Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Investor Presentation (May 2019)
32 slides from Twin Disc's investor presentation, May 7, 2019
Slide 1: Investor Presentation
a INVESTOR PRESENTATION
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 ATA GLANCE = Foundedin 1918 m= Headquartered in Racine, WI = ~900 employees (incl. Veth) = Designer and manufacturer of heavy duty power transmission equipment = Aglobal company — Manufacturing operationsin the U.S., Belgium, Netherlands, Italy, Switzerland and Japan (JV) - World-wide dist
Slide 5: Geographic Diversity
GEOGRAPHIC DIVERSITY "Manufacturing location ‘= North American oil and gas markets drivingincrease in FY18/19 ‘= European segment has been relatively recent years, Veth driving FY19 = Asia Pacific sales have experienced strong recovery in FYI and into FY18. "NOSE SRY COTERTE RT merece, 3 Te Company
Slide 6: Twin Disc Strategic Priorities
TWIN DISC STRATEGIC PRIORITIES ® Continued growth in land-based transmission business = Development of hybrid technologies for diesel applications Integration of Veth Propulsion acquisition Increased focus on controls and system integration rather than individual components North American footprint
Slide 7: Marine & Propulsion - Work Boat / Commercial Marine
MARINE & PROPULSION - work BOAT / COMMERCIAL MARINE Target Markets Diesel powered planning & displacement vessels 30'~250. Products = transmissions Asmat ‘hres = propellers facet -MCD's 3 Is ope ~ ¥ cm cms = European market remains stable Customers = Asian growth rebounded in FY18/19. — Long term gr
Slide 8: Marine & Propulsion - Pleasure Craft
MARINE & PROPULSION - pLeasure cRart > Te SE High speed diesel powered planing & displacement yachts 50’ ~ 150". Products @ ’ as & seerng a sutce nal ne Dives sytem oe ~ Market remains stable but off historic highs, some market share gains recentiy — EJs™ introduced and established strong Market Dyn
Slide 9: Marine & Propulsion - Patrolcraft
MARINE & PROPULSION - patroLcrart Target Markets High speed diesel powered planing & Alsplacement yachts 50’ ~ 1507 Products @ ame Be i, < & ~ Experienced recent growth as demand for coastal securing applications has increased globally. = Expect long term growth to continue. — Demand for high perfor
Slide 10: Recent Acquisition: Veth Propulsion Overview
RECENTACQUISITION: VETH PROPULSION OVERVIEW (owm(osc) ‘TRANSACTION OVERVIEW & BUSINESS DESCRIPTION END MARKET BY SHIP TYPE ‘= Acquired Veth Propulsion for €49.7 milion; additional consideration of up to £€3.3 milion payable in Twin Disc common stockif certain earn-out provisions aremet comer nana Ma
Slide 11: Strategic Rationale for Veth Propulsion Acquisition
STRATEGIC RATIONALE FOR VETH PROPULSION ACQUISITION QRAARA RAR Complementary product offering with exposure to new technologies Additive engineering talent and product development capabilities Acceleration of hybrid technology strategy End market diversification away from land-based energy markets a
Slide 12: Land Based Transmission Products
LAND BASED TRANSMISSION PRODUCTS FEE eE Diesel powered off-highway and all-terrain specialty vehicles 400hp ~ 3000hp. Products : 5 “AOO.SOH Fracking _TA00-750 racing TOOL-INO ARF > SS Dace nga ol pices 20 cased op Sonor ie FI? = Sanat toshpunte ott mera nr 5 © SSS er toro Market Dynamics ene = age e
Slide 13: Industrial Products
INDUSTRIAL PRODUCTS Tee SN Heavy duty industrial disconnect applications. Products $ ae Mechanical &hyeravl sie & cute ) rin romporie 1+ North American Energy Rested = Impacted by falloeil prices beginning in V25 Demand recovered in 47 though FYIB as North American oll & gasimaret recovered , = Twin
Slide 14: FY20 Growth Outlook
