Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Investor Presentation (November 2017)
39 slides from Twin Disc's investor presentation, Nov 7, 2017
Slide 1: Twin Disc Incorporated Investor Presentation November 2017
Twin Disc, Incorporated Twin Disc Incorporated Investor Presentation November 2017
Slide 2: Safe Harbor Statement
jwin Disc, Incorporated Safe Harbor Statement This presentation contains statements that are forward-looking within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on management's current expectations that are based on assumptions that are su
Slide 3: Twin Disc At A Glance
Gwnn(DIsc)) Twin Disc, Incorporated Twin Disc At A Glance Founded in 1918 Headquartered in Racine, WI = 700 employees y Weare a global oe Be company — Mfg Operations in the a Mfg Operations in th od U.S., Belgium, Italy, v Switzerland and y Japan (JV) - World-wide distributor network hee) - Global:
Slide 4: FY 2017 Highlights
smo) ned FY 2017 — Highlights + Sales up 1% from FY ‘16 $ millions Sales $300 — Weak first half, followed by signs of $250 Tee recovery in 2" half. oy — NA O&G driving second half improvement. $100 — Continued softening in Asian demand for $50 commercial marine. ae” Erase viel © ORVa? — Weakness in
Slide 5: FY18 - 1st Quarter Highlights
qwin(pisc.) Twin Disc, Incorporated FY18 - 1S* Quarter Highlights $ millions $75 $60 FY15 $ millions 8 Sales FrI6 Fvir Net Earnings Fyte + Sales up 26% from Q1 of FY ‘17 — Significant NA O&G volume in Q1 FY18. — Aftermarket demand recovery continued in Q1. - Stability in industrial and marine market
Slide 6: Broad product offering with diverse market applications
aum(osc) ‘Twin Disc, Incorporated Twin Disc benefits from a broad product offering with diverse market applications. FY17 Product Mix Other 6.1% Industrial 17.1% Marine & Propulsion Sys 51.6% Product/Market Diversity Land-Based Transmission *Pressure pumping (O&G) Airport rescue & fire fighting Mili
Slide 7: Land-Based Transmission Systems
(o1sc.) Twin Disc, ncoported Land-Based Tra smission Systems « Pressure Pumping: — Achieved record units sales in fiscal 12 — Asian market, driven by China, has become a key source of demand and future growth. — Severe decline in global oil prices in'15 caused significant drop in demand into FY17. —
Slide 8: Marine & Propulsion Systems
wndsckeoposted Marine & Propulsion Systems + Commercial Marine: — Fiscal '15 softening in Asia following record years. — Fiscal '16 — '17 further decline in Asia demand, primarily due to China economy — European market remains stable but uncertain — Long term growth in Asia, Latin and North America
Slide 9: Industrial Products
Gwin(pisc) Twin Disc, incorporated ri al P rod u cts « North America Energy Related: — After a strong fiscal 2012, shipments and orders were impacted by oversupply in oil & gas markets. — Slight rebound in early FY15, followed by crash of oil prices. — Demand will grow as North American oil & gas ma
Slide 10: Geographic Diversity
=> Geographic Diversity + Sales to Asia Pacific peaked at 29% in Q1FY18 FY18 FY 14, declining through FY 17 with reduced O&G and economic downturn in China. + European segment relatively stable, following pleasure craft downturn in FY10/FY11. + North American O&G driving increase in FY18. FY2008 FY2
Slide 11: Managing Our Cost Structure
4win(bisc) Twin Disc, Incorporated Managing Our Cost Structure Actions + Announced $6M annual savings ($3.3M charge) in Q4 FY15. + Announced additional $4M annual savings in Q2 FY16 * Ongoing focus on global cost reduction. + Revamped operational approach in Racine driving productivity gains. Result
Slide 12: Improving Net Cash Position
Improving Net Cash Position $20,000 $10,000 so ($10,000) ($20,000) ($30,000) ($40,000) ($50,000)
Slide 13: Strategic Focus
