Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Q1 FY2015 Earnings Presentation
36 slides from Twin Disc's earnings presentation, Nov 6, 2014
Slide 1: We Put Horsepower to Work
Twin Disc, Incorporated WE PUT HORSEPOWER TO WORK ™ November 6, 2014
Slide 2: Safe Harbor Statement
Twin Disc, Incorporated Safe Harbor Statement This presentation contains statements that are for forward-looking ard looking within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on g management’s current expectations p that are based on ass
Slide 3: Twin Disc At A Glance
Twin Disc, Incorporated Twin Disc At A Glance • Founded in 1918 • Headquartered H d d iin R Racine, i WI • ≈ 970 employees • TTM Revenues of $262M FY14 Revenues of $264M FY13 Revenues of $285M 2 1 1 FY12 Revenues of $356M 2 1 • We are a global company 1 – Well-known W ll k customers t around the wor
Slide 4: FY 2014 – Highlights
Twin Disc, Incorporated FY 2014 – Highlights $ millions • Sales down 7% from FY ‘13 Sales $400 $356 – Asian operations continued at record $350 $310 +15% -20% levels, driven by strong demand in the $300 $ $285 $250 $118 -7% % $264 Chinese O&G and Asian commercial $200 $112 $112 $109 marine markets $
Slide 5: 1st Quarter Highlights
Twin Disc, Incorporated 1st Quarter Highlights $ millions Sales • Sales down 2% from Q1 of FY ‘14 $100 – Biggest decline in Asia, partially offset by $81 $80 -15% North America $69 3% $66 -3% $64 $60 $30 -2% – Transmission sales up 12%, driven by $40 $26 $27 $22 improved North American pressure-pump
Slide 6: Marine & Propulsion
Twin Disc, Incorporated Marine M i &P Propulsion l i Sales Mix %: Industrial 15.9% Q1 FY15 Other Industrial 15.6% FY14 Other Industrial 15.2% FY12 Other Systems 3.1% 2.4% 1.1% Marine & Propulsion Marine & Land‐based Sys Marine & Propulsion • Commercial Marine: Trans Sys Land‐based 47.7% Propulsion S
Slide 7: Land-Based Products
Twin Disc, Incorporated Land-Based Products Sales Mix %: Q1 FY15 FY14 Industrial FY12 Industrial Industrial 15.6% 15.2% 15.9% Other Other Other 3.1% 2.4% 1.1% Marine & Transmission Systems Propulsion Sys 47.7% Land‐based Trans Sys 25 4% 25.4% Marine & Propulsion Land‐based Trans Sys Marine & Propuls
Slide 8: Land-Based Products: Pressure Pumping
Twin Disc, Incorporated Land-Based Products U.S. domestic crude oil production by source, 1990-2040 (million barrels per day) Pressure Pumping Source: EIA, Annual Energy Outlook 2013 (Early Release Overview). ) U.S. dry natural gas production by source,1990-2040 (trillion cubic feet) Source: EIA, An
Slide 9: Land-Based Products: Industrial Products
Twin Disc, Incorporated Land-Based Products Sales Mix %: Q1 FY15 FY14 Industrial FY12 Industrial Industrial 15.6% 15.2% 15.9% Other Other Other 3.1% 2.4% 1.1% Marine & Industrial Products Propulsion Sys 47.7% Land‐based Trans Sys 25 4% 25.4% Marine & Propulsion Land‐based Trans Sys Marine & Propulsi
Slide 10: Corporate Profile – Geographic Diversity
Twin Disc, Incorporated C Corporate P Profile fil – Geographic G hi Di Diversity i Sales (as a % of total sales) • Highlights: Rest of World FY2014 – Nearly 59% of sales were outside the USA 8.1% Canada in fiscal 2014 3.5% USA – Sales to Canada were nearly 13% in 2012 Europe 41.1% (oil & gas driven)
Slide 11: Managing Our Cost Structure
Twin Disc, Incorporated Managing Our Cost Structure CAPEX • Investing in core competencies • Expanding p gppresence in low cost manufacturing g locations • Over $100 million over past 10 yrs 11 November 6, 2014
Slide 12: Managing Our Cost Structure
Twin Disc, Incorporated Managing Our Cost Structure Low Cost Lower Cost Sourcing Offices Corporate HQ/Mfg Mfg locations 12 November 6, 2014
Slide 13: What Differentiates Us?
