- Record quarterly net sales of $741 million, up 9% year over
year
- Diluted EPS of $1.85, up 42% year over year
Allison Transmission Holdings Inc. (NYSE: ALSN), today
reported first quarter net sales of $741 million, a 9 percent
increase from the same period in 2022, and diluted EPS of $1.85, a
42 percent increase from the same period in 2022.
David S. Graziosi, Chairman and Chief Executive Officer of
Allison Transmission commented, “Our first quarter results for 2023
continue the trend of strong performance after a record year in
2022. Record quarterly net sales were achieved in the first
quarter, demonstrating our value proposition and strength in our
Service Parts, Support Equipment and Other and North America end
markets. While the business environment remains challenging, we
continued our cost mitigation and pricing actions as demonstrated
through our gross margin expansion in the first quarter, increasing
145 basis points year over year.”
Graziosi continued, “Our strong operating performance has
enabled the consistent execution of our capital allocation
priorities, starting with investment in both our conventional
products as well as our electric axle portfolio, which will drive
growth for the business into the future. We also maintained our
commitment to returning capital to shareholders through our share
repurchase program and fourth consecutive annual increase to our
quarterly dividend. During the first quarter, we increased our
quarterly dividend by 10 percent to $0.23 per share and repurchased
1 percent of outstanding shares. As a result of sustained demand in
our end markets, particularly in North America, and the continued
execution of our growth initiatives, we are pleased to raise full
year 2023 guidance.”
First Quarter Financial Highlights
Net sales for the quarter were an all-time high of $741 million.
Year over year results were led by:
- A $44 million increase in net sales in the Service Parts,
Support Equipment and Other end market, leading to record quarterly
sales of $183 million, principally driven by higher demand for
global service parts and support equipment, higher demand for
aluminum die cast components and price increases on certain
products.
- A $30 million increase in net sales in the North America
On-Highway end market principally driven by strength in customer
demand for medium-duty and Class 8 vocational trucks and price
increases on certain products.
Net income for the quarter was $170 million. Diluted EPS for the
quarter was $1.85. Adjusted EBITDA, a non-GAAP financial measure,
for the quarter was $276 million. Net cash provided by operating
activities for the quarter was $193 million. Adjusted free cash
flow, a non-GAAP financial measure, for the quarter was $169
million.
First Quarter Net Sales by End Market
Q1 2023
Q1 2022
End Market
Net Sales ($M)
Net Sales ($M)
% Variance
North America On-Highway
$376
$346
9%
North America Off-Highway
$24
$18
33%
Defense
$27
$35
(23%)
Outside North America
On-Highway
$108
$109
(1%)
Outside North America
Off-Highway
$23
$30
(23%)
Service Parts, Support Equipment &
Other
$183
$139
32%
Total Net Sales
$741
$677
9%
First Quarter Financial Results
Gross profit for the quarter was $361 million, an increase of 13
percent from $320 million for the same period in 2022. The increase
in gross profit was principally driven by price increases on
certain products, partially offset by higher manufacturing expense
and higher direct material costs.
Selling, general and administrative expenses for the quarter
were $87 million, an increase of $12 million from $75 million for
the same period in 2022. The increase was principally driven by
higher commercial activities spending and increased product
warranty expense.
Engineering – research and development expenses for the quarter
were $44 million, an increase of $1 million from $43 million for
the same period in 2022.
Net income for the quarter was $170 million, an increase of 32
percent from $129 million for the same period in 2022. The increase
was principally driven by higher gross profit.
Net cash provided by operating activities was $193 million, an
increase of $31 million from $162 million for the same period in
2022. The increase was principally driven by higher gross profit
partially offset by higher operating working capital
requirements.
First Quarter Non-GAAP Financial Measures
Adjusted EBITDA for the quarter was $276 million, an increase of
$32 million from $244 million for the same period in 2022. The
increase in Adjusted EBITDA was principally driven by higher gross
profit partially offset by increased selling, general and
administrative expenses.
