Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - Allison Transmission Holdings Inc | d362316d8k.htm |
| EX-99.2 - J.P. MORGAN DIVERSIFIED INDUSTRIES CONFERENCE PRESENTATION MATERIALS - Allison Transmission Holdings Inc | d362316dex992.htm |
 0
Investor Relations Presentation
First Quarter 2012 (Published June 4, 2012)
Exhibit 99.1 |
 Safe
Harbor Statement 1
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”, “seek”, “will”, “expect”,
“intend”, “estimate”, “anticipate”, “believe”,
“project”, “opportunity”, “target”, “goal”, “growing” and
“continue” or other words that relate to future events, as opposed to past or current
events. By their nature, forward-looking statements are not statements of historical
facts and involve risks and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. These statements give Allison
Transmission’s current expectation of future events or its future performance and do not
relate directly to historical or current events or Allison Transmission’s historical or
future performance. As such, Allison Transmission’s future results may vary from any
expectations or goals expressed in, or implied by, the forward-looking statements included in this
presentation, possibly to a material degree.
Allison Transmission cannot assure you that the assumptions made in preparing any of the
forward- looking statements will prove accurate or that any long-term financial goals
will be realized. All forward- looking statements included in this presentation speak only
as of the date made, and Allison Transmission undertakes no obligation to update or revise
publicly any such forward-looking statements, whether as a result of new information,
future events, or otherwise. In particular, Allison Transmission cautions you not to
place undue weight on certain forward-looking statements pertaining to potential growth
opportunities, long-term financial goals or the value we currently ascribe to certain tax attributes
set forth herein. Actual results may vary significantly from these statements.
Allison Transmission’s business is subject to numerous risks and uncertainties, which may cause
future results of operations to vary significantly from those presented herein. |
 Business Overview
2 |
 3
Allison Transmission at a Glance
North
America
On-highway
35%
North
America
Off-highway
13%
Outside
North America
17%
Military
13%
Parts,
Support
Equipment
and Other
16%
Hybrid
Transit Bus
6%
LTM
(1)
Net Sales by End Market
(1) LTM 3/31/2012.
LTM Net Sales: $2.2 billion
World’s largest manufacturer of fully-
automatic
transmissions
for
medium-
and heavy-duty commercial vehicles
–
62% global market share of fully-automatic
transmissions
–
Virtually no exposure to Class 8 line-haul
tractors
Allison is the premier fully-automatic
transmission brand
–
Premium price component frequently
specified by end users
–
Differentiated technology
Well positioned for revenue and earnings
growth
–
Continued recovery in North America
–
Further adoption outside North America
–
Global off-highway growth opportunities
–
Expanding addressable market |
 4
Allison Key Financial Highlights
(1) LTM 3/31/2012.
(2) Note: See appendix for comments regarding the presentation of
non-GAAP financial information. Strong Financial Profile
(2)
$501
$766
$712
$544
$617
34.1%
32.9%
32.0%
28.4%
26.4%
4.5%
2.8%
14.2%
14.1%
15.1%
17.5%
9.4%
8.0%
16.4%
17.2%
2008
2009
2010
2011
LTM
Adj. EBITDA
Adj. EBITDA Margin
Adj. NI Margin
Free Cash Flow (% of Net Sales)
($ in millions)
(1)
Strong, sustainable operating margins
Low capital expenditure requirements
Minimal cash income taxes / valuable U.S. tax shield ($0.9-1.1bn present value)
Positioned for long-term cash earnings growth
|
 5
Allison Is a Premier Industrial Asset
Improved Margins and Low Capex Drive Strong Cash Flow Generation
Experienced Management Team
Premier Brand and End User Value Proposition
Multiple Organic Growth Opportunities
Global Market Leader
Diverse End Markets with Long-Standing OEM Customer Relationships
Technology Leadership - The Allison Advantage
|
 6
The “de facto”
standard in medium-
and heavy-duty applications
–
Well established as standard in North America
Increasing presence in rapidly growing emerging markets (China and India) which
today are predominantly manual
Virtually no exposure to more cyclical Class 8 line-haul tractors
Global On-Highway Fully-Automatic Share
(1)
North American Market Share
(1)
Allison
~62%
Other
(2)
~38%
Global Market Leader
(1) 2011 Units. Source: Allison management estimates and ACT research.
