- Net sales of $736 million, up 4% year over year
- Net Income of $158 million, up 14% year over year
- Diluted EPS of $1.76, up 21% year over year
Allison Transmission Holdings Inc. (NYSE: ALSN), today
reported third quarter net sales of $736 million, a 4 percent
increase from the same period in 2022 and diluted EPS of $1.76, a
21 percent increase from the same period in 2022.
David S. Graziosi, Chairman and Chief Executive Officer of
Allison Transmission commented, “Allison’s third quarter 2023
results demonstrate the sustained strength in our North America
On-Highway and Service Parts end markets and the continued focus of
our team to drive operational and financial performance. We
continue to realize solid year over year EBITDA growth, up 9
percent on net sales growth of 4 percent. The increase in net sales
was also surpassed by an even stronger increase in diluted EPS, up
21 percent. Furthermore, our team’s efforts toward price
realization and cost mitigation drove gross margin expansion of 230
basis points year over year.”
Graziosi continued, “During the third quarter, we paid a
quarterly dividend of $0.23 per share and repurchased $20 million
of shares of our common stock. Allison remains committed to our
capital allocation priorities by investing in the business while
returning capital to shareholders, with nearly 4 percent of shares
outstanding repurchased in 2023. Given third quarter results and
current end markets conditions, we are reaffirming our full year
2023 guidance provided to the market on July 27.”
Third Quarter Financial Highlights
Net sales for the quarter were $736 million. Year over year
results were improved by:
- A $36 million increase in net sales in the North America
On-Highway end market principally driven by strength in customer
demand for Class 8 vocational and medium-duty trucks and price
increases on certain products,
- A $14 million increase in net sales in the Service Parts,
Support Equipment and Other end market principally driven by
strength in North America On-Highway service parts and support
equipment and price increases on certain products, and
- An $8 million increase in net sales in the Defense end market
principally driven by increased demand for Tracked and Wheeled
vehicle applications.
Net income for the quarter was $158 million. Diluted EPS for the
quarter was $1.76. Adjusted EBITDA, a non-GAAP financial measure,
for the quarter was $267 million. Net cash provided by operating
activities for the quarter was $212 million. Adjusted free cash
flow, a non-GAAP financial measure, for the quarter was $182
million.
Third Quarter Net Sales by End Market
End Market
Q3 2023
Net Sales ($M)
Q3 2022
Net Sales ($M)
% Variance
North America On-Highway
$376
$340
11%
North America Off-Highway
$9
$24
(63%)
Defense
$43
$35
23%
Outside North America
On-Highway
$118
$118
0%
Outside North America
Off-Highway
$19
$36
(47%)
Service Parts, Support Equipment &
Other
$171
$157
9%
Total Net Sales
$736
$710
4%
Third Quarter Financial Results
Gross profit for the quarter was $357 million, an increase of
$29 million from $328 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.
Selling, general and administrative expenses for the quarter
were $86 million, an increase of $8 million from $78 million for
the same period in 2022.
Engineering – research and development expenses for the quarter
were $49 million, an increase of $2 million from $47 million for
the same period in 2022.
Net income for the quarter was $158 million, an increase of 14
percent from $139 million for the same period in 2022. The increase
was principally driven by higher gross profit partially offset by
increased selling, general and administrative expense.
Net cash provided by operating activities was $212 million, an
increase of $5 million from $207 million for the same period in
2022. The increase was principally driven by higher gross profit
partially offset by higher cash income taxes.
Third Quarter Non-GAAP Financial Measures
Adjusted EBITDA for the quarter was $267 million, an increase of
$22 million from $245 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 $182 million, flat
from the same period in 2022 driven by increased net cash provided
by operating activities offset by increased capital
expenditures.
2023 Guidance Update
Given third quarter results and current end markets conditions,
we are reaffirming our full year 2023 guidance provided to the
market on July 27. Allison expects 2023 Net Sales in the range of
$2.96 to $3.04 billion, Net Income in the range of $575 to $625
million, Adjusted EBITDA in the range of $1.05 to $1.11 billion,
Net Cash Provided by Operating Activities in the range of $675 to
$725 million, Capital Expenditures in the range of $125 to $135
million, and Adjusted Free Cash Flow in the range of $550 to $590
million.
Our 2023 net sales guidance reflects higher customer demand in
the Global On-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
Wednesday, October 25, 2023 to discuss its third 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 October 25 until 11:59 p.m.
ET on November 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 13741446.
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: 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 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; 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; 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 September
30,
Nine months ended September
30,
2023
2022
2023
2022
Net sales
$
736
$
710
$
2,260
$
2,051
Cost of sales
379
382
1,161
1,092
Gross profit
357
328
1,099
959
Selling, general and administrative
86
78
265
231
Engineering - research and development
49
47
140
136
Operating income
222
203
694
592
Interest expense, net
(27)
(29)
(83)
(88)
Other (expense) income, net
(2)
(15)
10
(28)
Income before income taxes
193
159
621
476
Income tax expense
(35)
(20)
(118)
(86)
Net income
$
158
$
139
$
503
$
390
Basic earnings per share attributable to common stockholders
$
1.76
$
1.46
$
5.53
$
4.02
Diluted earnings per share attributable to common stockholders
$
1.76
$
1.45
$
5.53
$
4.02
Allison Transmission Holdings,
Inc.
