- Net Sales of $664 million, up 10% year over year (up 13%
year to date)
- Diluted EPS of $1.26, up 25% year over year (up 24% year to
date)
- Record net sales for the first half of the year in the
Outside North America On-Highway end market
Allison Transmission Holdings Inc. (NYSE: ALSN), a
leading designer and manufacturer of conventional and electrified
vehicle propulsion solutions and the largest global manufacturer of
medium- and heavy-duty fully automatic transmissions for commercial
and defense vehicles, today reported net sales for the second
quarter of $664 million, a 10 percent increase from the same period
in 2021, driven by price increases, resilient customer demand
despite persistent supply chain challenges and the continued
execution of growth initiatives.
David S. Graziosi, Chairman and Chief Executive Officer of
Allison Transmission commented, “Second quarter 2022 results
demonstrate solid year over year performance. Net sales growth of
10 percent was once again surpassed by Diluted EPS growth of 25
percent. Per share returns in excess of net sales and net income
growth are driven by Allison’s disciplined and well-defined
approach to capital allocation. In spite of a challenging
environment, the Allison team continues to deliver balanced
execution, while driving multi-year growth initiatives across all
of our end markets.”
Graziosi continued, “As a result of the ongoing strength in
Allison’s global On- and Off-Highway end markets, we are pleased to
affirm the full year 2022 guidance midpoints, while narrowing the
guidance ranges, provided to the market on February 16. Finally,
during the second quarter, we settled $34 million of share
repurchases and paid a quarterly dividend of $0.21 per share to
shareholders. As of June 30, Allison had repurchased 3 percent of
outstanding shares, year to date.”
Second Quarter Financial Highlights
Net sales for the quarter were $664 million. Year over year
results were led by:
- A 13 percent increase in net sales in the North America
On-Highway end market principally driven by continued strength in
customer demand for last mile delivery, regional haul and
vocational trucks,
- A $25 million increase in net sales in the Global Off-Highway
end markets driven by sustained demand for hydraulic fracturing
applications in the energy sector as well as higher demand in the
mining and construction sectors,
- An 8 percent increase in net sales in the Service Parts,
Support Equipment and Other end market principally driven by North
America service parts and global support equipment, and
- A 7 percent increase in net sales in the Outside North America
On-Highway end market principally driven by improving demand in
Europe and South America.
Net income for the quarter was $122 million. Diluted EPS for the
quarter was $1.26. Adjusted EBITDA, a non-GAAP financial measure,
for the quarter was $227 million. Net cash provided by operating
activities for the quarter was $66 million. Adjusted free cash
flow, a non-GAAP financial measure, for the quarter was $36
million.
Second Quarter Net Sales by End Market
End Market
Q2 2022
Net Sales ($M)
Q2 2021
Net Sales ($M)
% Variance
North America On-Highway
$340
$302
13%
North America Off-Highway
$20
$9
122%
Defense
$29
$48
(40%)
Outside North America
On-Highway
$105
$98
7%
Outside North America
Off-Highway
$32
$18
78%
Service Parts, Support Equipment &
Other
$138
$128
8%
Total Net Sales
$664
$603
10%
Second Quarter Financial Results
Gross profit for the quarter was $311 million, an increase of 8
percent from $288 million for the same period in 2021. The increase
in gross profit was principally driven by price increases on
certain products and higher net sales partially offset by
unfavorable material costs.
Selling, general and administrative expenses for the quarter
were $78 million, a decrease of $2 million from $80 million for the
same period in 2021. The decrease was principally driven by lower
commercial activities spending.
Engineering – research and development expenses for the quarter
were $46 million, an increase of $5 million from $41 million for
the same period in 2021. The increase was principally driven by
increased product initiatives spending.
Net income for the quarter was $122 million, an increase of $12
million from $110 million for the same period in 2021. The increase
was principally driven by higher gross profit partially offset by
increased product initiatives spending.
Net cash provided by operating activities was $66 million, a
decrease of $74 million from $140 million for the same period in
2021. The decrease was principally driven by higher operating
working capital funding requirements and higher cash income taxes
partially offset by higher gross profit.
