Allison Transmission Announces Third Quarter 2022 Results
Allison Transmission Holdings (NYSE: ALSN) reported third quarter net sales of $710 million, a 25% increase year over year, driven by strong customer demand despite supply chain challenges. Diluted EPS rose 63% to $1.45. Notable performance included record sales in Outside North America On-Highway markets, with net sales up 27%. The company repurchased $109 million of stock and paid a $0.21 dividend. 2022 guidance for net sales raised to $2.69 billion to $2.74 billion, reflecting ongoing demand and growth initiatives.
- Net sales increased 25% year over year to $710 million.
- Diluted EPS rose by 63% to $1.45.
- Record quarterly net sales of $118 million in Outside North America On-Highway market, up 27%.
- Gross profit increased by 26% to $328 million.
- Adjusted EBITDA rose 30% to $245 million.
- Raised full-year 2022 net sales guidance to $2.69-$2.74 billion.
- Selling, general, and administrative expenses rose by $5 million to $78 million.
- R&D expenses increased by $5 million to $47 million.
- Unrealized losses on marketable securities impacted net income.
-
Net Sales of , up$710 million 25% year over year -
Diluted EPS of
, up$1.45 63% year over year -
Record quarterly net sales of
in the Outside North America On-Highway end market$118 million
Graziosi continued, “During the third quarter, we maintained our well-defined approach to capital allocation by repurchasing
Third Quarter Financial Highlights
Net sales for the quarter were
- A 24 percent increase in net sales in the North America On-Highway end market principally driven by continued strength in customer demand for last mile delivery, regional haul and vocational trucks,
- A 25 percent increase in net sales in the Service Parts, Support Equipment and Other end market principally driven by global service parts and support equipment, and aluminum die cast components,
-
A
increase in net sales in the Global Off-Highway end markets driven by demand for hydraulic fracturing applications in the energy sector as well as higher demand in the mining and construction sectors, and$26 million -
Record quarterly net sales in the Outside North America On-Highway end market, as a result of a 27 percent increase in net sales driven by the continued execution of our growth initiatives in
Europe ,Asia andSouth America .
Net income for the quarter was
Third Quarter
End Market |
Q3 2022
|
Q3 2021
|
% Variance |
North America On-Highway |
|
|
|
North America Off-Highway |
|
|
|
Defense |
|
|
( |
Outside North America On-Highway |
|
|
|
Outside North America Off-Highway |
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|
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Service Parts, Support Equipment & Other |
|
|
|
Total |
|
|
|
Third Quarter Financial Results
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
Net cash provided by operating activities was
Third Quarter Non-GAAP Financial Measures
Adjusted EBITDA for the quarter was
Adjusted free cash flow for the quarter was
2022 Guidance Update
Given third quarter 2022 results and current end markets conditions, we are raising our full year 2022 guidance midpoints and narrowing ranges. Allison expects 2022 Net Sales in the range of
Our 2022 net sales guidance reflects higher customer demand in the Global On-Highway, Global Off-Highway and Service Parts, Support Equipment & Other end markets, price increases on certain products and the continued execution of growth initiatives.
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. 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: 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 the war in
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. 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
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
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||||||||||||||||
Condensed Consolidated Statements of Operations |
||||||||||||||||
(Unaudited, dollars in millions, except per share data) |
||||||||||||||||
Three months ended |
Nine months ended |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Net sales | $ |
710 |
|
$ |
567 |
|
$ |
2,051 |
|
$ |
1,758 |
|
