[10-Q] ALLISON TRANSMISSION HOLDINGS, INC. Quarterly Earnings Report
Cartesian Growth Corporation II (Nasdaq: RENE/RENEU/RENEW) filed an 8-K disclosing its ninth one-month extension to complete a business combination. The Board moved the deadline, known as the 鈥淏usiness Combination Period,鈥� from 5 Aug 2025 to 5 Sep 2025.
To effect the extension, sponsor CGC II Sponsor LLC will advance $250,000 under an unsecured promissory note that permits borrowings up to $2.4 million. The funds will be deposited into the IPO trust account as required by the company鈥檚 amended memorandum and articles.
This is the 9th of 12 permissible monthly extensions; no additional financial results, target identification, or other material transactions were reported.
Cartesian Growth Corporation II (Nasdaq: RENE/RENEU/RENEW) ha presentato un modulo 8-K comunicando la sua nona proroga di un mese per completare una fusione aziendale. Il Consiglio ha spostato la scadenza, nota come 鈥淧eriodo di Combinazione Aziendale鈥�, dal 5 agosto 2025 al 5 settembre 2025.
Per attuare la proroga, lo sponsor CGC II Sponsor LLC anticiper脿 250.000 dollari tramite una nota di debito non garantita che consente prestiti fino a 2,4 milioni di dollari. I fondi saranno depositati nel conto fiduciario IPO come previsto dal memorandum e dallo statuto modificati della societ脿.
Questa 猫 la 9陋 delle 12 proroghe mensili consentite; non sono stati riportati ulteriori risultati finanziari, identificazione di obiettivi o altre transazioni rilevanti.
Cartesian Growth Corporation II (Nasdaq: RENE/RENEU/RENEW) present贸 un formulario 8-K revelando su novena pr贸rroga de un mes para completar una combinaci贸n de negocios. La Junta movi贸 la fecha l铆mite, conocida como el 鈥淧er铆odo de Combinaci贸n de Negocios鈥�, del 5 de agosto de 2025 al 5 de septiembre de 2025.
Para efectuar la pr贸rroga, el patrocinador CGC II Sponsor LLC adelantar谩 250,000 d贸lares bajo un pagar茅 no garantizado que permite pr茅stamos de hasta 2.4 millones de d贸lares. Los fondos se depositar谩n en la cuenta fiduciaria de la oferta p煤blica inicial seg煤n lo requerido por el memorando y los estatutos enmendados de la compa帽铆a.
Esta es la novena de 12 pr贸rrogas mensuales permitidas; no se reportaron resultados financieros adicionales, identificaci贸n de objetivos u otras transacciones materiales.
Cartesian Growth Corporation II (雮橃姢雼�: RENE/RENEU/RENEW)電� 靷梾 瓴绊暕 鞕勲毳� 鞙勴暅 鞎勴檳 氩堨Ц 頃� 雼� 鞐办灔 靷嫟鞚� 8-K 氤搓碃靹滊 瓿奠嫓頄堨姷雼堧嫟. 鞚挫偓須岆姅 '靷梾 瓴绊暕 旮瓣皠'鞙茧 鞎岆牑歆� 毵堦皭鞚检潉 2025雲� 8鞗� 5鞚检棎靹� 2025雲� 9鞗� 5鞚茧 鞐瓣赴頄堨姷雼堧嫟.
鞐办灔鞚� 鞁ろ枆頃橁赴 鞙勴暣 鞀ろ彴靹滌澑 CGC II Sponsor LLC電� 斓滊寑 240毵� 雼煬旯岇 彀瀰鞚� 臧�電ロ暅 氍措嫶氤� 鞎届啀鞏挫潓鞙茧 25毵� 雼煬毳� 靹犾旮夗暊 鞓堨爼鞛呺媹雼�. 鞛愱笀鞚� 須岇偓鞚� 靾橃爼霅� 鞝曣磤 氚� 臧侅劀鞐� 霐半澕 IPO 鞁犿儊 瓿勳鞐� 鞓堨箻霅╇媹雼�.
鞚措矆鞚� 項堨毄霅� 12須� 欷� 9氩堨Ц 鞗旊硠 鞐办灔鞛呺媹雼�; 於旉皜 鞛 瓴瓣臣, 氇╉憸 鞁濍硠 霕愲姅 旮绊儉 欷戩殧頃� 瓯半灅電� 氤搓碃霅橃 鞎婌晿鞀惦媹雼�.
Cartesian Growth Corporation II (Nasdaq : RENE/RENEU/RENEW) a d茅pos茅 un formulaire 8-K divulguant sa neuvi猫me prolongation d鈥檜n mois pour finaliser une op茅ration de fusion. Le conseil d鈥檃dministration a repouss茅 la date limite, appel茅e 芦 P茅riode de fusion 禄, du 5 ao没t 2025 au 5 septembre 2025.
Pour effectuer cette prolongation, le sponsor CGC II Sponsor LLC avancera 250 000 dollars sous forme d鈥檜ne reconnaissance de dette non garantie permettant des emprunts allant jusqu鈥櫭� 2,4 millions de dollars. Les fonds seront d茅pos茅s sur le compte fiduciaire de l鈥檌ntroduction en bourse, conform茅ment au m茅morandum et aux statuts amend茅s de la soci茅t茅.
Il s鈥檃git de la 9e des 12 prolongations mensuelles autoris茅es ; aucun r茅sultat financier suppl茅mentaire, identification de cible ou autre transaction importante n鈥檃 茅t茅 signal茅.
Cartesian Growth Corporation II (Nasdaq: RENE/RENEU/RENEW) hat eine 8-K-Meldung eingereicht, in der die neunte einmonatige Verl盲ngerung zur Durchf眉hrung einer Unternehmenszusammenf眉hrung bekannt gegeben wird. Der Vorstand verschob die Frist, bekannt als 鈥濨usiness Combination Period鈥�, vom 5. August 2025 auf den 5. September 2025.
Zur Umsetzung der Verl盲ngerung wird der Sponsor CGC II Sponsor LLC 250.000 US-Dollar 眉ber einen unbesicherten Schuldschein vorschie脽en, der Darlehen bis zu 2,4 Millionen US-Dollar erlaubt. Die Gelder werden gem盲脽 der ge盲nderten Satzung und des Memorandums des Unternehmens auf das IPO-Treuhandkonto eingezahlt.
Dies ist die 9. von 12 zul盲ssigen monatlichen Verl盲ngerungen; weitere finanzielle Ergebnisse, Zielidentifikationen oder sonstige wesentliche Transaktionen wurden nicht gemeldet.
- Sponsor advances $250,000 to fund the trust, signaling ongoing financial support.
- Trust account remains intact, preserving redemption value for public shareholders.
- Ninth extension highlights continued inability to secure a merger target, increasing deal uncertainty.
- Additional borrowing under the $2.4 million note raises leverage ahead of any future transaction.
Insights
TL;DR 鈥� Ninth extension keeps SPAC alive but signals difficulty closing a deal; sponsor support limits immediate redemption risk.
Another one-month extension to 5 Sep 2025 indicates CGC II has yet to secure a definitive merger agreement. The sponsor鈥檚 $250k deposit demonstrates continued financial backing, protecting the trust value and meeting charter requirements. However, with only three monthly extensions left, time pressure rises and potential targets gain negotiating leverage. Overall impact is neutral: cash safety maintained, but strategic uncertainty persists.
TL;DR 鈥� Repeated deadline pushes heighten execution risk; growing sponsor loan increases leverage against future proceeds.
The ninth consecutive extension underscores prolonged deal sourcing challenges, raising the probability of liquidation or shareholder fatigue. Each draw on the unsecured note鈥攏ow at least $250k鈥攁dds liabilities senior to ordinary shareholders upon closing. With only three extensions remaining, investors should monitor note balance growth and any shift in sponsor commitment. From a risk viewpoint, the filing leans negative because timeline slippage and incremental debt can erode eventual transaction economics.
Cartesian Growth Corporation II (Nasdaq: RENE/RENEU/RENEW) ha presentato un modulo 8-K comunicando la sua nona proroga di un mese per completare una fusione aziendale. Il Consiglio ha spostato la scadenza, nota come 鈥淧eriodo di Combinazione Aziendale鈥�, dal 5 agosto 2025 al 5 settembre 2025.
Per attuare la proroga, lo sponsor CGC II Sponsor LLC anticiper脿 250.000 dollari tramite una nota di debito non garantita che consente prestiti fino a 2,4 milioni di dollari. I fondi saranno depositati nel conto fiduciario IPO come previsto dal memorandum e dallo statuto modificati della societ脿.
Questa 猫 la 9陋 delle 12 proroghe mensili consentite; non sono stati riportati ulteriori risultati finanziari, identificazione di obiettivi o altre transazioni rilevanti.
Cartesian Growth Corporation II (Nasdaq: RENE/RENEU/RENEW) present贸 un formulario 8-K revelando su novena pr贸rroga de un mes para completar una combinaci贸n de negocios. La Junta movi贸 la fecha l铆mite, conocida como el 鈥淧er铆odo de Combinaci贸n de Negocios鈥�, del 5 de agosto de 2025 al 5 de septiembre de 2025.
Para efectuar la pr贸rroga, el patrocinador CGC II Sponsor LLC adelantar谩 250,000 d贸lares bajo un pagar茅 no garantizado que permite pr茅stamos de hasta 2.4 millones de d贸lares. Los fondos se depositar谩n en la cuenta fiduciaria de la oferta p煤blica inicial seg煤n lo requerido por el memorando y los estatutos enmendados de la compa帽铆a.
Esta es la novena de 12 pr贸rrogas mensuales permitidas; no se reportaron resultados financieros adicionales, identificaci贸n de objetivos u otras transacciones materiales.
Cartesian Growth Corporation II (雮橃姢雼�: RENE/RENEU/RENEW)電� 靷梾 瓴绊暕 鞕勲毳� 鞙勴暅 鞎勴檳 氩堨Ц 頃� 雼� 鞐办灔 靷嫟鞚� 8-K 氤搓碃靹滊 瓿奠嫓頄堨姷雼堧嫟. 鞚挫偓須岆姅 '靷梾 瓴绊暕 旮瓣皠'鞙茧 鞎岆牑歆� 毵堦皭鞚检潉 2025雲� 8鞗� 5鞚检棎靹� 2025雲� 9鞗� 5鞚茧 鞐瓣赴頄堨姷雼堧嫟.
