents the selected financial information with respect to the Company’s reportable segments for the year ended* June 30, 2026:*

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The following table presents the selected financial information with respect to the Company’s reportable segments for the year ended* June 30, 2025:*

Corporate expenses pertain to certain costs that arenot allocated to the reportable segments, primarily consisting of corporate overhead costs, including administrative functions and global functional expenses.

Geographic information about the Company for the years ended* June 30*is summarized as follows:

Net sales by geographic region are based on product shipment destination.

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Long-lived assets primarily pertain to property, plant, and equipment and exclude goodwill, other intangibles, and deferred income taxes. They are summarized as follows:

No one customer accounted for10% of consolidated net sales in fiscal year2026 and2025.

Disaggregated revenue:

The following tables present details deemed most relevant to the users of the financial statements for the years ended* June 30, 2026and June 30, 2025.*

Net sales by product group for the year ended* June 30, 2026*is summarized as follows:

Net sales by product group for the year ended* June 30, 2025*is summarized as follows:

K. STOCK-BASED COMPENSATION

In thefirst quarter of fiscal2025, the Company adopted the Twin Disc, Incorporated Amended and Restated2021 Omnibus Incentive Plan (the “Omnibus Plan”), which was subsequently approved by the Company’s shareholders. The Omnibus Plan amended and restated the Twin Disc, Incorporated2021 Long-Term Incentive Plan (the*“2021* LTI Plan”), and effectively replaced the Twin Disc, Incorporated2020 Stock Incentive Plan for Non-Employee Directors (the*“2020* Directors' Plan”). Benefits under the Omnibus Plan* maybe granted, awarded or paid in anyone* or a combination of stock options, stock appreciation rights, restricted stock awards, restricted stock units, cash-settled restricted stock units, performance stock awards, performance stock unit awards, performance unit awards, and dividend equivalent awards. The Omnibus Plan is designed to benefit key employees and consultants of the Company and its subsidiaries, as well as non-employee directors of the Company.

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There is reserved for issuance under the Plan an aggregate of 1,636,550 shares of the Company’s common stock, which consists of the previously-approved 715,000 shares of common stock reserved for issuance under the2021 LTI Plan prior to its amendment and restatement to become the Omnibus Plan;521,550 shares of common stock that remained available for issuance under the2020 Directors' Plan; and 400,000 newly authorized shares of common stock. Shares issued under the Omnibus Plan* may*be authorized and unissued shares or shares reacquired by the Company in the open market or a combination of both. The aggregate amount is subject to proportionate adjustments for stock dividends, stock splits and similar changes.

Shares available for future awards as of* June 30*were as follows (assuming that outstanding performance awards are issued at the target level of performance):

Performance Stock Awards (“PSA”)

In fiscal2026 and2025, the Company granted a target number of 166,537 and 116,091 PSAs, respectively, to various employees and consultants of the Company, including executive officers.

The PSAs granted in fiscal2026 will vest if the Company achieves performance-based target objectives relating to average return on invested capital and cumulative EBITDA (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending* June 30, 2028.*These PSAs are subject to adjustment if the Company's return on invested capital and cumulative EBITDA falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 333,074. Based upon actual results to date, the Company is currently accruing compensation expense for these PSAs.

The PSAs granted in fiscal2025 will vest if the Company achieves performance-based target objectives relating to average return on invested capital and cumulative EBITDA (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending* June 30, 2027.*These PSAs are subject to adjustment if the Company’s return on invested capital and cumulative EBITDA falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 227,610. Based upon actual results to date, the Company is currently accruing compensation expense for these PSAs.

There were 280,342 and 233,154 unvested PSAs outstanding at* June 30, 2026and2025,* respectively. The fair value of the PSAs (on the date of grant) is expensed over the performance period for the shares that are expected to ultimately vest. A total of 2,810 and 2,286 shares of performance stock awards were forfeited during fiscal2026 and2025, respectively. The compensation expense for the year ended* June 30, 2026and2025,* related PSAs, was $2,018 and $1,951, respectively. The tax expense from compensation expense for the year ended* June 30, 2026and2025,* related PSAs, was $473 and $417, respectively. The weighted average grant date fair value of the unvested awards at* June 30, 2026was $10.69. At June 30, 2026,the Company had $1,543 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal2026* and2025 awards. The total fair value of performance stock awards vested in fiscal2026 and fiscal2025 was $2,762.

