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Allison projects 50% drop in 1Q net income; offers 22M shares of common stock

The company said the quarter's results reflect considerably lower North American demand for equipment used in hydraulic fracturing, along with lower defense sales.

The Trucker News Services

4/15/2013

INDIANAPOLIS — Allison Transmission Holdings Inc. said Monday that it expects its first-quarter net income to fall by more than half, but that would still beat current Wall Street predictions.

The world's largest manufacturer of fully-automatic transmissions for medium- and heavy-duty commercial vehicles, medium- and heavy-tactical U.S. defense vehicles and hybrid-propulsion systems for transit buses, also announced a proposed secondary offering of 22 million shares of its common stock by investment funds affiliated with The Carlyle Group and Onex Corp.

A group led by BofA Merrill Lynch, Citigroup and J.P. Morgan will act as the underwriters in the proposed registered public offering of those shares. In addition, the underwriters will have an option to purchase up to 3,300,000 additional shares from the Sponsors. All of the shares are being sold on a pro rata basis by the Sponsors, which are existing stockholders of Allison Transmission Holdings Inc., in accordance with their current interests.

Following the offering, the Sponsors will continue to beneficially own an aggregate of approximately 128,697,499 shares, or approximately 70 percent in the aggregate, of Allison's outstanding common stock after giving effect to the offering (or approximately 125,397,499 shares, or approximately 68 percent in the aggregate if the underwriters fully exercise their option to purchase additional shares). The total number of outstanding shares of Allison's common stock will not change as a result of the offering.

For the quarter ended March 31, Allison projected net income of $27.5 million, down from $58 million in the year-ago period. Revenue is expected to total between $455 million and $460 million, compared with $601.9 million a year ago.

Analysts, on average, expect earnings of $21.2 million on $459.3 million in revenue, according to FactSet.

The company said the quarter's results reflect considerably lower North American demand for equipment used in hydraulic fracturing, along with lower defense sales.

Allison reaffirmed its full-year guidance of a sales decline of between 6 and 8 percent. Based on the company's 2012 results, the guidance implies 2013 revenue of between $1.97 billion and $2.01 billion. Analysts expect $1.99 billion.

The company said that for the full-year, it still expects low demand from the North Americas hydraulic fracturing market, reductions to U.S. defense spending, along with lower demand for North American hybrid-propulsion systems used in buses.

Allison shares fell $1.13, or 4.8 percent, to $22.66 in morning trading. Its shares peaked for the past year at $24.24 on Feb. 19. They traded as low as $15.82 last July.

The Trucker staff can be reached to comment on this article at editor@thetrucker.com.

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