Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Q2 FY2024 Earnings Presentation
20 slides from Twin Disc's earnings presentation, Feb 7, 2024
Slide 1: Twin Disc, Inc Investor Presentation
a TWIN DISC, INC Investor Presentation
Slide 2: Disclosures
DISCLOSURES >> Sale Harbor Statement This presentation contains statements that are frwardJooking wihin the meaning of Secton 21 of he Secures Exchange Actof 1934, as amended. These slalements are based on managemet’s current expedaons that are based on assumptions that are subjectto risks and uncer
Slide 3: Second Quarter Highlights
SECOND QUARTER HIGHLIGH >> = Q2sales +15.2% vs. YA to $73.0 million 0 dite Bysentharprend Royce = Gross margin increased ~140 bps vs. operational execution, working capital YA to 28.3% improvements = EBITDA of $5.5 million vs. $7.0 million * Capturing stable demand, driving YA, down due to $4.2 mill
Slide 4: Marine & Propulsion
MARINE & PROPULSIO! * Increased sales by 29% vs. YA * Continued activity in global commercial markets supporting strong demand * Increase in government defense spending driving patrol boat projects * Veth six-month backlog increased 6% sequentially * Near-term Veth inventory build to support anticip
Slide 5: Land-Based Transmissions
ND-BASED TRANSMISSIONS = Increased sales 8% vs. YA = Solid continued demand in Oil & Gas markets supporting growth = First new unit orders in North America for Oil & Gas = ARFF transmissions demand driving backlog expansion * General increase in orders across business sequentially; seeing early impr
Slide 6: Industrial
INDUSTRIA! * Sales declined 13% due to continuedsoftness amongst key industrial customers * Continuedweaker demand primarily for commoditized products; higher-content products performing well * Continuing to advance domestic OEM partnerships
Slide 7: Continued Backlog Growth
CONTINUED BACKLOG GROWTH BACKLOG AND INVENTORY % OF BACKLOG + 6-month backlog continuing to increase on sequential and year-over-year basis + Temporary increase in inventory as a percentage of backlog, reflecting a short- term headwind driven by near-term Veth inventory build + Inventories expected
Slide 8: Long-Term Strategy
LONG-TERM STRATEGY Leading Hybrid/Electric solution provider for niche marine and land-based applications Continued expansion of Veth {fi Rationalize global footprint product to reach new for efficiency and customer markets and geographies response Increased focus on controls and system integration
Slide 9: Financial Overview
FINANCIAL OVERVIEW wn(bisc,
Slide 10: Financial Performance
FINANCIAL PERFORMANCE $639 | l EARNINGS PER SHARE $730 rane 2aF24 Generally stable demand across global markets Capitalizing on increased pricing and favorable product mix Lower earnings vs. YA due to currency and inflationary headwinds, one-time benefit of facility sale recorded in prior year perio
Slide 11: Sales Diversity
SALES DIVERSITY SALES BY PRODUCT GROUP Benne 10s 2023303 4ars 1024282 laMarine & Propulsion Systems Land Based Transmissions Industrial @ Other SALES MIX BY GEOGRAPHY 20R3 30R23 40823 raR28 20828 North America mEurope MAsloPacic mOther Continued strength within Marine and Propulsion Systems and Land
Slide 12: Strong Balance Sheet
STRONG BALANCE SHEET BALANCE SHEET Bennid 3319 a 7 EBITDA S184 a all | —_ $33 m2ar23 m20F28 3260 $258 m3 2aF28 uM LEVERAGE RATIO. 26 20823 rare 2
Slide 13: Margins & Near-Term Expectations
MARGINS & NEAR-TERM EXPECTATIONS TWIN DISC GROSS MARGIN ee 23% 2aR3 20828 SECOND QUARTER GROSS PROFIT BY PRODUCT GROUP ‘mMarine & Propulsion Systems m Land Based Transmlsionsm Indusval m Other ‘SECOND QUARTER GROSS MARGIN DRIVERS * Gross margin increased 140 basis points vs. YA + Increased volume; f
Slide 14: Capital Allocation Framework
CAPITAL ALLOCATION FRAMEWORK Debt Reduction Return Capital to Shareholders (Dividends) Organic Growth Investments Bolt-On & Transformational Acquisitions Return Capital to Shareholders (Share Repurchases) Focus Areas Research& Development Geographic diversification / expansion Marketing Strategic Fi
Slide 15: Key Takeaways
KEY TAKEAWA' > = Continued momentum of double-digit revenue growth, margin expansion, and ample cash generation = Cautiously optimistic outlook due to lingering macroeconomic volatility; Anticipating continued demand heading into 2H 2024 = Strong performance strengthening balance sheet, providing ad
Slide 16: Q&A
Q&A Fiscal 2024 Second Quarter Earnings Call 16
Slide 17: Appendix
APPENDIX
Slide 18: Reconciliation of Non-GAAP Financial Measures: Total Debt to Net Debt
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO REPORTED FINANCIAL MEASURI RECONCILIATION OF TOTAL DEBT TONET DEBT (ln thousands; unaudited) December 29,2023, December 30,2022 Current maturities of long-term debt 2,000 Long-termdebt 15,698 Total debt $17,698 Lesscash 21,021 Netdebt ($3,323) 2,000 2
Slide 19: Reconciliation of Consolidated Net Income to EBITDA
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO REPORTED FINANCIAL MEASURI RECONCILIATION OF CONSOLIDATED NETINCOME TO EBITDA (In thousands; unaudited) saneirw | sae vas tot aaass saan Inc tserpnse so | awe | ame | ae oy Posty 25s 9359 2492 2a saR25 2670 20F23 2489 2126 19
Slide 20: Net Debt to EBITDA Leverage Ratio Calculation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO REPORTED FINANCIAL MEASURES NET DEBT TO EBITDALEVERAGE RATIO CALCULATION 20824 20823 Net debt ($3,323) $18,399 EBITDA 5515 6,955 Leverage Ratio 06x 2.6x a> 20