Performance Stock Unit Awards (“PSUA”)

The PSUAs entitle an individual to shares of common stock of the Company or cash in lieu of shares of Company common stock if specific terms and conditions or restrictions are met through a specified date. The fiscal2025 PSUAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital and cumulative EBITDA (as defined in the PSUA Grant Agreement), in the cumulativethree fiscal year period ending* June 30, 2026.*These PSUAs are subject to adjustment if the Company's return on invested capital and cumulative EBITDA falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 16,006.

There were 0 and 8,003 unvested PSUAs outstanding at* June 30, 2026and2025,* respectively. A total of 0 and 2,470 shares of PSUAs were forfeited during fiscal2026 and2025, respectively. The compensation expense for the year ended* June 30, 2026and2025,* related to PSUAs was $202 and $24. respectively. The tax expense from compensation expense for the year ended* June 30, 2026and2025,* related PSUAs, was $47 and $6, respectively. The weighted average grant date fair value of the unvested awards at* June 30, 2026was $12.15. At June 30, 2026,the Company had $0 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal2026* and2025 awards. The total fair value of performance stock awards vested in fiscal2026 and fiscal2025 was $190 and $0.

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Restricted Stock Awards (“RS”)

The Company has unvested RS outstanding that will vest if certain service conditions are fulfilled. The fair value of the RS grants is recorded as compensation over the vesting period, which is generally 1 to 3 years. During fiscal2026 and2025, the Company granted 148,750 and 48,733 service based restricted shares, respectively, to employees and non-employee directors in each year. A total of 2,195 and 0 shares of restricted stock were forfeited during fiscal2026 and2025, respectively. There were 221,727 and 252,888 unvested shares outstanding at* June 30, 2026and2025,* respectively. Compensation expense of $1,196 and $1,266 was recognized during the year ended* June 30, 2026and2025,* respectively, related to these service-based awards. The tax benefit from compensation expense for the year ended* June 30, 2026and2025,* related to these service-based awards, was $280 and $297, respectively. The total fair value of restricted stock grants vested in fiscal2026 and2025 was $1,896 and $464, respectively. As of* June 30, 2026,the Company had $910 of unrecognized compensation expense related to restricted stock which will be recognized over the nextthree* years.

Restricted Stock Unit Awards (“RSU”)

The RSUs entitle an individual to shares of common stock of the Company or cash in lieu of shares of Company common stock if specific terms and conditions or restrictions are met through a specified date, generally three years from the date of grant or when performance conditions have been met. In fiscal2026 and2025, the Company granted 0 and 77,395 RSUs, respectively, to various employees of the Company, including executive officers. A total of 0 and 1,601 shares of restricted stock unit awards were forfeited during fiscal2026 and2025, respectively. There were 79,174 and 82,883 unvested RSUs outstanding at* June 30, 2026and June 30, 2025,respectively. Compensation expense of $429 and $866 was recognized during the year ended June 30, 2026and2025,* respectively. The tax benefit from compensation expense for the year ended* June 30, 2026and2025,* related to these service-based awards, was $101 and $203, respectively. The total fair value of restricted stock grants vested in fiscal2026 and2025 was $33 and $1,779, respectively. The weighted average grant date fair value of the unvested awards at* June 30, 2026was $12.84. As of June 30, 2026,*the Company had $350 of unrecognized compensation expense related to RSUs which will be recognized over the next year.

