Allison Transmission Holdings Inc (ALSN) 2023 Q2 法說會逐字稿

Good afternoon, and thank you for standing by. Welcome to Allison Transmission's Second Quarter 2023 Earnings Conference Call. My name is Daryl, and I will be your conference call operator today. (Operator Instructions) After prepared remarks, Allison Transmission's executive will conduct a question-and-answer session and conference call participants will be given instructions at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference call over to Jackie Bolles, Executive Director of Treasury and Investor Relations. Please go ahead, Jackie.

下午好，感謝您的耐心等待。歡迎參加艾里遜變速箱 2023 年第二季度收益電話會議。我叫達里爾，今天我將擔任您的電話會議接線員。 （操作員指示）準備好的發言後，艾里遜變速箱的高管將進行問答會議，屆時將向電話會議參與者發出指示。謹此提醒，本次電話會議正在錄音中。我現在想將電話會議轉交給財務和投資者關係執行董事 Jackie Bolles。請繼續，傑基。

Thank you, Daryl. Good afternoon, and thank you for joining us for our second quarter 2023 earnings conference call. With me this afternoon are Dave Graziosi, our Chairman and Chief Executive Officer; and Fred Bohley, our Senior Vice President, Chief Financial Officer and Treasurer.

謝謝你，達里爾。下午好，感謝您參加我們的 2023 年第二季度收益電話會議。今天下午與我在一起的有我們的董事長兼首席執行官戴夫·格拉齊奧西 (Dave Graziosi)；以及我們的高級副總裁、首席財務官兼財務主管 Fred Bohley。

As a reminder, this conference call, webcast and this afternoon's presentation are available on the Investor Relations section of allisontransmission.com. A replay of this call will be available through August 10. As noted on Slide 2 of the presentation, many of our remarks today contain forward-looking statements based on current expectations.

請注意，本次電話會議、網絡廣播和今天下午的演示可在 allisontransmission.com 的投資者關係部分查看。本次電話會議的重播將持續到 8 月 10 日。正如演示文稿幻燈片 2 中所述，我們今天的許多言論都包含基於當前預期的前瞻性陳述。

These forward-looking statements are subject to known and unknown risks, including those set forth in our second quarter 2023 earnings press release and our annual report on Form 10-K for the year ended December 31, 2022, as well as other general economic factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those that we express today.

這些前瞻性陳述受到已知和未知風險的影響，包括我們的 2023 年第二季度收益新聞稿和截至 2022 年 12 月 31 日的 10-K 表格年度報告中所述的風險，以及其他一般經濟因素。如果這些風險或不確定性中的一項或多項成為現實，或者基本假設或估計被證明不正確，則實際結果可能與我們今天所表達的結果存在重大差異。

In addition, as noted on Slide 3 of the presentation, some of our remarks today contain non-GAAP financial measures as defined by the SEC. You can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures attached as an appendix to the presentation and to our second quarter 2023 earnings press release.

此外，正如演示文稿幻燈片 3 中所指出的，我們今天的一些言論包含 SEC 定義的非 GAAP 財務指標。您可以在演示文稿和 2023 年第二季度收益新聞稿的附錄中找到非 GAAP 財務指標與最具可比性 GAAP 指標的調節表。

Today's call is set to end at 5:45 p.m. Eastern Time. In order to maximize participation opportunities on the call, we'll take just one question from each analyst. Please turn to Slide 4 of the presentation for the call agenda.

今天的電話會議定於下午 5:45 結束。東部時間。為了最大限度地增加電話會議的參與機會，我們將只回答每位分析師的一個問題。請參閱演示文稿的幻燈片 4 以了解電話會議議程。

During today's call, Dave Graziosi will review highlights from our second quarter 2023 results and provide an operational update. Fred Bohley will then review our second quarter financial performance and review updates to our full year 2023 guidance prior to commencing the Q&A. Now I'll turn the call over to Dave Graziosi.

在今天的電話會議中，Dave Graziosi 將回顧我們 2023 年第二季度業績的要點並提供運營更新。 Fred Bohley 隨後將回顧我們第二季度的財務業績，並在開始問答之前回顧我們 2023 年全年指引的更新。現在我將把電話轉給戴夫·格拉齊奧西。

Thank you, Jackie. Good afternoon, and thank you for joining us. Our second quarter results continued the trend from the first quarter to prove 2023 to be an exciting year for the business as Allison remains positioned for success with growth opportunities and strong demand across our largest end markets. Net sales increased 18% year-over-year to a quarterly record of $783 million, leading to all-time high first half revenue of over $1.5 billion.

謝謝你，傑基。下午好，感謝您加入我們。我們第二季度的業績延續了第一季度的趨勢，證明 2023 年對於業務來說是令人興奮的一年，因為艾里遜憑藉增長機會和最大終端市場的強勁需求，繼續取得成功。淨銷售額同比增長 18%，達到 7.83 億美元的季度記錄，上半年營收超過 15 億美元，創歷史新高。

Given these results and the current end market conditions, we are pleased to raise our full year 2023 guidance with a revenue expectation of $3 billion at the midpoint. Although our operating environment remains challenged, Allison continues to realize year-over-year price, while working to mitigate the cost pressures in our business. During the second quarter, we increased our gross margin 190 basis points year-over-year, along with EPS growth of 52% year-over-year to $1.92.

鑑於這些結果和當前的終端市場狀況，我們很高興上調 2023 年全年指引，收入預期中值為 30 億美元。儘管我們的運營環境仍然面臨挑戰，艾里遜繼續實現同比價格，同時努力減輕我們業務的成本壓力。第二季度，我們的毛利率同比增長 190 個基點，每股收益同比增長 52% 至 1.92 美元。

Allison's strong operating performance allows us to fund and invest in our business for long-term growth while maintaining our capital allocation priorities and returning capital to shareholders through our quarterly dividend and share repurchase program. During the second quarter, we paid a dividend of $0.23 per share and repurchased over 2% of our shares outstanding.

