Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Investor Presentation (October 2007)
31 slides from Twin Disc's investor presentation, Oct 30, 2007
Slide 1: Twin Disc, Incorporated
Slide 2: Safe Harbor Statement
‘Twin Disc, Incorporated 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 s
Slide 3: Twin Disc At A Glance
Twin Disc At A Glance Founded in 1918 Headquartered in Racine, WI 1,000 employees We are a global company — Well-known customers around the world — Operations in the U.S., Italy, %*& Manufacturing Belgium, Switzerland and @ TDI Distributors Japan ) — World-wide distributor @ Service Dealers network
Slide 4: FY 2007 Financial Highlights
Twin((pisc.) Twin Disc, Incorporated FY 2007 Financial Highlights ¢« Record Sales >> $317 million — 30% revenue growth; 17% after BCS — Strong demand from oilfield, military and marine markets * Gross margin >> 32.4% (+180 bps) « Net Earnings >> $22 million (+51%) ¢ FY end Backlog >> $110 million re
Slide 5: Key Investment Highlights
TWIN(DISC.) Twin Disc, Incorporated Key Investment Highlights « Added To Russell 2000 Index * Two 2-for-1 Stock Splits (last 2 years) ¢ Three Dividend Increases (last 2 years) * Share Repurchase Program * Market Capitalization Exceeds $300 million for first time October 24, 2007 5
Slide 6: Marine Markets
(win(Disc.) Twin Dise, Incorporated Marine Markets October 24, 2007
Slide 7: Marine Systems
TWIn( Marine Systems Marine Transmissions, Propulsion & Boat Management Systems Electronic Controls Anchor Winches Surface Drives, Propellers, Water Jets, Drivelines Bow Thrusters October 24, 2007 t
Slide 8: Marine Systems
(twnn(sc.) Twin Dise, Incorporated Marine Systems * Target Markets: Pleasure, commercial & military boats 30° to 250’ ¢ Products: Transmissions, Surface Drives, Propellers, Steering/Thruster/Trim Systems * Channels: Engine OEMs & dealers & boat builders ¢« Customers: CAT, Cummins, MAN, MTU, Volvo /
Slide 9: Transmission Systems
A, Gwin(bsc) ) Twin Disc, Incorporated Transmission Systems October 24, 2007
Slide 10: Transmission Systems
‘Twin Disc, Incorporated Transmission Systems Transmissions Torque Converters Electronic Controls * Target Market: Off-highway and all-terrain specialty vehicles + Products: Niche products - 400 to 3,000 HP * Channel: OEM vehicle mfrs. * Customers: BAE, Oshkosh, Tatra / BJ Services, Cisco High-Lift,
Slide 11: Industrial Products
Gun(Bsc) ‘Twin Disc, Incorporated Industrial Products October 24, 2007 1
Slide 12: Industrial Products
Twin Disc, Incorporated Industrial Products Clutches PTOs Torque Converters Variable Speed & Starting Drives « Target Market: Heavy duty industrial disconnect appins * Products: Mech & hyd clutches, PTOs & pump mount drives - 100 - 2,500 HP « Channels: Distribution & OEMs * Customers: Bandit, Morbar
Slide 13: Technology Differentiation
Twin(bisc,) Twin Disc. Incorporated Technology Differentiation « Land-Based « Marine — 8500 Series — QuickShift® — “Pump & Roll” — Rolla CFD — “Legacy” Contracts — Dynamic Positioning — Electronic Control — Electronic/Hydraulic Systems Boat Management Systems October 24, 2007 BS)
Slide 14: Managing Our Cost Structure
Managing Our Cost Structure Investing in Core Competencies —— at ‘ | i o October 24, 2007 14
Slide 15: Managing Our Cost Structure: Global Sourcing
qwin(bisc. ) Twin Disc, Incorporated Managing Our Cost Structure Global Sourcing Sourcing Offices October 24, 2007
Slide 16: Net Sales & Net Earnings
Twin((pisc,) Twin Disc, Incorporated Net Sales & Net Earnings Silfens (Fiscal Year) aa ows S miigns va eT) Th $200 | + $15 $150 | + $10 $100 $50 | 7 8 $0 + LI + + $0 FY04 FY05 FY06 FY07 TTM* [Net Sales —e-Net Earnings * See Appendix Ill for reconciliation of TTM (trailing 12 month) figures to report
Slide 17: Net Sales & Net Earnings (First Fiscal Quarter)
Twin((bisc.) Twin Dise, Incorporated Net Sales & Net Earnings (First Fiscal Quarter) $ millions $ millions $80 $6 $70 4 §5 $60 $50 + $4 $40 $3 $30 + §9 $20 $10 $1 $0 + $0 FY04 FY05 FY06 FY07 FY08 [Net Sales -e—Net Earnings October 24, 2007 17
