Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Investor Presentation (May 2008)
35 slides from Twin Disc's investor presentation, May 1, 2008
Slide 1: Twin Disc, Incorporated
Cwn(sc, ‘Twin Disc, Incorporated NOTE: All EPS figures contained in these presentation materials have been adjusted for the January 2008 2-for-1 stock split.
Slide 2: Safe Harbor Statement
‘Twin Disc, Incorporated a 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
Slide 3: Twin Disc At A Glance
‘Twin Disc, Incorporated 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 @ Independent Distributors —
Slide 4: FY 2008 Financial Highlights
(win((Disc.) Twin Disc, Incorporated FY 2008 Financial Highlights Record 1st & 24 Quarter Sales - Continued growth from mega-yacht and commercial marine markets - Strong demand for land based transmission products for the Airport Rescue and Fire Fighting (ARFF) and military markets — Experiencing cy
Slide 5: Key Investment Highlights
win(bisc,) 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 ¢ Strong Balance Sheet May 1, 2008 5
Slide 6: Marine Markets
‘Twin Disc, Incorporated Marine Markets May 1, 2008 6
Slide 7: Marine Systems
Twin (Disc. Twin Disc, Incorporated A Marine Systems Marine Transmissions, Propulsion & Boat Management Systems Electronic Controls Anchor Winches Power Steering ‘Surface Dri Dives Propellers, Water Jets) verelnes Bow Thrusters May 1, 2008 7
Slide 8: Marine Systems
Twin Disc, 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 / Azimuth, Bai
Slide 9: Transmission Systems
Gwn(bisc.) ‘Twin Disc, Incorporated Transmission Systems May 1, 2008
Slide 10: Transmission Systems
.,) Twin Dise, 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-Li
Slide 11: Industrial Products
‘Twin Disc, Incorporated Industrial Products May 1, 2008 11
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, Mor
Slide 13: Technology Differentiation
Twin((Disc.)) Twin Disc, Incorporated Technology Differentiation « Land-Based « Marine — 8500 Series — QuickShift® — “Pump & Roll” — Dynamic Positioning — “Legacy” Contracts —- Rolla CFD — Electronic Control — Electronic/Hydraulic Systems Boat Management Systems May 1, 2008 13
Slide 14: Managing Our Cost Structure
Managing Our Cost Structure Investing in Core Competencies May 1, 2008 14
Slide 15: Managing Our Cost Structure: Global Sourcing
Managing Our Cost Structure Global Sourcing Low Cost Sourcing Offices May 1, 2008 15
Slide 16: Net Sales & Net Earnings
Twin((Disc.)) Twin Disc, Incorporated Net Sales & Net Earnings Emitions (Fiscal Year) = sooo SE $300 $243 =f) | + $20 $250 W278 : $200 $486 + $15 $150 ! : + $40 $100 7 | $50 | + $0 | t t t + $0 FY04 FY05 FY06 FY07 TTM* Net Sales -* Net Earnings * See Appendix Ill for reconciliation of TTM (trailing
Slide 17: Net Sales & Net Earnings (First Nine Months)
Twin(bisc.) Twin Disc, Incorporated ie Net Sales & Net Earnings (First Nine Months) $ millions $ millions $250 $226 $244 $25 $200 $171 7 $20 $150 $15 $100 $10 $50 $5 $0 $0 FY04 FY05 FY06 FY07 FY08 Net Sales - Net Earnings May 1, 2008 17
Slide 18: Consolidated Earnings Per Share (Diluted)
‘win Disc, Incorporated Consolidated Earnings Per Share (Diluted) $0.80 $0.70 $0.70 $0.64 $0.60 $0.50 $0.48 $0.48 : $0.41 $0. $0.40 $0.27 $0.32 $0.31 ~ oe sos $0.21 a = $0.09 | 0: $0.00 T T T FY04 FY05 FY06 FY07 FY08 1st Qtr @ 2nd Qtr M@ 3rd Qtr @ 4th Qtr May 1, 2008 18
Slide 19: EBITDA
‘win Disc, Incorporated EBITDA (See Appendices | & II for note on non-GAAP Financial Disclosures and a i reconciliation of net earnings to EBITDA) % Eee fo 14.0% Oe 12.5% pet 14% $40 $44.5 FEI | 190, $30 “2.3% an 7 10% ~ TARY 7 f $30.5| 1 ga $20 Zi + 6% 40 Z pe $16.2 + 4% $ 62.4% + a% $0 0% FY03 FY0
Slide 20: Debt & Debt to Total Capital
Twin Disc, Incorporated Debt ($) & Debt to Total Capital (%) $70 37% 40% $60 $50 n = $40 2 . = $30 | = $21.3 + 15% $20 | + 10% $10 | | | j +. 5% go . 0% FY99 FYOO FYO1 FY02 FYO3 FY04 FYOS FYOG FYO7 Q3 ‘08 First Nine Months cash outflows included — * Stock Repurchases $15,643,000 (660,000 shares (pos
