Attached files
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| 8-K - CURRENT REPORT - Allison Transmission Holdings Inc | d362316d8k.htm |
| EX-99.1 - INVESTOR PRESENTATION MATERIALS - Allison Transmission Holdings Inc | d362316dex991.htm |
 0
J.P.
Morgan
Diversified
Industries
Conference
June 5, 2012
Exhibit 99.2
Lawrence Dewey, Chairman, President & Chief Executive Officer
David Graziosi, Executive Vice President & Chief Financial Officer
|
 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. |
 2
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 |
 3
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
|
 4
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
|
 5
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 |
 6
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 |
 7
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 |
 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
8 |
 Appendix: Non-GAAP Financial Information
9 |
 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.
10 |
 Non-GAAP Reconciliations
(1 of 2)
11
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)
12
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. |