Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Investor Presentation (February 2008)
34 slides from Twin Disc's investor presentation, Feb 25, 2008
Slide 1: Twin Disc, Incorporated
Gwn((Dsc.) Twin Dise, Incorporated al NOTE: All EPS figures contained in these presentation materials have been adjusted for the January 2008 2-for-1 stock split.
Slide 2: Safe Harbor Statement
Twin 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
Incorporated Twin Disc At A Glance Founded in 1918 Headquartered in Racine, WI 1,000 employees We are a global company — Well-known customers around the world — Operations in the U.S., Italy, * Manufacturing Belgium, Switzerland and @ TDI Distributors Japan ie) — World-wide distributor @ Service Dea
Slide 4: FY 2008 Financial Highlights
‘Twin Disc, Incorporated FY 2008 Financial Highlights Record 1st & 2"4 Quarter Sales — Continued growth from mega-yacht and commercial marine markets — Strong demand for land based transmission products for the Airport Rescue and Fire Fighting (ARFF) and military markets — Experiencing cyclical soft
Slide 5: Key Investment Highlights
Twin(bisc.) Twin Disc, Incorporated Key Investment Highlights « Added To Russell 2000 Index * Two 2-for-1 Stock Splits (last 2 years) * Three Dividend Increases (last 2 years) « Share Repurchase Program ¢ Strong Balance Sheet February 25, 2008 5
Slide 6: Marine Markets
Gwn(bsc) ‘Twin Disc, Incorporated Marine Markets February 25, 2008
Slide 7: Marine Systems
*) ‘Twin Dise, Incorporated Marine Systems Marine Transmissions, Propulsion & Boat Management Systems Electronic Controls = Anchor Winches Power Steering { eq _ Bow Thrusters February 25, 2008 7
Slide 8: Marine Systems
Twin Disc, Incorporated Marine Systems February 25, 2008 Target Markets: Pleasure, commercial & military boats 30° to 250° Products: Transmissions, Surface Drives, Propellers, Steering/Thruster/Trim Systems Channels: Engine OEMs & dealers & boat builders Customers: CAT, Cummins, MAN, MTU, Volvo / Az
Slide 9: Transmission Systems
Gwnn(bsc) ‘Twin Disc, Incorporated Transmission Systems February 25, 2008
Slide 10: Transmission Systems
Twin Disc, Incorporated Transmission Systems Transmissions Torque Converters Electronic Controls * Target Market: Off-highway and all-terrain specialty vehicles + Products: Niche products - 400 to 3,000 HP * Channel: OEM vehicle mfrs. ¢« Customers: BAE, Oshkosh, Tatra / BJ Services, Cisco High-Lift,
Slide 11: Industrial Products
Industrial Products February 25, 2008 1
Slide 12: Industrial Products
Twin Disc, Incorporated Industrial Products Clutches PTOs Torque Converters = Variable Speed & Starting Drives * Target Market: Heavy duty industrial disconnect appins * Products: Mech & hyd clutches, ~ PTOs & pump mount drives - 100 - 2,500 HP * Channels: Distribution & OEMs * Customers: Bandit, Mo
Slide 13: Technology Differentiation
) Twin Disc, Incorporated Technology Differentiation « Land-Based « Marine — 8500 Series — QuickShift® — “Pump & Roll” — Dynamic Positioning — “Legacy” Contracts — Rolla CFD — Electronic Control — Electronic/Hydraulic Systems Boat Management Systems February 25, 2008 13
Slide 14: Managing Our Cost Structure
Managing Our Cost Structure Investing in Core Competencies ——— q ~ | o February 25, 2008 14
Slide 15: Managing Our Cost Structure: Global Sourcing
(Twin((Disc,) Twin Disc, Incorporated Managing Our Cost Structure Global Sourcing Sourcing Offices February 25, 2008
Slide 16: Net Sales & Net Earnings
‘Twin Disc, Incorporated Net Sales & Net Earnings {itions (Fiscal Year) - sasa_2iNigns = $243 io ~ | + $20 a $219 5 $200 +186 a + $15 $150 | so $100 ; Le $50 | #8 $0 ] ] $0 FY04 FYO5 FY06 FYO7 = TTM* Net Sales -* Net Earnings * See Appendix Ill for reconciliation of TTM (trailing 12 month) figures t
Slide 17: Net Sales & Net Earnings (First Fiscal Half)
') Twin Disc, Incorporated Net Sales & Net Earnings (First Fiscal Half) $ millions $ millions $200 $10 $150 7 $8 | $6 $100 + $4 $50 1 § $0 $0 FY04 FY05 FY06 FY07 FY08 Net Sales -*- Net Earnings February 25, 2008 17
Slide 18: Consolidated Earnings Per Share
‘Twin Disc, Incorporated Consolidated Earnings Per Share (Diluted) $0.70 $0.64 $0.60 $0.48 $0.48 om $0.41 $0.44 $0.40 $097 50:82 $0.31 al 0.30 z $ $0.25 sa! FY04 FY05 FY06 FY07 FY08 1st Qtr M 2nd Qtr @ 3rd Qtr M@ 4th Qtr February 25, 2008 18
Slide 19: EBITDA
‘Twin Disc, Incorporated EBITDA (See Appendices | & II for note on non-GAAP Financial Disclosures and a $0 reconciliation of net earnings to EBITDA) % “et fo 14.0% 13.5% 12.5% _—_—_——— + 14% $40 7 $44: tamed |. 120% $30 93% A + 10% : TA%/) ; al EY $30.5) + go $20 i 4 gay 48 y, $17.4 $16.2 + A% $ 62.