=> Strategic Focus + Renewed focus on product development activities to drive Industrial product growth. * Ongoing efforts to acquire new products/technologies to diversify from O&G. + Remain poised with assets and production capability to benefit from O&G recovery and grow market share. + Establish
Slide 14: What Differentiates: Technology
(bisc.) Twin Disc, Incorporated W h at D iff Technology — Oil & Gas + 8500 Series 5 - Marine 1o00 Series + Patented QuickShift® + Express Joystick System® — \ — ARFF + “Pump & Roll” + Dynamic Positioning/DPII - Military + Rolla CFD * “Legacy” Contracts
Slide 15: What Differentiates
Gale oe What Differentiates * 98+ Years of Proven Application Know-How * Niche Market Focus * Global Distribution and Service Network + Product, Market & Geographic Diversity * Core Manufacturing Capabilities
Slide 16: Looking Ahead
Looking Ahead
Slide 17: Corporate Six Month Backlog
:) Twin Dise,nconorted CG Orporate Six Month Backlog $.millions $180 $160 Volatility driven — $140 by O&G cycles — $120 $100 $80 $60 $40 $20 $0 SDMJSDMJSDMJSDMJSDMJSDMJSDMJS FY Fy12 FY13 FY14 FY15 FY16 FYI7 FY18
Slide 18: Fiscal 2018 & Beyond Outlook
win Disc, Incorporated Fiscal 2018 & Beyond Outlook « North American Oil & Gas landscape key variable in near term outlook. — Recent order activity drives consistent volume through Q3 FY18. — Sustained aftermarket activity signals broader recovery. — Longer term sustainability of recovery unpredicta
Slide 19: Fiscal 2017 & Beyond Outlook
Twoorcrevponted Fiscal 2017 & Beyond Outlook * ARFF, Military and North American industrial markets are expected to remain stable. * Global industrial/transmission markets will remain mixed — European markets showing signs of improvement. — Asia continues to offer significant opportunities for above
Slide 20: Appendices
qwin(DIsc,) Twin Disc, Incorporated Appendices
Slide 21: Corporate Profile — Pleasure Craft Market
emi(oee) Twn Dis neomorted Appendix | Corporate Profile — Market Diversity Pleasure Craft Market: + Target Markets: High speed faning ang displacement yachts rom 50’ to 150’, diesel-powered + Products: Transmissions, Arneson Surface Drives, Propellers, Steering/Thruster/Trim Systems, Controls, EJS +
Slide 22: Corporate Profile — Work Boat Market
GED ices Appendix II Corporate Profile — Market Diversity Work Boat Market: * Target Markets: planing and displacement vessels from 30’ to 50’, diesel-powered + Products: Transmissions, Propellers, MCD’s, Controls » Channels: Engine OEMs & dealers, boat builders & distribution + Customers: CAT, Cumm
Slide 23: Corporate Profile — Patrol Boat Market
Gen (oc ea Appendix III Corporate Profile — Market Diversity Patrol Boat Market: * Target Markets: military, patrol and coast guard vessels from 30° to 90’, diesel-powered + Products: Transmissions, Arneson Surface Drives, Propellers, Steering/Thruster/Trim Systems, Controls, EJS * Channels: Engine
Slide 24: Marine Transmissions, Propulsion & Boat Management Systems
Twin Dise, corporates Appendix IV Corporate Profile — Market Diversity Marine Transmissions, Propulsion & Boat Management Systems EJS®/Electronic __ Controls a Arneson Surface Drives, Rolla Propellers, Drivelines We have been successful “packaging” more marine products + Increasing content and value
Slide 25: Corporate Profile — Industrial Products
GED ices Appendix V Corporate Profile — Market Diversity Industrial Products: * Target Market: Heavy duty industrial disconnect applications * Products: Mechanical & hydraulic clutches, PTOs, reduction gearboxes & pump mount drives, 100 - 2,500 HP + Channels: Distribution & OEMs + Customers: Bandit,
Slide 26: Corporate Profile — Industrial Transmissions
