Allison Transmission Announces Third Quarter 2017 Results
Net Income for the quarter was
Third Quarter Net Sales by End Market
End Market |
Q3 2017 Net Sales |
Q3 2016 Net Sales |
% Variance |
North America On-Highway |
$282 |
$224 |
26% |
North America Electric Hybrid-Propulsion Systems |
$19 |
$8 |
138% |
North America Off-Highway |
$17 |
$1 |
1600% |
Defense |
$35 |
$25 |
40% |
Outside North America On-Highway |
$89 |
$78 |
14% |
Outside North America Off-Highway |
$14 |
$2 |
600% |
Service Parts, Support Equipment & Other |
$139 |
$96 |
45% |
Total Net Sales |
$595 |
$434 |
37% |
Third Quarter Highlights
North America On-Highway end market net sales were up 26 percent from the same period in 2016 principally driven by higher demand for Rugged Duty Series and Highway Series models and down 6 percent on a sequential basis principally driven by lower demand for Rugged Duty Series, Pupil Transport/Shuttle and Highway 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 14 percent from the same period in 2016 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 45 percent from the same period in 2016 principally driven by higher demand for North America Off-Highway service parts, global On-Highway service parts and global support equipment, and up 2 percent on a sequential basis principally driven by higher demand for global On-Highway service parts.
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
Third Quarter Non-GAAP Financial Measures
Adjusted EBITDA for the quarter was
Adjusted Free Cash Flow for the quarter was
Full Year 2017 Guidance Update
Our updated full year 2017 guidance includes a year-over-year net sales increase in the range of 21 to 22 percent, Adjusted EBITDA margin in the range of 37.75 to 38.75 percent, Adjusted Free Cash Flow in the range of
Allison's full year 2017 net sales guidance reflects stronger demand for North America Off-Highway service parts, Global On-Highway products and Global Off-Highway products. Our full year 2017 net sales outlook also assumes price increases on certain products.
Although we are not providing specific fourth quarter 2017 guidance, Allison does expect fourth quarter net sales to be up from the same period in 2016 and down sequentially.
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 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 2017. 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 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. |
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Condensed Consolidated Statements of Operations |
||||||||
(Unaudited, dollars in millions, except per share data) |
||||||||
Three months ended September 30, |
Nine months ended September 30, |
|||||||
2017 |
2016 |
2017 |
2016 |
|||||
Net sales |
$ 595 |
$ 434 |
$ 1,674 |
$ 1,371 |
||||
Cost of sales |
293 |
230 |
831 |
725 |
||||
Gross profit |
302 |
204 |
843 |
646 |
||||
Selling, general and administrative |
78 |
79 |
245 |
240 |
||||
Engineering - research and development |
26 |
21 |
74 |
64 |
||||
Operating income |
198 |
104 |
524 |
342 |
||||
Interest expense, net |
(26) |
(22) |
(78) |
(84) |
||||
Expenses related to long-term debt refinancing |
- |
(12) |
- |
(12) |
||||
Other (expense) income, net |
(2) |
1 |
(3) |
1 |
||||
Income before income taxes |
170 |
71 |
443 |
247 |
||||
Income tax expense |
(59) |
(26) |
(154) |
(93) |
||||
Net income |
$ 111 |
$ 45 |
$ 289 |
$ 154 |
||||
Basic earnings per share attributable to common |
$ 0.75 |
$ 0.27 |
$ 1.91 |
$ 0.91 |
||||
Diluted earnings per share attributable to common |
$ 0.75 |
$ 0.27 |
$ 1.90 |
$ 0.91 |
Allison Transmission Holdings, Inc. |
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(Unaudited, dollars in millions) |
|||||||
September 30, |
December 31, |
||||||
2017 |
2016 |
||||||
ASSETS |
|||||||
Current Assets |
|||||||
Cash and cash equivalents |
$ 210 |
$ 205 |
|||||
Accounts receivable |
271 |
197 |
|||||
Inventories |
156 |
126 |
|||||
Other current assets |
28 |
20 |
|||||
Total Current Assets |
665 |
548 |
|||||
Property, plant and equipment, net |
456 |
464 |
|||||
Intangible assets, net |
1,175 |
1,242 |
|||||
Goodwill |
1,941 |
1,941 |
|||||
Other non-current assets |
24 |
24 |
|||||
TOTAL ASSETS |
$ 4,261 |
$ 4,219 |
|||||
LIABILITIES |
|||||||
Current Liabilities |
|||||||
Accounts payable |
$ 184 |
$ 128 |
|||||
Product Warranty Liability |
22 |
25 |
|||||
Current portion of long-term debt |
12 |
12 |
|||||
Deferred revenue |
33 |
27 |
|||||
Other current liabilities |
193 |
150 |
|||||
Total Current Liabilities |
444 |
342 |
|||||
Product Warranty Liability |
27 |
38 |
|||||
Deferred Revenue |
75 |
66 |
|||||
Long-term debt |
2,536 |
2,147 |
|||||
Deferred income taxes |
393 |
312 |
|||||
Other non-current liabilities |
