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td8k11052013.htm

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934


Date of Report (Date of Earliest Event Reported): November 5, 2013


TWIN DISC, INCORPORATED

(exact name of registrant as specified in its charter)


WISCONSIN
001-7635
39-0667110
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification No.)



1328 Racine Street                                                                           Racine, Wisconsin 53403

(Address of principal executive offices)

Registrant's telephone number, including area code: (262)638-4000


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 7.01
Regulation FD Disclosure

The executive officers of Twin Disc intend to present materials at meetings with investors and analysts and at investor conferences on or after November 5, 2013.  A copy of the presentation materials to be used at those meetings and from time to time thereafter is filed as Exhibit 99.1 hereto.  The presentation materials will also be posted on the Company’s website, www.twindisc.com  The Company does not intend to file any update of these presentation materials.  The fact that these presentation materials are being furnished should not be deemed an admission as to the materiality of any information contained in the materials.

The information included in the presentation includes financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s management uses these non-GAAP measures in its analysis of the Company’s performance. The Company believes that the presentation of certain non-GAAP measures provides useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
 
The information in this Form 8-K being furnished under Item 7.01 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the Company’s expectations and involve risks and uncertainties that could cause the Company’s actual results to differ materially from those set forth in the statements. These risks are discussed in the Company’s filings with the Securities and Exchange Commission, including an extensive discussion of these risks in the Company’s Annual Report on Form 10-K for the year ended June 30, 2012.


Item 9.01
Financial Statements and Exhibits

(c)
Exhibits
 

EXHIBIT NUMBER
DESCRIPTION
99.1
Presentation Materials – 1st Quarter Fiscal 2014


SIGNATURE

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 5, 2013
Twin Disc, Inc.
   
 
/s/JEFFREY S. KNUTSON
 
Jeffrey S. Knutson
 
General Counsel & Secretary


 
 
 

td8k11052013ex991.htm
Twin Disc, Incorporated
 
 
 
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 2013 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.
2
November 5, 2013
 
 
 
Twin Disc, Incorporated
• Founded in 1918
• Headquartered in Racine, WI
• ≈ 990 employees (FYE ‘13)
• FY13 Revenues of $285M
 FY12 Revenues of $356M
 FY11 Revenues of $310M
• We are a global company
 – Well-known customers
 around the world
 – Mfg Operations in the U.S.,
 Belgium, Italy, India,
 Switzerland and Japan (JV)
 – World-wide distributor
 network
 – Global: 55% of fiscal 2013
 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
3
1
November 5, 2013
 
 
 
Twin Disc, Incorporated
FY 2013 Highlights
• Sales down 20% from record FY ‘12
 – Pressure pumping transmission business
 continued to slow down in North America,
 only partially offset by China market
 – Commercial marine business
 experienced strong demand in North
 America (Gulf Coast) & Asia
 
• $3.9 million profit, or $0.34 per diluted
 share, down from all-time record of FY
 ‘12
 – Unfavorable mix of business and volume
 declines impacted margins & overall
 profitability
+36%
+15%
* 2011 and 2012 fiscal year figures have been revised. See Footnote A in the
 Company’s Form 10K for the period ending June 30, 2013.
4
November 5, 2013
-20%
Sales
Net Earnings*
$228
$310
$356
$285
 
 
 
Twin Disc, Incorporated
1st Quarter Highlights
• Sales down 3% from Q1 of FY ‘13
 – Reflects lower level of business in North
 America and Europe
 – Offset by increased shipments to
 customers in Asian markets
 
• $1.3 million profit, or $0.11 per diluted
 share, flat compared to Q1 of FY ‘13
 – Q1 of FY ‘14 included a $1.1 million, or
 $0.10 per diluted share, restructuring
 charge at the Company’s Belgian
 operation
 – Gross margin increased 290 basis points
 to 31.1% driven by a more profitable
 product mix and lower warranty expense
+32%
-15%
* 2011 and 2012 fiscal year figures have been revised. See Footnote A in the
 Company’s Form 10K for the period ending June 30, 2013.
5
November 5, 2013
-3%
Sales
Net Earnings*
$61
$81
$69
$66
 
 
 