||||
Cost of sales |
|
382 |
|
|
306 |
|
|
1,092 |
|
|
918 |
|
||||
Gross profit |
|
328 |
|
|
261 |
|
|
959 |
|
|
840 |
|
||||
Selling, general and administrative |
|
78 |
|
|
73 |
|
|
231 |
|
|
226 |
|
||||
Engineering - research and development |
|
47 |
|
|
42 |
|
|
136 |
|
|
121 |
|
||||
Operating income |
|
203 |
|
|
146 |
|
|
592 |
|
|
493 |
|
||||
Interest expense, net |
|
(29 |
) |
|
(28 |
) |
|
(88 |
) |
|
(87 |
) |
||||
Other (expense) income, net |
|
(15 |
) |
|
6 |
|
|
(28 |
) |
|
12 |
|
||||
Income before income taxes |
|
159 |
|
|
124 |
|
|
476 |
|
|
418 |
|
||||
Income tax expense |
|
(20 |
) |
|
(30 |
) |
|
(86 |
) |
|
(94 |
) |
||||
Net income | $ |
139 |
|
$ |
94 |
|
$ |
390 |
|
$ |
324 |
|
||||
Basic earnings per share attributable to common stockholders | $ |
1.46 |
|
$ |
0.89 |
|
$ |
4.02 |
|
$ |
2.97 |
|
||||
Diluted earnings per share attributable to common stockholders | $ |
1.45 |
|
$ |
0.89 |
|
$ |
4.02 |
|
$ |
2.97 |
|
|
||||||
Condensed Consolidated Balance Sheets |
||||||
(Unaudited, dollars in millions) |
||||||
|
||||||
2022 |
2021 |
|||||
ASSETS | ||||||
Current Assets | ||||||
Cash and Cash Equivalents | $ |
180 |
$ |
127 |
||
Accounts receivable, net |
|
374 |
|
301 |
||
Inventories |
|
223 |
|
204 |
||
Other current assets |
|
61 |
|
39 |
||
Total Current Assets |
|
838 |
|
671 |
||
|
||||||
Property, plant and equipment, net |
|
711 |
|
706 |
||
Intangible assets, net |
|
889 |
|
917 |
||
|
2,074 |
|
2,064 |
|||
Other non-current assets |
|
81 |
|
99 |
||
TOTAL ASSETS | $ |
4,593 |
$ |
4,457 |
||
|
||||||
LIABILITIES |
|
|||||
Current Liabilities |
|
|||||
Accounts payable | $ |
227 |
$ |
179 |
||
Product warranty liability |
|
26 |
|
33 |
||
Current portion of long-term debt |
|
6 |
|
6 |
||
Deferred revenue |
|
39 |
|
37 |
||
Other current liabilities |
|
189 |
|
204 |
||
Total Current Liabilities |
|
487 |
|
459 |
||
|
||||||
Product warranty liability |
|
20 |
|
20 |
||
Deferred revenue |
|
95 |
|
99 |
||
Long-term debt |
|
2,502 |
|
2,504 |
||
Deferred income taxes |
|
525 |
|
514 |
||
Other non-current liabilities |
|
202 |
|
227 |
||
TOTAL LIABILITIES |
|
3,831 |
|
3,823 |
||
TOTAL STOCKHOLDERS' EQUITY |
|
762 |
|
634 |
||
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | $ |
4,593 |
$ |
4,457 |
|
||||||||||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||||||||||
(Unaudited, dollars in millions) |
||||||||||||||||
Three months ended |
Nine months ended |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Net cash provided by operating activities | $ |
207 |
|
$ |
196 |
|
$ |
433 |
|
$ |
467 |
|
||||
Net cash used for investing activities (a) (b) |
|
(25 |
) |
|
(50 |
) |
|
(93 |
) |
|
(119 |
) |
||||
Net cash used for financing activities |
|
(123 |
) |
|
(122 |
) |
|
(285 |
) |
|
(396 |
) |
||||
Effect of exchange rate changes on cash |
|
(1 |
) |
|
(1 |
) |
|
(2 |
) |
|
(1 |
) |
||||
Net increase (decrease) in cash and cash equivalents |
|
58 |
|
|
23 |
|
|
53 |
|
|
(49 |
) |
||||
Cash and cash equivalents at beginning of period |
|
122 |
|
|
238 |
|
|
127 |
|
|
310 |
|
||||
Cash and cash equivalents at end of period | $ |
180 |
|
$ |
261 |
|
$ |
180 |
|
$ |
261 |
|
||||
Supplemental disclosures: | ||||||||||||||||
Income taxes paid | $ |
26 |
|
$ |
3 |
|
$ |
85 |
|
$ |
48 |
|
||||
Interest paid | $ |
27 |
|
$ |
34 |
|
$ |
84 |
|
$ |
72 |
|
||||
(a) Additions of long-lived assets | $ |
(25 |
) |
$ |
(43 |
) |
$ |
(75 |
) |
$ |
(112 |
) |
||||
(b) Business acquisitions | $ |
- |
|
$ |
- |
|
$ |
(23 |
) |
$ |
- |
|
|
||||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
||||||||||||||||
(Unaudited, dollars in millions) |
||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Net income (GAAP) | $ |
139 |
|
$ |
94 |
|
$ |
390 |
|
$ |
324 |
|
||||
plus: | ||||||||||||||||
Interest expense, net |
|
29 |
|
|
28 |
|
|
88 |
|
|
87 |
|
||||
Income tax expense |
|
20 |
|
|
30 |
|
|
86 |
|
|
94 |
|
||||
Depreciation of property, plant and equipment |
|
29 |
|
|
26 |
|
|
82 |
|
|
77 |
|
||||
Amortization of intangible assets |
|
12 |
|
|
12 |
|
|
35 |
|
|
35 |
|
||||
Unrealized loss on marketable securities (a) |
|
9 |
|
|
- |
|
|
20 |
|
|
- |
|
||||
Stock-based compensation expense (b) |