鞐办灔鞚� 鞁ろ枆頃橁赴 鞙勴暣 鞀ろ彴靹滌澑 CGC II Sponsor LLC電� 斓滊寑 240毵� 雼煬旯岇 彀瀰鞚� 臧�電ロ暅 氍措嫶氤� 鞎届啀鞏挫潓鞙茧 25毵� 雼煬毳� 靹犾旮夗暊 鞓堨爼鞛呺媹雼�. 鞛愱笀鞚� 須岇偓鞚� 靾橃爼霅� 鞝曣磤 氚� 臧侅劀鞐� 霐半澕 IPO 鞁犿儊 瓿勳鞐� 鞓堨箻霅╇媹雼�.
鞚措矆鞚� 項堨毄霅� 12須� 欷� 9氩堨Ц 鞗旊硠 鞐办灔鞛呺媹雼�; 於旉皜 鞛 瓴瓣臣, 氇╉憸 鞁濍硠 霕愲姅 旮绊儉 欷戩殧頃� 瓯半灅電� 氤搓碃霅橃 鞎婌晿鞀惦媹雼�.
Cartesian Growth Corporation II (Nasdaq : RENE/RENEU/RENEW) a d茅pos茅 un formulaire 8-K divulguant sa neuvi猫me prolongation d鈥檜n mois pour finaliser une op茅ration de fusion. Le conseil d鈥檃dministration a repouss茅 la date limite, appel茅e 芦 P茅riode de fusion 禄, du 5 ao没t 2025 au 5 septembre 2025.
Pour effectuer cette prolongation, le sponsor CGC II Sponsor LLC avancera 250 000 dollars sous forme d鈥檜ne reconnaissance de dette non garantie permettant des emprunts allant jusqu鈥櫭� 2,4 millions de dollars. Les fonds seront d茅pos茅s sur le compte fiduciaire de l鈥檌ntroduction en bourse, conform茅ment au m茅morandum et aux statuts amend茅s de la soci茅t茅.
Il s鈥檃git de la 9e des 12 prolongations mensuelles autoris茅es ; aucun r茅sultat financier suppl茅mentaire, identification de cible ou autre transaction importante n鈥檃 茅t茅 signal茅.
Cartesian Growth Corporation II (Nasdaq: RENE/RENEU/RENEW) hat eine 8-K-Meldung eingereicht, in der die neunte einmonatige Verl盲ngerung zur Durchf眉hrung einer Unternehmenszusammenf眉hrung bekannt gegeben wird. Der Vorstand verschob die Frist, bekannt als 鈥濨usiness Combination Period鈥�, vom 5. August 2025 auf den 5. September 2025.
Zur Umsetzung der Verl盲ngerung wird der Sponsor CGC II Sponsor LLC 250.000 US-Dollar 眉ber einen unbesicherten Schuldschein vorschie脽en, der Darlehen bis zu 2,4 Millionen US-Dollar erlaubt. Die Gelder werden gem盲脽 der ge盲nderten Satzung und des Memorandums des Unternehmens auf das IPO-Treuhandkonto eingezahlt.
Dies ist die 9. von 12 zul盲ssigen monatlichen Verl盲ngerungen; weitere finanzielle Ergebnisse, Zielidentifikationen oder sonstige wesentliche Transaktionen wurden nicht gemeldet.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number
(Exact name of registrant as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act:
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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.
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).
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.
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Smaller reporting company |
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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). Yes ☐ No
As of July 22, 2025, there were
Table of Contents
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
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Condensed Consolidated Balance Sheets |
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Condensed Consolidated Statements of Comprehensive Income |
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Condensed Consolidated Statements of Cash Flows |
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Condensed Consolidated Statements of Stockholders’ Equity |
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Notes to Condensed Consolidated Financial Statements |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Quantitative and Qualitative Disclosures About Market Risk |
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Controls and Procedures |
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PART II. OTHER INFORMATION |
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Legal Proceedings |
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Risk Factors |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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Other Information |
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Exhibits |
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Signatures |
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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)
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December 31, |
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ASSETS |
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Current Assets |
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Accounts receivable – net of allowance for doubtful accounts of $ |
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Inventories |
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Other current assets |
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Marketable securities |
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Property, plant and equipment, net |
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Goodwill |
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LIABILITIES |
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Current Liabilities |
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Accounts payable |
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Product warranty liability |
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Current portion of long-term debt |
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Deferred revenue |
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Other current liabilities |
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Total Current Liabilities |
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Product warranty liability |
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Deferred revenue |
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Long-term debt |
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STOCKHOLDERS’ EQUITY |
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Common stock, $ |
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Preferred stock, $ |
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Paid in capital |
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Accumulated deficit |
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Accumulated other comprehensive loss, net of tax |
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TOTAL STOCKHOLDERS’ EQUITY |
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TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY |
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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)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2024 |
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Net sales |
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Cost of sales |
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Gross profit |
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Selling, general and administrative |
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Engineering — research and development |
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Operating income |
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Interest expense, net |
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Other income (expense), net |
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Income before income taxes |
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Income tax expense |
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Net income |
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Basic earnings per share attributable to common stockholders |
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Diluted earnings per share attributable to common stockholders |
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Comprehensive income, net of tax |
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$ |
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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)
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Six Months Ended June 30, |
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2025 |
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2024 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation of property, plant and equipment |
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Stock-based compensation |
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Unrealized (gain) loss on marketable securities |
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Amortization of intangible assets |
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Deferred income taxes |
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Pension settlement loss |
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Technology-related investments loss |
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Other |
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Changes in assets and liabilities: |
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Accounts receivable |
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Inventories |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
|
||
Other assets and liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
Additions of long-lived assets |
|
|
( |
) |
|
|
( |
) |
Investment in equity method investee |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of assets |
|
|
|
|
|
|
||
Net cash used for investing activities |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Repurchases of common stock |
|
|
( |
) |
|
|
( |
) |
Dividend payments |
|
|
( |
) |
|
|
( |
) |
Taxes paid related to net share settlement of equity awards |
|
|
( |
) |
|
|
( |
) |
Proceeds from exercise of stock options |
|
|
|
|
|
|
||
Debt financing fees |
|
|
( |
) |
|
|
( |
) |
Payments on long-term debt |
|
|
( |
) |
|
|
( |
) |
Net cash used for financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of exchange rate changes on cash |
|
|
|
|
|
( |
) |
|
Net (decrease) increase in cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
||
Income taxes paid |
|
$ |
( |
) |
|
$ |
( |
) |
Interest paid |
|
$ |
( |
) |
|
$ |
( |
) |
Interest received from interest rate swaps |
|
$ |
|
|
$ |
|
||
Non-cash investing activities: |
|
|
|
|
|
|
||
Capital expenditures in liabilities |
|
$ |
|
|
$ |
|
||
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 March 31, 2024 |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Pension and OPEB liability adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Interest rate swaps |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Dividends on common stock ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Balance at June 30, 2024 |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
Balance at March 31, 2025 |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Pension and OPEB liability adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Interest rate swaps |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Issuance of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Dividends on common stock ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Balance at June 30, 2025 |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
The accompanying notes are an integral part of the condensed consolidated financial statements.
6
Table of Contents
|
|
Six 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, 2023 |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Pension and OPEB liability adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Issuance of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Dividends on common stock ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Balance at June 30, 2024 |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
Balance at December 31, 2024 |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Pension and OPEB liability adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Interest rate swaps |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Issuance of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Dividends on common stock ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Balance at June 30, 2025 |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
The accompanying notes are an integral part of the condensed consolidated financial statements.
7
Table of Contents
Allison Transmission Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(UNAUDITED)
NOTE A. OVERVIEW
Overview
Allison Transmission Holdings, Inc. and its subsidiaries (“Allison” or the “Company”) is a leading designer and manufacturer of propulsion solutions for commercial and defense vehicles and the largest global manufacturer of medium- and heavy-duty fully automatic transmissions. The business was founded in 1915 and has been headquartered in Indianapolis, Indiana since inception. Allison is traded on the New York Stock Exchange under the symbol “ALSN”.
The Company has a global presence by serving customers in North America, Asia, Europe, South America, and Africa, with approximately
NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The condensed consolidated financial statements have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary for the fair statement of the results for the periods presented. The condensed consolidated financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated.
These condensed consolidated financial statements present the financial position, results of comprehensive income, cash flows and statements of stockholders’ equity of the Company. Certain immaterial reclassifications have been made in the condensed consolidated financial statements of prior periods to conform to the current period presentation. These reclassifications had no impact on previously reported net income, total stockholders’ equity or cash flows. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission on February 13, 2025. The interim period financial results for the three- and six-month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year.
8
Table of Contents
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Estimates include, but are not limited to, sales incentives, government price adjustments, fair market values and future cash flows associated with goodwill, indefinite-lived intangibles, definite-lived intangibles, long-lived asset impairment tests, useful lives for depreciation and amortization, warranty liabilities, core deposit liabilities, determination of discount rate and other assumptions for pension and other post-retirement benefit ("OPEB") expense, income taxes and deferred tax valuation allowances, derivative valuation, assumptions for business combinations and contingencies. The Company’s accounting policies involve the application of judgments and assumptions made by management that include inherent risks and uncertainties. Actual results could differ materially from these estimates and from the assumptions used in the preparation of the Company's financial statements. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur.
Recently Issued Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board ("FASB") issued authoritative accounting guidance to improve income tax disclosures by requiring disaggregated information about a reporting entity's effective tax rate reconciliation and information on income taxes paid. The guidance will become effective for the Company beginning with its fiscal year ending December 31, 2025. The guidance may be applied prospectively with the option to apply it retrospectively. The adoption of this guidance is not expected to have an impact on the Company's consolidated financial statements but will result in additional disclosures.
In November 2024, the FASB issued authoritative accounting guidance, which was subsequently amended, requiring additional disaggregation of certain expense and cost line items presented in the financial statements and in the notes to the financial statements. The guidance will become effective for the Company beginning with the fiscal year ending December 31, 2027 and the subsequent interim periods. Early adoption is permitted. Upon adoption, the guidance may be applied prospectively or retrospectively. Management is currently evaluating the impact of this guidance on the Company's consolidated financial statements.
All other recently issued accounting pronouncements were assessed as either not applicable to the Company or were not expected to have a material impact on the Company's condensed consolidated financial statements.
9
Table of Contents
NOTE C. REVENUE
Revenue is recognized as each distinct performance obligation within a contract is satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company enters into long-term agreements (“LTAs”) and distributor agreements with certain customers. The LTAs and distributor agreements do not include committed volumes until underlying purchase orders are issued; therefore, the Company determined that purchase orders are the contract with a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied, as there is no right of return.
Some of the Company's contracts include multiple performance obligations, most commonly the sale of both a transmission and extended transmission coverage ("ETC"). The Company allocates the contract’s transaction price to each performance obligation based on the standalone selling price of each distinct good or service in the contract.
