Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Q1 2020 Earnings Presentation
32 slides from Twin Disc's earnings presentation, Nov 4, 2019
Slide 1: Investor Presentation First Quarter Fiscal 2020
INVESTOR PRESENTATION First Quarter Fiscal 2020
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 — ~900 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 4 Manufacturing location @ Company owned distribution / service location —_@ Purchasing / sourcing offices * oe * oe e e ee? = North American oil and gas markets driving increase in FY18/19 . Rest of = European segment has been relatively world stable in recent years, Veth drivi
Slide 6: Twin Disc Strategic Priorities
TWIN DISC STRATEGIC PRIORITIES = Continued growth in land-based transmission business m= Development of hybrid technologies for diesel applications @ Integration of Veth Propulsion acquisition m Increased focus on controls and system integration rather than individual components = North American foo
Slide 7: Marine & Propulsion - Work Boat / Commercial
MARINE & PROPULSION - work BoAT / COMMERCIAL MARINE Target Markets Diesel powered planning & displacement vessels 30’— 250’. Products - transmissions Azimuth , Thrusters - propellers ransmissions - MCD’s - controls ois. a MCDs Propellers — European market remains stable — Asian growth rebounded in F
Slide 8: Marine & Propulsion - Pleasure Craft
MARINE & PROPULSION — PLEASURE CRAFT Trwn(osc) Target Markets High speed diesel powered planing & displacement yachts 50’ — 150’. @ 5 * Gene! Transmissions Steering feral = Arneson surface drives - BS * -trim systems ~ steering ‘Surface Trim Controls Drives Bs ‘Systems — Market remains stable but of
Slide 9: Marine & Propulsion - Patrol
MARINE & PROPULSION - patRoL High speed diesel powered planing & displacement yachts 50’ — 150’. @ = *% Transmissions Steering Propellers N eo — / SS vA = - steering ores ae Drives Bs systems Controls — Experienced recent growth as demand for coastal securing applications has increased globally. = r
Slide 10: Recent Acquisition: Veth Propulsion
RECENT ACQUISITION: VETH PROPULSION OVERVIEW TRANSACTION OVERVIEW & BUSINESS DESCRIPTION END MARKET BY SHIP TYPE = Acquired Veth Propulsion for €49.7 million; additional consideration of up to. €3.3 million payable in Twin Disc common stock if certain earn-out provisions are met Other 21% = Financed
Slide 11: Strategic Rationale for Veth Propulsion Acquisition
STRATEGIC RATIONALE FOR VETH PROPULSION ACQUISITION 4 4 4 4 HAA 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
Slide 12: Land Based Transmission Products
LAND BASED TRANSMISSION PRODUCTS <> Target Markets Diesel powered off-highway and all-terrain specialty vehicles 400hp — 3000hp. & TA90-8501 Fracking _TA90-7500 Fracking __TD61-1180 ARFF Transmission Transmission Transmission = Pressure Pumping: = Decline in global oi s in 2015 caused drop in = Star
Slide 13: Industrial Products Markets
Markets | Heavy duty industrial disconnect applications. Power Take-Off SP314 Power Take-Off HP1200 = North American Energy Related: = Impacted by fall of oil prices beginning in FY15 — Demand recovered in FY17 through FY18 as North American oil & gas market recovered - Twin Disc gained market share
Slide 14: FY20 Growth Outlook
FY20 GROWTH OUTLOOK = Marine markets are beginning to accelerate — Asian commercial marine markets softened in FY15-FY17, but experienced significant recovery in FY18 and FY19. e Longer term, this remains a potential high growth market for the Company’s products. — North American commercial marine (
Slide 15: Financial Overview
FINANCIAL OVERVIEW a>
Slide 16: Q1 Performance
