Allison Transmission Holdings, Inc. · NYSE:ALSN
Allison Transmission — Investor Presentation (June 2012)
40 slides from Allison Transmission's investor presentation, Jun 4, 2012
Slide 1: Investor Relations Presentation
Exhibit 99.1 Investor Relations Presentation First Quarter 2012 (Published June 4, 2012) 0
Slide 2: Safe Harbor Statement
Safe Harbor Statement The following information contains, or may be deemed to contain, “forward-looking statements” (as defined in the U.S. Private Securities Litigation Reform Act of 1995). Most forward-looking statements contain words that identify them as forward-looking, such as “may”, “plan”, “
Slide 3: Business Overview
Business Overview @& Allison 2 Transmission
Slide 4: Allison Transmission at a Glance
Allison Transmission at a Glance World’s largest manufacturer of fully- automatic transmissions for medium- LTM (1) Net Sales by End Market and heavy-duty commercial vehicles Parts, – 62% global market share of fully-automatic Support transmissions Equipment and Other – Virtually no exposure to Clas
Slide 5: Allison Key Financial Highlights
Allison Key Financial Highlights Strong Financial Profile(2) ($ in millions) $766 $712 $617 $544 $501 32.9% 34.1% 32.0% 26.4% 28.4% 16.4% 17.2% 17.5% 9.4% 8.0% 14.2% 14.1% 15.1% 4.5% 2.8% 2008 2009 2010 2011 LTM (1) Adj. EBITDA Adj. EBITDA Margin Adj. NI Margin Free Cash Flow (% of Net Sales) Strong
Slide 6: Allison Is a Premier Industrial Asset
Allison Is a Premier Industrial Asset Global Market Leader Premier Brand and End User Value Proposition Technology Leadership - The Allison Advantage Diverse End Markets with Long-Standing OEM Customer Relationships Improved Margins and Low Capex Drive Strong Cash Flow Generation Experienced Managem
Slide 7: Global Market Leader
Global Market Leader Global On-Highway Fully-Automatic Share (1) North American Market Share (1) Allison’s Core Addressable Market Expansion Market Other (2) ~38% 100% 20% Substantially 32% 46% All 58% 96% 80% 68% Allison 54% 42% ~62% 4% School Bus Motorhome Class 6-7 Truck Class 8 Hybrid Bus Class
Slide 8: Allison Is a Recognized and Respected Brand
Allison Is a Recognized and Respected Brand The Allison brand is associated with: – High Quality – Reliability – Durability – Vocational Value and Expertise – Technological Leadership – Superior Customer Service – Attractive Total Lifecycle Value 90+ year history of providing high- quality innovativ
Slide 9: End User Value Proposition
End User Value Proposition High Allison Advantage Productivity (acceleration) Maintenance Savings (life cycle costs) Allison Fuel Efficiency (Fully-Automatic) Driver Skillset / Wages Training (time, cost) Relative Customer Shift Quality Value Safety Residual Value Automated Manual Transmission (AMT)
Slide 10: Technology Leadership – The Allison Advantage
Technology Leadership – The Allison Advantage Allison transmissions employ complex software algorithms that are individually tailored to maximize end user performance in thousands of vocational duty cycles Allison Advantage Technology Differentiators Lower Vehicle Life Cycle Costs Proprietary and pa
Slide 11: End Market & Vocation Overview
End Market & Vocation Overview Global On-Highway Global Off-Highway North America Hybrid Transit Bus Sample Vocations Select End Users Distribution Emergency Select End Users Select End Users Vehicle Motorhome Parts, Support Equipment and Rugged Duty Military Other School Bus / Shuttle Bus Select En
Slide 12: OEMs Rely on Allison for Fully-Automatic Transmissions
OEMs Rely on Allison for Fully-Automatic Transmissions On-Highway Hybrid Transit Bus Off-Highway On-Highway Off-Highway Medium- and Heavy- Tactical U.S. Government Over 45 Year Relationship with Many Industry-Leading OEMs 11
Slide 13: Premier Industrial Asset Financial Profile Resulting from Experienced Management and Execution
Premier Industrial Asset Financial Profile Resulting from Experienced Management and Execution Today 2008 2012 (1) Net Sales $2,061mm $2,248mm +9.0% Despite cyclical low industry Adj. EBITDA $544mm $766mm +40.8% volumes, significant improvement in EBITDA margin and Adjusted Net % Margin 26.4% 34.1%
