INDIANAPOLIS, May 16, 2024  /PRNewswire/ -- Allison Ventures, Allison Transmission's venture capital arm, is pleased to announce it has committed to a $10 million investment in EnerTech Capital, a venture capital firm focused on the development of emerging technologies and business models in the mobility space.Through this partnership, Allison will gain access to EnerTech's large network of high-tech companies that are advancing automotive technologies in the electrification, connectivity, autonomy and digi ...

Investment Thesis - Allison Transmission Holdings, Inc. has achieved annual compounded double-digit profit growth over the past decade despite modest revenue growth, indicating strong operational and capital efficiencies [2] - The company is financially sound with a solid capital allocation plan, presenting a valuation with more than a 30% margin of safety at the current market price [2] Business Background - Allison is the largest manufacturer of fully automatic transmissions for medium and heavy-duty commercial and U.S. defense vehicles, also leading in electrified propulsion systems [3] - In 2023, service parts and support equipment sales accounted for 23% of net sales, with North America representing about 52% of total net sales [3] - The global automotive transmission market was valued at USD 62.4 billion in 2023, expected to grow at a CAGR of 6.2% by 2028 [3] Operating Trends - Revenue grew at a 4% CAGR over the past decade, while profit after tax (PAT) grew at 12.7% CAGR, driven by higher revenue and lower Selling, General, and Administration (SGA) margins [5] - SGA margin reduced from 16% in 2014 to 11% in 2023, indicating improved cost control [5] - Operating return averaged 17% compared to a WACC of 9%, and ROE averaged 52% against a cost of equity of 11% [6] Financial Position - As of December 2023, Allison had USD 562 million in cash, representing about 11% of total assets, and a Debt Capital ratio of 0.59, down from 0.73 [12] - The company generated USD 6.7 billion in cash flow from operations over the past decade, with a positive cash flow every year [12] Capital Allocation - The company has a low CAPEX relative to cash flow from operations, returning a substantial portion of funds to shareholders [13] - USD 4.0 billion spent on share buybacks boosted the 2023 EPS to USD 7.48 per share, significantly enhancing shareholder value [13] Valuation - Using a single-stage valuation model, the intrinsic value of Allison is estimated at USD 104 per share, compared to a market price of USD 75 per share, indicating a 30% margin of safety [14] - The valuation assumes a conservative 4% growth rate, with the market pricing based on past revenue averages, suggesting potential upside in intrinsic value [14][19]

Core Viewpoint - Allison Transmission has been experiencing a decline in stock performance, with a return of -10.3% over the past month, compared to the Zacks S&P 500 composite's -4.2% and the Zacks Automotive - Original Equipment industry's -8.1% [1] Earnings Estimates - The expected earnings for Allison Transmission for the current quarter is $2.02 per share, reflecting a year-over-year increase of +5.2% [3] - The consensus earnings estimate for the current fiscal year is $7.56, indicating a year-over-year change of +2.2%, with a recent decrease of -1.1% over the last 30 days [3] - For the next fiscal year, the consensus estimate is $8.62, showing a change of +13.9% from the previous year, with a recent increase of +2.8% [3] Revenue Growth - The consensus sales estimate for the current quarter is $791.4 million, indicating a year-over-year change of +1.1% [6] - The sales estimates for the current and next fiscal years are $3.13 billion and $3.32 billion, reflecting changes of +3.1% and +6.2%, respectively [6] Recent Performance - In the last reported quarter, Allison Transmission achieved revenues of $789 million, a year-over-year increase of +6.5%, and an EPS of $1.90 compared to $1.85 a year ago [7] - The company exceeded the Zacks Consensus Estimate for revenues by +4.02% and for EPS by +1.06% [7] - Allison Transmission has consistently beaten consensus EPS estimates in the last four quarters and topped revenue estimates three times [7] Valuation Metrics - The Zacks Value Style Score indicates that Allison Transmission is graded B, suggesting it is trading at a discount to its peers [10] - Valuation multiples such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF) are essential for assessing whether the stock is fairly valued [8][9]

