Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 01, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2023 | ||
Entity File Number | 001-35456 | ||
Entity Registrant Name | ALLISON TRANSMISSION HOLDINGS, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 26-0414014 | ||
Entity Address, Address Line One | One Allison Way | ||
Entity Address, City or Town | Indianapolis | ||
Entity Address, State or Province | IN | ||
Entity Address, Postal Zip Code | 46222 | ||
City Area Code | 317 | ||
Local Phone Number | 242-5000 | ||
Title of 12(b) Security | Common Stock, $0.01 par value | ||
Trading Symbol | ALSN | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Voluntary Filers | No | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Common Stock, Shares Outstanding | 87,214,197 | ||
Entity Public Float | $ 5,034 | ||
Entity Central Index Key | 0001411207 | ||
Current Fiscal Year End Date | --12-31 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Documents Incorporated by Reference | Portions of the Registrant’s definitive Proxy Statement for its 2024 annual meeting of stockholders will be incorporated by reference in Part III of this Annual Report on Form 10-K. | ||
Auditor Firm ID | 238 | ||
Auditor Name | PricewaterhouseCoopers LLP | ||
Auditor Location | Indianapolis, Indiana | ||
Document Financial Statement Error Correction [Flag] | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Current Assets | ||
Cash and cash equivalents | $ 555 | $ 232 |
Accounts receivable - net of allowance for doubtful accounts of $4 and $5, respectively | 356 | 363 |
Inventories | 276 | 224 |
Other current assets | 63 | 47 |
Total Current Assets | 1,250 | 866 |
Property, plant and equipment, net | 774 | 763 |
Intangible assets, net | 833 | 878 |
Goodwill | 2,076 | 2,075 |
Marketable securities | 20 | 22 |
Other non-current assets | 72 | 67 |
TOTAL ASSETS | 5,025 | 4,671 |
Current Liabilities | ||
Accounts payable | 210 | 195 |
Product warranty liability | 32 | 33 |
Current portion of long-term debt | 6 | 6 |
Deferred revenue | 41 | 38 |
Other current liabilities | 212 | 208 |
Total Current Liabilities | 501 | 480 |
Product warranty liability | 27 | 24 |
Deferred revenue | 89 | 93 |
Long-term debt | 2,497 | 2,501 |
Deferred income taxes | 519 | 536 |
Other non-current liabilities | 159 | 163 |
TOTAL LIABILITIES | 3,792 | 3,797 |
Commitments and Contingencies (see Note 18) | ||
STOCKHOLDERS’ EQUITY | ||
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Paid in capital | 1,891 | 1,848 |
Accumulated deficit | (628) | (953) |
Accumulated other comprehensive loss, net of tax | (31) | (22) |
TOTAL STOCKHOLDERS’ EQUITY | 1,233 | 874 |
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | 5,025 | 4,671 |
Voting Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | 1 | 1 |
Non-voting Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | $ 0 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Allowance for doubtful accounts receivable | $ 4 | $ 5 |
Preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Voting Common Stock | ||
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,880,000,000 | 1,880,000,000 |
Common stock, shares issued (in shares) | 87,648,046 | 91,788,885 |
Common stock, shares outstanding (in shares) | 87,648,046 | 91,788,885 |
Non-voting Common Stock | ||
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 0 | 0 |
Common stock, shares outstanding (in shares) | 0 | 0 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | |||
Net sales | $ 3,035 | $ 2,769 | $ 2,402 |
Cost of sales | 1,565 | 1,472 | 1,257 |
Gross profit | 1,470 | 1,297 | 1,145 |
Selling, general and administrative | 357 | 328 | 305 |
Engineering — research and development | 194 | 185 | 171 |
Operating income | 919 | 784 | 669 |
Interest expense, net | (107) | (118) | (116) |
Other income (expense), net | 15 | (21) | 19 |
Income before income taxes | 827 | 645 | 572 |
Income tax (expense) benefit | (154) | (114) | (130) |
Net income | $ 673 | $ 531 | $ 442 |
Basic earnings per share attributable to common stockholders | $ 7.48 | $ 5.53 | $ 4.13 |
Diluted earnings per share attributable to common stockholders | $ 7.4 | $ 5.53 | $ 4.13 |
Other comprehensive (loss) income, net of tax: | |||
Pension and OPEB liability adjustment | $ (7) | $ 22 | $ 2 |
Interest rate swaps | (4) | 39 | 22 |
Foreign currency translation | 2 | (10) | (8) |
Net current period other comprehensive income (loss) | (9) | 51 | 16 |
Comprehensive income, net of tax | $ 664 | $ 582 | $ 458 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net Income (Loss) | $ 673 | $ 531 | $ 442 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation of property, plant and equipment | 109 | 109 | 104 |
Amortization of intangible assets | 45 | 46 | 46 |
Stock-based compensation | 22 | 18 | 14 |
Deferred income taxes | (17) | (4) | 64 |
Amortization of deferred financing costs | 4 | 4 | 4 |
Technology-related investments gain | (3) | (6) | (3) |
Unrealized loss (gain) on marketable securities | 1 | 22 | (4) |
Loss on intercompany foreign exchange | 0 | 6 | 0 |
Other | 1 | 2 | 0 |
Changes in assets and liabilities: | |||
Accounts receivable | 7 | (70) | (78) |
Inventories | (52) | (25) | (26) |
Accounts payable | 21 | 15 | 24 |
Other assets and liabilities | (27) | 9 | 48 |
Net cash provided by operating activities | 784 | 657 | 635 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Additions of long-lived assets | (125) | (167) | (175) |
Investment in equities without a readily determinable fair value | (5) | 0 | 0 |
Proceeds from technology-related investments | 2 | 6 | 4 |
Investment in equity method investee | (1) | (1) | 0 |
Business acquisitions | 0 | (23) | 0 |
Proceeds from sale of assets | 0 | 2 | 0 |
Investment in marketable securities | 0 | 0 | (41) |
Loans to third parties | 0 | 0 | (12) |
Repayments from loans to third parties | 0 | 0 | 12 |
Net cash used for investing activities | (129) | (183) | (212) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Repurchases of common stock | (263) | (278) | (513) |
Dividend payments | (83) | (80) | (81) |
Proceeds from exercise of stock options | 28 | 2 | 3 |
Payments on long-term debt | (7) | (7) | (7) |
Taxes paid related to net share settlement of equity awards | (7) | (4) | (3) |
Repayments on revolving credit facility | 0 | (95) | 0 |
Borrowings on revolving credit facility | 0 | 95 | 0 |
Payment of acquisition-related contingent liability | 0 | 0 | (3) |
Net cash used for financing activities | (332) | (367) | (604) |
Effect of exchange rate changes on cash | 0 | (2) | (2) |
Net increase (decrease) in cash and cash equivalents | 323 | 105 | (183) |
Cash and cash equivalents at beginning of period | 232 | 127 | 310 |
Cash and cash equivalents at end of period | 555 | 232 | 127 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||
Income taxes paid | (194) | (102) | (60) |
Interest paid | (131) | (117) | (103) |
Interest received from interest rate swaps | 12 | 1 | 0 |
Non-cash investing activities: | |||
Capital expenditures in liabilities | $ 4 | $ 11 | $ 9 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Total | Common Stock Voting Common Stock | Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss, net of tax |
Beginning Balance at Dec. 31, 2020 | $ 756 | $ 1 | $ 1,818 | $ (974) | $ (89) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 14 | 14 | |||
Pension and OPEB liability adjustment | 2 | 2 | |||
Foreign currency translation adjustment | (8) | (8) | |||
Interest rate swaps | 22 | 22 | |||
Repurchase of common stock | (513) | (513) | |||
Dividends on common stock | (81) | (81) | |||
Net Income (Loss) | 442 | 442 | |||
Ending Balance at Dec. 31, 2021 | 634 | 1 | 1,832 | (1,126) | (73) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 18 | 18 | |||
Pension and OPEB liability adjustment | 22 | 22 | |||
Foreign currency translation adjustment | (10) | (10) | |||
Interest rate swaps | 39 | 39 | |||
Issuance of common stock | (2) | (2) | |||
Repurchase of common stock | (278) | (278) | |||
Dividends on common stock | (80) | (80) | |||
Net Income (Loss) | 531 | 531 | |||
Ending Balance at Dec. 31, 2022 | 874 | 1 | 1,848 | (953) | (22) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 22 | 22 | |||
Pension and OPEB liability adjustment | (7) | (7) | |||
Foreign currency translation adjustment | 2 | 2 | |||
Interest rate swaps | (4) | (4) | |||
Issuance of common stock | 21 | 21 | |||
Repurchase of common stock | (265) | (265) | |||
Dividends on common stock | (83) | (83) | |||
Net Income (Loss) | 673 | 673 | |||
Ending Balance at Dec. 31, 2023 | $ 1,233 | $ 1 | $ 1,891 | $ (628) | $ (31) |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Pay vs Performance Disclosure | |||
Net Income (Loss) | $ 673 | $ 531 | $ 442 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | Insider Trading Arrangements The following table sets forth information related to the Company's directors and officers who adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) ("Rule 10b5-1 trading arrangement") or any “non-Rule 10b5-1 trading arrangement,” as such term is defined in Item 408(c) of Regulation S-K, during the three months ended December 31, 2023: Trading Arrangement Name Title Action Date Rule Non-Rule 10b5-1** Total Shares to be Sold Expiration Date Dana J.H. Pittard Vice President, Defense Programs Adopted 11/1/2023 X 43,978 1/31/2025 John M. Coll Senior Vice President, Global Marketing, Sales & Services Adopted 11/30/2023 X 8,000 3/28/2025 * Intended to satisfy the affirmative defense of Rule 10b5-1(c) ** No t intended to satisfy the affirmative defense of Rule 10b5-1(c) |
Dana J.H. Pittard | |
Trading Arrangements, by Individual | |
Name | Dana J.H. Pittard |
Title | Vice President, Defense Programs |
Rule 10b5-1 Arrangement Adopted | true |
Non-Rule 10b5-1 Arrangement Adopted | false |
Adoption Date | 11/1/2023 |
Aggregate Available | 43,978 |
Expiration Date | 1/31/2025 |
John M. Coll | |
Trading Arrangements, by Individual | |
Name | John M. Coll |
Title | Senior Vice President, Global Marketing, Sales & Services |
Rule 10b5-1 Arrangement Adopted | true |
Non-Rule 10b5-1 Arrangement Adopted | false |
Adoption Date | 11/30/2023 |
Aggregate Available | 8,000 |
Expiration Date | 3/28/2025 |
Overview
Overview | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Overview | NOTE 1. OVERVIEW Overview Allison Transmission Holdings, Inc. and its subsidiaries (“Allison” or the “Company”) design and manufacture vehicle propulsion solutions, including commercial-duty on-highway, off-highway and defense fully automatic transmissions and electric hybrid and fully electric systems. The business was founded in 1915 and has been headquartered in Indianapolis, Indiana since inception. Allison trades on the New York Stock Exchange under the symbol, “ALSN”. The Company has a global presence by serving customers in North America, Asia, Europe, South America, and Africa, with approximately 75 % of its revenues being generated in North America in 2023. The Company serves customers through an independent network of approximately 1,600 in dependent distributor and dealer locations worldwide. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the periods presented. The consolidated financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated. These consolidated financial statements present the financial position, results of comprehensive income, cash flows and statements of stockholders’ equity. Certain immaterial reclassifications have been made in the consolidated financial statements of prior periods to conform to the current period presentation. These reclassifications had no material impact on previously reported net income, total stockholders’ equity or cash flows. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Estimates include, but are not limited to, sales incentives, government price adjustments, fair market values and future cash flows associated with goodwill, indefinite-lived intangibles, definite-lived intangibles, long-lived asset impairment tests, useful lives for depreciation and amortization, warranty liabilities, core deposit liabilities, determination of discount rate and other assumptions for pension and other post-retirement benefit (“OPEB”) expense, income taxes and deferred tax valuation allowances, derivative valuation, assumptions for business combinations and contingencies. The Company’s accounting policies involve the application of judgments and assumptions made by management that include inherent risks and uncertainties. Actual results could differ materially from these estimates and from the assumptions used in the preparation of the Company's financial statements. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur. Segment Reporting In accordance with the Financial Accounting Standards Board’s (“FASB”) authoritative accounting guidance on segment reporting, the Company has one operating segment and reportable segment. The Company is in one line of business, which is the manufacture and distribution of vehicle propulsion solutions. Business Combinations The Company uses the acquisition method to account for business combinations. The assets acquired and liabilities assumed are recorded at their respective estimated fair value at the date of acquisition. Any excess purchase price over the fair values of the acquired net assets is recorded as goodwill. Determining the fair values of assets acquired and liabilities assumed requires management's judgment and includes the use of estimates with respect to timing and amount of future cash flows, market rate assumptions, actuarial assumptions, appropriate discount rates and other relevant factors. Cash and Cash Equivalents Cash equivalents are defined as short-term, highly-liquid investments with original maturities of 90 days or less. Under the Company’s cash management system, checks issued but not presented to banks may result in book overdraft balances for accounting purposes and are classified within Accounts payable in the Consolidated Balance Sheets. The change in book overdrafts is reported as a component of operating cash flows for Accounts payable. Investments Investments in equity securities where the Company is able to exercise significant influence, but not control, are accounted for under the equity method. Significant influence is typically considered to exist when the Company's ownership interest in the investee is between 20% and 50%, although other factors, such as representation on the investee's board of directors and the impact of commercial arrangements, also are considered. Investments in limited partnerships and limited liability companies are also accounted for using the equity method if the Company's investment is more than minor or if the Company is the general partner. Under the equity method of accounting, the investment is initially recorded at cost and subsequently adjusted by the Company's proportionate share of the entity's net income, with adjustments recognized in Other income (expense), net. Investments in equity securities with a readily determinable fair value, not accounted for under the equity method, are recorded at fair value with unrealized gains and losses included in Other income (expense), net. For equity securities without a readily determinable fair value, the investments are recorded utilizing the measurement alternative at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities, with gains and losses included in Other income (expense), net . See "Note 7. Fair Value of Financial Instruments" for more details on the Company's investments in equity securities. Inventories Inventories are stated at the lower of cost or net realizable value. The Company determines cost using the first-in, first-out method. The Company analyzes inventory on a quarterly basis to determine whether it is excess or obsolete inventory. Any decline in carrying value of estimated excess or obsolete inventory is recorded as a reduction of inventory and as an expense included in Cost of sales in the period it is identified. Property, Plant and Equipment Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation expense is recorded using the straight-line method over the following estimated lives: Range in Land improvements 5 – 30 Buildings and building improvements 10 – 40 Machinery and equipment 2 – 20 Software 2 – 5 Special tooling 2 – 10 Software represents the costs of software developed or obtained for internal use. Software costs are amortized on a straight-line basis over their estimated useful lives. Software assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets. Upgrades