The Company may also use volume-based discounts and rebates as marketing incentives in the sales of both vehicle propulsion solutions and service parts, which are accounted for as variable consideration. The Company records the impact of the incentives as a reduction to revenue when it is determined that the adjustment is not likely to reverse. The Company estimates the impact of all other incentives based on the related sales and market conditions in the end market vocation. The Company recorded
Net sales are made on credit terms, generally
The Company has
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
North America On-Highway |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Outside North America On-Highway |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Global Off-Highway |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Defense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service Parts, Support Equipment and Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
10
Table of Contents
NOTE D. INVENTORIES
Inventories consisted of the following components (dollars in millions):
|
|
June 30, |
|
|
December 31, |
|
||
Purchased parts and raw materials |
|
$ |
|
|
$ |
|
||
Work in progress |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Service parts |
|
|
|
|
|
|
||
Total inventories |
|
$ |
|
|
$ |
|
||
Inventory components shipped to third parties, primarily cores, parts to re-manufacturers, and parts to contract manufacturers, which the Company has an obligation to buy back, are included in purchased parts and raw materials, with an offsetting liability in Other current liabilities. See "Note L. Other Current Liabilities” for more information.
NOTE E. GOODWILL AND OTHER INTANGIBLE ASSETS
As of June 30, 2025 and December 31, 2024, the carrying value of the Company’s Goodwill was $
The following presents a summary of other intangible assets (dollars in millions):
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||||||||||
|
|
Intangible |
|
|
Accumulated |
|
|
Intangible |
|
|
Intangible |
|
|
Accumulated |
|
|
Intangible |
|
||||||
Other intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trade name |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Customer relationships — commercial |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Proprietary technology |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Customer relationships — defense |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Non-compete agreement |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Amortization expense related to other intangible assets for the next five fiscal years is expected to be (dollars in millions):
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|||||
Amortization expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
11
Table of Contents
NOTE F. FAIR VALUE OF FINANCIAL INSTRUMENTS
Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date.
Level 2 — Inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes financial instruments that are valued using quoted prices in markets that are not active and those financial instruments that are valued using models or other valuation methodologies in which all significant value-drivers are observable in active markets or are supported by observable levels at which transactions are executed in the marketplace.
Level 3 — Certain inputs are unobservable or have little or no market data available. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. At each balance sheet date, the Company performs an analysis of all instruments subject to authoritative accounting guidance and includes, in Level 3, all of those whose fair value is based on significant unobservable inputs. As of June 30, 2025 and December 31, 2024, the Company did
The following table summarizes the Company’s financial assets and (liabilities) measured at fair value as of June 30, 2025 and December 31, 2024 (dollars in millions):
|
|
Fair Value Measurements Using |
|
|||||||||||||||||||||
|
|
Quoted Prices in Active |
|
|
Significant Other |
|
|
TOTAL |
|
|||||||||||||||
|
|
June 30, |
|
|
December 31, |
|
|
June 30, |
|
|
December 31, |
|
|
June 30, |
|
|
December 31, |
|
||||||
Cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Rabbi trust assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deferred compensation obligation |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The Company’s valuation techniques used to calculate the fair value of cash equivalents, marketable securities, assets held in the rabbi trust and the deferred compensation obligation represent a market approach in active markets for identical assets that qualify as Level 1 in the fair value hierarchy. A description of the Company’s Level 1 assets is as follows:
12
Table of Contents
The Company’s valuation techniques used to calculate the fair value of derivative instruments represent a market approach with observable inputs that qualify as Level 2 in the fair value hierarchy. The Company uses valuations from the issuing financial institutions for the fair value measurement of interest rate swaps. The floating-to-fixed interest rate swaps are based on the Secured Overnight Financing Rate ("SOFR"), which is observable at commonly quoted intervals. The fair values are included in other current assets in the Condensed Consolidated Balance Sheets. See "Note H. Derivatives” for more information regarding the Company's interest rate swaps.
The Company holds equity securities in unconsolidated entities without a readily determinable fair value. Each of these investments represents a less than 20% ownership interest in the respective privately-held entity, and the Company does not maintain significant influence over or control of any of the entities. The Company has elected the measurement alternative and measures the investments at cost, less any impairment, plus or minus adjustments related to observable price changes in orderly transactions for identical or similar investments of the same issuer. These equity investments are recorded in Other non-current assets in the Condensed Consolidated Balance Sheets, with changes in the value recorded in Other income (expense), net in the Condensed Consolidated Statements of Comprehensive Income. As of both June 30, 2025 and December 31, 2024, the Company held equity securities without a readily determinable fair value of $
13
Table of Contents
NOTE G. DEBT
Long-term debt and maturities are as follows (dollars in millions):
|
|
June 30, |
|
|
December 31, |
|
||
Long-term debt: |
|
|
|
|
|
|
||
Senior Notes, fixed |
|
$ |
|
|
$ |
|
||
Senior Notes, fixed |
|
|
|
|
|
|
||
Senior Notes, fixed |
|
|
|
|
|
|
||
Senior Secured Credit Facility Term Loan, variable, due |
|
|
|
|
|
|
||
Total long-term debt |
|
$ |
|
|
$ |
|
||
Less: current maturities of long-term debt |
|
|
|
|
|
|
||
deferred financing costs, net |
|
|
|
|
|
|
||
Total long-term debt, net |
|
$ |
|
|
$ |
|
||
As of June 30, 2025, the Company had $
The fair value of the Company’s long-term debt obligations as of June 30, 2025 was $
Senior Secured Credit Facility
The borrowings under the Senior Secured Credit Facility are collateralized by a lien on substantially all assets of the Company, ATI and certain existing and future U.S. subsidiary guarantors, as provided in the Credit Agreement. Interest on the Term Loan, as of June 30, 2025, is either (a)
The Senior Secured Credit Facility also provides a Revolving Credit Facility, net of an allowance for up to $
14
Table of Contents
Facility is (a)
The Senior Secured Credit Facility requires the Company to maintain a specified maximum first lien net leverage ratio of
In addition, the Credit Agreement, among other things, includes customary restrictions (subject to certain exceptions) on the Company’s ability to incur certain indebtedness, grant certain liens, make certain investments, engage in acquisitions, consolidations and mergers, declare or pay certain dividends or repurchase shares of the Company’s common stock. As of June 30, 2025, the Company was in compliance with all covenants under the Credit Agreement.
Senior Notes
Each series of the Senior Notes is unsecured and is guaranteed by each of ATI’s domestic subsidiaries that is a borrower under or guarantees the Senior Secured Credit Facility and is unconditionally guaranteed, jointly and severally, by any of ATI’s future domestic subsidiaries that are borrowers under or guarantee the Senior Secured Credit Facility. None of ATI’s domestic subsidiaries currently guarantee its obligations under the Senior Secured Credit Facility, and therefore none of ATI’s domestic subsidiaries currently guarantee any series of the Senior Notes. The indentures governing the Senior Notes contain negative covenants restricting or limiting the Company’s ability to, among other things: incur or guarantee additional indebtedness, incur liens, pay dividends on, redeem or repurchase the Company’s capital stock, make certain investments, permit payment or dividend restrictions on certain of the Company’s subsidiaries, sell assets, engage in certain transactions with affiliates, and consolidate or merge or sell all or substantially all of the Company’s assets. As of June 30, 2025, the Company was in compliance with all covenants under the indentures governing the Senior Notes.
ATI may from time to time seek to retire its Senior Notes through cash purchases, exchanges for equity securities, open market purchases, privately negotiated transactions, contractual redemptions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors and will be in accordance with the respective indenture governing such notes. The amounts involved may be material. Some or all of the
15
Table of Contents
NOTE H. DERIVATIVES
As of June 30, 2025, the Company held interest rate swap contracts that, in the aggregate, effectively hedge $
The following tabular disclosures further describe the Company’s interest rate derivatives qualifying and designated for hedge accounting and their impact on the financial condition of the Company (dollars in millions):
|
|
|
|
Fair Value |
|
|||||
|
|
Balance Sheet Location |
|
June 30, |
|
|
December 31, |
|
||
Derivative Assets: |
|
|
|
|
|
|
|
|
||
Interest rate swaps |
|
Other current assets |
|
$ |
|
|
$ |
|
||
|
|
|
$ |
|
|
$ |
|
|||
The balance of net derivative gains recorded in AOCL as of June 30, 2025 and December 31, 2024 was $
16
Table of Contents
NOTE I. PRODUCT WARRANTY LIABILITIES
As of June 30, 2025, current and non-current product warranty liabilities were $
Product warranty liability activities consisted of the following (dollars in millions):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Increase in liability (warranty issued during period) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net adjustments to liability |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE J. DEFERRED REVENUE
As of June 30, 2025, current and non-current deferred revenue were $
Deferred revenue activity consisted of the following (dollars in millions):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Increases |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue earned |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred revenue recorded in current and non-current liabilities related to ETC as of June 30, 2025 was $
17
Table of Contents
NOTE K. LEASES
Contracts are assessed by the Company to determine if the contract conveys the right to control an identified asset in exchange for consideration during a period of time. The Company classifies all identified leases as either operating or finance leases. The Company's operating leases consist of real estate, vehicles and IT equipment. As of both June 30, 2025 and December 31, 2024, the Company was not a party to any finance leases. Contracts that contain leases are assessed to determine if the consideration in the contract is related to a lease component, non-lease component or other components not related to the lease. Lease components are recorded as right-of-use (“ROU”) assets and lease liabilities while any non-lease component is expensed as incurred. The consideration in the contract related to other components not related to the lease is allocated among the lease component and the non-lease component, as applicable, based on the stand-alone selling price of the lease and non-lease components.
Certain lease contracts may contain an option to extend or terminate the lease. The Company considers the economic impact of extension and termination options by contract. If the Company concludes it is reasonably certain an option will be exercised, that option is included in the lease term and impacts the amount recorded as an ROU asset and lease liability at inception of the contract.