(2)
Majority
of
“Other”
volume
is
in
North
American
Class
4-5
truck
and
European
bus.
Substantially
All
Allison’s Core Addressable Market
Expansion Market
42%
54%
80%
4%
46%
96%
68%
20%
58%
32%
100%
School Bus
Motorhome
Class 6-7 Truck
Class 8
Straight Truck
Hybrid Bus
Class 8 Metro
Allison
Other Automatics
AMT, Manual |
 7
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 innovative products and
demonstrated value to end users
End Users Frequently Request Allison Transmissions by Name and Pay a Premium for
Them |
 8
End User Value Proposition
Productivity (acceleration)
Maintenance Savings (life cycle
costs)
Fuel Efficiency
Driver Skillset / Wages
Training (time, cost)
Shift Quality
Safety
Residual Value
Low
High
Included in Vehicle Price
$3,000 - $7,000
$3,000 - $11,000
Manual
Transmission
Automated
Manual
Transmission
(AMT)
Allison
(Fully-Automatic)
Relative
Customer
Value
Approximate Option Pricing
End Users are Willing to Pay a Premium Price for Allison
Allison Advantage |
 9
Technology
Leadership
–
The
Allison
Advantage
Lower Vehicle Life Cycle Costs
Superior Performance
Proprietary and patented
technology developed over many
decades and 5.7 million units
Properly Matched to Selected Engine
Optimized for Intended Vocation
Customer
Benefits
Superior
Technology
Engine &
Vocation
Optimized
Generating
Pull-Through
Demand
Allison Advantage
Allison Advantage
Technology Differentiators
Allison transmissions employ complex software algorithms that are individually tailored to maximize
end user performance in thousands of vocational duty cycles |
 10
Distribution
Emergency
Vehicle
Motorhome
Rugged Duty
School Bus /
Shuttle Bus
Transit Bus
End Market & Vocation Overview
Global On-Highway
Military
Sample Vocations
Select End Users
Select End Users
North America Hybrid Transit Bus
Select End Users
Beijing City
Transit
New Delhi
Transit
Global Off-Highway
Select End Users
Parts, Support Equipment and
Other |
 11
OEMs Rely on Allison for Fully-Automatic Transmissions
On-Highway
Hybrid
Transit Bus
Off-Highway
On-Highway
Off-Highway
U.S. Government
Medium-
and
Heavy-
Tactical
Over 45 Year Relationship with Many Industry-Leading OEMs
|
 12
2008
Today
2012
(1)
Net Sales
Adj. EBITDA
% Margin
Adj. Net Income
$2,061mm
$544mm
26.4%
$93mm
$2,248mm
$766mm
34.1%
$339mm
+9.0%
+40.8%
+770bps
+265.2%
Despite cyclical low industry
volumes, significant improvement in
EBITDA margin and Adjusted Net
Income
Employees
UAW Contract
UAW Wage
Structure
3,300
Part of GM
Single-Tier
2,800
Allison Only
Multi-Tier
(15.2%)
2009 Hourly buyout plan reduced
headcount by ~25%, positioning the
company to replace Tier I with Tier II
workers and realize operating
leverage
Technology Focus
Enhance Existing
Products
New, More Fuel
Efficient Technologies
Investing in the development of next
generation technologies
Note: See appendix for comments regarding the presentation of non-GAAP
financial information. (1) LTM 3/31/2012
Premier Industrial Asset Financial Profile Resulting from
Experienced Management and Execution
(1)
Net Debt Reduction of More Than $1.2 Billion Since Acquisition in August 2007 |
 13
Premier Industrial Asset
(2)
(2)
EBITDA
Margin
(1)
EBITDA
–
CapEx
Margin
(1)
(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 included above may not be consistent with such entity’s reported EBITDA or
Adjusted EBITDA, if available. (2) Represents Adjusted LTM EBITDA and Adjusted LTM EBITDA less capex (excluding
non-recurring capex related to non-North American manufacturing expansion and new product-related capex) as of 3/31/2012.
