Allison Transmission Holdings Inc. reports net sales for 2Q15 of US$511 million – a 5% decrease from the same period in 2014. The company has attributed the decrease in net sales to mainly a result of lower demand in the global Off-Highway and Defense end markets.
Lawrence E. Dewey, Chairman, President and CEO of Allison Transmission commented: "Our 2Q15 results are within the full year guidance ranges we provided to the market on 27 April. Net sales in the North America On-Highway end market improved on a y/y basis for the eighth consecutive quarter. During the second quarter, Allison experienced the unfavourable impact of lower energy and commodity prices in the global Off-Highway and Service Parts, Support Equipment & Other end markets. Given that these end markets continue to exhibit an elevated level of uncertainty and a dearth of near-term visibility, we are updating our full year net sales guidance to a decrease in the range of 6 to 8% y/y. Allison continued its prudent and well-defined approach to capital allocation during the second quarter by settling US$79 million of share repurchases, paying a dividend of US$0.15 per share, repaying US$54 million of debt and completing a refinancing of the Senior Notes due 2019."
Non-GAAP financial measures 2Q15
Adjusted Net Income for 2Q15 was US$98 million, compared to Adjusted Net Income of US$117 million for the same period in 2014, decreasing US$19 million. Adjusted EBITDA for the quarter was US$186 million, or 36.3% of net sales, compared to US$186 million (34.7%) of net sales for the same period in 2014. Adjusted Free Cash Flow for 2Q15 was US$140 million, or US$0.78 per diluted share, compared to US$135 million for the same period in 2014, or US$0.74 per diluted share.
Net sales and gross profit
North America Off-Highway end market net sales declined 57% from the same period in 2014 and down 55% on a sequential basis principally driven. This is reported to be a result of lower demand from hydraulic fracturing applications.
Due to lower demand in energy and mining sectors, outside North America Off-Highway end market net sales were down 67 percent from the same period in 2014 and down 50% sequentially.
Service Parts, Support Equipment & Other end market net sales were down 12% from the same period in 2014 and down 4% on a sequential basis principally. This is reported to be due to lower demand for North America service parts.
Gross profit for 2Q15 was US$236 million – a decrease of 1% from US$239 million for the same period in 2014. Gross margin for the quarter was 46.2%, increasing 170 basis points from a gross margin of 44.5% for the same period in 2014. The decrease in gross profit from the same period in 2014 was reported to a result of decreased sales volume partially offset by price increases on certain products, favourable material costs and lower incentive compensation expense.
Edited from press release by Harleigh Hobbs