[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 ...

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 ...

Financial Data and Key Metrics Changes - In Q4 2023, net sales increased 8% year-over-year to a record $775 million, contributing to a full year record of $3,035 million, a 10% increase from 2022 [7][10] - Adjusted EBITDA for 2023 rose to $1,108 million, with an adjusted EBITDA margin expanding by 180 basis points from 2022 [8] - Net income for Q4 2023 was $170 million, a 21% increase from $141 million in Q4 2022, while full year net income increased 27% year-over-year to $673 million [11][8] - Diluted EPS for 2023 reached a record $7.40, up 34% from 2022 [9] Business Line Data and Key Metrics Changes - North America On-Highway end market saw a 13% year-over-year increase, driven by demand for Class 8 vocational and medium-duty trucks [7] - Service parts and support equipment revenue increased by 18% year-over-year, reaching nearly $700 million [8] - Defense end market revenue for Q4 2023 was $63 million, with full year revenue of $166 million, a 14% increase from 2022 [19] Market Data and Key Metrics Changes - North American On-Highway market is expected to remain strong, supported by infrastructure spending [15] - Outside North America On-Highway market is projected to grow by 14% year-over-year at the midpoint for 2024 [17] - The defense market is anticipated to continue growing due to increased defense investments globally and opportunities with U.S. modernization programs [19] Company Strategy and Development Direction - The company plans to invest in new products and technologies across all end markets to drive growth [21] - A strategic partnership with SANY aims to enhance market share in the mining dump market in Africa, Asia, and South America [18] - The launch of Allison Ventures will focus on investing in startup and growth-stage companies to foster advancements in commercial-duty mobility [21] Management's Comments on Operating Environment and Future Outlook - Management expressed a favorable outlook for the North America On-Highway market, citing pent-up demand and upcoming emissions changes [7] - The company is prepared to support the industry amid strong demand for Class 8 vocational trucks [26] - Management acknowledged challenges in the Off-Highway market in North America due to capital discipline but remains optimistic about Outside North America [33] Other Important Information - The company repurchased over $100 million worth of shares in Q4 2023, totaling over $260 million for the year [9] - The company ended Q4 2023 with a net leverage ratio of 1.8 times and $555 million in cash [13] Q&A Session Summary Question: North America On-Highway market outlook - Management noted strong demand in the medium-duty segment and indicated that Class 8 vocational trucks remain relatively unsupplied, with expectations for continued strong demand into 2024 [25][26] Question: Volume and price mix expectations - Management reported a 540 basis point price increase year-over-year in 2023 and anticipates approximately 200 basis points of price increase in 2024 [29][30] Question: Off-Highway market growth expectations - Management highlighted that North America's Off-Highway market is largely energy-focused and expects limited demand increase, while Outside North America remains strong due to mining and construction activities [33][34] Question: Pricing power and negotiations - Management emphasized that over 60% of the North American On-Highway market will be available for price negotiations, allowing the company to leverage its value proposition [41][42] Question: Margin outlook for 2024 - Management indicated that margins are expected to be flat year-over-year, with potential upside driven by stronger topline revenue [44][46] Question: Impact of defense business growth on margins - Management clarified that while defense business has historically lower margins, the expansion into international sales is expected to mitigate negative impacts on overall EBITDA margins [49]

Q4 2023 Earnings Release February 13th, 2024 Dave Graziosi, Chairman & CEO 1 Fred Bohley, Senior Vice President, CFO & Treasurer ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-35456 | --- | --- | --- | |--------------------------------------------------------------------|---------------------------------------------------------------- ...

Allison Transmission Holdings, Inc. (NYSE:ALSN) Q3 2023 Earnings Conference Call October 25, 2023 5:00 PM ET Company Participants Jackie Bolles - Executive Director of Treasury and Investor Relations Dave Graziosi - Chairman and CEO Fred Bohley - Senior Vice President, CFO and Treasurer Conference Call Participants Lawrence De Maria - William Blair Robert Wertheimer - Melius Research Timothy Thein - Citigroup Isaac Sellhausen - Oppenheimer & Co. Tami Zakaria - JPMorgan Jerry Revich - Goldman Sachs Operator ...

Q3 2023 Earnings Release October 25th, 2023 Dave Graziosi, Chairman & CEO 1 Fred Bohley, Senior Vice President, CFO & Treasurer ...

Financial 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]

Q2 2023 Earnings Release July 27, 2023 Dave Graziosi, Chairman & CEO 1 Fred Bohley, Senior Vice President, CFO & Treasurer ...