Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Q4 FY2023 Earnings Presentation
21 slides from Twin Disc's earnings 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 ae forward Jooking within the meaning of Section 21E ofthe Securities Exchange Act of 1934, as amended. These ‘are based on current that are based on that are subject to risks and Actual results may vary because of variat
Slide 3: Q4 sales +10.5% to $83.9 million vs. YA
Q4 sales +10.5% to $83.9 million vs. YA Gross margin improved ~340 bps sequentially to 29.5% in the quarter FY23 EBITDA +7.6% to $25.8 million Solid operating cash flow of $16.0 million; Free cash flow of $14.9 million Veth 6-month backlog continues to increase, reaching record high Expanded Veth bu
Slide 4: Marine & Propulsion Systems
MARINE & PROPULSION S = Strong demand across end markets; seeing an uptick in activity for U.S. and Canada * Solid projects in pipeline; pricing in full effect = Belgium plant is fully booked for fiscal 2023; now booking into late 2024 = Veth seeing continued strength in Europe and expansion in Nort
Slide 5: Land-Based Transmissions
ND-BASED TRANSMISSIONS a> * Significant Oil & Gas demand, especially in North America and China * Positive feedback on E-Frac; Opportunity for first E-Frac sales in USA starting Q1 of fiscal 2024 = Third-party engine manufacturer delays impact timing of orders for new transmissions * Lack of investm
Slide 6: Industrial
INDUSTRIAL = Delivering results in-line with expectations = Stable demand globally across end markets = Addressing supply chain and sourcing headwinds with certain components = Hybrid and electrification projects underway in partnership with OEMs
Slide 7: Improving Inventory & Healthy Backlog
IMPROVING INVENTORY & HEALTHY BACKLOG BACKLOG AND INVENTORY % OF BACKLOG s1240 4aF22 10923 20F23 3023 mmBacklog (SMM) —Inventory (% Backlog) fgur fa six enon period. backog $1277 « Supply chain headwinds moderating; shipments improving « Improved past-due orders driving healthier backlog = Inventory
Slide 8: 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 9: Financial Overview
FINANCIAL OVERVIEW
Slide 10: Financial Performance
FINANCIAL PERFORMANCE SALES Bison) $760 $78 $63.4 $559 4ar22 10923 20F23 3023 EARNINGS PER SHARE $0.58 $0.20 = a (0.18) 4aF22 10523 2aF23 30823 40F23 4023 Healthy demand across global markets ‘Supply chain and shipment improvements converting strong backlog to sales growth Pricing and mix benefits f
Slide 11: Sales Diversity
SALES DIVERSITY SALES BY PRODUCT GROUP imnon) Continue to see strength within Marine and Propulsion Systems and Land-Based Transmissions : - Strong end market demand - Geographic expansion - Strategic partnerships 40822 10F23 20823 30F 40823 & Whsbertel extestrtinewwit . ‘mt Marine & Propulsion Syst
Slide 12: Margins & Near-Term Expectations
MARGINS & NEAR-TERM EXPEC ‘TWIN DISC GROSS MARGIN 26.1% 30F23 4ar23 FOURTH QUARTER GROSS PROFIT BY PRODUCT GROUP ‘Marine & Propulsion Systems m Land-Based Transmissions m Industrial Other FOURTH QUARTER GROSS MARGIN DRIVERS + Sequential margin improvement Increased volume; favorable product mix = Fi
Slide 13: Strong Balance Sheet
STRONG BALANCE SHEET BALANCE SHEET amen) 36.5 5186 | ss $33 Total Debt cash mrv22 23 EBITDA aman) $258 $24.0 re $240 $54 = Net Debt LEVERAGE RATIO 10 02 re Fra
Slide 14: Capital Allocation Framework
CAPITAL ALLOCATION FRAMEWORK 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 Fit Diversificat
Slide 15: Reaffirming Medium-Term Targets
REAFFIRMING 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 MBA * European cost structure * Operational efficiencies * Greater pass-through content * Supply chain
Slide 16: Robust product group and end market demand driving performance
= Robust product group and end market demand driving performance improvement and expected to continue through Q1 = Improved shipments and healthier backlog set the foundation for fiscal 2024 = Supply chain headwinds moderating as actions to address legacy challenges successfully implemented = Free c
Slide 17: Q&A
Q&A Fiscal 2023 Fourth Quarter Earnings Call 7
Slide 18: Appendix
APPENDIX > |
Slide 19: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO REPORTED FINANCIAL MEASURES RECONCILIATION OF TOTAL DEBT TO NET DEBT (In thousands; unaudited) June 30, 2023 June 30, 2022 Current maturities of long-term debt 2,010 2,000 Long-term debt 16,617 34,543 Total debt $18,627 $36,543 Less cash 13,263 12,521
Slide 20: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL (on(osc) MEASURES TO REPORTED FINANCI MEASURES RECONCILIATION OF CONSOLIDATED NET INCOME TO EBITDA (In thousands; unaudited) 30F23 ‘Net income (Joss) attributable to ee Ineo $10,380 $8,596 $2,678 $139 $(2,029) Interest expense 2253 sm 52 soa 566 sa Income tax exp
Slide 21: Net Debt to EBITDA Leverage Ratio Calculation
RECONCILIATION OF NON-GAAP FINANCIAL (on(osc) MEASURES TO REPORTED FINANCIAL MEASURES NET DEBT TO EBITDA LEVERAGE RATIO CALCULATION a