Q2 2023 Allison Transmission Holdings Inc Earnings Call
Good afternoon, and thank you for standing by welcome to Allison transmission second quarter 2023 earnings Conference call.
I'm as Daryl and I will be your conference call operator today at this.
This time, all participants are in a listen only mode.
After prepared remarks, Allison transmission executives, we 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 Jacky, both executive director of Treasury and Investor Relations. Please go ahead Jackie.
Thank you Darryl good afternoon, and thank you for joining us for our second quarter 2023 earnings Conference call with me. This afternoon are Dave <unk>, our chairman and Chief Executive Officer, and Fred Bully, Our senior Vice President Chief Financial Officer and Treasurer.
As a reminder, this conference call webcast and this afternoon's presentation are available on the Investor Relations section of Allison transmission Dot com.
A replay of this call will be available through August 10th.
As noted on slide two of the presentation. Many of our remarks today contain forward looking statements based on current expectations.
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 31st 2022, as well as other general economic sectors.
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.
In addition, as noted on slide three of the presentation. Some of our remarks today contain non-GAAP financial measures as defined by the SEC.
You can find a reconciliation of the non-GAAP financial measures. The most comparable GAAP measures attached as an appendix to the presentation and to our second quarter 2023 earnings press release.
Today's call is set to end at 545 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 four of the presentation for the call agenda.
During today's call, Dave Gretzky or people review highlights from our second quarter 2023 results and provide an operational update.
I believe we will then review our second quarter financial performance and review updates to our full year 2023 guidance prior to commencing the Q&A now.
Now I'll turn the call over to Dave <unk>.
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.
Were a quarterly record of $783 million, leading to all time high first half revenue of over $1 $5 billion. Given these results and the current end market conditions. We are pleased to raise our full year 2023 guidance with our 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 90.
Two cents.
Allison 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 23 cents per share and repurchased over two.
2% of our shares outstanding.
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 long standing partnership with the United States Department of defense, while diversifying our revenue sources by increasing our international sales.
We expect an increase in international sales due to continued demand for our current products, particularly the X 1100 Cross drive transmission is over 400 Abrams main battle tanks are expected to be delivered overseas by the U S Department of defense in the next three years.
Allison also expects to realize growth internationally through our relationships with global defense Oems late this summer Allison will deliver the first electric X 1100 transmission to Turkey for therefore, Tina self propelled howitzer program further international growth is anticipated from south.
Korea is Han why aerospace with sales of their canine Thunder.
Self propelled howitzer also equipped with an X 1100 variants to countries, such as Egypt, Australia, Norway and Poland <unk>.
Additionally, development of new products, such as our 30 40, Amex 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 and Geo political dynamics as we have previously.
And the 30 40 Amex has already been selected for India's future Infantry combat vehicle as well as Poland Sports Inc.
Infantry fighting vehicle with further opportunities in other European Infantry fighting vehicle programs domestically Allison who's involved in several programs with the U S Department of defense, including truck platforms, such as the U S. Army's mobile protected firepower MTF and the M 88.
A three armored recovery vehicle during the quarter. The MTF was renamed the EM 10, Booker light tank with the U S Army funding a second production contracts for their programs Alison will supply our 30 40 amex as the propulsion solution of choice for the program.
For the M 80, 83 equipped with our X 1100 Dash five be Allison has worked closely with the U S Army as an 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 E. Gen four.
This electric hybrid propulsion system for tracked combat vehicles, we're looking forward to even longer term growth opportunities in our defense end market as modernization programs become a priority.
As we have previously mentioned the Allison each enforce was selected by American Ryan Mittal is the propulsion system further optionally manned fighting vehicle or O M. S D program offering and.
Late June the U S Army re designated D. O M. S. C program. The X M 30, mechanized infantry combat vehicle and down selected from five Oems to two we are pleased that American Rheumatol 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 startup production in 2029 for the X M 30.
Allison remains committed to investing and pursuing growth in our defense end markets, 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 move.
Moving on I would like to highlight a few other announcements Alison made during the second quarter in June we released our 2022, environmental social and governance report Allison and its peers are navigating the evolving commercial vehicle industry in preparation for upcoming changes to emission standards one of the ways we are dry.
<unk>. The next generation of propulsion solutions is through our <unk> family of fully electric and electric hybrid propulsion solutions and.