Condensed Consolidated Balance
Sheets
(Unaudited, dollars in
millions)
September 30, December 31,
2023
2022
ASSETS Current Assets Cash and Cash Equivalents
$
501
$
232
Accounts receivable, net
372
363
Inventories
281
224
Other current assets
63
47
Total Current Assets
1,217
866
Property, plant and equipment, net
763
763
Intangible assets, net
844
878
Goodwill
2,075
2,075
Other non-current assets
88
89
TOTAL ASSETS
$
4,987
$
4,671
LIABILITIES Current Liabilities Accounts payable
$
238
$
195
Product warranty liability
23
33
Current portion of long-term debt
6
6
Deferred revenue
44
38
Other current liabilities
193
208
Total Current Liabilities
504
480
Product warranty liability
36
24
Deferred revenue
94
93
Long-term debt
2,498
2,501
Deferred income taxes
511
536
Other non-current liabilities
160
163
TOTAL LIABILITIES
3,803
3,797
TOTAL STOCKHOLDERS' EQUITY
1,184
874
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
$
4,987
$
4,671
Allison Transmission Holdings,
Inc.
Condensed Consolidated Statements
of Cash Flows
(Unaudited, dollars in
millions)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Net cash provided by operating activities
$
212
$
207
$
546
$
433
Net cash used for investing activities (a) (b)
(30)
(25)
(71)
(93)
Net cash used for financing activities
(31)
(123)
(205)
(285)
Effect of exchange rate changes on cash
(1)
(1)
(1)
(2)
Net increase in cash and cash equivalents
150
58
269
53
Cash and cash equivalents at beginning of period
351
122
232
127
Cash and cash equivalents at end of period
$
501
$
180
$
501
$
180
Supplemental disclosures: Income taxes paid
$
(43)
$
(26)
$
(164)
$
(85)
Interest paid
$
(31)
$
(27)
$
(95)
$
(84)
Interest received from interest rate swaps
$
5
$
-
$
8
$
-
(a) Additions of long-lived assets
$
(30)
$
(25)
$
(73)
$
(75)
(b) Business acquisitions
$
-
$
-
$
-
$
(23)
Allison Transmission Holdings,
Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(Unaudited, dollars in
millions)
Three months ended Nine months ended September 30, September 30,
2023
2022
2023
2022
Net income (GAAP)
$
158
$
139
$
503
$
390
plus: Income tax expense
35
20
118
86
Interest expense, net
27
29
83
88
Depreciation of property, plant and equipment
28
29
81
82
Amortization of intangible assets
11
12
33
35
Stock-based compensation expense (a)
6
5
17
14
Technology-related investments gain (b)
-
-
(3)
(6)
Unrealized loss (gain) on marketable securities (c)
2
9
(1)
20
Unrealized loss on foreign exchange (d)
-
2
-
5
Acquisition-related earnouts (e)
-
-
-
2
Adjusted EBITDA (Non-GAAP)
$
267
$
245
$
831
$
716
Net sales (GAAP)
$
736
$
710
$
2,260
$
2,051
Net income as a percent of net sales (GAAP)
21.5%
19.6%
22.3%
19.0%
Adjusted EBITDA as a percent of net sales (Non-GAAP)
36.3%
34.5%
36.8%
34.9%
Net cash provided by operating activities (GAAP)
$
212
$
207
$
546
$
433
Deductions to Reconcile to Adjusted Free Cash Flow: Additions of
long-lived assets
(30)
(25)
(73)
(75)
Adjusted free cash flow (Non-GAAP)
$
182
$
182
$
473
$
358
(a) Represents stock-based compensation expense (recorded in Cost
of sales, Selling, general and administrative, and Engineering –
research and development). (b) Represents gains (recorded in Other
(expense) income, net) related to investments in co-development
agreements to expand our position in propulsion solution
technologies. (c) Represents losses (gains) (recorded in Other
(expense) income, net) related to an investment in the common stock
of Jing-Jin Electric Technologies Co. Ltd. (d) Represents losses
(recorded in Other (expense) income, net) on intercompany financing
transactions for our India facility. (e) Represents expenses
(recorded in Selling, general and administrative, Engineering -
research and development) 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)
$
575
$
625
plus: Depreciation and amortization
175
175
Income tax expense
161
171
Interest expense, net
118
118
Stock-based compensation expense (a)
24
24
Technology-related investments gain (b)
(3)
(3)
Adjusted EBITDA (Non-GAAP)
$
1,050
$
1,110
Net Cash Provided by Operating Activities (GAAP)
$
675
$
725
(Deductions) to Reconcile to Adjusted Free Cash Flow: Additions of
long-lived assets
$
(125)
$
(135)
Adjusted Free Cash Flow (Non-GAAP)
$
550
$
590
(a) Represents stock-based compensation expense
(recorded in Cost of sales, Selling, general and administrative,
and Engineering – research and development). (b) Represents gains
(recorded in Other (expense) income, 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/20231025477862/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
Grafico Azioni Transmission (NYSE:ALSN)
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