Allison Transmission Holdings Inc ALSN

• Record net sales of $789 million
• Diluted EPS of $1.90, which includes $0.13 impact from $14 Million of Non-Recurring UAW Contract Signing Incentives incurred in the quarter
• Refinanced Revolving Credit Facility and Term Loan, Paying Down $101 Million of Outstanding Debt

INDIANAPOLIS, April 25, 2024 /PRNewswire/ -- Allison Transmission Holdings Inc. (NYSE: ALSN), today reported first quarter net sales of $789 million and first quarter diluted EPS of $1.90, which includes a $0.13 impact from $14 million of non-recurring UAW contract signing incentives incurred in the quarter.

David S. Graziosi, Chair and Chief Executive Officer of Allison Transmission commented, "In the first quarter we generated record net sales, driven by strong Global On-Highway demand and strength in our Outside North America Off-Highway and Defense end markets. Robust demand for Class 8 vocational and medium-duty trucks drove record revenue in our North America On-Highway end market, while strength in Asia drove record first quarter revenue in our Outside North America On-Highway end market."

Graziosi continued, "During the first quarter, in support of our long-standing commitment to prudent balance sheet management and our focus on a low-cost, flexible and pre-payable debt structure with long-dated maturities, we increased commitments under our revolving credit facility to $750 million, extending the maturity date to 2029 and refinanced $518 million of term loan debt, paying down $101 million of existing term loan debt and extending the maturity date to 2031. We also maintained our commitment to returning capital to shareholders through our share repurchase program, repurchasing nearly 1 percent of outstanding shares. We also increased our quarterly dividend by 9 percent to $0.25 per share, the fifth consecutive annual increase to our quarterly dividend."

First Quarter Financial Highlights

Net sales for the quarter were an all-time high of $789 million. Year over year results were led by:

• A $44 million increase in net sales in the North America On-Highway end market, leading to record net sales of $420 million, principally driven by strength in demand for Class 8 vocational and medium-duty trucks and price increases on certain products,
• A $21 million increase in net sales in the Defense end market principally driven by increased demand for Tracked vehicle applications,
• A $19 million increase in net sales in the Outside North America Off-Highway end market principally driven by strength in demand from the energy, mining and construction sectors, and
• A $7 million increase in net sales in the Outside North America On-Highway end market, leading to record first quarter net sales of $115 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 $169 million. Diluted EPS for the quarter was $1.90. Adjusted EBITDA, a non-GAAP financial measure, for the quarter was $289 million. Net cash provided by operating activities for the quarter was $173 million. Adjusted free cash flow, a non-GAAP financial measure, for the quarter was $162 million.

First Quarter Net Sales by End Market

First Quarter Financial Results

Gross profit for the quarter was $366 million, an increase of $5 million from $361 million for the same period in 2023. The increase in gross profit was principally driven by increased net sales and price increases on certain products, partially offset by higher manufacturing expense, including $13 million of non-recurring UAW contract signing incentives, and higher direct material costs.

Selling, general and administrative expenses for the quarter were $86 million, a decrease of $1 million from $87 million for the same period in 2023. The decrease was principally driven by lower intangible amortization expense and favorable product warranty expense partially offset by higher commercial activities spending.

Engineering – research and development expenses for the quarter were $46 million, an increase of $2 million from $44 million for the same period in 2023. The increase was principally driven by increased product initiatives spending.

Net income for the quarter was $169 million, a decrease of $1 million from $170 million for the same period in 2023. The decrease was principally driven by higher manufacturing expense, $14 million of non-recurring UAW contract signing incentives, $10 million of unrealized mark-to-market adjustments for marketable securities and higher direct material costs partially offset by increased net sales, price increases on certain products and lower income tax expense.

Net cash provided by operating activities was $173 million, a decrease of $20 million from $193 million for the same period in 2023. The decrease was principally driven by higher cash incentive compensation payments and non-recurring UAW contract signing incentive payments partially offset by higher gross profit and lower operating working capital funding requirements.

First Quarter Non-GAAP Financial Measures

Adjusted EBITDA for the quarter was $289 million, an increase of $13 million from $276 million for the same period in 2023. The increase in Adjusted EBITDA was principally driven by increased net sales and price increases on certain products, partially offset by higher manufacturing expense and higher direct material costs.

Adjusted free cash flow for the quarter was $162 million, a decrease of $7 million from $169 million for the same period in 2023. The decrease was driven by lower net cash provided by operating activities partially offset by lower capital expenditures.

2024 Guidance Update

We are reaffirming our full year 2024 guidance provided to the market on February 13. Allison expects 2024 Net Sales in the range of $3,050 to $3,150 million, Net Income in the range of $635 to $685 million, Adjusted EBITDA in the range of $1,070 to $1,130 million, Net Cash Provided by Operating Activities in the range of $700 to $760 million, Capital Expenditures in the range of $125 to $135 million, and Adjusted Free Cash Flow in the range of $575 to $625 million.

Conference Call and Webcast

The company will host a conference call at 5:00 p.m. ET on Thursday, April 25, 2024 to discuss its first 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 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 25 until 11:59 p.m. ET on May 9. 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 13745491.

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 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

Contacts
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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SOURCE Allison Transmission Holdings Inc.