Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Q1 FY2021 Earnings Presentation
30 slides from Twin Disc's earnings presentation, Nov 10, 2020
Slide 1: Investor Presentation: First Quarter Fiscal 2021
INVESTOR PRESENTATION First Quarter Fiscal 2021
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 Overview
TWIN DISC OVERVIEW
Slide 4: Twin Disc at a Glance
TWIN DISC AT A GLANCE Founded in 1918 Headquartered in Racine, WI — ~800 employees Designer and manufacturer of heavy duty power transmission equipment A global company — Manufacturing operations in the U.S., Belgium, Netherlands, Italy, Switzerland and Japan (JV) — World-wide distributor network —
Slide 5: Geographic Diversity
GEOGRAPHIC DIVERSITY 4 Manufacturing location * = North American oil and gas markets driving increase in FY18/19, decline in FY20/21. = European segment has been relatively stable in recent years, Veth driving FY19 and FY20 growth. ™ Asia Pacific sales have experienced strong recovery in FY18 and in
Slide 6: Twin Disc Strategic Priorities
TWIN DISC STRATEGIC PRIORITIES = Continued growth in land-based transmission business = Development of hybrid/electric technologies for marine and industrial applications @ Integration of Veth Propulsion acquisition and expansion into new markets m Increased focus on controls and system integration
Slide 7: Marine & Propulsion - Work Boat / Commercial
MARINE & PROPULSION - work BoAT / COMMERCIAL MARINE Target Markets Diesel powered planning & displacement vessels 30’— 250’. Products - transmissions Azimuth , Thrusters - propellers jransmissions - MCD’s - controls Propellers — European market remains stable — Asian growth rebounded in FY18/19. — L
Slide 8: Marine & Propulsion - Pleasure Craft
MARINE & PROPULSION — PLEASURE CRAFT Frwn(osc) Target Markets High speed diesel powered planing & displacement yachts 50’ — 150’. @ 5 * - contro Transmissions steering Propellers ~ Arneson surface drives « aay & \ <— imagens Ss - steering — =a Drives Bs systems Controls — Market remains stable but o
Slide 9: Marine & Propulsion - Patrol
MARINE & PROPULSION - patRoL High speed diesel powered planing & displacement yachts 50’ — 150’. @ se % Transmissions Steering Propellers sd N & —_ / SS vA = - steering betas ae Drives Bs systems Controls — Experienced growth in FY17-FY19 as demand for coastal security applications has increased glo
Slide 10: Recent Acquisition: Veth Propulsion
RECENT ACQUISITION: VETH PROPULSION Frni(oisc OVERVIEW TRANSACTION OVERVIEW & BUSINESS DESCRIPTION END MARKET BY SHIP TYPE = Acquired Veth Propulsion for €53.0million (€3.3 million paid in TWIN stock) on 7/2/2018. a y oye are Othe Financed with existing cash / new debt facility oe ee = Veth Propulsi
Slide 11: Strategic Rationale for Veth Propulsion Acquisition
STRATEGIC RATIONALE FOR VETH PROPULSION ACQUISITION 4 4 4 4 HAA Complementary product offering with exposure to new technologies Additive engineering talent and product development capabilities Acceleration of hybrid technology strategy End market diversification away from land-based energy markets
Slide 12: Land Based Transmission Products
LAND BASED TRANSMISSION PRODUCTS <> Target Markets Diesel powered off-highway and all-terrain specialty vehicles 400hp — 3000hp. Sa TA90-8501 Fracking _TA90-7500 Fracking __TD61-1180 ARFF Transmission Transmissi Transmission = Pressure Pumping: = Traditionally cyclical market. = Weak NA market in FY
Slide 13: Industrial Product
INDUSTRIAL PRODUCT Target Markets Products Mechanical & hydraulic clutches Reduction gearboxes Pump mount drives Market Dynamics WIN DISC ~ STRICTLY CONFIDENTIAL 4 Heavy duty industrial disconnect applications. Power Take-Off = oN =n Power Take-Off SP314 HP1200 jorth American Energy Related: Cyclica
Slide 14: Financial Overview
FINANCIAL OVERVIEW 14
