Allison Transmission Holdings, Inc.

Good afternoon, and thank you for standing by. Welcome to the Allison Transmission's fourth quarter 2023 earnings conference call. My name is Camilla, and I will be your conference call operator today. At this time, all participants are in a listen-only mode. After prepared remarks, Allison Transmission executives 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. I would now like to turn the conference over to Jackie Bowles, Executive Director of Treasury and Investor Relations. Please go ahead, Jackie.

Thank you, Camilla. Good afternoon, and thank you for joining us for our fourth quarter 2023 earnings conference call. With me this afternoon are Dave Graziosi, our Chairman and Chief Executive Officer, and Fred Boley, 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 allisontransmission.com. A replay of this call will be available through February 27th. 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 fourth 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 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 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 reconciliations of the non-GAAP financial measures to the most comparable GAAP measures attached as an appendix to the presentation and to our fourth quarter 2023 earnings press release. Today's call is set to end at 5.45 p.m. Eastern. 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 Graziosi will review highlights from our full year 2023 results. Fred Boley will then review our fourth quarter 2023 financial performance and introduce full year 2024 guidance. Dave will then close with an update on recent announcements across our business prior to commencing the Q&A. Now, I'll turn the call over to Dave Graziosi.

Thank you, Jackie. Good afternoon and thank you for joining us. 2023 finished on a strong note with fourth quarter net sales accelerating 5% sequentially and 8% year over year. Fourth quarter increases boosted full year top line performance to a record $3,035,000,000, an increase of 10% from 2022. Our top line performance for the year was driven by robust demand in our North America on highway end market of 13% year-over-year, attributed to strength in the Class 8 vocational and medium-duty trucks. We hold a favorable outlook for our largest end market into 2024 and beyond, as we believe the market has not fully satisfied pent-up demand and upcoming emissions changes in 2027 will support our medium-duty strength. Also, contributing to our full-year performance, we realized an 18 percent increase year-over-year in our service parts, support equipment, and other end market, leading to record annual revenue of nearly $700 million. We expect continued strength in our aftermarket business, driven by aging fleets and increased demand for Allison Genuine service parts as warranties for units from high-volume production years in 2018 and 2019 expire. Continuing with our full year 2023 performance, we are pleased with our team's commitment to controlling cost in an inflationary environment and expanding margin while increasing our earnings power. Adjusted EBITDA increased to $1,108,000,000 for 2023 with adjusted EBITDA margin expanding 180 basis points from 2022. Net income increased 27 percent year-over-year to $673 million. Finally, we achieved full-year record diluted EPS of $7.40, up 34 percent from 2022. As we increase earnings while reducing share count through our capital allocation priorities, we expect to further improve our per share performance while funding the business for growth and returning capital to shareholders through our quarterly dividend and share repurchase program. In the fourth quarter of 2023, we repurchased over $100 million worth of our shares, bringing the total for 2023 to over $260 million and ending the year with almost $800 million of authorized share repurchase capacity remaining. Shares repurchased in 2023 represent nearly 6% of outstanding shares, with over 63% of our outstanding shares repurchased since our IPO in 2012. Thank you, and I'll now turn the call over to Fred.