- Record quarterly net sales of $816
million, up 4% year over year
- Diluted EPS of $2.13, up 11%
year over year
- Increasing full year 2024 revenue, earnings and cash flow
guidance
INDIANAPOLIS, July 25,
2024 /PRNewswire/ -- Allison Transmission Holdings
Inc. (NYSE: ALSN), today reported second quarter net sales of
$816 million, a quarterly record
driven by all-time high quarterly net sales of $456 million in the North America On-Highway end
market.
David S. Graziosi, Chair and
Chief Executive Officer of Allison Transmission commented,
"Unprecedented demand for Class 8 vocational vehicles drove record
quarterly revenue in our North America On-Highway end market,
propelling second quarter revenue to a company record of
$816 million. Second quarter
performance was also improved by year over year increases in our
Defense and Outside North America On-Highway end markets as we
continue to execute and realize our growth initiatives
globally."
Graziosi continued, "As a result of the ongoing strength in our
North America On-Highway end market, we are pleased to raise our
full year 2024 revenue, earnings and cash flow guidance. During the
second quarter, we returned capital to shareholders through our
quarterly dividend of $0.25 per share
and repurchasing over $31 million of
our outstanding shares."
Second Quarter Financial Highlights
Net sales for the quarter were a record $816 million. Year over year results were led
by:
- A $59 million increase in net
sales in the North America On-Highway end market principally driven
by strength in demand for Class 8 vocational vehicles and
medium-duty trucks, and price increases on certain products,
- A $10 million increase in net
sales in the Defense end market principally driven by increased
demand for Tracked vehicle applications, and
- A $5 million increase in net
sales in the Outside North America On-Highway end market, leading
to record second quarter net sales of $128
million, principally driven by higher demand in Asia and price increases on certain products,
partially offset by lower demand in Europe.
Net income for the quarter was $187
million. Diluted EPS for the quarter was $2.13. Adjusted EBITDA, a non-GAAP financial
measure, for the quarter was $301
million. Net cash provided by operating activities for the
quarter was $171 million. Adjusted
free cash flow, a non-GAAP financial measure, for the quarter was
$150 million.
Second Quarter Net Sales by End Market
End
Market
|
Q2
2024
Net Sales
($M)
|
Q2
2023
Net Sales
($M)
|
Variance
|
North America
On-Highway
|
$456
|
$397
|
$59
|
North America
Off-Highway
|
$1
|
$25
|
($24)
|
Defense
|
$43
|
$33
|
$10
|
Outside North
America On-Highway
|
$128
|
$123
|
$5
|
Outside North
America Off-Highway
|
$22
|
$24
|
($2)
|
Service Parts,
Support Equipment & Other
|
$166
|
$181
|
($15)
|
Total Net
Sales
|
$816
|
$783
|
$33
|
Second Quarter Financial Results
Gross profit for the quarter was $394
million, an increase of $13
million from $381 million for
the same period in 2023. The increase in gross profit was
principally driven by price increases on certain products and
increased net sales partially offset by higher manufacturing
expense.
Selling, general and administrative expenses for the quarter
were $82 million, a decrease of
$10 million from $92 million for the same period in 2023. The
decrease was principally driven by lower intangible amortization
expense.
Engineering – research and development expenses for the quarter
were $49 million, an increase of
$2 million from $47 million for the same period in 2023.
Net income for the quarter was $187
million, an increase of $12
million from $175 million for
the same period in 2023. The increase was principally driven by
higher gross profit, lower selling, general and administrative
expenses and lower interest expense, net, partially offset by a
non-cash defined benefit pension plan settlement charge incurred in
the second quarter of 2024 and unrealized mark-to-market
adjustments for marketable securities.
Net cash provided by operating activities was $171 million, an increase of $30 million from $141
million for the same period in 2023. The increase was
principally driven by lower cash income taxes and higher gross
profit partially offset by higher operating working capital funding
requirements.
Second Quarter Non-GAAP Financial Measures
Adjusted EBITDA for the quarter was $301
million, an increase of $13
million from $288 million for
the same period in 2023. The increase in Adjusted EBITDA was
principally driven by higher gross profit.
Adjusted free cash flow for the quarter was $150 million, an increase of $28 million from $122
million for the same period in 2023. The increase was
principally driven by higher net cash provided by operating
activities.
