Allison Transmission Holdings, Inc.

Good afternoon and thank you for standing by. Welcome to Allison's second quarter 2026 earnings conference call. My name is Sherry and I will be your conference call operator today. At this time, all participants are in a listen-only mode. After the prepared remarks, Allison's 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 on your telephone keypad. I would now like to turn the conference over to Jackie Bolles, Executive Director of Treasury and Investor Relations. Please go ahead, Jackie.

Thank you, Sherry. Good afternoon, and thank you for joining us for our second quarter 2026 earnings conference call. With me this afternoon are Dave Graziosi, our Chair, President, and Chief Executive Officer, Scott Mell, our Chief Financial Officer and Treasurer, Fred Boley, Allison's Chief Operating Officer and Allison Transmission's Business Unit Leader, and Craig Price, Allison Off-Highway's Business Unit Leader. 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 17th. 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 annual report on Form 10-K for the year ended December 31st, 2025. 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 second quarter 2026 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 Graziosi will provide a business update, including recent announcements across Allison, along with a synergy capture strategy update and a brief review of each business unit's net sales performance for the second quarter. Scott Mell will then review Allison's second quarter 2026 financial performance and our full year guidance update prior to commencing the Q&A. Now, I'll turn the call over to Dave.

Thank you, Jackie. Good afternoon and thank you for joining us. Please turn to slide five of the presentation for our second quarter business update. Before we begin, I would like to take a moment to introduce the new Allison in Action page on our corporate website. The creation of Allison in Action is an important development in our global communication strategy and serves as a new platform for engaging with our investors, customers, and partners. While we continue to use press releases to communicate significant company announcements and major milestones, Allison in Action serves as a content-rich platform to highlight the value we provide to our customers, the trust they place in our products, and the measurable impact our solutions offer across a broad range of industries and markets. This site brings together compelling customer stories from around the world, showcasing in-depth testimonials, engaging multimedia content, Product Achievements, and Real-World Business Outcomes that Demonstrate the Value Allison Delivers Every Day. By sharing these successes, we will provide greater visibility into the global momentum that continues to drive our long-term growth. To explore these stories, simply visit our corporate website, allisontransmission.com, click on Newsroom in the top menu, and select Allison in Actions. If you would like to stay informed directly, we encourage you to subscribe to our Allison in Action email alerts. You can sign up by clicking the link at the top of the Allison in Action page. Going forward, we will reference Allison in Action stories alongside newly distributed press releases. We look forward to sharing the innovations, partnerships, and achievements that continue to shape Allison's growth and success. Moving on, we continue to build meaningful momentum with defense customers, securing three significant program wins that underscore both the strength of our existing product portfolio and the success of our new product development strategy. These program awards reinforce our position as a trusted propulsion partner for leading global defense OEMs at a time when rising defense budgets and heightened national security priorities are driving sustained investment in modernization programs. Importantly, these wins demonstrate growth across both our established and emerging product portfolio. First, Allison's proven 4500 Specialty Series Fully Automatic Transmission was selected for the French Land Forces Next Generation PL-6T Tactical Truck Program, supporting more than 7,000 vehicles over the next decade. This award highlights the continued demand for our core propulsion solutions in mission-critical wheel defense applications. At the same time, we are seeing strong customer adoption of our newest defense technologies. We secured a landmark $250 million contract with B.E. Haglunds to supply our all-new 4040MX cross-drive transmission for the CV90 Mark IV infantry fighting vehicle. Representing the largest tracked defense order in Allison's history, and the inaugural production application for this next generation product. This achievement validates our continued investment in innovation and expands our opportunity within the rapidly growing tracked combat vehicle market. Finally, we announced a significant order with General Dynamics European Land Systems to supply Allison's 2500 Specialty Series fully automatic transmissions for Eagle Series armored vehicles with deliveries expected to begin in 2027. This order covers approximately 3,000 vehicles with an option for up to an additional 2,000 units. The outlook for global defense market remains highly constructive, supported by multi-year increases in spending, particularly in Europe. There are robust NATO rearmament initiatives with elevated geopolitical tensions and governments' renewed focus on defense readiness. Across the defense industry, companies are reporting record order backlogs, expanding manufacturing capacity, and increased investment in next-generation platforms to support sustained growth. These industry conditions have created a supportive backdrop for suppliers like Allison with differentiated technologies and long-standing customer relationships. As we look forward to providing further updates in this space, We continue to execute on our growth initiatives, illustrating how our strategy of leveraging our proven legacy products while investing in next-generation propulsion solutions is creating long-term profitable growth. Moving now to a brief update on second quarter sales performance and end markets outlooks for both our business units. Second quarter net sales of $1,566,000,000 was a year-over-year increase of 92%. In addition to $706 million from the Allison Off-Highway Business Unit, revenue in the Allison Transmission Business Unit increased 6% year-over-year to a quarterly record of $860 million. Within the Allison Transmission Business Unit, the defense and market continues to drive top-line growth, increasing 57% year-over-year with second-quarter revenue of nearly $100 million. As I just mentioned, we hold a favorable outlook for the defense end market. Also a driver for year-over-year performance in the Allison Transmission Business Unit, revenue in