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| 8-K - TWIN DISC, INC. 8K - TWIN DISC INC | r8k04272011.htm |
Twin Disc, Incorporated
WE PUT HORSEPOWER TO WORK ™
Twin Disc, Incorporated
April 27, 2011
2
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 subject to risks and uncertainties. Actual
results may vary because of variations between these
assumptions and actual performance. Investors are referred to
Twin Disc’s fiscal year 2010 Annual Report and Form 10-K,
“Management’s Discussion and Analysis of Financial Condition
and Results of Operations - Forward-Looking Information,” which
outlines certain risks regarding the Company’s forward-looking
statements. Copies of the Company’s SEC filings may be
obtained from the SEC, and are available on Twin Disc’s web site
(www.twindisc.com), or by request from the Investor Relations
department at the Company.
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 subject to risks and uncertainties. Actual
results may vary because of variations between these
assumptions and actual performance. Investors are referred to
Twin Disc’s fiscal year 2010 Annual Report and Form 10-K,
“Management’s Discussion and Analysis of Financial Condition
and Results of Operations - Forward-Looking Information,” which
outlines certain risks regarding the Company’s forward-looking
statements. Copies of the Company’s SEC filings may be
obtained from the SEC, and are available on Twin Disc’s web site
(www.twindisc.com), or by request from the Investor Relations
department at the Company.
Twin Disc, Incorporated
April 27, 2011
3
Twin Disc At A Glance
• Founded in 1918
• Headquartered in Racine, WI
• ≈913 employees (FYE ‘10)
• TTM Revenues of $277M
FY10 Revenues of $228M
FY09 Revenues of $296M
FY08 Revenues of $332M
FY10 Revenues of $228M
FY09 Revenues of $296M
FY08 Revenues of $332M
• We are a global company
– Well-known customers
around the world
around the world
– Mfg Operations in the U.S.,
Italy, Belgium, Switzerland
and Japan (JV)
Italy, Belgium, Switzerland
and Japan (JV)
– World-wide distributor
network
network
– 65% of fiscal 2010 sales to
international markets
international markets
2
1
1
#
Manufacturing location (# of facilities in each location)
Company owned distribution/service location
Purchasing/sourcing offices
Twin Disc, Incorporated
April 27, 2011
FY 2010 Financial Highlights
$ millions
$ millions
• Quarterly sequential sales &
earnings improvement
earnings improvement
– Despite challenges, profitable for
the full fiscal year
the full fiscal year
• Key Markets
– Mega Yacht and European markets
remained soft throughout fiscal 2010
remained soft throughout fiscal 2010
– ARFF, Military and Commercial Marine
were steady
were steady
– Sales in the Pacific Rim continued
strong, at near record levels
strong, at near record levels
– Oil & gas markets experienced strong
growth in 2nd half of fiscal year
growth in 2nd half of fiscal year
Twin Disc, Incorporated
• Generated $35 million of cash
from operating activities
from operating activities
• Reduced debt by $19.6 million,
or 39%
or 39%
– Cash also increased $5.8 million, or 44%,
to $19.0 million
to $19.0 million
• $25 million cost reduction and
avoidance program fully implemented
avoidance program fully implemented
– announced in 2009’s 4th Fiscal
Quarter
Quarter
April 27, 2011
FY 2010 Financial Highlights
$ millions
$ millions
Twin Disc, Incorporated
April 27, 2011
6
Net Sales & Net Earnings
(First Nine Months)
(First Nine Months)
• Sales up 31%
