Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Baird Industrial Conference (November 2022)
32 slides from Twin Disc's conference presentation, Nov 10, 2022
Slide 1: Baird Industrial Conference
ea BAIRD INDUSTRIAL CONFERENCE CEO: John Batten CFO: Jeffrey Knutson
Slide 2: Safe Harbor Statement
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 subject to risks and uncer
Slide 3: Twin Disc Overview
TWIN DISC OVERVIEW
Slide 4: Twin Disc at a Glance
TWIN DISC AT A GLANCE Founded in 1918 Headquartered in Racine, WI — 7800 employees Designer and manufacturer of heavy duty power transmission equipment A global company = Manufacturing operations in the U.S., Belgium, Netherlands, Italy, Switzerland and Japan (JV) — World-wide distributor network —
Slide 5: Geographic Diversity
GEOGRAPHIC DIVERSITY > ‘# Manufacturinglocation © Company owned distribution / service location Purchasing / sourcing offices oH, = Focus on European structure a es simplification and back office * consolidation. e? Sold Swiss facility in FY22. ™ Sold one Italian facility in FY22. Agreement to sell
Slide 6: Twin Disc Strategic Priorities
TWIN DISC STRATEGIC PRIORITIE ™ Leading hybrid/electric solution provider for niche marine and land-based applications. ™ Continued expansion of Veth product reach to new markets and geographies. @ Rationalize global footprint for efficiency and customer response. ™@ Increased focus on controls and
Slide 7: Hybrid Electric - Land Based / E-Frac
HYBRID ELECTRIC - LAND BASED / E-FRAC * Initial E-Frac applications achieving performance beyond expectations. * Significant volume anticipated starting in late FY23. * Signed 18 month exclusive agreement with Sewart Supply Grizzly Manufacturing is excited to be partnering with Sewart —— Supply Inc
Slide 8: Hinckley Yachts
{ij = “=O HINCKLEY YACHTS Confidential => Hinckley Silent Jet combines benefits of diesel/electric propulsion Seamless transition between diesel and electric power. Benefits of silent operation under electric power or high performance diesel propulsion. Partnered with Twin Disc to supply entire inte
Slide 9: Hybrid Electric - Passenger Vessel
HYBRID ELECTRIC — PASSENGER VESSEL d of the Mist Confidential Two all-electric catamarans launched in 2020. Utilizing Veth L-Drives powered by lithium-ion batteries and sourced from Niagara Falls. No diesel fumes, no exhaust stacks obscuring views and no noise to compete with the falls. Take about s
Slide 10: Marine & Propulsion - Work Boat / Commercial
MARINE Target Markets Diesel powered planning & displacement vessels 30" - 250’. Products - transmissior Azimuth: - propellers Uiatinly Transmissions. - MCD’s - controls Aaa; OB. Be. — European market remains stable — Asian growth rebounded in FY18/19. = Long term growth in Asia, Latin America and N
Slide 11: Marine & Propulsion - Pleasure Craft
Target Markets Products - trans propeller controls - Arneson surface drives Market Dynamics TWIN DISC sTRICTL ‘ONFIDENTIAL 8 MARINE & PROPULSION - Pleasure CRAFT High speed diesel powered planing & displacement yachts 50’ - 150’. @ ‘Transmissions surface Tim * brves ES systems Controls = Market rema
Slide 12: Marine & Propulsion - Patrol Craft
MARINE & PROPULSION - patroL cRAFT Te ea SEE High speed diesel powered planing & displacement yachts 50’ - 150. Products @ bi 7 ‘transt 1 propelle ange ‘Transmissions Steering : 4A ie aes Ciera — Experienced growth in FY17-FY19 as demand for coastal security applications has increased globally. Mark
Slide 13: Land Based Transmission Products
LAND BASED TRANSMISSION PRODUCTS Te en Diesel powered off-highway and all-terrain specialty vehicles 400hp — 3000hp. ef @ TA90-0501 Fracking _TA90-7500Fracking 1061-1180 ARFF Transmission Transmision Transmission Pressure Pumping: = Traditionally cyclical market = Weak NA market in FY20 and into FY2
Slide 14: Industrial Products
INDUSTRIAL PRODUCTS Gece CS Heavy duty industrial disconnect applications. WiGENS ’ Power Take Of M 8 sPaid & ‘North American Energy Relatect = Cyclical market with strong share. —Umited market activity through FY20, into FY21 = Irrigation & Pumping Applications: — Power take-off and industrial gear
