![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit1.jpg)
Twin Disc, Incorporated
WE PUT HORSEPOWER TO WORK ™
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit2.jpg)
February 3, 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 2008 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 2008 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.
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit3.jpg)
February 3, 2009
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Twin Disc, Incorporated
Manufacturing
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
• 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
Italy, Belgium, Switzerland
and Japan
– World-wide distributor
network
network
– 61% of fiscal 2008 sales to
international markets
international markets
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit4.jpg)
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Twin Disc, Incorporated
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, Controls
Surface Drives, Propellers,
Steering/Thruster/Trim Systems,
Water Jets, Controls
• Channels: Engine OEMs &
dealers, & boat builders
dealers, & boat builders
• Customers: CAT, CMD, MAN,
MTU, Volvo / Azimuth, Baia,
Ferretti, Palmer Johnson, Riviera,
Sanlorenzo, Sunseeker
MTU, Volvo / Azimuth, Baia,
Ferretti, Palmer Johnson, Riviera,
Sanlorenzo, Sunseeker
• Competition: ZF, Reintjes /
Kamewa /Side Power, Ultraflex
Kamewa /Side Power, Ultraflex
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit5.jpg)
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Twin Disc, Incorporated
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)
IVECO, Mitsubishi, Volvo /
Damen / Sewart Supply
(operators: Secor, Tidewater)
• Competition: ZF, Reintjes /
Kamewa, Hamilton
Kamewa, Hamilton
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit6.jpg)
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Twin Disc, Incorporated
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
Surface Drives, Propellers,
Steering/Thruster/Trim Systems,
Water Jets, Controls
• Channels: Engine OEMs &
dealers, & boat builders
dealers, & boat builders
• Customers: CAT, CMD, MAN,
MTU, Volvo / Israeli Navy, Turkish
Coast Guard, USCG, US Navy,
RCMP
MTU, Volvo / Israeli Navy, Turkish
Coast Guard, USCG, US Navy,
RCMP
• Competition: ZF / Kamewa
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit7.jpg)
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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
Corporate Profile - Market Diversity
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit8.jpg)
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Twin Disc, Incorporated
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, Oshkosh, Tatra
/ BJ Services, Cisco High-Lift,
Crown Energy, Enerflo, Fractec,
Trican
/ BJ Services, Cisco High-Lift,
Crown Energy, Enerflo, Fractec,
Trican
• Competitors: Allison, ZF
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit9.jpg)
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Twin Disc, Incorporated
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
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit10.jpg)
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Twin Disc, Incorporated
2006
2007
2008
48% International Sales
61% International Sales
USA
Italy
Rest of
World
Corporate Profile - Geographic Diversity
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit11.jpg)
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Twin Disc, Incorporated
What Differentiates Us?
• Technology
– Land-Based
• 8500 Series
• “Pump & Roll”
• “Legacy” Contracts
• Electronic Control Systems
• Global Distribution and Service Network
• Product/Market & Geographic Diversity
• Niche Market Focus
• 90 Years of Proven Application Know-How
• Core Manufacturing Capabilities
– Marine
• QuickShift®
• Dynamic Positioning
• Rolla CFD
• Electronic/Hydraulic Boat
Management Systems
Management Systems
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit12.jpg)
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Twin Disc, Incorporated
Managing Our Cost Structure
Investing in Core Competencies
Investing in Core Competencies
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit13.jpg)
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Twin Disc, Incorporated
Lower Cost
Low Cost
Sourcing Offices
Managing Our Cost Structure
Global Sourcing
Global Sourcing
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit14.jpg)
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Twin Disc, Incorporated
FY 2009 First Half Highlights
• Major Markets Experience Varied Results
– Shipment and order weakness emerged for mega yachts during second quarter
– Demand for oil and gas transmissions continued at soft levels
– Increased shipments and demand for industrial products continued through the
second fiscal quarter
second fiscal quarter
– Shipments of land based transmission products for the Airport Rescue and Fire
Fighting (ARFF) and military markets were off slightly in the first half, although
backlog remained strong
Fighting (ARFF) and military markets were off slightly in the first half, although
backlog remained strong
– Commercial marine markets continued strong and improved versus year ago levels
• Gross margins at 27.9%, down from 31.6% for FY 2008
– Impacted by unfavorable product mix, higher material costs and increased domestic
pension expense
pension expense
• Diluted EPS of $0.52, off record FY 2008 level of $0.81
• Six Month Backlog at end of 2nd Fiscal Qtr >> $106 million
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit15.jpg)
February 3, 2009
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Twin Disc, Incorporated
$ millions
$ millions
* See Appendix III for reconciliation of TTM (trailing 12 month) figures to reported figures.
