Allison Transmission Holdings, Inc.

Good evening, ladies and gentlemen. Thank you for standing by. Welcome to the Allison Transmission's first quarter 2020 earnings conference call. My name is Shamali, and I will be your conference call operator today. At this time, all participants are in a listen-only mode. After the prepared remarks, the management team from Allison Transmission 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I would now like to turn the conference call over to Mr. Ray Posadas, the Company's Director of Investor Relations. Please go ahead, sir.

Thank you, Shamali. Good evening, and thank you for joining us for our first quarter 2020 earnings conference call. With me this evening are Dave Graziosi, our President, Chief Executive Officer, and Fred Bowley, our Senior Vice President, Chief Financial Officer, and Treasurer. As a reminder, this conference call, webcast, and the presentation we are using this evening are available on the investor relations section of our website, allisontransmission.com. A replay of this call will be available through May 11th. 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 first quarter 2020 earnings press release in our annual report on Form 10-K for the year ended December 31st, 2019, and uncertainties related to the COVID-19 pandemic and related responses by governments, customers, and suppliers, and other factors as well as general economic conditions. 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 expressed 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 to the most comparable GAAP measures attached to an appendix to the presentation and to our first quarter 2020 earnings press release. 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 one question from each analyst. please turn to slide four of the presentation for the call agenda. During today's call, Dave Graziosi will provide you with an operational update. Fred Boley will then review our first quarter results and financial performance. Fred will also provide an update on Allison's liquidity and full year 2020 capital spending plan. Finally, Dave will conclude the prepared remarks prior to commencing the Q&A. Now I'll turn the call over to Dave Graziosi.

Thank you, Ray. Good evening, and thank you for joining us. I would like to start out by thanking all of Allison's employees, customers, and suppliers for their dedication and resilience during this unprecedented time. The COVID-19 pandemic has had a devastating impact on governments, communities, individuals, and businesses around the world. Allison transmission has not been spared from the consequences, both on an individual and organizational level. Our employees, customers, and suppliers have done an extraordinary job to keep our operations moving forward even against significant obstacles. The health and well-being of Allison's extended family remains our top priority, and we will continue to take the actions necessary to ensure the safety of our people and our communities. The last time we addressed the market during our earnings call in February, the outlook facing the industry was very different. At that time, We were actively monitoring a number of COVID-19-related developments around the globe while preparing and refining contingency plans for a variety of potential outcomes. Since then, we've implemented a number of proactive measures to better position our business and team as we navigate through this demanding period, inspired by generations of Allison employees that overcame countless challenges to realize the enterprise we're all privileged to be a part of. These measures included the development of a cross-functional task force to apply COVID-19 related expert guidance, monitor developments, establish and implement protocols to ensure the safety of our employees, communities, customers, and suppliers, and develop plans for a measured resumption of normal operation in the weeks and months ahead. The Allison team is also working to proactively align operations programs and spending across our entire business with current end markets conditions while ensuring our ability to meet the needs of our customers. In March, we announced temporary production suspensions at select manufacturing facilities due to changes in customer demand, global supply chain disruptions, and a weaker global outlook. Unfortunately, current end markets conditions have also resulted in furloughs of a portion of our workforce We also have restricted employee hiring, significantly reduced overtime, introduced telecommuting where possible, and allowed for flexible working policies. The timing and cadence of various capital investments and commercial and product development initiatives are undergoing reoccurring assessments in support of our alignment activities as well. These are difficult decisions that will significantly impact our employees their families, and our communities, and we do not take them without due consideration. Throughout its 105-year history, Allison has experienced many cycles, downturns, and extraordinary events. Today, Allison is an agile company with a seasoned management team that has experienced navigating challenging environments. Barely a year following the divestiture from General Motors in 2007, we were faced with the effects of the 2008 financial crisis while rightsizing and managing a newly independent enterprise. Lessons learned during that time have been applied over the past decade, and today Allison is better positioned than ever before to manage through this unprecedented period. Not only is Allison better capitalized and significantly less levered today, but the experience of our team, the flexibility of our operating structure, and the relationships we have cultivated over the years facilitate our organization's ability to accomplish its objectives and deliver its commitments under extremely difficult circumstances. Our Indianapolis manufacturing plants have run continuously throughout 2020, and currently all of our global plants are producing components and transmissions. Volumes and shipping are based on demand, and Allison is designated as critical infrastructure by the U.S. Department of Homeland Security. However, our ability to produce is the direct result of the tremendous efforts and collaboration taking place behind the scenes amongst our employees, communities, customers, and suppliers. These efforts are taking place both domestically and globally, and we are grateful to all of our employees and partners for their unwavering commitment and support. Turning to our supply chain, the management of our supplier network has always been a priority for Allison. Our ability to continuously produce transmissions over the past month, despite a relatively high percentage of purchase components, approximately 69% of our cost of sales, is attributed to our team's abilities and relationships to effectively manage our supply base. I am exceedingly proud of the work of our team and our partners have done over the years to identify and comprehend inherent risk and opportunities, and to secure a strong and enduring supply chain. Finally, Allison continues to operate from a position of strength. In addition to our longstanding commitment to prudent balance sheet management, we also maintain ample liquidity, profitable operations, and fully funded defined benefit pension plans. As of March 31, 2020, the company had $114 million of cash, $595 million of available revolving credit facility commitments, and a flexible and long-dated debt structure with the earliest debt maturity due in September 2024. A history of robust cash flow generation combined with our strong financial position has also enabled the company to settle $180 million of share repurchases and increase the quarterly dividend to 17 cents per share during the first quarter. Thank you, and I'll now turn the call over to Fred.