Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Investor Presentation (November 2016)
41 slides from Twin Disc's investor presentation, Nov 2, 2016
Slide 1: Twin Disc Incorporated Investor Presentation
Twin Disc, Incorporated Twin Disc Incorporated Investor Presentation November 2016
Slide 2: Safe Harbor Statement
jwin 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 su
Slide 3: Twin Disc At A Glance
mm momen Twin Disc At A Glance * Founded in 1918 « Headquartered in Racine, WI « ~ 800 employees 5 « Weare a global : * We company x — Mfg Operations in the Od U.S., Belgium, Italy, & India, Switzerland and » Japan (JV) — World-wide distributor network ° — Global: 58% of fiscal 2016 sales to interna
Slide 4: FY 2016 Highlights
sms De ts FY 2015 — Highligh Sales down 37% from FY ‘16 $ millions Sales ‘$200 SEE — Dramatic reduction in global O&G demand ‘$250 due to oil prices. oe bs - Softening in Asian demand for commercial $100 marine. $50 [| — Weakness in pleasure craft continues. = FY13 FY 14 FY15 FY16 — Unfavorable curr
Slide 5: FY17 1st Quarter Highlights
vmiose weoscmns FY47 « 48t Quarter Highligh $ millions Sales $90 * Sales down 4% from Q1 of FY ‘16 ss +8 ae — No recovery in global O&G demand. us ‘$37 $38 — Continued softening in Asian _ commercial marine demand. * [L [ $0 FY14 FY15 FY16 FY17 simone oy + $2.7 million loss, or $0.24 per diluted Net
Slide 6: Product/Market Diversity
jwin Disc, Incorporated Product/Market Diversity Twin Disc benefits from a broad product offering with diverse market applications. FY16 Product Mix Other 2.3% Industrial 19.5% Marine & Land- Propulsion based Sys Trans Sys 59.5% 25.4% Land-Based Transmission «Pressure pumping (O&G) Airport rescue &
Slide 7: Land-Based Transmission Systems
Twn dis,hcopoted Land-Based Transmission Systems « Pressure Pumping: — Achieved record units sales in fiscal ’12 — Asian market, driven by China, has become a key source of demand and future growth. — Severe decline in global oil prices in 15 have caused significant drop in demand. — Started to ship
Slide 8: Marine & Propulsion Systems
w(osc) wndsc.rcoportes Marine & Propulsion Systems * Commercial Marine: — Fiscal ’15 softening in Asia following record years. —Fiscal’16 —’17 further decline in Asia demand, primarily due to China economy — European market remains stable but uncertain, likely 2-3 years to recover — Long term growth
Slide 9: North America Energy Related and Industrial Products
Twin Disc, Incorporated ¢ North America Energy Related: — After a strong fiscal 2012, shipments and orders were impacted by oversupply in oil & gas markets. — Slight rebound in early FY15, followed by crash of oil prices. — Demand will grow as North American oil & gas market strengthens. + Irrigatio
Slide 10: Geographic Diversity
‘Twin Disc, Incorporated Geog ra re) h ic D ive rs ity + Sales to Asia Pacific peaked at 29% in Restof QiFY17 FY 14, declining through FY 16 with reduced ©&G and economic downturn in China. + European segment relatively stable, Europe following pleasure craft downturn in Biles FY10/FY11. ; « North A
Slide 11: Managing Our Cost Structure
‘rm(ose) Twn dsccononied ~—- Managing Our Cost Structure Announced $6 million annualized savings in Q4 FY15 * Response to initial downturn in NA O&G demand * Primarily Racine-based headcount actions * $3.3 million charge recorded in Q4. Announced additional $4 million annualized savings in Q2 FY16 *
Slide 12: Managing Our Cost Structure: Capital Investments
se) win Disc nconorted Managing Our Cost Structure Capital Investments * Investing in core competencies * Expanding benefit from low cost manufacturing sources * Nearly $100 million over past 10 yrs
Slide 13: $20,000 $10,000 so ($10,000) ($20,000) ($30,000) ($40,000) ($50,000) ~
$20,000 $10,000 so ($10,000) ($20,000) ($30,000) ($40,000) ($50,000) ~
Slide 14: Strategies Focus
Gwan(bIsc) Twin Disc, Incorporated Strate g j res F ocu Renewed focus on product development activities to drive Industrial product growth. Sale of non-core NA distribution entities. *Eliminated 5 locations *Territories in good hands with long-term partner *Generated $5 million of capital for reinve
Slide 15: What Differentiates Us? Technology
<uav(bsc.) Twi Ds, eopovaed What Differentiates Us? Technology — Oil & Gas * 8500 Series * 7500 Series — Marine * Patented QuickShift® ¢ Express Joystick System® — ARFF « “Pump & Roll” « Dynamic Positioning/DPII — Military * Rolla CFD « “Legacy” Contracts
Slide 16: What Differentiates Us?