Slide 14: Premier Industrial Asset
Premier Industrial Asset EBITDA Margin(1) (2) EBITDA – CapEx Margin(1) (2) (1) The LTM period and LTM EBITDA, which excludes non-recurring or one-time items as designated by each entity, are based on information available in the entity’s most recent quarterly or annual report as of 4/30/2012. EBITDA
Slide 15: Multiple Organic Growth Opportunities
Multiple Organic Growth Opportunities Benefit from Developed Markets Recovery Increase Penetration of Fully Automatic Transmissions Accelerate Adoption in Emerging Markets Capitalize on Rising Demand for Energy and Commodities Continue New Technology and Product Development Increase Share in Underse
Slide 16: Cyclical Recovery in Developed On-Highway Markets
Cyclical Recovery in Developed On-Highway Markets North America Production in Allison’s Core Addressable Market (units in 000s) (1) Growth opportunity driven by continued 1998 – 2008 427 cyclical recovery in core North American market (~34% of 2011 sales) 337 303 Production has rebounded from cyclic
Slide 17: Increase Penetration of Fully-Automatic Transmissions
Increase Penetration of Fully-Automatic Transmissions Ongoing need for productivity Global Penetration of Fully-Automatic Transmissions improvements North America (1) Better acceleration and trip times allow 2011 increased miles and revenue Improved fuel efficiency as a function of work performed Al
Slide 18: Increasing Adoption in Emerging Markets – China Case Study
Increasing Adoption in Emerging Markets – China Case Study Allison is the #1 supplier of fully- Allison’s China Truck Vocational Focus automatic transmissions in China as a result of targeting specific vocations Substantial installed base of over 35,000 transmissions in China Airport Services Fire a
Slide 19: Global Off-Highway Growth Opportunities
Global Off-Highway Growth Opportunities Mining and Construction LTM (1) Allison Global Off-Highway Sales 3% of total sales (1) Parts, Support Equipment and Other NA, Europe, Middle East, Africa and China 20% Increasing global demand for commodities NA Hauling 1% Increasing urbanization in emerging m
Slide 20: New Product Development
New Product Development Class 8 Metro Hybrid Commercial Vehicle Developing a ten-speed fully-automatic Leading development of first fully-automatic hybrid transmission targeted at Class 8 tractors serving truck transmission for the Class 6-7 market urban markets Awarded $62.8 million U.S. Department
Slide 21: Well Positioned to Gain Share in Underserved Markets
Well Positioned to Gain Share in Underserved Markets North America Underserved Core Addressable Market Underserved Class 8 Class 8 Class 8 Class 1-3 Class 4-5 Motor Home School Bus Class 6-7 Straight Metro Linehaul Vehicles Weight < 14 lbs 14 – 19 lbs 16 – 33 lbs 16 – 33 lbs 19 – 33 lbs 33 lbs+ 33 l
Slide 22: Financial Overview
Financial Overview @& Allison 21 Transmission
Slide 23: Allison Financial Highlights
Allison Financial Highlights (1) Strong, sustainable operating margins LTM Financial Metrics – End markets diversity Gross Margin 44.9% – Premium vocational pricing model – Cost controls and productivity improvement – Multi-Tier UAW wage and benefits structure EBITDA Margin 34.1% Low capital expendi
Slide 24: Strong Financial Profile
Strong Financial Profile Financial Summary In $ millions Annual Quarterly 2008 2009 2010 2011 1Q 2011 1Q 2012 Significant sales growth since the 2009 trough Net Sales $2,061 $1,767 $1,926 $2,163 $517 $602 % Growth (5.2%) (14.3%) 9.0% 12.3% 9.1% 16.4% Resiliency through the downturn, evidenced by inc
Slide 25: Sustainable Margins with Further Enhancement Opportunities
Sustainable Margins with Further Enhancement Opportunities Long-Term Customer Supply Agreements Manufacturing Efficiencies (hours/unit) ~90% 1000/2000 Series 3000 Series 4000 Series ~90% of 2011 N.A. On-Highway Unit Volume was covered by long- 2005 2011 term customer supply agreements Hours Per Unit
Slide 26: Significant Cash Flow Generation
Significant Cash Flow Generation Free Cash Flow Generation(1) Net Debt(2) ($ in millions) ($ in millions) $394 $372 $16 $315 6.9x 7.4x 5.5x $193 $4,204 $142 16.4% 17.2% 17.5% $3,753 4.3x $3,721 3.9x $61 9.4% $3,419 8.0% $3,065 $2,981 $81 $378 (5) 2008 2009 2010 2011 LTM At 2008 2009 2010 2011 LTM(5)