ROU assets are calculated as the related lease liability adjusted for lease incentives, any initial direct costs, prepayments and the effect of escalating lease payments on period expense. As of June 30, 2025 and December 31, 2024, total were $
As of June 30, 2025, the Company recorded and operating lease liabilities of $
|
|
June 30, |
|
|
For the remainder of 2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Thereafter |
|
|
|
|
Total lease payments |
|
$ |
|
|
Less: Interest |
|
|
|
|
|
$ |
|
||
18
Table of Contents
The weighted average remaining lease term as of June 30, 2025 and June 30, 2024 was
Operating lease expense was $
NOTE L. OTHER CURRENT LIABILITIES
Other current liabilities consisted of the following (dollars in millions):
|
|
June 30, |
|
|
December 31, |
|
||
Sales incentives |
|
$ |
|
|
$ |
|
||
Payroll and related costs |
|
|
|
|
|
|
||
Accrued interest payable |
|
|
|
|
|
|
||
Vendor buyback obligation |
|
|
|
|
|
|
||
Taxes payable |
|
|
|
|
|
|
||
Other accruals |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
NOTE M. EMPLOYEE BENEFIT PLANS
Components of net periodic benefit cost (credit) consisted of the following (dollars in millions):
|
|
Pension Plans |
|
|
Post-retirement Benefits |
|
||||||||||
|
|
Three Months Ended |
|
|
Three Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net periodic benefit cost (credit): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected return on assets |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Settlement loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Prior service credit |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Recognized actuarial gain |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Net periodic benefit cost (credit) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
|
|
Pension Plans |
|
|
Post-retirement Benefits |
|
||||||||||
|
|
Six Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net periodic benefit cost (credit): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected return on assets |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Settlement loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Prior service credit |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Recognized actuarial gain |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Net periodic benefit cost (credit) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
The components of net periodic benefit cost (credit) other than the service cost component are included in Other income (expense), net in the Condensed Consolidated Statements of Comprehensive Income.
19
Table of Contents
In June 2024, the Company completed a pension risk transfer to a third-party insurance company of a portion of its salaried defined benefit pension plan's obligations for certain participants and their beneficiaries. The Company agreed to an annuity contract that was purchased using pension plan assets, resulting in the transfer of $
NOTE N. INCOME TAXES
For the three and six months ended June 30, 2025, the Company recorded total income tax expense of $
NOTE O. ACCUMULATED OTHER COMPREHENSIVE LOSS
The following tables reconcile changes in AOCL by component (net of tax, dollars in millions):
|
|
Three months ended |
|
|||||||||||||
|
|
Pension |
|
|
Interest |
|
|
Foreign |
|
|
Total |
|
||||
AOCL as of March 31, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income (loss) before reclassifications |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Amounts reclassified from AOCL |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Income tax (expense) benefit |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Net current period other comprehensive income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
AOCL as of June 30, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
AOCL as of March 31, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income before reclassifications |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amounts reclassified from AOCL |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net current period other comprehensive (loss) income |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
AOCL as of June 30, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
20
Table of Contents
|
|
Six months ended |
|
|||||||||||||
|
|
Pension |
|
|
Interest |
|
|
Foreign |
|
|
Total |
|
||||
AOCL as of December 31, 2023 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income (loss) before reclassifications |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Amounts reclassified from AOCL |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net current period other comprehensive income (loss) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
AOCL as of June 30, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
AOCL as of December 31, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income before reclassifications |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amounts reclassified from AOCL |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net current period other comprehensive (loss) income |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
AOCL as of June 30, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
Amounts reclassified from AOCL |
|
|
|
|||||
AOCL Components |
|
Three months ended |
|
|
Three months ended |
|
|
Affected line item in the Condensed |
||
Interest rate swaps |
|
$ |
|
|
$ |
|
|
Interest expense, net |
||
Prior service credit |
|
|
|
|
|
|
|
Other income (expense), net |
||
Recognized actuarial gain |
|
|
|
|
|
|
|
Other income (expense), net |
||
Pension settlement loss |
|
|
|
|
$ |
( |
) |
|
Other income (expense), net |
|
Total reclassifications, before tax |
|
$ |
|
|
$ |
|
|
Income before income taxes |
||
Income tax expense |
|
|
( |
) |
|
|
( |
) |
|
Income tax expense |
Total reclassifications, net of tax |
|
$ |
|
|
$ |
|
|
|
||
|
|
Amounts reclassified from AOCL |
|
|
|
|||||
AOCL Components |
|
Six months ended |
|
|
Six months ended |
|
|
Affected line item in the Condensed |
||
Interest rate swaps |
|
$ |
|
|
$ |
|
|
Interest expense, net |
||
Prior service credit |
|
|
|
|
|
|
|
Other income (expense), net |
||
Recognized actuarial gain |
|
|
|
|
|
|
|
Other income (expense), net |
||
Pension settlement loss |
|
|
|
|
|
( |
) |
|
Other income (expense), net |
|
Total reclassifications, before tax |
|
$ |
|
|
$ |
|
|
Income before income taxes |
||
Income tax expense |
|
|
( |
) |
|
|
( |
) |
|
Income tax expense |
Total reclassifications, net of tax |
|
$ |
|
|
$ |
|
|
|
||
Prior service credits and actuarial gains are included in the computation of the Company’s net periodic benefit cost (credit). See "Note M. Employee Benefit Plans” for additional details.
NOTE P. COMMITMENTS AND CONTINGENCIES
The Company is party to various legal actions and administrative proceedings and subject to various claims arising in the ordinary course of business. These proceedings primarily involve commercial claims, product liability claims, personal injury claims and workers’ compensation claims. The Company believes that the ultimate liability, if any, in excess of amounts already provided for in the condensed consolidated financial statements or covered by insurance on the disposition of these matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company.
21
Table of Contents
NOTE Q. EARNINGS PER SHARE
The following table reconciles the numerators and denominators used to calculate basic EPS and diluted EPS (in millions, except per share data):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted average shares of common stock outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of stock-based awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted average shares of common stock outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share attributable to common stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted earnings per share attributable to common stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The dilutive impact of stock-based compensation is calculated using the treasury stock method. The treasury stock method assumes that the Company uses the proceeds from the exercise of awards to repurchase common stock at the average market price during the period. For each of the three and six months ended June 30, 2025 and 2024, there were
NOTE R. COMMON STOCK
On February 20, 2025, the Board of Directors authorized the Company to repurchase an additional $
During the three and six months ended June 30, 2025, the Company repurchased approximately $
NOTE S. SEGMENT INFORMATION
In accordance with the FASB’s authoritative accounting guidance on segment reporting, the Company has
22
Table of Contents
The CODM assesses Company performance utilizing Net income and Adjusted EBITDA by comparing budget versus actual and year-over-year variances. Certain variances identified in the analysis of Net income and Adjusted EBITDA are evaluated to assist the CODM in assessing Company performance and making decisions on the allocation of Company resources. The following expenses included in Net income and Adjusted EBITDA are identified as significant expenses regularly provided to the CODM: Cost of sales, Selling, general and administrative, and Engineering — research and development.
The Company’s
The following presents a financial summary of the Company’s one reportable segment (dollars in millions):
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net sales |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
less: |
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|
|
|
|
|
|
|
|
|
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
||||
Engineering — research and development |
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items (a) |
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|
|
|
|
|
|
|
|
|
|
||||
Net income (GAAP) |
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|
|
|
|
|
|
|
|
|
|
||||
plus: |
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|
|
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
|
|
|
|
|
|
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|
|
|
||||
Depreciation of property, plant and equipment |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
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|
|
|
|
|
|
|
|
|
|
||||
Amortization of intangible assets |
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|
|
|
|
|
|
|
|
|
|
||||
Other adjustments (b) |
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA (Non-GAAP) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total assets |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE T. ACQUISITIONS
On
Also on June 11, 2025, in connection with the entry into the Purchase Agreement, the Company entered into a commitment letter (the “Commitment Letter”) with a group of lenders (the "Lenders"), pursuant to which the Lenders have committed to provide a 364-day senior unsecured bridge term loan facility (the “Bridge Facility”), in an aggregate principal amount of up to $
23
Table of Contents
delivery of definitive documentation with respect to the Bridge Facility in accordance with the terms set forth in the Commitment Letter. The proceeds of the Bridge Facility may be used to finance a portion of the purchase price under the Purchase Agreement and to pay costs, fees and expenses in connection with the Bridge Facility and the transactions contemplated thereby. The Company expects to replace the Bridge Facility prior to the closing of the transaction with permanent financing, which may include the issuance of debt securities.
NOTE U. SUBSEQUENT EVENT
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The OBBBA made a number of changes to U.S. federal income tax law that will impact the Company, including: allowing immediate deduction of the full cost of qualified capital investments, suspending the requirement to capitalize and amortize research and development expenditures, and modifying the applicable rules for global intangible low-taxed income and foreign derived intangible income. Management is currently evaluating the impact the OBBBA will have on the Company's consolidated financial statements.
24
Table of Contents
ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion in conjunction with our condensed consolidated interim financial statements and the related notes contained elsewhere in this Quarterly Report on Form 10-Q.
The statements in this discussion regarding industry trends, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Cautionary Note Regarding Forward-Looking Statements” and Part II, Item 1A “Risk Factors” below, and in Part I, Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission on February 13, 2025. Our actual results may differ materially from those contained in or implied by any forward-looking statements.
Overview
Allison Transmission Holdings, Inc. and its subsidiaries (“Allison,” the “Company,” “we,” “us” or “our”) is a leading designer and manufacturer of propulsion solutions for commercial and defense vehicles and the largest global manufacturer of medium- and heavy-duty fully automatic transmissions. The business was founded in 1915 and has been headquartered in Indianapolis, Indiana since inception. Allison is traded on the New York Stock Exchange under the symbol “ALSN”.
We have a global presence by serving customers in North America, Asia, Europe, South America, and Africa, with approximately 77% of our revenues being generated in North America in 2024. We serve customers through an independent network of approximately 1,600 independent distributor and dealer locations worldwide.
Recent Developments
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The OBBBA made a number of changes to U.S. federal income tax law that will impact us, including: allowing immediate deduction of the full cost of qualified capital investments, suspending the requirement to capitalize and amortize research and development expenditures, and modifying the applicable rules for global intangible low-taxed income and foreign derived intangible income. We are continuing to evaluate the impact that the OBBBA will have on our business and our results of operations.
On June 11, 2025, we entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Dana Incorporated (“Dana”) to acquire the off-highway business of Dana (the "Acquisition"). Pursuant to the Purchase Agreement, we plan to acquire Dana's off-highway business for a purchase price of approximately $2,732 million, subject to certain adjustments, using a combination of cash on hand and debt. The closing of the transaction is not subject to a financing condition or to the approval of Dana’s or Allison’s stockholders and is projected to occur late in the fourth quarter of 2025, pending customary regulatory approvals. We will be required to pay Dana a termination fee of $120 million if the Purchase Agreement is terminated due to the failure of the transactions contemplated by the Purchase Agreement to be completed by a specified outside date as a result of the failure to obtain required approvals or clearances under, or as a result of an injunction or order relating to, competition and foreign investment laws.
Also on June 11, 2025, in connection with the entry into the Purchase Agreement, we entered into a commitment letter (the “Commitment Letter”) with a group of lenders (the "Lenders"), pursuant to which the Lenders have committed to provide a 364-day senior unsecured bridge term loan facility (the “Bridge Facility”), in an aggregate principal amount of up to $2,000 million, subject to customary conditions, including the execution and delivery of definitive documentation with respect to the Bridge Facility in accordance with the terms set forth in the
25
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Commitment Letter. The proceeds of the Bridge Facility may be used to finance a portion of the purchase price under the Purchase Agreement and to pay costs, fees and expenses in connection with the Bridge Facility and the transactions contemplated thereby. We expect to replace the Bridge Facility prior to the closing of the transaction with permanent financing, which may include the issuance of debt securities.