Twin Disc, Incorporated
Marine & Propulsion Systems
• Commercial Marine:
 – Achieved record sales in fiscal 2013, driven by
 strong demand in Asia and the US Gulf Coast
 – European market remains uncertain, likely 2-3 years
 to recover
 – Long term growth in Asia, Latin and North America
 expected to continue
 
• Patrol Boat:
 – Experienced recent growth as demand for coastal
 security applications has increased globally
 – Expect long term growth to continue
• Pleasure Craft:
 – Market remains at historic lows
 – EJS™ introduced and Cat® Three60 available
 – Likely 5+ years before market recovers to pre-
 recession levels
 – Continue to emphasize technological differentiation
November 5, 2013
 
 
 
Twin Disc, Incorporated
Land-Based Products
Transmission Systems
• Pressure Pumping:
 – Achieved record units sales in fiscal ‘12
 – North American market saw significant decline
 in fiscal ‘13, that has continued into ‘14
 – Asian market, driven by China, has partially
 offset North American softening
 – Cautiously optimistic that order activity will start
 to build in calendar 2014 in the North American
 market
 – Global markets continue to represent
 opportunity for above average growth in the
 long run
 
• Airport Rescue and Fire Fighting (ARFF)
 & Military:
 – Markets to remain stable with potential for
 modest growth
 – Continue to develop next generation
 transmission system for ARFF
November 5, 2013
 
 
 
Twin Disc, Incorporated
June 25, 2013
Land-Based Products
Pressure Pumping
U.S. dry natural gas production by source,1990-2040
(trillion cubic feet)
Source: EIA, Annual Energy
Outlook 2013 (Early
Release Overview).
8
U.S. domestic crude oil production by source, 1990-2040
(million barrels per day)
Source: EIA, Annual Energy
Outlook 2013 (Early
Release Overview).
 
 
 
Twin Disc, Incorporated
Land-Based Products
Industrial Products
• North America Energy Related:
 – After a strong fiscal 2012, shipments and orders
 were impacted by softness in oil & gas markets
 – Demand will grow as North American oil & gas
 market strengthens
 
• Irrigation & Pumping Applications:
 – PTO and industrial gearbox lines drove growth
 – Solid reputation for quality, global service and new
 product development will continue to produce growth
 opportunities in the future
• International Markets:
 – Opened a new facility in India, south of Chennai,
 expect to expand our penetration in the region in the
 coming years
 – European markets remain sluggish
 – Vigorous demand in Asia, Australia, Africa and
 Middle East support optimism for the near term and
 beyond
November 5, 2013
 
 
 
Twin Disc, Incorporated
Corporate Profile - Geographic Diversity
Sales (as a % of total sales)
FY2013
FY2008
• Highlights:
 – More than 55% of sales were outside the
 USA in fiscal 2013
 – Sales to Canada were nearly 13% in 2012
 (oil & gas driven)
 – In 2012, Asia surpassed Europe as 2nd
 largest end market (achieving record sales)
 – Sales to China have tripled over last 3
 years, now represent 10.2% of sales
 – Overall CAGR from 2006 to 2013 = 2%
 (Asia = 14%)
 
• Outlook:
 – Continue to focus on BRIC as largest
 growth opportunity
10
Peak of mega
yacht market
sales
November 5, 2013
 
 
 
Twin Disc, Incorporated
Managing Our Cost Structure
CAPEX
 • Investing in core competencies
 • Expanding presence in low cost manufacturing locations
 • Nearly $100 million over past 9 yrs
11
November 5, 2013
 
 
 
Twin Disc, Incorporated
Sourcing Offices
Managing Our Cost Structure
Low Cost
Lower Cost
Corporate HQ/Mfg
Mfg locations
12
November 5, 2013
 
 
 
Twin Disc, Incorporated
• Technology
 – Oil & Gas
 • 8500 Series
 – ARFF
 • “Pump & Roll”
 – Military
 • “Legacy” Contracts
 
What Differentiates Us?
 – Marine
 • Patented QuickShift®
 • Dynamic Positioning/DPII
 • Rolla CFD
13
November 5, 2013
 
 
 
Twin Disc, Incorporated
What Differentiates Us?
• 95 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
14
November 5, 2013
#
 
 
 
Twin Disc, Incorporated
Looking Ahead
 
 
 