Slide 21: Corporate Six Month Backlog
vin Disc, Incorporated Corporate Six Month Backlog (Orders to be shipped in the next 6 months) $ millions 140 120 100, 80 | 14 $37 | JSDMJSDMJSDMJSDMJSDMJSDMJSDMJSOMJSDM FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FYO7 FY08 May 1, 2008 21
Slide 22: Fiscal Year 2008 Outlook
(C,) Twin Disc, Incorporated Fiscal Year 2008 Outlook FY 2008 will be another good year Cyclical softening continues in industrial markets Slow down in demand for oil and gas transmissions Key markets will remain strong — Outlook for mega-yachts is bright — Activity in crew & supply boats is solid —
Slide 23: Fiscal Year 2008 Outlook
(win(isc.) 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 Board authorized repurchase of up to an add
Slide 24: Incorporated
Incorporated ®
Slide 25: Appendices
Twin((Disc.) Twin Disc. Incorporated Appendices
Slide 26: Appendix I: Non-GAAP Financial Disclosures
TWIN((DISC.)) 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”). T
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 $ 22,244 Income Taxes (300) 4,964 2,485 8,470 12,273 10,986 Interest Expense 1,323 1,078 1,134 1,
Slide 28: Appendix III: Reconciliation of TTM Data to Reported Quarterly Figures
TwiN((Disc.) Twin Dise, Incorporated Appendix III Reconciliation of TTM Data to Reported Quarterly Figures O17 Q207 307 Q4o7 |] FYO7 | Qios Q2z0e 308 | YTD TM (A) (8) (A) + (B) Sales $ 65,774 $74,239 $86,405 $90,782) $ 317,200] $ 73,613 $81,894 $85,838|$ 241,345|$ 332,127 Gross Profit 20,313 24,389
Slide 29: Appendix IV: 3rd Fiscal Quarter Statements of Operations
‘TWIN((DisC.), Twin Disc, Incorporated Appendix IV 3" Fiscal Quarter Condensed Consolidated Statements of Operations ($ thousands, unaudited) 2008 2007 2006 2005 Sales $ 85,838 $ 86405 $ 64,125 $ 56,436 Gross Profit 26,627 28,185 19,906 14,675 31.0% 32.6% 31.0% 26.0% MEA Expense 14,969 15,913, 13,15
Slide 30: Appendix V: 2nd Fiscal Quarter Statements of Operations
(SC. Twin Disc, Incorporated Appendix V 2" Fiscal Quarter Condensed Consolidated Statements of Operations ($ thousands, unaudited) Sales Gross Profit MEA Expense Interest Expense Misc. Exp/(Inc) Pretax Earnings Income Taxes Minority Interest Net Earnings EBITDA DILUTED EPS May 1, 2008 2008 2007 2006
Slide 31: Appendix VI: 1st Fiscal Quarter Statements of Operations
‘TWIN((DISC.) Twin Disc, Incorporated Appendix V1 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 10,14
Slide 32: Appendix VII: Marketing, Engineering & Administrative Expenses
sc.) Twin Disc, Incorporated Appendix VII Marketing, Engineering & Administrative Expenses (ME&A) FY 2007 ME&A Expenses % of sales Significant Year-over-Year Variances: Decrease in Stock Based Comp Expense Impact of Foreign Currency Translation Increase in Corporate IT/ERP Implementation Expenses Sp
Slide 33: Appendix VIII: Fiscal Year Statements of Operations
Twin(Disc,) Twin Disc. Incorporated Appendix VIII Fiscal Year Condensed Consolidated Statements of Operations ($ 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,
Slide 34: Appendix IX: FY 2007 Financial Highlights
(Twin(DISC.) Twin Disc, Incorporated Appendix IX FY 2007 Financial Highlights — versus fiscal year 2006 * Record Sales >> $317 million — 30% revenue growth; 17% after BCS — Strong demand from oilfield, military and marine markets « Gross margins remain >30% 32.4% (+180 bps) ¢ Net Earnings >> $22 mil
Slide 35: Appendix X: Impact of Significant Items — Fiscal Year 2007
Twin Disc, Incorporated Appendix X Impact of Significant Items — Fiscal Year 2007 Diluted Diluted Qtr4 EPS Impact Full Year EPS Impact FY 2007, as reported $5,001 $ 0.42| |$ 21,852 $ 1.84 Significant Items (after-tax impact): Intangible Asset Write-off 366 $ 0.03 366 0.03 Restructuring 1,751 $ 0.15