In previous quarters, we have announced numerous awards in partnerships with transit authorities across the United States that will utilize the gen flex zero emission capable electric hybrid system, we recently announced that the Indianapolis Public Transportation Corporation or Indigo is applying its recent grant from the federal.
Transit administration towards expanding its fleet of Allison <unk> Flex equipped buses. This partnership is representative of our efforts to expand the market share of the Gen flex with transit agencies across the country advancing clean transportation and enabling a greener future with fewer.
And mission.
Also during the quarter, we announced that our new hydraulic fracturing transmission. The Frac trend has been released in China, the frac trend for us.
And 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 the <unk>.
As operators and producers.
In conclusion, Allison 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.
Thank you Dave following Daves second quarter 2023 comments I will 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 five of the presentation for the Q2 2023 performance summary.
Second quarter net sales increased 18% from the same period in 2022.
Two 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 eight vocational trucks and price increases on certain products.
A $43 million increase in the service parts support equipment and other end markets, 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.
Gross profit for the quarter was $381 million or 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.
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.
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.
It 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 six of the presentation.
Please turn to slide seven 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 activities 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, Please turn to slide eight 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 <unk> 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 our since IPO in 2012.
We ended the quarter with a net leverage ratio of two one times.
$351 million of cash and $645 million of available revolving credit facility commitments. In addition, we continued 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.
Please turn to slide nine of the presentation for the update to our 2023 guidance.
Given the 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.
Yes.
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 here.
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.
This concludes our prepared remarks, Daryl please open up the call for questions.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad <unk>.
A confirmation tone will indicate your line is in the question queue.
You May press star two to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
A moment, please while we poll for your questions.
Our first questions come from the line of Rob Wertheimer with Melius Research. Please proceed with your question.
How do you just so that was a litany of good news and unfortunately going to ask you about potentially good news, it's not even in your list.
Leaders in Europe have moved to make hydrogen combustion acceptable sort of zero emission.
Mission strategy and I think the U S is maybe moving that direction too.
I assume that's positive because I assume a hydrogen in combustion and medium duty trucks would use the.
The same transmissions is 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 for fully autonomous machines and trucks versus diesel persons.
Rob Good afternoon, Steve.
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 other others are hearing about hydrogen I think it's been long.
A subject of discussion just given the existing <unk>.
<unk> and conventional assets that can be deployed as you well know.
For hydrogen in many ways. So I think from a from an overall industry perspective is as well as.
Frankly, I think the a number of different alternatives being available. It's one of many as you know we're certainly are a supporter of and all of the above strategy I think the.
The development in Europe , My guess is or our guesses it'll.
You'll see more of that elsewhere to your question because it's as you can tell given a 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 is as you know.
With our strategy and 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'd be infrastructure. The maturity of the technology et cetera. So we're we're certainly staying close to those.
<unk> topics and look forward to further developments on the regulatory side.
[music].
Oh, I think that was not me no.
Yeah.
Yeah.
Right.
This is Brad.
Little by Little quick follow up on that I know that from your question Youre aware, but just for the broader audience.
Hydrogen combustion engine will use of conventional and transmission so back to your question certainly.
That's.
The path, that's that's broadly adopted you'll be able to use obviously the assets of internal combustion engine, but but also.
Conventional transmissions, so certainly that that's obviously favorable for us.
Perfect. You said one question, so I'll stop there and get back in line. Thank you.
Yeah.
Thank you our next questions come from the line and Savino with Oppenheimer. Please proceed with your questions.
Great. Thank you very much no question would be I guess on all of the defense success, and maybe help us understand what's differentiating yourselves.
All of this business.
Hey, Ian go Dave Good afternoon, it's Dave I guess.
In terms of success you start out with.
Okay.
The advantage of.
Our technology when you think about fully automatic solutions as they have 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 fleet.
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 to training the wear and tear the fully automatic product as you well know is a significant amount of advantages over advantages over availability uptime and performance so at.
At the same could be said on the track side in terms of the developments are technology.
And in the Abrams of 40, plus your 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 the <unk> as well and comment CME installed base. There when you think about what's been accumulated from an experience standpoint.
Also the assets that are deployed for that those particular cross drive solutions that 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 so when.
When you think about.
That type of products, which is typically buy on highway measure relatively low volumes. It does have a number of challenges when you think about sustaining our low level of very complex production over a period of time and that goes whether we are fabricating where supplier partners, but it's a fairly.
Complex.
To actually launch.
Propulsion solutions into that particular market I would also add to the other differentiator for us is our team.
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.
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.