2024 Guidance Update
Given first half of 2024 results and current end markets
conditions, we are raising our full year 2024 revenue, earnings and
cash flow guidance. Allison expects 2024 Net Sales in the range of
$3,090 to $3,170 million, Net Income in the range of
$650 to $700
million, Adjusted EBITDA in the range of $1,085 to $1,145
million, Net Cash Provided by Operating Activities in the
range of $715 to $775 million, Capital Expenditures in the range
of $125 to $135 million, and Adjusted Free Cash Flow in the
range of $590 to $640 million.
Conference Call and Webcast
The Company will host a conference call at 5:00 p.m. ET on Thursday, July 25, 2024 to
discuss its second quarter 2024 results. The dial-in phone number
for the conference call is +1-877-425-9470 and the international
dial-in number is +1-201-389-0878. A live webcast of the conference
call will also be available online at
https://ir.allisontransmission.com.
For those unable to participate in the conference call, a replay
will be available from 9:00 p.m. ET
on July 25 until 11:59 p.m. ET on August
8. The replay dial-in phone number is +1-844-512-2921 and
the international replay dial-in number is +1-412-317-6671. The
replay passcode is 13747609.
About Allison Transmission
Allison
Transmission (NYSE: ALSN) is a leading designer and
manufacturer of propulsion solutions for commercial and defense
vehicles and the largest global manufacturer of medium- and
heavy-duty fully automatic transmissions that Improve the
Way the World Works. Allison products are used in a wide
variety of applications, including on-highway trucks (distribution,
refuse, construction, fire and emergency), buses (school, transit
and coach), motorhomes, off-highway vehicles and equipment (energy,
mining and construction applications) and defense vehicles
(tactical wheeled and tracked). Founded in 1915, the company is
headquartered in Indianapolis,
Indiana, USA. With a presence in more than 150 countries,
Allison has regional headquarters in the
Netherlands, China and
Brazil, manufacturing facilities
in the USA, Hungary and India, as well as global engineering
resources, including electrification engineering centers in
Indianapolis, Indiana,
Auburn Hills, Michigan and
London in the United Kingdom. Allison also has more than
1,600 independent distributor and dealer locations worldwide. For
more information, visit https://allisontransmission.com.
Forward-Looking Statements
This press release contains
forward-looking statements. The words "believe," "expect,"
"anticipate," "intend," "estimate" and other expressions that are
predictions of or indicate future events and trends and that do not
relate to historical matters identify forward-looking statements.
You should not place undue reliance on these forward-looking
statements. Although forward-looking statements reflect
management's good faith beliefs, reliance should not be placed on
forward-looking statements because they involve known and unknown
risks, uncertainties and other factors, which may cause actual
results, performance or achievements to differ materially from
anticipated future results, performance or achievements expressed
or implied by such forward-looking statements. Forward-looking
statements speak only as of the date the statements are made. We
undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events, changed circumstances or otherwise. These
forward-looking statements are subject to numerous risks and
uncertainties, including, but not limited to: our participation in
markets that are competitive; our ability to prepare for, respond
to and successfully achieve our objectives relating to
technological and market developments, competitive threats and
changing customer needs, including with respect to electric hybrid
and fully electric commercial vehicles; increases in cost,
disruption of supply or shortage of labor, freight, raw materials,
energy or components used to manufacture or transport our products
or those of our customers or suppliers, including as a result of
geopolitical risks, wars and pandemics; global economic volatility;
general economic and industry conditions, including the risk of
recession; labor strikes, work stoppages or similar labor disputes,
which could significantly disrupt our operations or those of our
principal customers or suppliers; the highly cyclical industries in
which certain of our end users operate; uncertainty in the global
regulatory and business environments in which we operate; the
concentration of our net sales in our top five customers and the
loss of any one of these; the failure of markets outside
North America to increase adoption
of fully automatic transmissions; the success of our research and
development efforts, the outcome of which is uncertain; U.S. and
foreign defense spending; risks associated with our international
operations, including acts of war and increased trade
protectionism; the discovery of defects in our products, resulting
in delays in new model launches, recall campaigns and/or increased
warranty costs and reduction in future sales or damage to our brand
and reputation; our ability to identify, consummate and effectively
integrate acquisitions and collaborations; and risks related to our
indebtedness.
Use of Non-GAAP Financial Measures
This press release
contains information about Allison's financial results and
forward-looking estimates of financial results which are not
presented in accordance with accounting principles generally
accepted in the United States
("GAAP"). Such non-GAAP financial measures are reconciled to their
closest GAAP financial measures at the end of this press release.
Non-GAAP financial measures should not be considered in isolation
or as a substitute for our reported results prepared in accordance
with GAAP and, as calculated, may not be comparable to other
similarly titled measures of other companies.