the North America on-highway end market increased 3% year-over-year. Second quarter volumes in this end market were only slightly higher on a year-over-year basis, with the revenue increase driven primarily by favorable pricing. Although we continue to see end-user purchasing decisions influenced by geopolitical impacts, including tariffs and emissions regulations, we expect sequential improvement in volumes in the second half of 2026 for medium-duty and Class 8 vocational trucks. For the Allison Off-Highway Business Unit, second quarter revenue was $706 million. We saw a strong year-over-year growth in construction and material handling and mining end markets as demand continues to rebound from trough levels. The agriculture end market, although showing signs of recovery in certain segments and regions, has yet to inflect positively. Regionally, Europe is performing well on a year-over-year basis, particularly the construction and material handling end market. Asia Pacific and India also showed year-over-year growth across all end markets, while as a whole the Americas region decreased year-over-year driven primarily by the construction, material handling, and agriculture end markets. The mining end market continues to show year-over-year strength driven by elevated commodity prices. The first half of 2026 reflected strong commercial execution by the Allison Off-Highway team with notable program wins across the construction, material handling, mining, and agriculture end markets. These program awards, representing more than $50 million of annual run rate net new business, underscore the strength of our growth pipeline and its contribution to incremental revenue. They also reinforce our position as a leading partner in the end markets we serve, reflecting strong endorsements from major OEMs. You can find detailed breakdowns by end market for both business units on slides six and seven of the presentation. Before turning the call over to Scott for an overview of our second quarter financial performance, please turn to slide eight of the presentation for an update on our synergy capture strategy. On the left side of the slide, you'll note our expected synergy realization is built around three primary categories. The first category, procurement and logistics, holds the largest opportunity for value creation with 60% of our expected $120 million annual run rate synergies. Our key initiatives in this category include strategic sourcing efforts designed to consolidate supplier spend across the combined organization, thereby enabling more favorable pricing and commercial terms, as well as the establishment of long-term strategic partnerships with key suppliers. We are also evaluating opportunities to expand vertical integration and insourcing, improving supply security while reducing total cost. As we integrate our supply chains, we will simplify our bill of materials, optimizing scale and category leverage. This reduces complexity for both our manufacturing operations and our suppliers while allowing us to leverage higher purchasing volumes. At the same time, we will continue to strengthen supply chain resilience by qualifying multiple sources for critical materials and components. reducing the risk of supply disruptions while fostering competitive pricing. By integrating our procurement organizations, we expect to significantly improve our purchasing economics while enhancing supply continuity and reducing complexity across the enterprise. Our second category for Synergy Capture is optimizing how and where Allison manufactures its products. As we continue to combine our operations, we are positioned to leverage the strength of each business unit to establish a more agile, lean, and efficient footprint. Allison's overarching objective is to ensure that we are producing the right products in the right locations while maintaining the flexibility to respond quickly to changing customer demand and market conditions. A key element of this strategy is our local-for-local approach, aligning manufacturing closer to the customers and markets we serve. Producing products closer to end markets helps reduce transportation costs, improve delivery performance, shorten lead times, and lessen exposure to geopolitical and trade-related risks. Allison will also expand its manufacturing capabilities in best-cost countries, ensuring we maintain the highest standards of quality while improving our overall cost competitiveness. Together, our initiatives surrounding operations and footprint optimization are expected to contribute approximately 20% of our $120 million annual run rate Synergy target. The third category of our Synergy capture plan focuses on building a more efficient organization that can support future growth. As we combine our operations, we will integrate Allison's corporate functions, eliminating redundancies and duplicative activities aligning our organizational structure with the needs of the combined business. Our goal is to reduce complexity while ensuring we continue to invest in the capabilities that differentiate us in the marketplace. Finally, we also see significant opportunity to leverage our global talent more effectively by aligning work with regional centers that offer the right combination of expertise, We can better serve our customers while creating additional opportunities for employee success across our organization. Collectively, our three synergy categories will enhance our cost structure and cash flows, strengthen operational resilience, improve organizational agility, and position Allison to deliver sustained long-term value for our stakeholders. On the right side of the slide, you'll note the expected timing of synergy realization over the next few years. We expect to realize approximately 40% of our $120 million annual run rate synergy target by the end of 2027. Further, we expect to realize another 40% by the end of 2028 and full realization by the end of 2029. Importantly, the majority of our identified strategies are currently in various stages of execution. The underlying initiatives have been identified. Detail implementation plans have been developed, accountable owners have been assigned, and the necessary resource planning has been completed. Where capital investments are required to enable these initiatives, funding has already been appropriated, allowing execution to proceed without delay. This high level of execution provides a strong foundation for achieving our targeted timeline with a high degree of confidence. In addition, we continue to evaluate further opportunities that could provide incremental value beyond our current target as the integration teams work closely, collaborating on identifying additional efficiencies. Now I'll turn the call over to Scott for a review of Allison's second quarter 2026 financial performance and full year 2026 guidance update. Scott?