Slide 15: Q1 Performance
Q1 PERFORMANCE Fv (ois NET SALES (Sin millions) 80 70 m Weak O&G demand in FY20 and FY21 60 following strong FY19. 50 40 @ All markets negatively impacted by COVID- 30 19 pandemic. = @ Asia Pacific volume stable, with strong ° Australian market demand. FY18 FY19 FY20 FY21 Base mVeth EARNINGS PER SHA
Slide 16: Net Sales Diversity
NET SALES DIVERSITY NET SALES BY CATEGORY (Sin milions) 80 140 20 W Marine Wland-Based miIndustrial ml Other FY18 FY19 FY20 FY21 NET SALES MIX BY GEOGRAPHY E | E a a Fva7 Fvig FvIg FY20 TWIN DISC - STRICTLY CONFIDENTIAL 19 Confidential Marine segment includes marine transmissions, controls, surface
Slide 17: Historical Financial Performance - Q1
HISTORICAL FINANCIAL PERFORMANCE - Q1 GROSS MARGIN aise 32.1% 22.3% a a - Fvig rvs Fv20 Fv21 NET INCOME {(S.in millions) $34 $2.9 {| rs pis pie ru isc sete cERBERTUES remem een an ra Confidential Reduced volume, due to impact of COVID-19 on global demand, along with poor product mix impacted GP%. Pr
Slide 18: Product Images
PRODUCT IMAGES a>
Slide 19: Marine & Propulsion Products
MARINE & PROPULSION PRODUCTS Susur Susur You've got to feelit to believe it You've gotto feelit to believe it Marine Transmission Marine Transmission Marine Control Drive MGX 5065 MGX 5600 (MCD) 270hp—570hp 1300hp— 2100hp 5 Models 215hp—60325hp TWIN DISC - STRICTLY CONFIDENTIAL
Slide 20: Marine & Propulsion Products
ap MARINE & PROPULSION PRODUCTS ¥en Surface Drive w ROLLA A Twin Disc Company Controls EC 300 Express Joystick TWIN DISC - STRICTLY CONFIDENTIAL
Slide 21: Marine & Propulsion Products - Veth
MARINE & PROPULSION PRODUCTS - VET Frwn(osc BF be Tunnel Thrusters Z-Drives L-Drives Veth-Jet Diesel Engines / Electronics Generator Sets TWIN DISC - STRICTLY CONFIDENTIAL
Slide 22: Transmission Products
TRANSMISSION PRODUC TAS0-8501 TAS0-7500 TD61-1180 Fracing Transmission Fracing Transmission ARFF Transmission 3000hp (2300kW) 2600hp (1939kW) 705hp (526kW) TWIN DISC - STRICTLY CONFIDENTIAL
Slide 23: Frac Rig Diagram
Frac Rig Diagram Engine Transmission * 4 TWIN DISC ~ STRICTLY CONFIDENTIAL
Slide 24: Industrial Products
INDUSTRIAL PRODUC Pump Drive HP1200 Power Take-Off AM370 Released 3/16 SP314 Clutch Gear Box Universal Control Drive TWIN DISC - STRICTLY CONFIDENTIAL
Slide 25: Hybrid System - Sample Schematic
HYBRID SYSTEM — SAMPLE SCHEMATIC Diese Oriven Generator FY'19: Build Dedicated elute Hybrid Control Team S) Diese Driven Generator Hotel Load Grid Diese Driven Generator FY'20: Partner w/ Battery Management Company Partner w/ Energy Management Company satery ‘Bank static Converter Generator S sanery
Slide 26: Drivers Impacting Marine Hybrid Adoption
DRIVERS IMPACTING MARINE HYBRID ADOPTIO 1. Regulation to reduce emissions + International Maritime Organization (UN) sulfur reduction initiative for the global shipping industry Reduce emissions by 50% by 2050 “Black smoke” reduction initiatives in urban areas and major ports/waterways—invest only i
Slide 27: Appendix
APPENDIX a>
Slide 28: Reconciliation of Net Income to EBITDA
RECONCILIATION OF NET INCOME TO EBITDA (Sin thousands) FY18 FY19 FY20 Fy21.Q1 YTD Net income $9,528 $10,673 ($39,817) ($3,979) Income Taxes 4773 374 (4,169) (929) Interest Expense 282 1,927 1,860 373 Depreciation & Amortization 6464 13,612 11,925 2,758 Earnings beforeinterest, taxes, depreciation ‘a
Slide 29: Income Statement Summary - Q1 YTD
INCOME STATEMENT SUMMARY - Q1 YTD (Sin thousands) FY18 FY19 FY20 FY24 Net Sales $45,064 $74,689 $59,290 $46,143, Gross Profit 13,895 23,985 9,636 10,27 96 Margin 30.8% 32.1% 16.3% 22.3% MEA Expense 13,668 18,986 16,346 13,022 Restructuring Impairment 1,218 173 121 405 Interest Expense 6a m7 389 3873
Slide 30: Non-GAAP Financial Disclosures
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 items are measures that management believes ar