See appendix for comments regarding the presentation of non-GAAP information.
|
 14
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 Underserved Markets |
 (1) Source: ACT Research, May 2012. Includes Class 4-7 Truck and
Bus (Excluding Transit and Coach) and Class 8 Straight Truck. 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
cyclical recovery in core North American
market (~34% of 2011 sales)
Production has rebounded from cyclical
lows and growth is expected
Allison’s growth is supported by pent up
demand from deferred purchases
Continued demand for fuel efficient
vehicles to provide incremental growth
Note: Excludes Class 8 line-haul units.
15
1998 –
2008
337
274
427
151
178
234
247
283
303
Avg.
Min
(2003)
Max
(2006)
2009
2010
2011
2012e
2013e
2014e |
 16
Increase Penetration of Fully-Automatic Transmissions
Global Penetration of Fully-Automatic Transmissions
Non-North America
(2)
North America
(1)
2011
Source: Allison Management.
(1) Includes Class 4-7 trucks, Class 8 straight trucks, buses (school,
conventional transit, shuttle and coach) and motorhomes. (2) Includes
medium- and heavy-duty commercial vehicles.
Low penetration in markets
outside North America
presents a significant growth
opportunity
2011
Ongoing need for productivity
improvements
Better acceleration and trip times allow
increased miles and revenue
Improved fuel efficiency as a function of
work performed
More vehicle uptime
Focus on reducing life-cycle costs
Lower maintenance expense
Improved fuel efficiency
Increased vehicle residual value
Micro / demographic trends
Easier
to
operate
–
increases
pool
of
qualified drivers
Less driver training and turnover
Safety factors
Allison has significantly
increased market share in
North America |
 17
Increasing Adoption in Emerging Markets –
China Case Study
Allison’s China Truck Vocational Focus
2004 -
2006
2007 -
2009
2010+
Fire and Emergency
Oil Field
Crane Carrier
Construction / Dump
Airport Services
Terminal Tractor
Refuse
Allison’s
Cumulative
China
Truck
OEM
Releases
(1)
Allison is the #1 supplier of fully-
automatic transmissions in China as a
result of targeting specific vocations
Substantial installed base of over 35,000
transmissions in China
Secular growth due to low penetration
Allison’s existing bus presence serves as
entry point for incremental penetration
Significant growth opportunities by
targeting a wide range of vocational
applications
Government emphasis on equipment
modernization for mining, rescue operations,
school buses and other applications
Construction and oil field sector
(1) Source: Allison.
17
22
53
72
2008
2009
2010
2011 |
 Global Off-Highway Growth Opportunities
LTM
(1)
Allison Global Off-Highway Sales
Hydraulic Fracturing Activity
NA
29%
ROW
71%
Total
Recoverable
Shale
Gas
(4)
Current Activity
(3)
NA
88%
(2) Source: Spears & Associates, January 2012.
(3) Source: U.S. Energy Information Administration, April 2011.
ROW
12%
Energy Sectors
14% of total sales
(1)
Considerable end market cyclicality
Multiple opportunities in exploration, fracturing and
oil and gas support
Mining and Construction
3% of total sales
(1)
NA, Europe, Middle East, Africa and China
Increasing global demand for commodities
Increasing urbanization in emerging markets
18
Non-NA Energy
7%
Non-NA Hauling
13%
NA Hauling
1%
NA Energy
59%
2012 LTM Global Off-Highway Sales: $485 million (21% of total sales)
Parts, Support
Equipment and
Other
20%
(1)
Excluding replacement parts.