– Oil & gas markets strong
– Experienced continued softness in
mega yacht and European markets
mega yacht and European markets
– Prior year: seasonal and temporary
plant shutdowns impacted Q1
shipments
plant shutdowns impacted Q1
shipments
– Asian markets continued at near
record levels
record levels
• $11.2 million profit, up $12.7 million
– Prior year includes extended plant
shutdowns in Q1 at European and
US manufacturing locations
shutdowns in Q1 at European and
US manufacturing locations
Twin Disc, Incorporated
April 27, 2011
7
Marine & Propulsion Systems
• Pleasure Craft market
continues soft worldwide
continues soft worldwide
– However, building share of
market with new technology
market with new technology
• Work Boat market steady
– Europe soft
– North America showing
improvement
improvement
– Asia-Pacific moderating
• Patrol Boat market
experiencing global growth
experiencing global growth
– Asian market experiencing
strong growth
strong growth
Twin Disc, Incorporated
April 27, 2011
• Industrial markets showing
modest growth
modest growth
– Agriculture, irrigation,
recycling and construction
recycling and construction
• ARFF and Military holding
steady
steady
– ARFF: Continue to
increase market share with
‘pump & roll’ transmissions
increase market share with
‘pump & roll’ transmissions
• Oil & Gas markets picking up
– Orders increasing globally
for 8500 & air clutches
for 8500 & air clutches
– New 7500 series finishing
field tests, initial deliveries
in Q4
field tests, initial deliveries
in Q4
Twin Disc, Incorporated
April 27, 2011
9
2006
48% International Sales
65% International Sales
Twin Disc, Incorporated
April 27, 2011
10
Managing Our Cost Structure
CAPEX
• Investing in core competencies
• Spent over $64 million over past 6 yrs
Twin Disc, Incorporated
Sourcing Offices
April 27, 2011
Managing Our Cost Structure
Low Cost
Lower Cost
Corporate HQ/Mfg
Mfg locations
Twin Disc, Incorporated
April 27, 2011
12
What Differentiates Us?
• Technology
– Oil & Gas
• 8500 Series
– ARFF
• “Pump & Roll”
– Military
• “Legacy” Contracts
– Marine
• Patented QuickShift®
• Dynamic Positioning/DPII
• Rolla CFD
Twin Disc, Incorporated
April 27, 2011
13
What Differentiates Us?
• 92+ Years of Proven Application Know-How
• Niche Market Focus
• Product/Market & Geographic Diversity
• Core Manufacturing Capabilities
#
Mfg location
Co.-owned dist.
3rd Party dist.
Service dealers
Twin Disc, Incorporated
Looking Ahead
Twin Disc, Incorporated
April 27, 2011
15
FY04
FY05
FY06
FY07
$ millions
Corporate Six Month Backlog
(Mfg Orders to be shipped in the next 6 months)
(Mfg Orders to be shipped in the next 6 months)
FY08
FY09
FY11
FY10
+131%
Twin Disc, Incorporated
April 27, 2011
16
Fiscal Year 2011/12 Outlook
• Mega Yacht & Europe - weakness expected to continue,
modest growth off historic lows expected
modest growth off historic lows expected
• Industrial, ARFF & Military will remain stable, modest
growth
growth
• Oil & Gas - experiencing strong growth in demand
• Patrol Boat market expanding
• Asian market continues at near record levels
• New product launches: 7500 & Express Joystick System®
• Continued focus on working capital management
• Expect continued improvement into fiscal 2012
Twin Disc, Incorporated
WE PUT HORSEPOWER TO WORK ™
Twin Disc, Incorporated
Appendices
Twin Disc, Incorporated
April 27, 2011
19
Corporate Profile - Market Diversity
Pleasure Craft Market:
• Target Markets: High speed
planing and displacement yachts
from 50’ to 150’, diesel powered