L. ENGINEERING AND DEVELOPMENT COSTS

Engineering and development costs include research and development expenses for new products, development and major improvements to existing products, and other costs for ongoing efforts to refine existing products. Research and development costs charged to operations totaled $2,856 and $2,699 in fiscal2026 and2025, respectively. Total engineering and development costs were $13,441 and $12,236 in fiscal2026 and2025, respectively, and are primarily recorded within marketing, engineering and administrative expenses on the consolidated statements of operations and comprehensive income.

M. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The Company has non-contributory, qualified defined benefit pension plans covering substantially all domestic employees hired prior to* October 1, 2003,and certain foreign employees. Domestic plan benefits are based on years of service, and, for salaried employees, on average compensation for benefits earned prior to January 1, 1997,and on a cash balance plan for benefits earned from January 1, 1997through July 31, 2009,*at which time the Company froze future accruals under domestic defined benefit pension plans.

In addition, the Company has unfunded, non-qualified retirement plans for certain management employees and Directors. In the case of management employees, benefits are based on an annual credit to a bookkeeping account, intended to restore the benefits that would have been earned under the qualified plans, but for the earnings limitations under the Internal Revenue Code. In the case of Directors, benefits are based on years of service on the Board. All benefits vest upon retirement from the Company.

In addition to providing pension benefits, the Company provides other postretirement benefits, including healthcare and life insurance benefits for certain domestic retirees. All employees retiring after* December 31, 1992,*and electing to continue healthcare coverage through the Company's group plan, are required to pay 100% of the premium cost.

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The measurement date for the Company’s pension and postretirement benefit plans in fiscal2026 and2025 was* June 30.*

Obligations and Funded Status

The following table sets forth the Company's defined benefit pension plans’ and other postretirement benefit plans’ funded status and the amounts recognized in the Company's balance sheets and statement of operations and comprehensive income as of* June 30:*

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The amounts in accumulated other comprehensive income (loss) that are expected to be recognized as components of net periodic benefit cost during the next fiscal year for the qualified defined benefit and other postretirement benefit plans are as follows:

The accumulated benefit obligation for all defined benefit pension plans was approximately $62,173 and $66,424 at* June 30, 2026and2025,* respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets**:**

Components of Net Periodic Benefit Cost (Income):

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Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) for Fiscal2026 (Pre-tax):

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss for Fiscal2025 (Pre-tax):

Additional Information

Assumptions

The assumed weighted-average healthcare cost trend rate was 6.2% in fiscal2026, grading down to 3.7% in fiscal2073.

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Plan Assets

The Company’s Benefits Committee (“Committee”), a non-board management committee, oversees investment matters related to the Company’s funded benefit plans. The Committee works with external actuaries and investment consultants on an ongoing basis to establish and monitor investment strategies and target asset allocations. The overall objective of the Committee’s investment strategy is to earn a rate of return over time to satisfy the benefit obligations of the pension plans and to maintain sufficient liquidity to pay benefits and address other cash requirements of the pension plans. The Committee has established an Investment Policy Statement which provides written documentation of the Company’s expectations regarding its investment programs for the pension plans, establishes objectives and guidelines for the investment of the plan assets consistent with the Company’s financial and benefit-related goals, and outlines criteria and procedures for the ongoing evaluation of the investment program. The Company employs a total return on investment approach whereby a mix of investments among several asset classes are used to maximize long-term return of plan assets while avoiding excessive risk. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, and annual liability measurements.

The Company’s pension plan weighted-average asset allocations at* June 30, 2026and2025* by asset category were as follows:

Due to market conditions and other factors, actual asset allocation* mayvary from the target allocation outlined above. The U.S. pension plans held 34,211 shares of Company stock with a fair market value of $794 (1.7% of total plan assets) at June 30, 2026and 98,211 shares with a fair market value of $867 (1.7% of total plan assets) at June 30, 2025.*

The U.S. plans have a long-term return assumption of 6.25%. This rate was derived based upon historical experience and forward-looking return expectations for major asset class categories.

Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are classified into the following hierarchy:

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The following table presents plan assets using the fair value hierarchy as of* June 30, 2026:*

The following table presents plan assets using the fair value hierarchy as of* June 30, 2025:*

(a) Common stock is valued at the closing price reported on the active market on which the individual securities are traded. These securities include U.S. equity securities invested in companies that are traded on exchanges inside the U.S. and international equity securities invested in companies that are traded on exchanges outside the U.S.

