Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Investor Presentation (June 2023)
27 slides from Twin Disc's investor presentation, Jun 14, 2023
Slide 1: Twin Disc, Inc. Investor Presentation
ae TWIN DISC, INC Investor Presentation
Slide 2: Disclosures
DISCLOSURES > ‘Safe Harbor Statement This presentation contains statements that are forward-looking within the meaning of Section 21€ ofthe Securities Exchange Act of 1934, as amended. The words "anticipates, believes," “intends,” “estimates,” and "expects," or similar anticipatory expressions, usua
Slide 3: Investment Highlights
Pe 01. Robust backlog supported by healthy demand growth across product groups INVESTMENT HIGHLIGHTS % 02. 03. Innovative technologies in Marine and Industrial scalable across attractive end markets Strategic playbook focused on margin expansion and cash generation 04. Accelerating growth across end
Slide 4: Overview
OVERVIEW
Slide 5: Twin Disc Snapshot
TWIN DISC SNAPSHOT Kown(osc) FY22 Revenue by Segment FY22 Revenue by Geography Manufacturi Distribution $242.9M 2.9% + Marine & Propulsion Systems » Industrial ‘North America * Europe Asia Pacifc = Other = Land-Based Systems other Key Market Differentiators D> Acentury of expertise putting horsepowe
Slide 6: Twin Disc Evolution
a> TWIN DISC EVOLUTION 1e) 1918 1950s 1999 2006 2021 Today Tin ise was T ydraviemarine | cain | Acquisionof8cs Sale ofSwssfacty | strate focus on bid Timed i Stone 1 ected nd i i 1 Seb eosin | | aoaive H i 1 etrlsand allem clutches that became H H i {integration opportunities thesandadin H i i i i S
Slide 7: Product Group Overview
PRODUCT GROUP OVERVIEW Marine & Propulsion = Land-Based — —_ tnaustriat Transmission systems Diesel powered planning & Diesel powered off-highway and all- Heavy duty industrial disconnect displacement vessels terrain specialty vehicles ‘applications + Positioned to capitalize on paradigm + Increasin
Slide 8: Marine & Propulsion Systems
MARINE & PROPULSION SYSTEMS 'Twin Disc’s Unique Position 1 1 Veth acquisition provided complementary products ! and powerful new technologies t 1 1 1 1 In-house hybrid and electrification expertise Expansion into new markets and geographies Substantial Growth Opportunities Across End Markets Commerc
Slide 9: Land-Based Transmission
LAND-BASED TRANSMISSION "Over a century of experience in power transmission + Strong North American customer base provides a | Solid foundation for growth 1 1 1 1 1 | product design and innovation 1 1 1 1 1 1 1 Substantial Growth Opportunities Across End Markets "Airport Rescue and Fire + Energy + M
Slide 10: Industrial
INDUSTRIAL + Best-in-class quality + Proprietary technology in controls, hybrid, EV + In-house engineering capabilities * Accelerating activity with new customers and application expansion among existing customers Substantial Growth Opportunities Across End Markets + Agriculture + Irrigation * Const
Slide 11: Strategy
STRATEGY
Slide 12: Long-Term Strategy
LONG-TERM STRATEGY Leading Hybrid/Elect solution provider for niche marine and land-based pallens markets and geographie resem Increased focus on contri and system integration rather than individual components MBA priorities: Industrial and Marine Technology (Hybrid focus) Continued expansion of Vet
Slide 13: Hybrid Electric Solutions
HYBRID ELECTRIC SOLUTIONS Transforming the global Off-Highway and Marine markets with our sustainable Hybrid and Electric powertrains, empowering customers to meet business goals as well as regulatory requirements Expertise in drive train technology provides edge in hybrid technology Veth Propulsion