Slide 20: Debt & Debt to Total Capital
) Twin Disc, Incorporated Debt ($) & Debt to Total Capital (%) $60 37% $55.5, 40% Jt 35% $50 : 6 | 30% $40 + “ 5 2 27h | p 25% S s30 + 20% = 21.3 = . 4+ 15% $20 | ° | + 10% 10 $ + 5% $0 0% FY99 FY00 FYO1 FY02 FY03 FY04 FY05: FY06 FYO7 Q1'08 Q2'08 1* half cash outflows included — * Stock Repurchases
Slide 21: Corporate Six Month Backlog
Corporate Six Month Backlog (Orders to be shipped in the next 6 months) $ millions 140 120 100 » | li JSDMJSDMJSDMJSDMJSDMJSDMJSDMJSDMJSD FYy99 FY0O FY01 FY02 FY03 FY04 FY05 FY06 FYO07 FYO08 February 25, 2008 21
Slide 22: Fiscal Year 2008 Outlook
Twin Disc, Incorporated Fiscal Year 2008 Outlook FY 2008 will be another good year Cyclical softening continues in industrial markets Slow down in demand for oil and gas transmissions Key markets will remain strong — Outlook for mega-yachts is bright — Activity in crew & supply boats is solid — Dema
Slide 23: Fiscal Year 2008 Outlook
Twin(Disc,) Twin Dise, Incorporated Fiscal Year 2008 Outlook Technology differentiation/new products Opportunity for operating leverage continues — Increasing volume — Expanding global outsourcing — Investing in core competencies Active Acquisition Program Board authorized repurchase of up to an 500
Slide 24: fn Disc, Incorporated
fn Disc, Incorporated
Slide 25: Appendices
Appendices
Slide 26: Appendix I: Non-GAAP Financial Disclosures
Twin Disc, Incorporated Appendix | 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 m
Slide 27: Appendix II: Reconciliation of Net Earnings to EBITDA
Twin Disc, Incorporated Appendix II Reconciliation of Net Earnings to EBITDA in $ thousands, except % data 2003 2004 Net Earnings $ (2,394) $ 5,643 Income Taxes (300) 4,964 Interest Expense 1,323 1,078 Depreciation & Amortization §,673 5,692 4,302 $ 17,377 Earnings before interest, taxes, depreciati
Slide 28: Appendix III: Reconciliation of TTM Data
‘Twin Disc, Incorporated Appendix III Reconciliation of TTM Data to Reported Quarterly Figures (A) (B) (o) (A)+(B)-(C) 1st Half FY 08 FY 07 1st Half FY 07* TT™ per Q2 10Q per 10-K per Q2 10Q Sales $ 155,507 $ 317,200 $ 140,013 $ 332,694 Gross Profit 49,196 102,909 44,702 107,403 Interest Exp 1,568 3
Slide 29: Appendix IV: 2nd Fiscal Quarter Statements of Operations
WSC.) Twin Disc, Incorporated Appendix IV 2°¢ Fiscal Quarter Condensed Consolidated Statements of Operations (S thousands, unaudited) 2008 2007 2006 2005 Sales $ 81,894 $ 74,239 $ 57,051 $ 54,731 Gross Profit 25,346 24,389 16,023 13,938 30.9% 32.9% 28.1% 25.5% MEA Expense 17,378 14,528 11,489 11,261
Slide 30: Appendix V: 1st Fiscal Quarter Statements of Operations
Twin Disc, Incorporated Appendix V 1s‘ Fiscal Quarter Condensed Consolidated Statements of Operations (S$ thousands, unaudited) 2008 2007 2006 2005 Sales $ 73,613 $ 65,774 $ 49,577 $ 45,382 Gross Profit 23,851 20,313 14,404 11,652 32.4% 30.9% 29.1% 25.7% MEA Expense 14,694 13,652 10,147 9,509 20.0%
Slide 31: Appendix VI: Marketing, Engineering & Administrative Expenses
Twin Disc, Incorporated Appendix VI Marketing, Engineering & Administrative Expenses (ME&A) Qtr2 1st Half $ 14,528 $ 28,180 FY 2007 ME&A Expenses % of sales Significant Year-over-Year Variances: Increase in Stock Based Comp Expense Impact of Foreign Currency Translation Increase in Corporate IT/ERP
Slide 32: Appendix VII: Fiscal Year Statements of Operations
C,) Twin Disc, Incorporated Appendix VII Fiscal Year Condensed Consolidated Statements of Operations ($ thousands, per Form 10-K) 2007 2006 2005 2004 Sales $ 317,200 $243,287 $218,472 —$ 186,089 Gross Profit 102,909 74,390 57,420 48,285 32.4% 30.6% 26.3% 25.9% MEA Expense 63,267 49,606 44,666 37,168
Slide 33: Appendix VIII: FY 2007 Financial Highlights
Twin((DISC.) Twin Disc, Incorporated Appendix VIII FY 2007 Financial Highlights — versus fiscal year 2006 * Record Sales >> $317 million — 30% revenue growth; 17% after BCS — Strong demand from oilfield, military and marine markets * Gross margins remain >30% 32.4% (+180 bps) * Net Earnings >> $22 m
Slide 34: Appendix IX: Impact of Significant Items
‘Twin Disc, Incorporated Appendix IX Impact of Significant Items — Fiscal Year 2007 Diluted Diluted Qtr4 EPS Impact Full Year EPS Impact FY 2007, as reported $5,001 $ 0.42| | $21,852 $ 1.84 Significant Items (after-tax impact): Intangible Asset Write-off 366 $ 0.03 366 $ 0.03 Restructuring 1,751 $ 0