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8-K - TWIN DISC., INC. 8K - TWIN DISC INCr8k11092009.htm
Twin Disc, Incorporated
WE PUT HORSEPOWER TO WORK ™
 
 

 
November 10, 2009
 
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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
 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 2009 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.
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
2
1
1
#
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 of $332M
 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
  61% of fiscal 2009 sales to
 international markets
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
FY 2009 Financial Highlights
 Sales were down 10.8% versus FY 2008
  1st Half: down less than 1% off record ’08 levels
  2nd Half: down nearly 20% off record ’08 levels
 Key Markets
  Mega Yacht, Oil & Gas and Industrial markets saw
 significant fall off as the year progressed
  ARFF, Military and Commercial Marine were steady
  Sales in the Pacific Rim continued at record pace and
 experienced double-digit growth
 $25 million cost reduction and avoidance program
 announced in 4th Fiscal Quarter, including significant
 1st Fiscal Quarter 2010 temporary plant shutdowns
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
$ millions
 Sales down 35% off record levels
  Experienced continued softness
  Seasonal and temporary plant
 shutdowns impacted Q1 shipments
  Asian markets continued at record
 levels
 $2.4 million loss
  Reflects extended plant shutdowns in
 Q1 at European and US
 manufacturing locations
Net Sales & Net Earnings
(First Fiscal Quarter)
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
$ millions
17.1%
of sales
-1.8%
of sales
 Generated $8.1 million of operating
 cash flow in Q1
  Continue to focus on inventory and
 receivables management
 Debt Reduction & Cash
  Revolver balance has decreased
 $7.2 million over the past 2 quarters
  As of September 25, 2009, nearly
 $14 million of available borrowing on
 revolver & over $17 million of cash
  In compliance with all financial
 covenants
Operating Cash Flows
(First Fiscal Quarter)
 
 

 
November 10, 2009
 
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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 growth
  Asian market experiencing
 strong growth
 
 

 
November 10, 2009
 
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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 picking up
  Orders increasing globally
 for 8500 & air clutches
  New 7500 series
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
2006
2007
2008
48% International Sales
61% International Sales
USA
Italy
Rest of
World
2009
Corporate Profile - Geographic Diversity
 
 

 
November 10, 2009
 
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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 retirement packages
Suspension of corporate incentive program
Managing Our Cost Structure
 
 

 
November 10, 2009
 
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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
 90+ Years of Proven Application Know-How
 Core Manufacturing Capabilities
  Marine
  Patented QuickShift®
  Joystick Docking - new in Fiscal 2010
  Dynamic Positioning/DP 2
  Rolla CFD
 
 

 
Twin Disc, Incorporated
Looking Ahead
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
FY04
FY05
FY06
FY07
$ millions
FY08
FY09
FY10
Corporate Six Month Backlog
(Mfg Orders to be shipped in the next 6 months)
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
Fiscal Year 2010 Outlook
 FY09 softness expected to continue thru 1st 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 record levels
 New product launches: 7500 & Joystick Docking
 “Cash is King” - continued focus on working capital
 management and debt reduction
 Expect sequential quarterly improvements
 
 

 
Twin Disc, Incorporated
WE PUT HORSEPOWER TO WORK ™
 
 

 
Twin Disc, Incorporated
Appendices
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
Appendix I
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
 Channels: Engine OEMs &
 dealers, & boat builders
 Customers: CAT, CMD, MAN,
 MTU, Volvo / Azimuth, Baia,
 Ferretti, Palmer Johnson, Riviera,
 Sanlorenzo, Sunseeker
 Competition: ZF, Reintjes /
 Kamewa /Side Power, Ultraflex
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
Appendix II
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
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
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,
 Surface Drives, Propellers,
 Steering/Thruster/Trim Systems,
 Water Jets, Controls
 Channels: Engine OEMs &
 dealers, naval authorities & boat
 builders
 Customers: CAT, CMD, MAN,
 MTU, Volvo / Israeli Navy, Turkish
 Coast Guard, USCG, US Navy,
 RCMP
 Competition: ZF / Kamewa
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
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
  Increasing content and value on each vessel
  Working directly with the shipyards
  Industry expert on vessel performance and handling
Appendix IV
Corporate Profile - Market Diversity
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
Appendix V
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
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
Appendix VI
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, Trican, Tai’an
 Competitors: Allison, ZF
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
$ millions
% sales
* See Appendix X for reconciliation of TTM figures to reported figures.
Appendix VII
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
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 VIII
Non-GAAP Financial Disclosures
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
* See Appendix X for reconciliation of TTM figures to reported figures.
Appendix IX
Reconciliation of Net Earnings to EBITDA
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
Appendix X
Reconciliation of TTM Data to Reported Quarterly Figures
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
Appendix XI
Fiscal Year Condensed Consolidated Statements of Operations
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
Appendix XII
1st Fiscal Qtr Condensed Consolidated Statements of Operations
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
$317
$243
$219
$332
$296
Net Sales by Segment
Appendix XIII
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
Net Earnings by Segment (before Corporate Expense)
Appendix XIV
 
 

 
November 10, 2009
 
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Twin Disc, Incorporated
$ millions
% sales
Operating Cash Flows - Fiscal Year
Appendix XV
 
 

 
Twin Disc, Incorporated
WE PUT HORSEPOWER TO WORK ™