Q1 PERFORMANCE Fv (oss NET SALES (Sinmitlons) m Weak O&G demand in FY20 following strong FY19. 40 = Global marine demand stable. 30; m Industrial demand growth trend 20 . 40 continues. oO a: FY17 FY18 FY19 Veth activity remains strong. FY20 ™Base mVeth EARNINGS PER SHARE is 0.24 m FY20 impacted by v
Slide 17: Net Sales Diversity
NET SALES DIVERSITY NET SALES BY CATEGORY (Sin milions) 20; Marine mLand-Based windustrial_m Other m Marine segment includes marine transmissions, controls, surface drives, propellers and boat management systems. lz A r m= Land-Based Transmission products include applications for oilfield and natura
Slide 18: Historical Financial Performance - Q1
HISTORICAL FINANCIAL PERFORMANCE - Q1 GROSS MARGIN Sony 32.1% 16.3% ; Z a Fva7 Fvig Fvis FY20 NET INCOME (Sin millions) $3.4 $29 a SS neo) 5 Ea $(2.7) ru isc sete cERBERTUES remem een an ra Confidential Product performance issue recorded in Q1 impacted FY20 by 660 basis points. Excluding this, margi
Slide 19: Product Images
PRODUCT IMAGES a>
Slide 20: Marine & Propulsion Products
MARINE & PROPULSION PRODUCTS Susur Susur You've got to feelit to believe it You've gotto feelit to believe it Marine Transmission Marine Transmission Marine Control Drive MGX 5065 MGX 5600 (MCD) 270hp—570hp 1300hp— 2100hp 5 Models 215hp—60325hp TWIN DISC - STRICTLY CONFIDENTIAL
Slide 21: Marine & Propulsion Products
ap MARINE & PROPULSION PRODUCTS ¥en Surface Drive w ROLLA A Twin Disc Company Controls EC 300 Express Joystick TWIN DISC - STRICTLY CONFIDENTIAL
Slide 22: Marine & Propulsion Products - Veth
MARINE & PROPULSION PRODUCTS - VET Frwns(sc BF be Tunnel Thrusters Z-Drives L-Drives Veth-Jet Diesel Engines / Electronics Generator Sets TWIN DISC - STRICTLY CONFIDENTIAL
Slide 23: Transmission Products
TRANSMISSION PRODUC TAS0-8501 TAS0-7500 TD61-1180 Fracing Transmission Fracing Transmission ARFF Transmission 3000hp (2300kW) 2600hp (1939kW) 705hp (526kW) TWIN DISC - STRICTLY CONFIDENTIAL
Slide 24: Frac Rig Diagram
Frac Rig Diagram Engine Transmission * 4 TWIN DISC ~ STRICTLY CONFIDENTIAL
Slide 25: Industrial Products
INDUSTRIAL PRODUC Pump Drive HP1200 Power Take-Off AM370 Released 3/16 SP314 Clutch Gear Box Universal Control Drive TWIN DISC - STRICTLY CONFIDENTIAL
Slide 26: Hybrid System - Sample Schematic
HYBRID SYSTEM — SAMPLE SCHEMATIC FY'19:Build Dedicated Hybrid Control Team Diese Driven Generator Diesel Driven Generator SHORE Ss Diesel Driven Generator Hotel Load Grid static Converter Generator [2] controtler ‘Thruster ‘Veth Propulsion Controller Controller FY'21: Develop Master Control System F
Slide 27: Drivers Impacting Marine Hybrid Adoption
DRIVERS IMPACTING MARINE HYBRID ADOPTIO Crwn(ois 1. Regulation to reduce emissions «International Maritime Organization (UN) KG sulfur reduction initiative for the global shipping industry * Reduce emissions by 50% by 2050 eselgate * “Black smoke" reduction initiatives in urban areas and major ports
Slide 28: Appendix
APPENDIX a>
Slide 29: Reconciliation of Net Income to EBITDA
RECONCILIATION OF NET INCOME TO EBITDA (Sin thousands) FY17 Fvi8 FY19 FY20 01 YTD Net income ($6,294) $9,528 $10,673 ($6,311) Income Taxes (3,414) 4773 374 (1,618) Interest Expense 303 282 1,927 389 Depreciation & Amortization 7,017 6464 13,612 2,926 Earnings beforeinterest, taxes, depreciation and
Slide 30: Income Statement Summary - Q1 YTD
INCOME STATEMENT SUMMARY - Q1 YTD (Sin thousands) FY17 Fvi8 FY19 FY20 Net Sales $35,835 $45,064 $74,689 $59,290 Gross Profit 9,173 13,895 23,985 9,636 96 Margin 25.6% 30.8% 32.1% 16.3% MEA Expense 12,475 13,668 18,986 16,346 Restructuring Impairment 258 1,218 173 frre Interest Expense 53 6a m7 389 M
Slide 31: 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
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