(b) Mutual funds are valued at the daily closing price as reported by the fund. Mutual funds held by the Company’s funded benefit plans are open-end mutual funds that are registered with the Securities Exchange Commission. These funds are required to publish their daily net asset value (“NAV”) and to transact at that price. The mutual funds held by the Company’s funded benefit plans are deemed to be actively traded.

(c) Annuity contracts represent contractual agreements in which payments are made to an insurance company, which agrees to pay out an income or lump sum amount at a later date. Annuity contracts are valued at fair value using the net present value of future cash flows.

(d) In accordance with ASC820-10, certain investments that were measured at net asset value per share (or its equivalent) havenot been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the fair value of plan assets at the end of the year.

The following table sets forth additional disclosures for the fair value measurement of the fair value of pension plan assets that calculate fair value based on NAV per share practical expedient as of* June 30, 2026and June 30, 2025:*

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The following tables present a reconciliation of the fair value measurements using significant unobservable inputs (Level III) as of* June 30, 2026and2025:*

Cash Flows

Contributions

The Company expects to contribute $1,979 to its defined benefit pension plans in fiscal2027.

The Company expects to contribute $591 to its other postretirement benefit plans in fiscal2027.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

The Company doesnot expect to make any Part D reimbursements for the periods presented.

The Company sponsors defined contribution plans covering substantially all domestic employees and certain foreign employees. These plans provide for employer contributions based primarily on employee participation. The total expense under the plans was $2,683 and $2,447 in fiscal2026 and2025, respectively. These amounts are recorded in cost of goods sold and marketing, engineering and administration costs.

N. INCOME TAXES

United States and foreign income (loss) before income taxes and minority interest as of* June 30*were as follows:

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The provision (benefit) for income taxes is comprised of the following:

The components of the net deferred tax asset as of* June 30*are summarized in the table below.

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At* June 30, 2026the Company has net operating loss carryforwards (“NOLs”) of approximately $0 and $11,685 for federal and state income tax purposes, respectively, which will expire at various dates from fiscal year2027* –2045. During the year, the Company filed accounting method change applications with the Internal Revenue Service, which resulted in changes to certain tax attribute balances, including inventory, prepaids and deferred revenue. The Company has federal and state tax Research & Development credit (“R&D credits”) carryforwards of approximately $1,345 and $1,190, respectively. Federal R&D credits will expire at various dates from fiscal years2038 –2046, while state R&D credits will expire at various dates from fiscal years2063 –2076. The Company has foreign tax credit carryforwards of approximately $1,502, which will expire at various dates from fiscal2027-2034.

The Company maintains valuation allowances when it is more likely thannot that all or a portion of a deferred tax asset willnot be realized. Changes in valuation allowances from period to period are included in the tax provision in the period of change. In determining whether a valuation allowance is required, the Company takes into account such factors as prior earnings history, expected future earnings, carry-back and carry-forward periods, and available tax planning strategies.

During fiscal2026, the Company reassessed the realizability of its deferred tax assets and concluded that its domestic valuation allowance wasno longer required. This conclusion was supported by improved operating results, including athree-year cumulative income position, as well as the implementation of tax planning strategies during the year. As a result, the Company released $23,879 of valuation allowance and recognized a corresponding income tax benefit. Of the total valuation allowance released, $7,462 was recorded directly to retained earnings in connection with the change in inventory valuation method from LIFO to FIFO, and $16,417 was recognized as an income tax benefit in the Consolidated Statement of Operations and Comprehensive Income (Loss).

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The table below provides the updated requirements of ASU2023-09, on a prospective basis. See Note A – Description of Business and Summary of Significant Accounting Policies- Recently Adopted Accounting Standards section for additional details on the adoption of ASU-2023-09.

