Home » Allison Transmission First Quarter 2013 Results

Allison Transmission First Quarter 2013 Results

fleetnewsdaily | May 1, 2013

Allison Transmission Holdings Inc. (NYSE: ALSN), the largest global provider of commercial duty fully-automatic transmissions and hybrid-propulsion systems, reported net sales for the quarter of $457 million, a 24 percent decrease from the same period in 2012.

Net Income for the quarter was $28 million, compared to a net income of $58 million for the same period in 2012, a decrease of $30 million. Adjusted Net Income, a non-GAAP financial measure, for the quarter was $80 million, compared to Adjusted Net Income of $144 million for the same period in 2012, a decrease of $64 million. Diluted earnings per share for the quarter were $0.15.

The decrease in net sales was principally driven by considerably lower demand in the North America energy sector’s hydraulic fracturing market, relative to the same period in 2012, due to weakness in natural gas pricing, previously considered reductions in U.S. defense spending and weaker global On-Highway end markets. Partially offsetting these declines were price increases on certain products.

Adjusted EBITDA, a non-GAAP financial measure, for the quarter was $141 million, or 30.8 percent of net sales, compared to $223 million for the same period in 2012. Excluding $6 million of technology-related license expenses Adjusted EBITDA for the quarter was $147 million, or 32.1 percent of net sales. Adjusted Free Cash Flow, also a non-GAAP financial measure, for the quarter was $48 million compared to $120 million for the same period in 2012.

Lawrence E. Dewey, Chairman, President and Chief Executive Officer of Allison Transmission commented, “Our first quarter 2013 results are consistent with the guidance we provided to the market on February 19. Despite challenging end markets demand conditions, Allison continued to demonstrate strong operating margins and cash flow by executing initiatives to proactively align costs and programs across our business. Although these initiatives affected our entire organization, we believe Allison continues to be well positioned for a cyclical recovery in the North America On-Highway end market while supporting its Outside North America growth plans. Maintaining our prudent approach to capital structure management we refinanced the remaining balance of our Senior Secured Credit Facility Term B-1 Loan due in 2014, reduced the applicable borrowing margin of our Senior Secured Credit Facility Term B-2 Loan due in 2017, extended the maturity of our $400 million revolving credit facility to 2016 and paid a quarterly dividend to our shareholders. In addition, on April 15, Allison’s Board of Directors approved an increase in its quarterly cash dividend from $0.06 to $0.12 per share, further highlighting our commitments to cash flow generation and the return of capital to shareholders.”

North America Hybrid-Propulsion Systems for Transit Bus end market net sales were down 11 percent from the same period in 2012 principally driven by municipal subsidy and spending constraints, engine emission improvements and non-hybrid alternative technologies that generally require a fully-automatic transmission (e.g. xNG).

North America Off-Highway end market net sales were down 89 percent from the same period in 2012 principally driven by lower demand from hydraulic fracturing applications due to weakness in natural gas pricing.

Defense end market net sales were down 26 percent from the same period in 2012 principally driven by continued 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 down 6 percent from the same period in 2012 reflecting weakness in Asia partially offset by strength in Latin America.

Outside North America Off-Highway end market net sales were down 34 percent from the same period in 2012 principally driven by weakness in the mining sector.

Service Parts, Support Equipment & Other end market net sales were down 9 percent from the same period in 2012 principally driven by lower demand for North America Off-Highway service parts and global support equipment commensurate with lower transmission unit volumes, partially offset by price increases on certain products.

Gross profit for the quarter was $198 million, a decrease of 30 percent from gross profit of $284 million for the same period in 2012. Gross margin for the quarter was 43.4 percent, an increase of 60 basis points from a gross margin of 42.8 percent for the fourth quarter of 2012, excluding costs ($7 million) and charges ($8 million) to conclude a new five-year labor agreement. The decrease in gross profit from the same period in 2012 was principally driven by decreased net sales and unfavorable material costs, partially offset by improved manufacturing performance and price increases on certain products.

Selling, general and administrative expenses for the quarter were $88 million, a decrease of 13 percent from selling, general and administrative expenses of $101 million for the same period in 2012. The decrease was principally driven by $8 million of lower intangible asset amortization and reduced global commercial spending activities reflecting actions to align costs and programs across our business with expectations of weakened near-term end markets demand.

Engineering – research and development expenses for the quarter were $29 million, compared to $28 million for the same period in 2012, a decrease of $5 million excluding the 2013 technology-related license expenses of $6 million to expand our position in transmission technologies. The decrease was principally driven by lower product initiatives spending reflecting actions to align costs and programs across our business with expectations of weakened near-term end markets demand.

About Allison Transmission
Allison Transmission is the world’s largest manufacturer of fully-automatic transmissions for medium- and heavy-duty commercial vehicles, medium- and heavy-tactical U.S. defense vehicles and hybrid-propulsion systems for transit buses. Allison transmissions are used in a variety of applications including on-highway trucks (distribution, refuse, construction, fire and emergency), buses (primarily school and transit), motor homes, off-highway vehicles and equipment (primarily energy and mining) and defense vehicles (wheeled and tracked). Founded in 1915, the Allison business is headquartered in Indianapolis, Ind., USA and employs approximately 2,800 people. Allison has manufacturing facilities and customization centers located in China, The Netherlands, Brazil, India and Hungary. With a global presence, serving customers in North America, Europe, Asia, Australia, South America, and Africa, Allison also has over 1,400 independent distributor and dealer locations worldwide. More information at Allison.