FY20 GROWTH OUTLOOK = Marine markets are beginningto accelerate Asian commercial marine markets softenedinFY15-FY17, but experienced significant recoveryin FYAB and FY19 Longer term, this remains a potential high growth market for the Company's products North American commercial marine (non-oiland g
Slide 15: Financial Overview
FINANCIAL OVERVIEW Cwin(bisc,)
Slide 16: Q3 Performance
Q3 PERFORMANCE INET SALES mba Voth EARNINGS PER SHARE ° oe oa 008 in . " ‘ | rns no Confidential Slight softening in 0&G demand, following significant ramp up. = Global marine demand stable. = Industrial demand acceleratingwith new products, up 29%, ‘Veth demand strong following acquisition. Volume
Slide 17: Leverage Profile
LEVERAGE PROFILE TOTAL DEBT (21 offering proceeds educed net leverage, which had increas significantly following the Veth Propulsion acquisition, allowing Twin to,remain fesible to capitalize on market conditions and be i nstic wth attractive future MBA opportunities ry es a ® Boe Boe 2 ala ei tei i
Slide 18: Historical Financial Performance - Q3 YTD
HISTORICAL FINANCIAL PERFORMANCE - Q3 YTD GROSS MARGIN NET INCOME sus 6 £FY19 margins impacted by purchase accounting ‘amortization, approximately 140 basis points. FY18 gross margins were favorably impacted by higher sales volume and a favorable product mix, primarily related to increased demand fr
Slide 19: Product Images
PRODUCT IMAGES Cwin(bisc,)
Slide 20: Marine & Propulsion Products
MARINE & PROPULSION PRODUCTS Ser ra ori Marine Transmission Marine Transmission Marine Control Drive MGx5065 MGx5600 (mco) 270hp-570np 1300hp-2100hp 5 Models 21Shp—6035hp
Slide 21: Marine & Propulsion Products
MARINE & PROPULSION PRODU we tw ——— _— Ss Se «4 Controls ps Express Joystick
Slide 22: Marine & Propulsion Products - Veth
MARINE & PROPULSION PRODUCTS - VETH ~~ & Tunnel Thrusters ZDrives LDrives Veth-Jet Diesel Engines / Electronics Generator Sets
Slide 23: Transmission Products
TRANSMISSION PRODUCTS (owm(osc) TA9O-8501 TA90-7500 ‘TD61-1180 racing Transmission racing Transmission AREF Transmission -3000hp (2300KW) 2600hp (1939kW) 7OShp (526KW)
Slide 24: Transmission Products - Frac Rig Diagram
TRANSMISSION PRODUCTS Frac Rig Diagram
Slide 25: Power Take-Off
Power Take-Off P1200 Released 3/16 Clutch Gear Box Universal Control Drive
Slide 26: Hybrid System - Sample Schematic
HYBRID SYSTEM - SAMPLE SCHEMATIC Frwn(osc) ‘20:Pone eatery Monger Company ‘ata En anagonen amo F721 Delo ter fer “conta Sales / Product Management £20: Form Hybrid Applicaton & lastalation Team £20: Determine Sales Chanel to Market 21: Hite Hybrid Specialist fr Service FY'22: Full Hybrid System Laun
Slide 27: Drivers Impacting Marine Hybrid Adoption
DRIVERS IMPACTING MARINE HYBRID ADOPTION 1. Regulation to reduce emissions 3. Economics of doing business ‘woe smenycotranma, a ‘inancial incentives to go hybrid Intemational Maritime Organization (UN) sulfur reduction initiative for the global shipping industry e Me + Reduce emissions by 50% by 205
Slide 28: Appendix
APPENDIX Cwin(bisc,)
Slide 29: Reconciliation of Net Income to EBITDA
RECONCILIATION OF NETINCOMETO EBITDA &> ets ssse2 sucess sor smo B Confidential
Slide 30: Income Statement Summary - Q3 YTD
INCOME STATEMENT SUMMARY - Q3 YTD &> Morn 236% ae aes aes MEA epee 3.905 aan 01s 55260 esrctring mosiment ~» 4000 2500 8 other Operating Ince) gente co E wasn Inert tnense 6 26 a ase 0 / 260 wa, 208 608 oo cass) (oo8) 8 oa (5500) (ssa) sua sre Pn Confidential
Slide 31: Non-GAAP Financial Disclosures
NON-GAAP FINANCIAL DISCLOSURES Non-GAAP Financial isclosures 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 are
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