艾里森強勁的經營業績使我們能夠為業務的長期增長提供資金和投資，同時保持我們的資本配置優先事項，並通過季度股息和股票回購計劃向股東返還資本。第二季度，我們支付了每股 0.23 美元的股息，並回購了超過 2% 的已發行股票。

On our last earnings conference call, we outlined opportunities within our defense end market, which we expect to lead to $100 million of incremental annual revenue in the coming years. Global defense budgets continue to rise. Allison is poised to capture growth in this cycle through our longstanding partnership with the United States Department of Defense while diversifying our revenue sources by increasing our international sales.

在我們上次的財報電話會議上，我們概述了國防終端市場的機遇，我們預計這將在未來幾年帶來 1 億美元的年收入增量。全球國防預算繼續增加。艾里森準備通過與美國國防部的長期合作夥伴關係來抓住這一周期的增長，同時通過增加國際銷售來實現收入來源多元化。

We expect an increase in international sales due to continued demand for our current products, particularly the X1100 cross-drive transmission as over 400 Abrams main battle tanks are expected to be delivered overseas by the U.S. Department of Defense in the next three years.

我們預計，由於對我們當前產品的持續需求，特別是X1100 交叉驅動變速箱，我們預計國際銷售額將會增加，因為美國國防部預計將在未來三年內向海外交付超過400 輛艾布拉姆斯主戰坦克。

Allison also expects to realize growth internationally through our relationships with global defense OEMs. Late this summer, Allison will deliver the first X1100 transmission to Turkey for their Firtina self-propelled howitzer program. Further international growth is anticipated from South Korea's Hanwha Aerospace with sales of their K9 Thunder self-propelled howitzer also equipped with an X1100 variant to countries such as Egypt, Australia, Norway and Poland.

艾里森還希望通過我們與全球國防原始設備製造商的關係實現國際增長。今年夏末，艾里森將向土耳其交付第一台 X1100 變速箱，用於其 Firtina 自行榴彈砲項目。韓國韓華航空航天公司預計將進一步實現國際增長，其 K9 Thunder 自行榴彈砲也配備了 X1100 變型，銷往埃及、澳大利亞、挪威和波蘭等國家。

Additionally, development of new products, such as our 3040 MX medium-weight cross-drive transmission will drive international growth in the near future as the demand for medium-weight armored combat vehicles increases with shifts in geopolitical dynamics. As we have previously mentioned, the 3040 MX has already been selected for India's future infantry combat vehicle as well as Poland's Borsuk infantry fighting vehicle with further opportunities in other European inventory fighting vehicle programs.

此外，隨著地緣政治動態的變化，對中型裝甲戰車的需求不斷增加，我們的 3040 MX 中型交叉驅動變速箱等新產品的開發將在不久的將來推動國際增長。正如我們之前提到的，3040 MX 已被選用於印度未來的步兵戰車以及波蘭的 Borsuk 步兵戰車，並且在其他歐洲庫存戰車項目中還有更多機會。

Domestically, Allison is involved in several programs with the U.S. Department of Defense, including platforms such as the U.S. Army's Mobile Protected Firepower or MPF and the M88A3 armored recovery vehicle. During the quarter, the MPF was renamed the M10 Booker light tank with the U.S. Army funding a second production contract for the program. Allison will supply our 3040 MX as the propulsion solution of choice for the program.

在國內，艾里森參與了美國國防部的多個項目，包括美國陸軍移動防護火力（MPF）和 M88A3 裝甲救援車等平台。本季度，MPF 更名為 M10 布克輕型坦克，美國陸軍為該項目的第二份生產合同提供了資金。艾里遜將提供我們的 3040 MX 作為該計劃的首選推進解決方案。

For the M88A3 equipped with our X1100-5B, Allison has worked closely with the U.S. Army and is expecting government testing to begin on the program late this year. In addition to the $100 million of incremental annual revenue opportunity in the medium term, with our new eGen Force electric hybrid propulsion system for tracked combat vehicles, we are looking forward to even longer-term growth opportunities in our defense end market as modernization programs become a priority.

對於配備 X1100-5B 的 M88A3，艾里森與美國陸軍密切合作，預計政府測試將於今年年底開始。除了中期增加1 億美元的年收入機會外，通過我們用於履帶式戰車的新型eGen Force 電動混合動力推進系統，隨著現代化計劃的實施，我們還期待在我們的國防終端市場獲得更長期的增長機會。優先權。

As we have previously mentioned, the Allison eGen Force was selected by American Rheinmetall as the propulsion system for their optionally manned fighting vehicle or OMFV program offering. In late June, the U.S. Army redesignated the OMFV program the XM30 mechanized inventory combat vehicle and down-selected from 5 OEMs to 2. We are pleased that American Rheinmetall was selected to continue into the detailed design and prototype build and testing phases and look forward to future announcements as the U.S. Army plans to start testing in 2026 with estimated start of production in 2029 for the XM30.

正如我們之前提到的，美國萊茵金屬公司選擇艾里遜 eGen Force 作為其可選載人戰車或 OMFV 項目產品的推進系統。 6 月下旬，美國陸軍將OMFV 計劃重新指定為XM30 機械化庫存戰車，並將選擇的原始設備製造商從5 家減少到2 家。我們很高興美國萊茵金屬公司被選中繼續進入詳細設計、原型製造和測試階段，並期待未來美國陸軍計劃於 2026 年開始測試，預計 XM30 將於 2029 年開始生產。

Allison remains committed to investing and pursuing growth in our defense end market, leveraging our asset-light business model and long-standing relationship with defense OEMs as a competitive advantage. We are enthusiastic for the upcoming programs and opportunities from the U.S. Department of Defense as well as international OEMs and end users in both wheeled and tracked applications. Our team is focused and aligned to realize $100 million of incremental annual revenue in the coming years, and we look forward to providing updates in the near future.

艾里森仍然致力於投資並追求國防終端市場的增長，利用我們的輕資產業務模式以及與國防原始設備製造商的長期關係作為競爭優勢。我們對美國國防部以及國際原始設備製造商和最終用戶在輪式和履帶式應用方面即將推出的計劃和機會充滿熱情。我們的團隊致力於在未來幾年實現 1 億美元的年增量收入，我們期待在不久的將來提供更新。

Moving on, I would like to highlight a few other announcements Allison made during the second quarter. In June, we released our 2022 environmental, social and governance report. Allison and its peers are navigating an evolving commercial vehicle industry in preparation for upcoming changes to emission standards. One of the ways we are driving the next generation of propulsion solutions is through our eGen family of fully electric and electric hybrid propulsion solutions.

