Allison Transmission Announces First Quarter 2014 Results

INDIANAPOLIS, May 6, 2014 /PRNewswire/ — Allison Transmission Holdings Inc.
(NYSE: ALSN), the largest global provider of commercial duty fully-automatic
transmissions, today reported net sales for the quarter of $494 million, an 8
percent increase from the same period in 2013. Adjusted Net Income, a non-GAAP
financial measure, for the quarter was $108 million, compared to Adjusted Net
Income of $80 million for the same period in 2013, an increase of $28 million.
Diluted earnings per share for the quarter were $0.28.

http://photos.prnewswire.com/prnvar/20120702/DE33547LOGO

The increase in net sales was principally driven by the continued recovery in
the North America On-Highway end market, our largest, and higher demand in the
Service Parts, Support Equipment & Other end market partially offset by
previously contemplated reductions in U.S. defense spending.

Adjusted EBITDA, a non-GAAP financial measure, for the quarter was $166 million,
or 33.6 percent of net sales, compared to $141 million, or 30.8 percent of net
sales, for the same period in 2013. Excluding $3 million of technology-related
license expenses, Adjusted EBITDA for the first quarter 2014 was $169 million,
or 34.3 percent of net sales. Excluding $6 million of technology-related license
expenses, Adjusted EBITDA for the first quarter 2013 was $147 million, or 32.1
percent of net sales. Adjusted Free Cash Flow, also a non-GAAP financial
measure, for the quarter was $91 million compared to $48 million for the same
period in 2013.

Lawrence E. Dewey, Chairman, President and Chief Executive Officer of Allison
Transmission commented, “Our first quarter 2014 results are within the full year
guidance ranges we provided to the market on February 13. Net sales improved on
a year-over-year basis for the second consecutive quarter. Continued recovery in
the North American On-Highway end market and higher demand for global service
parts are encouraging and consistent with our full year guidance which we are
affirming. Highlighting our commitment to the return of capital to Allison’s
shareholders we completed a $100 million share repurchase and paid a quarterly
dividend of $0.12 per share.”

First Quarter Net Sales by End Market

End Market Q1 2014 Q1 2013 % Variance

Net Sales ($M) Net Sales ($M)
— ————- ————-

North America On-
Highway 233 188 24%
—————– — — —

North America
Hybrid-
Propulsion
Systems for
Transit Bus 24 31 (23%)
————- — — —-

North America Off-
Highway 12 8 50%
—————— — — —

Defense 34 57 (40%)
——- — — —-

Outside North
America On-
Highway 64 62 3%
————- — — —

Outside North
America Off-
Highway 21 21 0%
————- — — —

Service Parts,
Support Equipment
& Other 106 90 18%
—————— — — —

Total Net Sales 494 457 8%
————— — — —

First Quarter Highlights

North America On-Highway end market net sales were up 24 percent from the same
period in 2013 principally driven by higher demand for Rugged Duty Series,
Highway Series and Pupil Transport/Shuttle Series models, and up 11 percent on a
sequential basis principally driven by higher demand for Rugged Duty Series and
Pupil Transport/Shuttle Series models.

North America Hybrid-Propulsion Systems for Transit Bus end market net sales
were down 23 percent from the same period in 2013 and 25 percent sequentially
principally driven by lower demand due to engine emissions improvements and
non-hybrid alternatives that generally require a fully-automatic transmission
(e.g. xNG).

North America Off-Highway end market net sales were up 50 percent from the same
period in 2013 principally driven by higher demand from hydraulic fracturing
applications, and down 14 percent on a sequential basis principally driven by
the precipitous rate of improvement in demand from hydraulic fracturing
applications experienced in the fourth quarter of 2013.

Defense end market net sales were down 40 percent from the same period in 2013
and 3 percent sequentially principally driven by previously considered
reductions in U.S. defense spending to longer term averages experienced during
periods without active conflicts.

Outside North America On-Highway end market net sales were up 3 percent from the
same period in 2013 reflecting strength in China bus partially offset by
weakness in Europe truck due to fourth quarter 2013 Euro VI emissions pre-buy
activities, and down 26 percent on a sequential basis principally driven by
fourth quarter 2013 China bus tender timing and Europe truck Euro VI emissions
pre-buy activities.

Outside North America Off-Highway end market net sales were flat compared with
the same period in 2013 principally driven by modestly improved demand
conditions in the mining sector offsetting lower demand from the energy sector,
and up 50 percent on a sequential basis principally driven by modestly improved
demand conditions in the mining sector.

Service Parts, Support Equipment & Other end market net sales were up 18 percent
from the same period in 2013 principally driven by higher demand for global
service parts, and global On-Highway support equipment commensurate with
increased transmission unit volumes, and up 6 percent on a sequential basis
principally driven by higher demand for global service parts and support
equipment.

Gross profit for the quarter was $223 million, an increase of 12 percent from
gross profit of $198 million for the same period in 2013. Gross margin for the
quarter was 45.1 percent, an increase of 170 basis points from a gross margin of
43.4 percent for the same period in 2013. The increase in gross profit from the
same period in 2013 was principally driven by increased net sales.