We use Adjusted EBITDA and Adjusted EBITDA as a percent of net
sales to measure our operating profitability. We believe that
Adjusted EBITDA and Adjusted EBITDA as a percent of net sales
provide management, investors and creditors with useful measures of
the operational results of our business and increase the
period-to-period comparability of our operating profitability and
comparability with other companies. Adjusted EBITDA as a percent of
net sales is also used in the calculation of management's incentive
compensation program. The most directly comparable GAAP measure to
Adjusted EBITDA is Net income. The most directly comparable GAAP
measure to Adjusted EBITDA as a percent of net sales is Net Income
as a percent of net sales. Adjusted EBITDA is calculated as the
earnings before interest expense, net, income tax expense,
amortization of intangible assets, depreciation of property, plant
and equipment and other adjustments as defined by Allison
Transmission, Inc.'s, the Company's wholly-owned subsidiary, Second
Amended and Restated Credit Agreement. Adjusted EBITDA as a percent
of net sales is calculated as Adjusted EBITDA divided by net
sales.
We use Adjusted Free Cash Flow to evaluate the amount of cash
generated by our business that, after the capital investment needed
to maintain and grow our business and certain mandatory debt
service requirements, can be used for the repayment of debt,
stockholder distributions and strategic opportunities, including
investing in our business. We believe that Adjusted Free Cash Flow
enhances the understanding of the cash flows of our business for
management, investors and creditors. Adjusted Free Cash Flow is
also used in the calculation of management's incentive compensation
program. The most directly comparable GAAP measure to Adjusted Free
Cash Flow is Net cash provided by operating activities. Adjusted
Free Cash Flow is calculated as Net cash provided by operating
activities, after additions of long-lived assets.
Attachments
- Condensed Consolidated Statements of Operations
- Condensed Consolidated Balance Sheets
- Condensed Consolidated Statements of Cash Flows
- Reconciliation of GAAP to Non-GAAP Financial Measures
- Reconciliation of GAAP to Non-GAAP Financial Measures for Full
Year Guidance
Allison Transmission
Holdings, Inc.
|
Condensed Consolidated
Statements of Operations
|
(Unaudited, dollars in
millions, except per share data)
|
|
|
Three months
ended June 30,
|
|
Six months ended
June 30,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
816
|
|
$
783
|
|
$
1,605
|
|
$
1,524
|
Cost of
sales
|
|
422
|
|
402
|
|
845
|
|
782
|
Gross profit
|
|
394
|
|
381
|
|
760
|
|
742
|
Selling, general and
administrative
|
|
82
|
|
92
|
|
168
|
|
179
|
Engineering - research
and development
|
|
49
|
|
47
|
|
95
|
|
91
|
Operating
income
|
|
263
|
|
242
|
|
497
|
|
472
|
Interest expense,
net
|
|
(22)
|
|
(28)
|
|
(47)
|
|
(56)
|
Other (expense) income,
net
|
|
(7)
|
|
2
|
|
(12)
|
|
12
|
Income before income
taxes
|
|
234
|
|
216
|
|
438
|
|
428
|
Income tax
expense
|
|
(47)
|
|
(41)
|
|
(82)
|
|
(83)
|
Net income
|
|
$
187
|
|
$
175
|
|
$
356
|
|
$
345
|
Basic earnings per
share attributable to common stockholders
|
|
$
2.15
|
|
$
1.94
|
|
$
4.05
|
|
$
3.79
|
Diluted earnings per
share attributable to common stockholders
|
|
$
2.13
|
|
$
1.92
|
|
$
4.05
|
|
$
3.75
|
|
|
|
|
|
|
|
|
|
Allison Transmission
Holdings, Inc.