wor wosnet What Differentiates Us? * 96+ Years of Proven Application Know-How * Niche Market Focus * Global Distribution and Service Network * Product, Market & Geographic Diversity * Core Manufacturing Capabilities
Slide 17: Looking Ahead
qwin(bisc.) Twin Disc, Incorporated Looking Ahead
Slide 18: Corporate Six Month Backlog
Gwn(bsc) Twn Discincopoted ~~ COrporate Six Month Backlog $ millions $180 + $160 + Volatility driven — $140 by O&G cycles — $120 4 $100 + $80 $60 + $40 | $20 | $0 + SDMJSDMJISDMJSDMJSODMJSODMJISDMJS FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Slide 19: Fiscal 2017 & Beyond Outlook
win Dis, Incorporated Fiscal 2017 & Beyond Outlo * Anticipate second half of fiscal 2017 volume to remain in line with FY16 second half levels. ¢ North American Oil & Gas landscape causes difficult near term outlook. — No order activity for several quarters. — Current signals positive for some near
Slide 20: Fiscal 2017 & Beyond Outlook
npc.) Twin ise, ncorpoated Fiscal 2017 & 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 av
Slide 21: Appendices
qwin(bisc.) Twin Disc, Incorporated Appendices
Slide 22: Market Diversity: Pleasure Craft Market
Tehmestare Appendix | Corporate Profile — Market Diversity Pleasure Craft Market: + Target Markets: High speed planing and displacement yachts from 50’ to 150’, diesel-powered « Products: Transmissions, Arneson Surface Drives, Propellers, Steering/Thruster/Trim Systems, Controls, EJS * Channels: Eng
Slide 23: Market Diversity: Work Boat Market
win(bisc.) Twin Disc, Incorporated Ap p en | ix | | Corporate Profile — Market Diversity Work Boat Market: * Target Markets: planing and displacement vessels from 30’ to 250’, diesel-powered « Products: Transmissions, Propellers, MCD’s, Controls * Channels: Engine OEMs & dealers, boat builders & dis
Slide 24: Market Diversity: Patrol Boat Market
5) canines tence 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 * Channels: E
Slide 25: Marine Transmissions, Propulsion & Boat Management Systems
‘rwav(oee) Twin Diss heoported Appendix IV Corporate Profile — Market Diversity Marine Transmissions, Propulsion & Boat Management Systems EJS®/Electronic Controls | Sas QuickShift® Transmissions — gS Arneson Surface Drives, Rolla Propellers, Drivelines We have been successful “packaging” more marin
Slide 26: Market Diversity: Industrial Products
Twin(Pisc. Twin Disc, Incorporated Ap pe n | ix 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 - 2,500 HP * Channels: Distributi
Slide 27: Market Diversity: Industrial Transmissions
Twin(Pisc. Twin Disc, Incorporated Ap p en | ix V Corporate Profile — Market Diversity Industrial Transmissions: + Target Market: Off-highway and all-terrain specialty vehicles, diesel powered + Products: Powertrain components - 400 to 3,000 HP * Channel: OEM vehicle mfrs. & Distribution * Customers
Slide 28: Marine Products
fwin(bisc.) Twin Disc, Incorporated AIDTTTISHI-T: You've got to feelitto believe it Marine Transmission MGX 5065 270hp — 570hp Marine Products AIDTTTISHI-T You've got to feelitto believe it Marine Transmission MGX 5600 4300hp — 2100hp - Appendix V1 Marine Control Drive (McD) 5 Models 215hp — 6035hp
Slide 29: Marine Products
Gun(isc) Twin Disc, Incorporated Marine Products - Appen dix VI Surface Drive wy ROLLA A Twin Disc Company a Controls Ec 300 Express Joystick
Slide 30: Transmissions