Following is a reconciliation of the applicable U.S. federal income taxes to the actual income taxes reflected in the statements of operations and other comprehensive income (loss) for the year-end* June 30, 2026:*

The Company’s effective tax rate of (102.8%) was primarily driven by the release of the Federal and State valuation allowance, and foreign inclusion items: GILTI, FDII and subpart F.

On* July 4, 2025,the President signed H.R.1, the “One Big Beautiful Bill Act,” into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in calendar year2025,* including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The Act also includes certain changes to the US taxation of foreign activity, including changes to foreign tax credits, GILTI, FDII, and BEAT. These changes are generally effective for tax years beginning after* December 31, 2025.*

The change in tax law has had an immaterial net impact on the tax provision for the year ended* June 30, 2026.The advantageous provisions of the tax act werenot* beneficial to the Company in their efforts to utilize expiring tax attributes.

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As previously disclosed and adjusted, the following is a reconciliation of the applicable U.S. federal income taxes to the actual income taxes reflected in the statements of operations and other comprehensive income (loss) for the year-end* June 30, 2025:*

The Company hasnot provided additional U.S. income taxes on cumulative earnings of its consolidated foreign subsidiaries that are considered to be reinvested indefinitely. The Company reaffirms its position that the earnings of those subsidiaries remain permanently invested and hasno plans to repatriate funds from any permanently reinvested subsidiaries to the U.S. for the foreseeable future. Such earnings could become taxable upon the sale or liquidation of these foreign subsidiaries or upon dividend repatriation. The Company’s intent is for such earnings to be reinvested by the subsidiaries or to be repatriated only when it would be tax effective through the utilization of foreign tax credits.

Annually, the company files income tax returns in various taxing jurisdictions inside and outside the United States. In general, the tax years that remain subject to examination are 2021 through2026 for our major operations in Belgium, Japan, Netherlands, Singapore and Australia. The tax years open to examination in the U.S. are for years subsequent to fiscal 2022, however some statutes remain open with respect to certain tax attribute carryforwards until those attributes are utilized.

The Company has approximately $757 and $644 of unrecognized tax benefits as of* June 30, 2026and June 30, 2025*respectively, which, if recognized would impact the effective tax rate. The Company’s policy is to accrue interest and penalties related to unrecognized tax benefits in income tax expense.

Below is a reconciliation of beginning and ending amount of unrecognized tax benefits as of* June 30:*

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Substantially all of the Company’s unrecognized tax benefits as of* June 30, 2026,if recognized, would affect the effective tax rate. As of June 30, 2026and2025,* the amounts accrued for interest and penalties totaled $2 and $6, respectively, and arenot included in the reconciliation above.

The Company made tax payments and received tax refunds during the year ended* June 30, 2026*as follows:

O. CONTINGENCIES

The Company is involved in litigation of which the ultimate outcome and liability to the Company, if any, arenot presently determinable. Management believes that final disposition of such litigation willnot have a material impact on the Company’s results of operations, financial position or cash flows, either individually or in the aggregate.

Tariffs:

On* February 20, 2026,the U.S. Supreme Court invalidated tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). The ruling didnot* address the availability, timing or mechanics of any potential refunds related to tariffs previously collected, and the outcome of any related administrative or legal processes remains uncertain. Following the ruling, the U.S. administration implemented new tariffs under alternative statutory authority, including Section122 of the Trade Act of1974, which permits temporary import surcharges subject to statutory limits and duration requirements. In* April 2026,the U.S. Court of International Trade (“CIT”) issued an order for the U.S. Customs and Border Protection (“CBP”) to treat the IEEPA Tariffs as unlawful and administer affected import entries accordingly. As a result of the order, the CBP must recalculate duties without the IEEPA tariffs and ensure that importers of record receive the benefit of the Supreme Court ruling in the form of refunds for such amounts paid and interest. On June 2, 2026,the Department of Justice filed an appeal with the U.S. Court of Appeals for the Federal Circuit challenging the CIT's order requiring CBP to provide refunds of IEEPA tariffs on a broad, nationwide basis. Multiple legal challenges to the Section122* tariffs have been filed as well, and on* May 7, 2026,the U.S. Court of International Trade ruled that the Section122* tariffs are unlawful; however, the court's injunction applies only to the named plaintiffs, and the tariffs remain in effect for all other importers pending appeal.