Selling, general and administrative expenses for the quarter were $83 million, a
decrease of 5 percent from $88 million for the same period in 2013. The decrease
was principally driven by a $5 million reduction in intangible asset
amortization.

Engineering – research and development expenses for the quarter were $25
million, a decrease of 16 percent from $29 million for the same period in 2013.
The decrease was principally driven by a $3 million reduction in
technology-related license expenses.

First Quarter Non-GAAP Financial Measures
Adjusted EBITDA for the quarter was $166 million, or 33.6 percent of net sales,
compared to $141 million, or 30.8 percent of net sales, for the same period in
2013. Excluding $3 million of technology-related license expenses Adjusted
EBITDA for the first quarter 2014 was $169 million, or 34.3 percent of net
sales. Excluding $6 million of technology-related license expenses Adjusted
EBITDA for the first quarter 2013 was $147 million, or 32.1 percent of net
sales. The increase in Adjusted EBITDA from the same period in 2013 was
principally driven by increased net sales and a $3 million reduction in
technology-related license expenses.

Adjusted Net Income for the quarter was $108 million compared to $80 million for
the same period in 2013. The increase was principally driven by increased
Adjusted EBITDA.

Adjusted Free Cash Flow for the quarter was $91 million compared to $48 million
for the same period in 2013. The increase was principally driven by increased
net cash provided by operating activities, decreased capital expenditures and a
$3 million reduction in technology-related license expenses. The decrease in
capital expenditures was principally driven by lower product initiatives
spending partially offset by increased investments in productivity and
replacement programs.

Full Year 2014 Guidance Update
We are affirming our full year 2014 guidance released to the market on February
13: net sales increase in the range of 3 to 6 percent, an Adjusted EBITDA margin
excluding technology-related license expenses in the range of 32 to 34 percent,
an Adjusted Free Cash Flow in the range of $375 to $425 million, capital
expenditures in the range of $60 to $70 million and cash income taxes in the
range of $10 to $15 million.

Although we are not providing specific second quarter 2014 guidance, Allison
expects second quarter net sales to be higher than the same period in 2013. The
anticipated year-over-year increase in second quarter net sales is expected to
be principally driven by higher demand in the North America On-Highway, North
America Off-Highway and Service Parts, Support Equipment & Other end markets
partially offset by previously considered reductions in Defense net sales.

Conference Call and Webcast
The company will host a conference call at 8:00 a.m. ET on Thursday April 17 to
discuss its first quarter 2014 results. Dial-in number is 1-201-689-8470 and the
U.S. toll-free dial-in number is 1-877-407-9039. The passcode for the call is
13580054. 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 11:00 a.m. ET on April 17 until 11:59 p.m. ET on April 24. The
replay dial-in number is 1-858-384-5517 and the U.S. toll-free replay dial-in
number is 1-877-870-5176. The replay passcode is 13580054.

About Allison Transmission
Allison Transmission (NYSE: ALSN) is the world’s largest manufacturer of
fully-automatic transmissions for medium- and heavy-duty commercial vehicles.
Allison transmissions are used in a variety of applications including refuse,
construction, fire, distribution, bus, motorhomes, defense and energy. Founded
in 1915, the company is headquartered in Indianapolis, Indiana, USA and employs
approximately 2,700 people worldwide. With a market presence in more than 80
countries, Allison has regional headquarters in the Netherlands, China and
Brazil with manufacturing facilities in the U.S., Hungary and India. Allison
also has approximately 1,400 independent distributor and dealer locations
worldwide. For more information, visit allisontransmission.com.

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 North America to increase adoption of fully-automatic
transmissions; the concentration of our net sales in our top five customers and
the loss of any one of these; future reductions or changes in government
subsidies for hybrid vehicles, U.S. defense spending; 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 prepare for, respond to and successfully achieve our objectives relating to
technological and market developments and changing customer needs; risks
associated with our international operations; labor strikes, work stoppages or
similar labor disputes, which could significantly disrupt our operations or
those of our principal customers; and other risks and uncertainties associated
with our business described in our Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K. 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.

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
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.

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

(Dollars in millions, except per share data)

Three months ended March 31,

2014 2013
—- —-

(Unaudited) (Unaudited)

Net sales $493.6 $457.4

Cost of sales 271.1 259.1
—– —–

Gross profit 222.5 198.3

Selling, general and
administrative expenses 83.2 87.9

Engineering -research
and development 24.5 29.0
—- —-

Operating income 114.8 81.4

Interest expense, net (35.1) (33.9)

Other expense, net (0.4) (3.1)
—- —-

Income before income
taxes 79.3 44.4

Income tax expense (27.2) (16.9)
—– —–

Net income $52.1 $27.5
===== =====

Basic earnings per share
attributable to

common stockholders $0.29 $0.15

Diluted earnings per share attributable to

common stockholders $0.28 $0.15
===== =====

Allison Transmission Holdings, Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