接下來，我想重點介紹艾里森在第二季度發布的其他一些公告。 6 月，我們發布了 2022 年環境、社會和治理報告。艾里遜及其同行正在不斷發展的商用車行業中，為即將到來的排放標準變化做好準備。我們推動下一代推進解決方案的方式之一是通過我們的 eGen 全電動和電動混合推進解決方案系列。

In previous quarters, we have announced numerous awards and partnerships with transit authorities across the United States that will utilize the eGen Flex zero-emission capable electric hybrid system. We recently announced that the Indianapolis Public Transportation Corporation, or IndyGo, is applying its recent grant from the Federal Transit Administration towards expanding its fleet of Allison eGen Flex equipped buses. This partnership is representative of our efforts to expand the market share of the eGen Flex with transit agencies across the country advancing clean transportation and enabling a greener future with fewer emissions.

在前幾個季度，我們宣布了與美國各地運輸當局的眾多獎項和合作夥伴關係，這些機構將利用 eGen Flex 零排放電動混合動力系統。我們最近宣布，印第安納波利斯公共交通公司 (IndyGo) 正在利用聯邦運輸管理局最近提供的撥款來擴大其配備艾里遜 eGen Flex 的公交車隊。此次合作代表了我們與全國各地的交通機構共同擴大 eGen Flex 市場份額的努力，推進清潔交通並以更少的排放打造更綠色的未來。

Also during the quarter, we announced that our new hydraulic fracturing transmission, the FracTran, has been released in China. The FracTran represents an opportunity of $100 million of incremental annual revenue in our global off-highway end market. Expansion into energy markets in China signifies the strong demand we are experiencing outside of North America and reiterates our efforts in designing a clean sheet transmission specific to the needs of service operators and producers.

同樣在本季度，我們宣布我們的新型水力壓裂傳動裝置 FracTran 已在中國發布。 FracTran 為我們的全球非公路終端市場提供了每年 1 億美元增量收入的機會。向中國能源市場的擴張標誌著我們在北美以外地區遇到的強勁需求，並重申了我們在設計專門針對服務運營商和生產商需求的清潔傳輸方面所做的努力。

In conclusion, Allison's second quarter results illustrate the current success of our business and operating performance as well as our future opportunities for growth. We remain diligent in our investments in order to achieve our growth initiatives while returning capital to shareholders and delivering on our brand promise to improve the way the world works. Thank you, and I'll now turn the call over to Fred.

總之，艾里遜第二季度業績說明了我們當前業務和經營業績的成功以及我們未來的增長機會。我們仍然勤奮投資，以實現我們的增長計劃，同時向股東返還資本，並兌現我們改善世界運轉方式的品牌承諾。謝謝您，我現在將把電話轉給弗雷德。

Thank you, Dave. Following Dave's second quarter 2023 comments, I'll discuss the Q2 2023 performance summary, key income statement line items and cash flow. I'll then provide updates to the full year 2023 guidance. Please turn to Slide 5 of the presentation for the Q2 2023 performance summary.

謝謝你，戴夫。在 Dave 發表 2023 年第二季度評論之後，我將討論 2023 年第二季度業績摘要、關鍵損益表項目和現金流。然後我將提供 2023 年全年指導的更新。請參閱演示文稿的幻燈片 5，了解 2023 年第二季度的業績摘要。

Second quarter net sales increased 18% from the same period in 2022 to a record of $783 million. The increase in year-over-year results was led by a $57 million increase in net sales in the North American On-Highway end market, principally driven by strength in customer demand for medium-duty and Class 8 vocational trucks and price increases on certain products.

第二季度淨銷售額較 2022 年同期增長 18%，達到創紀錄的 7.83 億美元。業績同比增長的主要原因是北美公路終端市場的淨銷售額增長了 5700 萬美元，這主要是由於客戶對中型和 8 級職業卡車的需求強勁以及某些產品的價格上漲所致。產品。

A $43 million increase in the service parts, support equipment and other end market, principally driven by higher demand for global service parts and support equipment and price increases. Year-over-year results were also improved by an $18 million increase in net sales in the outside North America On-Highway end market, principally driven by strength in customer demand in Europe and Asia, the continued execution of our growth initiatives and price increases.

服務零件、支持設備和其他終端市場增長了 4300 萬美元，主要是由於全球服務零件和支持設備的需求增加以及價格上漲。北美以外公路終端市場的淨銷售額增加了 1800 萬美元，同比業績也有所改善，這主要是由於歐洲和亞洲客戶需求的強勁、我們增長計劃的持續執行以及價格上漲所致。

Gross profit for the quarter was $381 million, a 23% increase from the $311 million for the same period in 2022. The increase was principally driven by price increases on certain products and increased net sales, partially offset by higher manufacturing expense. Net income for the quarter was $175 million compared to $122 million for the same period in 2022. The increase was principally driven by higher gross profit, partially offset by increased selling, general and administrative expense.

該季度毛利潤為 3.81 億美元，比 2022 年同期的 3.11 億美元增長 23%。這一增長主要是由某些產品價格上漲和淨銷售額增加推動的，但部分被製造費用增加所抵消。本季度淨利潤為 1.75 億美元，而 2022 年同期為 1.22 億美元。這一增長主要是由毛利潤增加推動的，但部分被銷售、一般和管理費用的增加所抵消。

Adjusted EBITDA for the quarter was $288 million compared to $227 million for the same period in 2022. The increase was principally driven by higher gross profit, partially offset by increased selling, general and administrative expenses. Diluted earnings per share increased 52% from the same period in 2022. Second quarter EPS of $1.92 was driven by higher net income and lower total shares outstanding. A detailed overview of our net sales by end market can be found on Slide 6 of the presentation.

本季度調整後 EBITDA 為 2.88 億美元，而 2022 年同期為 2.27 億美元。這一增長主要是由毛利潤增加推動的，但部分被銷售、一般和管理費用的增加所抵消。稀釋後每股收益較 2022 年同期增長 52%。第二季度每股收益為 1.92 美元，原因是淨利潤增加和流通股總數減少。我們按終端市場劃分的淨銷售額的詳細概述可以在演示文稿的幻燈片 6 中找到。

Please turn to Slide 7 of the presentation for the Q2 2023 financial performance summary. Selling, general and administrative expenses increased $14 million from the same period in 2022, principally driven by increased commercial activity spending, incentive compensation expense and product warranty expense. Engineering research and development expenses for the quarter were essentially flat with the same period in 2022.