Twin Disc, Incorporated
FY05
FY06
FY07
$ millions
Corporate Six Month Backlog
(Mfg Orders to be shipped in the next 6 months)
FY08
FY09
FY11
FY10
FY12
FY13
16
November 5, 2013
FY14
 
 
 
Twin Disc, Incorporated
Fiscal Year 2014 Outlook
• North American Oil & Gas landscape causes near
 term outlook to be cautious
 – Six-month backlog reflects continued weakness in demand
 from North American oil and gas market, which is expected
 to continue for the balance of fiscal 2014
 – International oil and gas markets offer significant long term
 growth opportunities
• Marine markets will remain mixed
 – Commercial marine markets remain robust and another
 strong year is expected
 – Global mega yacht market will remain depressed
 – Patrol Boat market will continue to expand beyond 2014
17
November 5, 2013
 
 
 
Twin Disc, Incorporated
Fiscal Year 2014 Outlook
• ARFF, Military and North American industrial markets
 are expected to remain stable
• Global markets will remain mixed
 – European markets will remain challenged in the near term
 – Asia continues to offer significant opportunities for above
 average growth rates
 – North American pressure pumping market has been slow to
 rebound and continues to impact near-term financial results
• The Company is well-positioned to grow as end
 markets recover and remains focused on providing
 innovative and differentiating product and market
 development projects
18
November 5, 2013
 
 
 
Twin Disc, Incorporated
Appendices
 
 
 
Twin Disc, Incorporated
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,
 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
November 5, 2013
 
 
 
Twin Disc, Incorporated
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
21
November 5, 2013
 
 
 
Twin Disc, Incorporated
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,
 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
22
November 5, 2013
 
 
 
Twin Disc, Incorporated
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
23
November 5, 2013
 
 
 
Twin Disc, Incorporated
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
24
November 5, 2013
 
 
 
Twin Disc, Incorporated
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
25
November 5, 2013
 
 
 
Twin Disc, Incorporated
Frac Rig Diagram
Engine
Transmission
Pump
Appendix VII
26
November 5, 2013
 
 
 
Twin Disc, Incorporated
$ millions
% sales
* See Appendix XI for reconciliation of TTM figures to reported figures.
Appendix VIII
27
November 5, 2013
 
 
 
Twin Disc, Incorporated
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
28
November 5, 2013
 
 
 
Twin Disc, Incorporated
Reconciliation of Net Earnings to EBITDA
* See Appendix XI for reconciliation of TTM figures to reported figures.
Appendix X
NOTE:  2011 and 2012 fiscal year figures have been revised. See Footnote A in the Company’s Form 10K for the period ending June 30, 2013.
29
November 5, 2013
 
 
 
Twin Disc, Incorporated
Reconciliation of TTM Data to Reported Quarterly Figures
Appendix XI
NOTE:  2011 and 2012 fiscal year figures have been revised. See Footnote A in the Company’s Form 10K for the period ending June 30, 2013.
30
November 5, 2013
 
 
 
Twin Disc, Incorporated
November 2013
Fiscal Year Condensed Consolidated Statements of Operations
NOTE:  2011 and 2012 fiscal year figures have been revised. See Footnote A in the Company’s Form 10K for the period ending
 June 30, 2013.
31
Appendix XII
 
 
 
Twin Disc, Incorporated
November 2013
$317
$310
$332
$296
Historical Net Sales by Segment
$228
$356
32
$285
Appendix XIII
 
 
 
Twin Disc, Incorporated
November 2013
Historical Net Earnings by Segment (before Corporate Expense)
NOTE:  2011 and 2012 fiscal year figures have been revised. See Footnote A in the Company’s Form 10K for the period ending
 June 30, 2013.
33
Appendix XIV
 
 
 
Twin Disc, Incorporated
1st Fiscal Quarter: Condensed Consolidated Statements of Operations
Appendix XV
NOTE:  2011 and 2012 fiscal year figures have been revised. See Footnote A in the Company’s Form 10K for the period ending
 June 30, 2013.
34
November 5, 2013
 
 
 
Twin Disc, Incorporated
35
$ millions
% sales
Operating Cash Flows - Fiscal Year
November 2013
* See Appendix X for reconciliation of TTM figures to reported figures.
Appendix XVI
 
 
 
Twin Disc, Incorporated
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.
36
November 5, 2013