Twin Disc, Incorporated · NASDAQ:TWIN
Twin Disc — Q1 FY2015 Earnings Presentation
36 slides from Twin Disc's earnings presentation, Nov 6, 2014
Slide 1: Twin Disc, Incorporated November 6, 2014
Twin Disc, Incorporated November 6, 2014
Slide 2: Safe Harbor Statement
Twin Disc, Incorporated November 6, 2014 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 assump
Slide 3: Twin Disc At A Glance
Twin Disc, Incorporated November 6, 2014 • Founded in 1918 • Headquartered in Racine, WI • ≈ 970 employees • TTM Revenues of $262M FY14 Revenues of $264M FY13 Revenues of $285M FY12 Revenues of $356M • We are a global company – Well-known customers around the world – Mfg Operations in the U.S., Belg
Slide 4: FY 2014 - Highlights
Twin Disc, Incorporated FY 2014 - Highlights November 6, 2014 • Sales down 7% from FY ‘13 – Asian operations continued at record levels, driven by strong demand in the Chinese O&G and Asian commercial marine markets – Marine transmissions down 6% from record 2013 levels – N. American oil & pas activ
Slide 5: 1st Quarter Highlights
Twin Disc, Incorporated 1 st Quarter Highlights November 6, 2014 • Sales down 2% from Q1 of FY ‘14 – Biggest decline in Asia, partially offset by North America – Transmission sales up 12%, driven by improved North American pressure-pumping shipments – Marine sales down 12%, driven by lower shipments
Slide 6: Marine & Propulsion Systems
Twin Disc, Incorporated November 6, 2014 Marine & Propulsion Systems • Commercial Marine: – Achieved record sales in fiscal 2013, driven by strong demand in Asia and the US Gulf Coast – Fiscal 2014 moderated somewhat, continuing into Q1 – European market remains uncertain, likely 2-3 years to recove
Slide 7: Land-Based Products: Transmission Systems
Twin Disc, Incorporated November 6, 2014 Land-Based Products Transmission Systems • Pressure Pumping: – Achieved record units sales in fiscal ‘12 – Asian market, driven by China, has partially offset North American softening through fiscal ‘14 – Order activity started to build in second half of fisc
Slide 8: Land-Based Products: Pressure Pumping
Twin Disc, Incorporated November 6, 2014 Land-Based Products Pressure Pumping U.S. dry natural gas production by source,1990-2040 (trillion cubic feet) Source: EIA, Annual Energy Outlook 2013 (Early Release Overview). U.S. domestic crude oil production by source, 1990-2040 (million barrels per day)
Slide 9: Land-Based Products: Industrial Products
Twin Disc, Incorporated November 6, 2014 Land-Based Products Industrial Products • North America Energy Related: – Demand will grow as North American oil & gas market strengthens • Irrigation & Pumping Applications: – PTO and industrial gearbox lines drove growth – Solid reputation for quality, glob
Slide 10: Sales by Geography Highlights
Twin Disc, Incorporated November 6, 2014 FY2014 FY2008 • Highlights: – Nearly 59% of sales were outside the USA in fiscal 2014 – Sales to Canada were nearly 13% in 2012 (oil & gas driven), down to 4% in 2014 – In 2012, Asia surpassed Europe as 2 nd largest end market – Sales to China have tripled ov
Slide 11: Managing Our Cost Structure
Twin Disc, Incorporated November 6, 2014 Managing Our Cost Structure CAPEX • Investing in core competencies • Expanding presence in low cost manufacturing locations • Over $100 million over past 10 yrs
Slide 12: Low Cost: Managing Our Cost Structure
Twin Disc, Incorporated Low Cost November 6, 2014 Sourcing Offices Managing Our Cost Structure Lower Cost Corporate HQ/Mfg Mfg locations
Slide 13: What Differentiates Us? Technology
Twin Disc, Incorporated November 6, 2014 • Technology – Oil & Gas • 8500 Series – ARFF • “Pump & Roll” – Military • “Legacy” Contracts What Differentiates Us? – Marine • Patented QuickShift ® • Dynamic Positioning/DPII • Rolla CFD
Slide 14: What Differentiates Us?
