10-Q 1 alsn-20220930.htm 10-Q 10-Q
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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-35456

ALLISON TRANSMISSION HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

img104405579_0.jpg 

 

Delaware

26-0414014

(State or Other Jurisdiction of Incorporation or

Organization)

(I.R.S. Employer

Identification Number)

One Allison Way

 

Indianapolis, IN

46222

(Address of Principal Executive Offices)

(Zip Code)

 

(317) 242-5000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading Symbol(s)

 

Name of Each Exchange

on which Registered

Common stock, $0.01 par value

 

ALSN

 

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YesNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesNo

As of October 13, 2022, there were 92,490,446 shares of Common Stock outstanding.

 


Table of Contents

 

INDEX

 

 

 

Page

 

PART I. FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

3 – 7

 

 

 

 

Condensed Consolidated Balance Sheets

3

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income

4

 

 

 

 

Condensed Consolidated Statements of Cash Flows

5

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity

6 – 7

 

 

 

 

Notes to Condensed Consolidated Financial Statements

8 – 23

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24 – 37

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

38 – 39

 

 

 

Item 4.

Controls and Procedures

40

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

41

 

 

 

Item 1A.

Risk Factors

41

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

42

 

 

 

Item 6.

Exhibits

43

 

 

 

 

Signatures

44

 

 

 

 

2


Table of Contents

 

 

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Allison Transmission Holdings, Inc.

Condensed Consolidated Balance Sheets

(unaudited, dollars in millions, except share and per share data)

 

 

 

September 30,
2022

 

 

December 31,
2021

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

180

 

 

$

127

 

Accounts receivable – net of allowances for doubtful accounts of $5 and $3, respectively

 

 

374

 

 

 

301

 

Inventories

 

 

223

 

 

 

204

 

Other current assets

 

 

61

 

 

 

39

 

Total Current Assets

 

 

838

 

 

 

671

 

Property, plant and equipment, net

 

 

711

 

 

 

706

 

Intangible assets, net

 

 

889

 

 

 

917

 

Goodwill

 

 

2,074

 

 

 

2,064

 

Marketable securities

 

 

22

 

 

 

46

 

Other non-current assets

 

 

59

 

 

 

53

 

TOTAL ASSETS

 

$

4,593

 

 

$

4,457

 

LIABILITIES

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts payable

 

$

227

 

 

$

179

 

Product warranty liability

 

 

26

 

 

 

33

 

Current portion of long-term debt

 

 

6

 

 

 

6

 

Deferred revenue

 

 

39

 

 

 

37

 

Other current liabilities

 

 

189

 

 

 

204

 

Total Current Liabilities

 

 

487

 

 

 

459

 

Product warranty liability

 

 

20

 

 

 

20

 

Deferred revenue

 

 

95

 

 

 

99

 

Long-term debt

 

 

2,502

 

 

 

2,504

 

Deferred income taxes

 

 

525

 

 

 

514

 

Other non-current liabilities

 

 

202

 

 

 

227

 

TOTAL LIABILITIES

 

 

3,831

 

 

 

3,823

 

Commitments and contingencies (see Note P)

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Common stock, $0.01 par value, 1,880,000,000 shares authorized, 93,480,956 shares issued and outstanding and 99,262,951 shares issued and outstanding, respectively

 

 

1

 

 

 

1

 

Non-voting common stock, $0.01 par value, 20,000,000 shares authorized, none issued and outstanding

 

 

 

 

 

 

Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding

 

 

 

 

 

 

Paid in capital

 

 

1,843

 

 

 

1,832

 

Accumulated deficit

 

 

(1,021

)

 

 

(1,126

)

Accumulated other comprehensive loss, net of tax

 

 

(61

)

 

 

(73

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

762

 

 

 

634

 

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY

 

$

4,593

 

 

$

4,457

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

3


Table of Contents

 

Allison Transmission Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income

(unaudited, dollars in millions, except per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

 

$

710

 

 

$

567

 

 

$

2,051

 

 

$

1,758

 

Cost of sales

 

 

382

 

 

 

306

 

 

 

1,092

 

 

 

918

 

Gross profit

 

 

328

 

 

 

261

 

 

 

959

 

 

 

840

 

Selling, general and administrative

 

 

78

 

 

 

73

 

 

 

231

 

 

 

226

 

Engineering — research and development

 

 

47

 

 

 

42

 

 

 

136

 

 

 

121

 

Operating income

 

 

203

 

 

 

146

 

 

 

592

 

 

 

493

 

Interest expense, net

 

 

(29

)

 

 

(28

)

 

 

(88

)

 

 

(87

)

Other (expense) income, net

 

 

(15

)

 

 

6

 

 

 

(28

)

 

 

12

 

Income before income taxes

 

 

159

 

 

 

124

 

 

 

476

 

 

 

418

 

Income tax expense

 

 

(20

)

 

 

(30

)

 

 

(86

)

 

 

(94

)

Net income

 

$

139

 

 

$

94

 

 

$

390

 

 

$

324

 