Adjusted free cash flow for the quarter was $169 million, an
increase of $27 million from $142 million for the same period in
2022. The increase was driven by higher net cash provided by
operating activities partially offset by higher capital
expenditures.
2023 Guidance Update
Given first quarter 2023 results and current end markets
conditions, we are raising our full year 2023 guidance. Allison
expects 2023 Net Sales in the range of $2.9 to $3.0 billion, Net
Income in the range of $550 to $600 million, Adjusted EBITDA in the
range of $1.01 to $1.09 billion, Net Cash Provided by Operating
Activities in the range of $635 to $695 million, Capital
Expenditures in the range of $125 to $135 million, and Adjusted
Free Cash Flow in the range of $510 to $560 million.
Our 2023 net sales guidance reflects higher customer demand in
the Global On-Highway, Global Off-Highway and Service Parts,
Support Equipment & Other end markets, price increases on
certain products and the continued execution of growth
initiatives.
Conference Call and Webcast
The company will host a conference call at 5:00 p.m. ET on
Thursday, April 27, 2023 to discuss its first quarter 2023 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
http://ir.allisontransmission.com.
For those unable to participate in the conference call, a replay
will be available from 9:00 p.m. ET on April 27 until 11:59 p.m. ET
on May 11. 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 13737670.
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
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: 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 the war in Ukraine and the COVID-19 pandemic; global
economic volatility; the duration and spread of the COVID-19
pandemic, including new variants of the virus and the pace and
availability of vaccines and boosters, mitigating efforts deployed
by government agencies and the public at large, and the overall
impact from such outbreak on economic conditions, financial market
volatility and our business, including but not limited to the
operations of our manufacturing and other facilities, the
availability of labor, our supply chain, our distribution processes
and demand for our products and the corresponding impacts to our
net sales and cash flow; 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; 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 and the
timing of defense programs; risks associated with our international
operations, including acts of war and increased trade
protectionism; general economic and industry conditions including
the risk of recession; 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; labor
strikes, work stoppages or similar labor disputes, which could
significantly disrupt our operations or those of our principal
customers or suppliers; risks related to our indebtedness; and
other risks and uncertainties associated with our business
described in our Annual Report on Form 10-K and Quarterly Reports
on Form 10-Q. Although we believe the expectations reflected in
such forward-looking statements are based upon reasonable
assumptions, we can give no assurance that the expectations will be
attained or that any deviation will not be material. All
information is as of the date of this press release, and we
undertake no obligation to update any forward-looking statement to
conform the statement to actual results or changes in expectations
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 March 31,
2023
2022
Net sales
$
741
$
677
Cost of sales
380
357
Gross profit
361
320
Selling, general and administrative
87
75
Engineering - research and development
44
43
Operating income
230
202
Interest expense, net
(28)
(29)
Other income (expense), net
10
(10)
Income before income taxes
212
163
Income tax expense
(42)
(34)
Net income
$
170
$
129
Basic earnings per share attributable to common stockholders
$
1.85
$
1.32
Diluted earnings per share attributable to common stockholders
$
1.85
$
1.30
Allison Transmission Holdings, Inc. Condensed Consolidated Balance
Sheets (Unaudited, dollars in millions)
March 31,
December 31,
2023
2022
ASSETS Current Assets Cash and Cash Equivalents
$
344
$
232
Accounts receivable, net
394
363
Inventories
257
224
Other current assets
48
47
Total Current Assets
1,043
866
Property, plant and equipment, net
757
763
Intangible assets, net
867
878
Goodwill
2,075
2,075
Other non-current assets
91
89
TOTAL ASSETS