The Company is evaluating the impact of the Supreme Court ruling and the subsequent order issued by the CIT, and is monitoring related developments from the CBP regarding its plan to process refunds to importers of record, including the launch on* April 20, 2026of the CBP's Consolidated Administration and Processing of Entries (“CAPE”) system for submitting refund claims, as well as the administration’s decision on whether ornot* to appeal the CIT’s order. As of* June 30, 2026,the Company hasnot* recorded a receivable related to potential refunds for IEEPA Tariffs paid by the Company. The ultimate resolution of this matter, including the administration’s decision to appeal the CIT’s order, the extent and manner in which costs previously incurred and paid* may*be recoverable through the CBP, and the timing of any potential recovery remains uncertain.

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P. RESTRUCTURING OF OPERATIONS

Restructuring expenses

The Company has implemented various restructuring programs in response to unfavorable macroeconomic trends in certain of the Company’s markets since thefourth quarter of fiscal2015. These programs primarily involved the reduction of workforce in several of the Company’s manufacturing locations, under a combination of voluntary and involuntary programs. During thefourth quarter of fiscal2021, the Company undertook a series of steps to accelerate its focus on its core competencies, improve its fixed cost structure, and monetize some of its under-utilized assets.

The Company continued its restructuring plans with regard to its Belgian operations during fiscal year2026 and2025. A voluntary program was implemented to reduce the workforce. The action was taken to allow the Belgian operation to focus resources on core manufacturing processes, while allowing for savings on the outsourcing of non-core processes.

Total restructuring charges relating to streamlining operations totaled $227 and $369 in fiscal year* June 30, 2026and June 30, 2025,*respectively.

The following is a roll-forward of restructuring activity:

Q. EARNINGS PER SHARE

The Company calculates basic earnings per share based upon the weighted average number of common shares outstanding during the period, while the calculation of diluted earnings per share includes the dilutive effect of potential common shares outstanding during the period. The calculation of diluted earnings per share excludes all potential common shares if their inclusion would have an anti-dilutive effect.

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The components of basic and diluted earnings per share were as follows:

The following potential common shares were excluded from diluted EPS for the year-ended* June 30, 2025*as the Company reported a net loss:404.3 related to the Company’s unvested PSAs,10.5 related to the Company’s unvested PSAUs,121.0 related to the Company’s unvested RS awards, and 55.0 related to the Company’s unvested RSUs.

R. DERIVATIVE FINANCIAL INSTRUMENTS

The Company reports all derivative instruments on its consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of transactions entered into for hedging purposes.

As a global organization, the Company faces exposure to market risks, such as fluctuations in foreign currency exchange rates, interest rates and commodity prices. To manage the volatility relating to these exposures, the Company enters into various derivative instruments from time to time under its risk management policies. The Company designates derivative instruments as hedges on a transaction basis to support hedge accounting. The changes in fair value of these hedging instruments offset in part or in whole corresponding changes in the fair value or cash flows of the underlying exposures being hedged. The Company assesses the initial and ongoing effectiveness of its hedging relationships in accordance with its policy. The Company doesnot purchase, hold or sell derivative financial instruments for trading purposes. The Company’s practice is to terminate derivative transactions if the underlying asset or liability matures or is sold or terminated, or if it determines the underlying forecasted transaction isno longer probable of occurring.

Interest Rate Swaps Designated as Cash Flow Hedges

During the year the Company hadone interest rate swap contract that matured as of* March 4, 2026,with a notional amount of $6,500. It had been designated as a cash flow hedge in accordance with ASC815,* Derivatives and Hedging.