and enhancements are capitalized if they result in added functionality, which enables the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion and business process reengineering costs are expensed in the period in which they are incurred. Special tooling represents the costs to design and develop tools, dies, jigs and other items owned by the Company and used in the manufacture of components by suppliers under long-term supply agreements. Special tooling is depreciated on a straight-line basis ove r the tool’s expected useful life. Special tooling used in the development of new technology is expensed as incurred. Engineering, testing and other costs incurred in the design and development of production parts are expensed as incurred. Impairment of Long-Lived Assets The carrying value of long-lived assets is evaluated whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. Events or circumstances that would result in an impairment review primarily include a significant change in the use of an asset or the planned sale or disposal of an asset. The asset would be considered impaired when there is no future use planned for the asset or the future net undiscounted cash flows generated by the asset or asset group are less than its carrying value. An impairment loss would be recognized based on the amount by which the carrying value exceeds fair value. Assumptions and estimates used to determine cash flows in the evaluation of impairment and the fair values used to determine the impairment are subject to a degree of judgment and complexity. Any changes to the assumptions and estimates resulting from changes in actual results or market conditions from those anticipated may affect the carrying value of long-lived assets and could result in an impairment charge. Goodwill and Other Intangible Assets The Company has elected to perform its annual impairment tests for goodwill and indefinite-lived intangible assets on October 31 of every year using a multi-step impairment test. In Step 0, the Company has the option to evaluate various qualitative factors to determine the likelihood of impairment. If the Company determines that the fair value is more likely than not less than the carrying value, then it is required to perform Step 1. If the Company does not elect to perform Step 0, it can voluntarily proceed directly to Step 1. In Step 1, the Company performs a quantitative analysis to compare the fair value to its carrying value. If the fair value exceeds the carrying value, no impairment is recorded, and the Company is not required to perform further testing. If the carrying value exceeds fair value, the Company would record an impairment loss equal to the difference. A qualitative assessment contains uncertainties because it requires management to make assumptions and to apply judgment to assess business changes, economic outlook, financial trends and forecasts, growth rates, credit ratings, equity ratings, discount rates, industry data and other relevant qualitative factors. A quantitative analysis contains uncertainties because it is performed utilizing a discounted cash flow model which includes key assumptions, such as financial forecasts; net sales growth derived from market information, industry reports, marketing programs and future new product introductions; operating margin improvements derived from cost reduction programs and fixed cost leverage driven by higher sales volumes; and a risk-adjusted discount rate. Goodwill represents the excess of purchase price paid over the fair value of net assets acquired. In accordance with the FASB’s authoritative accounting guidance on goodwill, the Company does not amortize goodwill but rather evaluates it for impairment on an annual basis, or more often if events or circumstances change that could cause goodwill to become impaired. Goodwill is tested for impairment at the reporting unit level, which is the same as the Company's one operating and reportable segment. The Company does not aggregate any components into its reporting unit. Goodwill impairment testing for 2023 was performed using the Step 0 analysis by assessing certain qualitative trends and factors. These trends and factors were compared to, and based on, the assumptions used in prior years. After reviewing the various qualitative factors mentioned above, the Company's 2023 annual goodwill impairment test indicated that the fair value for the reporting unit more likely than not exceeded its carrying value, indicating no impairment. Other intangible assets have both indefinite and finite useful lives. Intangible assets with indefinite useful lives are not amortized but are tested annually for impairment, or more often if events or circumstances change that could cause intangible assets with indefinite useful lives to become impaired. After reviewing the various qualitative factors mentioned above, the Company's annual 2023 indefinite-lived intangible assets impairment tests, as of October 31, 2023, indicated that the fair value of its indefinite-lived intangible assets more likely than not exceeded their respective carrying value, indicating no impairment. Intangible assets with finite lives are amortized over their estimated useful lives and reviewed for impairment when circumstances change that would create a triggering event. Customer relationships are amortized over the life in which expected benefits are to be consumed. The other remaining finite life intangibles are amortized on a straight-line basis over their useful lives. The Company evaluates the remaining useful life of the other intangible assets on a periodic basis to determine whether events or circumstances warrant a revision to the remaining useful life. Assumptions and estimates about future values and remaining useful lives of the Company's intangible and other long-lived assets are complex and subjective. Such assumptions and estimates can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors, such as changes in the Company's business strategy and internal forecasts. Although management believes the historical assumptions and estimates are reasonable and appropriate, different assumptions and estimates could materially impact the Company's reported financial results. Further information is provided in "Note 6. Goodwill and Other Intangible Assets.” Deferred Financing Costs The deferred financing costs related to line-of-credit arrangements are presented as a component of other non-current assets. The deferred financing costs related to other types of debt instruments such as notes and loans are presented as a component of long-term debt. Deferred financing costs continue to be amortized over the life of the related debt using the effective interest method. Amortization of deferred financing costs is recorded as part of interest expense and totaled $ 4 million for each of the years ended December 31, 2023, 2022 and 2021 . Financial Instruments The Company’s cash equivalents are invested in U.S. government backed securities and recorded at fair value in the Consolidated Balance Sheets. The Company's marketable securities are carried at fair value on the Consolidated Balance Sheets. The Company’s financial derivative instruments, including interest rate swaps, are carried at fair value on the Consolidated Balance Sheets. Refer to "Note 7. Fair Value of Financial Instruments” for more detail. The Company’s long-term debt obligations are carried at historical amounts with the Company providing fair value disclosure in "Note 8. Debt”. The carrying values of accounts receivable and accounts payable approximate fair value due to their short-term nature. Insurable Liabilities The Company records liabilities for its medical, workers’ compensation, long-term disability, product, general and auto liabilities. The determination of these liabilities and related expenses is dependent on claims experience. For most of these liabilities, claims incurred but not yet reported are estimated based upon historical claims experience. Revenue Recognition The Company records sales as each distinct performance obligation within a contract is satisfied. The Company sells extended transmission coverage (“ETC”) for which sales are deferred. ETC sales are recognized ratably over the period of coverage, which typically ranges from one to five years after the standard warranty coverage ends. Costs associated with ETC programs are recorded as incurred during the ex tended period. Distributor and customer sales incentives, consisting of allowances and other rebates, are recorded as a reduction to Net sales when it is determined that the adjustment is not likely to reverse, historically on a quarterly basis. Incentive programs are generally product specific or region specific. Some factors used in estimating when an adjustment is not likely to reverse are the number of transmissions that will be affected by the incentive program and rate of acceptance of any incentive program. Sales under U.S. government production contracts are recognized at the point in time when control passes to the customer, or when the U.S. government accepts the transmission and is able to direct its use in certain bill-and-hold arrangements. Deferred revenue arises from cash received in advance of the culmination of the earnings process and is recognized as revenue in future periods when the applicable revenue recognition criteria have been met. Under the terms of certain previous U.S. government contracts, there were certain price reduction clauses and provisions for potential price reductions which were estimated at the time of sale based upon the Company’s history and experience and were recorded as a reduction to Net sales. Potential reductions may be attributed to a change in projected sales volumes or plant efficiencies which impact overall costs. The Company had $ 54 million recorded in the price reduction reserve account as of both December 31, 2023 and 2022. The Company engages in licensing agreements with certain third parties for the use of the Company’s intellectual property. Deferred revenue arises from cash received in advance of the period of use of the intellectual property. Revenue is recognized over the license period as it is earned. The Company classifies shipping and handling billed to customers in Net sales and shipping and handling costs in Cost of sales. The Company contracts with various third parties to provide engineering services. These services are recorded as Net sales in accordance with the terms of the contract. The saleable engineering services recorded were $ 26 million, $ 21 million and $ 21 million for the years ended December 31, 2023, 2022 and 2021 , respectively. The associated costs are recorded in Cost of sales. Warranty Provisions for estimated expenses related to product warranties are made at the time products are sold. Warranty claims arise when a transmission or propulsion solution manufactured by us fails while in service during the relevant warranty period. The warranty reserve is adjusted in Selling, general and administrative expense based on the Company’s current and historical warranty claims paid and associated repair costs. These estimates are established using historical information including the nature, frequency, and average cost of warranty claims and are adjusted as actual information becomes available. From time to time, the Company may initiate a specific field action program. As a result of the uncertainty surrounding the nature and frequency of specific field action programs, the liability for such programs is recorded when the Company commits to an action. The Company reviews and assesses the liability for these programs on a quarterly basis. The Company also assesses its ability to recover certain costs from its suppliers and records a receivable from the supplier when it believes a recovery is probable. Warranty costs may differ from those estimated if actual claim rates are higher or lower than the Company's historical rates. Research and Development The Company incurs costs in connection with research and development programs that are expected to contribute to future earnings. Such costs are charged to Engineering — research and development as incurred. Foreign Currency Translation Most of the Company’s subsidiaries outside the United States prepare financial statements in currencies other than the U.S. Dollar. The functional currency for all of these subsidiaries is the local currency, except for the Company’s Hong Kong and Middle East subsidiaries which currently use the U.S. Dollar as their functional currency. Balances are translated at period-end exchange rates for assets and liabilities and monthly weighted-average exchange rates for revenues and expenses. The translation gains and losses are stated as a component of Accumulated Other Comprehensive Loss (“AOCL”) as disclosed in "Note 17. Accumulated Other Comprehensive Loss”. Derivative Instruments In the normal course of business, the Company is exposed to fluctuations in interest rates, foreign currency exchange rates, and commodity prices. The risk is managed through the use of financial derivative instruments, when appropriate. The Company has qualified for and elected hedge accounting treatment on interest rate swap contracts. As necessary, the Company adjusts the values of the derivative instruments for counter-party or credit risk. "Note 9. Derivatives” provides further information on the accounting treatment of the Company’s derivative instruments. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The future tax benefits associated with operating loss and tax credit carryforwards are recognized as deferred tax assets. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. When releasing income tax effects from AOCL, the Company utilizes the portfolio securities approach. The need to establish a valuation allowance against the deferred tax assets is assessed periodically based on a more-likely-than-not realization threshold, in accordance with the FASB’s authoritative accounting guidance on income taxes. Appropriate consideration is given to all positive and negative evidence related to that realization. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, experience with tax attributes expiring unused and tax planning alternatives. The weight given to these considerations depends upon the degree to which they can be objectively verified. The Company records uncertain tax positions on the basis of a two-step process whereby (1) it is determined whether it is more likely than not that the tax position will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is greater than 50% likely to be re alized upon ultimate settlement with the related tax authority. Stock-Based Compensation In March 2015, the Company’s Board of Directors adopted, and in May 2015, the Company’s stockholders approved, the Allison Transmission Holdings, Inc. 2015 Equity Incentive Award Plan (“2015 Plan”), which became effective on May 14, 2015. Under the 2015 Plan, certain employees (including executive officers), consultants and directors are eligible to receive equity-based compensation, including non-qualified stock options, incentive stock options, restricted stock, dividend equivalents, stock payments, restricted stock units (“RSUs”), performance awards, stock appreciation rights and other equity-based awards, or any combination thereof. The 2015 Plan limits the aggregate number of shares of common stock available for issue to 15 million and will expire on, and no option or other equity award may be granted pursuant to the 2015 Plan after, the tenth anniversary of the date the 2015 Plan was approved by the Board of Directors. Prior to the adoption of the 2015 Plan, the Company’s equity-based awards were granted under the Allison Transmission Holdings, Inc. 2011 Equity Incentive Award Plan (“Prior Plan”). As of the effective date of the 2015 Plan, no new awards will be granted under the Prior Plan, but the Prior Plan will continue to govern the equity awards issued under the Prior Plan. RSU grants are recorded at fair market value at the date of grant and vest upon continued performance of services by the RSU holder typically over one to three years . Perfo rmance unit grants are recorded at fair value based on a Monte-Carlo pricing model, and the restrictions lapse on the date the Compensation Committee of the Board of Directors determines the number of shares that shall vest based on the related performance or market condition achievement. Non-qualified stock option grants are recorded at fair value using a Black-Scholes option pricing model and vest upon the continued performance of services by the option holder typically over one to three years . The Company has made a policy election under applicable accounting guidance to account for forfeitures as a reduction of stock-based compensation expense when the forfeiture actually occurs. RSUs were granted to certain employees and directors at fair market value on the date of grant. The restrictions lapse upon continued performance by the RSU holder on the vest date which generally occurs over one , two or three years . RSU incentive compensation expense recorded was $ 11 million, $ 9 million and $ 6 million for the years ended December 31, 2023, 2022 and 2021, respectively. Performance-based awards, including performance units, were granted to certain employees at fair value at the date of grant. The Company records the fair value of each performance-based award based on a Monte-Carlo pricing model. Performance-based award incentive compensation expense recorded was $ 5 million for each of the years ended December 31, 2023, 2022 and 2021. Stock options were granted to certain employees at fair value on the date of grant using a Black-Scholes option pricing model. Stock option incentive compensation expense recorded was $ 6 million, $ 4 million and $ 3 million for the years ended December 31, 2023, 2022 and 2021 , respectively. Pension and Post-retirement Benefit Plans For pension and OPEB plans in which employees participate, costs are determined within the FASB’s authoritative accounting guidance set forth in employers’ defined benefit pensions including accounting for settlements and curtailments of defined benefit pension plans, termination of benefits and accounting for post-retirement benefits other than pensions. In accordance with the authoritative accounting guidance, the Company recognizes the funded status of its defined benefit pension plans and OPEB plan in its Consolidated Balance Sheets with a corresponding adjustment to AOCL, net of tax. Post-retirement benefit costs consist of service cost and interest cost on accrued obligations. Actuarial gains and losses on liabilities, together with any prior service costs, are charged (or credited) to income over the average remaining service lives of employees. The benefit cost components shown in the Consolidated Statements of Comprehensive Income are based upon various actuarial assumptions and methodologies as prescribed by authoritative accounting guidance. These assumptions include discount rates, expected return on plan assets, health care cost trend rates, inflation, rate of compensation increases, population demographics, mortality rates and other factors. The Company reviews all actuarial assumptions on an annual basis. Changes in key economic indicators can change these assumptions. These assumptions, along with the actual value of assets at the measurement date, will impact the calculation of pension expenses for the following year. Recently Issued Accounting Pronouncements In November 2023, the FASB issued authoritative accounting guidance expanding public entities’ reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses that are regularly reviewed by the Chief Operating Decision Maker and included within each reported measure of segment profit or loss. The guidance will become effective for the Company starting with its fiscal year ended December 31, 2024 and the subsequent interim periods. The guidance will be applied retrospectively, and the Company does not plan to early adopt. Management is currently evaluating the impact of this guidance on the Company's consolidated financial statements. In December 2023, the FASB issued authoritative accounting guidance to improve income tax disclosures by requiring disaggregated information about a reporting entity's effective tax rate reconciliation and information on income taxes paid. The guidance will become effective for the Company beginning with its fiscal year ended December 31, 2025. The guidance will be applied prospectively with the option to apply it retrospectively. Management is currently evaluating the impact of this guidance on the Company's consolidated financial statements. All other recently issued accounting pronouncements were assessed as either not applicable to the Company or were not expected to have a material impact on the Company's consolidated financial statements. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | NOTE 3. REVENUE Revenue is recognized as each distinct performance obligation within a contract is satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company enters into long-term agreements (“LTAs”) and distributor agreements with certain customers. The LTAs and distributor agreements do not include committed volumes until underlying purchase orders are issued; therefore, the Company determined that purchase orders are the contract with a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied, as there is no right of return. Some of the Company's contracts include multiple performance obligations, most commonly the sale of both a transmission and ETC. The Company allocates the contract’s transaction price to each performance obligation based on the standalone selling price of each distinct good or service in the contract. The Company may also use volume-based discounts and rebates as marketing incentives in the sales of both vehicle propulsion solutions and service parts, which are accounted for as variable consideration. The Company records the impact of the incentives as a reduction to revenue when it is determined that the adjustment is not likely to reverse. The Company estimates the impact of all other incentives based on the related sales and market conditions in the end market vocation. The Company recorded no material adjustments based on variable consideration during any of the years ended December 31, 2023, 2022 and 2021. Net sales are made on credit terms, generally 30 days , based on an assessment of the customer’s creditworthiness. For certain goods or services, the Company receives consideration prior to satisfying the related performance obligation. Such consideration is recorded as a contract liability in current and non-current deferred revenue as of December 31, 2023 and December 31, 2022. See "Note 11. Deferred Revenue” for more information including the amount of revenue earned during the year ended December 31, 2023 that had been previously deferred. The Company had no material contract assets as of either December 31, 2023 or 2022. The Company has one operating segment and reportable segment. The Company is in one line of business, which is the manufacture and distribution of vehicle propulsion solutions. The following presents disaggregated revenue by categories that best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors (dollars in millions): Year ended Year ended Year ended North America On-Highway $ 1,529 $ 1,359 $ 1,177 North America Off-Highway 63 86 58 Defense 166 146 186 Outside North America On-Highway 477 463 381 Outside North America Off-Highway 104 127 83 Service Parts, Support Equipment and Other 696 588 517 Total Net Sales $ 3,035 $ 2,769 $ 2,402 Disaggregated revenue by end market is further described as follows: North America On-Highway Revenue from the North America On-Highway end market is driven by the sale of propulsion solutions to original equipment manufacturers (“OEMs”), distributors and dealers that install the product into Class 4-5, Class 6-7 and Class 8 straight trucks, Class 8 day cab tractors, conventional transit, shuttle and coach buses, school buses and motorhome applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. North America Off-Highway Revenue from the North America Off-Highway end market is driven by sales of transmissions to OEMs and distributors that serve end users who operate vehicles and auxiliary equipment in energy, mining and construction applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Defense Revenue from the Defense end market is driven by sales of propulsion solutions to the U.S. Government or its contractors and sales to certain government contractors outside of the U.S. for use in both wheeled and tracked defense vehicle applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Periodically, the Company and the U.S. Government will enter into a bill-and-hold arrangement where a completed transmission physically remains at the Company’s facility at the request of the U.S. Government. Revenue is recognized at the point in time when it is determined that the U.S. Government accepts the transmission and is able to direct its use. Outside North America On-Highway Revenue from the Outside North America On-Highway end market is driven by the sale of propulsion solutions to OEMs and distributors that produce vehicles for commercial users in medium- and heavy-duty applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Outside North America Off-Highway Revenue from the Outside North America Off-Highway end market is driven by sales of transmissions to OEMs and distributors serving end users who operate vehicles and auxiliary equipment in energy, mining and construction applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Service Parts, Support Equipment and Other Revenue from the Service Parts, Support Equipment and Other end market is primarily derived from the sale of transmission parts and fluid purchased for the normal maintenance and repair needs of products in service, the sale of aluminum die cast components purchased as original parts and the sale of ETC contracts which extend the warranty coverages of propulsion solutions beyond the standard warranty period. Revenue is recognized on sales of service parts, support equipment and aluminum die cast components at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Revenue from the sale of ETC contracts is recognized ratably over the time period that corresponds with the period of coverage, as the Company has determined this method best depicts the progress towards satisfaction of its performance obligation. ETC contracts are typically sold in one to five year durations within the North America On-Highway, Outside North America On-Highway, North America Off-Highway and Outside North America Off-Highway end markets. The ETC contract period begins when the standard warranty coverage period ends. All consideration allocated to an ETC performance obligation is initially deferred until the coverage period begins. NOTE 11. DEFERRED REVENUE As of December 31, 2023, the current and non-current deferred revenue were $ 41 million and $ 89 million, respectively. As of December 31, 2022, the current and non-current deferred revenue were $ 38 million and $ 93 million, respectively. Deferred revenue activity consisted of the following (dollars in millions): Year ended Year ended Year ended Beginning balance $ 131 $ 136 $ 143 Increases 52 35 29 Revenue earned ( 53 ) ( 40 ) ( 36 ) Ending balance $ 130 $ 131 $ 136 As of both December 31, 2023 and 2022, deferred revenue recorded in current and non-current liabilities related to ETC was $ 30 million and $ 85 million, respectively. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 4. INVENTORIES Inventories consisted of the following components (dollars in millions): December 31, 2023 December 31, 2022 Purchased parts and raw materials $ 152 $ 115 Work in progress 17 7 Service parts 54 53 Finished goods 53 49 Total inventories $ 276 $ 224 Inventory components shipped to third parties, primarily cores, parts to re-manufacturers, and parts to contract manufacturers, which the Company has an obligation to buy back, are included in purchased parts and raw materials, with an offsetting liability in Other current liabilities. See "Note 14. Other Current Liabilities” for more information. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | NOTE 5. PROPERTY, PLANT AND EQUIPMENT The cost and accumulated depreciation of property, plant and equipment are as follows (dollars in millions): December 31, 2023 December 31, 2022 Machinery and equipment $ 937 $ 845 Buildings and building improvements 528 517 Special tooling 259 268 Software 195 186 Construction in progress 68 107 Land and land improvements 29 27 Total property, plant and equipment 2,016 1,950 Accumulated depreciation ( 1,242 ) ( 1,187 ) Property, plant and equipment, net $ 774 $ 763 Depreciation of property, plant and equipm ent was $ 109 million, $ 109 million and $ 104 million for the years ended December 31, 2023, 2022 and 2021 , respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS As of December 31, 2023 and 2022, the carrying amount of the Company’s Goodwill was $ 2,076 million and $ 2,075 million, respectively. The following presents a summary of other intangible assets (dollars in millions): December 31, 2023 December 31, 2022 Intangible Accumulated Intangible Intangible Accumulated Intangible Other intangible assets: Trade name $ 791 $ — $ 791 $ 791 $ — $ 791 In-process research and development 25 — 25 25 — 25 Customer relationships – commercial 839 ( 833 ) 6 839 ( 793 ) 46 Customer relationships – defense 62 ( 56 ) 6 62 ( 53 ) 9 Proprietary technology 484 ( 479 ) 5 484 ( 477 ) 7 Non-compete agreement 1 ( 1 ) — 1 ( 1 ) — Total $ 2,202 $ ( 1,369 ) $ 833 $ 2,202 $ ( 1,324 ) $ 878 Amortization of intangible assets was $ 45 million, $ 46 million and $ 46 million for the years ended December 31, 2023, 2022 and 2021, respectively. The Company’s 2023 annual goodwill impairment test indicated that the fair value of the reporting unit more likely than not exceeded its carrying value, indicating no impairment. The Company's 2023 annual indefinite-lived intangible assets impairment test indicated that the fair value of the Company’s indefinite-lived intangible assets more likely than not exceeded their carrying value, indicating no impairment. Amortization expense re lated to other intangible assets for the next five years is expected to be (dollars in millions): 2024 2025 2026 2027 2028 Amortization expense $ 10 $ 7 $ 3 $ 3 $ 2 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the price (exit price) that would be received to sell an asset or paid to transfer a liability in an orderly tran saction between market participants at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The accounting guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy defined by the relevant guidance are as follows: Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Level 2 — Inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes financial instruments that are valued using quoted prices in markets that are not active and those financial instruments that are valued using models or other valuation methodologies in which all significant value-drivers are observable in active markets or are supported by observable levels at which transactions are executed in the marketplace. Level 3 — Certain inputs are unobservable or have little or no market data available. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. At each balance sheet date, the Company performs an analysis of all instruments subject to authoritative accounting guidance and includes, in Level 3, all of those whose fair value is based on significant unobservable inputs. As of December 31, 2023 and 2022, the Compan y did no t have any Level 3 fin ancial assets or liabilities. The Company’s assets and liabilities that are measured at fair value include cash equivalents, marketable securities, derivative instruments, assets held in a rabbi trust and a deferred compensation obligation. The Company’s cash equivalents consist of short-term U.S. government backed securities and time deposits. The Company's marketable securities consist of publicly traded stock of Jing-Jin Electric Technologies Co. Ltd., which has a readily determinable fair value. The Company’s derivative instruments consist of interest rate swaps. The Company’s assets held in the rabbi trust consist principally of publicly available mutual funds and target date retirement funds. The Company’s deferred compensation obligation is directly related to the fair value of assets held in the rabbi trust. The Company’s valuation techniques used to calculate the fair value of cash equivalents, marketable securities, assets held in the rabbi trust and the deferred compensation obligation represent a market approach in active markets for identical assets that qualify as Level 1 in the fair value hierarchy. The Company’s valuation techniques used to calculate the fair value of derivative instruments represent a market approach with observable inputs that qualify as Level 2 in the fair value hierarchy. The Company uses valuations from the issuing financial institutions for the fair value measurement of interest rate swaps. The floating-to-fixed interest rate swaps are based on the Secured Overnight Financing Rate ("SOFR"), which is observable at commonly quoted intervals. The fair values are included in other current and non-current assets in the Consolidated Balance Sheets. See “Note 9. Derivatives” for more information regarding the Company’s interest rate swaps. The following table summarizes the fair value of the Company’s financial assets and (liabilities) as of December 31, 2023 and 2022 (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Significant Other TOTAL 2023 2022 2023 2022 2023 2022 Cash equivalents $ 421 $ 111 $ — $ — $ 421 $ 111 Marketable securities 20 22 — — 20 22 Rabbi trust assets 18 15 — — 18 15 Deferred compensation obligation ( 18 ) ( 15 ) — — ( 18 ) ( 15 ) Derivative assets — — 12 18 12 18 Total $ 441 $ 133 $ 12 $ 18 $ 453 $ 151 In 2023, the Company invested in equity securities in an unconsolidated entity without a readily determinable fair value. This investment represents a less than a 20% ownership interest in the privately-held affiliate, and the Company does not maintain significant influence over or control of the entity. The Company has elected the measurement alternative and measures the investment at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities. This equity investment is recorded in Other non-current assets in the Consolidated Balance Sheets, with changes in the value recorded in Other income (expense), net in the Consolidated Statements of Comprehensive Income. As of December 31, 2023 , the Company held equity securities without a readily determinable fair value of $ 5 million and no such equity securities were held as of December 31, 2022. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 8. DEBT Long-term debt and maturities are as follows (dollars in millions): December 31, 2023 December 31, 2022 Long-term debt: Senior Secured Credit Facility Term Loan, variable, due 2026 $ 618 $ 625 Senior Notes, fixed 4.75 %, due 2027 400 400 Senior Notes, fixed 5.875 %, due 2029 500 500 Senior Notes, fixed 3.75 %, due 2031 1,000 1,000 Total long-term debt $ 2,518 $ 2,525 Less: current maturities of long-term debt 6 6 deferred financing costs, net (see Note 2) 15 18 Total long-term debt, net $ 2,497 $ 2,501 Principal payments required on long-term debt during the nex t five years are as follows (dollars in millions): 2024 2025 2026 2027 2028 Payments $ 6 $ 6 $ 606 $ 400 $ — As of December 31, 2023, the Company had $ 2,518 million of indebtedness associated with Allison Transmission, Inc.’s (“ATI”), the Company’s wholly-owned subsidiary, 4.75 % Senior Notes due October 2027 (“4.75% Senior Notes”), ATI’s 5.875 % Senior Notes due June 2029 (“5.875% Senior Notes”), ATI’s 3.75 % Senior Notes due January 2031 (“3.75% Senior Notes” and, together with the 4.75% Senior Notes and 5.875% Senior Notes, the “Senior Notes”) and the Second Amended and Restated Credit Agreement dated as of March 29, 2019, as amended (the “Credit Agreement”), governing ATI’s term loan facility in the amount of $ 618 million due March 2026 (“Term Loan”) and ATI’s revolving credit facility with commitments in the amount of $ 650 million due September 2025 (“Revolving Credit Facility” and, together with the Term Loan, the “Senior Secured Credit Facility”). The fair value of the Company’s long-term debt obligations as of December 31, 2023 was $ 2,388 million. The fair value is based on quoted Level 2 market prices of the Company’s debt as of December 31, 2023. The difference between the fair value and carrying value of the long-term debt is driven primarily by trends in the financial markets. Senior Secured Credit Facility In February 2023, the Company and ATI entered into Amendment No. 3 (the "Amendment") to the Credit Agreement. The Amendment replaced the London Interbank Offered Rate ("LIBOR") interest rate benchmark with SOFR and included a 0.1 % credit spread adjustment to the SOFR benchmark for all available interest periods. Other than the foregoing, the material terms of the Credit Agreement remained unchanged. The Amendment was treated as a modification to the Senior Secured Credit Facility through a practical expedient provided through reference rate reform accounting guidance. The borrowings under the Senior Secured Credit Facility are collateralized by a lien on substantially all assets of the Company, ATI and certain existing and future U.S. subsidiary guarantors, as provided in the Credit Agreement. Interest on the Term Loan, as of December 31, 2023 , is either (a) 1.75 % over a SOFR rate on deposits in U.S. dollars for one-, three- or six-month periods (or a twelve-month period if, at the time of the borrowing, consented to by all relevant lenders and the administrative agent) plus a 0.1 % credit spread adjustment for all interest periods ("Adjusted Term SOFR"), or (b) 0.75 % over the greater of the prime lending rate as quoted by the administrative agent, the Adjusted Term SOFR Rate for an interest period of one month plus 1.00 % and the federal funds effective rate published by the Federal Reserve Bank of New York plus 0.50 %, subject to a 1.00 % floor (the "Base Rate"). As of December 31, 2023, the Company elected to pay the lowest all-in rate of Adjusted Term SOFR plus the applicable margin, or 7.21 %, on the Term Loan. The Credit Agreement requires minimum quarterly principal payments on the Term Loan, as well as prepayments from certain net cash proceeds of non-ordinary course asset sales and casualty and condemnation events, the incurrence of certain debt and from a percentage of excess cash flow, if applicable. The minimum required quarterly principal payment on the Term Loan through its maturity date of March 2026 is $ 2 million. As of December 31, 2023, there had been no payments required for certain net cash proceeds of non-ordinary course asset sales and casualty and condemnation events. The remaining principal balance is due upon maturity. The Senior Secured Credit Facility also provides a Revolving C redit Facility, net of an allowance for up to $ 75 million in outstanding letters of credit commitments. Throughout the year ended December 31, 2023 , the Company made no withdrawals on the Revolving Credit Facility. As of December 31, 2023, the Company had $ 645 million available under the Revolving Credit Facility, net of $ 5 million in letters of credit. Borrowings under the Revolving Credit Facility bear interest at a variable base rate plus an applicable margin based on the Company’s first lien net leverage ratio. When the Company’s first lien net leverage ratio is above 4.00 x, interest on the Revolving Credit Facility is (a) 0.75 % over the Base Rate or (b) 1.75 % over the Adjusted Term SOFR Rate; when the Company’s first lien net leverage ratio is equal to or less than 4.00 x and above 3.50 x, interest on the Revolving Credit Facility is (i) 0.50 % over the Base Rate or (ii) 1.50 % over the Adjusted Term SOFR Rate; and when the Company’s first lien net leverage ratio is equal to or below 3.50 x, interest on the Revolving Credit Facility is (y) 0.25 % over the Base Rate or (z) 1.25 % over the Adjusted Term SOFR Rate. As of December 31, 2023, the applicable margin for the Revolving Credit Facility was 1.25 %. In addition, there is an annual commitment fee, based on the Company’s first lien net leverage ratio, on the average unused revolving credit borrowings available under the Revolving Credit Facility. As of December 31, 2023, the commitment fee was 0.25 %. Borrowings under the Revolving Credit Facility are payable at the option of the Company throughout the term of the Senior Secured Credit Facility with the balance due in September 2025. The Senior Secured Credit Facility requires the Company to maintain a specified maximum first lien net leverage ratio of 5.50 x when revolving loan commitments remain outstanding on the Revolving Credit Facility at the end of a fiscal quarter. As of December 31, 2023 , the Company had no amounts outstanding under the Revolving Credit Facility; however, the Company would have been in compliance with the maximum first lien net leverage ratio, achieving a 0.06 x ratio. Additionally, within the terms of the Senior Secured Credit Facility, a first lien net leverage ratio at or below 4.00 x resu lts in the elimination of excess cash flow payments on the Senior Secured Credit Facility for the applicable year. In addition, the Credit Agreement, among other things, includes customary restrictions (subject to certain exceptions) on the Company’s ability to incur certain indebtedness, grant certain liens, make certain investments, engage in acquisitions, consolidations and mergers, declare or pay certain dividends or repurchase shares of the Company’s common stock. As of December 31, 2023, the Company was in compliance with all covenants under the Credit Agreement. Senior Notes Each series of the Senior Notes is unsecured and is guaranteed by each of ATI’s domestic subsidiaries that is a borrower under or guarantees the Senior Secured Credit Facility and is unconditionally guaranteed, jointly and severally, by any of ATI’s future domestic subsidiaries that are borrowers under or guarantee the Senior Secured Credit Facility. None of ATI’s domestic subsidiaries currently guarantee its obligations under the Senior Secured Credit Facility, and therefore none of ATI’s domestic subsidiaries currently guarantee any series of the Senior Notes. The indentures governing the Senior Notes contain negative covenants restricting or limiting the Company’s ability to, among other things: incur or guarantee additional indebtedness, incur liens, pay dividends on, redeem or repurchase the Company’s capital stock, make certain investments, permit payment or dividend restrictions on certain of the Company’s subsidiaries, sell assets, engage in certain transactions with affiliates, and consolidate or merge or sell all or substantially all of the Company’s assets. As of December 31, 2023, the Company was in compliance with all covenants under the indentures governing the Senior Notes. ATI may from time to time seek to retire its Senior Notes through cash purchases, exchanges for equity securities, open market purchases, privately negotiated transactions, contractual redemptions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors and will be in accordance with the respective indenture governing such notes. The amounts involved may be material. Some or all of the 4.75 % Senior Notes may be redeemed at any time at redemption prices specified in the indenture governing such notes. Some or all of the 5.875 % Senior Notes may be redeemed prior to June 1, 2024 by paying a price equal to 100.00 % of the principal amount being redeemed, plus an “applicable premium”. At any time on or after June 1, 2024 , ATI may redeem some or all of the 5.875 % Senior Notes at redemption prices specified in the indenture governing such notes. Prior to January 30, 2026 , ATI may redeem some or all of the 3.75 % Senior Notes by paying a price equal to 100.00 % of the principal amount being redeemed, plus an “applicable premium”. At any time on or after January 30, 2026 , ATI may redeem some or all of the 3.75 % Senior Notes at redemption prices specified in the indenture governing such notes. |
Derivatives
Derivatives | 12 Months Ended |
Dec. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | NOTE 9. DERIVATIVES The Company is subject to interest rate risk related to the Senior Secured Credit Facility and entered into interest rate swaps to manage a portion of this exposure. The Company amended the contractual terms of its interest rate swaps in the second quarter of 2023. These amendments transitioned the reference rates from LIBOR to the forward-looking term rate based on SOFR ("Term SOFR") and were only a result of reference rate reform. During this transition period, the Company utilized optional expedients permitting the Company not to de-designate the existing cash flow hedging relationships and to continue to qualify for hedge accounting based upon a qualitative subsequent assessment concluding that the hedging relationships remained highly effective. When the transition of the reference rates was completed, the Company performed an initial quantitative assessment that demonstrated a highly effective hedging relationship that qualifies for hedge accounting under the hypothetical derivative method. As of December 31, 2023 , the Company held interest rate swap contracts that, in the aggregate, effectively hedge $ 500 million of the variable rate debt associated with the Term Loan at the Term SOFR weighted average fixed rate of 2.81 % through September 2025. Fair value adjustments are recorded as a component of AOCL in the Consolidated Balance Sheets. Balances in AOCL are reclassified to earnings when transactions related to the underlying risk are settled. See " Note 7. Fair Value of Financial Instruments” for information regarding the fair value of the Company’s interest rate swaps. The following tabular disclosures further describe the Company’s interest rate derivatives qualifying and designated for hedge accounting and their impact on the financial condition of the Company (dollars in millions): Fair Value Balance Sheet December 31, December 31, Derivative Assets: Interest rate swaps Other current assets $ 7 $ 7 Other non-current assets 5 11 Total derivative assets $ 12 $ 18 The balance of derivative gains recorded in AOCL as of December 31, 2023 and 2022 was $ 12 million and $ 18 million, respectively. The Company had $ 10 million of derivative gains recorded in AOCL expected to be reclassified to earnings within the next twelve months as of December 31, 2023. See "Note 17. Accumulated Other Comprehensive Loss” for information regarding activity recorded as a component of AOCL during the year ended December 31, 2023 . |
Product Warranty Liabilities
Product Warranty Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Guarantees and Product Warranties [Abstract] | |
Product Warranty Liabilities | NOTE 10. PRODUCT WARRANTY LIABILITIES As of December 31, 2023, the current and non-current product warranty liabilities were $ 32 million and $ 27 million, respectively. As of December 31, 2022, the current and non-current product warranty liabilities were $ 33 million and $ 24 million, respectively. Product warranty liability activities consisted of the following (dollars in millions): Year ended Year ended Year ended Beginning balance $ 57 $ 53 $ 66 Payments ( 41 ) ( 31 ) ( 30 ) Increase in liability (warranty issued during period) 28 17 16 Net adjustments to liability 15 18 1 Ending balance $ 59 $ 57 $ 53 The adjustments to the total liability in 2023, 2022 and 2021 were the result of general changes in estimates for various products and specific field action programs as additional claims data and field information became available. |
Deferred Revenue
Deferred Revenue | 12 Months Ended |