Trends Impacting Our Business
In 2025, we expect decreased net sales in our North America On-Highway end market, partially offset by price increases on certain products and increased demand for Tracked vehicle applications in our Defense end market.
26
Table of Contents
Second Quarter Net Sales by End Market (dollars in millions)
|
|
For the Three Months Ended June 30, |
|
|
|
|
||||||
End Market |
|
2025 |
|
|
2024 |
|
|
% Variance |
|
|||
North America On-Highway |
|
$ |
417 |
|
|
$ |
456 |
|
|
|
(9 |
)% |
Outside North America On-Highway |
|
|
142 |
|
|
|
128 |
|
|
|
11 |
% |
Global Off-Highway |
|
|
16 |
|
|
|
23 |
|
|
|
(30 |
)% |
Defense |
|
|
63 |
|
|
|
43 |
|
|
|
47 |
% |
Service Parts, Support Equipment and Other |
|
|
176 |
|
|
|
166 |
|
|
|
6 |
% |
Total Net Sales |
|
$ |
814 |
|
|
$ |
816 |
|
|
|
0 |
% |
North America On-Highway end market net sales were down 9% for the second quarter 2025 compared to the second quarter 2024, principally driven by lower demand for medium-duty trucks, partially offset by price increases on certain products and increased demand for hybrid transit buses.
Outside North America On-Highway end market net sales were up 11% for the second quarter 2025 compared to the second quarter 2024, principally driven by higher demand in South America and Europe.
Global Off-Highway net sales were down $7 million for the second quarter 2025 compared to the second quarter 2024, principally driven by lower demand from the energy, mining and construction sectors outside of North America.
Defense end market net sales were up 47% for the second quarter 2025 compared to the second quarter 2024, principally driven by increased demand for Tracked vehicle applications, price increases on certain products and the continued execution of our growth initiatives.
Service Parts, Support Equipment and Other end market net sales were up 6% for the second quarter 2025 compared to the second quarter 2024, principally driven by higher demand for service parts and price increases on certain products, partially offset by lower demand for aluminum die cast components.
27
Table of Contents
Key Components of our Results of Operations
Net sales
We generate our net sales primarily from the sale of vehicle propulsion solutions, service and component parts, support equipment, defense kits, engineering services, royalties and extended transmission coverage to a wide array of original equipment manufacturers, distributors and the U.S. government. Sales are recorded in accordance with the terms of the contract, net of provisions for customer incentives and other rebates. Engineering services are recorded as net sales in accordance with the terms of the contract. The associated costs are recorded in cost of sales. We also have royalty agreements with third parties that provide net sales as a result of joint efforts in developing marketable products.
Cost of sales
Our primary components of cost of sales are purchased parts, the overhead expense related to our manufacturing operations and direct labor associated with the manufacture and assembly of vehicle propulsion solutions and parts. For the six months ended June 30, 2025, direct material costs were approximately 66%, overhead costs were approximately 26%, and direct labor costs were approximately 8% of cost of sales. We are subject to changes in our cost of sales caused by movements in underlying commodity prices. We seek to hedge against this risk by using long-term agreements (“LTAs”), as appropriate. See Part I, Item 3, “Quantitative and Qualitative Disclosures about Market Risk—Commodity Price Risk” included below.
Selling, general and administrative
The principal components of our selling, general and administrative expenses are salaries and benefits for our office personnel, advertising and promotional expenses, product warranty expense, expenses relating to certain information technology systems and amortization of our intangible assets.
Engineering — research and development
We incur costs in connection with research and development programs that are expected to contribute to future earnings. Such costs are expensed as incurred.
28
Table of Contents
Non-GAAP Financial Measures
We use Adjusted Earnings before Interest, Taxes, Depreciation, and Amortization (“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 operational results of our business and increase the period-to-period comparability of our operating profitability and comparability with other companies. Adjusted EBITDA as a percent of net sales is also used in the calculation of management’s incentive compensation program. The most directly comparable U.S. generally accepted accounting principles (“GAAP”) measure to Adjusted EBITDA and Adjusted EBITDA as a percent of net sales is Net income and Net income as a percent of net sales, respectively. Adjusted EBITDA is calculated as earnings before interest expense, net, income tax expense, amortization of intangible assets, depreciation of property, plant and equipment and other adjustments as defined by the Second Amended and Restated Credit Agreement dated as of March 29, 2019, as amended (the “Credit Agreement”), governing Allison Transmission, Inc.’s (“ATI”), our wholly-owned subsidiary, term loan facility in the amount of $512 million due March 2031 (“Term Loan”) and ATI’s revolving credit facility with commitments in the amount of $750 million due March 2029 ("Revolving Credit Facility" and, together with the Term Loan, the "Senior Secured Credit Facility"). Adjusted EBITDA as a percent of net sales is calculated as Adjusted EBITDA divided by net sales.
We use Adjusted free cash flow to evaluate the amount of cash generated by our business that, after the capital investment needed to maintain and grow our business and certain mandatory debt service requirements, can be used for repayment of debt, stockholder distributions and strategic opportunities, including investing in our business. We believe that Adjusted free cash flow enhances the understanding of the cash flows of our business for management, investors and creditors. Adjusted free cash flow is also used in the calculation of management’s incentive compensation program. The most directly comparable GAAP measure to Adjusted free cash flow is Net cash provided by operating activities. Adjusted free cash flow is calculated as Net cash provided by operating activities after additions of long-lived assets.
29
Table of Contents
The following is a reconciliation of Net income and Net income as a percent of net sales to Adjusted EBITDA and Adjusted EBITDA as a percent of net sales and a reconciliation of Net cash provided by operating activities to Adjusted free cash flow:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
(unaudited, dollars in millions) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net income (GAAP) |
|
$ |
195 |
|
|
$ |
187 |
|
|
$ |
387 |
|
|
$ |
356 |
|
plus: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
|
47 |
|
|
|
47 |
|
|
|
88 |
|
|
|
82 |
|
Depreciation of property, plant and equipment |
|
|
29 |
|
|
|
27 |
|
|
|
57 |
|
|
|
54 |
|
Interest expense, net |
|
|
22 |
|
|
|
22 |
|
|
|
43 |
|
|
|
47 |
|
Amortization of intangible assets |
|
|
1 |
|
|
|
2 |
|
|
|
3 |
|
|
|
7 |
|
Acquisition-related expenses (a) |
|
|
15 |
|
|
|
— |
|
|
|
24 |
|
|
|
— |
|
Stock-based compensation expense (b) |
|
|
8 |
|
|
|
8 |
|
|
|
14 |
|
|
|
14 |
|
Unrealized (gain) loss on marketable securities (c) |
|
|
(5 |
) |
|
|
3 |
|
|
|
(8 |
) |
|
|
10 |
|
UAW Local 933 contract signing incentives (d) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14 |
|
Pension plan settlement loss (e) |
|
|
— |
|
|
|
4 |
|
|
|
— |
|
|
|
4 |
|
Other (f) |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
313 |
|
|
$ |
301 |
|
|
$ |
609 |
|
|
$ |
590 |
|
Net sales (GAAP) |
|
$ |
814 |
|
|
$ |
816 |
|
|
$ |
1,580 |
|
|
$ |
1,605 |
|
Net income as a percent of Net sales (GAAP) |
|
|
24.0 |
% |
|
|
22.9 |
% |
|
|
24.5 |
% |
|
|
22.2 |
% |
Adjusted EBITDA as a percent of Net sales (Non-GAAP) |
|
|
38.5 |
% |
|
|
36.9 |
% |
|
|
38.5 |
% |
|
|
36.8 |
% |
Net cash provided by operating activities (GAAP) (g) |
|
$ |
184 |
|
|
$ |
171 |
|
|
$ |
365 |
|
|
$ |
344 |
|
Deductions to reconcile to Adjusted free cash flow: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Additions of long-lived assets |
|
|
(31 |
) |
|
|
(21 |
) |
|
|
(57 |
) |
|
|
(32 |
) |
Adjusted free cash flow (Non-GAAP) (g) |
|
$ |
153 |
|
|
$ |
150 |
|
|
$ |
308 |
|
|
$ |
312 |
|
30
Table of Contents
Results of Operations
Comparison of three months ended June 30, 2025 and 2024
The following table sets forth certain financial information for the three months ended June 30, 2025 and 2024. The following table and discussion should be read in conjunction with the information contained in our condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
|
|
Three Months Ended June 30, |
|
|||||||||||||
(unaudited, dollars in millions) |
|
2025 |
|
|
% |
|
|
2024 |
|
|
% |
|
||||
Net sales |
|
$ |
814 |
|
|
|
100 |
% |
|
$ |
816 |
|
|
|
100 |
% |
Cost of sales |
|
|
412 |
|
|
|
51 |
|
|
|
422 |
|
|
|
52 |
|
Gross profit |
|
|
402 |
|
|
|
49 |
|
|
|
394 |
|
|
|
48 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
102 |
|
|
|
13 |
|
|
|
82 |
|
|
|
10 |
|
Engineering — research and development |
|
|
44 |
|
|
|
5 |
|
|
|
49 |
|
|
|
6 |
|
Total operating expenses |
|
|
146 |
|
|
|
18 |
|
|
|
131 |
|
|
|
16 |
|
Operating income |
|
|
256 |
|
|
|
31 |
|
|
|
263 |
|
|
|
32 |
|
Interest expense, net |
|
|
(22 |
) |
|
|
(2 |
) |
|
|
(22 |
) |
|
|
(2 |
) |
Other income (expense), net |
|
|
8 |
|
|
|
1 |
|
|
|
(7 |
) |
|
|
(1 |
) |
Income before income taxes |
|
|
242 |
|
|
|
30 |
|
|
|
234 |
|
|
|
29 |
|
Income tax expense |
|
|
(47 |
) |
|
|
(6 |
) |
|
|
(47 |
) |
|
|
(6 |
) |
Net income |
|
$ |
195 |
|
|
|
24 |
% |
|
$ |
187 |
|
|
|
23 |
% |
Net sales
Net sales for the quarter ended June 30, 2025 were $814 million compared to $816 million for the quarter ended June 30, 2024.
The decrease was principally driven by:
These decreases were partially offset by:
Cost of sales
Cost of sales for the quarter ended June 30, 2025 was $412 million compared to $422 million for the quarter ended June 30, 2024, a decrease of 2%. The decrease was principally driven by lower direct material and
31
Table of Contents
manufacturing expense commensurate with decreased net sales and $5 million of lower incentive compensation expense, partially offset by unfavorable direct material costs.