(2)
LTM 3/31/2012. |
 19
New Product Development
Hybrid Commercial Vehicle
Class 8 Metro
Developing a ten-speed fully-automatic
transmission targeted at Class 8 tractors serving
urban markets
–
Large, addressable market size of ~60k units
–
Historically
a
“manual”
market
under
addressed by Allison’s fully-automatic
product portfolio
Currently being tested by customers
Leading development of first fully-automatic hybrid
truck transmission for the Class 6-7 market
Awarded $62.8 million U.S. Department of Energy
cost-share grant for hybrid development
–
Fuel economy improvements of ~25%-35%
–
Target Vocations: Refuse, Pick-Up &
Delivery/Distribution, Utility and Shuttle Bus
Average Annual Spend over $110 Million in Product-Related Research and
Development Since Acquisition |
 20
Well Positioned to Gain Share in Underserved Markets
Core Addressable Market
Underserved
Note: Analysis excludes Allison’s Transit/Coach Bus and Hybrid Transit Bus
Segments. Source: Allison and ACT Research.
Underserved
“Metro”
is a term for tractors that are used
primarily in urban environments, which
represent ~30% of the Class 8 tractor
market between 1998 and 2011; target
market for the TC10 transmission
Historically, this market has been dominated by
Ford and GM who offered their own light-
duty/uprated automotive transmissions
GM exited Medium-Duty truck market in
2009
North America
Class 1-3
Class 4-5
Motor Home
School Bus
Class 6-7
Class 8
Straight
Class 8
Metro
Class 8
Linehaul
Vehicles
Weight
(000s of lbs)
< 14 lbs
14 –
19 lbs
16 –
33 lbs
16 –
33 lbs
19 –
33 lbs
33 lbs+
33 lbs+
33 lbs+
2011 Industry
Units Produced
5,239,866
59,080
12,255
23,230
72,147
61,611
60,806
132,844
2011 Allison
Share
0%
13%
42%
99%
68%
54%
4%
0% |
 Financial Overview
21 |
 22
Allison Financial Highlights
Note: See appendix for comments regarding the presentation of non-GAAP
information. (1)
LTM 3/31/2012
(2)
2.6%
excluding
non-North
American
manufacturing
expansion
and
new
product
related.
Strong, sustainable operating margins
–
End markets diversity
–
Premium vocational pricing model
–
Cost controls and productivity improvement
–
Multi-Tier UAW wage and benefits structure
Low capital expenditure requirements
–
Maintenance capital spending ~$55mm/year
Minimal cash income taxes / valuable U.S. tax shield
($0.9-1.1bn present value)
Positioned for long-term cash earnings growth
–
Multiple growth opportunities
–
De-leveraging
Strong free cash flow supports $0.06 per share
quarterly dividend
LTM
(1)
Financial Metrics
5.4%
34.1%
44.9%
15.1%
0.3%
17.5%
Cash Income
Taxes (% of
sales)
Capex (% of
sales)
Adj Net Income
Margin
Free Cash Flow
(% of Sales)
EBITDA Margin
Gross Margin
(2) |
 23
Strong Financial Profile
Financial Summary
Significant sales growth since the
2009 trough
Resiliency through the downturn,
evidenced by increasing EBITDA
margins and strong free cash flow
generation
Continued investments in global
commercial capabilities, new product
development and low-cost country
manufacturing
Strong free cash flow driven by high
margins, low maintenance capex,
and de minimis cash income taxes
In $ millions
Annual
Quarterly
2008
2009
2010
2011
1Q 2011
1Q 2012
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%
Adjusted EBITDA
544
501
617
712
169
223
% Margin
26.4%
28.4%
32.0%
32.9%
32.7%
37.0%
Effective Cash Tax Rate
(2)
NM
NM
2.7%
3.9%
2.9%
3.5%
Adjusted Net Income
93
50
274
305
111
144
% of Net Sales
4.5%
2.8%
14.2%
14.1%
21.5%
23.9%
Total CapEx
75
88
74
97
12
36
% of Net Sales
3.7%
5.0%
3.8%
4.5%
2.1%
5.9%
Free cash flow
(3,4,5)
193
142
315
372
98
120
% of Net Sales
9.4%
10.4%
16.4%
17.2%
19.0%
19.9%
Note:
See appendix for comments regarding the presentation of non-GAAP
measures. (1)
LTM 03/31/2012
(2)
Effective cash tax rate defined as cash income taxes divided by income (loss) before taxes.
