Allison Transmission Announces Second Quarter 2016 Results
Net Income for the quarter was
Second Quarter Net Sales by End Market
End Market |
Q2 2016 Net Sales |
Q2 2015 Net Sales |
% Variance |
North America On-Highway |
264 |
277 |
(5%) |
North America Hybrid-Propulsion Systems for Transit Bus |
16 |
20 |
(20%) |
North America Off-Highway |
1 |
10 |
(90%) |
Defense |
28 |
29 |
(3%) |
Outside North America On-Highway |
74 |
73 |
1% |
Outside North America Off-Highway |
3 |
8 |
(63%) |
Service Parts, Support Equipment & Other |
89 |
94 |
(5%) |
Total Net Sales |
475 |
511 |
(7%) |
Second Quarter Highlights
North America On-Highway end market net sales were down 5 percent from the same period in 2015 principally driven by lower demand for Highway Series and Rugged Duty Series models partially offset by higher demand for Pupil Transport/Shuttle Series models and up 3 percent on a sequential basis principally driven by higher demand for Pupil Transport/Shuttle Series and Rugged Duty Series models partially offset by lower demand for Highway Series models.
North America Hybrid-Propulsion Systems for Transit Bus end market net sales were down 20 percent from the same period in 2015 and down 6 percent sequentially principally driven by lower demand due to engine emissions improvements and non-hybrid alternatives.
North America Off-Highway end market net sales were down 90 percent from the same period in 2015 and down 80 percent on a sequential basis principally driven by lower demand from hydraulic fracturing applications.
Defense end market net sales were down 3 percent from the same period in 2015 principally driven by lower demand for Tracked Defense partially offset by higher demand for Wheeled Defense and up 12 percent on a sequential basis principally driven by higher demand for Wheeled Defense.
Outside North America On-Highway end market net sales were up 1 percent from the same period in 2015 principally driven by higher demand in
Outside North America Off-Highway end market net sales were down 63 percent from the same period in 2015 principally driven by lower demand in the energy and mining sectors and flat sequentially.
Service Parts, Support Equipment & Other end market net sales were down 5 percent from the same period in 2015 principally driven by lower demand for global Off-Highway service parts and
Gross profit for the quarter was
Selling, general and administrative expenses for the quarter were
Engineering – research and development expenses for the quarter were
Net income for the quarter was
Second Quarter Non-GAAP Financial Measures
Adjusted EBITDA for the quarter was
Adjusted Free Cash Flow for the quarter was
Full Year 2016 Guidance Update
Our updated full year 2016 guidance includes a year-over-year net sales decrease in the range of 9.5 to 10.5 percent, an Adjusted EBITDA margin in the range of 33.25 to 34.0 percent and Adjusted Free Cash Flow in the range of
Although we are not providing specific third quarter 2016 guidance, Allison does expect third quarter net sales to be down sequentially and down from the same period in 2015.
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; 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 which are not presented in accordance with accounting principles generally accepted in
This press release also contains forward-looking estimates of non-GAAP Adjusted EBITDA Margin and Adjusted Free Cash Flow for fiscal year 2016. We are unable to provide a reconciliation of our forward-looking estimate of non-GAAP Adjusted EBITDA Margin to a forward-looking estimate of GAAP Net Income because certain information needed to make a reasonable forward-looking estimate of GAAP Net Income is difficult to predict and estimate and is often dependent on future events which may be uncertain or outside of our control. These may include unanticipated charges related to asset impairments (fixed assets, investments, intangibles or goodwill) and unanticipated non-recurring items not reflective of ongoing operations. We are unable to provide a reconciliation of our forward-looking estimate of non-GAAP Adjusted Free Cash Flow to a forward-looking estimate of GAAP Net Cash Provided by Operating Activities because certain information needed to make a reasonable forward-looking estimate of GAAP Net Cash Provided by Operating Activities is difficult to predict and estimate and is often dependent on future events which may be uncertain or outside of our control. These may include the level of excess income tax benefit from share-based compensation and unanticipated non-recurring items.