Gross profit
Gross profit for the quarter ended June 30, 2025 was $402 million compared to $394 million for the quarter ended June 30, 2024, an increase of 2%. The increase was principally driven by $34 million from price increases on certain products, $5 million of lower manufacturing expense and $5 million of lower incentive compensation expense, partially offset by $25 million from decreased net sales and $11 million of unfavorable direct material costs. Gross profit as a percent of net sales for the three months ended June 30, 2025 increased 110 basis points compared to the same period in 2024, principally driven by price increases on certain products and decreased cost of sales.
Selling, general and administrative
Selling, general and administrative expenses for the quarter ended June 30, 2025 were $102 million compared to $82 million for the quarter ended June 30, 2024, an increase of 24%. The increase was principally driven by expenses related to the Acquisition and higher product warranty expense.
Engineering — research and development
Engineering expenses for the quarter ended June 30, 2025 were $44 million compared to $49 million for the quarter ended June 30, 2024, a decrease of 10%. The decrease was principally driven by reduced product initiatives spending.
Interest expense, net
Interest expense, net for each of the quarters ended June 30, 2025 and 2024 was $22 million.
Other income (expense), net
Other income (expense), net for the quarter ended June 30, 2025 was $8 million compared to ($7) million for the quarter ended June 30, 2024. The change was principally driven by an $8 million change in unrealized mark-to-market adjustments for marketable securities and a $4 million non-cash defined benefit pension plan settlement charge recognized in the second quarter of 2024 that did not reoccur in 2025.
Income tax expense
Income tax expense for the three months ended June 30, 2025 was $47 million, resulting in an effective tax rate of 19%, compared to $47 million of income tax expense and an effective tax rate of 20% for the three months ended June 30, 2024.
32
Table of Contents
Comparison of six months ended June 30, 2025 and 2024
The following table sets forth certain financial information for the six months ended June 30, 2025 and 2024. The following table and discussion should be read in conjunction with the information contained in our condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
|
|
Six Months Ended June 30, |
|
|||||||||||||
(unaudited, dollars in millions) |
|
2025 |
|
|
% |
|
|
2024 |
|
|
% |
|
||||
Net sales |
|
$ |
1,580 |
|
|
|
100 |
% |
|
$ |
1,605 |
|
|
|
100 |
% |
Cost of sales |
|
|
800 |
|
|
|
51 |
|
|
|
845 |
|
|
|
53 |
|
Gross profit |
|
|
780 |
|
|
|
49 |
|
|
|
760 |
|
|
|
47 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
188 |
|
|
|
12 |
|
|
|
168 |
|
|
|
10 |
|
Engineering — research and development |
|
|
87 |
|
|
|
5 |
|
|
|
95 |
|
|
|
6 |
|
Total operating expenses |
|
|
275 |
|
|
|
17 |
|
|
|
263 |
|
|
|
16 |
|
Operating income |
|
|
505 |
|
|
|
32 |
|
|
|
497 |
|
|
|
31 |
|
Interest expense, net |
|
|
(43 |
) |
|
|
(3 |
) |
|
|
(47 |
) |
|
|
(3 |
) |
Other income (expense), net |
|
|
13 |
|
|
|
1 |
|
|
|
(12 |
) |
|
|
(1 |
) |
Income before income taxes |
|
|
475 |
|
|
|
30 |
|
|
|
438 |
|
|
|
27 |
|
Income tax expense |
|
|
(88 |
) |
|
|
(6 |
) |
|
|
(82 |
) |
|
|
(5 |
) |
Net income |
|
$ |
387 |
|
|
|
24 |
% |
|
$ |
356 |
|
|
|
22 |
% |
Net sales
Net sales for the six months ended June 30, 2025 were $1,580 million compared to $1,605 million for the six months ended June 30, 2024, a decrease of 2%.
The decrease was principally driven by:
These decreases were partially offset by:
Cost of sales
Cost of sales for the six months ended June 30, 2025 was $800 million compared to $845 million for the six months ended June 30, 2024, a decrease of 5%. The decrease was principally driven by lower direct material and manufacturing expense commensurate with decreased net sales, $13 million of UAW Local 933 contract signing incentives recognized in the first quarter of 2024 that did not reoccur in 2025 and $9 million of lower incentive compensation expense, partially offset by unfavorable direct material costs.
33
Table of Contents
Gross profit
Gross profit for the six months ended June 30, 2025 was $780 million compared to $760 million for the six months ended June 30, 2024, an increase of 3%. The increase was principally driven by $73 million of price increases on certain products, $13 million of UAW Local 933 contract signing incentives recognized in the first quarter of 2024 that did not reoccur in 2025, $9 million of lower incentive compensation expense and $4 million of lower manufacturing expense, partially offset by $62 million from decreased net sales and $17 million of unfavorable direct material costs. Gross profit as a percent of net sales for the six months ended June 30, 2025 increased 200 basis points compared to the same period in 2024, principally driven by price increases on certain products and decreased cost of sales.
Selling, general and administrative
Selling, general and administrative expenses were $188 million for the six months ended June 30, 2025 compared to $168 million for the six months ended June 30, 2024, an increase of 12%. The increase was principally driven by expenses related to the Acquisition and higher product warranty expense, partially offset by lower incentive compensation expense and lower intangible amortization expense.
Engineering — research and development
Engineering expenses for the six months ended June 30, 2025 were $87 million compared to $95 million for the six months ended June 30, 2024, a decrease of 8%. The decrease was principally driven by reduced product initiatives spending.
Interest expense, net
Interest expense, net for the six months ended June 30, 2025 was $43 million compared to $47 million for the six months ended June 30, 2024, a decrease of 9%. The decrease was principally driven by lower interest expense on ATI's Term Loan due primarily to decreased variable interest rates.
Other income (expense), net
Other income (expense), net for the six months ended June 30, 2025 was $13 million compared to ($12) million for the six months ended June 30, 2024. The change was principally driven by an $18 million change in unrealized mark-to-market adjustments for marketable securities, $6 million of favorable foreign exchange and a $4 million non-cash defined benefit pension plan settlement charge recognized in the second quarter of 2024 that did not reoccur in 2025.
Income tax expense
Income tax expense for the six months ended June 30, 2025 was $88 million, resulting in an effective tax rate of 19%, compared to $82 million of income tax expense and an effective tax rate of 19% for the six months ended June 30, 2024. The increase in income tax expense was principally driven by higher taxable income.
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Liquidity and Capital Resources
We generate cash primarily from our operations to fund our operating, investing and financing activities. Our principal uses of cash are operating expenses, capital expenditures, working capital needs, debt service, dividends on common stock, stock repurchases and strategic growth initiatives, including investments, acquisitions and collaborations. Our ability to generate cash in the future and our future uses of cash are subject to general economic, financial, competitive, legislative, regulatory and other factors that may be beyond our control. We had total available cash and cash equivalents of $778 million and $781 million as of June 30, 2025 and December 31, 2024, respectively. Of the available cash and cash equivalents, $204 million was deposited in operating accounts and $574 million was invested primarily in U.S. government backed securities and time deposits as of June 30, 2025, compared to $117 million deposited in operating accounts and $664 million invested primarily in U.S. government backed securities as of December 31, 2024.
As of June 30, 2025, the total of cash held by foreign subsidiaries was $136 million, the majority of which was at our subsidiaries located in the Netherlands, China, Japan and India. We manage our worldwide cash requirements considering available funds among the subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed. As a result, we do not currently anticipate that local liquidity restrictions will preclude us from funding our targeted initiatives or operating needs with local resources.
We have not recognized any deferred tax liabilities associated with earnings in foreign subsidiaries, except for our subsidiary located in China, as they are intended to be permanently reinvested and used to support foreign operations or have no associated tax requirements. We have recorded a deferred tax liability of $3 million for the tax liability associated with the remittance of previously taxed income and unremitted earnings for our subsidiary located in China. The remaining deferred tax liabilities, if recorded, related to unremitted earnings that are indefinitely reinvested are not material.
Our liquidity requirements are significant, primarily due to our debt service requirements. As of June 30, 2025, we had $512 million of indebtedness associated with ATI’s Term Loan, $400 million of indebtedness associated with ATI’s 4.75% Senior Notes due October 2027 (“4.75% Senior Notes”), $500 million of indebtedness associated with ATI’s 5.875% Senior Notes due June 2029 (“5.875% Senior Notes”) and $1,000 million of indebtedness associated with ATI’s 3.75% Senior Notes due January 2031 (“3.75% Senior Notes” and, together with the 4.75% Senior Notes and 5.875% Senior Notes, the “Senior Notes”). Short-term and long-term debt service liquidity requirements consist of $1 million of minimum required quarterly principal payments on ATI’s Term Loan through its maturity date of March 2031 and periodic interest payments on ATI’s Term Loan and the Senior Notes. There are no required quarterly principal payments on the Senior Notes. Long-term debt service liquidity requirements also consist of the payment in full of any remaining principal balance of ATI’s Term Loan and the Senior Notes upon their respective maturity dates.
We made $2 million and $102 million of principal payments on the Term Loan during the six months ended June 30, 2025 and 2024, respectively. Our ability to make payments on and refinance our indebtedness and to fund planned capital expenditures and growth initiatives will depend on our ability to generate cash in the future.
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The Senior Secured Credit Facility provides for a $750 million Revolving Credit Facility, net of an allowance for up to $75 million in outstanding letter of credit commitments. As of June 30, 2025, we had $745 million available under the Revolving Credit Facility, net of $5 million in letters of credit. As of June 30, 2025, we had no amounts outstanding under the Revolving Credit Facility. If we have commitments outstanding on the Revolving Credit Facility at the end of a fiscal quarter, the Senior Secured Credit Facility requires us to maintain a specified maximum first lien net leverage ratio of 5.50x. Additionally, within the terms of the Senior Secured Credit Facility, a first lien net leverage ratio at or below 4.00x results in the elimination of excess cash flow payments on the Senior Secured Credit Facility for the applicable year. As of June 30, 2025, our first lien net leverage ratio was (0.22x). The Senior Secured Credit Facility also provides certain financial incentives based on our first lien net leverage ratio. A first lien net leverage ratio at or below 4.00x and above 3.50x results in a 25 basis point reduction to the applicable margin on the Revolving Credit Facility. A first lien net leverage ratio at or below 3.50x results in an additional 25 basis point reduction to the applicable margin on the Revolving Credit Facility. These reductions remain in effect as long as we achieve a first lien net leverage ratio at or below the related threshold.