(3)
Based on operating cash flow less capex.
(4)
2009 free cash flow adjusted for non-recurring activity of: (a) capitalized accrued interest on
Senior Toggle Notes ($29) million, (b) cash restructuring charge $51 million, (c) accounts payable early
payments $3 million, (d) delayed accounts receivable receipts $19 million and (e) Lehman LIBOR swap
settlement $17 million.
(5)
2011 free cash flow adjusted for non-recurring activity of: Fee to terminate services
agreement with Sponsors $16 |
 Sustainable Margins with Further Enhancement Opportunities
24
International Manufacturing
India (~$107mm total investment; ~$7mm remaining
(1)
)
–
New facility constructed to better serve Asia-Pacific
–
Phase I: In-source component manufacturing (Q3 2010)
–
Phase II: Assembly of 1000/2000 Series (Q3 2012)
Hungary (~$17mm total investment
(1)
)
–
Relocate assembly of 3000/4000 Series (Q2 2011)
~90% of 2011 N.A. On-Highway Unit Volume was covered by long-
term customer supply agreements
Workforce Optimization (cost/employee)
Hours Per Unit continue to decline
Source: Allison.
(1) As of 3/31/2012.
~30% of total
UAW workforce
Manufacturing Efficiencies (hours/unit)
Long-Term Customer Supply Agreements
~90%
Significant savings driven by retirement of Tier I workers; 800 hourly
employees are retirement eligible (~53% of workforce)
1000/2000 Series
3000 Series
4000 Series
2005
2011
Tier I
Tier II |
 25
Significant Cash Flow Generation
$4,204
$3,753
$3,721
$3,419
$3,065
$2,981
6.9x
7.4x
5.5x
4.3x
3.9x
At
Acquisition
2008
2009
2010
2011
LTM
Free Cash Flow Generation
(1)
Net Debt
(2)
$378
$81
$61
$16
$315
$142
$193
$372
$394
9.4%
17.2%
17.5%
16.4%
8.0%
2008
2009
2010
2011
LTM
Free Cash Flow
Certain Non-Recurring Activity
% of Sales
($ in millions)
($ in millions)
(3,4)
Note: See appendix for comments regarding the presentation of non-GAAP
measures. Net
debt
reduction
of
more
than
$1.2
bn
since
acquisition
(6)
(5)
(5)
(1)
Free cash flow defined as cash flow from operations less capex.
(2)
Net debt defined as total debt minus cash and cash equivalents.
(3)
2009 free cash flow adjusted for certain non-recurring activity of (a) capitalized accrued
interest on Senior Toggle Notes ($29) million, (b) cash restructuring charge $51 million, (c)
accounts payable early payments $3 million, (d) delayed accounts receivable receipts $19 million and
(e) Lehman LIBOR swap settlement $17 million.
(4)
LTM free cash flow adjusted for certain non-recurring activity: 1Q 2012 Fee to terminate
services agreement with sponsors $16
(5)
LTM 3/31/2012
(6)
Represents debt reduction through 3/31/2012.
|
 26
Income Tax Attributes
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 income tax deductions of $315mm through 2021 and
$183mm in 2022
Net operating loss carryforward of $382mm as of 12/31/2011
Income Tax attributes overview
(1)
Assuming continued profitability and no limitations at an assumed 38.5% federal
and state tax rate. (2)
Calculated at a 35.0% federal tax rate on the $382mm of federal NOL carryforward
balance as of 12/31/2011. (3)
Based on annual discount rate of 5-10%; includes both amortization of
intangibles and federal NOL’s (contingent on timing of taxable income).