Attachment
- Condensed Consolidated Statements of Operations
- Condensed Consolidated Balance Sheets
- Condensed Consolidated Statements of Cash Flows
- Reconciliation of GAAP to Non-GAAP Financial Measures
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, |
|||||||
2016 |
2015 |
2016 |
2015 |
|||||
Net sales |
$ 474.9 |
$ 511.0 |
$ 937.0 |
$ 1,014.6 |
||||
Cost of sales |
248.2 |
274.7 |
495.2 |
539.1 |
||||
Gross profit |
226.7 |
236.3 |
441.8 |
475.5 |
||||
Selling, general and administrative expenses |
77.8 |
75.6 |
160.4 |
149.0 |
||||
Engineering - research and development |
21.8 |
23.2 |
43.6 |
45.4 |
||||
Loss associated with impairment of long-lived assets |
- |
- |
- |
1.3 |
||||
Operating income |
127.1 |
137.5 |
237.8 |
279.8 |
||||
Interest expense, net |
(27.8) |
(23.1) |
(61.9) |
(60.0) |
||||
Premiums and expenses on tender offer and redemption of |
- |
(25.1) |
- |
(25.1) |
||||
Other (expense) income, net |
(0.2) |
(2.2) |
(0.3) |
0.6 |
||||
Income before income taxes |
99.1 |
87.1 |
175.6 |
195.3 |
||||
Income tax expense |
(38.3) |
(32.7) |
(66.5) |
(72.5) |
||||
Net income |
$ 60.8 |
$ 54.4 |
$ 109.1 |
$ 122.8 |
||||
Basic earnings per share attributable to common stockholders |
$ 0.36 |
$ 0.30 |
$ 0.64 |
$ 0.68 |
||||
Diluted earnings per share attributable to common stockholders |
$ 0.36 |
$ 0.30 |
$ 0.64 |
$ 0.68 |
||||
Allison Transmission Holdings, Inc. |
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(Unaudited, dollars in millions) |
|||||||
June 30, |
December 31, |
||||||
2016 |
2015 |
||||||
ASSETS |
|||||||
Current Assets |
|||||||
Cash and cash equivalents |
$ 364.4 |
$ 251.6 |
|||||
Accounts receivable - net of allowance for |
|||||||
doubtful accounts of $0.5 and $0.4, respectively |
200.0 |
195.0 |
|||||
Inventories |
150.4 |
141.4 |
|||||
Other current assets |
29.3 |
28.8 |
|||||
Total Current Assets |
744.1 |
616.8 |
|||||
Property, plant and equipment, net |
460.1 |
479.7 |
|||||
Intangible assets, net |
3,229.5 |
3,275.8 |
|||||
Other non-current assets |
29.4 |
36.1 |
|||||
TOTAL ASSETS |
$ 4,463.1 |
$ 4,408.4 |
|||||
LIABILITIES |
|||||||
Current Liabilities |
|||||||
Accounts payable |
$ 138.6 |
$ 126.2 |
|||||
Current portion of long term debt |
24.5 |
24.5 |
|||||
Other current liabilities |
177.7 |
153.9 |
|||||
Total Current Liabilities |
340.8 |
304.6 |
|||||
Long term debt |
2,343.9 |
2,352.7 |
|||||
Other non-current liabilities |
615.7 |
562.5 |
|||||
TOTAL LIABILITIES |
3,300.4 |
3,219.8 |
|||||
TOTAL STOCKHOLDERS' EQUITY |
1,162.7 |
1,188.6 |
|||||
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY |
$ 4,463.1 |
$ 4,408.4 |
|||||
Allison Transmission Holdings, Inc. |
||||||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||||||
(Unaudited, dollars in millions) |
||||||||||||
Three months ended June 30, |
Six months ended June 30, |
|||||||||||
2016 |
2015 |
2016 |
2015 |
|||||||||
Net cash provided by operating activities |
$ 170.0 |
$ 151.7 |
$ 287.9 |
$ 242.7 |
||||||||
Net cash used for investing activities (a) |
(16.2) |
(13.5) |
(22.5) |
(14.7) |
||||||||
Net cash used for financing activities |
(88.2) |
(186.8) |
(153.0) |
(272.4) |
||||||||
Effect of exchange rate changes in cash |
(0.3) |
0.3 |
0.4 |
(1.8) |
||||||||
Net increase (decrease) in cash and cash equivalents |
65.3 |
(48.3) |
112.8 |
(46.2) |
||||||||
Cash and cash equivalents at beginning of period |
299.1 |
265.1 |
251.6 |
263.0 |
||||||||
Cash and cash equivalents at end of period |
$ 364.4 |
$ 216.8 |
$ 364.4 |
$ 216.8 |
||||||||
Supplemental disclosures: |
||||||||||||
Interest paid |
$ 21.5 |
$ 35.1 |
$ 43.1 |
$ 53.6 |
||||||||
Income taxes paid |
$ 4.3 |
$ 1.4 |
$ 7.6 |
$ 3.9 |
||||||||
(a) Additions of long-lived assets |
$ (16.2) |
$ (13.6) |
$ (22.6) |
$ (14.9) |
||||||||
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, |
|||||||||
2016 |
2015 |
2016 |
2015 |
|||||||
Net income (GAAP) |
$ 60.8 |
$ 54.4 |
$ 109.1 |
$ 122.8 |
||||||
plus: |
||||||||||
Income tax expense |
38.3 |
32.7 |
66.5 |
72.5 |
||||||
