Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Investor Presentation (August 2023)
27 slides from Twin Disc's investor presentation, Aug 16, 2023
Slide 1: Twin Disc, Inc. Investor Presentation
a TWIN DISC, INC Investor Presentation
Slide 2: Disclosures
DISCLOSURES ‘Safe Harbor Statement This presentation contains statements that are fonvarddoking within the meaning of Section 21€ of the Seourites Exchange Act of 1934, as amended. The words “anticipates,” ‘believes, similar anticipatory expressions, usualy identify forward-ooking statements. These
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS yw 9 *o 01. 02. 03. 04. 05. Robust backlog Innovative Strategic playbook Accelerating growth Niche capabilities and supported by healthy — technologies in focused on margin across end markets _specific product group Marine and Industrial scalable across attractive end markets d
Slide 4: Overview
OVERVIEW
Slide 5: Twin Disc Snapshot
TWIN DISC SNAPSHOT FY23 Revenue by Product Group = = Marine & Propulsion Systems * Land-Based Systems! North America « Europe Asia Pacific.» Other 1 Industrial * Other Key Market Differentiators D> Acentury of expertise putting horsepower to work and delivering world-lass solutions to our global cus
Slide 6: Twin Disc Evolution
TWIN DISC EVOLUTION — s- o- 4% + _¥- Tran oewas Pyare custiont asus 83 Sse cfSwisadty | Seateicocuson nid ; wae | ake sua | Sen | Retuniedvacor | Shei oe i Seeders | | aon cyorntes i itaiee | i {agricultural H H | machinery H H . , i , , * D ’ a H H i {Acquisition of veth 1 Sale-leaseback of i | one
Slide 7: Product Group Overview
PRODUCT GROUP OVERVIEW Land-Based Transmission Marine & Propulsion Systems Diesel powered planing & displacement vessels Diesel powered off-highway and all- terrain specialty vehicles + Increasing global demand for Oil & Gas + &-Frac and Hybrid solutions expand Twin s¢'s addressable market + Capabil
Slide 8: Marine & Propulsion Systems
MARINE & PROPULSION SYSTEMS + Veth acquisition provided complementary products and powerful new technologies + In-house hybrid and electrification expertise + Expansion into new markets and geographies Strong Veth and Rolla partnership encourages innovation and expands growth opportunities Substanti
Slide 9: Land-Based Transmission
LAND-BASED TRANSMISSION | Twin Disc’s Unique Position : + Over a century of experience in power transmission ! product design and innovation i + Strong North American customer base providesa! solid foundation for growth i 1 1 In-house diesel and hybrid / electrification expertise Substantial Growth
Slide 10: Industrial
INDUSTRIAL Best-in-class quality * Proprietary technology in controls, hybrid, EV + In-house engineering capabilities + Accelerating activity with new customers and application expansion among existing customers Substantial Growth Opportunities Across End Markets + Agriculture + Irrigation * Constru
Slide 11: Strategy
STRATEGY a1
Slide 12: Long-Term Strategy
LONG-TERM STRATEGY Leading Hybrid/Electric solution provider for niche marine and land-based applications Continued Rationalize global footprint product to reach new for efficiency and customer markets and geographies response Increased focus on controls and system integration rather than individual
Slide 13: Hybrid Electric Solutions
HYBRID ELECTRIC SOLUTIONS Transforming the global Off-Highway, Industrial, and Marine markets with our sustainable Hybrid and Electric powertrains, empowering customers to ‘meet business goals as well as regulatory requirements Expertise in drive train technology provides edge in hybrid technology V
Slide 14: Veth Expansion