Twin Disc, Incorporated What Differentiates Us? • Technology T h l – Oil & Gas – Marine • 8500 Series • Patented QuickShift® • 7500 Series • Express Joystick System® • Dynamic Positioning/DPII – ARFF • Rolla CFD • “Pump & Roll” – Militaryy • “Legacy” Contracts 13 November 6, 2014
Slide 14: What Differentiates Us?
Twin Disc, Incorporated What Differentiates Us? • 96+ Years of Proven Application pp Know-How • Niche Market Focus # Mfg location C Co.-ownedd dist. di t rd 3 Party dist. Service dealers # • Global Distribution and Service Network • Product/Market & Geographic Diversity • Core Manufacturing Capabili
Slide 15: Looking Ahead
Twin Disc, Incorporated Looking Ahead 15 November 6, 2014
Slide 16: Corporate Six Month Backlog
Twin Disc, Incorporated C Corporate t Si Six M Month th B Backlog kl $ millions (Mfg Orders to be shipped in the next 6 months) $180 $165 $160 $140 $126 $120 $100 $80 $64 $56 $60 $40 $20 $0 $ S DM J S DM J S DM J S DM J S DM J S DM J S DM J S DM J S DM J S DM J S FY05 FY06 FY07 FY08 FY09 FY10 FY11 F
Slide 17: Fiscal 2015 & Beyond Outlook
Twin Disc, Incorporated Fiscal 2015 & Beyond Outlook • Expect fiscal 2015 results to improve over fiscal 2014 • North American Oil & Gas landscape causes near term outlook to be cautiously optimistic – Experienced increased order activity in the 2nd half of fiscal 2014, which resulted in improved sh
Slide 18: Fiscal 2015 & Beyond Outlook
Twin Disc, Incorporated Fiscal 2015 & Beyond Outlook • ARFF, Military and North American industrial markets are expected to remain stable • Global markets will remain mixed – European markets will remain challenged in the near term – Asia continues to offer significant opportunities for above averag
Slide 19: Appendices
Twin Disc, Incorporated Appendices 19 November 6, 2014
Slide 20: Corporate Profile – Market Diversity I
Twin Disc, Incorporated Appendix I Corporate Profile – Market Diversity Pleasure Craft Market: • Target Markets: High speed planing and displacement yachts from 50’ to 150’, diesel-powered p • Products: Transmissions, Arneson Surface Drives, Propellers, Steering/Thruster/Trim Systems, Controls, EJS
Slide 21: Corporate Profile – Market Diversity II
Twin Disc, Incorporated Appendix II Corporate Profile – Market Diversity Work Boat Market: • Target Markets: planing and displacement vessels from 30’ 30 to 250’, diesel-powered • Products: Transmissions, Propellers, MCD’s, Controls • Channels: Engine OEMs & dealers, boat builders & distribution • C
Slide 22: Corporate Profile – Market Diversity III
Twin Disc, Incorporated Appendix III Corporate Profile – Market Diversity Patrol Boat Market: • Target Markets: military, patrol and coast guard vessels from 30’ to 90’, diesel-powered • Products: Transmissions, Arneson Surface Drives, Propellers, Steering/Thruster/Trim Systems, Controls, EJS • Chan
Slide 23: Corporate Profile – Market Diversity IV
Twin Disc, Incorporated Appendix IV Corporate Profile – Market Diversity Marine Transmissions,, Propulsion p & Boat Management g Systems y EJS®/Electronic Controls Anchor Winches Power Steering QuickShift® Transmissions Gangways Bow Thrusters Trim Tabs, Stern Thrusters Arneson Surface Drives, Rolla
Slide 24: Corporate Profile – Market Diversity V
Twin Disc, Incorporated Appendix V Corporate Profile – Market Diversity Industrial Products: • Target Market: Heavy duty industrial disconnect applications • Products: Mechanical & hydraulic clutches, PTOs, reduction gearboxes & pump mount drives, 100 00 - 2,500 ,500 HP • Channels: Distribution & OE
Slide 25: Corporate Profile – Market Diversity VI
