TWIN DISC INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 22, 2012

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8-K - TWIN DISC, INC. 8-K - TWIN DISC INCtd8k02222012.htm
Twin Disc, Incorporated
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Twin Disc, Incorporated
February 21, 2012
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 2011 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
3
• Founded in 1918
• Headquartered in Racine, WI
• ≈941 employees (FYE ‘11)
• TTM Revenues of $338M*
 FY11 Revenues of $310M
 FY10 Revenues of $228M
• We are a global company
 – Well-known customers
 around the world
 – Mfg Operations in the U.S.,
 Italy, Belgium, Switzerland
 and Japan (JV)
 – World-wide distributor
 network
 – Global: 59% of fiscal 2011
 sales to international
 markets
2
1
1
#
Manufacturing location (# of facilities in each location)
Company owned distribution/service location
Purchasing/sourcing offices
Twin Disc At A Glance
February 21, 2012
* See Appendix XI for reconciliation of TTM figures to reported figures.
 
 
 
Twin Disc, Incorporated
February 21, 2012
FY 2011 Financial Highlights
$ millions
$ millions
• Quarterly sequential sales &
 earnings improvement
 – Sales up over 36% vs. FY ’10
 – Earnings up over $18 million
• Key Markets
 – Oil & gas markets experienced strong
 growth in shipments and order backlog
 – Sales in the Pacific Rim continued strong,
 at record levels
 – Modest recovery in Mega Yacht and
 European markets off of fiscal ‘10 lows
 – Patrol boat business continued to expand
 – ARFF, Military and Commercial Marine
 were steady
 
 
 
Twin Disc, Incorporated
5
Net Sales & Net Earnings
(FY 2012 - First Six Months)
• Sales up 20%
 – Oil & gas markets strong
 – Most end markets showing growth
 – Record 6-month backlog as of Q1
 $165 million, Q2 = $149 million
• $15.4 million profit, up $8.8 million
 – Record Diluted EPS of $1.34
 – Record GM% of 36.7%
+34%
+20%
February 21, 2012
 
 
 
Twin Disc, Incorporated
February 21, 2012
• Industrial markets showing
 modest growth
 – Agriculture, irrigation,
 recycling and construction
• ARFF and Military holding
 steady
 – ARFF: Continue to
 increase market share with
 ‘pump & roll’ transmissions
• Oil & Gas markets picking up
 – Thru 1st half of fiscal 2012,
 orders and sales increasing
 globally for 8500 & air
 clutches
 – New 7500 series in
 production
 
 
 
Twin Disc, Incorporated
February 21, 2012
7
Marine & Propulsion Systems
• Pleasure Craft market continues
 soft worldwide
 – However, building share of
 market with new technology
 – Modest growth in sales & backlog
 began in 2nd half of FY11
 – Cat announcements in Q1
• Work Boat market steady
 – Europe soft
 – North America picking up
 – Asia-Pacific continues to show
 positive long-term trends
• Patrol Boat market experiencing
 global growth
 – Asian market experiencing strong
 growth
 
 
 
Twin Disc, Incorporated
February 21, 2012
8
Corporate Profile - Geographic Diversity
Sales (as a % of total sales)
59%
International Sales
USA
Rest of
World
 
 
 
Twin Disc, Incorporated
February 21, 2012
9
Managing Our Cost Structure
CAPEX
 • Investing in core competencies
 • Expanding presence in low cost manufacturing locations
 • Spent over $77 million over past 7 yrs
 
 
 
Twin Disc, Incorporated
Sourcing Offices
February 21, 2012
Managing Our Cost Structure
Low Cost
Lower Cost
Corporate HQ/Mfg
Mfg locations
 
 
 
Twin Disc, Incorporated
February 21, 2012
11
What Differentiates Us?
• Technology
 – Oil & Gas
 • 8500 Series
 • 7500 Series
 
 
 
 
 
 
 
 
 
 – ARFF
 • “Pump & Roll”
 – Military
 • “Legacy” Contracts
 
 – Marine
 • Patented QuickShift®
 • Express Joystick System®
 
 
 
 
 
 
 
 
 • Dynamic Positioning/DPII
 • Rolla CFD
 
 
 
Twin Disc, Incorporated
February 21, 2012
12
What Differentiates Us?
• 93+ 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
February 21, 2012
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FY04
FY05
FY06
FY07
$ millions
Corporate Six Month Backlog
(Mfg Orders to be shipped in the next 6 months)
FY08
FY09
FY11
FY10
+172%
FY12
 