|
5 |
|
|
3 |
|
|
14 |
|
|
11 |
|
||||
Technology-related investments gain (c) |
|
- |
|
|
(3 |
) |
|
(6 |
) |
|
(3 |
) |
||||
Unrealized loss (gain) on foreign exchange (d) |
|
2 |
|
|
(1 |
) |
|
5 |
|
|
(1 |
) |
||||
Acquisition-related earnouts (e) |
|
- |
|
|
1 |
|
|
2 |
|
|
1 |
|
||||
|
- |
|
|
(1 |
) |
|
- |
|
|
(1 |
) |
|||||
Adjusted EBITDA (Non-GAAP) | $ |
245 |
|
$ |
189 |
|
$ |
716 |
|
$ |
624 |
|
||||
Net sales (GAAP) | $ |
710 |
|
$ |
567 |
|
$ |
2,051 |
|
$ |
1,758 |
|
||||
Net income as a percent of net sales (GAAP) |
|
19.6 |
% |
|
16.6 |
% |
|
19.0 |
% |
|
18.4 |
% |
||||
Adjusted EBITDA as a percent of net sales (Non-GAAP) |
|
34.5 |
% |
|
33.3 |
% |
|
34.9 |
% |
|
35.5 |
% |
||||
Net cash provided by operating activities (GAAP) | $ |
207 |
|
$ |
196 |
|
$ |
433 |
|
$ |
467 |
|
||||
Deductions to Reconcile to Adjusted Free Cash Flow: | ||||||||||||||||
Additions of long-lived assets |
|
(25 |
) |
|
(43 |
) |
|
(75 |
) |
|
(112 |
) |
||||
Adjusted free cash flow (Non-GAAP) | $ |
182 |
|
$ |
153 |
|
$ |
358 |
|
$ |
355 |
|
(a) | Represents a loss (recorded in Other (expense) income, net) related to an investment in the common stock of Jing-Jin Electric Technologies Co. Ltd. | |||||||||
(b) | Represents stock-based compensation expense (recorded in Cost of sales, Selling, general and administrative, and Engineering – research and development). | |||||||||
(c) | Represents a gain (recorded in Other (expense) income, net) related to investments in co-development agreements to expand our position in propulsion solution technologies. | |||||||||
(d) | Represents losses (gains) (recorded in Other (expense) income, net) on intercompany financing transactions related to investments in plant assets for our |
|||||||||
(e) | Represents expenses (recorded in Selling, general and administrative, Engineering - research and development and Other (expense) income, net) for earnouts related to our acquisition of |
|||||||||
(f) | Represents adjustments (recorded in Cost of sales) related to a retirement incentive program for certain employees represented by the |
|
||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures for Full Year Guidance |
||||||||
(Unaudited, dollars in millions) |
||||||||
Guidance | ||||||||
Year Ending |
||||||||
Low | High | |||||||
Net Income (GAAP) | $ |
490 |
|
$ |
510 |
|
||
plus: | ||||||||
Depreciation and amortization |
|
155 |
|
|
155 |
|
||
Interest expense, net |
|
118 |
|
|
118 |
|
||
Income tax expense |
|
114 |
|
|
124 |
|
||
Unrealized loss on marketable securities (a) |
|
20 |
|
|
20 |
|
||
Stock-based compensation expense (b) |
|
17 |
|
|
17 |
|
||
Unrealized loss on foreign exchange (c) |
|
5 |
|
|
5 |
|
||
Acquisition-related earnouts (d) |
|
2 |
|
|
2 |
|
||
Technology-related investments gain (e) |
|
(6 |
) |
|
(6 |
) |
||
Adjusted EBITDA (Non-GAAP) | $ |
915 |
|
$ |
945 |
|
||
Net Cash Provided by Operating Activities (GAAP) | $ |
620 |
|
$ |
650 |
|
||
(Deductions) to Reconcile to Adjusted Free Cash Flow: | ||||||||
Additions of long-live assets | $ |
(160 |
) |
$ |
(170 |
) |
||
Adjusted Free Cash Flow (Non-GAAP) | $ |
460 |
|
$ |
480 |
|
(a) | Represents a loss (recorded in Other (expense) income, net) related to an investment in the common stock of Jing-Jin Electric Technologies Co. Ltd. | ||||
(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 |
||||
(d) | Represents expenses (recorded in Selling, general and administrative, Engineering - research and development and Other (expense) income, net) for earnouts related to our acquisition of |
||||
(e) | Represents a gain (recorded in Other (expense) income, net) related to investments in co-development agreements to expand our position in propulsion solution technologies earnouts related to our acquisition of |
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Investor Relations
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(317) 242-3078
Media Relations
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(317) 694-2065
Source:
FAQ
What are Allison Transmission's net sales for Q3 2022?
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What factors contributed to the increase in Allison Transmission's net sales?