planing and displacement yachts
from 50’ to 150’, diesel powered
• Products: Transmissions,
Surface Drives, Propellers,
Steering/Thruster/Trim Systems,
Water Jets, Control Systems
Surface Drives, Propellers,
Steering/Thruster/Trim Systems,
Water Jets, Control Systems
• Channels: Engine OEMs &
dealers, & boat builders
dealers, & boat builders
• Customers: CAT, CMD, MAN,
MTU, Volvo / Azimuth, Baia,
Ferretti, Maritimo, Palmer
Johnson, Riviera, Sanlorenzo,
Sunseeker
MTU, Volvo / Azimuth, Baia,
Ferretti, Maritimo, Palmer
Johnson, Riviera, Sanlorenzo,
Sunseeker
• Competition: ZF, Reintjes /
Kamewa /Side Power, Ultraflex
Kamewa /Side Power, Ultraflex
Appendix I
Twin Disc, Incorporated
April 27, 2011
20
Corporate Profile - Market Diversity
Work Boat Market:
• Target Markets: planing and
displacement vessels from 30’ to
250’, diesel powered
displacement vessels from 30’ to
250’, diesel powered
• Products: Transmissions,
Propellers, MCD’s, Water Jets,
Controls
Propellers, MCD’s, Water Jets,
Controls
• Channels: Engine OEMs &
dealers, boat builders &
distribution
dealers, boat builders &
distribution
• Customers: CAT, Cummins,
IVECO, Mitsubishi, Volvo /
Damen / Sewart Supply
(operators: Secor, Tidewater,
Groupe Bourbon)
IVECO, Mitsubishi, Volvo /
Damen / Sewart Supply
(operators: Secor, Tidewater,
Groupe Bourbon)
• Competition: ZF, Reintjes /
Kamewa, Hamilton
Kamewa, Hamilton
Appendix II
Twin Disc, Incorporated
April 27, 2011
21
Corporate Profile - Market Diversity
Patrol Boat Market:
• Target Markets: military, patrol
and coast guard vessels from 30’
to 90’, diesel powered
and coast guard vessels from 30’
to 90’, diesel powered
• Products: Transmissions,
Surface Drives, Propellers,
Steering/Thruster/Trim Systems,
Water Jets, Controls, EJS
Surface Drives, Propellers,
Steering/Thruster/Trim Systems,
Water Jets, Controls, EJS
• Channels: Engine OEMs &
dealers, naval authorities & boat
builders
dealers, naval authorities & boat
builders
• Customers: CAT, CMD, MAN,
MTU, Volvo / Indian Navy/Coast
Guard, Israeli Navy, Turkish
Coast Guard, USCG, US Navy,
RCMP
MTU, Volvo / Indian Navy/Coast
Guard, Israeli Navy, Turkish
Coast Guard, USCG, US Navy,
RCMP
• Competition: ZF / Kamewa
Appendix III
Twin Disc, Incorporated
April 27, 2011
22
QuickShift®
Transmissions
Transmissions
EJS®/Electronic
Controls
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 very successful “bundling” more marine products
• Increasing content and value on each vessel
• Working directly with the shipyards
• Industry expert on vessel performance and handling
Appendix IV
Twin Disc, Incorporated
April 27, 2011
23
Corporate Profile - Market Diversity
Industrial Products:
• Target Market: Heavy duty
industrial disconnect applications
industrial disconnect applications
• Products: Mechanical & hydraulic
clutches, PTOs & pump mount
drives, 100 - 2,500 HP
clutches, PTOs & pump mount
drives, 100 - 2,500 HP
• Channels: Distribution & OEMs
• Customers: Bandit, Morbark,
Peterson Pacific / OEM engine
dealers
Peterson Pacific / OEM engine
dealers
• Competitors: Funk, NACD, PT
Tech, Stiebel, Transfluid, WPT
Tech, Stiebel, Transfluid, WPT
Appendix V
Twin Disc, Incorporated
April 27, 2011
24
Corporate Profile - Market Diversity
Industrial Transmissions:
• Target Market: Off-highway and
all-terrain specialty vehicles,
diesel powered
all-terrain specialty vehicles,
diesel powered
• Products: Powertrain
components - 400 to 3,000 HP
components - 400 to 3,000 HP
• Channel: OEM vehicle mfrs.