Twin Disc, Incorporated Appendix VI Corporate Profile – Market Diversity Industrial Transmissions: • Target Market: Off-highway and all-terrain ll t i specialty i lt vehicles, hi l diesel powered • Products: Powertrain components p - 400 to 3,000 , HP • Channel: OEM vehicle mfrs. & Distribution • Cu
Slide 26: Frac Rig Diagram
Twin Disc, Incorporated Appendix VII Frac Rig Diagram Engine Transmission Pump 26 November 6, 2014
Slide 27: EBITDA
Twin Disc, Incorporated Appendix VIII EBITDA (See Appendices IX & X for note on non-GAAP Financial Disclosures and a reconciliation of net $ millions earnings to EBITDA) % sales $60 16.0% 18% 14.0% 16% $50 $56.8 13.9% 14% $46.1 $40 $43.5 12% 10.2% 10% $30 7.4% $33.0 7 4% 7.4% 8 5% 8% 8.5% 6.0% $20 $
Slide 28: Non-GAAP Financial Disclosures
Twin Disc, Incorporated Appendix IX 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
Slide 29: Reconciliation of Net Earnings to EBITDA
Twin Disc, Incorporated Appendix X Reconciliation of Net Earnings to EBITDA i $ th in thousands, d exceptt % d data t TTM 2014 2013 2012 2011 2010 2009 Net Earnings $ 6,410 $ 3,644 $ 3,882 $ 26,743 $ 17,997 $ 597 $ 11,502 Income Taxes 4,347 4,226 4,986 17,815 13,897 992 6,257 Interest Expense 846 93
Slide 30: Reconciliation of TTM Data to Reported Quarterly Figures
Twin Disc, Incorporated Appendix XI Reconciliation of TTM Data to Reported Quarterly Figures FY 10** FY 11** FY 12** FY 13** Q1 14* Q2 14* Q3 14* Q4 14* FY 14** Q1 '15* TTM Sales $227,534 $310,393 $355,870 $ 285,282 $66,426 $63,212 $60,705 $73,567 $ 263,909 $64,824 $ 262,308 Gross Profit 60,465 107,
Slide 31: Fiscal Year Condensed Consolidated Statements of Operations
Twin Disc, Incorporated Appendix XII Fiscal Year Condensed Consolidated Statements of Operations ($ thousands, per Form 10-K) 2014 2013 2012 2011 2010 2009 Sales $ 263,909 $ 285,282 $ 355,870 $ 310,393 $ 227,534 $ 295,618 Gross Profit 77,254 80,025 121,632 107,683 60,465 81,443 29.3% 28.1% 34.2% 34.
Slide 32: Historical Net Sales by Segment
Twin Disc, Incorporated Appendix XIII Historical Net Sales by Segment $400 $356 $332 $350 $317 $296 $310 $285 $300 $98 $118 $264 $87 $250 $91 $228 $112 $112 $200 $109 $85 $150 $230 $234 $238 $100 $205 $199 $174 $143 $155 $50 $0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Manufacturing g Distribution 32
Slide 33: Historical Net Earnings by Segment
Twin Disc, Incorporated Appendix XIV Historical Net Earnings by Segment (before Corporate Expense) $50 $45 $6 $40 $35 $6 $7 $30 $7 $25 $20 $ $40 $6 $ $15 $32 $30 $25 $6 $10 $17 $6 $5 $10 $7 $5 $0 $0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Manufacturing Distribution NOTE: 2011 and 2012 fiscal year fi
Slide 34: 1st Fiscal Quarter: Condensed Consolidated Statements of Operations
Twin Disc, Incorporated Appendix XV 1st Fiscal Quarter: Condensed Consolidated Statements of Operations ($ thousands, unaudited) 2015 2014 2013 2012 2011 Sales $ 64,824 $ 66,426 $ 68,793 $ 81,330 $ 61,395 Gross Profit 22,389 20,667 19,416 30,768 20,023 34.5% 31.1% 28.2% 37.8% 32.6% MEA Expense 15,91
Slide 35: Operating Cash Flows – Fiscal Year
Twin Disc, Incorporated Appendix XVI Operating Cash Flows – Fiscal Year $ millions % sales $40 15.4% 16% $35 14% $ $30 12% $25 8.5% 9.8% 10% $20 8% $35 1 $35.1 $15 5.9% 4.5% 6.2% 6% 5.5% 3.9% $14.4 $25.7 $24.5 $10 $17.5 $19.7 4.0% 4% $16.3 $13.9 $5 $11.5 2% $0 0% FY07 FY08 FY09 FY10 FY11 FY12 FY13 F
Slide 36: Express Joystick System in Action
Twin Disc, Incorporated Express Joystick System® in Action Go to http://www.twindisc.com/en/marine/marine http://www twindisc com/en/marine/marine-products/express-joystick-system products/express joystick system to see the new revolutionary Twin Disc Express Joystick System® in action. 36 November