Allison(ALSN) - 2025 Q1 - Quarterly Report

Financial Performance - Net sales for the first quarter of 2025 were $766 million, a decrease of 3$789 million in the first quarter of 2024[105] - Gross profit for the first quarter of 2025 was $378 million, an increase of 3$366 million in the same period of 2024, with gross profit as a percentage of net sales rising to 49%[107] - Adjusted EBITDA for the first quarter of 2025 was $287 million, representing 37.5$289 million and 36.6% in the first quarter of 2024[101] - Net income for the first quarter of 2025 was $192 million, or 25.1$169 million, or 21.4% in the first quarter of 2024[104] - Adjusted free cash flow for Q1 2025 was $155 million, down from$162 million in Q1 2024[101] Market Performance - North America On-Highway end market net sales increased by 4% to $435 million, driven by price increases and strong demand for Class 8 vocational trucks[92] - Global Off-Highway end market net sales decreased by 61$18 million, primarily due to lower demand from the energy, mining, and construction sectors outside of North America[92] - The company expects higher net sales in 2025, driven by price increases and increased demand in the Defense end market[91] Expenses and Costs - Engineering expenses decreased by 7% to $43 million in the first quarter of 2025, down from$46 million in the same period of 2024[109] - Interest expense decreased by 16% to $21 million in the first quarter of 2025, primarily due to lower variable interest rates on the Term Loan[110] - Direct material costs accounted for approximately 66$181 million, compared to $173 million for the same period in 2024, reflecting a year-over-year increase of approximately 4.6$26 million for the three months ended March 31, 2025, from $12 million in the same period of 2024, primarily due to a$15 million increase in capital expenditures[125] - Cash used for financing activities was $184 million for the three months ended March 31, 2025, compared to$164 million in 2024, driven by $98 million higher stock repurchases[126] - As of March 31, 2025, the company had total available cash and cash equivalents of$753 million, a decrease from $781 million as of December 31, 2024[114] - The company had$744 million available under the Revolving Credit Facility as of March 31, 2025, with no amounts outstanding[119] Debt and Taxation - As of March 31, 2025, the company had $513 million of indebtedness associated with its Term Loan and$1,000 million associated with its 3.75% Senior Notes due January 2031[117] - The effective tax rate for the first quarter of 2025 was 18%, compared to 17% in the same period of 2024, driven by higher taxable income[112] - The company recorded a deferred tax liability of $3 million for its subsidiary in China, with no other deferred tax liabilities recognized for foreign subsidiaries[116] Stock Repurchase and Shareholder Returns - The company repurchased$154 million of its common stock under the Repurchase Program during the three months ended March 31, 2025, with approximately $1,366 million remaining available under the program[121] - The first lien net leverage ratio was (0.21x) as of March 31, 2025, indicating strong liquidity management[119] Risks and Future Outlook - The company is subject to various legal actions and administrative proceedings, which may impact future financial performance[127] - The company faces numerous risks, including competitive market conditions and potential disruptions in supply chains[130] - The company anticipates that its cash flows and liquidity will be sufficient to meet known and anticipated cash requirements for the next twelve months[123] - The company is focused on technological developments, including electric hybrid and fully electric commercial vehicles, to meet changing customer needs[130]