Dec. 31, 2023 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Revenue | NOTE 3. REVENUE Revenue is recognized as each distinct performance obligation within a contract is satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company enters into long-term agreements (“LTAs”) and distributor agreements with certain customers. The LTAs and distributor agreements do not include committed volumes until underlying purchase orders are issued; therefore, the Company determined that purchase orders are the contract with a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied, as there is no right of return. Some of the Company's contracts include multiple performance obligations, most commonly the sale of both a transmission and ETC. The Company allocates the contract’s transaction price to each performance obligation based on the standalone selling price of each distinct good or service in the contract. The Company may also use volume-based discounts and rebates as marketing incentives in the sales of both vehicle propulsion solutions and service parts, which are accounted for as variable consideration. The Company records the impact of the incentives as a reduction to revenue when it is determined that the adjustment is not likely to reverse. The Company estimates the impact of all other incentives based on the related sales and market conditions in the end market vocation. The Company recorded no material adjustments based on variable consideration during any of the years ended December 31, 2023, 2022 and 2021. Net sales are made on credit terms, generally 30 days , based on an assessment of the customer’s creditworthiness. For certain goods or services, the Company receives consideration prior to satisfying the related performance obligation. Such consideration is recorded as a contract liability in current and non-current deferred revenue as of December 31, 2023 and December 31, 2022. See "Note 11. Deferred Revenue” for more information including the amount of revenue earned during the year ended December 31, 2023 that had been previously deferred. The Company had no material contract assets as of either December 31, 2023 or 2022. The Company has one operating segment and reportable segment. The Company is in one line of business, which is the manufacture and distribution of vehicle propulsion solutions. The following presents disaggregated revenue by categories that best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors (dollars in millions): Year ended Year ended Year ended North America On-Highway $ 1,529 $ 1,359 $ 1,177 North America Off-Highway 63 86 58 Defense 166 146 186 Outside North America On-Highway 477 463 381 Outside North America Off-Highway 104 127 83 Service Parts, Support Equipment and Other 696 588 517 Total Net Sales $ 3,035 $ 2,769 $ 2,402 Disaggregated revenue by end market is further described as follows: North America On-Highway Revenue from the North America On-Highway end market is driven by the sale of propulsion solutions to original equipment manufacturers (“OEMs”), distributors and dealers that install the product into Class 4-5, Class 6-7 and Class 8 straight trucks, Class 8 day cab tractors, conventional transit, shuttle and coach buses, school buses and motorhome applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. North America Off-Highway Revenue from the North America Off-Highway end market is driven by sales of transmissions to OEMs and distributors that serve end users who operate vehicles and auxiliary equipment in energy, mining and construction applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Defense Revenue from the Defense end market is driven by sales of propulsion solutions to the U.S. Government or its contractors and sales to certain government contractors outside of the U.S. for use in both wheeled and tracked defense vehicle applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Periodically, the Company and the U.S. Government will enter into a bill-and-hold arrangement where a completed transmission physically remains at the Company’s facility at the request of the U.S. Government. Revenue is recognized at the point in time when it is determined that the U.S. Government accepts the transmission and is able to direct its use. Outside North America On-Highway Revenue from the Outside North America On-Highway end market is driven by the sale of propulsion solutions to OEMs and distributors that produce vehicles for commercial users in medium- and heavy-duty applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Outside North America Off-Highway Revenue from the Outside North America Off-Highway end market is driven by sales of transmissions to OEMs and distributors serving end users who operate vehicles and auxiliary equipment in energy, mining and construction applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Service Parts, Support Equipment and Other Revenue from the Service Parts, Support Equipment and Other end market is primarily derived from the sale of transmission parts and fluid purchased for the normal maintenance and repair needs of products in service, the sale of aluminum die cast components purchased as original parts and the sale of ETC contracts which extend the warranty coverages of propulsion solutions beyond the standard warranty period. Revenue is recognized on sales of service parts, support equipment and aluminum die cast components at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Revenue from the sale of ETC contracts is recognized ratably over the time period that corresponds with the period of coverage, as the Company has determined this method best depicts the progress towards satisfaction of its performance obligation. ETC contracts are typically sold in one to five year durations within the North America On-Highway, Outside North America On-Highway, North America Off-Highway and Outside North America Off-Highway end markets. The ETC contract period begins when the standard warranty coverage period ends. All consideration allocated to an ETC performance obligation is initially deferred until the coverage period begins. NOTE 11. DEFERRED REVENUE As of December 31, 2023, the current and non-current deferred revenue were $ 41 million and $ 89 million, respectively. As of December 31, 2022, the current and non-current deferred revenue were $ 38 million and $ 93 million, respectively. Deferred revenue activity consisted of the following (dollars in millions): Year ended Year ended Year ended Beginning balance $ 131 $ 136 $ 143 Increases 52 35 29 Revenue earned ( 53 ) ( 40 ) ( 36 ) Ending balance $ 130 $ 131 $ 136 As of both December 31, 2023 and 2022, deferred revenue recorded in current and non-current liabilities related to ETC was $ 30 million and $ 85 million, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Leases | NOTE 12. LEASES Lessee Accounting Contracts are assessed by the Company to determine if the contract conveys the right to control an identified asset in exchange for consideration during a period of time. The Company classifies all identified leases as either operating or finance leases. As of both December 31, 2023 and 2022, the Company was not a party to any finance leases. Contracts that contain leases are assessed to determine if the consideration in the contract is related to a lease component, non-lease component or other components not related to the lease. Lease components are recorded as right-of-use (“ROU”) assets and lease liabilities while any non-lease component is expensed as incurred. The consideration in the contract related to other components not related to the lease is allocated among the lease component and the non-lease component, as applicable, based on the stand-alone selling price of the lease and non-lease components. Certain lease contracts may contain an option to extend or terminate the lease. The Company considers the economic impact of extension and termination options by contract. If the Company concludes it is reasonably certain an option will be exercised, that option is included in the lease term and impacts the amount recorded as an ROU asset and lease liability upon inception of the contract. The Company's lease liability is determined by discounting the future cash flows over the lease period. The Company determines its discount rates utilizing current secured financing rates based on the length of the lease period plus the Company's margin over Adjusted Term SOFR on the Term Loan. The Company believes this rate effectively represents a borrowing rate the Company could obtain on a debt instrument possessing similar terms as the lease. Lease liabilities are classified between current and non-current liabilities based on the terms of the underlying leases. The weighted average discount rate on operating leases as of December 31, 2023 and 2022 was 4.75 % and 4.43 %, respectively. As of December 31, 2023 , the Company recorded current and non-current operating lease liabilities of $ 4 million and $ 14 million, respectively. As of December 31, 2022 , the Company recorded current and non-current operating lease liabilities of $ 4 million and $ 13 million, respectively. The following table reconciles future undiscounted cash flows for operating leases as of December 31, 2023 to total operating lease liabilities: December 31, 2024 $ 5 2025 5 2026 4 2027 3 2028 3 Thereafter 4 Total lease payments $ 24 Less: Interest 6 Present value of operating lease liabilities $ 18 ROU assets are calculated as the related lease liability adjusted for lease incentives, prepayments and the effect of escalating lease payments on period expense. The below table depicts the ROU assets held by the Company based on the underlying asset: December 31, December 31, Buildings $ 15 $ 15 Equipment 2 — Land 1 1 Vehicles 1 1 Total ROU assets $ 19 $ 17 The weighted average remaining lease term as of December 31, 2023 and December 31, 2022 was 5.6 years and 6.3 years , respectively. Operating lease expense was $ 6 million and $ 5 million for the years ended December 31, 2023 and 2022, respectively, and was recorded within Selling, general and administrative expense and Engineering — research and development on the Company's Consolidated Statements of Comprehensive Income. There was no material short-term operating lease expense for either of the years ended December 31, 2023 or 2022. During the years ended December 31, 2023 and 2022, the Company recorded $ 6 million and $ 4 million, respectively, of new ROU assets obtained in exchange for lease obligations. |
Other Income (Expense), Net
Other Income (Expense), Net | 12 Months Ended |
Dec. 31, 2023 | |
Other Income and Expenses [Abstract] | |
Other Income (Expense), Net | NOTE 13. OTHER INCOME (EXPENSE), NET Other income (expense), net consists of the following (dollars in millions): Years ended December 31, 2023 2022 2021 Post-retirement benefit plan amendment credits $ 9 $ 9 $ 10 Technology-related investments gain 3 6 4 Rabbi trust assets gain (loss) 3 ( 3 ) 2 Loss on foreign exchange ( 2 ) ( 13 ) ( 2 ) Unrealized (loss) gain on marketable securities ( 1 ) ( 22 ) 4 Other 3 2 1 Total $ 15 $ ( 21 ) $ 19 |
Other Current Liabilities
Other Current Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | NOTE 14. OTHER CURRENT LIABILITIES Other current liabilities consist of the following (dollars in millions): December 31, December 31, Payroll and related costs $ 89 $ 72 Sales incentives 41 42 Accrued interest payable 24 24 Vendor buyback obligation 18 16 Taxes payable 17 31 Lease liability 4 4 Other accruals 19 19 Total $ 212 $ 208 |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2023 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | NOTE 15. EMPLOYEE BENEFIT PLANS The Company provides defined benefit pension plans, defined contribution plans and/or other postretirement benefit plans to certain employees globally. However, contributions to the Company’s various international benefit plans are not material for the periods presented. The Company’s defined benefit pension plans generally provide benefits of negotiated, stated amounts for each year of service as well as significant supplemental benefits for eligible employees. The Company sponsors defined contribution retirement savings plans for eligible employees, based on employee location and status. The Company’s salaried defined contribution retirement savings plans provide for a Company match of employee contributions up to certain limits based upon eligible base salary. The charge to expense for the Company’s defined contribution retirement savings plans was $ 18 million, $ 16 million and $ 14 million for the years ended December 31, 2023, 2022 and 2021, respectively. The Company is also responsible for OPEB costs (medical, dental, vision, and life insurance) for hourly employees hired prior to May 19, 2008, excluding those employees eligible to retire at the time of the sale of the Company. The plan is unfunded and any future payments will be funded by the Company’s operating cash flows. Obligations, Funded Status and Recognition in the Consolidated Balance Sheets The following table provides a reconciliation of the changes in the benefit obligations, funded status and amounts recognized in the Consolidated Balance Sheets for the years ended December 31, 2023 and 2022 (dollars in millions): Pension Plans Post-retirement Benefits Year ended Year ended Year ended Year ended Benefit Obligations: Benefit obligation at beginning of year $ 161 $ 220 $ 73 $ 102 Service cost 4 7 — 1 Interest cost 8 6 4 3 Benefits paid ( 12 ) ( 15 ) ( 5 ) ( 4 ) Actuarial loss (gain) 8 ( 57 ) ( 8 ) ( 29 ) Benefit obligation at end of year $ 169 $ 161 $ 64 $ 73 Fair Value of Plan Assets: Fair value of plan assets at beginning of year $ 158 $ 213 $ — $ — Actual return on plan assets 10 ( 43 ) — — Employer contributions 8 3 5 4 Benefits paid ( 12 ) ( 15 ) ( 5 ) ( 4 ) Fair value of plan assets at end of year $ 164 $ 158 $ — $ — Net Funded Status $ ( 5 ) $ ( 3 ) $ ( 64 ) $ ( 73 ) Amounts Recognized in Balance Sheet: Non-current assets $ 1 $ 3 $ — $ — Current liabilities — — ( 4 ) ( 4 ) Non-current liabilities ( 6 ) ( 6 ) ( 60 ) ( 69 ) Total liabilities $ ( 5 ) $ ( 3 ) $ ( 64 ) $ ( 73 ) Accumulated Other Comprehensive Loss: Prior service credit $ 1 $ 1 $ 14 $ 24 Actuarial (gain) loss ( 7 ) ( 1 ) 33 27 Total $ ( 6 ) $ — $ 47 $ 51 The accumulated benefit obligation for the Company's pension plans as of December 31, 2023 and 2022 was $ 164 million and $ 159 million, respectively. The table below provides the weighted-average actuarial assumptions used to determine the benefit obligations of the Company’s plans. Pension Plans Post-retirement Benefits As of December 31, 2023 2022 2023 2022 Discount rate 5.00 % 5.20 % 5.00 % 5.20 % Rate of compensation increase (salaried) 3.00 % 3.00 % N/A N/A The discount rate is used to determine the present value of the Company’s benefit obligations. The Company’s discount rate is determined by matching the plans’ projected cash flows to a yield curve based on long-term, fixed income debt instruments available as of the measurement date of December 31, 2023. The Company reviews all actuarial assumptions on an annual basis and in the case of remeasurement. As of December 31, 2023 and 2022, the projected benefit obligation, the accumulated benefit obligation, and the fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets and for pension plans with an accumulated benefit obligation in excess of plan assets were as follows (dollars in millions): Hourly Plan Salary Plan As of December 31, 2023 2022 2023 2022 Plans with projected benefit obligation in excess of plan assets: Projected benefit obligation N/A 1 N/A 1 $ 83 $ 79 Fair value of plan assets N/A 1 N/A 1 $ 77 $ 73 Plans with accumulated benefit obligation in excess of plan assets: Accumulated benefit obligation N/A 1 N/A 1 $ 79 $ 76 Fair value of plan assets N/A 1 N/A 1 $ 77 $ 73 (1) As of December 31, 2023 and 2022, the hourly defined pension plan had plan assets greater than the p rojected benefit obligation and the accumulated benefit obligation. Net Periodic Benefit Cost Information about the net periodic benefit cost (credit) and other changes recognized in AOCL for the pension and post-retirement benefit plans is as follows (dollars in millions): Pension Plans Post-retirement Benefits Year ended Year ended Year ended Year ended Year ended Year ended Net Periodic Benefit Cost (Credit): Service cost $ 4 $ 7 $ 9 $ — $ 1 $ 1 Interest cost 8 6 5 4 3 3 Expected return on assets ( 8 ) ( 8 ) ( 8 ) — — — Prior service credit — ( 1 ) — ( 10 ) ( 10 ) ( 10 ) Recognized actuarial loss (gain) — 1 1 ( 2 ) — — Net Periodic Benefit Cost (Credit) $ 4 $ 5 $ 7 $ ( 8 ) $ ( 6 ) $ ( 6 ) Other changes in other Net loss (gain) $ 6 $ ( 6 ) $ ( 6 ) $ ( 8 ) $ ( 29 ) $ ( 5 ) Amortizations — — ( 1 ) 12 10 10 Total recognized – other $ 6 $ ( 6 ) $ ( 7 ) $ 4 $ ( 19 ) $ 5 The components of net periodic benefit costs other than the service cost component are included in Other income (expense), net in the Consolidated Statements of Comprehensive Income. The table below provides the weighted-average actuarial assumptions used to determine the net periodic benefit cost (credit). Pension Plans Post-retirement Benefits Year ended Year ended Year ended Year ended Year ended Year ended Discount rate 5.20 % 2.70 % 2.30 % 5.20 % 2.80 % 2.40 % Rate of compensation 3.00 % 3.00 % 3.00 % N/A N/A N/A Expected return on assets 5.30 % 3.80 % 3.70 % N/A N/A N/A The overall expected rate of return on plan assets is based upon historical and expected future returns consistent with the expected benefit duration of the plan for each asset group adjusted for investment and administrative fees. Health care cost trends are used to project future post-retirement benefits payable from the Company’s plans. As of December 31, 2023, future post-retirement health care costs were forecasted assuming an initial annual increase of up to 9.75 %, decreasing to an annual increase of up to 4.00 % by the year 2048 . The Company reviews all actuarial assumptions on an annual basis and in the case of