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The primary purpose of the Company’s cash flow hedging activities is to manage the potential changes in value associated with interest payments on the Company’s SOFR-based indebtedness. The Company records gains and losses on interest rate swap contracts qualifying as cash flow hedges in accumulated other comprehensive income (loss) to the extent that these hedges are effective and until the Company recognizes the underlying transactions in net earnings, at which time these gains and losses are recognized in interest expense on its consolidated statements of operations and comprehensive income (loss). Cash flows from derivative financial instruments are classified as cash flows from financing activities on the consolidated statements of cash flows. These contracts generally have original maturities of greater thantwelve months.

Net unrealized after-tax losses related to cash flow hedging activities that were included in accumulated other comprehensive income (loss) were $0 and ($285) for the years ended* June 30, 2026and2025,* respectively. The unrealized amounts in accumulated other comprehensive loss will fluctuate based on changes in the fair value of open contracts during each reporting period.

Derivatives Designated as Net Investment Hedges

On* June 30, 2026,*the Company refinanced and replaced its Credit Agreement as discussed in Note G, Debt, of the notes to the consolidated financial statements. As part of the refinance of the credit agreement the Revolving Loan designated in euro was paid in full.

The Company is exposed to foreign currency exchange risk related to its investment in net assets in foreign countries. As discussed in Note G, Debt, of the notes to the consolidated financial statements, during thefourth quarter of fiscal2021, the Company designated its euro denominated Revolving Loan, with a notional amount of€13,500, as a net investment hedge to mitigate the risk of variability in its euro denominated net investments in wholly-owned foreign subsidiaries. All changes in fair value of the euro revolver were then reported in accumulated other comprehensive loss along with the foreign currency translation adjustments on those foreign investments. Net unrealized after-tax income (loss) related to net investment hedging activities that were included in accumulated other comprehensive income (loss) were $0 and $129 for the years ended* June 30, 2026and2025,* respectively.

Foreign Currency Forward ContractsNot* Designated as Hedges*

The Company primarily enters into forward exchange contracts to reduce the earnings and cash flow impact of non-functional currency denominated receivables and payables. These contracts are highly effective in hedging the cash flows attributable to changes in currency exchange rates. Gains and losses resulting from these contracts offset the foreign exchange gains or losses on the underlying assets and liabilities being hedged. The maturities of the forward exchange contracts generally coincide with the settlement dates of the related transactions. Gains and losses on these contracts are recorded in other expense, net in the consolidated statement of operations and comprehensive income (loss) as the changes in the fair value of the contracts are recognized and generally offset the gains and losses on the hedged items in the same period. The primary currency to which the Company was exposed in fiscal2026 and2025 was the euro. At* June 30, 2026and2025,* there wereno significant forward exchange contracts outstanding.

Other Derivative Instruments

The Company doesnot utilize commodity price hedges to manage commodity price risk exposure. Likewise, the Company doesnot hedge the translation exposure represented by the net assets of its foreign subsidiaries.

Fair Value of Derivative Instruments

The Company’s interest rate swaps and foreign currency forward contracts are recorded at fair value on the consolidated balance sheets using a discounted cash flow analysis that incorporates observable market inputs. These market inputs include foreign currency spot and forward rates, and various interest rate curves, and are obtained from pricing data quoted by various banks,third-party sources and foreign currency dealers involving identical or comparable instruments (Level2).

Counterparties to these foreign currency forward contracts have at least an investment grade rating. Credit ratings on some of the Company’s counterparties* may*change during the term of the financial instruments. The Company closely monitors its counterparties’ credit ratings and, if necessary, will make any appropriate changes to its financial instruments. The fair value generally reflects the estimated amounts that the Company would receive or pay to terminate the contracts at the reporting date.

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The fair value of derivative instruments included in the consolidated balance sheets at* June 30*were as follows:

The impact of the Company’s derivative instruments on the consolidated statement of operations and comprehensive income (loss) for the years ended* June 30*was as follows:

S.2025 IMPACT OF ACCOUNTING METHOD CHANGE

The following tables summarize the effects of the accounting change described in Note B, Inventories, net, of the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss), Statements of Cash Flows and Statements of Changes in Equity for the year ended* June 30, 2025and Consolidated Balance Sheets as of June 30, 2025.*

See next page.

