Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Investor Presentation (November 2015)
37 slides from Twin Disc's investor presentation, Nov 10, 2015
Slide 1: Twin Disc Incorporated Investor Presentation
Twin Disc, Incorporated Twin Disc Incorporated Investor Presentation November 2015
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
mio mmoccrome Twin Dise At A Glance * Founded in 1918 « Headquartered in Racine, WI « ~ 840 employees 5 « Weare a global : * We company x — Mfg Operations in the Od U.S., Belgium, Italy, & India, Switzerland and » Japan (JV) — World-wide distributor network ° — Global: 55% of fiscal 2015 sales to in
Slide 4: FY 2015 Highlights
qwin(bisc.) Twin Disc, Incorporated FY 2015 — Highligh $ millions $400 $350 $300 + $250 $200 $150 Sales S506 FY12 $285 FY13 FY 14 FY Net Earnings 5 $14 FY12 FY13 FY14 Sales up slightly from FY ‘14 - Strong North American O&G demand through first 3 quarters. - Softening in Asian demand for O&G and co
Slide 5: 1st Quarter Highlights
— 1st Quarter Highlights $ millions Sales $100 * Sales down 42% from Q1 of FY ‘15 $80 | —s55 es — Sales of O&G produce for NA and Asia $65 - Pen $60 severely impacted by oil price. $40 a — Softening in Asian commercial marine $20 | demand. $0 — Unfavorable currency impact of $4.5M. FY12 FY13 FY14 FY
Slide 6: Product/Market Diversity
jwin Disc, Incorporated Product/Market Diversity Twin Disc benefits from a broad product offering with diverse market applications. FY15 Product Mix Other Industrial 23% 15.8% Sys Land- ela based Trans Sys 25.4% Marine & Propulsion Land-Based Transmission «Pressure pumping (O&G) Airport rescue & fir
Slide 7: Land-Based Transmission Systems
Twn dise,conorted Land-Based Transmission Systems « Pressure Pumping: — Achieved record units sales in fiscal ‘12 — Some recovery in early '15 following decline in 13 &'14. — Asian market, driven by China, has become a key source of demand and future growth. — Severe decline in global oil prices in
Slide 8: Marine & Propulsion Systems
Twndscixoronied ~— Marine & Propulsion Systems * Commercial Marine: — Fiscal ’15 softening in Asia following record years. — Fiscal 16 further decline in Asia demand, primarily to China economy — European market remains stable but uncertain, likely 2-3 years to recover — Long term growth in Asia, La
Slide 9: Industrial Markets
Twin Disc, Incorporated ¢ 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 market strengthens + Irrigation
Slide 10: Geographic Diversity
Twin Disc, Incorporated Geographic Diversity + Sales to Asia Pacific peaked at 29% in FY 14, declining in FY15 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 decline in Q1 of FY16. FY
Slide 11: Managing Our Cost Structure
win(bisc,) Twin Disc, Incorporated M a nag i ng Ou r Cost Stru ctu re Announced $6 million annualized savings in Q4 FY15 * Response to initial downturn in NA O&G demand * Primarily Racine-based headcount actions * $3.3 million charged recorded in Q4. Announced additional $4 million annualized saving
Slide 12: Managing Our Cost Structure: Capital Investments
se) win Disc nconorted Managing Our Cost Structure Capital Investments * Investing in core competencies * Expanding benefit from low cost manufacturing sources * Over $100 million over past 10 yrs
Slide 13: Managing Our Balance Sheet
Twin(bisc,) Twin Disc, incorporated M a nag i ng our Ba la nce Ss heet Improving Net Cash Position $20 $10 $0 ($10) ($20) ($30) ($40) °$45 million improvement in net cash since fiscal 2008. *$95 million borrowing capacity *Balance sheet strength for extended downturn or M&A opportunities.
