Allison Transmission Announces First Quarter 2018 Results
Net Income for the quarter was
First Quarter Net Sales by End Market
End Market |
Q1 2018 Net Sales |
Q1 2017 Net Sales |
% Variance |
North America On-Highway |
$315 |
$255 |
24% |
North America Electric Hybrid-Propulsion Systems |
$24 |
$20 |
20% |
North America Off-Highway |
$33 |
$1 |
3200% |
Defense |
$37 |
$27 |
37% |
Outside North America On-Highway |
$91 |
$72 |
26% |
Outside North America Off-Highway |
$12 |
$6 |
100% |
Service Parts, Support Equipment & Other |
$151 |
$118 |
28% |
Total Net Sales |
$663 |
$499 |
33% |
First Quarter Highlights
North America On-Highway end market net sales were up 24 percent from the same period in 2017 principally driven by higher demand for Rugged Duty Series models and up 17 percent on a sequential basis principally driven by higher demand for Rugged Duty Series, Pupil Transport/Shuttle and Transit Series models.
North America Electric Hybrid-Propulsion Systems for Transit Bus end market net sales were up
North America Off-Highway end market net sales were up
Defense end market net sales were up
Outside North America On-Highway end market net sales were up 26 percent from the same period in 2017 principally driven by higher demand in
Outside North America Off-Highway end market net sales were up
Service Parts, Support Equipment & Other end market net sales were up 28 percent from the same period in 2017 principally driven by higher demand for North America Off-Highway service parts and global support equipment, and up 9 percent on a sequential basis principally driven by higher demand for
Gross profit for the quarter was
Selling, general and administrative expenses for the quarter were
Engineering – research and development expenses for the quarter were
Income tax expense for the quarter was
Net income for the quarter was
Net cash provided by operating activities was
First Quarter Non-GAAP Financial Measures
Adjusted EBITDA for the quarter was
Adjusted Free Cash Flow for the quarter was
Full Year 2018 Guidance Update
Our updated full year 2018 guidance includes a year-over-year net sales increase in the range of 10 to 14 percent, Net Income in the range of
Allison's full year 2018 net sales guidance reflects increased demand for Global On-Highway products and Global Off-Highway products and price increases on certain products.
Although we are not providing specific second quarter 2018 guidance, Allison does expect second quarter net sales to be up from the same period in 2017 principally driven by increased demand for Global On-Highway products and Global Off-Highway products.
Conference Call and Webcast
The company will host a conference call at
For those unable to participate in the conference call, a replay will be available from
About
Forward-Looking Statements
This press release contains forward-looking statements. All statements other than statements of historical fact contained in this press release are forward-looking statements, including all statements regarding future financial results. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plans," "project," "anticipate," "believe," "estimate," "predict," "intend," "forecast," "could," "potential," "continue" or the negative of these terms or other similar terms or phrases. Forward-looking statements are not guarantees of future performance and involve known and unknown risks. Factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made include, but are not limited to: risks related to our substantial indebtedness; uncertainty in the global regulatory and business environments in which we operate; our participation in markets that are competitive; the highly cyclical industries in which certain of our end users operate; the failure of markets outside
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
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. Adjusted EBITDA is calculated as the earnings before interest expense, income tax expense, amortization of intangible assets, depreciation of property, plant and equipment and other adjustments as defined by
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 and certain other adjustments.
Attachment
- 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, |
|||||
2018 |
2017 |
||||
Net sales |
$ 663 |
$ 499 |
|||
Cost of sales |
321 |
248 |
|||
Gross profit |
342 |
251 |
|||
Selling, general and administrative |
92 |
79 |
|||
Engineering - research and development |
28 |
23 |
|||
Operating income |
222 |
149 |
|||
Interest expense, net |
(30) |
(25) |
|||
Other (expense) income, net |
(1) |
3 |
|||
Income before income taxes |
191 |
127 |
|||
Income tax expense |
(40) |
(44) |
|||
Net income |
$ 151 |
$ 83 |
|||
Basic earnings per share attributable to common |
$ 1.09 |
$ 0.53 |
|||
Diluted earnings per share attributable to common |
$ 1.08 |
$ 0.52 |
Allison Transmission Holdings, Inc. |
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(Unaudited, dollars in millions) |
|||||||
March 31, |
December 31, |
||||||
2018 |
2017 |
||||||
ASSETS |
|||||||
Current Assets |
|||||||
Cash and cash equivalents |
$ 195 |
$ 199 |
|||||
Accounts receivable |
312 |
221 |
|||||
Inventories |
172 |
154 |
|||||
Income taxes receivable |
10 |
33 |
|||||
Other current assets |
27 |
25 |
|||||
Total Current Assets |