請參閱演示文稿的幻燈片 7，了解 2023 年第二季度的財務業績摘要。銷售、一般和管理費用較 2022 年同期增加 1,400 萬美元，主要是由於商業活動支出、激勵補償費用和產品保修費用增加。該季度工程研發費用與2022年同期基本持平。

Please turn to Slide 8 of the presentation for the Q2 2023 cash flow performance summary. Adjusted free cash flow for the quarter was $122 million compared to $34 million for the same period in 2022. The increase was principally driven by higher gross profit, lower operating working capital requirements, and lower capital expenditures, partially offset by higher cash income taxes. During the second quarter, we returned capital to shareholders through our quarterly dividend of $0.23 per share and repurchasing $97 million of our common stock. For the quarter, this represented over 2% of our outstanding shares with nearly 61% of our outstanding shares repurchased since Allison's IPO in 2012.

請參閱演示文稿的幻燈片 8，了解 2023 年第二季度現金流表現摘要。本季度調整後的自由現金流為 1.22 億美元，而 2022 年同期為 3400 萬美元。這一增長主要是由於毛利潤增加、運營營運資本要求降低以及資本支出減少，部分被現金所得稅增加所抵消。第二季度，我們通過每股 0.23 美元的季度股息和回購 9700 萬美元的普通股向股東返還資本。本季度，這占我們流通股的 2% 以上，自 2012 年艾里遜 IPO 以來，我們回購了近 61% 的流通股。

We ended the quarter with a net leverage ratio of 2.1x, $351 million of cash and $645 million of available revolving credit facility commitments. In addition, we continue to maintain a flexible, long-dated and covenant-light debt structure with the earliest maturity due in 2026. Of our $2.5 billion of outstanding debt, $622 million is subject to variable interest rates, of which $500 million is hedged, resulting in 95% of our debt being fixed through the third quarter of 2025.

本季度結束時，我們的淨槓桿率為 2.1 倍，現金為 3.51 億美元，可用循環信貸額度承諾為 6.45 億美元。此外，我們繼續保持靈活、長期和輕契約的債務結構，最早到期日為 2026 年。在我們 25 億美元的未償債務中，6.22 億美元採用可變利率，其中 5 億美元進行對沖，導致我們95% 的債務在2025 年第三季度得到修復。

Please turn to Slide 9 of the presentation for the update to our 2023 guidance. Given first half of 2023 results and current end market conditions, we are raising our full year 2023 guidance for net sales, earnings and cash flow. Allison expects net sales to be in the range of $2.96 billion to $3.04 billion. At the midpoint, this represents over 8% year-over-year growth based on the continued strength in demand in our end markets, price increases on certain products and the continued execution of our growth initiatives leading to another anticipated record net sales year. In addition to Allison's 2023 net sales guidance, we anticipate net income in the range of $575 million to $625 million, adjusted EBITDA in the range of $1.05 billion to $1.11 billion, net cash provided by operating activities in the range of $675 million to $725 million, capital expenditures in the range of $125 million to $135 million, and adjusted free cash flow in the range of $550 million to $590 million.

請參閱演示文稿的幻燈片 9，了解我們 2023 年指南的更新。鑑於 2023 年上半年的業績和當前的終端市場狀況，我們上調了 2023 年全年淨銷售額、盈利和現金流的指引。艾里森預計淨銷售額將在 29.6 億美元至 30.4 億美元之間。中點來看，這代表了超過8% 的同比增長，這是基於我們終端市場需求的持續強勁、某些產品的價格上漲以及我們的增長計劃的持續執行，導致另一個預期的淨銷售年度創紀錄。除了艾里遜2023 年淨銷售額指引外，我們預計淨利潤將在5.75 億美元至6.25 億美元之間，調整後EBITDA 將在10.5 億美元至11.1 億美元之間，經營活動提供的淨現金將在6.75 億美元至7.25 億美元之間，資本支出在 1.25 億美元至 1.35 億美元之間，調整後的自由現金流在 5.5 億美元至 5.9 億美元之間。

This concludes our prepared remarks. Daryl, please open the call for questions.

我們準備好的發言到此結束。達里爾，請打開電話提問。

(Operator Instructions) Our first questions come from the line of Rob Wertheimer with Melius Research.

（操作員說明）我們的第一個問題來自 Melius Research 的 Rob Wertheimer。

So that was a litany of good news. And unfortunately, when I ask you about potentially good news, it's not even in your list. Regulators in Europe have moved to make hydrogen combustion an acceptable sort of zero-emission emission strategy. And I think the U.S. is maybe moving in that direction, too. I assume that's positive because I assume a hydrogen combustion say medium-duty truck would use the same transmissions as not. I wonder if you can just comment generally on if you see hydrogen combustion as making progress in the regulatory world. And if it's neutral or negative or positive or (inaudible) emissions in trucks versus diesel operations.

這是一連串的好消息。不幸的是，當我向你詢問潛在的好消息時，它甚至不在你的清單中。歐洲監管機構已採取行動，使氫燃燒成為一種可接受的零排放戰略。我認為美國可能也在朝這個方向前進。我認為這是積極的，因為我假設氫燃燒的中型卡車將使用與不燃燒相同的變速器。我想知道您是否可以籠統地評論一下您是否認為氫燃燒在監管領域取得了進展。與柴油機相比，卡車排放是否為中性、負值、正值或（聽不見）排放。

Rob, good afternoon. Dave. Thank you for the question. I'd say the short answer there is we believe it's a positive. We certainly hear many of the things that you and others are hearing about hydrogen. I think it's been long a subject of discussion just given the existing investments in conventional assets that can be deployed, as you well know, for hydrogen in many ways. So I think from an overall industry perspective, as well as -- frankly, I think the -- a number of different alternatives being available, it's one of many as you know.