Second Quarter Non-GAAP Financial Measures
Adjusted EBITDA for the quarter was $227 million, an increase of
$14 million from $213 million for the same period in 2021. The
increase in Adjusted EBITDA was principally driven by higher gross
profit partially offset by increased product initiatives
spending.
Adjusted free cash flow for the quarter was $36 million, a
decrease of $59 million from $95 million for the same period in
2021. The decrease was driven by lower net cash provided by
operating activities partially offset by lower capital
expenditures.
Full Year 2022 Guidance Update
We are narrowing the full year 2022 guidance ranges and
affirming the guidance midpoints released to the market on February
16. Allison expects 2022 Net Sales in the range of $2,650 to $2,750
million, Net Income in the range of $450 to $500 million, Adjusted
EBITDA in the range of $885 to $955 million, Net Cash Provided by
Operating Activities in the range of $590 to $660 million, Adjusted
Free Cash Flow in the range of $420 to $480 million and Capital
Expenditures in the range of $170 to $180 million.
Our 2022 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 our growth
initiatives.
Conference Call and Webcast
The company will host a conference call at 5:00 p.m. ET on
Wednesday, August 3 to discuss its second quarter 2022 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 8:00 p.m. ET on August 3 until 11:59 p.m. ET
on August 10. 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 13731235.
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 1,400 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 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 conditions; 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; risks
associated with our international operations, including acts of war
and increased trade protectionism; general economic and industry
conditions; 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 June 30, Six months ended
June 30,
2022
2021
2022
2021
Net sales
$
664
$
603
$
1,341
$
1,191
Cost of sales
353
315
710
612
Gross profit
311
288
631
579
Selling, general and administrative
78
80
153
153
Engineering - research and development
46
41
89
79
Operating income
187
167
389
347
Interest expense, net
(30
)
(30
)
(59
)
(59
)
Other (expense) income, net
(3
)
3
(13
)
6
Income before income taxes
154
140
317
294
Income tax expense
(32
)
(30
)
(66
)
(64
)
Net income
$
122
$
110
$
251
$
230
Basic earnings per share attributable to common stockholders
$
1.26
$
1.01
$
2.59
$
2.09
Diluted earnings per share attributable to common stockholders
$
1.26
$
1.01
$
2.56
$
2.07
Allison Transmission Holdings, Inc. Condensed Consolidated Balance
Sheets (Unaudited, dollars in millions) June 30, December
31,
2022
2021
ASSETS Current Assets Cash and Cash Equivalents
$
122
$
127
Accounts receivable, net
363
301
Inventories
228
204
Other current assets
52
39
Total Current Assets
765
671
Property, plant and equipment, net
705
706
Intangible assets, net
901
917
Goodwill
2,076
2,064
Other non-current assets
87
99
TOTAL ASSETS
$
4,534
$
4,457
LIABILITIES Current Liabilities Accounts payable
$
198
$
179
Product warranty liability
28
33
Current portion of long-term debt
6
6
Deferred revenue
39
37
Other current liabilities
160
204
Total Current Liabilities
431
459
Product warranty liability
25
20
Deferred revenue
96
99
Long-term debt
2,502
2,504
Deferred income taxes
530
514
Other non-current liabilities
201
227
TOTAL LIABILITIES
3,785
3,823
TOTAL STOCKHOLDERS' EQUITY
749
634
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
$
4,534
$
4,457
Allison Transmission Holdings, Inc. Condensed Consolidated
Statements of Cash Flows (Unaudited, dollars in millions)
Three months ended June 30, Six months ended June 30,
2022
2021
2022
2021
Net cash provided by operating activities
$
66
$
140
$
229
$
271
Net cash used for investing activities (a) (b)
(30
)
(45
)
(68
)
(69
)
Net cash used for financing activities
(56
)
(153
)
(162
)
(274
)