Allison Transmission Holdings (ALSN) delivered first-quarter 2024 earnings of $1.90 per share, which rose 2.7% year over year and beat the Zacks Consensus Estimate of $1.88. Record quarterly revenues of $789 million grew 6.5% from the year-ago period's level and outpaced the Zacks Consensus Estimate of $759 million.Segmental PerformanceAllison segregates revenues in terms of end markets served, which are as follows:In the reported quarter, net sales in the North America On-Highway end market rose 11.7% year ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Allison Transmission reported Q1 2024 net sales of **$789 million** (up 6%), with net income stable at **$169 million** and total assets at **$5.06 billion** Q1 2024 Key Financial Performance (vs. Q1 2023) (in millions) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Sales | $789M | $741M | | Gross Profit | $366M | $361M | | Operating Income | $234M | $230M | | Net Income | $169M | $170M | | Diluted EPS | $1.90 | $1.85 | Condensed Balance Sheet Summary (as of March 31, 2024) (in millions) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $1,300M | $1,250M | | Total Assets | $5,056M | $5,025M | | Total Current Liabilities | $518M | $501M | | Total Liabilities | $3,714M | $3,792M | | Total Stockholders' Equity | $1,342M | $1,233M | Condensed Cash Flow Summary (Q1 2024 vs. Q1 2023) (in millions) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $173M | $193M | | Net cash used for investing activities | ($12M) | ($22M) | | Net cash used for financing activities | ($164M) | ($59M) | | Net (decrease) increase in cash | ($4M) | $112M | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to **$5.056 billion** by March 31, 2024, with liabilities decreasing due to reduced long-term debt, increasing equity - Cash and cash equivalents decreased slightly to **$551 million** from **$555 million** at the end of 2023[13](index=13&type=chunk) - Long-term debt decreased from **$2.497 billion** at year-end 2023 to **$2.398 billion** as of March 31, 2024[13](index=13&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q1 2024 net sales rose **6.5%** to **$789 million**, gross profit increased to **$366 million**, but net income remained flat at **$169 million** due to higher costs Q1 2024 Income Statement Highlights (in millions) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Sales | $789M | $741M | | Gross Profit | $366M | $361M | | Operating Income | $234M | $230M | | Net Income | $169M | $170M | | Diluted EPS | $1.90 | $1.85 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2024 operating cash flow was **$173 million**, with increased debt repayments and stock repurchases resulting in a **$4 million** net cash decrease - Payments on long-term debt increased to **$101 million** in Q1 2024 from just **$1 million** in Q1 2023[18](index=18&type=chunk) - Repurchases of common stock increased to **$52 million** from **$40 million** in the prior-year quarter[18](index=18&type=chunk) - Additions of long-lived assets (capital expenditures) were reduced to **$11 million** from **$24 million** year-over-year[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail revenue by market, a March 2024 credit facility amendment extending maturities and increasing revolver commitment, and a lower effective tax rate Disaggregated Revenue by Market (Q1 2024 vs Q1 2023) (in millions) | Market | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | North America On-Highway | $420M | $376M | | North America Off-Highway | $4M | $24M | | Defense | $48M | $27M | | Outside North America On-Highway | $115M | $108M | | Outside North America Off-Highway | $42M | $23M | | Service Parts, Support Equipment and Other | $160M | $183M | | **Total Net Sales** | **$789M** | **$741M** | - In March 2024, the company amended its Credit Agreement, extending the term loan maturity to 2031 and the revolving credit facility to 2029, while also increasing the revolver commitment by **$100 million** to **$750 million**[47](index=47&type=chunk) - The effective tax rate for Q1 2024 was **17%**, a decrease from **20%** in Q1 2023, primarily due to increased estimated U.S. federal income tax deductions[71](index=71&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2024 revenue grew **6%** driven by North America On-Highway and Defense, offset by lower service parts and off-highway demand, with gross margin declining due to UAW incentives [First Quarter Net Sales by End Market](index=24&type=section&id=First%20Quarter%20Net%20Sales%20by%20End%20Market) Total net sales increased **6%** in Q1 2024, led by strong growth in Defense and North America On-Highway, partially offset by a significant decline in North America Off-Highway Q1 Net Sales by End Market (YoY % Change) (in millions) | End Market | Q1 2024 Sales | Q1 2023 Sales | % Variance | | :--- | :--- | :--- | :--- | | North America On-Highway | $420M | $376M | 12% | | North America Off-Highway | $4M | $24M | (83%) | | Defense | $48M | $27M | 78% | | Outside North America On-Highway | $115M | $108M | 6% | | Outside North America Off-Highway | $42M | $23M | 83% | | Service Parts, Support Equipment and Other | $160M | $183M | (13%) | | **Total Net Sales** | **$789M** | **$741M** | **6%** | [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q1 2024 net sales increased **6%** to **$789 million**, but gross margin declined **230 basis points** due to higher manufacturing costs and UAW incentives, keeping net income flat - Gross profit increase of **$5 million** was driven by higher net sales (**$20 million**) and price increases (**$14 million**), but offset by higher manufacturing expense (**$13 million**), non-recurring UAW incentives (**$13 million**), and higher material costs (**$4 million**)[100](index=100&type=chunk) - Other expense was **$5 million** in Q1 2024 compared to other income of **$10 million** in Q1 2023, a change driven by unrealized losses on marketable securities and unfavorable foreign exchange[105](index=105&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$551 million** cash and **$745 million** revolver availability, using **$101 million** for debt and **$52 million** for stock repurchases in Q1 2024 - Total available liquidity as of March 31, 2024, was approximately **$1.3 billion**, consisting of **$551 million** in cash and **$745 million** in revolver availability[107](index=107&type=chunk)[112](index=112&type=chunk)[116](index=116&type=chunk) - Cash from operating activities decreased by **$20 million** YoY, primarily due to higher cash incentive compensation payments and non-recurring UAW contract signing incentive payments[117](index=117&type=chunk) - Financing activities used **$164 million**, a significant increase from **$59 million** YoY, driven by a **$100 million** increase in debt payments and **$12 million** more in stock repurchases[119](index=119&type=chunk) [Non-GAAP Financial Measures](index=26&type=section&id=Non-GAAP%20Financial%20Measures) Q1 2024 Adjusted EBITDA increased to **$289 million**, with margin slightly decreasing, while Adjusted Free Cash Flow was **$162 million** Reconciliation of Non-GAAP Measures (Q1 2024 vs Q1 2023) (in millions) | Metric (in millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income (GAAP) | $169 | $170 | | **Adjusted EBITDA (Non-GAAP)** | **$289** | **$276** | | Net cash from operating activities (GAAP) | $173 | $193 | | **Adjusted free cash flow (Non-GAAP)** | **$162** | **$169** | - Adjustments to calculate Adjusted EBITDA include adding back items such as **$14 million** for UAW contract signing incentives and a **$7 million** unrealized loss on marketable securities[92](index=92&type=chunk)[94](index=94&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks include interest rate fluctuations, foreign currency volatility, and commodity price changes, with sensitivity analyses provided - **Interest Rate Risk:** A **0.125%** change in interest rates on the fully drawn Senior Secured Credit Facility would impact annual interest expense by approximately **$1 million**; the company hedges **$500 million** of its variable-rate term loan[126](index=126&type=chunk) - **Exchange Rate Risk:** A **10%** aggregate change in the Chinese Yuan, Euro, Indian Rupee, and Japanese Yen would change net earnings by an estimated **$8 million** per year[127](index=127&type=chunk) - **Commodity Price Risk:** A **10%** change in the price of aluminum and steel would impact annual earnings by approximately **$8 million** and **$13 million**, respectively[128](index=128&type=chunk) [Controls and Procedures](index=35&type=section&id=Controls%20and%20Procedures) CEO and CFO concluded disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[130](index=130&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[131](index=131&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions not expected to materially affect its financial position, results, or cash flows - The company is party to various legal actions in the normal course of business, which are not expected to have a material adverse effect[133](index=133&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes from the risk factors reported in the Annual Report on Form 10-K for the year ended December 31, 2023[134](index=134&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **819,812** shares for **$52 million** in Q1 2024, with **$721 million** remaining under the repurchase program Common Stock Repurchases in Q1 2024 (in millions) | Period | Total Shares Purchased | Average Price Paid | Approx. Value Remaining Under Program | | :--- | :--- | :--- | :--- | | Jan 2024 | 425,645 | $57.50 | $748.2M | | Feb 2024 | 264,189 | $66.24 | $730.7M | | Mar 2024 | 129,978 | $76.92 | $720.7M | | **Total Q1** | **819,812** | **$63.40** | **$720.7M** | - The stock repurchase program, with an aggregate authorization of **$4 billion**, has no termination date[79](index=79&type=chunk)[136](index=136&type=chunk) [Other Information](index=37&type=section&id=Item%205.%20Other%20Information) Two company officers adopted Rule 10b5-1 trading arrangements for securities sales during Q1 2024 - Two officers adopted Rule 10b5-1 trading plans in Q1 2024: Ryan A. Milburn for **5,231 shares** and Rafael Basso for **12,624 shares**[139](index=139&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) The report includes Amendment No. 4 to the Credit Agreement, updated equity incentive forms, and required CEO and CFO certifications - Filed Amendment No. 4 to the Credit Agreement, dated March 13, 2024[140](index=140&type=chunk) - Filed required CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)