羅布，下午好。戴夫.感謝你的提問。我想說的簡短回答是我們相信這是積極的。我們當然聽到了您和其他人聽到的有關氫的許多事情。我認為，鑑於傳統資產的現有投資，如您所知，可以通過多種方式部署到氫能源，這長期以來一直是討論的主題。因此，我認為從整個行業的角度來看，以及 - 坦率地說，我認為 - 有許多不同的替代方案可供選擇，這是您所知道的眾多替代方案之一。

We're certainly a supporter of an all-of-the-above strategy. I think the development in Europe, my guess is or our guess is, you'll see more of that elsewhere, to your question, because as you can tell, given the number of developments around emissions in the U.S., there continues to be a fair number of constraints that everybody is trying to work through. As you know, with our strategy, really getting the right solutions at the right time, time appears to be getting stretched out a bit just given the realities of a number of the constraints, whether they be infrastructure, the maturity of technology, et cetera. So we're certainly staying close to those particular topics and look forward to further developments on the regulatory side.

我們當然是上述所有戰略的支持者。我認為歐洲的發展，我的猜測是，或者我們的猜測是，對於你的問題，你會在其他地方看到更多這樣的情況，因為正如你所知，考慮到美國在排放方面的進展，仍然存在每個人都在努力克服許多限制。如您所知，根據我們的戰略，真正在正確的時間獲得正確的解決方案，考慮到許多限制的現實，無論是基礎設施、技術的成熟度等等，時間似乎有點被拉長了。 。因此，我們當然會密切關注這些特定主題，並期待監管方面的進一步發展。

Rob, this is Fred. Just a little quick follow-up on that. I know that, from your question, you're aware of it, just for the broader audience, the hydrogen combustion engine will use a conventional transmission. So back to your question, certainly, that's the path that's broadly adopted. You'll be able to use, obviously, assets of an internal combustion engine, but also conventional transmissions. So certainly, that's obviously favorable for us.

羅布，這是弗雷德。只是對此進行一點快速跟進。我知道，從你的問題中，你已經意識到，只是對於更廣泛的受眾來說，氫燃燒發動機將使用傳統的變速箱。回到你的問題，當然，這是廣泛採用的道路。顯然，您將能夠使用內燃機的資產，但也可以使用傳統的變速器。當然，這顯然對我們有利。

Perfect. You said one question, so I'll stop there and get back in the line. Thank you.

完美的。你說了一個問題，那麼我就停下來，回到隊列中。謝謝。

Our next questions come from the line of Ian Zaffino with Oppenheimer.

我們的下一個問題來自伊恩·扎菲諾（Ian Zaffino）和奧本海默（Oppenheimer）的對話。

Question would be, I guess, on all the defense success. Maybe help us understand what's differentiating yourselves, where you're winning all this business?

我想，問題在於所有防守的成功。也許可以幫助我們了解你們的與眾不同之處以及你們贏得所有業務的原因？

Ian, good afternoon, it's Dave. I guess in terms of success, you start out with (technical difficulty) the advantage of our technology when you think about fully automatic solutions as they've evolved over the years. On the wheel side, we certainly have a very significant position with the U.S. military with fully automatic transmissions for their wheeled fleet. On the tactical side, I think as you continue to think about the issues on the commercial side with labor and the challenges of frankly, manual transmissions, the training, the wear and tear, the fully automatic product, as you all know, has a significant amount of advantages over availability, uptime and performance.

伊恩，下午好，我是戴夫。我想就成功而言，當您考慮多年來不斷發展的全自動解決方案時，您首先會想到（技術難度）我們技術的優勢。在輪式方面，我們在美國軍方中無疑擁有非常重要的地位，為他們的輪式車隊提供全自動變速箱。在戰術方面，我認為，當您繼續思考商業方面的勞動力問題和坦率地說，手動變速箱、培訓、磨損、全自動產品的挑戰時，眾所周知，全自動產品具有與可用性、正常運行時間和性能相比具有顯著的優勢。

So the same could be said on the track side in terms of the developments. Our technology in the Abrams is a 40-plus year platform at this point, many advances over time, but the differentiation there beyond the capability to deliver a highly reliable solution does come down to as well incumbency and the installed base there when you think about what's been accumulated from an experience standpoint. And also the assets that are deployed for those particular cross-drive solutions, it can be a very capital-intensive process and one that requires a fairly high level of technical skill, both on the engineering side as well as manufacturing.

因此，在賽道方面的發展也是如此。我們在“艾布拉姆斯”上的技術目前已經是一個已有40 多年曆史的平台，隨著時間的推移取得了許多進步，但除了提供高度可靠的解決方案的能力之外，其差異化確實取決於現有技術和安裝基礎。從經驗的角度來看，積累了什麼。還有為這些特定的跨驅動解決方案部署的資產，它可能是一個資本密集型的​​過程，並且需要相當高水平的技術技能，無論是在工程方面還是在製造方面。

So when you think about that type of product, which is typically by on-highway measure, relatively low volumes, it does have a number of challenges when you think about sustaining a low level of very complex production over a period of time. And that goes whether we are fabricating or supplier partners, but it's fairly complex to actually launch propulsion solutions into that particular market.

因此，當您考慮這種類型的產品時（通常以公路測量的產量相對較低），當您考慮在一段時間內維持低水平的非常複雜的生產時，它確實面臨許多挑戰。無論我們是製造商還是供應商合作夥伴，這都是如此，但實際上向該特定市場推出推進解決方案相當複雜。

I would also add that the other differentiator for us is our team, which we have a global organization that we are able to cross-functionally leverage, whether that be technical sales, marketing, service channel, et cetera, but our reach is really critical when you think about deploying systems and the need to be able to service those on a global basis in a timely fashion.

我還想補充一點，我們的另一個區別在於我們的團隊，我們擁有一個全球組織，我們能夠跨職能利用該組織，無論是技術銷售、營銷、服務渠道等，但我們的影響力非常關鍵當您考慮部署系統以及需要能夠在全球範圍內及時為這些系統提供服務時。

Our next question comes from the line of Tim Thein with Citi.

