Allison(US:ALSN)2023-10-25 16:00Financial Performance - Net income for the nine months ended September 30, 2023, was $503 million, compared to $390 million in the same period in 2022[14] - Net sales for the nine months ended September 30, 2023, were $2,260 million, up from $2,051 million in the same period in 2022[14] - Gross profit for the nine months ended September 30, 2023, was $1,099 million, compared to $959 million in the same period in 2022[14] - Operating income for the nine months ended September 30, 2023, was $694 million, up from $592 million in the same period in 2022[14] - Net income for the three months ended September 30, 2023, was $158 million, compared to $139 million for the same period in 2022[21] - Net income for the nine months ended September 30, 2023, was $503 million, compared to $390 million in the same period in 2022, representing a 29% increase[83] - Net income for the three months ended September 30, 2023, was $158 million, compared to $139 million in the same period in 2022, representing a 13.7% increase[83] - Net sales for Q3 2023 increased by 4% to $736 million compared to $710 million in Q3 2022, driven by strong demand in North America On-Highway and Defense markets[106] - Gross profit for Q3 2023 rose by 9% to $357 million, with gross profit margin increasing by 230 basis points to 49% due to price increases on certain products[108] - Net income for Q3 2023 grew to $158 million, a 21% increase from $139 million in Q3 2022, with net income as a percent of net sales rising to 21.5%[105] - Net sales for the first nine months of 2023 increased by 10% to $2,260 million, driven by strong performance in North America On-Highway and Service Parts markets[118] - Gross profit for the first nine months of 2023 increased by 15% to $1,099 million, with gross profit margin rising by 180 basis points to 49%[120] - Net income for the first nine months of 2023 grew to $503 million, a 22% increase from $390 million in the same period in 2022[117] Cash Flow and Liquidity - Cash and cash equivalents rose to $501 million in September 2023 from $232 million in December 2022[11] - Net cash provided by operating activities for the nine months ended September 30, 2023, was $546 million, compared to $433 million in the same period in 2022[18] - Total available cash and cash equivalents as of September 30, 2023 was $501 million, compared to $232 million as of December 31, 2022, with $178 million in operating accounts and $323 million invested in U.S. government-backed securities and time deposits[129] - Cash flows provided by operating activities for the nine months ended September 30, 2023 were $546 million, compared to $433 million for the same period in 2022, driven by higher gross profit and lower operating working capital requirements[141] - Cash used for investing activities for the nine months ended September 30, 2023 was $71 million, compared to $93 million for the same period in 2022, primarily due to $23 million in cash paid for business acquisitions in 2022 that did not reoccur in 2023[142] - Cash used for financing activities for the nine months ended September 30, 2023 was $205 million, compared to $285 million for the same period in 2022, driven by $59 million of lower stock repurchases and $26 million of higher proceeds from stock option exercises[143] Balance Sheet and Assets - Total assets increased to $4,987 million in September 2023 from $4,671 million in December 2022[11] - Total stockholders' equity increased to $1,184 million in September 2023 from $874 million in December 2022[11] - Stockholders' equity increased to $1,184 million as of September 30, 2023, from $762 million as of September 30, 2022[21] - Total inventories increased to $281 million as of September 30, 2023 from $224 million as of December 31, 2022[37] - The carrying value of the company's Goodwill remained unchanged at $2,075 million as of September 30, 2023 and December 31, 2022[38] - Total intangible assets, net decreased to $844 million as of September 30, 2023 from $878 million as of December 31, 2022[39] - ROU assets as of September 30, 2023, total $15 billion, with buildings accounting for $13 billion, land $1 billion, and equipment $1 billion[64] Debt and Liabilities - Long-term debt remained relatively stable at $2,498 million in September 2023, compared to $2,501 million in December 2022[11] - Total long-term debt was $2,520 million as of September 30, 2023, compared to $2,525 million as of December 31, 2022[47] - The fair value of the company's long-term debt obligations was $2,269 million as of September 30, 2023[47] - The Company amended its Senior Secured Credit Facility in February 2023, replacing LIBOR with SOFR and adding a 0.1% credit spread adjustment to the SOFR benchmark[48] - As of September 30, 2023, the Company elected to pay the lowest all-in rate of Adjusted Term SOFR plus the applicable margin, or 7.17%, on the Term Loan[48] - The minimum required quarterly principal payment on the Term Loan through its maturity date of March 2026 is $2 million[48] - As of September 30, 2023, the Company had $645 million available under the Revolving Credit Facility, net of $5 million in letters of credit[50] - The company held interest rate swap contracts that effectively hedge $500 million of the variable rate debt associated with the Term Loan at the Term SOFR weighted average fixed rate of 2.81% through September 2025[54] - The company's first lien net leverage ratio as of September 30, 2023 was 0.11x, well below the threshold of 4.00x required to eliminate excess cash flow payments on the Senior Secured Credit Facility[134] - The company held interest rate swap contracts effectively hedging $500 million of variable rate debt associated with the Term Loan at a weighted average fixed rate of 2.81% through September 2025[151] Earnings Per Share and Stock Repurchases - Basic earnings per share for the nine months ended September 30, 2023, were $5.53, up from $4.02 in the same period in 2022[14] - Basic earnings per share (EPS) for the three months ended September 30, 2023, was $1.76, compared to $1.46 in the same period in 2022[83] - Basic EPS for the nine months ended September 30, 2023, was $5.53, compared to $4.02 in the same period in 2022[83] - The company repurchased $20 million of its common stock in Q3 2023 and $157 million in the nine months