Slide 14: Strategies Focus
Gwan(bIsc) Twin Disc, Incorporated Strate g j res F ocu Renewed focus on product development activities to drive Industrial product growth. Sale of non-core NA distribution entities. *Eliminated 5 locations *Territories in good hands with long-term partner *Generated $5 million of capital for reinve
Slide 15: What Differentiates Us? Technology
wavs) Twin Ds, eopovaed What Differentiates Us? Technology — Oil & Gas * 8500 Series * 7500 Series — Marine * Patented QuickShift® ¢ Express Joystick System® — ARFF « “Pump & Roll” « Dynamic Positioning/DPII — Military * Rolla CFD « “Legacy” Contracts
Slide 16: What Differentiates Us?
mio: tworcrormss What Differentiates * 96+ Years of Proven Application Know-How * Niche Market Focus + Mfg location © Co.-owned dist. © 3" Party dist. @ Service dealers * Global Distribution and Service Network * Product, Market & Geographic Diversity * Core Manufacturing Capabilities
Slide 17: Looking Ahead
Twin(bisc.) Twin Disc, Incorporated Looking Ahead
Slide 18: Corporate Six Month Backlog
tn oscreoreaes Corporate Six Month Backlog $ million: $180 + $160 | Volatility driven —| $140 4 by O&G cycles — $120 + $100 + $80 | $60 | $40 +1 | $20 | $0 sDMJSDMJSDMJISDMJISDMJISODM JS FY10 FY11 FY12 FY13 FY14 FY15 FY16
Slide 19: Fiscal 2016 & Beyond Outlook
rmiose wrossmms Fiscal 2016 & Beyond Outlo * Expect fiscal 2016 results to improve sequentially through the year. * North American Oil & Gas landscape causes difficult near term outlook. — No order activity for several quarters. — Timing of any recovery unpredictable. — Intent on maintaining/growing
Slide 20: Fiscal 2016 & Beyond Outlook
npc) Twin ise ncorpoated Fiscal 2016 & Beyond Outlook « ARFF, Military and North American industrial markets are expected to remain stable. * Global markets will remain mixed — European markets will remain challenged in the near term — Asia continues to offer significant opportunities for above aver
Slide 21: Appendices
qwin(bisc.) Twin Disc, Incorporated Appendices
Slide 22: Corporate Profile — Pleasure Craft Market
Tehmestare Appendix | Corporate Profile — Market Diversity Pleasure Craft Market: + Target Markets: High speed planing and displacement yachts from 50’ to 150’, diesel-powered « Products: Transmissions, Arneson Surface Drives, Propellers, Steering/Thruster/Trim Systems, Controls, EJS * Channels: Eng
Slide 23: Corporate Profile — Work Boat Market
win(bisc.) Twin Disc, Incorporated Ap p en | ix | | Corporate Profile — Market Diversity Work Boat Market: * Target Markets: planing and displacement vessels from 30’ to 250’, diesel-powered « Products: Transmissions, Propellers, MCD’s, Controls * Channels: Engine OEMs & dealers, boat builders & dis
Slide 24: Corporate Profile — Patrol Boat Market
Gwin(bssc_) Twin Disc, Incorporated Appendix lll 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
Slide 25: Marine Transmissions, Propulsion & Boat Management Systems
S) eines erect Appendix IV Corporate Profile — Market Diversity Marine Transmissions, Propulsion & Boat Management Systems EJS®/Electronic Controls | esas QuickShift® Transmissions — Yee Arneson Surface Drives, Rolla Propellers, Drivelines We have been successful “packaging” more marine products + I
Slide 26: Corporate Profile — Industrial Products
