Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Investor Presentation (February 2016)
37 slides from Twin Disc's investor presentation, Feb 25, 2016
Slide 1: Twin Disc Incorporated Investor Presentation
Twin Disc Incorporated Investor Presentation February 2016
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 At A Glance
(ose winds, er win Disc At A Glance Founded in 1918 Headquartered in Racine, WI = 800 employees We are a global company ial Mfg erations in the jelgium, Italy, India, Sutzeriand and Japan (JV) — World-wide distributor network — Global: 55% of fiscal 2015 sales to international markets AE Manufacturi
Slide 4: FY 2015 Highlights
wn wn an FY 2015 — Highlights $ millions or + Sales up slightly from FY ‘14 $400 = Strong North American O&G demand oot a through first 3 quarters. pot — Softening in Asian demand for O&G and 3150 commercial marine. we — Weakness in pleasure craft continues. Oa ne A vS - Unfavorable currency impact
Slide 5: 1st Half Highlights
vmie roncrorens FG ~ 48t Half Highlights * Sales down 40% from H1 of FY ‘15 — Sales of O&G produce for NA and Asia severely impacted by oil price. — Softening in Asian commercial marine demand. — Unfavorable currency impact of $4.5M. selene NG ESATIfies + $6.6 million loss, or $0.59 per diluted shar
Slide 6: Product/Market Diversity and FY15 Product Mix
qwin(Isc.. Twin Disc, Incorporated Twin Disc benefits from a broad product offering with diverse market applications. Product/Market Dive Land-Based Transmission *Pressure pumping (O&G) Airport rescue & fire fighting y Military FY15 Product Mix Marine & Propulsion -Commercial marine Pleasure craft P
Slide 7: Land-Based Transmission Systems
Twindise, Incorporated Land-Based Transmission Systems + Pressure Pumping: — Achieved record units sales in fiscal ‘12 - some recovery in early '15 following decline in 13. — 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
vooscincoroaed 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, Latin
Slide 9: Industrial Products
Qe oes Industrial Products + North America Energy Related: — After a strong fiscal 2012, shipments and orders were impactéd 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. + Irriga
Slide 10: Geographic Diversity
wmn(08C ) Twin Dis, Incorporated Geographic Diversity H1 FY16 + 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, bows following pleasure craft downturn in STORY 11 19.9% * North American O&G driving
Slide 11: Managing Our Cost Structure
Twn(ose Twndscinovened © Managing Our Cost Structure 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 savings in Q2 FY16 + Dr
Slide 12: Managing Our Cost Structure: Capital Investments
wine incomoraed 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
Managing our Balance Sheet Improving Net Cash Position ee & 8 & MO oe
Slide 14: Strategic Focus
ES et Strategic Focus 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 reinvestment Further actions under consid
Slide 15: What Differentiates Us? Technology
cc at 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?
rewexsi What Differentiates Us? * 96+ Years of Proven Application Know-How + Niche Market Focus + Global Distribution and Service Network + Product, Market & Geographic Diversity * Core Manufacturing Capabilities
Slide 17: Looking Ahead
Looking Ahead
Slide 18: Corporate Six Month Backlog
wn(oxe) Twn se nnoees Corporate Six Month Backlog $ millions $180 $160 4 $140 $120 $100 $80 4 $60 $40 $20 $0 Volatility driven — by O&G cycles — SDMJSOMJSDMJSDMJSDMJSDMJSD FY10 FYHt FY12 FY13 FYI4 FYISFY16
Slide 19: Fiscal 2016 & Beyond
erent Fiscal 2016 & Bey + Expect second half of fiscal 2016 volume to remain in line with Q2 levels. + 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 our position
Slide 20: Fiscal 2016 & Beyond
Fiscal 2016 & Beyond + 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 average growth rates, but experiencin
Slide 21: Appendices
Appendices
Slide 22: Market Diversity: Pleasure Craft Market