 
 
Twin Disc, Incorporated
February 21, 2012
15
Fiscal Year 2012 Outlook
• FY 2012 will be another strong year
• Oil and Gas experiencing record demand
 – Continuing introduction of 7500 Series Transmission
• Marine markets will remain mixed
 – Pleasure Craft improving off of low base - EJS impact
 – Work Boat, despite US Gulf, showing improvement
 – Patrol Boat market is expanding
• Industrial, ARFF & Military showing modest growth
• Asian market continues at record levels; Europe is slow;
 while US (excluding Oil and Gas) is improving modestly
 
 
 
Twin Disc, Incorporated
WE PUT HORSEPOWER TO WORK ™
 
 
 
Twin Disc, Incorporated
Appendices
 
 
 
Twin Disc, Incorporated
February 21, 2012
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 Jets, Controls, EJS
• Channels: Engine OEMs &
 dealers, & boat builders
• Customers: CAT, CMD, MAN,
 MTU, Volvo / Azimuth, Baia,
 Ferretti, Maritimo, Palmer
 Johnson, Riviera, Sanlorenzo,
 Sunseeker
• Competition: ZF, Reintjes /
 Kamewa /Side Power, Ultraflex
Appendix I
 
 
 
Twin Disc, Incorporated
February 21, 2012
19
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 builders &
 distribution
• Customers: CAT, Cummins,
 IVECO, Mitsubishi, Volvo /
 Damen / Sewart Supply
 (operators: Secor, Tidewater,
 Groupe Bourbon)
• Competition: ZF, Reintjes /
 Kamewa, Hamilton
Appendix II
 
 
 
Twin Disc, Incorporated
February 21, 2012
20
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, Controls, EJS
• Channels: Engine OEMs &
 dealers, naval authorities & boat
 builders
• Customers: CAT, CMD, MAN,
 MTU, Volvo / Indian Navy/Coast
 Guard, Israeli Navy, Turkish
 Coast Guard, USCG, US Navy,
 RCMP
• Competition: ZF / Kamewa
Appendix III
 
 
 
Twin Disc, Incorporated
February 21, 2012
21
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 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
February 21, 2012
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
• Customers: Bandit, Morbark,
 Peterson Pacific / OEM engine
 dealers
• Competitors: Funk, NACD, PT
 Tech, Stiebel, Transfluid, WPT
Appendix V
 
 
 
Twin Disc, Incorporated
February 21, 2012
23
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, Rosenbauer,
 Oshkosh, Tatra / BJ Services,
 Cisco High-Lift, Crown Energy,
 Enerflo, Fractec, MG Bryan,
 Trican, Tai’an, Zoomlion
• Competitors: Allison, Cat
Appendix VI
 
 
 
Twin Disc, Incorporated
February 21, 2012
Frac Rig Diagram
Engine
Transmission
Pump
Appendix VII
 
 
 
Twin Disc, Incorporated
February 21, 2012
25
$ millions
% sales
* See Appendix X for reconciliation of TTM figures to reported figures.
Appendix VIII
 
 
 
Twin Disc, Incorporated
February 21, 2012
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.
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.
Appendix IX
 
 
 
Twin Disc, Incorporated
February 21, 2012
27
Reconciliation of Net Earnings to EBITDA
* See Appendix XI for reconciliation of TTM figures to reported figures.
Appendix X
 
 
 
Twin Disc, Incorporated
February 21, 2012
28
Reconciliation of TTM Data to Reported Quarterly Figures
Appendix XI
 
 
 
Twin Disc, Incorporated
February 21, 2012
29
Fiscal Year Condensed Consolidated Statements of Operations
Appendix XII
* Represents trailing four quarter figures as of the quarter ending December 30, 2011.
 See Appendix XI for reconciliation of TTM figures to reported figures.
 
 
 
Twin Disc, Incorporated
January 27, 2010
30
2nd Fiscal Qtr Condensed Consolidated Statements of Operations
Appendix XIII
 
 
 
Twin Disc, Incorporated
February 21, 2012
31
$317
$310
$332
$296
Historical Net Sales by Segment
Appendix XIV
$228
 
 
 
Twin Disc, Incorporated
February 21, 2012
32
Historical Net Earnings by Segment (before Corporate Expense)
Appendix XV
 
 
 
Twin Disc, Incorporated
February 21, 2012
33
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.
 
 
 
Twin Disc, Incorporated
WE PUT HORSEPOWER TO WORK ™
 
 
 

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