Allison Transmission Holdings, Inc. (NYSE:ALSN) Q1 2024 Earnings Conference Call April 25, 2024 5:00 PM ET Company Participants Jackie Bolles - Executive Director, Treasury and IR Dave Graziosi - Chairman and CEO Fred Bohley - Senior Vice President, Chief Financial Officer and Treasurer Conference Call Participants Ian Zaffino - Oppenheimer Justin Pellegrino - Melius Research Tami Zakaria - JPMorgan Angel Castillo - Morgan Stanley Jerry Revich - Goldman Sachs Operator Good afternoon. Thank you for standing ...

For the quarter ended March 2024, Allison Transmission (ALSN) reported revenue of $789 million, up 6.5% over the same period last year. EPS came in at $1.90, compared to $1.85 in the year-ago quarter.The reported revenue represents a surprise of +4.02% over the Zacks Consensus Estimate of $758.53 million. With the consensus EPS estimate being $1.88, the EPS surprise was +1.06%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determi ...

Allison Transmission (ALSN) came out with quarterly earnings of $1.90 per share, beating the Zacks Consensus Estimate of $1.88 per share. This compares to earnings of $1.85 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 1.06%. A quarter ago, it was expected that this automatic transmission maker would post earnings of $1.42 per share when it actually produced earnings of $1.91, delivering a surprise of 34.51%.Over the last fo ...

Exhibit 99.1 Allison Transmission Announces First Quarter 2024 Results * Record net sales of $789 million * Diluted EPS of $1.90, which includes $0.13 impact from $14 Million of Non-Recurring UAW Contract Signing Incentives incurred in the quarter * Refinanced Revolving Credit Facility and Term Loan, Paying Down $101 Million of Outstanding Debt INDIANAPOLIS, April 25, 2024 – Allison Transmission Holdings Inc. (NYSE: ALSN), today reported first quarter net sales of $789 million and first quarter diluted EPS ...

Allison 3414 Regional Haul Series™ (RHS) and 4000 Series™ now available to order as the exclusive fully automatic in International RH and HX Series trucks, respectively.INDIANAPOLIS, April 24, 2024 /PRNewswire/ -- Allison Transmission announced today that International Truck, a Navistar brand, has integrated Allison fully automatic transmissions into S13-equipped trucks. Through the partnership's continued collaboration, the award-winning Allison 3414 Regional Haul Series™ (RHS) is now available to order in ...