Slide 15: Financial Overview
FINANCIAL OVERVIEW
Slide 16: Financial Performance
FINANCIAL PERFORMANCE NET SALES. Senta S00 26a woo 2s008 - 20 — = Weak O&G demand in FY20 and FY21, 200 growing through FY22. 150 = All markets negatively impacted by COVID- 100 19 pandemic. 30 = All markets showing sustained demand, ° with headwinds from inflation and supply 20 ra wva2 ™ chain. EAR
Slide 17: Net Sales Diversity
NET SALES DIVERSITY NET SALES BY CATEGORY (saan miVarine mLand-Based mindustrial mOther g . Marine segment includes marine transmissions, controls, azimuth thrusters, surface drives, propellers hoo and boat management systems. pe = Land-Based Transmission products include loo applications for oilfie
Slide 18: Historical Financial Performance
HISTORICAL FINANCIAL PERFORMANCE GROSS MARGIN 203% 226% 233% 0 pos ree NET INCOME enter) sea saa 3120) $398) TWIN DISC - STRICTLY CONFIDENTIAL a Confidential Reduced volume, due to impact of COVID-19 on global ‘demand, along with poor product mix impacted GP%. Product performance issue recorded in Q
Slide 19: Financial Targets - Medium Term
FINANCIAL TARGETS - MEDI $400M Revenue 30% Gross Profit 60% FCF Conversion Hybrid/electric leadership Veth global expansion Industrial focus Acquisitions * European cost structure * Operational efficiencies * Greater pass-through content (lower margin) Supply chain processes Manufacturing footprint
Slide 20: Product Images
PRODUCT IMAGES >
Slide 21: Marine & Propulsion Products
MARINE & PROPULSION PRODUCT: STE snr Tr’ STE SHir Tr eave got oi bale Tove po lot baer Marine Transmission Marine Transmission Marine Control Drive MGX 5065 MGX 5600 (Mcp) 270hp-570hp 1300hp - 2100hp 5 Models 215hp—6035hp TWIN DISC STRICTLY CONBIDENTIAL
Slide 22: Marine & Propulsion Products
MARINE & PROPULSION PRODUCTS > ‘BY TWIN DISC Surface Drive Controls Cano, Express loystick ‘TWIN DISC - STRICTLY CONFIDENTIAL
Slide 23: Marine & Propulsion Products - Veth
MARINE & PROPULSION PRODUCTS - VETH Krwn(isc) = & Tunnel Thrusters Z-Drives L-Drives Veth-Jet Diesel Engines / Electronics Generator Sets TWIN DISC- STRICTLY CONFIDENTIAL
Slide 24: Transmission Products
TRANSMISSION PRODU S&> “Ty TASO-8501 TASO-7500 7D61-1180 Fracing Transmission Fracing Transmission ARFF Transmission 3000hp (2300kW) 2600hp (1939kW) Toshp {526kW) ‘TWIN DISC - STRICTLY CONFIDENTIAL
Slide 25: Frac Rig Diagram
Slide 26: Industrial Products
USTRIAL PRODU S&> Released 3/16 ‘SP314 Clutch Gear Box Universal Control Drive ‘TWIN DISC - STRICTLY CONFIDENTIAL
Slide 27: Hybrid System - Sample Schematic
HYBRID SYSTEM - SAMPLE SCHEMATIC Hybrid Contra Team FY'20: Form Hybrid Application & Installation Team £Y'20: Determine Sales Channel to Market FY'21: Hire Hybrid Specialist for Service FY22: Full Hybrid System Launch ‘TWIN DISC - STRICTLY CONRIDENTIAL a P20: Partner w/ EAtotor Maker Custom and/or O
Slide 28: Drivers Impacting Marine Hybrid Adoption
DRIVERS IMPACTING MARINE HYBRID ADOPTIO} > 1. Regulation to reduce emissions . International Maritime Organization (LIN) sulfur reduction initiative for the global pebdiccceptlaaaaaal shipping industry {GANIZATION J + Reduce emissions by 50% by 2050 “Black smoke" reduction initiatives in urban areas
Slide 29: Appendix
APPENDIX >
Slide 30: Reconciliation of Net Income to EBITDA
RECONCILIATION OF NET INCOME TO EBITDA (Sin mowsans) Nelo (s3917) (529,719) Income Taxes am. (4.265) TWIN DISC - STRICTLY CONFIDENTIAL B Confidential
Slide 31: Income Statement Summary - Q1
INCOME STATEMENT SUMMARY - Q1 <> (sm thowonds) Gross Profit 9636 1027 13907 13297 Mergin 163% 22.3% 702% 23.8% MEA Expense 16,306 Bon 13001 sso78 Restructuring impakment. m2 105, 2.351) 10 Amores Expense 389 ss 530 66 Ms. Exp (he) cn sass 355 260 Pretax Eaming ($7911) ($4966) $2382 ($2,619) Income T
Slide 32: Non-GAAP Financial Disclosures
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 measures that management believes ar
Twin Disc — Baird Industrial Conference (November 2022) on 6ix