716 |
632 |
|||||
Property, plant and equipment, net |
440 |
448 |
|||||
Intangible assets, net |
1,131 |
1,153 |
|||||
Goodwill |
1,941 |
1,941 |
|||||
Other non-current assets |
32 |
31 |
|||||
TOTAL ASSETS |
$ 4,260 |
$ 4,205 |
|||||
LIABILITIES |
|||||||
Current Liabilities |
|||||||
Accounts payable |
$ 203 |
$ 159 |
|||||
Product warranty liability |
24 |
22 |
|||||
Current portion of long-term debt |
12 |
12 |
|||||
Deferred revenue |
40 |
41 |
|||||
Other current liabilities |
157 |
183 |
|||||
Total Current Liabilities |
436 |
417 |
|||||
Product warranty liability |
38 |
33 |
|||||
Deferred revenue |
72 |
75 |
|||||
Long-term debt |
2,532 |
2,534 |
|||||
Deferred income taxes |
289 |
276 |
|||||
Other non-current liabilities |
187 |
181 |
|||||
TOTAL LIABILITIES |
3,554 |
3,516 |
|||||
TOTAL STOCKHOLDERS' EQUITY |
706 |
689 |
|||||
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY |
$ 4,260 |
$ 4,205 |
Allison Transmission Holdings, Inc. |
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(Unaudited, dollars in millions) |
||||||||
Three Months Ended March 31, |
||||||||
2018 |
2017 |
|||||||
Net cash provided by operating activities |
$ 153 |
$ 111 |
||||||
Net cash used for investing activities (a) |
(10) |
(8) |
||||||
Net cash used for financing activities |
(149) |
(189) |
||||||
Effect of exchange rate changes in cash |
2 |
1 |
||||||
Net decrease in cash and cash equivalents |
(4) |
(85) |
||||||
Cash and cash equivalents at beginning of period |
199 |
205 |
||||||
Cash and cash equivalents at end of period |
$ 195 |
$ 120 |
||||||
Supplemental disclosures: |
||||||||
Interest paid |
$ 10 |
$ 14 |
||||||
Income taxes paid |
$ 1 |
$ 3 |
||||||
(a) Additions of long-lived assets |
$ (10) |
$ (8) |
Allison Transmission Holdings, Inc. |
|||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||||||
(Unaudited, dollars in millions) |
|||||||||
Three months ended |
|||||||||
March 31, |
|||||||||
2018 |
2017 |
||||||||
Net income (GAAP) |
$ 151 |
$ 83 |
|||||||
plus: |
|||||||||
Income tax expense |
40 |
44 |
|||||||
Interest expense, net |
30 |
25 |
|||||||
Amortization of intangible assets |
22 |
22 |
|||||||
Depreciation of property, plant and equipment |
20 |
19 |
|||||||
UAW Local 933 retirement incentive (a) |
7 |
- |
|||||||
Stock-based compensation expense (b) |
3 |
2 |
|||||||
Unrealized loss (gain) on foreign exchange (c) |
2 |
(2) |
|||||||
Unrealized gain on commodity hedge contracts (d) |
- |
(1) |
|||||||
Adjusted EBITDA (Non-GAAP) |
$ 275 |
$ 192 |
|||||||
Net sales (GAAP) |
$ 663 |
$ 499 |
|||||||
Net income as a percent of net sales (GAAP) |
22.8% |
16.6% |
|||||||
Adjusted EBITDA as a percent of net sales (Non-GAAP) |
41.5% |
38.5% |
|||||||
Net Cash Provided by Operating Activities (GAAP) |
$ 153 |
$ 111 |
|||||||
Deductions to Reconcile to Adjusted Free Cash Flow: |
|||||||||
Additions of long-lived assets |
(10) |
(8) |
|||||||
Adjusted Free Cash Flow (Non-GAAP) |
$ 143 |
$ 103 |
|||||||
(a) |
Represents a charge (recorded in Cost of sales) related to a retirement incentive program for certain employees represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America ("UAW") pursuant to the UAW Local 933 collective bargaining agreement effective through November 2023. |
||||||||
(b) |
Represents stock-based compensation expense (recorded in Cost of sales, Selling, general and administrative, and Engineering – research and development). |
||||||||
(c) |
Represents losses (gains) (recorded in Other (expense) income, net) on intercompany financing transactions related to investments in plant assets for our India facility. |
||||||||
(d) |
Represents unrealized gains (recorded in Other (expense) income, net) on the mark-to-market of our commodity hedge contracts. |
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, 2018 |
|||||
Low |
High |
||||
Net Income (GAAP) |
$ 515 |
$ 550 |
|||
plus: |
|||||
Income tax expense |
144 |
154 |
|||
Interest expense, net |
118 |
123 |
|||
Depreciation and amortization |
168 |
168 |
|||
UAW Local 933 retirement incentive (a) |
15 |
15 |
|||
Stock-based compensation expense (b) |
13 |
13 |
|||
Unrealized loss on foreign exchange (c) |
2 |
2 |
|||
Adjusted EBITDA (Non-GAAP) |
$ 975 |
$ 1,025 |
|||
Net Cash Provided by Operating Activities (GAAP) |
$ 720 |
$ 760 |
|||
Deductions to Reconcile to Adjusted Free Cash Flow: |
|||||
Additions of long-lived assets |
(95) |
(85) |
|||
Adjusted Free Cash Flow (Non-GAAP) |
$ 625 |
$ 675 |
|||
(a) |
Represents a charge (recorded in Cost of sales) related to a retirement incentive program for certain employees represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America ("UAW") pursuant to the UAW Local 933 collective bargaining agreement effective through November 2023. |
||||
(b) |
Represents stock-based compensation expense (recorded in Cost of sales, Selling, general and administrative, and Engineering – research and development). |
||||
(c) |
Represents losses (recorded in Other (expense) income, net) on intercompany financing transactions related to investments in plant assets for our India facility. |
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SOURCE
Investor Relations, ir@allisontransmission.com, (317) 242-3078; Media Relations, media@allisontransmission.com, (317) 242-5000