Slide 14: Veth Expansion
VETH EXPANSION Global supplier of main and auxiliary Marine propulsion products Veth Sales sk # to $153 Strategic Fit Complementary products and powerful new technologies Enhances engineering talent and product development capabilities Prior history working with Veth enables efficient integration Ac
Slide 15: Optimize Geographic Footprint
OPTIMIZE GEOGRAPHIC FOOTPRINT a> $162 million ’ FY22 International Sales ‘ ae Pas * World-wide distribution network e vith manufacturing. ‘% Manufacturinglocation © Company owned distribution / service location © Purchasing / sourcing offices 15
Slide 16: Controls & System Integration
CONTROLS & SYSTEM INTEGRATION Control and full-system integration focus to accelerate growth Twin Disc products across all end markets are built with our control systems, utilizing multiple components and sophisticated controls to manage power output Ability to package a full system solution to virt
Slide 17: Pursue M&A Opportunities
PURSUE M&A OPPORTUNITIES Strategic Fit Diversification away from Oil & Gas Acquisition logic immediately evident Financial Fit Evident value creation potential Consistent business performance Internal Rate of Return > Weighted Average Cost of Capital Other Considerations Platform for transformative
Slide 18: Financial Overview
FINANCIAL OVERVIEW
Slide 19: Financial Performance
FINANCIAL PERFORMANCE NET SALES Sines) Marine mLand-Based sm Industrial Other $302.7 468 $2807 sy DILUTED EARNINGS PER SHARE som $088 $0.60 = hm rs Fo GROSS PROFIT BY PRODUCT GROUP (e229) inet (g303) Marine mLand-Based ‘Industrial mother rus yI9. FOLD $68.8 ris rig Fra
Slide 20: Balance Sheet
BALANCE SHEET NET DEBT ‘Sinmew EBITDA (simon mis $30.1 ms $29.9 Fi $31.9 Fr20 5197 rai Fat $240 ne ree LEVERAGE RATIO. 10% 1k (aay fig Fig. Fv20 F212 a> 20
Slide 21: Location Priorities
LOCATION PRIORITIES
Slide 22: Medium-Term Targets
MEDIUM-TERM TARGETS <> MEDIUM-TERM: = Hybrid/Electric leadership Revenue = Veth global expansion ali = Industrial focus $400 million aan Gross Margin * European cost structure * Operational efficiencies 30% * Greater pass-through content Free Cash Flow = Supply chain processes Conversion = Manufactu
Slide 23: Key Takeaways
KEY TAKEAWAYS Kown(osc) oO Robust backlog supported by healthy demand growth across product groups C2 Innovative technologies in Marine and Industrial scalable across attractive end markets Oo Strategic playbook focused on margin expansion and cash generation eo Accelerating growth across end market
Slide 24: Appendix
APPENDIX >.
Slide 25: Reconciliation of Total Debt to Net Debt
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO REPORTED FINANCIAL MEASURES RECONCILIATION OF TOTAL DEBT TO NET DEBT (In thousands; unaudited) Fvig vig FY20 FY2L Fy22 - 2,000 4691 2,000 2,000 4,824 40,491. 37,896 30,085 34,543 Total debt $4,824 $42,491 $42,587 $32,085 $36,543 Less cash 15,171 12,36
Slide 26: Reconciliation of Net Income to EBITDA
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO REPORTED FINANCIAL MEASURES RECONCILIATION OF CONSOLIDATED NET INCOME TO EBITDA (In thousands; unaudited) rvs Fris Fr20 Frat Net Income (I et incor Co eee? 528. $10,673 (39,817) ($29,719) Interest expense 282 1,927 1,860 2,358 Income ta tou 4773 371 (
Slide 27: Net Debt to EBITDA Leverage Ratio Calculation
RECONCILIATION OF NON-GAAP FINANCIAL Kown(osc) ES TO REPORTED FINANCIAL MEASURES NET DEBT TO EBITDA LEVERAGE RATIO CALCULATION Fv18 Fy19 Fv20 Fy21 Fv22 Net debt (10,347) 30,129 31,899 19,745 $24,022 EBITDA 21,087 29,823 (30,201) «3,562 (21,593 Leverage Ratio (0.5) 10x (tx 5.5K tak 27