我們的下一個問題來自蒂姆·泰恩 (Tim Thein) 與花旗銀行的對話。

Dave or Fred, the question is really on the North America On-Highway segment. And just curious as to, if you look at the forecast from some or, I guess, the one common independent consultancy out there, they're calling, especially in the Class 8 market -- sorry, the Class 8 straight truck market, a pretty significant step down in the fourth quarter. And I'm just curious, and this would extend to a lesser extent in medium duty as well. But I'm just curious, is that the messaging you're getting from your OEM customers? And then, b, I'm curious, is your guidance that you just laid out today, does that assume -- that kind of follows that pattern of what ACT is assuming in terms of that sequential step down in the fourth quarter? Or is it something different? Because it seems to be -- the messaging from certain of your OEM customers seems to be more -- not that fall off. So basically, the spirit of the question is, what your guidance assumes? Is it that fall off or not?

戴夫或弗雷德，問題實際上是關於北美公路部分。只是好奇，如果你看一下一些預測，或者我猜是一家常見的獨立諮詢公司的預測，他們會打電話給我們，特別是在 8 級市場——抱歉，8 級直卡車市場，一個第四季度的下降幅度相當大。我只是好奇，這在中等任務中也會有較小程度的擴展。但我只是好奇，這是您從 OEM 客戶那裡得到的消息嗎？然後，b，我很好奇，您今天剛剛提出的指導意見是否假設——這是否遵循 ACT 在第四季度連續降級的假設模式？或者有什麼不同嗎？因為看起來——來自某些 OEM 客戶的信息似乎更多——並沒有下降。所以基本上，問題的實質是，你的指導假設是什麼？到底是掉還是不掉呢？

Tim, it's Dave. Good afternoon. So I would just -- you mentioned the forecaster. I would tell you, as we see things developing right now and the feedback that we have from our OEM partners, we're really not expecting that kind of result, frankly, in Q4.

蒂姆，我是戴夫。下午好。所以我想——你提到了預報員。我想告訴你，當我們看到現在的情況發展以及我們從 OEM 合作夥伴那裡得到的反饋時，坦率地說，我們真的不希望在第四季度出現這種結果。

I would say, as the phrase goes, trees don't grow to the sky, and I think one thing that becomes clear as we get further into comping over last year, I would certainly expect -- we're getting to more of a normalized run rate. As you know, many supply constraints have been resolved. They are certainly improving, I wouldn't say they're all resolved, but it's better than it was a year ago, it's better than it was 6 months ago. I think some of that ultimately is playing into the mindset of everybody adjusting to this new reality, which continues to be more variable, but it's improving.

我想說，正如俗話說的那樣，樹不會長到天上，我認為隨著我們去年的進一步比較，一件事會變得越來越清楚，我當然希望——我們將達到更多標準化運行率。如您所知，許多供應限制已經得到解決。他們確實在進步，我不會說他們都解決了，但比一年前好，比六個月前好。我認為其中一些最終會影響每個人適應這個新現實的心態，這個新現實仍然更加多變，但它正在改善。

I would say the underlying fundamentals as we see impact in Class 8 straight and medium duty, medium duty, as you know, has been very undersupplied, so OEMs are still catching up with that level of pent-up demand. Vehicles are aging. As you know, lease rental is a big part of the medium-duty market. Those fleets are getting pretty long in the tooth that they're going to need to be replaced. So we see certainly medium duty continue to be pretty strong. I would say vocational, the underlying support there in terms of vocational drivers such as infrastructure spending, the number of trucks, again, that have not been produced continues to be a relatively strong market.

我想說的是，正如我們所看到的對 8 級直列和中型負載的影響一樣，正如您所知，中型負載的供應非常不足，因此原始設備製造商仍在追趕被壓抑的需求水平。車輛老化。如您所知，租賃是中型市場的重要組成部分。這些機隊已經年久失修，需要更換。因此，我們肯定認為中型負載仍然相當強勁。我想說的是職業，在職業驅動因素方面的潛在支持，例如基礎設施支出、尚未生產的卡車數量仍然是一個相對強勁的市場。

So overall, we see favorable demand dynamics continuing into the second half, but clearly, some level of normalization relative to our '22 performance into the second half should be anticipated at this point. But I think, frankly, our bigger concerns if any are the entire industry being able to produce at higher levels. And as I said, the constraints have not been all resolved and you would assume, given the carryover into this year with very strong demand, some of that is expected to move into '24 as well.

因此，總體而言，我們認為有利的需求動態將持續到下半年，但顯然，此時應該預期相對於我們 22 年下半年的表現將出現某種程度的正常化。但坦率地說，我認為我們更關心的是整個行業能否提高生產水平。正如我所說，這些限制因素尚未全部解決，您可能會認為，考慮到今年的需求非常強勁，其中一些預計也會進入 24 年。

Having said that, backlogs, as you well know, have been burned down a bit, so I think some of that will get further focus and frankly, clarity as order books are opened by a number of OEMs yet this year, certainly by the end of this quarter. So that's the next thing for us to be focused on. In the meantime, we're prepared to supply to whatever demand is required.

話雖如此，眾所周知，積壓的訂單已經減少了一些，所以我認為其中一些將得到進一步的關注，坦率地說，隨著今年許多原始設備製造商打開訂單簿，當然是在年底，其中一些訂單將得到進一步的關注本季度的。所以這是我們接下來要關注的事情。與此同時，我們已準備好滿足任何需求。

Our next question comes from the line of Larry De Maria with William Blair.

我們的下一個問題來自拉里·德·瑪麗亞和威廉·布萊爾的對話。

I wanted to talk about the big 31% increase in service parts. I'm seeing this nice growth, and you've had a strong year overall, even on some not even naturally easy comps. But can you, I don't know, maybe deconstruct your price volume and talk about the sustainability of service parts growth? And what's going on specifically? Is it catch-up from supply chain challenges? Is it mostly price? Can you just kind of deconstruct what's going on there for us and the sustainability, please?

我想談談維修零件 31% 的大幅增長。我看到了這種良好的增長，而且你們總體上度過了強勁的一年，即使是在一些本來並不容易的比賽中也是如此。但我不知道，您能否解構您的價格量並談論服務零件增長的可持續性？具體是怎麼回事？它是否能夠應對供應鏈挑戰？主要是價格嗎？您能解構一下我們正在發生的事情以及可持續性嗎？

Sure, Larry. This is Fred. When you break it down, there's certainly an element of everything you mentioned. We're -- the North American service business, very strong for the quarter, on a year-over-year basis, driving about half of the uplift. But outside North America, support equipment sold to our OEMs with the higher volumes up, our business coming out of Walker Die Cast is up, and then relative to pricing, I mean, in the quarter, we had significant price in total, $45 million in price, over 600 basis points, and that's also providing a lift in the parts category as well, but we are getting price across all of our end markets.