• Customers: BAE, Rosenbauer,
Oshkosh, Tatra / BJ Services,
Cisco High-Lift, Crown Energy,
Enerflo, Fractec, MG Bryan,
Trican, Tai’an, Zoomlion
Oshkosh, Tatra / BJ Services,
Cisco High-Lift, Crown Energy,
Enerflo, Fractec, MG Bryan,
Trican, Tai’an, Zoomlion
• Competitors: Allison, ZF
Appendix VI
Twin Disc, Incorporated
April 27, 2011
25
$ millions
% sales
* See Appendix X for reconciliation of TTM figures to reported figures.
Appendix VII
Twin Disc, Incorporated
April 27, 2011
26
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
management believes are important to adjust for in order to have a meaningful comparison to prior and future
periods and to provide a basis for future projections and for estimating our earnings growth prospects. Non-
GAAP measures are used by management as a performance measure to judge profitability of our business
absent the impact of foreign currency exchange rate changes and acquisitions. Management analyzes the
company’s business performance and trends excluding these amounts. These measures, as well as EBITDA,
provide a more consistent view of performance than the closest GAAP equivalent for management and
investors. Management compensates for this by using these measures in combination with the GAAP
measures. The presentation of the non-GAAP measures in this presentation are made alongside the most
directly comparable GAAP measures.
are defined in U.S. Generally Accepted Accounting Principles (“GAAP”). These items are measures that
management believes are important to adjust for in order to have a meaningful comparison to prior and future
periods and to provide a basis for future projections and for estimating our earnings growth prospects. Non-
GAAP measures are used by management as a performance measure to judge profitability of our business
absent the impact of foreign currency exchange rate changes and acquisitions. Management analyzes the
company’s business performance and trends excluding these amounts. These measures, as well as EBITDA,
provide a more consistent view of performance than the closest GAAP equivalent for management and
investors. Management compensates for this by using these measures in combination with the GAAP
measures. The presentation of the non-GAAP measures in this presentation are made alongside the most
directly comparable GAAP measures.
Definition - Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
The sum of, net earnings and adding back provision for income taxes, interest expense, depreciations and
amortization expenses: this is a financial measure of the profit generated excluding the above mentioned
items.
amortization expenses: this is a financial measure of the profit generated excluding the above mentioned
items.
Appendix VIII
Twin Disc, Incorporated
April 27, 2011
27
Reconciliation of Net Earnings to EBITDA
* See Appendix X for reconciliation of TTM figures to reported figures.
Appendix IX
Twin Disc, Incorporated
April 27, 2011
28
Reconciliation of TTM Data to Reported Quarterly Figures
Appendix X
Twin Disc, Incorporated
April 27, 2011
29
Fiscal Year Condensed Consolidated Statements of Operations
Appendix XI
Twin Disc, Incorporated
April 27, 2011
30
3rd Fiscal Qtr Condensed Consolidated Statements of Operations
Appendix XII
Twin Disc, Incorporated
April 27, 2011
31
YTD Condensed Consolidated Statements of Operations
(first nine months of the fiscal year)
(first nine months of the fiscal year)
Appendix XIII
Twin Disc, Incorporated
April 27, 2011
32
$317
$243
$332
$296
Net Sales by Segment
Appendix XIV
$228
$213
(9 months)
Twin Disc, Incorporated
April 27, 2011
33
Net Earnings by Segment (before Corporate Expense)
Appendix XV
(9 months)
Twin Disc, Incorporated
April 27, 2011
34
$ millions
% sales
Operating Cash Flows - Fiscal Year
Appendix XVI
Twin Disc, Incorporated
April 27, 2011
35
Express Joystick System® in Action
Go to http://www.twindisc.com/MarineProducts/EJS.html to see the new
revolutionary Twin Disc Express Joystick System® in action.
revolutionary Twin Disc Express Joystick System® in action.
Twin Disc, Incorporated
WE PUT HORSEPOWER TO WORK ™