Twin(Pisc. Twin Disc, Incorporated Ap pe n | ix 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: Distributi
Slide 27: Corporate Profile — Industrial Transmissions
Twin(Pisc. Twin Disc, Incorporated Appendix Vi 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: B
Slide 28: Land-Based Products: Pressure Pumping
») Twin Disc, Incorporated Land-Based Products rcecerene vo = (rons eres) History 2011 Projections Pressure Pumping ee ee 6 Tight ol stg era ota names comet Maccee anemones ~O~ NORWAY — 4 p & iw 4 my 2 nga Sas BD cnn . = D ‘VENEZUELA Co) lh ) e 2 : edco > 2 om INDONESIA 1990 2000 +2010 ~»=-2020 «203
Slide 29: Frac Rig Diagram
win(bisc.) Twin Disc, Incorporated Ne) pe n | ix Vi | Frac Rig Diagram Engine ; wy Transmission —s
Slide 30: EBITDA
ronbsesrenretes Appendix VIII EBITDA (See Appendices |X & X for note on non-GAAP Financial Disclosures and a reconciliation of net earnings to EBITDA) $ millions % sales $60 16:0% 18% + 16% $50 + 14% $40 12% + 10% $30 1 ie, $20 : 84% 6% ge : $19.5 y 4% $10 a al | om $0 + 4 1 t +—s + 0% FY10 FY11 FY1
Slide 31: Non-GAAP Financial Disclosures
Tear ee Reoperted 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 measur
Slide 32: Reconciliation of Net Earnings to EBITDA
Twin(bisc,) Twin Disc, incorporated Ap p en | ix X Reconciliation of Net Earnings to EBITDA in $ thousands, except % data T™ 2015 2014 2013 2012 2011 2010 Net Earnings $ 2807 $ 11,173 $ 3,644 $ 3,882 $ 26,743 $ 17,997 $ 597 Income Taxes. (286) 4,515 4,226 4,986 17,815 13,897 992 Interest Expense 533
Slide 33: Reconciliation of TTM Data to Reported Quarterly Figures
qwin(bisc.) Twin Disc, Incorporated Ap p en | ix X | Reconciliation of TTM Data to Reported Quarterly Figures Fyao= | Fyam | Fya2= | Fyas= ] Eva? | QIs Q24e Qo1s asus | Fe | give | TM Sales $227,534 | $310,393 | $356,870 | $285,282 | $263,909 | $64,824 $72,691 $60,941 $67,334 | $266,790 | $ 37,373 |
Slide 34: Fiscal Year Condensed Consolidated Statements of Operations
qwin(bisc.) Twin Disc, Incorporated Append ix Xl | Fiscal Year Condensed Consolidated Statements of Operations ($ thousands, per Form 10-K) 2015 2014 2043 2012 2011 2010 Sales $265,790 $ 263,909 -«-$ 285,282 © $ 355,870 $ 310,393 $227,534 Gross Profit 83,032 77,254 80,025 121,632 107,683, 60,465 31.
Slide 35: 1st Fiscal Quarter: Condensed Consolidated Statements of Operations
qwin(bisc.) Twin Disc, Incorporated Append ix XV 1st Fiscal Quarter: Condensed Consolidated Statements of Operations (S thousands, unaudited) 2016 2015 2014 2013 2012 Sales $ 37,373 $ 64,824 $ 66,426 $ 68,793 $ 81,330 Gross Profit 8,190 22,389 20,667 = 119,416 30,768 21.9% 34.5% 31.1% 28.2% 37.8% ME
Slide 36: Operating Cash Flows — Fiscal Year
TaniiRestisepeearss Appendix XVI Operating Cash Flows — Fiscal Year $ millions % sales $40 15.4% 16% $35 14% $30 0.8% 12% $25 oe 10% $20 | esi. 8% $15 a5 val gpa 6% * i: 513 a 4 7 a om $0 = + + + + + 0% Fy08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 TTM* Cash Flows from Operations -—*-% of Sales * See Appe
Slide 37: Express Joystick System in Action
Twin Disc, Incorporated Express Joystick System® in Action Twin Disc Express Joystick System® - Part | mx ery DP dij 008/425 @ Go to http://www.twindisc.com/en/marine/marine-products/express-joystick-system to see the new revolutionary Twin Disc Express Joystick System® in action.