當然，拉里。這是弗雷德。當你分解它時，肯定有你提到的一切元素。我們的北美服務業務本季度與去年同期相比非常強勁，約佔增長的一半。但在北美之外，銷售給我們OEM 的支持設備銷量增加，我們來自Walker Die Cast 的業務也在增加，然後相對於定價，我的意思是，在本季度，我們的總價格很高，為4500萬美元價格上漲超過 600 個基點，這也提高了零部件類別，但我們在所有終端市場都獲得了價格提升。

Our next question comes from the line of Tami Zakaria with JPMorgan.

我們的下一個問題來自塔米·扎卡里亞 (Tami Zakaria) 與摩根大通的對話。

I was hoping to ask two questions. So my first question is, I think you mentioned pricing was $45 million, so more than 6%. What was the cost headwind? Like I'm trying to get a sense of the price cost? And then what's your pricing outlook for the back half?

我本來希望問兩個問題。所以我的第一個問題是，我想你提到的定價是 4500 萬美元，所以超過 6%。成本逆風是什麼？就像我想了解價格成本一樣？那麼您對下半年的定價前景有何看法？

Sure, Tami. This is Fred. Yes, $45 million in price on a year-over-year basis, over 600 basis points in the quarter, that was off of 800 basis points of price in Q1. As you're aware, we did multiple inter-year pricing last year. So the comps from a price in total do get more difficult as you move into Q3 and Q4.

當然，塔米。這是弗雷德。是的，與去年同期相比，價格上漲了 4500 萬美元，本季度上漲了 600 個基點，比第一季度的價格上漲了 800 個基點。如您所知，我們去年進行了多次年際定價。因此，當您進入第三季度和第四季度時，從總價格中進行比較確實會變得更加困難。

Initially, when we provided a guide back in February, we were expecting to get about 400 basis points of price on a year-over-year basis. At this point, we should be closer to 500 basis points of price. In the quarter, material costs benefited from commodity prices coming off. So our total material cost on a year-over-year basis was basically neutral. We did incur about $17 million of additional manufacturing costs. Obviously, some of that associated with getting more volume out the door based on our initial increase in guide in Q1, and then again increase in guide in Q2. We are accruing higher incentive comp expenses as well, which is driving some of that manufacturing expense up.

最初，當我們在 2 月份提供指導時，我們預計價格將同比上漲約 400 個基點。此時，我們的價格應該接近 500 個基點。本季度，材料成本受益於大宗商品價格下跌。因此，我們的總材料成本同比基本上是中性的。我們確實產生了約 1700 萬美元的額外製造成本。顯然，其中一些與基於我們在第一季度指南的最初增加以及第二季度指南的再次增加而獲得更多銷量有關。我們還累積了更高的激勵補償費用，這導致部分製造費用上漲。

Got it. If I may ask one more question. As you look at your gross margin, they've been pretty strong this year. So if we look to next year, let's say, on-highway volumes are, let's say, flattish. Do you expect to hold gross margins in a flattish environment? Or how should we think about gross margin, let's say, in a flat volume year?

知道了。如果我可以再問一個問題的話。從你的毛利率來看，今年的毛利率相當強勁。因此，如果我們展望明年，公路銷量將持平。您預計在持平的環境中保持毛利率嗎？或者說，在銷量持平的年份中，我們應該如何考慮毛利率？

Tami, this is Fred again. I mean, I'd start with, as you mentioned, I mean, gross margin certainly strong in the quarter. The incremental drop-throughs on the revenues is very strong. Just thinking of the quarter, I mean, revenue up 18%, EBITDA margins up 260 basis points, net income up 43%, EPS up 52%, so definitely a very strong performing quarter. As we think what is 2024 going to look like, obviously, we're not providing guide for 2024, but as we look out there, one, the cost of everything has been inflating. So if you think about the cost of vehicles going up, the cost of labor going up, the cost to get your vehicle repair going up, maintenance parts going up, what that really has generated is a situation where we deliver products that make the vehicle to run more efficiently.

塔米，這又是弗雷德。我的意思是，正如您所提到的，我的意思是，本季度的毛利率肯定很高。收入的增量下降非常強勁。就本季度而言，我的意思是，收入增長了18%，EBITDA 利潤率增長了260 個基點，淨利潤增長了43%，每股收益增長了52%，所以絕對是一個表現非常強勁的季度。當我們思考 2024 年會是什麼樣子時，顯然，我們不會提供 2024 年的指南，但當我們展望未來時，第一，一切的成本都在膨脹。因此，如果你考慮車輛成本的上升、勞動力成本的上升、車輛維修成本的上升、維護零件的成本上升，那麼真正產生的是我們提供製造車輛的產品的情況更有效地運行。

Ultimately, you can get from point A to B quicker, you don't have the maintenance downtime, you can size smaller fleets and fewer drivers. So the cost increases has really driven for us a significant improvement in our value proposition, which is obviously already very strong. So as costs continue to go up, we definitely have to manage them from a price cost standpoint, but it positions us with more -- delivering a greater value proposition to both further increase market share as well as get price.

最終，您可以更快地從 A 點到達 B 點，無需維護停機時間，可以規模更小，並減少司機數量。因此，成本的增加確實推動了我們價值主張的顯著改善，這顯然已經非常強大了。因此，隨著成本持續上升，我們肯定必須從價格成本的角度來管理它們，但這使我們能夠獲得更多——提供更大的價值主張，以進一步增加市場份額並獲得價格。

So as we're thinking about where we sit right now, we're still -- we're not having conversations with our customers on 2024 pricing, we're really trying to understand what the expectations are for cost. But we're well-positioned to continue to get price. And then as the supply chain begins to normalize, we're going to get after the operating inefficiencies that are out there, whether that be expedited freight or our plant productivity measures, we don't always have every part you need to produce a product. And at times, you're running on overtime, which really is unnecessary if you had all parts. So there's definitely cost opportunities to get out, but we do expect that labor is going to continue to be challenged and that's going to drive some cost pressures across the business and the industry.