Slide 18: Consolidated Earnings Per Share
‘Twin Disc, Incorporated Consolidated Earnings Per Share (Diluted) $1.40 a7 $1.20 $0.95 $0.96 $1.00 $0.83 $0.88 $0.80 + $0.64 $0.62 $0.60 5 $0.54 42° $0.40 $0. on $0.20 {8010 $0.19 $0.00 + : 1 FY04 FY05 FY06 FY07 FY08 [ 1st Qtr H2nd Qtr M3rd Qtr mM 4th Qtr October 24, 2007 18
Slide 19: EBITDA
Gun(Bsc) ‘Twin Disc, Incorporated EBITDA (See Appendices | & II for note on non-GAAP Financial Disclosures and a $ millions are . % sales reconciliation of net earnings to EBITDA; $50 4 g } 16% 14.0% on 72% ae + 14% oe $44.5) 1 42% he $30 —_ + 10% + lia 7.4% 30.5 $25 + 7 8% $20 4 + 6% to / ee $16.2
Slide 20: Debt & Debt to Total Capital
Twin Disc, Incorporated Debt ($) & Debt to Total Capital (%) 60 409 $ ve $55.2 % 35% | bay, 359 $50 = = Lobaye 35% vs ° il * O74, 1% + 30% | in 0, f) “i 25% S $30 20% = - + 15% $20 ° + 10% 10 $ + 5% $0 : . tot 0% FYS9 FY0O FYO1 FYO2 FYO3 FY04 FYO5S FYO6 FYO7 Q1 08 1** Qtr cash outflows included — *
Slide 21: Corporate Six Month Backlog
‘win Disc, Incorporated Corporate Six Month Backlog (Orders to be shipped in the next 6 months) $ millions 120 $106 100 80 60 40 20 i JSDMJSDMJSDMJSDMJSDMJSDMJSDMJSDMJS 0 Fy99 FYO0 FY01 FY02 FY03 FY04 FY05 FY06 FYO7 FY08 October 24, 2007 21
Slide 22: Fiscal Year 2008 Outlook
Twin((pisc.) Twin Disc, Incorporated Fiscal Year 2008 Outlook ¢ FY 2008 will be another good year « Key markets will remain strong — Outlook for mega-yachts is bright — Activity in crew & supply boats is solid — Oilfield demand continues at strong levels — Demand & inquiries for military transmissio
Slide 23: Fiscal Year 2008 Outlook
) Twin Disc, Incorporated Fiscal Year 2008 Outlook ¢ Technology differentiation/new products * Opportunity for operating leverage continues — Increasing volume — Expanding global outsourcing — Investing in core competencies ¢ Active Acquisition Program October 24, 2007 23
Slide 24: Slide 24
Slide 25: Appendices
Appendices
Slide 26: Appendix I: Non-GAAP Financial Disclosures
Twin((pisc,) Twin Disc, Incorporated Appendix | 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”). Thes
Slide 27: Appendix II: Reconciliation of Net Earnings to EBITDA
Disc.) Twin Dise, Incorporated Appendix II Reconciliation of Net Earnings to EBITDA in $ thousands, except % data 2003 2004 2005 2006 2007 TTM* Net Earnings $ (2,394) $ 5,643 $ 6,910 $ 14,453 $ 21,852 $ 23,286 Income Taxes (300) 4,964 2,485 8,470 12,273 13,133 Interest Expense 1,323: 1,078 1,134 1,7
Slide 28: Appendix III: Reconciliation of TTM Data
Twin Disc, Incorporated Appendix III Reconciliation of TTM Data to Reported Quarterly Figures (A) (8) (CQ) (A)+(B)-(C) Q1 08* FY 07 Q107* T™ per 10-K Sales $ 73,613 $ 317,200 $ 65,774 $ 325,039 Gross Profit 23,851 102,909 20,313 106,447 Interest Exp 744 3,154 643 3,255 Net Eamings 5,106 21,852 3,672
Slide 29: Appendix IV: First Fiscal Quarter Statements of Operations
(Disc.) Twin Disc, Incorporated Appendix IV 1s‘ Fiscal Quarter Condensed Consolidated Statements of Operations (S thousands, unaudited) 2008 2007 2006 2005 Sales $ 73,613 $ 65,774 $ 49,577 $ 45,382 Gross Profit 23,851 20,313 14,404 11,652 32.4% 30.9% 29.1% 25.7% MEA Expense 14,694 13,652 10,147 9,50
Slide 30: Appendix V: Fiscal Year Statements of Operations
| Twin Disc, Incorporated Appendix V Fiscal Year Condensed Consolidated Statements of Operations (S thousands, per Form 10-K) 2007 2006 2005 2004 Sales $ 317,200 $243,287 $218,472 —$ 186,089 Gross Profit 102,909 74,390 57,420 48,285 32.4% 30.6% 26.3% 25.9% MEA Expense 63,267 49,606 44,666 37,168 19.
Slide 31: Appendix VI: Impact of Significant Items, Fiscal Year 2007
Twin Disc, Incorporated Appendix V1 Impact of Significant Items — Fiscal Year 2007 Diluted Diluted Qtr4 EPS Impact Full Year EPS Impact FY 2007, as reported $5,001 $ 0.83| [$21,852 $ 3.68 Significant Items (after-tax impact): Intangible Asset Write-off 366 0.06 366 Restructuring 1,751 $ 0.29 1,751 B