Effect of exchange rate changes on cash
(3
)
1
(4
)
-
Net decrease in cash and cash equivalents
(23
)
(57
)
(5
)
(72
)
Cash and cash equivalents at beginning of period
145
295
127
310
Cash and cash equivalents at end of period
$
122
$
238
$
122
$
238
Supplemental disclosures: Interest paid
$
31
$
31
$
57
$
38
Income taxes paid
$
58
$
44
$
59
$
45
(a) Additions of long-lived assets
$
(30
)
$
(45
)
$
(50
)
$
(69
)
(b) Business acquisitions
$
-
$
-
$
(23
)
$
-
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,
2022
2021
2022
2021
Net income (GAAP)
$
122
$
110
$
251
$
230
plus:
Income tax expense
32
30
66
64
Interest expense, net
30
30
59
59
Depreciation of property, plant and
equipment
26
26
53
51
Amortization of intangible assets
12
11
23
23
Unrealized (gain) loss on marketable
securities (a)
(4
)
-
11
-
Stock-based compensation expense (b)
6
5
9
8
Technology-related investments gain
(c)
-
-
(6
)
-
Unrealized loss on foreign exchange
(d)
2
1
3
-
Acquisition-related earnouts (e)
1
-
2
-
Adjusted EBITDA (Non-GAAP)
$
227
$
213
$
471
$
435
Net sales (GAAP)
$
664
$
603
$
1,341
$
1,191
Net income as a percent of net sales
(GAAP)
18.4
%
18.2
%
18.7
%
19.3
%
Adjusted EBITDA as a percent of net sales
(Non-GAAP)
34.2
%
35.3
%
35.1
%
36.5
%
Net cash provided by operating activities
(GAAP)
$
66
$
140
$
229
$
271
Deductions to Reconcile to Adjusted Free
Cash Flow:
Additions of long-lived assets
(30
)
(45
)
(50
)
(69
)
Adjusted free cash flow (Non-GAAP)
$
36
$
95
$
179
$
202
(a)
Represents a (gain) loss (recorded in
Other (expense) income, net) related to an investment in the common
stock of Jing-Jin Electric Technologies Co. Ltd.
(b)
Represents stock-based compensation
expense (recorded in Cost of sales, Selling, general and
administrative, and Engineering – research and development).
(c)
Represents a gain (recorded in Other
(expense) income, net) related to investments in co-development
agreements to expand our position in propulsion solution
technologies.
(d)
Represents losses (recorded in Other
(expense) income, 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 (expense) income, 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, 2022 Low High Net Income
(GAAP)
$
450
$
500
plus: Depreciation and amortization
158
158
Income tax expense
130
150
Interest expense, net
119
119
Stock-based compensation expense (a)
18
18
Unrealized loss on marketable securities (b)
11
11
Unrealized loss on foreign exchange (c)
3
3
Acquisition-related earnouts (d)
2
2
Technology-related investments gain (e)
(6
)
(6
)
Adjusted EBITDA (Non-GAAP)
$
885
$
955
Net Cash Provided by Operating Activities (GAAP)
$
590
$
660
(Deductions) to Reconcile to Adjusted Free Cash Flow: Additions of
long-live assets
$
(170
)
$
(180
)
Adjusted Free Cash Flow (Non-GAAP)
$
420
$
480
(a) Represents stock-based compensation expense
(recorded in Cost of sales, Selling, general and administrative,
and Engineering – research and development). (b) Represents a loss
(recorded in Other (expense) income, net) related to an investment
in the common stock of Jing-Jin Electric Technologies Co. Ltd. (c)
Represents losses (recorded in Other (expense) income, net) on
intercompany financing transactions related to investments in plant
assets for our India facility. (d) Represents expenses (recorded in
Selling, general and administrative, Engineering - research and
development and Other (expense) income, net) for earnouts related
to our acquisition of Vantage Power Limited. (e) Represents gains
(recorded in Other (expense) income, net) related to investments in
co-development agreements to expand our position in transmission
technologies.earnouts related to our acquisition of Vantage Power
Limited.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220803005858/en/
Raymond Posadas Managing Director, Investor Relations
ir@allisontransmission.com (317) 242-3078
Media Relations media@allisontransmission.com (317) 242-5000
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