$
4,833
$
4,671
LIABILITIES Current Liabilities Accounts payable
$
221
$
195
Product warranty liability
27
33
Current portion of long-term debt
6
6
Deferred revenue
45
38
Other current liabilities
227
208
Total Current Liabilities
526
480
Product warranty liability
32
24
Deferred revenue
94
93
Long-term debt
2,500
2,501
Deferred income taxes
525
536
Other non-current liabilities
168
163
TOTAL LIABILITIES
3,845
3,797
TOTAL STOCKHOLDERS' EQUITY
988
874
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
$
4,833
$
4,671
Allison Transmission Holdings, Inc. Condensed Consolidated
Statements of Cash Flows (Unaudited, dollars in millions)
Three months ended March 31,
2023
2022
Net cash provided by operating activities
$
193
$
162
Net cash used for investing activities (a) (b)
(22)
(38)
Net cash used for financing activities
(59)
(106)
Net increase in cash and cash equivalents
112
18
Cash and cash equivalents at beginning of period
232
127
Cash and cash equivalents at end of period
$
344
$
145
Supplemental disclosures: Interest paid
$
29
$
26
Income taxes paid
$
2
$
1
(a) Additions of long-lived assets
$
(24)
$
(20)
(b) Business acquisitions
$
-
$
(23)
Allison Transmission Holdings, Inc. Reconciliation of GAAP to
Non-GAAP Financial Measures (Unaudited, dollars in millions)
Three months ended
March 31,
2023
2022
Net income (GAAP)
$
170
$
129
plus: Income tax expense
42
34
Interest expense, net
28
29
Depreciation of property, plant and equipment
26
27
Amortization of intangible assets
11
11
Stock-based compensation expense (a)
5
3
Unrealized (gain) loss on marketable securities (b)
(3)
15
Technology-related investments gain (c)
(3)
(6)
Unrealized loss on foreign exchange (d)
-
1
Acquisition-related earnouts (e)
-
1
Adjusted EBITDA (Non-GAAP)
$
276
$
244
Net sales (GAAP)
$
741
$
677
Net income as a percent of net sales (GAAP)
22.9%
19.1%
Adjusted EBITDA as a percent of net sales (Non-GAAP)
37.2%
36.0%
Net cash provided by operating activities (GAAP)
$
193
$
162
Deductions to Reconcile to Adjusted Free Cash Flow: Additions of
long-lived assets
(24)
(20)
Adjusted free cash flow (Non-GAAP)
$
169
$
142
(a) Represents stock-based compensation expense (recorded in Cost
of sales, Selling, general and administrative, and Engineering –
research and development). (b) Represents a (gain) loss (recorded
in Other income (expense), net) related to an investment in the
common stock of Jing-Jin Electric Technologies Co. Ltd. (c)
Represents a gain (recorded in Other income (expense), net) related
to investments in co-development agreements to expand our position
in propulsion solution technologies. (d) Represents a loss
(recorded in Other income (expense), net) on intercompany financing
transactions related to investments in plant assets for our India
facility. (e) Represents expenses (recorded in Selling, general and
administrative, Engineering - research and development and Other
income (expense), net) for earnouts related to our acquisition of
Vantage Power Limited.
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, 2023 Low High Net Income
(GAAP)
$
550
$
600
plus: Depreciation and amortization
172
172
Income tax expense
152
182
Interest expense, net
121
121
Stock-based compensation expense (a)
21
21
Unrealized gain on marketable securities (b)
(3)
(3)
Technology-related investments gain (c)
(3)
(3)
Adjusted EBITDA (Non-GAAP)
$
1,010
$
1,090
Net Cash Provided by Operating Activities (GAAP)
$
635
$
695
(Deductions) to Reconcile to Adjusted Free Cash Flow: Additions of
long-live assets
$
(125)
$
(135)
Adjusted Free Cash Flow (Non-GAAP)
$
510
$
560
(a) Represents stock-based compensation expense (recorded in Cost
of sales, Selling, general and administrative, and Engineering –
research and development). (b) Represents a gain (recorded in Other
income (expense), net) related to an investment in the common stock
of Jing-Jin Electric Technologies Co. Ltd. (c) Represents a gain
(recorded in Other income (expense), net) related to investments in
co-development agreements to expand our position in propulsion
solution technologies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230427005896/en/
Jackie Bolles Executive Director, Treasury and Investor
Relations jacalyn.bolles@allisontransmission.com (317) 242-7073
Claire Gregory Director, Global External Communications
claire.gregory@allisontransmission.com (317) 694-2065
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