Net Sales & Net Earnings
(Fiscal Year)
(Fiscal Year)
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit16.jpg)
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Twin Disc, Incorporated
$ millions
$ millions
Net Sales & Net Earnings
(Second Fiscal Quarter)
(Second Fiscal Quarter)
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit17.jpg)
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Twin Disc, Incorporated
$ millions
$ millions
Net Sales & Net Earnings
(First Fiscal Half)
(First Fiscal Half)
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit18.jpg)
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Twin Disc, Incorporated
EBITDA
(See Appendices I & II for note on non-GAAP Financial Disclosures and a
reconciliation of net earnings to EBITDA)
(See Appendices I & II for note on non-GAAP Financial Disclosures and a
reconciliation of net earnings to EBITDA)
$ millions
% sales
* See Appendix III for reconciliation of TTM figures to reported figures.
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit19.jpg)
Twin Disc, Incorporated
Looking Ahead
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit20.jpg)
February 3, 2009
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Twin Disc, Incorporated
FY04
FY05
FY06
FY07
$ millions
FY08
FY09
Corporate Six Month Backlog
(Orders to be shipped in the next 6 months)
(Orders to be shipped in the next 6 months)
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit21.jpg)
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Twin Disc, Incorporated
Fiscal Year 2009/10 Outlook
• Cautious outlook in face of global turmoil
• Certain key markets will experience weakness
– Oil and gas and mega yacht markets softness expected to
continue into next fiscal year
continue into next fiscal year
• Other key markets expected to remain stable
– Commercial marine, military and airport firefighting and
rescue markets will continue stable
rescue markets will continue stable
• Continue to control global spending
– Reduced FY 2009 CAPEX forecast to $10-$12 million, down
from prior estimate of $15-$17 million
from prior estimate of $15-$17 million
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit22.jpg)
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Twin Disc, Incorporated
Fiscal Year 2009/10 Outlook
• Technology differentiation/new products
• Opportunity for operating leverage continues
– Expanding global outsourcing
– Investing in core competencies
• Active Acquisition Program
• Active stock buyback program (Board
authorized repurchase of up to an additional
250,000 shares)
authorized repurchase of up to an additional
250,000 shares)
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit23.jpg)
Twin Disc, Incorporated
WE PUT HORSEPOWER TO WORK ™
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit24.jpg)
Twin Disc, Incorporated
Appendices
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit25.jpg)
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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.
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 I
Non-GAAP Financial Disclosures
Non-GAAP Financial Disclosures
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit26.jpg)
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Twin Disc, Incorporated
* See Appendix III for reconciliation of TTM figures to reported figures.
Appendix II
Reconciliation of Net Earnings to EBITDA
Reconciliation of Net Earnings to EBITDA
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit27.jpg)
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Twin Disc, Incorporated
Appendix III
Reconciliation of TTM Data to Reported Quarterly Figures
Reconciliation of TTM Data to Reported Quarterly Figures
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit28.jpg)
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Twin Disc, Incorporated
Appendix IV
Fiscal Year Condensed Consolidated Statements of Operations
Fiscal Year Condensed Consolidated Statements of Operations
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit29.jpg)
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Twin Disc, Incorporated
Appendix VI
2nd Fiscal Quarter Condensed Consolidated Statements of Operations
2nd Fiscal Quarter Condensed Consolidated Statements of Operations
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit30.jpg)
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Twin Disc, Incorporated
$243
$219
$186
$317
$332
Appendix VI
Net Sales by Segment
Net Sales by Segment
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit31.jpg)
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Twin Disc, Incorporated
Appendix VII
Net Earnings by Segment (before Corporate Expense)
Net Earnings by Segment (before Corporate Expense)
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit32.jpg)
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Twin Disc, Incorporated
$ millions
% sales
Appendix VIII
Operating Cash Flows
Operating Cash Flows
![](https://capedge.com/proxy/8-K/0000100378-09-000005/r8kexhibit33.jpg)
Twin Disc, Incorporated
WE PUT HORSEPOWER TO WORK ™