Results
in
present
value
tax savings
of
$900-$1,100mm
(3)
($ millions)
Total
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Annual tax amortization
$3,333
$315
$315
$315
$315
$315
$315
$315
$315
$315
$315
$183
Cash tax savings
1
1,283
121
121
121
121
121
121
121
121
121
121
70
Cash tax savings of NOLs
2
134
Grand total
$1,417 |
 Summary / Guidance / Q&A
27 |
 Strategic Priorities
Expand global market leadership
–
Capitalize on continued market recovery
–
New vocational offerings
Emerging markets penetration
–
Vocational ladder strategy
–
Increase number of vehicle releases
Continued focus on new technologies and product development
–
Address markets adjacent to core
–
Advanced fuel efficient technologies
Deliver strong financial results
–
Earnings growth and cash flow generation
–
Focus on continued margin enhancement
28 |
 Full Year 2012 Guidance
Guidance
Commentary on Full Year
Net Sales Growth from 2011
5 to 7 percent
Assumes year over year growth in global on-
highway and Outside North America off-highway
end markets partially offset by year over year
reductions in North America off-highway, tracked
military products and North America hybrid-
propulsion systems for transit bus end markets
Adjusted EBITDA %
(1)
33.5 to 34.5 percent
Driven by sales mix and volume timing
CapEx
($ in millions)
Maintenance
New Facilities
New Product Programs
$55 to $60
$25 to $30
$30 to $40
New facilities and product programs subject to
timely completion of development and sourcing
milestones
Cash Income Taxes ($ in millions)
$10 to $15
U.S. income tax shield and net operating loss
utilization
Note: See appendix for comments regarding the presentation of non-GAAP
information. 29 |
 Appendix: Non-GAAP Financial Information
30 |
 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 EBITDA. However, Adjusted net income, Adjusted
EBITDA, Adjusted EBITDA margin, adjusted free cash flow and free cash flow
are not measurements of financial performance under GAAP, and these
metrics
may
not
be
comparable
to
similarly
titled
measures
of
other
companies.
Adjusted
net
income
is
calculated
as the sum of net income (loss), interest expense, net, income tax expense, trade
name impairment and amortization of intangible assets, less cash interest
expense, net and cash income taxes. Adjusted EBITDA is calculated as the sum of
Adjusted net income, cash interest expense, net, cash income taxes, depreciation of
property, plant and equipment and other adjustments as defined by the Senior
Secured Credit Facility and as further described below. Adjusted EBITDA
margin is calculated as Adjusted EBITDA divided by net sales. Free cash flow is
calculated as net cash provided by operating activities less capital
expenditures. Adjusted free cash flow is free cash flow adjusted for non-recurring items.
We use Adjusted net income to measure our overall profitability because it better
reflects our cash flow generation by capturing
the
actual
cash
taxes
paid
rather
than
our
tax
expense
as
calculated
under
GAAP
and
excludes
the
impact
of
the non-cash annual amortization of certain intangible assets that were created
at the time of the Acquisition Transaction. We use Adjusted EBITDA and
Adjusted EBITDA margin to evaluate and control our cash operating costs
and
to
measure
our
operating
profitability.
We
use
adjusted
free
cash
flow
and
free
cash
flow
to
evaluate
the
amount
of
cash generated by the business that, after the capital investment needed to
maintain and grow our business, can be used for strategic opportunities,
including investing in our business and strengthening our balance sheet. We believe
the presentation of Adjusted net income, Adjusted EBITDA, Adjusted EBITDA margin,
adjusted free cash and free cash flow enhances our investors' overall
understanding of the financial performance and cash flow of our business. You
should not consider Adjusted net income, Adjusted EBITDA, Adjusted EBITDA margin, adjusted free cash flow and
free cash flow as an alternative to net income (loss), determined in accordance
with GAAP, as an indicator of operating performance, or as an alternative to
net cash provided by operating activities, determined in accordance with GAAP, as
an indicator of Allison’s cash flow.