remeasurement. Pension Plan Assets The Company’s pension plan assets mostly consist of diversified equity securities and diversified debt securities. The fair values of plan assets for the Company’s pension plans as of December 31, 2023 and 2022 are as follows (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Significant Other TOTAL 2023 2022 2023 2022 2023 2022 Diversified debt securities $ 12 $ 8 $ 123 $ 123 $ 135 $ 131 Diversified equity securities 18 18 7 7 25 25 Cash equivalents 4 2 — — 4 2 Total $ 34 $ 28 $ 130 $ 130 $ 164 $ 158 The Company’s investment strategy with respect to pension plan assets is to invest the assets in accordance with laws and regulations. The long-term primary objectives for the Company’s pension assets are to provide results that meet or exceed the plans’ actuarially assumed long-term rate of return without subjecting the funds to undue risk. To achieve these objectives the Company has established the following targets: Target Asset Category Hourly Salary Cash equivalents 2 % 2 % Diversified equity securities 15 15 Diversified debt securities 83 83 Total 100 % 100 % Throughout 2023, the Company’s investment committee has continued to evaluate the investments and take steps toward the established targets. Expected Contributions and Benefit Payments Information about expected cash flows for the Company’s pension and post-retirement benefit plans is as follows (dollars in millions): Pension Post-retirement Employer Contributions: 2024 expected contributions $ — $ 4 Expected Benefit Payments: 2024 11 4 2025 12 5 2026 12 4 2027 12 4 2028 12 4 2029-2033 66 23 Expected benefit payments for pension and post-retirement benefits will be paid from plan trusts or corporate assets. The Company’s funding policy is to contribute amounts annually that are at least equal to the amounts required by applicable laws and regulations or to directly fund payments to plan participants. Additional discretionary contributions will be made when deemed appropriate to meet the Company’s long-term obligation to the plans. Non-qualified Deferred Compensation Plan The Company maintains a non-qualified deferred compensation plan (“Deferred Compensation Plan”) for a select group of management. Under the terms of the plan, the Company has utilized a rabbi trust to accumulate assets to fund its promise to pay benefits under the Deferred Compensation Plan. The rabbi trust is an irrevocable trust, which restricts any use of funds (operational or otherwise) by the Company other than to pay benefits under the Deferred Compensation Plan, and prevents immediate taxation of contributed amounts. Funds are accumulated through both employee deferrals and a Company match. Funds can be invested by the employee into a diversified group of investment options, which have been selected by the Company’s investment committee, that are all categorized as Level 1 in the fair value hierarchy. The Company match resulted in $ 1 million of expense recorded for the year ended December 31, 2023 and no charge to the Consolidated Statements of Comprehensive Income for either of the years ended December 31, 2022 and 2021. The fair value of the rabbi trust plan assets and deferred compensation obligation was $ 18 million and $ 15 million as of December 31, 2023 and 2022 , respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 16. INCOME TAXES Income before income taxes included the following (dollars in millions): Years ended December 31, 2023 2022 2021 U.S. income $ 776 $ 621 $ 513 Foreign income 51 24 59 Total $ 827 $ 645 $ 572 The provision for income tax expense was estimated as follows (dollars in millions): Years ended December 31, 2023 2022 2021 Current income taxes: U.S. federal $ 144 $ 98 $ 48 U.S. state and local 16 11 8 Foreign 11 9 10 Total Current 171 118 66 Deferred income tax expense, net: U.S. federal ( 15 ) 5 56 U.S. state and local 2 ( 3 ) 8 Foreign ( 4 ) ( 6 ) — Total Deferred ( 17 ) ( 4 ) 64 Total income tax expense $ 154 $ 114 $ 130 A reconciliation of the provision for income tax expense compared with the amounts at the U.S. federal statutory rate is as follow s (dollars in millions): Years ended December 31, 2023 2022 2021 Tax at U.S. statutory income tax rate $ 174 $ 136 $ 120 Tax credits ( 15 ) ( 9 ) ( 4 ) State tax expense (excluding tax rate changes) 13 12 12 Non-deductible expenses ( 13 ) 2 — Effect of tax rate changes ( 4 ) ( 15 ) 2 Valuation allowance 2 ( 6 ) ( 1 ) Other adjustments ( 3 ) ( 6 ) 1 Total income tax expense $ 154 $ 114 $ 130 The effective tax rate for the years ended December 31, 2023 and 2022 was 19 % and 18 %, respectively. Deferred income tax assets and liabilities as of December 31, 2023 and 2022 reflect the effect of temporary differences between amounts of assets, liabilities and equity for financial reporting purposes and the bases of such assets, liabilities and equity as measured by tax laws, as well as tax loss and tax credit carry forwards. Net deferred tax assets and liabilities are classified as non-current in the Consolidated Balance Sheets. As described above, the deferred tax assets and liabilities are measured based on the enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. The Company has not recognized any deferred tax liabilities associated with earnings in foreign subsidiaries, except for its subsidiary located in China, as they are intended to be permanently reinvested and used to support foreign operations or have no associated tax requirements. As of December 31, 2023 , the Company has recorded a deferred tax liability of $ 3 million for the tax liability associated with the remittance of previously taxed income and unremitted earnings for its subsidiary located in China. Temporary differences and carryforwards that gave rise to deferred tax assets and liabilities included the following (dollars in millions): December 31, December 31, Deferred tax assets: Capitalized research $ 43 $ 29 Other accrued liabilities 35 30 Deferred revenue 28 29 Warranty accrual 14 11 Stock-based compensation 8 10 Tax credits 8 7 Inventories 7 7 Sales incentives 7 7 Other 16 18 Total deferred tax assets 166 148 Valuation allowances ( 9 ) ( 7 ) Deferred tax liabilities: Goodwill ( 414 ) ( 413 ) Trade name ( 178 ) ( 179 ) Property, plant and equipment ( 61 ) ( 53 ) Post-retirement ( 6 ) ( 6 ) Intangibles ( 3 ) ( 12 ) Other ( 5 ) ( 6 ) Total deferred tax liabilities ( 667 ) ( 669 ) Net deferred tax liability $ ( 510 ) $ ( 528 ) Management has determined, based on an evaluation of available objective and subjective evidence, that it is more likely than not that certain federal and state deferred tax assets will not be realized; therefore, these deferred tax assets are offset with a valuation allowance of $ 9 million as of D ecember 31, 2023 and $ 7 million as of December 31, 2022. The 2017 U.S. Tax Cuts and Jobs Act requires taxpayers to capitalize and amortize specified research and development expenditures over a period of five years for domestic or 15 years for foreign research, beginning with the tax years ending after December 31, 2021. As a result, the Company recognized a deferred tax asset o f $ 43 million as of December 31, 2023. All of the Company's tax returns, once filed, will remain subject to examination by the various taxing authorities for the duration of the applicable statute of limitations (generally three years from the earlier of the date of filing or the due date of the return). |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | NOTE 17. ACCUMULATED OTHER COMPREHENSIVE LOSS The changes in components of AOCL consisted of the following (dollars in millions): Pension Interest Foreign Total AOCL as of December 31, 2020 $ ( 19 ) $ ( 46 ) $ ( 24 ) $ ( 89 ) Other comprehensive income (loss) before reclassifications 12 14 ( 8 ) 18 Amounts reclassified from AOCL ( 9 ) 15 — 6 Income tax expense ( 1 ) ( 7 ) — ( 8 ) Net current period other comprehensive income (loss) $ 2 $ 22 $ ( 8 ) $ 16 AOCL as of December 31, 2021 $ ( 17 ) $ ( 24 ) $ ( 32 ) $ ( 73 ) Other comprehensive income (loss) before reclassifications 39 44 ( 10 ) 73 Amounts reclassified from AOCL ( 10 ) 6 — ( 4 ) Income tax expense ( 7 ) ( 11 ) — ( 18 ) Net current period other comprehensive income (loss) $ 22 $ 39 $ ( 10 ) $ 51 AOCL as of December 31, 2022 $ 5 $ 15 $ ( 42 ) $ ( 22 ) Other comprehensive income before reclassifications 3 7 2 12 Amounts reclassified from AOCL ( 12 ) ( 12 ) — ( 24 ) Income tax benefit 2 1 — 3 Net current period other comprehensive (loss) income $ ( 7 ) $ ( 4 ) $ 2 $ ( 9 ) AOCL as of December 31, 2023 $ ( 2 ) $ 11 $ ( 40 ) $ ( 31 ) The following table shows the location in the Consolidated Statements of Comprehensive Income affected by reclassifications from AOCL (dollars in millions): Amounts reclassified from AOCL AOCL Components Year ended December 31, 2023 Year ended December 31, 2022 Year ended December 31, 2021 Affected line item in the Interest rate swaps $ 12 $ ( 6 ) $ ( 15 ) Interest expense, net Prior service credit 10 11 10 Other income (expense), net Recognized actuarial gain (loss) 2 ( 1 ) ( 1 ) Other income (expense), net Total reclassifications, before tax 24 4 ( 6 ) Income before income taxes Income tax (expense) benefit ( 5 ) ( 1 ) 1 Income tax expense Total reclassifications $ 19 $ 3 $ ( 5 ) The Company revised its disclosure of amounts reclassified from AOCL related to its interest rate swaps and the income tax (expense) benefit attributed to those reclassifications for the period ended December 31, 2021, which resulted in a decrease to the previously disclosed total reclassifications from AOCL. The Company believes these revisions to the disclosures are immaterial to the consolidated financial statements. Prior service credit and actuarial gain (loss) are included in the computation of the Company’s net periodic benefit cost. Please see "Note 15. Employee Benefit Plans” for additional details. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 18. COMMITMENTS AND CONTINGENCIES The Company is party to various legal actions and administrative proceedings and subject to various claims arising in the ordinary course of business. These proceedings primarily involve commercial claims, product liability claims, personal injury claims and workers’ compensation claims. The Company believes that the ultimate liability, if any, in excess of amounts already provided for in the consolidated financial statements or covered by insurance on the disposition of these matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company. |
Concentration of Risk
Concentration of Risk | 12 Months Ended |
Dec. 31, 2023 | |
Risks and Uncertainties [Abstract] | |
Concentration of Risk | NOTE 19. CONCENTRATION OF RISK As of December 31, 2023 and 2022, the Company empl oyed approximately 3,700 and 3,500 employees, respectively, with 89 % of those employees in the U.S. Approximately 48 % and 46 % of the Company’s U.S. employees were represented by unions and subject to a collective bargaining agreement as of December 31, 2023 and 2022, respectively. The Company is currently operating under a collective bargaining agreement with the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”) Local 933 that expires in November 2027 . Three cu stomers accounted for 10% or more of the Company's net sales within the last three years presented. Years ended December 31, % of net sales 2023 2022 2021 Daimler AG 18 % 20 % 20 % Traton SE 11 % 10 % 10 % PACCAR Inc. 11 % 9 % 10 % Two cust omers accounted for 10% or more of the Company's outstanding accounts receivable within the last two years presented. % of accounts receivable December 31, December 31, Daimler AG 16 % 17 % Traton SE 14 % 11 % No supplier accounted for 10% or more of materials purchased during any of the years ended December 31, 2023, 2022 or 2021 . |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Common Stock | NOTE 20. COMMON STOCK The Company's Board of Directors has authorized the Company to repurchase up to $ 4,000 million of its common stock pursuant to a stock repurchase program (the "Repurchase Program"). During 2023, the Company repurchased approximately $ 263 million of its common stock under the Repurchase Program, leaving $ 773 million of authorized repurchases remaining under the Repurchase Program as of December 31, 2023. The Repurchase Program h as no termination date, and the timing and amount of stock purchases are subject to market conditions and corporate needs. The Repurchase Program may be modified, suspended or discontinued at any time at the Company’s discretion. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | NOTE 21. EARNINGS PER SHARE The following table reconciles the numerators and denominators used to calculate basic EPS and diluted EPS (in millions, except per share data): Years ended December 31, 2023 2022 2021 Net income $ 673 $ 531 $ 442 Weighted average shares of common stock outstanding 90 96 107 Dilutive effect of stock-based awards 1 — — Diluted weighted average shares of common stock outstanding 91 96 107 Basic earnings per share attributable to common stockholders $ 7.48 $ 5.53 $ 4.13 Diluted earnings per share attributable to common $ 7.40 $ 5.53 $ 4.13 The dilutive impact of stock-based compensation is calculated using the treasury stock method. The treasury stock method assumes that the Company uses the proceeds from the exercise of awards to repurchase common stock at the average market price during the period. During the year ended December 31, 2023 , there were no outstanding stock options excluded from the diluted EPS calculation because they were anti-dilutive. During the years ended December 31, 2022 and 2021, there were 2 million and 1 million, respectively, of outstanding stock options excluded from the diluted EPS calculation because they were anti-dilutive. Basic and diluted EPS for the full-year is calculated using the weighted average shares of common stock outstanding during the year while quarterly basic and diluted EPS is calculated using the weighted average shares of common stock outstanding during the quarter; therefore, the sum of the four quarters’ EPS may not equal full-year EPS. |
Geographic Information
Geographic Information | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Geographic Information | NOTE 22. GEOGRAPHIC INFORMATION The Company had the following net sales by country, based on the location of the customer (dollars in millions): Years ended December 31, 2023 2022 2021 United States $ 2,171 $ 1,944 $ 1,706 China 164 196 122 Japan 102 103 109 Canada 65 57 62 Mexico 51 41 50 Germany 49 44 34 Other 433 384 319 Total $ 3,035 $ 2,769 $ 2,402 The Company had the following net long-lived assets by country (dollars in millions): Years ended December 31, 2023 2022 2021 United States $ 738 $ 730 $ 680 India 20 19 11 Hungary 10 10 11 Other 6 4 4 Total $ 774 $ 763 $ 706 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 23. SUBSEQUENT EVENTS In January 2024, the UAW Local 933 ratified a new four-year collective bargaining agreement with the Company that expires in November 2027 . The entry into the new collective bargaining agreement did not have a material impact on the Company's consolidated financial statements for the year ended December 31, 2023. |
Schedule I-Parent Company Only
Schedule I-Parent Company Only Financial Statements | 12 Months Ended |
Dec. 31, 2023 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule I-Parent Company Only Financial Statements | Allison Transmission Holdings, Inc. Schedule I—Parent Compa ny only Balance Sheets (dollars in millions) December 31, 2023 December 31, 2022 ASSETS Current Assets: Cash $ — $ — Total Current Assets — — Investments in and advances to subsidiaries 1,233 874 TOTAL ASSETS $ 1,233 $ 874 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ — $ — Total Current Liabilities — — Capital stock 1 1 Paid in capital 1,891 1,848 Accumulated deficit ( 628 ) ( 953 ) Accumulated other comprehensive loss, net of tax ( 31 ) ( 22 ) TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,233 $ 874 The accompanying note is an integral part of the Parent Company only financial statements. Allison Transmission Holdings, Inc. Schedule I—Parent Company only St atements of Comprehensive Income (dollars in millions) Years ended December 31, 2023 2022 2021 Net sales $ — $ — $ — General and administrative fees — — — Total operating income — — — Other income: Equity earnings of consolidated subsidiary 673 531 442 Income before income taxes 673 531 442 Income tax expense — — — Net income $ 673 $ 531 $ 442 Comprehensive income $ 664 $ 582 $ 458 The accompanying note is an integral part of the Parent Company only financial statements. Allison Transmission Holdings, Inc. Schedule I—Parent Company on ly Statements of Cash Flows (dollars in millions) Years ended December 31, 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 673 $ 531 $ 442 Deduct items included in net income not providing cash: Equity in earnings in consolidated subsidiary ( 673 ) ( 531 ) ( 442 ) Net cash provided by operating activities — — — CASH FLOWS FROM INVESTING ACTIVITIES: Investments in subsidiaries ( 28 ) ( 2 ) ( 3 ) Dividends 83 80 81 Net cash provided by investing activities 55 78 78 CASH FLOWS FROM FINANCING ACTIVITIES: Capital contributions 28 2 3 Dividends ( 83 ) ( 80 ) ( 81 ) Net cash used in financing activities ( 55 ) ( 78 ) ( 78 ) Net increase (decrease) during period — — — Cash and cash equivalents at beginning of period — — — Cash and cash equivalents at end of period $ — $ — $ — The accompanying note is an integral part of the Parent Company only financial statements. |