Basic earnings per share attributable to common stockholders

 

$

1.46

 

 

$

0.89

 

 

$

4.02

 

 

$

2.97

 

Diluted earnings per share attributable to common stockholders

 

$

1.45

 

 

$

0.89

 

 

$

4.02

 

 

$

2.97

 

Comprehensive income, net of tax

 

$

138

 

 

$

92

 

 

$

402

 

 

$

328

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

4


Table of Contents

 

Allison Transmission Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited, dollars in millions)

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

390

 

 

$

324

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation of property, plant and equipment

 

 

82

 

 

 

77

 

Amortization of intangible assets

 

 

35

 

 

 

35

 

Unrealized loss on marketable securities

 

 

20

 

 

 

 

Stock-based compensation

 

 

14

 

 

 

11

 

Technology-related investments gain

 

 

(6

)

 

 

(3

)

Loss on intercompany foreign exchange

 

 

5

 

 

 

 

Deferred income taxes

 

 

1

 

 

 

61

 

Other

 

 

5

 

 

 

2

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(89

)

 

 

(32

)

Inventories

 

 

(28

)

 

 

(38

)

Accounts payable

 

 

36

 

 

 

7

 

Other assets and liabilities

 

 

(32

)

 

 

23

 

Net cash provided by operating activities

 

 

433

 

 

 

467

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Additions of long-lived assets

 

 

(75

)

 

 

(112

)

Business acquisitions

 

 

(23

)

 

 

 

Proceeds from technology-related investments

 

 

6

 

 

 

4

 

Loans to third parties

 

 

 

 

 

(11

)

Investment in equity method investee

 

 

(1

)

 

 

 

Net cash used for investing activities

 

 

(93

)

 

 

(119

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Repurchases of common stock

 

 

(216

)

 

 

(326

)

Borrowings on revolving credit facility

 

 

95

 

 

 

 

Payments on revolving credit facility

 

 

(95

)

 

 

 

Dividend payments

 

 

(61

)

 

 

(62

)

Payments on long-term debt

 

 

(5

)

 

 

(5

)

Taxes paid related to net share settlement of equity awards

 

 

(4

)

 

 

(3

)

Proceeds from exercise of stock options

 

 

1

 

 

 

3

 

Payments of acquisition-related contingent liability

 

 

 

 

 

(3

)

Net cash used for financing activities

 

 

(285

)

 

 

(396

)

Effect of exchange rate changes on cash

 

 

(2

)

 

 

(1

)

Net increase (decrease) in cash and cash equivalents

 

 

53

 

 

 

(49

)

Cash and cash equivalents at beginning of period

 

 

127

 

 

 

310

 

Cash and cash equivalents at end of period

 

$

180

 

 

$

261

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

Cash paid during period for:

 

 

 

 

 

 

Income taxes

 

$

85

 

 

$

48

 

Interest

 

$

84

 

 

$

72

 

Non-cash investing activities:

 

 

 

 

 

 

Capital expenditures in liabilities

 

$

23

 

 

$

19

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

5


Table of Contents

 

Allison Transmission Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited, dollars in millions)

 

 

 

Three months ended

 

 

 

Common Stock

 

 

Non-voting Common Stock

 

 

Preferred Stock

 

 

Paid-in Capital

 

 

Accumulated (Deficit) Income

 

 

Accumulated Other Comprehensive (Loss) Income, net of tax

 

 

Stockholders' Equity

 

Balance at June 30, 2021

 

$

1

 

 

$

 

 

$

 

 

$

1,826

 

 

$

(1,012

)

 

$

(83

)

 

$

732

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Pension and OPEB liability adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

(1

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

(3

)

Interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

2

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(100

)

 

 

 

 

 

(100

)

Dividends on common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

 

 

 

(20

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

94

 

 

 

 

 

 

94

 

Balance at September 30, 2021

 

$

1

 

 

$

 

 

$

 

 

$

1,829

 

 

$

(1,038

)

 

$

(85

)

 

$

707

 

Balance at June 30, 2022

 

$

1

 

 

$

 

 

$

 

 

$

1,839

 

 

$

(1,031

)

 

$

(60

)

 

$

749

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

5

 

Pension and OPEB liability adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

(2

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12

)

 

 

(12

)

Interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

 

 

13

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

Repurchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(109

)

 

 

 

 

 

(109

)

Dividends on common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

 

 

 

(20

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

139

 

 

 

 

 

 

139

 

Balance at September 30, 2022

 

$

1

 

 

$

 

 

$

 

 

$

1,843

 

 

$

(1,021

)

 

$

(61

)

 

$

762

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

6


Table of Contents

 

 

 

Allison Transmission Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited, dollars in millions)

 

 

 

Nine months ended

 

 

 

Common Stock

 

 

Non-voting Common Stock

 

 

Preferred Stock

 

 

Paid-in Capital

 

 

Accumulated (Deficit) Income

 

 

Accumulated Other Comprehensive (Loss) Income, net of tax

 

 

Stockholders' Equity

 

Balance at December 31, 2020

 

$