In addition, the Credit Agreement includes, among other things, customary restrictions (subject to certain exceptions) on our ability to incur certain indebtedness, grant certain liens, make certain investments, engage in acquisitions, consolidations and mergers, declare or pay certain dividends, and repurchase shares of our common stock. The indentures governing the Senior Notes contain negative covenants restricting or limiting our ability to, among other things, incur or guarantee additional indebtedness, incur liens, pay dividends on, redeem or repurchase our capital stock, make certain investments, permit payment or dividend restrictions on certain of our subsidiaries, sell assets, engage in certain transactions with affiliates, and consolidate or merge or sell all or substantially all of our assets. As of June 30, 2025, we are in compliance with all covenants under the Senior Secured Credit Facility and indentures governing the Senior Notes.
In connection with the Acquisition, we entered into the Commitment Letter, which provides for up to $2,000 million of borrowing capacity under the Bridge Facility. The proceeds of the Bridge Facility may be used to finance a portion of the purchase price under the Purchase Agreement and to pay costs, fees and expenses in connection with the Bridge Facility and the transactions contemplated thereby. We expect to replace the Bridge Facility prior to the closing of the Acquisition with permanent financing, which may include the issuance of debt securities.
Our credit ratings and outlook are reviewed periodically by Moody’s Ratings (“Moody’s”) and Fitch Ratings, Inc. (“Fitch”). As of June 30, 2025, our credit ratings from both Moody's and Fitch are shown in the table below:
|
|
June 30, 2025 |
||
Credit Ratings |
|
Moody's |
|
Fitch |
Corporate Credit |
|
Ba1 |
|
BB+ |
Term Loan |
|
Baa2 |
|
BBB- |
4.75% Senior Notes |
|
Ba2 |
|
BB+ |
5.875% Senior Notes |
|
Ba2 |
|
BB+ |
3.75% Senior Notes |
|
Ba2 |
|
BB+ |
On February 20, 2025, our Board of Directors authorized us to repurchase an additional $1,000 million of our common stock pursuant to our stock repurchase program (the "Repurchase Program"), bringing the total amount authorized pursuant to the Repurchase Program to $5,000 million. During the six months ended June 30, 2025, we repurchased $256 million of our common stock under the Repurchase Program. Substantially all of the repurchase transactions during the six months ended June 30, 2025 were settled in cash during the same period. As of June 30, 2025, we had approximately $1,263 million available under the Repurchase Program.
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The following table shows our sources and uses of funds for the six months ended June 30, 2025 and 2024 (dollars in millions):
|
|
Six Months Ended |
|
|||||
Statements of Cash Flows Data |
|
2025 |
|
|
2024 |
|
||
Cash flows provided by operating activities |
|
$ |
365 |
|
|
$ |
344 |
|
Cash flows used for investing activities |
|
$ |
(59 |
) |
|
$ |
(32 |
) |
Cash flows used for financing activities |
|
$ |
(316 |
) |
|
$ |
(218 |
) |
Generally, cash provided by operating activities has been adequate to fund our operations. We have significant liquidity, including $778 million of cash and cash equivalents and $745 million available under the Revolving Credit Facility, net of $5 million of letters of credit as of June 30, 2025. In addition, we have $2,000 million available under the Bridge Facility, which may be used to finance a portion of the purchase price of the Acquisition and other related costs, fees and expenses. At this time, we believe cash provided by operating activities, cash and cash equivalents and borrowing capacity under the Revolving Credit Facility and Bridge Facility will be sufficient to meet our known and anticipated cash requirements for the next twelve months and thereafter.
Cash provided by operating activities
Operating activities for the six months ended June 30, 2025 generated $365 million of cash compared to $344 million for the six months ended June 30, 2024. The increase was principally driven by lower operating working capital funding requirements, UAW Local 933 contract signing incentives recognized in the first quarter of 2024 that did not reoccur in 2025, higher gross profit and lower cash income taxes, partially offset by payments for expenses related to the Acquisition and higher cash incentive compensation payments.
Cash used for investing activities
Investing activities for the six months ended June 30, 2025 used $59 million of cash compared to $32 million for the six months ended June 30, 2024. The increase was principally driven by a $25 million increase in capital expenditures.
Cash used for financing activities
Financing activities for the six months ended June 30, 2025 used $316 million of cash compared to $218 million for the six months ended June 30, 2024. The increase was principally driven by $172 million of higher stock repurchases under the Repurchase Program, $17 million of lower proceeds from the exercise of stock options and $6 million of higher taxes paid related to the net share settlement of equity awards, partially offset by $100 million of decreased payments on our long-term debt.
Contingencies
We are a party to various legal actions and administrative proceedings and subject to various claims arising in the ordinary course of business, including those relating to commercial transactions, product liability, personal injury and workers’ compensation, safety, health, taxes, environmental and other matters. For more information, see "Note P. Commitments and Contingencies” of our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
A discussion of our critical accounting estimates is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission on February 13, 2025. The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make
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estimates and assumptions that affect the reported amounts of some assets and liabilities and, in some instances, the reported amounts of revenues and expenses during the applicable reporting period. Actual results could differ materially from these estimates. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur. Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in different estimates being reported for the three and six months ended June 30, 2025.
Recently Issued Accounting Pronouncements
See "Note B. Summary of Significant Accounting Policies” in Part I, Item 1, of this Quarterly Report on Form 10-Q.
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Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Although forward-looking statements reflect management’s good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements speak only as of the date the statements are made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to: risks relating to the pending Acquisition, including: the Acquisition may not be completed in a timely manner or at all; we may experience delays, unanticipated costs or restrictions resulting from regulatory review of the Acquisition, including the risk that we may be unable to obtain governmental and regulatory approvals required for the Acquisition or that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the Acquisition; the financing intended to fund the Acquisition may not be obtained; uncertainties associated with the Acquisition may cause a loss of both companies’ management personnel and other key employees, and cause disruptions to both companies’ business relationships; the Purchase Agreement subjects the Company and Dana to restrictions on business activities prior to the effective time of the Acquisition; we are expected to incur significant costs in connection with the Acquisition and integration; litigation risks relating to the Acquisition; the off-highway business of Dana and its operations may not be integrated successfully in the expected time frame; the Acquisition may result in a loss of customers, vendors, and other business counterparties; the combined company may fail to realize all of the anticipated benefits of the Acquisition or fail to effectively manage its expanded operations; our participation in markets that are competitive; our ability to prepare for, respond to and successfully achieve our objectives relating to technological and market developments, competitive threats and changing customer needs, including with respect to electric hybrid and fully electric commercial vehicles; increases in cost, disruption of supply or shortage of labor, freight, raw materials, energy or components used to manufacture or transport our products or those of our customers or suppliers, including as a result of geopolitical risks, natural disasters, extreme weather events, wars and public health crises such as pandemics; global economic volatility; general economic and industry conditions, including the risk of prolonged inflation and recession; labor strikes, work stoppages or similar labor disputes, which could significantly disrupt our operations or those of our principal customers or suppliers; the highly cyclical industries in which certain of our end users operate; uncertainty in the global regulatory and business environments in which we operate; the concentration of our net sales in our top five customers and the loss of any one of these; cybersecurity risks to our operational systems, security systems or infrastructure owned by us or our third-party vendors and suppliers; the failure of markets outside North America to increase adoption of fully automatic transmissions; the success of our research and development efforts, the outcome of which is uncertain; U.S. and foreign defense spending; risks associated with our international operations, including acts of war and increased trade protectionism and tariffs; the discovery of defects in our products, resulting in delays in new model launches, recall campaigns and/or increased warranty costs and reduction in future sales or damage to our brand and reputation; our ability to identify, consummate and effectively integrate acquisitions and collaborations; and risks related to our indebtedness.
Important factors that could cause actual results to differ materially from our expectations are disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission on February 13, 2025 and Part II, Item 1A of this Quarterly Report on Form 10-Q. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from
39
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time to time in our other Securities and Exchange Commission filings or public communications. You should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q in the context of these risks and uncertainties.
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ITEM 3. |
Quantitative and Qualitative Disclosures About Market Risk |
Our exposure to market risk consists of changes in interest rates, foreign currency rate fluctuations and movements in commodity prices.
Interest Rate Risk
Our principal interest rate exposure relates to outstanding amounts under our Senior Secured Credit Facility. Our Senior Secured Credit Facility provides for variable rate borrowings of up to $1,257 million, including our $512 million Term Loan and $745 million available under our Revolving Credit Facility, net of $5 million of letters of credit. As of June 30, 2025, we held interest rate swap contracts that, in the aggregate, effectively hedge $500 million of the variable rate debt associated with the Term Loan at the forward-looking term rate based on the Secured Overnight Financing Rate weighted average fixed rate of 2.81% through September 2025. A one-eighth percent increase or decrease in assumed interest rates for the Senior Secured Credit Facility, if fully drawn as of June 30, 2025, would have an impact of approximately $1 million on interest expense per year. As of June 30, 2025, we had no amounts outstanding under the Revolving Credit Facility.
Exchange Rate Risk
While our net sales and costs are denominated primarily in U.S. Dollars, net sales, costs, assets and liabilities are generated in other currencies including Brazilian AG真人官方, British Pound, Canadian Dollar, Chinese Yuan Renminbi, Euro, Hungarian Forint, Indian Rupee and Japanese Yen. The expansion of our business outside North America may further increase the risk that cash flows resulting from these activities may be adversely affected by changes in currency exchange rates.
Assuming current levels of foreign currency transactions, a 10% aggregate increase or decrease in the Chinese Yuan Renminbi, Euro, Indian Rupee, and Japanese Yen would correspondingly change our earnings, net of tax, by an estimated $7 million per year. We believe our other direct exposure to foreign currencies is immaterial.
Commodity Price Risk
We are subject to changes in our cost of sales caused by movements in underlying commodity prices. As of June 30, 2025, approximately 66% of our cost of sales consisted of purchased components. A substantial portion of the purchased parts are made of aluminum and steel. The cost of aluminum parts includes an adjustment factor on future purchases for fluctuations in aluminum prices based on accepted industry indices. In addition, a substantial amount of steel-based contracts also includes an index-based component. As our costs change, we are able to pass through a portion of the changes in commodity prices to certain of our customers according to our LTAs. We historically have not entered into long-term purchase contracts related to the purchase of aluminum and steel.
Assuming current levels of commodity purchases, a 10% variation in the price of aluminum and steel would correspondingly change our earnings by approximately $8 million and $12 million per year, respectively.
Many of our LTAs have incorporated a cost-sharing arrangement related to potential future commodity price fluctuations. For purposes of the sensitivity analysis above, the impact of these cost sharing arrangements has not been included.
