Allison Transmission Holdings, Inc. · NYSE:ALSN
Allison Transmission — Q1 2019 Earnings Presentation
26 slides from Allison Transmission's earnings presentation, Apr 23, 2019
Slide 1: Q1 2019 Earnings Release
Q1 2019 Earnings Release Earnings Conference Call April 23, 2019 David Graziosi, President & Chief Executive Officer Fred Bohley, Vice President & Chief Financial Officer 1
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). The words “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions
Slide 3: Non-GAAP Financial Information
Non-GAAP Financial Information We use Adjusted EBITDA and Adjusted EBITDA as a percent of net sales to measure our operating profitability. We believe that Adjusted EBITDA and Adjusted EBITDA as a percent of net sales provide management, investors and creditors with useful measures of the operationa
Slide 4: Call Agenda
Call Agenda Q1 2019 Performance 2019 Guidance Update April 2019 Acquisitions 4
Slide 5: Q1 2019 Performance Summary
Q1 2019 Performance Summary ($ in millions) Q1 2019 Q1 2018 % Variance Net Sales $675 $663 1.8% Gross Margin % 53.2% 51.6% 160 bps Net Income $167 $151 10.6% Adjusted EBITDA(1) $290 $275 5.5% Commentary Net Sales: increase was principally driven by higher demand in the North America On-Highway and O
Slide 6: Q1 2019 Sales Performance
Q1 2019 Sales Performance ($ in millions) End Markets Q1 2019 Q1 2018 % Variance Commentary Principally driven by higher demand for Rugged Duty Series and North America On-Hwy $377 $339 11% Highway Series models Principally driven by lower demand from hydraulic fracturing North America Off-Hwy $14 $
Slide 7: Q1 2019 Financial Performance
Q1 2019 Financial Performance ($ in millions, except per share data) Q1 2019 Q1 2018 $ Var % Var Commentary Net Sales $675 $663 $12 1.8% Increase was principally driven by higher demand in the North America On- Highway and Outside North America Off-Highway end markets partially offset by lower deman
Slide 8: Q1 2019 Cash Flow Performance
Q1 2019 Cash Flow Performance ($ in millions) Q1 2019 Q1 2018 $ Variance % Variance Commentary Principally driven by lower operating working capital requirements and Net Cash Provided by $194 $153 $41 26.8% increased gross profit partially offset by Operating Activities higher cash income taxes and
Slide 9: 2019 Guidance Update
2019 Guidance Update ($ in millions) Guidance Commentary Guidance reflects lower demand in the North America Off- Highway and Service Parts, Support Equipment & Other end markets principally driven by hydraulic fracturing Net Sales Change $2,580 to $2,680 applications partially offset by increased d
Slide 10: April 2019 Acquisitions of Vantage Power and AxleTech Electric Vehicle Systems
April 2019 Acquisitions of Vantage Power and AxleTech Electric Vehicle Systems 10
Slide 11: Transactions Summary
Transactions Summary Allison acquired Vantage Power (VP) • Transaction Price: approximately £7 million ($9 million) • Potential to pay up to an additional approximately £6 million ($8 million) over the next three years based on specific conditions being met • Cash consideration for 100% stock sale •
Slide 12: Vantage Power
NN ANTAGE POWER An Allison Transmission Company
Slide 13: Business Overview
Business Overview Vantage Power designs and manufactures vehicle electrification and connectivity technologies applicable to a broad range of commercial end markets. VP is recognized as a leader and pioneer in the United Kingdom electrification and connectivity ecosystem. • West London based, award
Slide 14: Technologies Portfolio
Technologies Portfolio Hybrid and Electric System Design and • Highly-developed integrated solutions for hybrid and electric propulsion systems Integration • Large and complex programs with OEM and tier one manufacturers • Design, test and validation, rapid prototyping and battery pack pilot manufac
Slide 15: Acquisition Benefits
Acquisition Benefits • History of innovation in components and sub-systems complement Allison’s strengths in electrified propulsion • Highly skilled, experienced and specialized engineers and operational staff • Complements Allison’s integration expertise with battery systems, vehicle control system
Slide 16: AxleTech Electric Vehicle Systems
AXLETECHIH ELECTRIC VEHICLE SYSTEMS
Slide 17: Business Overview
Business Overview AxleTech’s Electric Vehicle Systems division designs and manufactures fully integrated electrified-axle propulsion solutions for medium- and heavy-duty trucks and buses. • Fully integrated electrified solutions designed to fit between the wheels, with adoption by broad customer bas
Slide 18: Commercial Truck and Bus Solutions
Commercial Truck and Bus Solutions • Line of fully integrated electric axles designed to fit between the wheels of medium- and heavy-duty trucks and buses • Allison’s latest electrified bolt-in solution is compatible within the current vehicle frame, suspension, wheel-ends, and OEM vehicle assembly
Slide 19: Transit Bus Solutions
Transit Bus Solutions • Line of fully-integrated electric axles designed to fit a variety of transit configurations, including low and ultra-low floor, articulated, double-decker and conventional chassis • Bolt-in solution, available in single- and multi-speed options, requiring no modifications to
Slide 20: Acquisition Benefits
Acquisition Benefits • Portfolio of highly integrated electric axles for medium- and heavy-duty truck and bus applications • Global customer relationships and active OEM programs • Talented, cross-functional and experienced engineering team • Collaborative efforts facilitated thorough knowledge of t
Slide 21: Acquisitions Strategic Fit
Acquisitions Strategic Fit • Extends Allison’s position as a leader in propulsion for medium- and heavy-duty commercial vehicles • Augments Allison’s portfolio of products to provide a full range of propulsion solutions • From conventional powertrains and alternative fuels to electric hybrid and ful
Slide 22: Leader in Commercial Propulsion
Leader in Commercial Propulsion Allison’s addressable market is a complex application space due to vocational fragmentation, requiring a range of propulsion solutions where we are a natural supplier • Internal Combustion Engines • Alternative Fuels with proven performance and a funded infrastructure
Slide 23: Appendix: Non-GAAP Financial Information
APPENDIX Non-GAAP Financial Information 23
Slide 24: Non-GAAP Reconciliations (1 of 3)
Non-GAAP Reconciliations (1 of 3) Adjusted EBITDA reconciliation Last twelve Three months ended months ended $ in millions, Unaudited For the year ended December 31, March 31, March 31, 2014 2015 2016 2017 2018 2018 2019 2019 Net income (GAAP) $229 $182 $215 $504 $639 $151 $167 $655 plus: Interest e
Slide 25: Non-GAAP Reconciliations (2 of 3)
Non-GAAP Reconciliations (2 of 3) Adjusted Free Cash Flow reconciliation Last twelve Three months ended months ended $ in millions, Unaudited For the year ended December 31, March 31, March 31, 2014 2015 2016 2017 2018 2018 2019 2019 Net Cash Provided by Operating Activities (GAAP) $573 $580 $591 $6
Slide 26: Non-GAAP Reconciliations (3 of 3)
Non-GAAP Reconciliations (3 of 3) Guidance reconciliation $ in millions Guidance Year Ending December 31, 2019 Low High Net Income (GAAP) $ 525 $ 575 plus: Income tax expense 155 165 Interest expense, net 134 134 Depreciation and amortization 162 162 Stock-based compensation expense 15 15 Unrealized
Allison Transmission Holdings — Q1 2019 Earnings Presentation on 6ix