Schedule I-Parent Company Onl_2
Schedule I-Parent Company Only Financial Statements - BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2023 | |
Parent Company | |
Condensed Financial Statements Captions [Line Items] | |
Basis of Presentation | NOTE 1—BASIS O F PRESENTATION Allison Transmission Holdings, Inc. (the “Parent Company”) is a holding company that conducts all of its business operations through its subsidiaries. There are restrictions on the Parent Company’s ability to obtain funds from its subsidiaries through dividends (refer to "Note 8. Debt” of Notes to Consolidated Financial Statements). The entire amount of the Parent Company’s consolidated net assets was subject to restrictions on payment of dividends as of December 31, 2023, 2022 and 2021 . Accordingly, these financial statements have been presented on a “parent-only” basis. Under a parent-only presentation, the Parent Company’s investments in its consolidated subsidiaries are presented under the equity method of accounting. These parent-only financial statements should be read in conjunction with Allison Transmission Holdings, Inc.’s audited Consolidated Financial Statements included elsewhere herein. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the periods presented. The consolidated financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated. These consolidated financial statements present the financial position, results of comprehensive income, cash flows and statements of stockholders’ equity. Certain immaterial reclassifications have been made in the consolidated financial statements of prior periods to conform to the current period presentation. These reclassifications had no material impact on previously reported net income, total stockholders’ equity or cash flows. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Estimates include, but are not limited to, sales incentives, government price adjustments, fair market values and future cash flows associated with goodwill, indefinite-lived intangibles, definite-lived intangibles, long-lived asset impairment tests, useful lives for depreciation and amortization, warranty liabilities, core deposit liabilities, determination of discount rate and other assumptions for pension and other post-retirement benefit (“OPEB”) expense, income taxes and deferred tax valuation allowances, derivative valuation, assumptions for business combinations and contingencies. The Company’s accounting policies involve the application of judgments and assumptions made by management that include inherent risks and uncertainties. Actual results could differ materially from these estimates and from the assumptions used in the preparation of the Company's financial statements. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur. |
Segment Reporting | Segment Reporting In accordance with the Financial Accounting Standards Board’s (“FASB”) authoritative accounting guidance on segment reporting, the Company has one operating segment and reportable segment. The Company is in one line of business, which is the manufacture and distribution of vehicle propulsion solutions. |
Business Combinations | Business Combinations The Company uses the acquisition method to account for business combinations. The assets acquired and liabilities assumed are recorded at their respective estimated fair value at the date of acquisition. Any excess purchase price over the fair values of the acquired net assets is recorded as goodwill. Determining the fair values of assets acquired and liabilities assumed requires management's judgment and includes the use of estimates with respect to timing and amount of future cash flows, market rate assumptions, actuarial assumptions, appropriate discount rates and other relevant factors. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents are defined as short-term, highly-liquid investments with original maturities of 90 days or less. Under the Company’s cash management system, checks issued but not presented to banks may result in book overdraft balances for accounting purposes and are classified within Accounts payable in the Consolidated Balance Sheets. The change in book overdrafts is reported as a component of operating cash flows for Accounts payable. |
Investments | Investments Investments in equity securities where the Company is able to exercise significant influence, but not control, are accounted for under the equity method. Significant influence is typically considered to exist when the Company's ownership interest in the investee is between 20% and 50%, although other factors, such as representation on the investee's board of directors and the impact of commercial arrangements, also are considered. Investments in limited partnerships and limited liability companies are also accounted for using the equity method if the Company's investment is more than minor or if the Company is the general partner. Under the equity method of accounting, the investment is initially recorded at cost and subsequently adjusted by the Company's proportionate share of the entity's net income, with adjustments recognized in Other income (expense), net. Investments in equity securities with a readily determinable fair value, not accounted for under the equity method, are recorded at fair value with unrealized gains and losses included in Other income (expense), net. For equity securities without a readily determinable fair value, the investments are recorded utilizing the measurement alternative at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities, with gains and losses included in Other income (expense), net . See "Note 7. Fair Value of Financial Instruments" for more details on the Company's investments in equity securities. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. The Company determines cost using the first-in, first-out method. The Company analyzes inventory on a quarterly basis to determine whether it is excess or obsolete inventory. Any decline in carrying value of estimated excess or obsolete inventory is recorded as a reduction of inventory and as an expense included in Cost of sales in the period it is identified. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation expense is recorded using the straight-line method over the following estimated lives: Range in Land improvements 5 – 30 Buildings and building improvements 10 – 40 Machinery and equipment 2 – 20 Software 2 – 5 Special tooling 2 – 10 Software represents the costs of software developed or obtained for internal use. Software costs are amortized on a straight-line basis over their estimated useful lives. Software assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets. Upgrades and enhancements are capitalized if they result in added functionality, which enables the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion and business process reengineering costs are expensed in the period in which they are incurred. Special tooling represents the costs to design and develop tools, dies, jigs and other items owned by the Company and used in the manufacture of components by suppliers under long-term supply agreements. Special tooling is depreciated on a straight-line basis ove r the tool’s expected useful life. Special tooling used in the development of new technology is expensed as incurred. Engineering, testing and other costs incurred in the design and development of production parts are expensed as incurred. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The carrying value of long-lived assets is evaluated whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. Events or circumstances that would result in an impairment review primarily include a significant change in the use of an asset or the planned sale or disposal of an asset. The asset would be considered impaired when there is no future use planned for the asset or the future net undiscounted cash flows generated by the asset or asset group are less than its carrying value. An impairment loss would be recognized based on the amount by which the carrying value exceeds fair value. Assumptions and estimates used to determine cash flows in the evaluation of impairment and the fair values used to determine the impairment are subject to a degree of judgment and complexity. Any changes to the assumptions and estimates resulting from changes in actual results or market conditions from those anticipated may affect the carrying value of long-lived assets and could result in an impairment charge. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The Company has elected to perform its annual impairment tests for goodwill and indefinite-lived intangible assets on October 31 of every year using a multi-step impairment test. In Step 0, the Company has the option to evaluate various qualitative factors to determine the likelihood of impairment. If the Company determines that the fair value is more likely than not less than the carrying value, then it is required to perform Step 1. If the Company does not elect to perform Step 0, it can voluntarily proceed directly to Step 1. In Step 1, the Company performs a quantitative analysis to compare the fair value to its carrying value. If the fair value exceeds the carrying value, no impairment is recorded, and the Company is not required to perform further testing. If the carrying value exceeds fair value, the Company would record an impairment loss equal to the difference. A qualitative assessment contains uncertainties because it requires management to make assumptions and to apply judgment to assess business changes, economic outlook, financial trends and forecasts, growth rates, credit ratings, equity ratings, discount rates, industry data and other relevant qualitative factors. A quantitative analysis contains uncertainties because it is performed utilizing a discounted cash flow model which includes key assumptions, such as financial forecasts; net sales growth derived from market information, industry reports, marketing programs and future new product introductions; operating margin improvements derived from cost reduction programs and fixed cost leverage driven by higher sales volumes; and a risk-adjusted discount rate. Goodwill represents the excess of purchase price paid over the fair value of net assets acquired. In accordance with the FASB’s authoritative accounting guidance on goodwill, the Company does not amortize goodwill but rather evaluates it for impairment on an annual basis, or more often if events or circumstances change that could cause goodwill to become impaired. Goodwill is tested for impairment at the reporting unit level, which is the same as the Company's one operating and reportable segment. The Company does not aggregate any components into its reporting unit. Goodwill impairment testing for 2023 was performed using the Step 0 analysis by assessing certain qualitative trends and factors. These trends and factors were compared to, and based on, the assumptions used in prior years. After reviewing the various qualitative factors mentioned above, the Company's 2023 annual goodwill impairment test indicated that the fair value for the reporting unit more likely than not exceeded its carrying value, indicating no impairment. Other intangible assets have both indefinite and finite useful lives. Intangible assets with indefinite useful lives are not amortized but are tested annually for impairment, or more often if events or circumstances change that could cause intangible assets with indefinite useful lives to become impaired. After reviewing the various qualitative factors mentioned above, the Company's annual 2023 indefinite-lived intangible assets impairment tests, as of October 31, 2023, indicated that the fair value of its indefinite-lived intangible assets more likely than not exceeded their respective carrying value, indicating no impairment. Intangible assets with finite lives are amortized over their estimated useful lives and reviewed for impairment when circumstances change that would create a triggering event. Customer relationships are amortized over the life in which expected benefits are to be consumed. The other remaining finite life intangibles are amortized on a straight-line basis over their useful lives. The Company evaluates the remaining useful life of the other intangible assets on a periodic basis to determine whether events or circumstances warrant a revision to the remaining useful life. Assumptions and estimates about future values and remaining useful lives of the Company's intangible and other long-lived assets are complex and subjective. Such assumptions and estimates can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors, such as changes in the Company's business strategy and internal forecasts. Although management believes the historical assumptions and estimates are reasonable and appropriate, different assumptions and estimates could materially impact the Company's reported financial results. Further information is provided in "Note 6. Goodwill and Other Intangible Assets.” |
Deferred Financing Costs | Deferred Financing Costs The deferred financing costs related to line-of-credit arrangements are presented as a component of other non-current assets. The deferred financing costs related to other types of debt instruments such as notes and loans are presented as a component of long-term debt. Deferred financing costs continue to be amortized over the life of the related debt using the effective interest method. Amortization of deferred financing costs is recorded as part of interest expense and totaled $ 4 million for each of the years ended December 31, 2023, 2022 and 2021 . |
Financial Instruments | Financial Instruments The Company’s cash equivalents are invested in U.S. government backed securities and recorded at fair value in the Consolidated Balance Sheets. The Company's marketable securities are carried at fair value on the Consolidated Balance Sheets. The Company’s financial derivative instruments, including interest rate swaps, are carried at fair value on the Consolidated Balance Sheets. Refer to "Note 7. Fair Value of Financial Instruments” for more detail. The Company’s long-term debt obligations are carried at historical amounts with the Company providing fair value disclosure in "Note 8. Debt”. The carrying values of accounts receivable and accounts payable approximate fair value due to their short-term nature. |
Insurable Liabilities | Insurable Liabilities The Company records liabilities for its medical, workers’ compensation, long-term disability, product, general and auto liabilities. The determination of these liabilities and related expenses is dependent on claims experience. For most of these liabilities, claims incurred but not yet reported are estimated based upon historical claims experience. |