ended September 30, 2023, leaving $878 million authorized for repurchases[85] - The company repurchased approximately $157 million of its common stock under the Repurchase Program during the nine months ended September 30, 2023, with $878 million still available under the program[137] - The company repurchased 169,127 shares in August 2023 at an average price of $59.11 per share[161] - The company repurchased 167,624 shares in September 2023 at an average price of $59.65 per share[161] - The total number of shares repurchased in the three months ended September 30, 2023, was 336,751 at an average price of $59.38 per share[161] - The company's Repurchase Program has an aggregate total authorized repurchases of $4,000 million[161] Market and Sales Performance - Total net sales for the three months ended September 30, 2023 were $736 million, compared to $710 million in the same period of 2022[34] - Total net sales for the nine months ended September 30, 2023 were $2,260 million, compared to $2,051 million in the same period of 2022[34] - North America On-Highway sales increased to $376 million in Q3 2023 from $340 million in Q3 2022[34] - Service Parts, Support Equipment and Other sales grew to $171 million in Q3 2023 from $157 million in Q3 2022[34] - North America On-Highway end market net sales increased by 11% to $376 million in Q3 2023 compared to Q3 2022[91] - Defense end market net sales increased by 23% to $43 million in Q3 2023 compared to Q3 2022[91] - Service Parts, Support Equipment, and Other end market net sales increased by 9% to $171 million in Q3 2023 compared to Q3 2022[91] - Total net sales for Q3 2023 were $736 million, a 4% increase compared to $710 million in Q3 2022[91] Expenses and Costs - Selling, general and administrative expenses increased by 10% in Q3 2023 to $86 million, primarily due to higher product warranty expenses[110] - Interest expense, net decreased by 7% in Q3 2023 to $27 million, driven by higher interest income on cash and cash equivalents[112] - Direct material costs accounted for approximately 67% of total cost of sales for the nine months ended September 30, 2023[94] - Approximately 67% of the company's cost of sales consists of purchased components, with a substantial portion made of aluminum and steel[153] - A 10% variation in the price of aluminum and steel would change the company's earnings by approximately $9 million and $12 million per year, respectively[153] Taxes and Other Financial Metrics - Income tax expense for the three and nine months ended September 30, 2023, was $35 million and $118 million, respectively, with effective tax rates of 18% and 19%[73] - Income tax expense for the nine months ended September 30, 2023 was $118 million, with an effective tax rate of 19%, compared to $86 million and an 18% effective tax rate for the same period in 2022, primarily due to increased taxable income[127] - AOCL as of September 30, 2023, was $(32) million, with net current period other comprehensive loss of $(7) million[75] - Reclassifications from AOCL for the three months ended September 30, 2023, totaled $6 million before tax and $5 million net of tax[76] - AOCL as of December 31, 2022, was $(22) million, with net current period other comprehensive loss of $(10) million for the nine months ended September 30, 2023[78] Other Financial Information - Stock-based compensation for the three months ended September 30, 2023, was $6 million, up from $5 million in the same period in 2022[21] - Repurchase of common stock for the three months ended September 30, 2023, was $20 million, compared to $109 million in the same period in 2022[21] - Dividends on common stock for the three months ended September 30, 2023, were $20 million, consistent with the same period in 2022[21] - Accumulated deficit decreased to $(670) million as of September 30, 2023, from $(1,021) million as of September 30, 2022[21] - Issuance of common stock for the three months ended September 30, 2023, was $11 million, compared to $(1) million in the same period in 2022[21] - Foreign currency translation adjustment for the three months ended September 30, 2023, was $(5) million, compared to $(12) million in the same period in 2022[21] - Pension and OPEB liability adjustment for the three months ended September 30, 2023, was $(2) million, consistent with the same period in 2022[21] - Interest rate swaps for the three months ended September 30, 2023, resulted in a $13 million gain, compared to a $13 million gain in the same period in 2022[21] - As of September 30, 2023, current and non-current product warranty liabilities were $23 million and $36 million, respectively[57] - As of September 30, 2023, current and non-current deferred revenue was $44 million and $94 million, respectively[59] - The weighted average discount rate on operating leases as of September 30, 2023 was 4.58%[62] - As of September 30, 2023, the Company recorded current and non-current operating lease liabilities of $4 million and $11 million, respectively[62] - Total lease payments for the remainder of 2023 to 2027 and thereafter amount to $17 billion, with a present value of operating lease liabilities at $15 billion[63] - Operating lease expense for the three and nine months ended September 30, 2023, was $2 million and $5 million, respectively[66] - Other current liabilities as of September 30, 2023, total $193 million, including payroll and related costs of $70 million and sales incentives of $35 million[68] - Net periodic benefit cost for pension plans for the three months ended September 30, 2023, was $1 million, with an interest cost of $2 million[71] - Other income (expense), net for the nine months ended September 30, 2023 was $10 million, compared to ($28) million for the same period in 2022, driven by favorable changes in marketable securities ($21 million), foreign exchange ($12 million), and assets held in a rabbi trust ($5 million), partially offset by unfavorable technology-related investment gains ($3 million)[126] - A 10% aggregate increase or decrease in the Chinese Yuan Renminbi, Euro, Indian Rupee, and Japanese Yen would change the company's earnings, net of tax, by an estimated $5 million per year[152] - Thomas D. Eifert, Vice President, Quality, Planning & Program Management, adopted a Rule 10b5-1 trading arrangement on 8/9/2023 for the sale of 5,047 shares[164]