‘rwin(Dse) Twn Di, Ieapartes Appendix | Corporate Profile — Market Di Pleasure Craft Market: versity + Target Markets: High speed laning and displacement yachts ‘rom 50’ to 150’, diesel-powered + Products: Transmissions, Arneson Surface Drives, Propellers, Steering/Thruster/Trim Systems, Controls, E
Slide 23: Market Diversity: Work Boat Market
fenoee rears! Appendix II 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 & distribution + Customers: CAT
Slide 24: Market Diversity: Patrol Boat Market
fwund(bsc) win Bis Incorporated Appendix III Corporate Profile — Market Diversity Patro| 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, EJ
Slide 25: Marine Transmissions, Propulsion & Boat Management Systems
aoe leer peaeet Appendix IV Corporate Profile — Market Diversity Marine Transmissions, Propulsion & Boat Management Systems \ EJS®/Electronic Controls Anchor Winches Power Steering Arneson Surface Dives, F Rolla Propellers, Drivelines We have been successful “packaging” more marine products + Increa
Slide 26: Market Diversity: Industrial Products
oy Appendix 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: Distribution & OEMs * Customers: Bandit, Morba
Slide 27: Market Diversity: Industrial Transmissions
rw 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: BAE, Rosenbauer, Oshkosh, Tatra
Slide 28: Land-Based Products: Pressure Pumping
win(Isc.) Twin iso, Incorporated Land-Based Products Pressure Pumping remains
Slide 29: Frac Rig Diagram
fwnv(OsC)| Twin Dio, Incorporated Appendix VII Frac Rig Diagram Engine BH Transmission — Pump vant ’
Slide 30: EBITDA
fwund(bsc) win Bis Incorporated Appendix VIII EBITDA (See Appendices IX & X for note on non-GAAP Financial Disclosures and a reconciliation of net $ millions earnings. ip EBLONY, % sales $60 150% 18% 16% $50 14% $40 12% 10% $30 5 e $20 | 6% 4% $10 ra Qt om $0 + A oy FY10 FY11 FY12 FY13 FY14 FY15 TT™
Slide 31: Non-GAAP Financial Disclosures
fwund(bsc) win Bis Incorporated 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 i
Slide 32: Reconciliation of Net Earnings to EBITDA
fwund(bsc) win Bis Incorporated Appendix X Reconciliation of Net Earnings to EBITDA in $ thousands, except % data = TTM 215 2014 2013 2012 2011 2010 Net Earnings S (3,241) $ 14,173 $ 3,644 $ 3,882 $ 26,743 $ 17,997 $ 597 Income Taxes (3.662) 4515-4228 4986 17,815 13,897 992 Interest Expense 42 606 9
Slide 33: Reconciliation of TTM Data to Reported Quarterly Figures
fwund(bsc) win Bis Incorporated Appendix XI Reconciliation of TTM Data to Reported Quarterly Figures Soe one | ow Sales S737 $ a4ame| soio4r7 Gross Pret gi 11.06] 50.338, MESA 150 14sez | e252 perating Inecme (685) ase] zr] Interest Ep 1 woe] aa. Net Eaminge 4422) 2300] | 24) EPS, Dated $x) $ (029]$
Slide 34: Fiscal Year Condensed Consolidated Statements of Operations
fwund(bsc) win Bis Incorporated Appendix XIl Fiscal Year Condensed Consolidated Statements of Operations (S thousands, per Form 10K) _2015, 2014 2013 2012 2011 2010 Sales $265,790 $263,000 $ 286,282 $355,870 $310,303 § 227,534 Gross Profit 93,092 77,254 0.028 © 424,692——107,603 60,465 31.2% 29.3% 23
Slide 35: Fiscal Half Condensed Consolidated Statements of Operations
fwund(bsc) win Bis Incorporated Appendix XV 1‘ Fiscal Half: Condensed Consolidated Statements of Operations (S thousands, unaudited) 2016. 2015, 2014 2013 2012 Sales $ 82.201 $437,515 $129,638 $141,118 $164,271 Gross Profit 19,795 44,492, 39,211 41,727 60,330 24.1% 324% 30.2% 29.6% 36.7% MEA Expense
Slide 36: Operating Cash Flows — Fiscal Year
fwund(bsc) win Bis Incorporated Appendix XVI Operating Cash Flows — Fiscal Year $ millions % sales $40 15.4% 16% $35 14% $30 12% $25 10% $20 8% $15 + 6% $10 ; 4% $5 $0 FY08 FYO9 FY10 FY11 FY12 FY13 FY14 FY15 TTM* [_=cash Flows from Operations _-*-% of Sales_| + See Appendix X for reconciliation of T
Slide 37: Express Joystick System in Action
Cum(O5 | Twin Dis, ncorporated Express Joystick System® in Action Twin Disc Express Joystick System® - Part | Desa |conrecs mol Go to http:/Avww.twindisc.com/en/marine/marine-products/express-joystick-system to see the new revolutionary Twin Disc Express Joystick System® in action.