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As a result of the retrospective application of the change in accounting principle, the following financial statement line items within the unaudited interim2026 and2025 quarterly condensed consolidated financial statements were adjusted, as follows:

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T. ACQUISITION

Kobelt Manufacturing Co., Ltd., Inc.

On* February 14, 2025,the Company completed the acquisition of 100% of the outstanding common stock of Kobelt. Based in Surrey, British Columbia, Kobelt is a Canadian manufacturer of controls, propulsion, steering, and braking systems to the marine, oil and gas, and industrial markets. This acquisition was pursuant to a Sale and Purchase Agreement (“Purchase Agreement”) entered into by Twin Disc Canada Holdings Ltd, a wholly-owned subsidiary of the Company, with the prior owners, on February 14, 2025.*Immediately following the acquisition, Kobelt and Twin Disc Canada Holdings Ltd amalgamated to continue a wholly-owned subsidiary of the Company, retaining the Kobelt name.

Under the terms of the Purchase Agreement, the Company paid an aggregate of approximately $17,236 in cash at closing, which included a base payment plus adjustments for net cash, working capital, and earnout. The Company paid an additional $516 for the net working capital adjustment. The amount is still subject to a final determination of the earnout calculation. The transaction is considered a taxable stock acquisition.

The Company, in part, financed the payment of the cash consideration through borrowings of $6,500 under a credit agreement entered into on* February 14, 2025*with Bank of Montreal (the “Credit Agreement”). The Credit Agreement is further discussed in Note G, Debt.

Kobelt brings a complementary range of products that enhance and diversify the Company's portfolio, reinforcing Twin Disc’s position as a global leader in power transmission solutions. Kobelt's in-house foundry and expertise in bronze die casting, precision machining, assembly and testing ensure complete quality control, which aligns perfectly with the Company's commitment to engineering excellence.

With over60 years of experience designing and manufacturing high-quality products, Kobelt is a well-suited addition to the Twin Disc family. This acquisition opens new opportunities for growth and partnerships, leveraging the Company's global sales and service teams to drive even greater success.

For fiscal years ended2026 and2025, the Company included in its consolidated statement of operations and comprehensive income net sales and earnings (loss) for Kobelt of $13,414 and $232, and $4,870 and ($164), respectively.

Purchase Price Allocation

The acquisition of Kobelt met the criteria for a business combination to be accounted for using the acquisition method under ASC805, Business Combinations (“ASC805”), with the Company identified as the legal and the accounting acquirer. The Company recognized approximately $0.7 million of acquisition-related costs which were expensed in the consolidated statement of operations for the quarter ended* March 28, 2025.*

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The following table details the final allocation of the purchase price of the assets acquired and liabilities assumed in connection with the acquisition of Kobelt.

Final Fair Value of Assets Acquired and Liabilities Assumed

The Company has completed its review of the fair value of the assets acquired and liabilities assumed in connection with the acquisition of Kobelt. The measurement period has ended, and the Company has made its final determination of the acquisition-date fair values of the assets acquired and liabilities assumed. The amounts reflected in the purchase price allocation table represent the final allocation of the purchase price based on information obtained about facts and circumstances that existed as of the acquisition date.

The excess of the purchase price over the final fair values assigned to the identifiable assets acquired and liabilities assumed was recorded as goodwill. Goodwill recognized in the acquisition is primarily attributable to the expected benefits from combining Kobelt’s operations with the Company’s existing business, including anticipated operating synergies, expanded product offerings and future growth opportunities.

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The following summarizes the final fair value of the assets acquired and liabilities assumed at the acquisition date:

The following information provides further details about the final fair values assigned to certain assets acquired and liabilities assumed at the acquisition date for key balance sheet items.

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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

For the years ended June 30, 2026and2025 (In thousands)**

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EXHIBIT INDEX

TWIN DISC, INCORPORATED

10-K for Year Ended June 30, 2026

SIGNATURES

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.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.