231 |
233 |
|||||
TOTAL LIABILITIES |
3,706 |
3,138 |
|||||
TOTAL STOCKHOLDERS' EQUITY |
555 |
1,081 |
|||||
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY |
$ 4,261 |
$ 4,219 |
Allison Transmission Holdings, Inc. |
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Condensed Consolidated Statements of Cash Flows |
||||||||||||
(Unaudited, dollars in millions) |
||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||
Net cash provided by operating activities |
$ 215 |
$ 128 |
$ 492 |
$ 416 |
||||||||
Net cash used for investing activities (a) |
(20) |
(15) |
(43) |
(37) |
||||||||
Net cash used for financing activities |
(71) |
(313) |
(447) |
(466) |
||||||||
Effect of exchange rate changes in cash |
1 |
- |
3 |
- |
||||||||
Net increase (decrease) in cash and cash equivalents |
125 |
(200) |
5 |
(87) |
||||||||
Cash and cash equivalents at beginning of period |
85 |
365 |
205 |
252 |
||||||||
Cash and cash equivalents at end of period |
$ 210 |
$ 165 |
$ 210 |
$ 165 |
||||||||
Supplemental disclosures: |
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Interest paid |
$ 16 |
$ 21 |
$ 71 |
$ 64 |
||||||||
Income taxes paid |
$ 31 |
$ 2 |
$ 65 |
$ 10 |
||||||||
(a) Additions of long-lived assets |
$ (20) |
$ (14) |
$ (40) |
$ (36) |
Allison Transmission Holdings, Inc. |
||||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
||||||||||||||||
(Unaudited, dollars in millions) |
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Three months ended |
Nine months ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||||
Net income (GAAP) |
$ 111 |
$ 45 |
$ 289 |
$ 154 |
||||||||||||
plus: |
||||||||||||||||
Income tax expense |
59 |
26 |
154 |
93 |
||||||||||||
Interest expense, net |
26 |
22 |
78 |
84 |
||||||||||||
Amortization of intangible assets |
22 |
23 |
67 |
69 |
||||||||||||
Depreciation of property, plant and equipment |
21 |
21 |
60 |
63 |
||||||||||||
Stock-based compensation expense (a) |
2 |
2 |
8 |
6 |
||||||||||||
Dual power inverter module units extended coverage (b) |
(2) |
- |
(2) |
1 |
||||||||||||
Unrealized loss (gain) on foreign exchange (c) |
2 |
(1) |
1 |
1 |
||||||||||||
Technology-related investment expense (d) |
- |
1 |
3 |
1 |
||||||||||||
Expenses related to long-term debt refinancing (e) |
- |
12 |
- |
12 |
||||||||||||
Unrealized gain on commodity hedge contracts (f) |
- |
- |
- |
(2) |
||||||||||||
Stockholder activism expenses (g) |
- |
- |
- |
4 |
||||||||||||
Adjusted EBITDA (Non-GAAP) |
$ 241 |
$ 151 |
$ 658 |
$ 486 |
||||||||||||
Net sales (GAAP) |
$ 595 |
$ 434 |
$ 1,674 |
$ 1,371 |
||||||||||||
Adjusted EBITDA margin (Non-GAAP) |
40.5% |
34.7% |
39.3% |
35.4% |
||||||||||||
Net Cash Provided by Operating Activities (GAAP) |
$ 215 |
$ 128 |
$ 492 |
$ 416 |
||||||||||||
(Deductions) or Additions to Reconcile to Adjusted Free Cash Flow: |
||||||||||||||||
Additions of long-lived assets |
(20) |
(14) |
(40) |
(36) |
||||||||||||
Stockholder activism expenses (g) |
- |
- |
- |
4 |
||||||||||||
Excess tax benefit from stock-based compensation (h) |
- |
1 |
- |
1 |
||||||||||||
Adjusted Free Cash Flow (Non-GAAP) |
$ 195 |
$ 115 |
$ 452 |
$ 385 |
||||||||||||
(a) |
Represents employee stock compensation expense (recorded in Cost of sales, Selling, general and administrative, and Engineering – research and development). |
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(b) |
Represents an adjustment (recorded in Selling, general and administrative) 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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(c) |
Represents losses (gains) (recorded in Other (expense) income, net) on intercompany financing transactions related to investments in plant assets for our India facility. |
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(d) |
Represents a charge (recorded in Other (expense) income, net) for investments in co-development agreements to expand our position in transmission technologies. |
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(e) |
Represents expenses related to the refinancing of Allison Transmission, Inc.'s, our wholly owned subsidiary, Senior Secured Credit Facility in the third quarter of 2016. |
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(f) |
Represents unrealized gains (recorded in Other (expense) income, net) on the mark-to-market of our commodity hedge contracts. |
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(g) |
Represents expenses (recorded in Selling, general and administrative) 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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(h) |
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; Media Relations, media@allisontransmission.com, (317) 242-5000