Twin Disc, Incorporated November 6, 2014 What Differentiates Us? • 96+ Years of Proven Application Know-How • Niche Market Focus • Product/Market & Geographic Diversity • Core Manufacturing Capabilities Mfg location Co.-owned dist. 3 rd Party dist. Service dealers
Slide 15: Looking Ahead
Twin Disc, Incorporated November 6, 2014 Looking Ahead
Slide 16: Corporate Six Month Backlog
Twin Disc, Incorporated November 6, 2014 FY05 FY06 FY07 $ millions Corporate Six Month Backlog (Mfg Orders to be shipped in the next 6 months) FY08 FY09 FY11 FY10 FY12 FY13 FY14 FY15
Slide 17: Fiscal 2015 & Beyond Outlook
Twin Disc, Incorporated November 6, 2014 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 2 nd half of fiscal 2014, which resul
Slide 18: Fiscal 2015 & Beyond Outlook
Twin Disc, Incorporated November 6, 2014 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
Slide 19: Appendices
Twin Disc, Incorporated November 6, 2014 Appendices
Slide 20: Corporate Profile - Pleasure Craft Market
Twin Disc, Incorporated Appendix I November 6, 2014 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,
Slide 21: Corporate Profile - Work Boat Market
Twin Disc, Incorporated Appendix II November 6, 2014 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 & di
Slide 22: Corporate Profile - Patrol Boat Market
Twin Disc, Incorporated Appendix III November 6, 2014 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, Con
Slide 23: Marine Transmissions, Propulsion & Boat Management Systems
Twin Disc, Incorporated Appendix IV November 6, 2014 QuickShift ® Transmissions EJS®/Electronic Controls Bow Thrusters Anchor Winches Gangways Trim Tabs, Stern Thrusters Power Steering Marine Transmissions, Propulsion & Boat Management Systems Corporate Profile - Market Diversity We have been succes
Slide 24: Corporate Profile - Industrial Products
Twin Disc, Incorporated Appendix V November 6, 2014 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: Distribu
Slide 25: Industrial Transmissions
Twin Disc, Incorporated Appendix VI November 6, 2014 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: BAE, Rosenbauer, Oshkosh, Tatra
Slide 26: Frac Rig Diagram
Twin Disc, Incorporated Engine Transmission Pump Appendix VII November 6, 2014 Frac Rig Diagram
Slide 27: Appendix VIII
Twin Disc, Incorporated Appendix VIII November 6, 2014 $ millions % sales * See Appendix XI for reconciliation of TTM figures to reported figures.
Slide 28: Non-GAAP Financial Disclosures
Twin Disc, Incorporated Appendix IX November 6, 2014 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”).
Slide 29: Reconciliation of Net Earnings to EBITDA
Twin Disc, Incorporated Appendix X November 6, 2014 Reconciliation of Net Earnings to EBITDA * See Appendix XI for reconciliation of TTM figures to reported figures. NOTE: 2011 and 2012 fiscal year figures have been revised. See Footnote A in the Company’s Form 10K for the period ending June 30, 201
Slide 30: Reconciliation of TTM Data to Reported Quarterly Figures
Twin Disc, Incorporated Appendix XI November 6, 2014 Reconciliation of TTM Data to Reported Quarterly Figures NOTE: 2011 and 2012 fiscal year figures have been revised. See Footnote A in the Company’s Form 10K for the period ending June 30, 2013.
Slide 31: Fiscal Year Condensed Consolidated Statements of Operations
Twin Disc, Incorporated November 6, 2014 Appendix XII Fiscal Year Condensed Consolidated Statements of Operations NOTE: 2011 and 2012 fiscal year figures have been revised. See Footnote A in the Company’s Form 10K for the period ending June 30, 2013.
Slide 32: Historical Net Sales by Segment
Twin Disc, Incorporated November 6, 2014 Appendix XIII $317 $310 $332 $296 Historical Net Sales by Segment $228 $356 $285 $264
Slide 33: Historical Net Earnings by Segment
Twin Disc, Incorporated November 6, 2014 Appendix XIV Historical Net Earnings by Segment (before Corporate Expense) NOTE: 2011 and 2012 fiscal year figures have been revised. See Footnote A in the Company’s Form 10K for the period ending June 30, 2013.
Slide 34: 1st Fiscal Quarter: Condensed Consolidated Statements of Operations
Twin Disc, Incorporated Appendix XV November 6, 2014 1 st Fiscal Quarter: Condensed Consolidated Statements of Operations NOTE: 2011 and 2012 fiscal year figures have been revised. See Footnote A in the Company’s Form 10K for the period ending June 30, 2013.
Slide 35: Operating Cash Flows - Fiscal Year
Twin Disc, Incorporated November 6, 2014 Appendix XVI $ millions % sales Operating Cash Flows - Fiscal Year * See Appendix X for reconciliation of TTM figures to reported figures.
Slide 36: Express Joystick System in Action
Twin Disc, Incorporated November 6, 2014 Express Joystick System ® in Action 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.