Slide 27: Income Tax Attributes
Income Tax Attributes Income Tax attributes overview Carlyle and Onex acquired Allison from General Motors in August 2007 – Asset deal structure – Step-up in basis for U.S. federal income tax purposes As of 12/31/2011 Allison had $3.3bn of unamortized intangible assets – Expect annual U.S. federal i
Slide 28: Summary / Guidance / Q&A
Summary / Guidance / Q&A @& Allison Transmission
Slide 29: Strategic Priorities
Strategic Priorities Expand global market leadership – Capitalize on continued market recovery – New vocational offerings Emerging markets penetration – Vocational ladder strategy – Increase number of vehicle releases Continued focus on new technologies and product development – Address markets adja
Slide 30: Full Year 2012 Guidance
Full Year 2012 Guidance Guidance Commentary on Full Year Assumes year over year growth in global on- highway and Outside North America off-highway end markets partially offset by year over year Net Sales Growth from 2011 5 to 7 percent reductions in North America off-highway, tracked military produc
Slide 31: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information 30
Slide 32: Non-GAAP Financial Information
Non-GAAP Financial Information We use Adjusted net income, Adjusted EBITDA, Adjusted EBITDA margin, adjusted free cash flow and free cash flow to evaluate our performance relative to that of our peers. In addition, the Senior Secured Credit Facility has certain covenants that incorporate Adjusted EB
Slide 33: Non-GAAP Reconciliations (1 of 2)
Non-GAAP Reconciliations (1 of 2) Adjusted Net Income and Adjusted EBITDA Reconciliation Last twelve Three months ended months ended $ in millions For the year ended December 31, March 31, March 31, 2008 2009 2010 2011 2011 2012 2012 Net (Loss) Income ($328.1) ($323.9) $29.6 $103.0 $36.9 $58.0 $124.
Slide 34: Non-GAAP Reconciliations (2 of 2)
Non-GAAP Reconciliations (2 of 2) Adjusted Free Cash Flow Three months Last twelve ended months ended $ in millions For the year ended December 31, March 31, March 31, 2008 2009 2010 2011 2011 2012 2012 Net Cash Provided by Operating Activities $268.1 $168.7 $388.9 $469.2 $109.9 $139.6 $498.9 (Deduc
Slide 35: Key Definitions
Key Definitions @& Allison 34 Transmission
Slide 36: Key Definitions
Key Definitions Types of Transmissions Fully-automatic transmission Utilize technology that smoothly shifts gears without power interruption Automated manual transmission Manual transmissions that feature automated operation of the disconnect clutch with power interruption Manual transmission Utiliz
Slide 37: End Markets – North America (1 of 2)
End Markets – North America (1 of 2) On-Highway Trucks Classes Vocation Class 4-5 - Medium duty Lease and rental Class 6-7 - Heavy duty Emergency - ambulance, fire, rescue Distribution - logistics, parcel delivery Airport operations Refuse Utilities Class 8 Refuse Straight Distribution Emergency - f
Slide 38: End Markets – North America (2 of 2)
End Markets – North America (2 of 2) Off-Highway Vehicle Vocation Well-stimulation equipment (stationary and mobile) Energy Pumping equipment, Well servicing rigs Rigid dump trucks Mining Underground trucks Heavy haul tractor trailer trucks Specialty vehicles Construction / Specialty Airport crash t
Slide 39: End Markets – Outside North America (1 of 2)
End Markets – Outside North America (1 of 2) On-Highway Trucks Classes Vocation 3.5 – 7.5 tonnes Commercial – lease and rental 7.5 – 16 tonnes Emergency – ambulance, fire, rescue Distribution – logistics, parcel delivery Airport operations Refuse Utilities Greater than 16 tonnes Refuse Straight Truc
Slide 40: End Markets – Outside North America (2 of 2)
End Markets – Outside North America (2 of 2) Off-Highway Vehicle Vocation Well stimulation equipment (stationary and Energy mobile) Mining Rigid dump trucks Underground trucks Heavy haul tractor trailer trucks Construction / Specialty Specialty vehicles Airport crash trucks (large fire trucks) Servi
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