31 |
 Non-GAAP Reconciliations
(1 of 2)
32
Adjusted Net Income and Adjusted EBITDA Reconciliation
(1) Includes charges or income related to legacy employee
benefits, shared income with General Motors, benefit plan adjustments, transitional costs to establish
Allison as a stand-alone entity, pension curtailment adjustments, employee
stock compensation expense, service fees paid to Allison’s Sponsors and an
adjustment for the settlement of litigation which originated with the Predecessor
but was assumed by the Company as part of the Acquisition Transaction.
$ in millions
Last twelve
months ended
March 31,
2008
2009
2010
2011
2011
2012
2012
Net (Loss) Income
($328.1)
($323.9)
$29.6
$103.0
$36.9
$58.0
$124.1
plus:
Interest expense,
net
385.9
234.2
277.5
217.3
49.6
40.7
208.4
Cash interest expense,
net
(334.2)
(242.5)
(239.1)
(208.6)
(29.9)
(36.1)
(214.8)
Income tax
expense
37.1
41.4
53.7
47.6
18.0
25.2
54.8
Cash income
taxes
(4.3)
(5.5)
(2.2)
(5.8)
(1.6)
(2.9)
(7.1)
Fee to terminate services agreement with Sponsors
—
—
—
—
—
16.0
16.0
Initial public offering expenses
—
—
—
—
—
5.7
5.7
Trade name
impairment
179.8
190.0
—
—
—
—
—
Amortization of intangible
assets
156.5
155.9
154.2
151.9
38.0
37.5
151.4
Adjusted Net
Income
$92.7
$49.6
$273.7
$305.4
$111.0
$144.1
$338.5
Cash interest expense,
net
334.2
242.5
239.1
208.6
29.9
36.1
214.8
Cash income
taxes
4.3
5.5
2.2
5.8
1.6
2.9
7.1
Depreciation of property, plant and equipment
106.6
105.9
99.6
103.8
25.7
24.6
102.7
Loss on repurchases of long-term debt
—
—
—
—
—
13.5
13.5
Premiums and expenses on tender offer of long-term debt
—
—
—
56.9
—
—
56.9
Dual power inverter module extended coverage
2.2
11.4
(1.9)
—
—
—
—
(Gain) / loss on repurchases of long-term debt
(21.0)
(8.9)
(3.3)
16.0
—
—
16.0
Unrealized (gain) loss on hedge contracts
—
(5.8)
0.1
6.8
(1.6)
(0.7)
7.7
Reduction of supply contract liability
—
—
(3.4)
—
—
—
—
Restructuring charges
15.7
47.9
—
—
—
—
—
Other, net
(1)
9.3
53.2
10.9
8.6
2.7
2.5
8.4
Adjusted
EBITDA
$544.0
$501.3
$617.0
$711.9
$169.3
$223.0
$765.6
Net
Sales
$2,061.4
$1,766.7
$1,926.3
$2,162.8
$517.0
$601.9
$2,247.7
Adjusted EBITDA
Margin
26.4%
28.4%
32.0%
32.9%
32.7%
37.0%
34.1%
For the year ended December 31,
Three months ended
March 31, |
 $ in millions
Last twelve
months ended
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
(Deductions) or Additions:
Long-lived assets
(75.3)
(88.2)
(73.8)
(96.9)
(11.6)
(35.7)
(121.0)
Fee to terminate services agreement with Sponsors
—
—
—
—
—
16.0
16.0
Non-Recurring Activity
(1)
—
61.0
—
—
—
—
—
Adjusted Free Cash Flow
$192.8
$141.5
$315.1
$372.3
$98.3
$119.9
$393.9
Net
Sales
$2,061.4
$1,766.7
$1,926.3
$2,162.8
$517.0
$601.9
$2,247.7
Adjusted Free Cash Flow (% to Net Sales)
9.4%
8.0%
16.4%
17.2%
19.0%
19.9%
17.5%
For the year ended December 31,
Three months
ended
March 31,
Non-GAAP Reconciliations
(2 of 2)
33
Adjusted Free Cash Flow
(1)
2009 adjusted for certain non-recurring activity: (a) capitalized accrued interest on Senior
Toggle Notes ($29) million, (b) cash restructuring charge $51 million, (c) accounts payable
