Slide 1: Twin Disc, Incorporated
Twin Disc, Incorporated WE PUT HORSEPOWER TO WORK ™
Slide 2: Safe Harbor Statement
January 27, 2010 Twin 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 assump
Slide 3: Twin Disc At A Glance
January 27, 2010 Twin Disc, Incorporated Manufacturing location (# of facilities in each location) Company owned distribution/service location Purchasing/sourcing offices Twin Disc At A Glance • Founded in 1918 • Headquartered in Racine, WI • ≈1,000 employees • FY09 Revenues of $296M FY08 Revenues o
Slide 4: FY 2010 Financial Highlights
January 27, 2010 Twin Disc, Incorporated FY 2010 Financial Highlights • Financial Results Improved Sequentially – Q2 versus Q1 Sales up 17% • Year-to-Date Cash Flow From Operations Strong – Generated $16.1 million thru first 6 months of fiscal year • Total Debt Reduced $9.2 million, or 18%, in First
Slide 5: Net Sales & Net Earnings (Second Fiscal Quarter)
January 27, 2010 Twin Disc, Incorporated $ millions • Sales down 32% off near record levels – Experienced continued softness in certain end markets – Seasonal and temporary plant shutdowns impacted Q1 shipments – Asian markets continued at record levels – Six month backlog grew over 12% in the quart
Slide 6: Net Sales & Net Earnings (First Six Months)
January 27, 2010 Twin Disc, Incorporated $ millions • Sales down 34% off near record levels – Experienced continued softness – Seasonal and temporary plant shutdowns impacted Q1 shipments – Asian markets continued at record levels • Q2 loss of $0.5 million improved sequentially from Q1 loss of $2.4
Slide 7: Net Sales & Net Earnings (First & Second Fiscal Quarter)
January 27, 2010 Twin Disc, Incorporated $ millions • Q2 Sales up 17.2% vs. Q1 Sales – 6 month backlog increased 12.1% in the quarter to $70 million – Asian markets continued at record levels – ARFF & Military transmission markets holding steady – Pleasure craft marine remains weak • Gross Margin as
Slide 8: Operating Cash Flows (First Six Months)
January 27, 2010 Twin Disc, Incorporated $ millions 16% of sales 2% of sales • Generated $16.1 million of operating cash flow in first half of Fiscal – Continue to focus on inventory and receivables management • Debt Reduction & Cash – Revolver balance has decreased $14.5 million over the past 3 qua
Slide 9: Marine & Propulsion Systems
January 27, 2010 Twin Disc, Incorporated Marine & Propulsion Systems • Pleasure Craft market soft worldwide – However, building share of market with new technology • Work Boat market steady – Europe soft – North America moderating – Asia-Pacific growing • Patrol Boat market experiencing global growt
Slide 10: Land-Based Products
January 27, 2010 Twin Disc, Incorporated Land-Based Products • Industrial markets soft – Agriculture, irrigation, recycling and construction – No impact from ‘stimulus’ • ARFF and Military holding steady – ARFF: Continue to increase market share with ‘pump & roll’ transmissions • Oil & Gas markets p
Slide 11: Corporate Profile - Geographic Diversity
January 27, 2010 Twin Disc, Incorporated 48% International Sales 61% International Sales USA Italy Rest of World Corporate Profile - Geographic Diversity
Slide 12: Managing Our Cost Structure
January 27, 2010 Twin Disc, Incorporated Global Outsourcing Lean Manufacturing $25 million Global Cost Reduction & Avoidance Program • Pension freeze • Salary & wage reductions • Temporary layoffs in US • Government-sponsored programs in Europe • ME&A cost reductions • Restructuring • Voluntary reti
Slide 13: What Differentiates Us?