|
Condensed Consolidated
Balance Sheets
|
(Unaudited, dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
|
|
2024
|
|
2023
|
ASSETS
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents
|
|
|
|
$
648
|
|
$
555
|
Accounts receivable, net
|
|
|
|
383
|
|
356
|
Inventories
|
|
|
|
|
303
|
|
276
|
Other current assets
|
|
|
|
89
|
|
63
|
Total Current
Assets
|
|
|
|
1,423
|
|
1,250
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
760
|
|
774
|
Intangible assets,
net
|
|
|
|
826
|
|
833
|
Goodwill
|
|
|
|
|
2,075
|
|
2,076
|
Other non-current
assets
|
|
|
|
92
|
|
92
|
TOTAL ASSETS
|
|
|
|
|
$
5,176
|
|
$
5,025
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
249
|
|
$
210
|
Product warranty liability
|
|
|
|
32
|
|
32
|
Current portion of long-term debt
|
|
|
5
|
|
6
|
Deferred revenue
|
|
|
|
44
|
|
41
|
Other current liabilities
|
|
|
|
181
|
|
212
|
Total Current
Liabilities
|
|
|
|
511
|
|
501
|
|
|
|
|
|
|
|
|
Product warranty
liability
|
|
|
|
27
|
|
27
|
Deferred
revenue
|
|
|
|
92
|
|
89
|
Long-term
debt
|
|
|
|
|
2,397
|
|
2,497
|
Deferred income
taxes
|
|
|
|
510
|
|
519
|
Other non-current
liabilities
|
|
|
|
155
|
|
159
|
TOTAL
LIABILITIES
|
|
|
|
3,692
|
|
3,792
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS'
EQUITY
|
|
|
|
1,484
|
|
1,233
|
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY
|
|
|
$
5,176
|
|
$
5,025
|
|
|
|
|
|
|
|
|
Allison Transmission
Holdings, Inc.
|
Condensed Consolidated
Statements of Cash Flows
|
(Unaudited, dollars in
millions)
|
|
|
|
|
|
|
Three months
ended June 30,
|
|
Six months ended
June 30,
|
|
|
|
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
|
|
$
171
|
|
$
141
|
|
$
344
|
|
$
334
|
Net cash used for
investing activities (a)
|
|
|
|
(20)
|
|
(19)
|
|
(32)
|
|
(41)
|
Net cash used for
financing activities
|
|
|
|
(54)
|
|
(115)
|
|
(218)
|
|
(174)
|
Effect of exchange rate
changes on cash
|
|
|
|
-
|
|
-
|
|
(1)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents
|
|
|
|
97
|
|
7
|
|
93
|
|
119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
|
|
551
|
|
344
|
|
555
|
|
232
|
Cash and cash
equivalents at end of period
|
|
|
|
$
648
|
|
$
351
|
|
$
648
|
|
$
351
|
Supplemental
disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
|
|
|
$
(95)
|
|
$
(119)
|
|
$
(99)
|
|
$
(121)
|
Interest paid
|
|
|
|
|
$
(33)
|
|
$
(35)
|
|
$
(62)
|
|
$
(64)
|
Interest received from interest rate swaps
|
|
|
$
4
|
|
$
3
|
|
$
7
|
|
$
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Additions of
long-lived assets
|
|
|
|
|
|
$
(21)
|
|
$
(19)
|
|
$
(32)
|
|
$
(43)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allison Transmission
Holdings, Inc.
|
Reconciliation of GAAP
to Non-GAAP Financial Measures
|
(Unaudited, dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
|
|
|
|
June
30,
|
|
June
30,
|
|
|
|
|
|
|
2024
|
2023
|
|
2024
|
2023
|
Net income
(GAAP)
|
|
|
|
|
$
187
|
$
175
|
|
$
356
|
$
345
|
plus:
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
47
|
41
|
|
82
|
83
|
Depreciation of property, plant and equipment
|
|
|
27
|
27
|
|
54
|
53
|
Interest expense, net
|
|
|
|
22
|
28
|
|
47
|
56
|
Stock-based compensation expense (a)
|
|
|
8
|
6
|
|
14
|
11
|
UAW
Local 933 contract signing incentives (b)
|
|
|
-
|
-
|
|
14
|
-
|
Unrealized loss (gain) on marketable securities (c)
|
|
|
3
|
-
|
|
10
|
(3)
|
Amortization of intangible assets
|
|
|
|
2
|
11
|
|
7
|
22
|
Pension plan settlement loss (d)
|
|
|
|
4
|
-
|
|
4
|
-
|
Technology-related investments loss (gain) (e)
|
|
|
1
|
-
|
|
1
|
(3)
|
Loss
associated with impairment of long-lived assets
|
|
|
-
|
-
|
|
1
|
-
|
Adjusted EBITDA
(Non-GAAP)
|
|
|
|
$
301
|
$
288
|
|
$
590
|
$
564
|
Net sales
(GAAP)
|
|
|
|
|
$
816
|
$
783
|
|
$
1,605
|
$
1,524
|
Net income as a percent
of net sales (GAAP)
|
|
|
22.9 %
|
22.3 %
|
|
22.2 %
|
22.6 %
|
Adjusted EBITDA as a
percent of net sales (Non-GAAP)
|
|
|
36.9 %
|
36.8 %
|
|
36.8 %
|
37.0 %
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities (GAAP)
|
|
|
$
171
|
$
141
|
|
$
344
|
$
334
|
Deductions to Reconcile
to Adjusted Free Cash Flow:
|
|
|
|
|
|
|
|
Additions of long-lived assets
|
|
|
|
(21)
|
(19)
|
|
(32)
|
(43)
|
Adjusted free cash flow
(Non-GAAP)
|
|
|
|
$
150
|
$
122
|
|
$
312
|
$
291
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Represents stock-based
compensation expense (recorded in Cost of sales, Selling, general
and administrative, and Engineering — research and
development).