early payments $3 million, (d) delayed accounts receivable receipts $19 million and (e) Lehman
LIBOR swap settlement $17 million. |
 Key Definitions
34 |
 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
Utilize a disconnect clutch with
power interruption
Most prevalent transmission type
used in North America Class 8
tractors and in medium and heavy-
duty commercial vehicles outside
North America
35
End Markets
North America
Outside North America
On-Highway
On-Highway
Off-Highway
Off-Highway
Hybrid Transit Bus
Military
Service Parts, Support Equipment
and Other
Service Parts, Support Equipment
and Other |
 End
Markets – North America
(1 of 2)
On-Highway
Trucks
Classes
Vocation
Class 4-5 -
Medium duty
Class 6-7 -
Heavy duty
Lease and rental
Emergency -
ambulance, fire, rescue
Distribution -
logistics, parcel delivery
Airport operations
Refuse
Utilities
Class 8
Straight
Metro Tractor
Tractor
Refuse
Distribution
Emergency -
fire
Construction
Transport cargo (dock spotters)
Distribution
Line haul
Buses
Buses
School
Transit:
Conventional (urban)
Shuttle (airport)
Coach (long distance)
Motorhomes
Type A -
large (gasoline and diesel)
36
Hybrid Transit Bus
Buses and shuttle buses
Public transit |
 Off-Highway
Vehicle
Vocation
Well-stimulation equipment (stationary and mobile)
Pumping equipment, Well servicing rigs
Rigid dump trucks
Underground trucks
Heavy haul tractor trailer trucks
Specialty vehicles
Airport crash trucks (large fire trucks)
Energy
Mining
Construction / Specialty
37
End Markets –
North America
(2 of 2)
Military
Medium-
and heavy-
tactical wheeled platforms
Armored security vehicle (ASV)
Family of medium tactical vehicles (FMTV)
Heavy expanded mobility tactical truck (HEMTT)
Heavy equipment transporter (HET)
Logistic vehicle system replacement (LVSR)
Mine resistant ambush protected (MRAP)
Palletized load system (PLS)
M900 family of vehicles
Stryker
Tracked combat platforms
Abrams Tank
M113
Service Parts, Support
Equipment and Other
Service parts, support equipment, remanufactured
transmissions, fluids |
 38
End Markets –
Outside North America
(1 of 2)
On-Highway
Trucks
Classes
Vocation
3.5 –
7.5 tonnes
7.5 –
16 tonnes
Commercial –
lease and rental
Emergency –
ambulance, fire,
rescue
Distribution –
logistics, parcel
delivery
Airport operations
Refuse
Utilities
Greater than 16 tonnes
Straight Truck
Metro Tractor
Refuse
Distribution
Emergency –
fire
Transport cargo (dock spotters)
Specialty vehicles (crane carriers)
Construction
Distribution
Buses
Buses
School
Transit:
Conventional (urban)
Shuttle (airport)
Coach (long distance) |
 Off-Highway
Vehicle
Vocation
Well stimulation equipment (stationary and
mobile)
Rigid dump trucks
Underground trucks
Heavy haul tractor trailer trucks
Specialty vehicles
Airport crash trucks (large fire trucks)
Energy
Mining
Construction / Specialty
39
End Markets –
Outside North America
(2 of 2)
Service Parts, Support
Equipment and Other
Service parts, support equipment,
remanufactured transmissions, fluids |