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Table of Contents
ITEM 4. |
Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer, who is our principal executive officer, and our Chief Financial Officer, who is our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION |
Item 1. Legal Proceedings
From time to time, we are a party to various legal actions in the normal course of our business, including those related to commercial transactions, product liability, personal injury and workers’ compensation, safety, health, taxes, environmental and other matters. Information pertaining to legal proceedings can be found in "Note P. Commitments and Contingencies” in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.
Item 1A. Risk Factors
Except as set forth below, there have been no material changes from our risk factors as previously reported in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission on February 13, 2025.
The following risk factors have been added:
Risks Related to our Pending Acquisition of Dana's Off-Highway Business (the "Acquisition")
The Acquisition may not be completed in a timely manner or at all, and the Purchase Agreement may be terminated in accordance with its terms.
The Acquisition is subject to certain customary closing conditions, including (a) the receipt of specified consents, clearances, authorizations and approvals from governmental entities, (b) the absence of any order, injunction, or other judgment or law that makes illegal or prohibits the closing of the Acquisition (the "Closing") and (c) subject to certain exceptions, the accuracy of the representations and warranties of, and compliance with covenants by, each of the parties to the Purchase Agreement. These conditions may not be satisfied or waived in a timely manner or at all, and, accordingly, the Acquisition may be delayed or may not be completed.
In addition, either we or Dana may terminate the Purchase Agreement based on the customary termination rights for each party included therein. In addition, we will be required to pay Dana a termination fee of $120 million if the termination is due to the failure of the transactions contemplated by the Purchase Agreement to be completed by a specified outside date as a result of failure to obtain required approvals or clearances under, or as a result of an injunction or order relating to, competition and foreign investment laws.
Failure to complete the Acquisition could negatively impact the price of shares of our common stock, as well as our business and results of operations.
If the Acquisition is not completed for any reason, our business and results of operations may be adversely affected and, without realizing any of the benefits of having completed the Acquisition, we would be subject to a number of risks, including:
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Any of the above could negatively impact our ongoing business and results of operations. In addition, if the Purchase Agreement is terminated under certain specified circumstances, we may be required to pay Dana a termination fee as discussed above.
We may fail to obtain financing intended to fund the Acquisition.
As previously disclosed, we expect to replace the Bridge Facility prior to the Closing with permanent financing, which may include the issuance of debt securities. Our ability to obtain any such new debt financing will depend on, among other factors, prevailing market conditions and other factors beyond our control. We cannot assure you that we will be able to obtain new debt financing on terms acceptable to us, and any such failure could materially adversely affect our business, results of operations and financial condition. The consummation of the Acquisition is not conditioned upon the receipt of any financing.
Uncertainties associated with the Acquisition may cause a loss of our and Dana’s management personnel and other key employees, which could adversely affect our business and operations.
We depend on the experience and industry knowledge of our officers and other key employees to execute our business plans. The success of the combined business and operations after the Closing will depend, in part, on our ability to retain key management personnel and other key employees. Our and Dana’s current and prospective employees may experience uncertainty about their roles within Allison following the Acquisition or other concerns regarding the timing and completion of the Acquisition or the operations of Allison following the Acquisition, any of which may have an adverse effect on our ability to retain or attract key management and other key personnel, which could materially adversely affect our business, results of operations and financial condition. No assurance can be given that, following the Acquisition, we will be able to retain or attract our and Dana’s key management personnel and other key employees to the same extent that we and Dana have previously been able to retain or attract personnel.
Our and Dana’s business relationships may be subject to disruption due to uncertainty associated with the Acquisition, which could have a material effect on our business, results of operations and financial condition following the Acquisition.
Parties with whom we or Dana do business may experience uncertainty associated with the Acquisition, including with respect to current or future business relationships with us or Dana following the Acquisition. Our and Dana’s business relationships may be subject to disruption as customers, suppliers, and other third parties with whom we or Dana do business may attempt to delay or defer entering into new business relationships with us or Dana, negotiate changes in their existing business relationships with us or Dana or consider entering into business relationships with parties other than us or Dana. These disruptions could have a material and adverse effect on our business, results of operations and financial condition, regardless of whether the Acquisition is completed, as well as a material and adverse effect on our ability to realize the expected opportunities, cost savings, operating synergies and other benefits of the Acquisition. The adverse impacts could be exacerbated by a delay in completion of the Acquisition or termination of the Purchase Agreement.
We expect to incur significant costs in connection with the Acquisition and integration of Dana's off-highway business (the "Business").
We have incurred and expect to continue to incur costs associated with completing the Acquisition and integrating the Business. These costs have been, and will continue to be, substantial and include, among others, fees paid to financial, legal and accounting advisors. Many of these costs will be borne by us even if the Acquisition is not completed.
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We will also incur costs related to formulating and implementing integration plans, including facilities, systems and service contract consolidation costs and employment‑related costs. We will continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in connection with the Acquisition and the integration of the Business. The costs described above, as well as other unanticipated costs and expenses, could adversely affect our business, results of operations and financial condition.
Litigation relating to the Acquisition, if any, could result in an injunction preventing the completion of the Acquisition and/or substantial costs to us.
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger or other business combination agreements like the Purchase Agreement. Even if such a lawsuit is without merit, defending against these claims can result in substantial costs and divert management time and resources. Any adverse judgment in such a lawsuit could result in monetary damages, which could have a negative impact on our results of operations and financial condition. Lawsuits that may be brought against us, Dana, or our or their directors could also seek, among other things, injunctive relief or other equitable relief, including a request to enjoin the parties from completing the Acquisition. One of the conditions to the closing of the Acquisition is the absence of any order, injunction, or other judgment or law that makes illegal or prohibits the Closing. Consequently, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Acquisition, that injunction may delay or prevent the Acquisition from being completed within the expected timeframe or at all.
The failure to integrate the Business and its operations with ours successfully in the expected time frame may adversely affect our results of operations and financial condition.
Following the completion of the Acquisition, the Business and its operations may not be integrated successfully with ours. It is possible that the integration process could result in the loss of our or Dana’s key employees, the loss of customers, suppliers, service providers or other business counterparties, the disruption of our ongoing businesses, inconsistencies in standards, controls, procedures and policies, potential unknown liabilities and unforeseen expenses, delays, or regulatory conditions associated with and following completion of the Acquisition, higher‑than‑expected integration costs and an overall post‑Closing integration process that takes longer than originally anticipated. In addition, the attention of our management team and our resources may be focused on the integration process, which may harm our day-to-day business operations or prevent us from pursuing other opportunities that may be beneficial.
We may fail to realize all of the anticipated benefits from the integration of the Business and its operations after the Acquisition.
The success of the Acquisition will depend, in part, on our ability to achieve the expected opportunities, cost savings, operating synergies and other benefits from integrating the Business. However, the anticipated benefits of the Acquisition may not be realized fully or at all, may take longer to realize than expected, or may result in other adverse effects that we do not currently foresee. In addition, the estimates and assumptions that we and Dana have made when evaluating the anticipated benefits from the Acquisition may not be accurate, and there could be potential unknown liabilities and unforeseen expenses associated with the Acquisition that could adversely impact us.
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Our future results following the Acquisition may suffer if we do not effectively manage our expanded operations.
Following the Acquisition, the size and complexity of our businesses and operations will increase significantly. Our future success will depend, in part, upon our ability to manage the expanded business. There can be no assurances that the combined businesses and operations will be successful or that we will realize the expected operating synergies, cost savings or other benefits currently anticipated from the Acquisition.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table sets forth information related to our repurchases of our common stock on a monthly basis during the three months ended June 30, 2025:
|
|
Total Number |
|
|
Average |
|
|
Total Number |
|
|
Approximate |
|
||||
April 1 – April 30, 2025 |
|
|
585,859 |
|
|
$ |
89.61 |
|
|
|
585,859 |
|
|
$ |
1,313,156,511 |
|
May 1 – May 31, 2025 |
|
|
297,720 |
|
|
$ |
100.76 |
|
|
|
297,720 |
|
|
$ |
1,283,159,528 |
|
June 1 – June 30, 2025 |
|
|
204,449 |
|
|
$ |
97.81 |
|
|
|
204,449 |
|
|
$ |
1,263,161,863 |
|
|
|
|
1,088,028 |
|
|
$ |
94.20 |
|
|
|
1,088,028 |
|
|
|
|
|
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Item 5. Other Information
Insider Trading Arrangements
The following table sets forth information related to the Company's directors and officers who adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) ("Rule 10b5-1 trading arrangement") or any “non-Rule 10b5-1 trading arrangement,” as such term is defined in Item 408(c) of Regulation S-K, during the three months ended June 30, 2025:
|
|
|
|
|
|
|
|
Trading Arrangement |
|
|
|
|
|
|||
Name |
|
Title |
|
Action |
|
Date |
|
Rule 10b5-1* |
|
Non-Rule 10b5-1** |
|
Total Shares to be Sold |
|
|
Expiration Date |
|
|
|
|
|
X |
|
|
|
|
|
|
||||||
* Intended to satisfy the affirmative defense of Rule 10b5-1(c)
** Not intended to satisfy the affirmative defense of Rule 10b5-1(c)
(a) This Rule 10b5-1 trading arrangement was originally
47
Table of Contents
Item 6. |
Exhibits |
(a) Exhibits
Exhibit Number |
Description |
|
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2.1*
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Stock Purchase Agreement, dated June 11, 2025, by and between Dana Incorporated and Allison Transmission Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed June 13, 2025) |
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3.1
|
Certificate of Amendment to Second Amended and Restated Certificate of Incorporation of Allison Transmission Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed May 9, 2025) |
|
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31.1 |
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
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31.2 |
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
|
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32.1 |
Certification of Periodic Report by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
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|
101.INS |
Inline XBRL Instance Document (filed herewith) |
|
|
101.SCH |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Document (filed herewith) |
|
|
104 |
Cover Page Interactive Data File – The cover page from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in Inline XBRL and contained in Exhibit 101 |
* Schedules and/or exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted schedules and/or exhibits to the Securities and Exchange Commission on a confidential basis upon request.
48
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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ALLISON TRANSMISSION HOLDINGS, INC. |
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Date: August 5, 2025 |
By: |
/s/ David S. Graziosi |
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|
Name: |
David S. Graziosi |
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|
|
Title: |
Chair, President and Chief Executive Officer (Principal Executive Officer) |
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|
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|
|
Date: August 5, 2025 |
By: |
/s/ Scott Mell |
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|
|
|
|
|
|
|
Name: |
Scott Mell |
|
|
|
Title: |
Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
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49
Source:
FAQ
Why did RENE/RENEW file this Form 8-K?
What is the new business-combination deadline for Cartesian Growth Corporation II?
How much money is being added to the trust account?
How many extensions remain under the Articles?
Does the filing mention any merger target or financial results?