VETH EXPANSION Global supplier of main and auxiliary Marine propulsion products Veth Sales Strategic Fit Complementary products and powerful new technologies Enhances engineering talent and product development capabilities Prior history working with Veth enables efficient integration Accelerates sal
Slide 15: Optimize Geographic Footprint
OPTIMIZE GEOGRAPHIC FOOTPRINT > $178.9 million Fiscal 2023 International Sales ay * ss e e wide distribution network e vith manufacturing e 0 countries e e ‘% Manufacturinglocation © Company owned distribution / service location © Purchasing / sourcing offices 15
Slide 16: Controls & System Integration
CONTROLS & SYSTEM INTEGRATION Control and full-system integration focus to accelerate growth Twin Disc products across all end markets are built with our control systems, utilizing multiple components and sophisticated controls to manage power output Ability to package a full system solution to virt
Slide 17: Pursue M&A Opportunities
PURSUE M&A OPPORTUNITIES Bolt-on & Transformational Acquisitions Framework Diversification away from Oil & Gas Strategic Fit ‘a Acquisition logic immediately evident Evident value creation potential Financial Fit Consistent business performance Internal Rate of Return > Weighted Average Cost of Capi
Slide 18: Financial Overview
FINANCIAL OVERVIEW
Slide 19: Financial Performance
FINANCIAL PERFORMANCE NET SALES mnt) Marine mland-Based Industeat mother 302.7 ose sano = $2186 si58 - $85, az DILUTED EARNINGS PER SHARE soe sore 3075 = = ras Frat r3 | GROSS PROFIT BY PRODUCT GROUP | Foe} 3.09) mMarine mtand Based industrial mother Fast ryt rv2itFraat* 23 $743 hi ai all U rai we W
Slide 20: Balance Sheet
BALANCE SHEET NET DEBT Banton) ~ sx02 | S8 LEVERAGE RATIO $24.0 $19.7 7 334 rag 20 Fat Fz Fas — 10x 10% soma r | | a | 259 $258 (13k = Fist Fao pvait yan" 3 (s302) rissa" ‘ilar tiaaiista eereiiadie eniied ‘6 Lireeffented for chenee ierectountion reatix
Slide 21: Location Priorities
LOCATION PRIORITIES
Slide 22: Medium-Term Targets
MEDIUM-TERM TARGETS MEDIUM-TERM: 3-5 YEARS Revenue $400 million Gross Margin 30% Free Cash Flow Conversion 60% * Hybrid/Electric leadership * Veth global expansion * Industrial focus M&A * European cost structure * Operational efficiencies * Greater pass-through content = Supply chain processes = Ma
Slide 23: Key Takeaways
KEY TAKEAWAYS (on(osc) eo Robust backlog supported by healthy demand growth across product groups eo Innovative technologies in Marine and Industrial scalable across attractive end markets eo Strategic playbook focused on margin expansion and cash generation («3 Accelerating growth across end market
Slide 24: Appendix
APPENDIX > .
Slide 25: Reconciliation of Non-GAAP Financial Measures: Total Debt to Net Debt
RECONCILIATION OF NON-GAAP FINANCIAL (on(osc) MEASURES TO REPORTED FINANCIAL MEASURES RECONCILIATION OF TOTAL DEBT TO NET DEBT (In thousands; unaudited) Fv23 FY22 Fran FY20 Fv19 Current maturities of 2,010 2,000 2,000 4,691 2,000 long-term debt Long-term debt 16,617 34,543 30,085 37,896 40,491. Tota
Slide 26: Reconciliation of Net Income to EBITDA
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO REPORTED FINANCIAL MEASURES RECONCILIATION OF CONSOLIDATED NET INCOME TO EBITDA (In thousands; unaudited) x23 Fy22** Fy2i* Fy20* Fyi9* Interest expense 2,253 228 2,358 1,860 1,927 Income tax expense (benefit) 3,788 1,823 19,681 (4,169) 371 Depreciatio
Slide 27: Net Debt to EBITDA Leverage Ratio Calculation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO REPORTED FINANCIAL MEASURES NET DEBT TO EBITDA LEVERAGE RATIO CALCULATION Fy23Fy22**—Fy2u* ——FY20" FY Net debt $5,364 $24,022 $19,745 $31,899 $30,129 EBITDA, 25,781 23,965 3,563 (30,201) (29,923 Leverage Ratio 0.2« 10x 55x (11) 10x 5S Licuslesieed tr