Tunes spares Transmissions - Appendix VI TA90-8501 TA90-7500 TD61-1180 Fracing Transmission Fracing Transmission ARFF Transmission 3000hp (2300kW) 2600hp (1939kW) 705hp (526kW)
Slide 31: Industrial Products
fwan(osc) Twin disencoporated INGUStrial Products - Appendix V1 Power Take-Off Pump Drive HP1200 AM370 Released 3/16 Power Take-Off SP314 Universal Control Drive
Slide 32: Land-Based Products: Pressure Pumping
;) Twin Disc, Incorporated Land-Based Products Pressure Pumping Remaining recoverable natural-gas resources naman cont Tipteers tenance Won totat onwar ‘ae > BO yaw 000% we STATES ray ~~ VENEZUELA = P > " ; = Ge 2. D wn ome INoONESY mA AusmRALA th By reion cen Tree metes ; Share of world primary ene
Slide 33: Frac Rig Diagram
win(bisc.) Twin Disc, Incorporated Ne) pe n | ix Vi | Frac Rig Diagram Engine ; wy Transmission 4
Slide 34: EBITDA
ronbsesrenretes Appendix VIII EBITDA (See Appendices |X & X for note on non-GAAP Financial Disclosures and a reconciliation of net $ millions earnings to EBITDA) % sales $70 20% “i 0% “ 10.0% 7 18% San laa 74% 7.A% a + 40% $30 A + 5% $20 + on $10 om i \ $0 = , , , ae Hed 3.3% | °% ($10) FY11 FY12 FY
Slide 35: Non-GAAP Financial Disclosures
Finder 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 measures that man
Slide 36: Reconciliation of Net Earnings to EBITDA
win(bisc.) Twin Disc, Incorporated Ap p en | ix x Reconciliation of Net Earnings to EBITDA in $ thousands, except % data T™ 2016 2015 2014 2013 2012 2011 Net Earnings $ (11,477) $ (13,104) $ 11,173 $ 3,644 $ 3,882 $ 26,743 $ 17,997 Income Taxes. (11,126) (12,282) 4,515 4,226 4,986 17,815 13,897 Inte
Slide 37: Reconciliation of TTM Data to Reported Quarterly Figures
fwin(bisc.) Twin Disc, Incorporated Ap p en | ix X | Reconciliation of TTM Data to Reported Quarterly Figures Evie | Eviz’ | Eyis’ | Ey | Pyis | Gig 2 ORE AG | EYIG | QI | Ti Sales $310,393 | $355,870 | $285,282 | $263,909 | $265,790 | $ 37.373 $ 44.829 $ 41,434 § 42,646 | $166,282 | $35,835 | $164,
Slide 38: Fiscal Year Condensed Consolidated Statements of Operations
fwin(bisc.) Twin Disc, Incorporated Append ix Xl | Fiscal Year Condensed Consolidated Statements of Operations ($ thousands, per Form 10-K) 2016 2015 2014 2013 2012 2014 Sales $166,282 $265,790 $ 263,909 $ 285,282 © $ 355,870 $310,393 Gross Profit 40,595 83,032 77,254 80,025 121,632 107,683 24.4% 31
Slide 39: 1st Fiscal Quarter Condensed Consolidated Statements of Operations
qwin(bisc.) Twin Disc, Incorporated Append ix Xl | | 1st Fiscal Quarter: Condensed Consolidated Statements of Operations (S thousands, unaudited) 2017 2016 2015 2014 2013 Sales $ 36,835 $ 37,373 $ 64,824 $ 66,426 $ 68,793 Gross Profit 9,173 8,190 22,389 ©—-20,667 «(19,416 25.6% 21.9% 34.5% 31.1% 28.
Slide 40: Operating Cash Flows — Fiscal Year
TaniiRestisepeearss Appendix XIV Operating Cash Flows — Fiscal Year $ millions % sales $40 15.4% 16% $35 x 14% $30 7 \ 12% $25 7 \ SB 8% 10% $20 7 $25. 64% 8% $15 : : 6% wh 4.0% TE $10 50% + 4% 95 tn ie \-2:0%—v 4.99% 2% $0 4 4 H 4 4 4 4 $34 4 0% FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 TTM* Cash Flo
Slide 41: Express Joystick System in Action
Twin Disc, Incorporated Express Joystick System® in Action Twin Disc Express Joystick System® - Part | ax ery DP dij 008/425 @ Go to http://www.twindisc.com/en/marine/marine-products/express-joystick-system to see the new revolutionary Twin Disc Express Joystick System® in action.