|
(b)
|
Represents
non-recurring incentives (recorded in Cost of sales, Selling,
general and administrative, and Engineering — research and
development) to eligible employees as a result of International
Union, United Automobile, Aerospace and Agricultural Implement
Workers of America ("UAW") Local 933 represented employees
ratifying a four-year collective bargaining agreement effective
through November 2027.
|
(c)
|
Represents a loss
(gain) (recorded in Other (expense) income, net) related to an
investment in the common stock of Jing-Jin Electric Technologies
Co. Ltd.
|
(d)
|
Represents a non-cash
settlement charge (recorded in Other (expense) income, net) for a
pro rata portion of previously unrecognized pension plan actuarial
net losses associated with the pension risk transfer of a portion
of our salaried defined benefit pension plan obligations to a
third-party insurance company.
|
(e)
|
Represents a loss
(gain) (recorded in Other (expense) income, net) related to
investments in co-development agreements to expand our position in
propulsion solution technologies.
|
|
Allison Transmission
Holdings, Inc.
|
|
Reconciliation of GAAP
to Non-GAAP Financial Measures for Full Year Guidance
|
|
(Unaudited, dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Guidance
|
|
|
|
Year Ending December
31, 2024
|
|
|
|
Low
|
|
High
|
Net Income
(GAAP)
|
|
$
650
|
|
$
700
|
plus:
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
161
|
|
171
|
Depreciation of
property, plant and equipment
|
|
113
|
|
113
|
Interest expense,
net
|
|
94
|
|
94
|
Stock-based
compensation expense (a)
|
|
26
|
|
26
|
UAW Local 933 contract
signing incentives (b)
|
|
14
|
|
14
|
Amortization of
intangible assets
|
|
11
|
|
11
|
Unrealized loss on
marketable securities (c)
|
|
10
|
|
10
|
Pension plan settlement
loss (d)
|
|
|
4
|
|
4
|
Technology-related
investments loss (e)
|
|
1
|
|
1
|
Loss associated with
impairment of long-lived assets
|
|
1
|
|
1
|
|
|
|
|
|
|
Adjusted EBITDA
(Non-GAAP)
|
|
|
$
1,085
|
|
$
1,145
|
|
|
|
|
|
|
Net Cash Provided by
Operating Activities (GAAP)
|
|
|
$
715
|
|
$
775
|
Deductions to Reconcile
to Adjusted Free Cash Flow:
|
|
|
|
|
|
Additions of long-lived assets
|
|
|
$
(125)
|
|
$
(135)
|
Adjusted Free Cash Flow
(Non-GAAP)
|
|
|
$
590
|
|
$
640
|
|
|
|
|
|
|
(a)
|
Represents stock-based
compensation expense (recorded in Cost of sales, Selling, general
and administrative, and Engineering — research and
development).
|
(b)
|
Represents
non-recurring incentives (recorded in Cost of sales, Selling,
general and administrative, and Engineering — research and
development) to eligible employees as a result of International
Union, United Automobile, Aerospace and Agricultural Implement
Workers of America ("UAW") Local 933 represented employees
ratifying a four-year collective bargaining agreement effective
through November 2027.
|
(c)
|
Represents a loss
(recorded in Other (expense) income, net) related to an investment
in the common stock of Jing-Jin Electric Technologies Co.
Ltd.
|
(d)
|
Represents a non-cash
settlement charge (recorded in Other (expense) income, net) for a
pro rata portion of previously unrecognized pension plan actuarial
net losses associated with the pension risk transfer of a portion
of our salaried defined benefit pension plan obligations to a
third-party insurance company.
|
(e)
|
Represents a loss
(recorded in Other (expense) income, net) related to investments in
co-development agreements to expand our position in propulsion
solution technologies.
|
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SOURCE Allison Transmission Holdings Inc.