Slide 1: Twin Disc, Inc Investor Presentation
TWIN DISC, INC Investor Presentation
Slide 2: Disclosures
DISCLOSURES 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 ris
Slide 3: Fourth Quarter Highlights
FOURTH QUARTER HIGHLIGHTS Financial Strategic Continuing to reap benefits of long- Q4 sales +0.6% vs. YA to $84.4 million term operational improvements and Gross margin increased ~20 bps vs. YA working capital discipline, supporting to 29.7% trend of profitable growth Q4 EBITDA of $11.8 mill
Slide 4: Marine & Propulsion Systems
MARINE & PROPULSION SYSTEMS Sales increased by 3.4% vs. YA Sustained activity across global commercial markets contributing to strong demand Veth six-month backlog decreased 3.7% sequentially Rolla & Veth partnership performing well due to strength in luxury yacht market Demand for workboa
Slide 5: Land-Based Transmissions
LAND-BASED TRANSMISSIONS Increased sales by 9.3% vs. YA ARFF transmissions demand supporting backlog expansion Record levels of backlog Oil & Gas exports flat 5
Slide 6: Industrial
INDUSTRIAL Sales decreased by 8.9% vs. YA Sequential improvement in demand Continued weakness primarily for commoditized products; higher-content products showing resilience Continuing to advance OEM partnerships 6
Slide 7: Continued Backlog Growth
CONTINUED BACKLOG GROWTH BACKLOG AND INVENTORY % OF BACKLOG $130.5 $133.7 1.11 $122.5 $125.2 $119.2 6-month backlog continuing to increase on sequential and year-over-year basis 1.05 1.03 Acquisition of Katsa Oy accounts for $12.6 million of backlog 1.00 0.98 Reductions in inventory in 4Q 2024
Slide 8: Long-Term Strategy
LONG-TERM STRATEGY Leading Hybrid/Electric Continued expansion of Veth Rationalize global footprint solution provider for niche product to reach new for efficiency and customer marine and land-based markets and geographies response applications Increased focus on controls M&A priorities: Industrial
Slide 9: Financial Overview
FINANCIAL OVERVIEW 9
Slide 10: Financial Performance
FINANCIAL PERFORMANCE SALES ($ in millions) $83.9 $84.4 Consistent healthy demand across global $73.0 $74.2 $63.6 markets Operational execution driving performance Adjusting for divestiture of BCS in FY 2024, FY 2024 revenue was $26 million, or 9.5%, higher than prior year 4QF23 1QF24 2QF24 3Q
Slide 11: Sales Diversity
SALES DIVERSITY SALES BY PRODUCT GROUP ($ in millions) $7.5 $5.0 $4.8 $4.3 $7.2 $7.9 Growth supported by strength within $5.0 $6.5 $6.2 $22.9 $5.7 $25.0 Marine and Propulsion Systems and Land- $15.9 $19.1 $18.6 Based Transmissions: - Consistent market demand $45.7 $45.8 $44.5 $47.2 $34.3 - Geograp
Slide 12: Strong Balance Sheet
STRONG BALANCE SHEET BALANCE SHEET ($ in millions) $25.8 $20.1 LEVERAGE RATIO $18.6 $13.3 0.2x 0.2x $5.4 $5.7 Total Debt Cash Net Debt FY23 FY24 EBITDA ($ in millions) $26.5 $25.8 FY23 FY24 FY23 FY24 12
Slide 13: Margins & Near-Term Expectations
MARGINS & NEAR-TERM EXPECTATIONS TWIN DISC GROSS MARGIN FOURTH QUARTER GROSS MARGIN DRIVERS 29.7% 28.2% Gross margin increased sequentially by 150 basis points vs. YA Capturing tailwinds from pricing actions executed throughout FY 2023 Cost reduction activities and operational 3QF24 4QF24 effi
Slide 14: Capital Allocation Framework
CAPITAL ALLOCATION FRAMEWORK Debt Reduction Research & Development Focus Areas Geographic diversification / expansion Marketing Return Capital to Shareholders (Dividends) Diversification away from Oil & Gas Strategic Fit Acquisition logic immediately evident Organic Growth Evident value
Slide 15: Updating Medium-Term Targets
UPDATING MEDIUM-TERM TARGETS 2030 TARGETS AND DRIVERS Revenue Gross Margin FCF Conversion $500M 30% 28% $295M 9% Maintain at least 60% CAGR FY 2024 FY 2030 FY 2024 FY 2030 Hybrid / Electric leadership European cost structure Supply chain processes Veth global expansion Operational efficien
Slide 16: Key Takeaways
KEY TAKEAWAYS Sustained outperformance in Q4 marked by margin expansion and robust cash generation Strong balance sheet supported by prudent working capital management Well positioned entering fiscal 2025 with healthy backlog supported by strong end market demand Expecting market conditions
Slide 17: Q&A Fiscal 2024 Fourth Quarter Earnings Call
Q&A Fiscal 2024 Fourth Quarter Earnings Call 17
Slide 18: Appendix
APPENDIX a>.
Slide 19: Reconciliation of Total Debt to Net Debt
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO REPORTED FINANCIAL MEASURES RECONCILIATION OF TOTAL DEBT TO NET DEBT (In thousands; unaudited) June 30, 2024 June 30, 2023 Current maturities of long-term debt 2,000 2,010 Long-term debt 23,811 16,617 Total debt $25,811 $18,627 Less cash 20,070 13,263
Slide 20: Reconciliation of Consolidated Net Income to EBITDA
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO REPORTED FINANCIAL MEASURES RECONCILIATION OF CONSOLIDATED NET INCOME TO EBITDA (In thousands; unaudited) FY24 4QF24 3QF24 2QF24 1QF24 4QF23 Net Income (loss) attributable to Twin Disc $10,988 $7,410 $3,822 $930 $(1,173) $8,594 Interest expense 1,443
Slide 21: Net Debt to EBITDA Leverage Ratio Calculation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO REPORTED FINANCIAL MEASURES NET DEBT TO EBITDA LEVERAGE RATIO CALCULATION FY24 FY23 Net debt $5,741 $5,364 EBITDA 26,533 25,781 Leverage Ratio 0.2x 0.2x 21
Slide 22: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO REPORTED FINANCIAL MEASURES RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW (In thousands; unaudited) For the Quarter Ended For the Four Quarters Ended June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Net cash prov