March 31, December 31,

2014 2013
—- —-

(Unaudited) (Audited)

ASSETS

Current Assets

Cash and cash equivalents $159.9 $184.7

Accounts receivables -net of
allowance for

doubtful accounts of$0.5 and $0.4,
respectively 227.2 175.1

Inventories 175.6 160.4

Deferred income taxes, net 58.1 58.1

Other current assets 31.8 28.6
—- —-

Total Current Assets 652.6 606.9

Property, plant and equipment, net 551.1 563.4

Intangible assets, net 3,527.1 3,551.8

Deferred income taxes, net 1.1 1.1

Other non-current assets 88.0 89.4
—- —-

TOTAL ASSETS $4,819.9 $4,812.6
======== ========

LIABILITIES

Current Liabilities

Accounts payable $173.3 $150.4

Current portion of long term debt 19.5 17.9

Other current liabilities 218.3 218.9
—– —–

Total Current Liabilities 411.1 387.2

Long term debt 2,656.0 2,660.4

Other non-current liabilities 359.0 326.2
—– —–

TOTAL LIABILITIES 3,426.1 3,373.8

TOTAL STOCKHOLDERS’ EQUITY 1,393.8 1,438.8
——- ——-

TOTAL LIABILITIES & STOCKHOLDERS’
EQUITY $4,819.9 $4,812.6
======== ========

Allison Transmission Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Dollars in millions)

Three months ended March 31,

2014 2013
—- —-

(Unaudited) (Unaudited)

Net cash provided by
operating activities $98.6 $54.7

Net cash used for investing
activities (a) (15.1) (19.1)

Net cash (used for)
provided by financing
activities (105.7) 2.1

Effect of exchange rate
changes in cash (2.6) 3.0
—- —

Net (decrease) increase in
cash and cash equivalents (24.8) 40.7

Cash and cash equivalents
at beginning of period 184.7 80.2
—– —-

Cash and cash equivalents
at end of period $159.9 $120.9
====== ======

Supplemental disclosures:

Interest paid $29.4 $30.0

Income taxes paid $2.1 $1.2

(a) Additions of long-
lived assets $(11.1) $(12.6)

Allison Transmission Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited, dollars in millions)

Three months ended
March 31,

2014 2013
—- —-

Net income $52.1 $27.5

plus:

Interest expense, net 35.1 33.9

Cash interest expense (29.4) (30.0)

Income tax expense 27.2 16.9

Cash income taxes (2.1) (1.2)

Impairment loss on technology-
related investments (a) – 2.5

Public offering expenses (b) 0.3 –

Amortization of intangible assets 24.7 29.9
—- —-

Adjusted net income $107.9 $79.5

Cash interest expense 29.4 30.0

Cash income taxes 2.1 1.2

Depreciation of property, plant and
equipment 23.3 24.7

Unrealized (gain) loss on foreign
exchange (c) (0.3) 0.6

Unrealized loss on commodity hedge
contracts (d) 0.1 1.3

Stock-based compensation expense
(e) 3.3 3.4
— —

Adjusted EBITDA $165.8 $140.7
====== ======

Adjusted EBITDA excluding
technology-related license
expenses (f) $169.1 $146.7
====== ======

Net sales $493.6 $457.4

Adjusted EBITDA margin 33.6% 30.8%

Adjusted EBITDA margin excluding
technology-related license
expenses (f) 34.3% 32.1%

Net Cash Provided by Operating
Activities $98.6 $54.7

(Deductions) or Additions to
Reconcile to Adjusted Free Cash
Flow:

Additions of long-lived assets (11.1) (12.6)

Technology-related license
expenses (f) 3.3 6.0
— —

Adjusted Free Cash Flow $90.8 $48.1
===== =====

(a) Represents an
impairment
charge
(recorded in
Other
expense, net)
for
investments
in co-
development
agreements to
expand our
position in
transmission
technologies.

(b) Represents
fees and
expenses
(recorded in
Other
expense, net)
related to
our secondary
offering in
February
2014.

(c) Represents
(gains)
losses
(recorded in
Other
expense, net)
on the mark-
to-market of
our foreign
currency
hedge
contracts.

(d) Represents
losses
(recorded in
Other
expense, net)
on the mark-
to-market of
our commodity
hedge
contracts.

(e) Represents
employee
stock
compensation
expense
(recorded in
Cost of
sales,
Selling,
general and
administrative
expenses, and
Engineering –
research and
development).

(f) Represents
payments
(recorded in
Engineering –
research and
development)
for licenses
to expand our
position in
transmission
technologies.

Logo – http://photos.prnewswire.com/prnh/20120702/DE33547LOGO

SOURCE Allison Transmission Holdings Inc.

 

Leave a Reply


Fatal error: Call to undefined function show_subscription_checkbox() in /home3/steer/public_html/indianapressreleases.com/wp-content/themes/comfy/comments.php on line 95