GED ices Appendix V Corporate Profile — Market Diversity Industrial Transmissions: + Target Market: Off-highway and all-terrain specialty vehicles, diesel powered + Products: Powertrain components - 400 to 3,000 HP * Channel: OEM vehicle mfrs. & Distribution + Customers: BAE, Rosenbauer, Oshkosh, Ta
Slide 27: Marine Products
wn osc.heopoated Marine Products - Appendix VI STE sui-r STAI SHir-r Tove goto ole bloe Tove got fol ole Marine Transmission Marine Transmission Marine Control Drive MGX 5065 MGX 5600 (McD) 270hp - 570hp 4300hp - 2100hp 5 Models 245hp - 6035hp
Slide 28: Marine Products
com(osc) wn dscreopoates Marine Products - Appendix VI Arneson By IWIN Disc Surface Drive wv ROLLA ‘Thin Die Company Controls - EC 300 Express Joystick
Slide 29: Fracing and ARFF Transmissions
TA90-8501 TA90-7500 TD61-1180 Fracing Transmission Fracing Transmission ARFF Transmission 3000hp (2300kW) 2600hp (1939kW) 705hp (526kW)
Slide 30: Industrial Products
(osc) twin dsc, eoportes INGUStrial Products - Appendix VI Power Take-Off Pump Drive HP1200 Power Take-Off AM370 Released 3/16 pas Gear Box Universal Control Drive
Slide 31: Land-Based Products: Pressure Pumping
‘Twin Disc, Incorporated Land-Based Products Pressure Pumping Remaining re 1990 2000 2010 202020002040 2020
Slide 32: Frac Rig Diagram
Twin((pisc.) Twin Disc, Incorporated Appendix Vil Frac Rig Diagram Engine Transmission Pump
Slide 33: EBITDA
pen Dedeaerer! Appendix VIII EBITDA (See Appendices IX & X for note on non-GAAP Financial Disclosuresand a reconciliation ofnet earings to EBITDA) $ millions % sales $70 20% $60 ON 10.0% 15% $50 i A% TAY ee Roe ie $30 \ 5% $20 \ 1.4% _ $10 i ee Famine $0 9.7%, $0.2 5% ($10) | FYI1 Fvi2__FYi3_Fyt4_FY
Slide 34: Non-GAAP Financial Disclosures
Twin Dist, Incorporated Appendix IX Non-GAAP Financial Disclosures Non-GAAP Financial Disclosures Financial information excluding the impact of certain significant items in this presentation are not measures that are defined in U.S. Generally Accepted Accounting Principles ("GAAP"). These items are
Slide 35: Reconciliation of Net Earnings to EBITDA
ED sie Appendix X Reconciliation of Net Earnings to EBITDA in $ thousands, except% data TM =. 2017-2046 2015 2014 20132012 2011 Net Earnings S (207) $ (6,295) $ (13,104) $ 14,173 $ 3,644 $ 3,882 $ 26,743 $ 17,997 Income Taxes (7,020) (3,414) (12,282) 4815 4,226 4.986 17,815 13,897 Interest Expense 3
Slide 36: Reconciliation of TTM Data to Reported Quarterly Figures
Ceuav(Ose) Twin Ds neapoated Appendix XI Reconciliation of TTM Data to Reported Quarterly Figures BE] Rae A OE OIE NI] EM ore | Oo Sales $310,393 | $266,970 | $285,282 | s 253.909 | $266,700] s 166,282] s 35.035 $23,672 $ 46.004 $ 53.500| $169.193|s 45.064| s177.412 Gross Prot 1o7883| 121632| en02|
Slide 37: Fiscal Year Condensed Consolidated Statements of Operations
Gen (oc ea Appendix XII Fiscal Year Condensed Consolidated Statements of Operations (S thousands, per Form 10K) _2017 2016 2015 2014 2013 2012, sales $ 168,192 $ 166,282 $ 265,790 $ 263,909 $ 295,282 $258,870 Gross Profit 48,202 40,595 83,092, 77,254 80,025 121,602 28.7% 244% 31.2% 29.3% 28.4% 94.2%
Slide 38: 1st Fiscal Quarter: Condensed Consolidated Statements of Operations
Gen (oc ea Appendix XIII 1st Fiscal Quarter: Condensed Consolidated Statements of Operations (6 thousands, unaudited) 2018 2017 2016 2015 2014 2013 Sales S 45,064 $ 35,835 $ 37,373 $ 64824 $ 66,426 $ 68,793 Gross Profit 13,895 9,173 8190 22.389 -20,667 19,416 30.8% 25.6% 21.9% 345% = 31.1% = 28.2% M
Slide 39: Operating Cash Flows — Fiscal Year
Appendix XIV Operating Cash Flows — Fiscal Year $ millions % sales $30 16% 5 14% 12% $20 8%, bod eal 10% $15 me 8% sto | fey ho PS 6% 4% " o, 2.5% $5 ry o% $0 0% FY11 FY12) FY139 FY14—FY15 FY16 FY17)-TTM* '==Cash Flows from Operations —*- % of Sales * See Appendix X for reconciliation of TTM figures