因此，當我們考慮現在的立場時，我們仍然沒有與客戶就 2024 年的定價進行對話，我們確實在努力了解對成本的期望。但我們處於有利地位，可以繼續獲得價格。然後，隨著供應鏈開始正常化，我們將解決存在的運營效率低下的問題，無論是加急貨運還是我們的工廠生產力措施，我們並不總是擁有生產產品所需的所有零件。有時，你會加班，如果你有所有零件，這確實是不必要的。因此，肯定存在退出的成本機會，但我們確實預計勞動力將繼續受到挑戰，這將給整個企業和行業帶來一些成本壓力。

Our next question comes from the line of Jerry Revich with Goldman Sachs.

我們的下一個問題來自高盛的傑里·雷維奇（Jerry Revich）。

I'm wondering if you could talk about your views on the opportunities for natural gas and landfill gas powered engines, in particular, in terms of what that would mean for an automatic attachment rates? And can you comment specifically whether you're going to be specked on the new upcoming 15-liter natural gas engines that are set to come out over the next 18 to 24 months?

我想知道您是否可以談談您對天然氣和垃圾填埋氣動力發動機機會的看法，特別是這對自動附著率意味著什麼？您能否具體評論一下您是否會關注即將在未來 18 至 24 個月內推出的新型 15 升天然氣發動機？

Jerry, it's Dave. Good evening. Relative to natural gas, and Fred mentioned this earlier on the question about hydrogen, nat gas has some interesting attributes in terms of power density. So one of the things that it requires is ways that you can actually increase the power at the lower end in terms of RPM performance. So what that requires is an Allison Transmission, a fully automatic overcomes that lag if you have this sense of hesitation when you would try to accelerate. That's the advantage of a fully automatic, right? So to your point on natural gas, we certainly view ourselves in an advantage position relative to transmission solutions to pair with natural gas.

傑瑞，我是戴夫。晚上好。相對於天然氣，弗雷德在前面關於氫氣的問題中提到過這一點，天然氣在功率密度方面有一些有趣的屬性。因此，它需要的事情之一是您可以實際增加低端轉速性能方面的功率。因此，這需要艾里遜變速箱，如果您在嘗試加速時有這種猶豫感，那麼全自動變速箱可以克服這種滯後。這就是全自動的優點吧？因此，就您關於天然氣的觀點而言，我們當然認為自己在與天然氣搭配的傳輸解決方案方面處於優勢地位。

So your question around engine releases, that situation continues to evolve for a number of reasons, will allow the OEMs and the engine providers to ultimately get there in terms of their maps and their product introduction timing. But suffice to say, I think we're certainly the preferred solution from a transmission perspective with natural gas engines.

因此，您關於發動機發布的問題，這種情況由於多種原因而不斷發展，將使原始設備製造商和發動機提供商最終能夠在他們的地圖和產品推出時間方面達到目標。但我只想說，我認為從天然氣發動機的傳輸角度來看，我們無疑是首選解決方案。

Our next question comes from the line of Rob Wertheimer with Melius Research.

我們的下一個問題來自 Melius Research 的 Rob Wertheimer。

Thanks for the follow-up. Just a quick one just for grounding. What has changed in margin structure from the kind of pre-COVID levels, I'll call it peak, but I'm not sure it's a very high peak in your end markets. Is there anything that's structurally down shifted for you in margin? Or is that something you hope to win back over time as price and volume catch up?

感謝您的跟進。只是為了接地而快速進行。與新冠疫情之前的水平相比，利潤結構發生了哪些變化，我將其稱為峰值，但我不確定這在終端市場是否是一個非常高的峰值。你們的利潤率是否有結構性下降？或者，隨著時間的推移，隨著價格和銷量的追趕，您希望重新贏回這一點嗎？

Yes, Rob, I mean, probably the only thing that's changed structurally would be the acquisition of Walker Die Cast and the portion of that business that's represented in outside sales and parts. That's a lower-margin business than the balance of our parts business. But really, beyond that, I think we've had a high-class problem in the -- you have roughly 50% margin. So in order to maintain those margins for every dollar of cost you get, you got to get $2 in price. Clearly, we're price/cost positive, and we're making more on everything that goes out the door. When you think about gross margin or gross profit per unit, we're making more, even though you've seen the gross margins down a couple hundred basis points from peak.

是的，羅布，我的意思是，唯一發生結構性變化的可能是收購沃克壓鑄公司以及該業務中代表外部銷售和零部件的部分。這是一項利潤率低於我們其餘零部件業務的業務。但實際上，除此之外，我認為我們還遇到了一個嚴重的問題——利潤率大約為 50%。因此，為了維持每 1 美元成本的利潤，你必須獲得 2 美元的價格。顯然，我們的價格/成本是積極的，而且我們在所有產品上都賺得更多。當你考慮毛利率或每單位毛利潤時，即使你看到毛利率比峰值下降了幾百個基點，我們仍然賺得更多。

But we're certainly, as I talked earlier, with the pricing opportunity that's out there is, certainly something we're focused on. But for us, the real focus is always EBITDA really as a proxy for cash and how much cash can we generate. And the good news is, we are generating more cash on what's going out the door now relative to what was pre-COVID.

但正如我之前所說，我們肯定會關注現有的定價機會。但對我們來說，真正的焦點始終是 EBITDA，它實際上是現金的代表，以及我們可以產生多少現金。好消息是，與新冠疫情之前相比，我們現在正在推出的產品中產生了更多的現金。

We have reached the end of our question-and-answer session. I would now like to hand the call back over to David Graziosi for closing comments.

我們的問答環節已經結束。我現在想將電話轉回大衛·格拉齊奧西 (David Graziosi) 以徵求結束意見。

Thank you, Daryl. Thank you for your continued interest in Allison and for participating on today's call. Enjoy your evening.

謝謝你，達里爾。感謝您對艾里森的持續關注並參加今天的電話會議。享受你的夜晚。

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

謝謝。今天的電話會議到此結束。我們感謝您的參與。此時您可以斷開線路。享受你一天剩下的時間。