TWIN DISC, INC
Investor Presentation
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DISCLOSURES
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 2023 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.
Non-GAAP Financial Disclosures
Financial information excluding the impact of asset impairments, restructuring charges, foreign currency exchange rate changes and the impact of acquisitions, if any, 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 press release are made alongside the most directly comparable GAAP measures.
Definitions
Earnings before interest, taxes, depreciation and amortization (EBITDA) is calculated as net earnings or loss excluding interest expense, the provision or benefit for income taxes, depreciation and amortization expenses.
Net debt is calculated as total debt less cash.
Leverage Ratio is calculated as net debt divided by the sum of EBITDA over the last twelve months.
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THIRD QUARTER HIGHLIGHTS
Financial
- Q3 sales +0.5% vs. YA to $74.2 million
- Gross margin increased ~210 bps vs. YA to 28.2%
-
EBITDA of $7.0 million (net income of $3.5) vs. $7.0 million (net income of
$3.3) YA - Robust operating cash flow of $22.3 million YTD; free cash flow of $14.7 million YTD
Strategic
- Impact of long-term operational improvements and working capital discipline supporting trend of profitable growth
- End market demand remains stable, driving improved backlog
- Announced agreement to acquire Katsa Oy, expanding our global footprint and introducing our portfolio into new, growing markets
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MARINE & PROPULSION SYSTEMS
- Increased sales by 3% vs. YA
- Global commercial markets show sustained activity, fostering robust demand
- Government defense spending surge fueling growth, particularly in patrol boat projects
- Veth six-month backlog increased 16% sequentially
- Resulting in the recent Veth inventory build to support rising demand
- Capturing continued demand for workboat marine transmissions in Asia Pacific
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LAND-BASED TRANSMISSIONS
- Decreased sales 2.5% vs. YA
- Oil & Gas exports to Asia were flat
- Initial orders secured in North America for Oil & Gas units signifying market penetration
- Expansion in backlog fueled by ARFF transmissions demand
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INDUSTRIAL
- Decreased sales 15% vs. YA
- Ongoing softness amongst key industrial customers
- Continued weakness primarily for commoditized products; higher-content products showing resilience
- Ongoing progress in advancing OEM partnerships
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CONTINUED BACKLOG GROWTH
BACKLOG AND INVENTORY % OF BACKLOG
1.11 | |||
$127.7 | $130.5 | ||
$122.5 | $125.2 | ||
$119.2 | |||
1.07 | 1.05 |
1.03
1.00
3QF23 | 4QF23 | 1QF24 | 2QF24 | 3QF24 | ||
Backlog ($MM) | Inventory (% Backlog) | |||||
- 6-monthbacklog continuing to increase on sequential and year-over-year basis
- Expecting additional inventory reductions in 4Q 2024 as backlog is worked through
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Note: Backlog figures are reflective of a six-month period. The six-month order backlog is considered more representative of operating conditions than total backlog.
LONG-TERM STRATEGY
Leading Hybrid/Electric
solution provider for niche
marine and land-based
applications
Continued expansion of Veth
product to reach new
markets and geographies
Rationalize global footprint for efficiency and customer response
Increased focus on controls
and system integration rather than individual components
M&A priorities: Industrial and Marine Technology (Hybrid focus)
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FINANCIAL OVERVIEW
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FINANCIAL PERFORMANCE
SALES
($ in millions)
$83.9 | ||
$73.8 | $73.0 | $74.2 |
$63.6 |
▪ Generally stable demand across global markets
▪ Capitalizing on realization of price increases
3QF23 | 4QF23 | 1QF24 | 2QF24 | 3QF24 |
EARNINGS PER SHARE
$0.62
$0.24 | $0.27 |
$0.07 | |
($0.09)
3QF23 | 4QF23 | 1QF24 | 2QF24 | 3QF24 |
- Increase in earnings vs YA due to strong operational execution
- Increase in ME&A spend vs. YA driven by investments in growth and strategy as well as inflation impacts
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Disclaimer
Twin Disc Incorporated published this content on 30 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 April 2024 12:41:33 UTC.