Interest expense, net |
27.8 |
23.1 |
61.9 |
60.0 |
||||||
Amortization of intangible assets |
23.0 |
24.3 |
46.4 |
48.6 |
||||||
Depreciation of property, plant and equipment |
21.0 |
22.0 |
41.7 |
43.4 |
||||||
Stock-based compensation expense (a) |
2.1 |
2.6 |
4.3 |
4.7 |
||||||
Stockholder activism expenses (b) |
0.1 |
- |
3.7 |
- |
||||||
Unrealized loss (gain) on foreign exchange (c) |
1.2 |
1.1 |
1.8 |
(1.2) |
||||||
Dual power inverter module extended coverage (d) |
- |
- |
1.5 |
(1.8) |
||||||
Unrealized (gain) loss on commodity hedge contracts (e) |
(1.0) |
0.2 |
(1.5) |
- |
||||||
Premiums and expenses on tender offer and redemption of long-term debt (f) |
- |
25.1 |
- |
25.1 |
||||||
Loss associated with impairment of long-lived assets (g) |
- |
- |
- |
1.3 |
||||||
Loss on repayments of long-term debt (h) |
- |
- |
- |
0.2 |
||||||
Adjusted EBITDA (Non-GAAP) |
$ 173.3 |
$ 185.5 |
$ 335.4 |
$ 375.6 |
||||||
Net sales (GAAP) |
$ 474.9 |
$ 511.0 |
$ 937.0 |
$ 1,014.6 |
||||||
Adjusted EBITDA margin (Non-GAAP) |
36.5% |
36.3% |
35.8% |
37.0% |
||||||
Net Cash Provided by Operating Activities (GAAP) |
$ 170.0 |
$ 151.7 |
$ 287.9 |
$ 242.7 |
||||||
(Deductions) or Additions to Reconcile to Adjusted Free Cash Flow: |
||||||||||
Additions of long-lived assets |
(16.2) |
(13.6) |
(22.6) |
(14.9) |
||||||
Stockholder activism expenses (b) |
2.6 |
- |
3.6 |
- |
||||||
Excess tax benefit from stock-based compensation (i) |
0.3 |
0.2 |
0.3 |
8.0 |
||||||
Adjusted Free Cash Flow (Non-GAAP) |
$ 156.7 |
$ 138.3 |
$ 269.2 |
$ 235.8 |
||||||
(a) |
Represents stock-based compensation expense (recorded in Cost of sales, Selling, general and administrative expenses, and Engineering – research and development). |
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(b) |
Represents expenses of $0.1 million and $3.7 million (recorded in Selling, general and administrative expenses) for the three months and six months ended June 30, 2016, respectively, and payments of $2.6 million and $3.6 million for the three months and six months ended June 30, 2016, respectively, directly associated with stockholder activism activity including the notice, and subsequent withdrawal, of director nomination and governance proposals by Ashe Capital Management, LP. |
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(c) |
Represents losses (gains) (recorded in Other (expense) income, net) on the mark-to-market of our foreign currency hedge contracts and on intercompany financing transactions related to investments in plant assets for our India facility. |
|||||||||
(d) |
Represents an adjustment (recorded in Selling, general and administrative expenses) associated with the Dual Power Inverter Module ("DPIM") extended coverage program liability. The DPIM liability will continue to be reviewed for any changes in estimates as additional claims data and field information become available. |
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(e) |
Represents unrealized (gains) losses (recorded in Other (expense) income, net) on the mark-to-market of our commodity hedge contracts. |
|||||||||
(f) |
Represents premiums and expenses related to the tender offer and redemption of Allison Transmission, Inc.'s ("ATI"), our wholly owned subsidiary, 7.125% Senior Notes due 2019. |
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(g) |
Represents a charge associated with the impairment of long-lived assets related to the production of the H3000 and H4000 hybrid-propulsion systems. |
|||||||||
(h) |
Represents losses (recorded in Other (expense) income, net) realized on the repayments of ATI's long-term debt. |
|||||||||
(i) |
Represents the amount of tax benefit (recorded in Income tax expense) related to stock-based compensation adjusted from cash flows from operating activities to cash flows from financing activities. |
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SOURCE
Investor Relations, ir@allisontransmission.com, (317) 242-3078, or Media Relations, media@allisontransmission.com, (317) 242-5000