Allison Transmission refinances debt, ends Q1 with $121 million cash

By Lisa Kerner

Charlotte, N.C., April 29 - Allison Transmission Holdings, Inc. first-quarter results were consistent with guidance, and the company demonstrated strong operating margins and cash flow despite challenging end-markets demand conditions, according to chairman, president and chief financial officer Lawrence E. Dewey.

Dewey made his comments on Monday during a conference call to discuss the company's first-quarter earnings.

"Maintaining our prudent approach to capital structure management, we refinanced the remaining balance of our senior secured credit facility term B-1 loan due in 2014, reduced the applicable borrowing margin of our senior secured credit facility term B-2 loan due in 2017, extended the maturity of our $400 million revolving credit facility to 2016 and paid a quarterly dividend to our shareholders," Dewey said of the company's quarterly activity.

Also, on April 15, Allison's board of directors approved an increase in its quarterly dividend, "doubling it from six cents to $0.12 per share," Dewey said.

"Allison ended the quarter with $121 million of cash, $375 million of revolver availability after letters of credit and net leverage of 4.33," said executive vice president and chief financial officer David Graziosi on the call.

For the first quarter, Allison's net sales were down 24% at $457 million, gross margin was down 380 basis points at 43.4%, adjusted net income declined 44.8% to $80 million, and adjusted free cash flow was down almost 60% at $48 million compared to the prior-year period, according to the earnings presentation.

The Indianapolis-based automatic transmission company attributed the decrease in net sales to considerably lower demand in the North America energy sector's hydraulic fracturing market due to weakness in natural gas pricing, previously considered reductions in U.S. defense spending and weaker global On-Highway end markets.

Allison affirmed its full-year 2013 guidance released on Feb. 19 that includes a net sales decline in the range of 6% to 8% and adjusted free cash flow in the range of $325 million to $375 million.

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