Okay. Thank you very much.
Thank you. Our next question comes from the line of Tim Thein with Citi. Please proceed with your questions.
Great.
Thank you and good afternoon.
And Dave or a friend I. The question is really on North America, and North America on highway.
Segment, and and just curious as to if you look at the forecast from.
Some are I guess the one.
Independent consultancy out there they are calling especially in the class eight market.
Sorry, the class eight straight truck market.
A pretty significant step down.
In the fourth quarter and I'm just curious.
Would extend.
The lesser extent the medium duty as well, but I'm just curious as you is that the message.
And then messaging you're getting from your OEM customers.
And then B is is I'm curious is your guidance.
It's laid out today does that assume that kind of follows that that pattern of what you're assuming in terms of that sequential step down in the fourth quarter or is it.
It.
Is it something different because it seems to me then.
<unk> from certain of your OEM customers seems to be more.
Matt.
Not that far off so it's basically the spirit of the question is what your guidance assumes is it at all or not thank you.
Tim it's.
Good afternoon so.
I would just you mentioned the forecaster.
I would tell you is as we things see things developing right now and the feedback that we have from our OEM partners.
We're really not expecting that.
That kind of result, frankly in Q4 I would say.
As the phrase goes trees don't grow to the Sky and I think one thing that.
It becomes clear as we get further into our.
Coughing over last year.
Certainly you expect where we are.
Normalized we're getting to more of a normalized run rate as you know some many supply constraints have been resolved or is certainly improving I wouldn't say, they're all they're all resolved, but it's better than it was a year ago. It was better than it was six 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.
I would say the underlying.
The fundamentals as we see impacting class eight straight and medium duty.
Medium duty as you know has been a very under <unk>.
Supplied 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 theyre going to need to be.
Replaced so we see certainly medium duty continues to be pretty strong I would say vocational the underlying support there in terms of vocational.
Vocational drivers such as infrastructure spending.
Number of trucks again that have not been produced.
Continues to be a relatively strong market. So overall, we see favorable demand dynamics and that's continuing into the second half.
Clearly some level of normalization relative to R 22 performance into the second half.
Should be.
Anticipated at this point, but I think our.
Frankly, our bigger concerns if any are the entire industry being able to produce at higher levels.
As I said the constraints are not been are 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, having said that backlogs as you well know have been.
And 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 the Oems yet.
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.
Yeah.
Good Thank you Dave.
Thank you. Our next question comes from the line if Larry de Maria with William Blair. Please proceed with your question.
Hey, Thanks, Good afternoon, everybody I wanted to talk about the big 31% increase in service parts.
Oh Jeez nice growth in your <unk>.
Had a strong year overall, even on some not even necessarily easy comps, but can you maybe I don't know, maybe deconstruct price volume and talk about the sustainability of service parts growth.
What's going on specifically if it can.
Catch up from supply chain challenges is it mostly price can you just kind of deconstruct, what's going on there for us and sustainability. Please.
Sure Larry This is Fred.
There there is when you break it down there is certainly you know.
An element of everything you mentioned you know we're.
The North American service business.
You know very strong for the quarter on a year over year basis.
You know driving about half of the uplift, but you know outside North America.
He is up.
Support equipment sold to them to our Oems with the higher volumes up.
You know our business coming out of the Walker Die cast is up and then relative to pricing I mean.
In the quarter.
We had significant price in total now.
$45 million in price.
Over 600 basis points, and and that's also providing a lift in the parts.
Category as well, but you know we are getting price across all of our end markets.
Okay. That's helpful. Thank you very much.
Yes.
Thank you. Our next question comes from the line of Tami Zakaria with JP Morgan. Please proceed with your question.
Hi, Thank you so much I was hoping to ask two questions.
So my first question is I think you mentioned pricing was 45 million a more.
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.
Sure Tami. This is a this is fred.
Yes, yeah $45 million in price on a year over year basis.
Yeah.
You know over 600 basis points in the quarter that was off of.
800 basis points of price in Q1.
As Youre aware, we did multiple.
Intra year pricing last year, so the comps from a price in total do get more difficult as you move into Q3 and Q4.
Initially when we provided guidance back in February we are 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.
Yeah.
Material cost benefited from.
Commodity prices coming off so.
Our total material cost on a year over year basis.
<unk> was basically neutral.
We did incur.
About $17 million of additional manufacturing cost.
Obviously some of that associated with getting more.
More volume out the door.