January 27, 2010 Twin Disc, Incorporated What Differentiates Us? • Technology – Oil & Gas • 8500 Series • 7500 Series - new in Fiscal 2010 – ARFF • “Pump & Roll” – Military • “Legacy” Contracts • Global Distribution and Service Network • Product/Market & Geographic Diversity • Niche Market Focus • 9
Slide 14: Looking Ahead
Twin Disc, Incorporated Looking Ahead
Slide 15: Corporate Six Month Backlog
January 27, 2010 Twin Disc, Incorporated FY04 FY05 FY06 FY07 $ millions FY08 FY09 FY10 • 6 month backlog up 16% since start of fiscal year Ø Increased order activity for 8500 series transmission for the oil & gas market Ø Military and ARFF holding steady Ø Industrial & Marine continue to be soft Cor
Slide 16: Fiscal Year 2010 Outlook
January 27, 2010 Twin Disc, Incorporated Fiscal Year 2010 Outlook • FY09 softness continued thru 1 st half of FY10 • Mega Yacht - weakness expected to continue • ARFF & Military will remain strong • Oil & Gas - order activity is increasing • Patrol Boat market expanding • Asian market continues at r
Slide 17: Twin Disc, Incorporated
Twin Disc, Incorporated WE PUT HORSEPOWER TO WORK ™
Slide 18: Appendices
Twin Disc, Incorporated Appendices
Slide 19: FY 2009 Financial Highlights
January 27, 2010 Twin Disc, Incorporated Appendix I FY 2009 Financial Highlights • Sales were down 10.8% versus FY 2008 – 1 st Half: down less than 1% off record ’08 levels – 2 nd Half: down nearly 20% off record ’08 levels • Key Markets – Mega Yacht, Oil & Gas and Industrial markets saw significant
Slide 20: Corporate Profile - Market Diversity: Pleasure Craft
January 27, 2010 Twin Disc, Incorporated Appendix II Corporate Profile - Market Diversity Pleasure Craft Market: • Target Markets: High speed planing and displacement yachts from 50’ to 150’, diesel powered • Products: Transmissions, Surface Drives, Propellers, Steering/Thruster/Trim Systems, Water
Slide 21: Corporate Profile - Market Diversity: Work Boat
January 27, 2010 Twin Disc, Incorporated Appendix III Corporate Profile - Market Diversity Work Boat Market: • Target Markets: planing and displacement vessels from 30’ to 250’, diesel powered • Products: Transmissions, Propellers, MCD’s, Water Jets, Controls • Channels: Engine OEMs & dealers, boat
Slide 22: Corporate Profile - Market Diversity: Patrol Boat
January 27, 2010 Twin Disc, Incorporated Appendix IV Corporate Profile - Market Diversity Patrol Boat Market: • Target Markets: military, patrol and coast guard vessels from 30’ to 90’, diesel powered • Products: Transmissions, Surface Drives, Propellers, Steering/Thruster/Trim Systems, Water Jets,
Slide 23: QuickShift®: Marine Transmissions, Propulsion & Boat Management Systems
January 27, 2010 Twin Disc, Incorporated Appendix V QuickShift® Transmissions Electronic Controls Bow Thrusters Anchor Winches Gangways Trim Tabs, Stern Thrusters Power Steering Marine Transmissions, Propulsion & Boat Management Systems We have been very successful “bundling” more marine products •
Slide 24: Corporate Profile - Market Diversity: Industrial Products
January 27, 2010 Twin Disc, Incorporated Appendix VI Corporate Profile - Market Diversity Industrial Products: • Target Market: Heavy duty industrial disconnect applications • Products: Mechanical & hydraulic clutches, PTOs & pump mount drives, 100 - 2,500 HP • Channels: Distribution & OEMs • Custom
Slide 25: Corporate Profile - Market Diversity: Industrial Transmissions
January 27, 2010 Twin Disc, Incorporated Appendix VII 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. • Customers: BAE, Ro
Slide 26: VIII
January 27, 2010 Twin Disc, Incorporated Appendix VIII $ millions % sales * See Appendix XI for reconciliation of TTM figures to reported figures.
Slide 27: Non-GAAP Financial Disclosures
January 27, 2010 Twin Disc, Incorporated Appendix IX 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
Slide 28: Reconciliation of Net Earnings to EBITDA
January 27, 2010 Twin Disc, Incorporated Appendix X * See Appendix XI for reconciliation of TTM figures to reported figures. Reconciliation of Net Earnings to EBITDA
Slide 29: Reconciliation of TTM Data to Reported Quarterly Figures
January 27, 2010 Twin Disc, Incorporated Appendix XI Reconciliation of TTM Data to Reported Quarterly Figures
Slide 30: Fiscal Year Condensed Consolidated Statements of Operations
January 27, 2010 Twin Disc, Incorporated Appendix XII Fiscal Year Condensed Consolidated Statements of Operations
Slide 31: 2nd Fiscal Qtr Condensed Consolidated Statements of Operations
January 27, 2010 Twin Disc, Incorporated Appendix XIII 2 nd Fiscal Qtr Condensed Consolidated Statements of Operations
Slide 32: Net Sales by Segment
January 27, 2010 Twin Disc, Incorporated Appendix XIV $317 $243 $219 $332 $296 Net Sales by Segment
Slide 33: Net Earnings by Segment (before Corporate Expense)
January 27, 2010 Twin Disc, Incorporated Appendix XV Net Earnings by Segment (before Corporate Expense)
Slide 34: Operating Cash Flows - Fiscal Year
January 27, 2010 Twin Disc, Incorporated Appendix XVI $ millions % sales Operating Cash Flows - Fiscal Year * See Appendix XI for reconciliation of TTM figures to reported figures.
Slide 35: Twin Disc, Incorporated
Twin Disc, Incorporated WE PUT HORSEPOWER TO WORK ™