Just on <unk>.
<unk>.
You know our initial guide increase in guidance 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.
Got it. Thank you if I may ask one more question.
As you look at your gross margins they've been pretty strong this year and so if I. If we look to next year, let's say on the highway volumes or 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 yet.
And Tami. This is Fred again, I start with as you mentioned I mean gross margin certainly you know strong strong in the quarter.
You know the incremental drop throughs on the revenues you know is very strong. It's just thinking of the quarter. I mean, you know revenue up 18%.
EBITDA margins up 260 basis point net income up 43% EPS up 52%, so definitely a very strong performing quarter now as we think what is you know 2024 gonna look like obviously, we're not.
Provide guide for 2024, but as we look out there you know one the cost of everything as you know it has been inflating. So if you think about the cost of vehicles going up.
Cost of labor going up the cost to get your vehicle repair gone up maintenance parts going up.
What that really is generated as a situation, where we deliver products that make the vehicles run more efficiently.
You know ultimately you.
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 you know the.
The cost increases has really driven for us a significant improvement in our value proposition, which is obviously already very strong. So you know as costs continue to go up would definitely have to manage that from a price cost standpoint, but it positions us with.
With more delivering a greater value proposition to both increase further increase market share as as well as get price. So as we're thinking about where we sit right now.
We're still you know, we're really not having conversations with our customers on 2020 for 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 you know as the supply chain begins to normalize.
We're going to get after the operating inefficiencies that are out there whether that be ex that expedited freight or.
You know our our print our plant productivity majors, where you don't always have every part you need to produce the product in and at times Youre running on overtime, which released on <unk>.
Necessary he had all parts so.
Yeah, there's definitely cost opportunities to get out, but we do.
That that you know labor is going to continue to be challenged and that's going to that's going to drive some cost pressures are you know across the business and industry.
Got it that's very helpful color. Thank you.
Thank you. Our next question comes from the line of Jerry Revich with Goldman Sachs. Please proceed with your question.
Yes, hi, good evening everyone.
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 specced on.
With the new upcoming 15 liter natural gas engines that are set to come out over the next 18 to 24 months. Thanks.
Hey, Jerry it's Dave good evening.
Relative to natural gas and Fred mentioned this earlier on the question about hydrogen.
Nat gas has some some interesting attributes in terms of power densities. So one of the things that it requires us.
Ways that you can actually increase the power at the at the lower end.
In terms of RPM performance, so what that what that requires us and Allison transmission a fully automatic overcomes that lag. If you have this sense of hesitation. When you would try to accelerate that that's the advantage of a fully automatic right.
So to your point on natural gas, we certainly view ourselves.
An advantage position relative to.
Transmission solutions to pair with with natural gas so.
Your comment or question around <unk>.
Engine releases that situation continues to evolve.
For a number of reasons will allow the Oems.
The engine providers to ultimately get there in terms of their maps and their product introduction timing, but so.
Suffice to say I think we're certainly the preferred solution.
From a transmission perspective with natural gas engines.
Thank you.
Thank you. Our next question comes from the line of Rob Wertheimer with Melius Research. Please proceed with your question.
Oh, Hey, guys. Thanks for the follow up.
Just a quick one just for grounding.
What has changed in margin structure from the kind of pre COVID-19 levels of I'll call. It peak, but I'm not sure is a very high peak in your end markets.
Is there anything that structurally down shifted for you in margin or is that something you hope to win back over time.
Rice and volume catch up.
Yeah, 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 being.
Is.
Represented in outside sales and parts.
No that's not.
That's a lower margin business than.
The balance of our parts business.
But really beyond that.
Yeah, and I think we've had a high class problem in the you know you have roughly 50% margins so in order to.
To maintain those margins for every dollar of cost to get you gotta get $2 in price.
Clearly, where you know price cost positive.
And we're.
So we're making more.
You know on everything that goes out the door. When you think about you know gross margin our gross profit per unit were making more even though you've seen you know margins gross the gross margins down a couple of hundred basis points from from peak.
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 as always.
You know EBITDA really is a proxy for cash and how much cash can we generate.
And the good news is we we are generating more cash.
What's going out the door now.
<unk>.
No.
Relative to what was pre COVID-19.
Okay. Thank you.
Thank you we have reached the end of our question and answer session I would now like to hand, the call back over to David <unk> for closing comments.
Thank you Dara. Thank you for your continued interest in Allison and for participating on today's call enjoy your evening.
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.