Revenue Recognition | Revenue Recognition The Company records sales as each distinct performance obligation within a contract is satisfied. The Company sells extended transmission coverage (“ETC”) for which sales are deferred. ETC sales are recognized ratably over the period of coverage, which typically ranges from one to five years after the standard warranty coverage ends. Costs associated with ETC programs are recorded as incurred during the ex tended period. Distributor and customer sales incentives, consisting of allowances and other rebates, are recorded as a reduction to Net sales when it is determined that the adjustment is not likely to reverse, historically on a quarterly basis. Incentive programs are generally product specific or region specific. Some factors used in estimating when an adjustment is not likely to reverse are the number of transmissions that will be affected by the incentive program and rate of acceptance of any incentive program. Sales under U.S. government production contracts are recognized at the point in time when control passes to the customer, or when the U.S. government accepts the transmission and is able to direct its use in certain bill-and-hold arrangements. Deferred revenue arises from cash received in advance of the culmination of the earnings process and is recognized as revenue in future periods when the applicable revenue recognition criteria have been met. Under the terms of certain previous U.S. government contracts, there were certain price reduction clauses and provisions for potential price reductions which were estimated at the time of sale based upon the Company’s history and experience and were recorded as a reduction to Net sales. Potential reductions may be attributed to a change in projected sales volumes or plant efficiencies which impact overall costs. The Company had $ 54 million recorded in the price reduction reserve account as of both December 31, 2023 and 2022. The Company engages in licensing agreements with certain third parties for the use of the Company’s intellectual property. Deferred revenue arises from cash received in advance of the period of use of the intellectual property. Revenue is recognized over the license period as it is earned. The Company classifies shipping and handling billed to customers in Net sales and shipping and handling costs in Cost of sales. The Company contracts with various third parties to provide engineering services. These services are recorded as Net sales in accordance with the terms of the contract. The saleable engineering services recorded were $ 26 million, $ 21 million and $ 21 million for the years ended December 31, 2023, 2022 and 2021 , respectively. The associated costs are recorded in Cost of sales. |
Warranty | Warranty Provisions for estimated expenses related to product warranties are made at the time products are sold. Warranty claims arise when a transmission or propulsion solution manufactured by us fails while in service during the relevant warranty period. The warranty reserve is adjusted in Selling, general and administrative expense based on the Company’s current and historical warranty claims paid and associated repair costs. These estimates are established using historical information including the nature, frequency, and average cost of warranty claims and are adjusted as actual information becomes available. From time to time, the Company may initiate a specific field action program. As a result of the uncertainty surrounding the nature and frequency of specific field action programs, the liability for such programs is recorded when the Company commits to an action. The Company reviews and assesses the liability for these programs on a quarterly basis. The Company also assesses its ability to recover certain costs from its suppliers and records a receivable from the supplier when it believes a recovery is probable. Warranty costs may differ from those estimated if actual claim rates are higher or lower than the Company's historical rates. |
Research and Development | Research and Development The Company incurs costs in connection with research and development programs that are expected to contribute to future earnings. Such costs are charged to Engineering — research and development as incurred. |
Foreign Currency Translation | Foreign Currency Translation Most of the Company’s subsidiaries outside the United States prepare financial statements in currencies other than the U.S. Dollar. The functional currency for all of these subsidiaries is the local currency, except for the Company’s Hong Kong and Middle East subsidiaries which currently use the U.S. Dollar as their functional currency. Balances are translated at period-end exchange rates for assets and liabilities and monthly weighted-average exchange rates for revenues and expenses. The translation gains and losses are stated as a component of Accumulated Other Comprehensive Loss (“AOCL”) as disclosed in "Note 17. Accumulated Other Comprehensive Loss”. |
Derivative Instruments | Derivative Instruments In the normal course of business, the Company is exposed to fluctuations in interest rates, foreign currency exchange rates, and commodity prices. The risk is managed through the use of financial derivative instruments, when appropriate. The Company has qualified for and elected hedge accounting treatment on interest rate swap contracts. As necessary, the Company adjusts the values of the derivative instruments for counter-party or credit risk. "Note 9. Derivatives” provides further information on the accounting treatment of the Company’s derivative instruments. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The future tax benefits associated with operating loss and tax credit carryforwards are recognized as deferred tax assets. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. When releasing income tax effects from AOCL, the Company utilizes the portfolio securities approach. The need to establish a valuation allowance against the deferred tax assets is assessed periodically based on a more-likely-than-not realization threshold, in accordance with the FASB’s authoritative accounting guidance on income taxes. Appropriate consideration is given to all positive and negative evidence related to that realization. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, experience with tax attributes expiring unused and tax planning alternatives. The weight given to these considerations depends upon the degree to which they can be objectively verified. The Company records uncertain tax positions on the basis of a two-step process whereby (1) it is determined whether it is more likely than not that the tax position will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is greater than 50% likely to be re alized upon ultimate settlement with the related tax authority. |
Stock-Based Compensation | Stock-Based Compensation In March 2015, the Company’s Board of Directors adopted, and in May 2015, the Company’s stockholders approved, the Allison Transmission Holdings, Inc. 2015 Equity Incentive Award Plan (“2015 Plan”), which became effective on May 14, 2015. Under the 2015 Plan, certain employees (including executive officers), consultants and directors are eligible to receive equity-based compensation, including non-qualified stock options, incentive stock options, restricted stock, dividend equivalents, stock payments, restricted stock units (“RSUs”), performance awards, stock appreciation rights and other equity-based awards, or any combination thereof. The 2015 Plan limits the aggregate number of shares of common stock available for issue to 15 million and will expire on, and no option or other equity award may be granted pursuant to the 2015 Plan after, the tenth anniversary of the date the 2015 Plan was approved by the Board of Directors. Prior to the adoption of the 2015 Plan, the Company’s equity-based awards were granted under the Allison Transmission Holdings, Inc. 2011 Equity Incentive Award Plan (“Prior Plan”). As of the effective date of the 2015 Plan, no new awards will be granted under the Prior Plan, but the Prior Plan will continue to govern the equity awards issued under the Prior Plan. RSU grants are recorded at fair market value at the date of grant and vest upon continued performance of services by the RSU holder typically over one to three years . Perfo rmance unit grants are recorded at fair value based on a Monte-Carlo pricing model, and the restrictions lapse on the date the Compensation Committee of the Board of Directors determines the number of shares that shall vest based on the related performance or market condition achievement. Non-qualified stock option grants are recorded at fair value using a Black-Scholes option pricing model and vest upon the continued performance of services by the option holder typically over one to three years . The Company has made a policy election under applicable accounting guidance to account for forfeitures as a reduction of stock-based compensation expense when the forfeiture actually occurs. RSUs were granted to certain employees and directors at fair market value on the date of grant. The restrictions lapse upon continued performance by the RSU holder on the vest date which generally occurs over one , two or three years . RSU incentive compensation expense recorded was $ 11 million, $ 9 million and $ 6 million for the years ended December 31, 2023, 2022 and 2021, respectively. Performance-based awards, including performance units, were granted to certain employees at fair value at the date of grant. The Company records the fair value of each performance-based award based on a Monte-Carlo pricing model. Performance-based award incentive compensation expense recorded was $ 5 million for each of the years ended December 31, 2023, 2022 and 2021. Stock options were granted to certain employees at fair value on the date of grant using a Black-Scholes option pricing model. Stock option incentive compensation expense recorded was $ 6 million, $ 4 million and $ 3 million for the years ended December 31, 2023, 2022 and 2021 , respectively. |
Pension and Post-retirement Benefit Plans | Pension and Post-retirement Benefit Plans For pension and OPEB plans in which employees participate, costs are determined within the FASB’s authoritative accounting guidance set forth in employers’ defined benefit pensions including accounting for settlements and curtailments of defined benefit pension plans, termination of benefits and accounting for post-retirement benefits other than pensions. In accordance with the authoritative accounting guidance, the Company recognizes the funded status of its defined benefit pension plans and OPEB plan in its Consolidated Balance Sheets with a corresponding adjustment to AOCL, net of tax. Post-retirement benefit costs consist of service cost and interest cost on accrued obligations. Actuarial gains and losses on liabilities, together with any prior service costs, are charged (or credited) to income over the average remaining service lives of employees. The benefit cost components shown in the Consolidated Statements of Comprehensive Income are based upon various actuarial assumptions and methodologies as prescribed by authoritative accounting guidance. These assumptions include discount rates, expected return on plan assets, health care cost trend rates, inflation, rate of compensation increases, population demographics, mortality rates and other factors. The Company reviews all actuarial assumptions on an annual basis. Changes in key economic indicators can change these assumptions. These assumptions, along with the actual value of assets at the measurement date, will impact the calculation of pension expenses for the following year. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In November 2023, the FASB issued authoritative accounting guidance expanding public entities’ reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses that are regularly reviewed by the Chief Operating Decision Maker and included within each reported measure of segment profit or loss. The guidance will become effective for the Company starting with its fiscal year ended December 31, 2024 and the subsequent interim periods. The guidance will be applied retrospectively, and the Company does not plan to early adopt. Management is currently evaluating the impact of this guidance on the Company's consolidated financial statements. In December 2023, the FASB issued authoritative accounting guidance to improve income tax disclosures by requiring disaggregated information about a reporting entity's effective tax rate reconciliation and information on income taxes paid. The guidance will become effective for the Company beginning with its fiscal year ended December 31, 2025. The guidance will be applied prospectively with the option to apply it retrospectively. Management is currently evaluating the impact of this guidance on the Company's consolidated financial statements. All other recently issued accounting pronouncements were assessed as either not applicable to the Company or were not expected to have a material impact on the Company's consolidated financial statements. |
Lessee Accounting | Contracts are assessed by the Company to determine if the contract conveys the right to control an identified asset in exchange for consideration during a period of time. The Company classifies all identified leases as either operating or finance leases. As of both December 31, 2023 and 2022, the Company was not a party to any finance leases. Contracts that contain leases are assessed to determine if the consideration in the contract is related to a lease component, non-lease component or other components not related to the lease. Lease components are recorded as right-of-use (“ROU”) assets and lease liabilities while any non-lease component is expensed as incurred. The consideration in the contract related to other components not related to the lease is allocated among the lease component and the non-lease component, as applicable, based on the stand-alone selling price of the lease and non-lease components. Certain lease contracts may contain an option to extend or terminate the lease. The Company considers the economic impact of extension and termination options by contract. If the Company concludes it is reasonably certain an option will be exercised, that option is included in the lease term and impacts the amount recorded as an ROU asset and lease liability upon inception of the contract. The Company's lease liability is determined by discounting the future cash flows over the lease period. The Company determines its discount rates utilizing current secured financing rates based on the length of the lease period plus the Company's margin over Adjusted Term SOFR on the Term Loan. The Company believes this rate effectively represents a borrowing rate the Company could obtain on a debt instrument possessing similar terms as the lease. Lease liabilities are classified between current and non-current liabilities based on the terms of the underlying leases. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Property Plant and Equipment Estimated Lives | Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation expense is recorded using the straight-line method over the following estimated lives: Range in Land improvements 5 – 30 Buildings and building improvements 10 – 40 Machinery and equipment 2 – 20 Software 2 – 5 Special tooling 2 – 10 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregated Revenue by Categories | The following presents disaggregated revenue by categories that best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors (dollars in millions): Year ended Year ended Year ended North America On-Highway $ 1,529 $ 1,359 $ 1,177 North America Off-Highway 63 86 58 Defense 166 146 186 Outside North America On-Highway 477 463 381 Outside North America Off-Highway 104 127 83 Service Parts, Support Equipment and Other 696 588 517 Total Net Sales $ 3,035 $ 2,769 $ 2,402 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Components of Inventories | Inventories consisted of the following components (dollars in millions): December 31, 2023 December 31, 2022 Purchased parts and raw materials $ 152 $ 115 Work in progress 17 7 Service parts 54 53 Finished goods 53 49 Total inventories $ 276 $ 224 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property Plant and Equipment Cost and Accumulated Depreciation | The cost and accumulated depreciation of property, plant and equipment are as follows (dollars in millions): December 31, 2023 December 31, 2022 Machinery and equipment $ 937 $ 845 Buildings and building improvements 528 517 Special tooling 259 268 Software 195 186 Construction in progress 68 107 Land and land improvements 29 27 Total property, plant and equipment 2,016 1,950 Accumulated depreciation ( 1,242 ) ( 1,187 ) Property, plant and equipment, net $ 774 $ 763 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Other Intangible Assets | The following presents a summary of other intangible assets (dollars in millions): December 31, 2023 December 31, 2022 Intangible Accumulated Intangible Intangible Accumulated Intangible Other intangible assets: Trade name $ 791 $ — $ 791 $ 791 $ — $ 791 In-process research and development 25 — 25 25 — 25 Customer relationships – commercial 839 ( 833 ) 6 839 ( 793 ) 46 Customer relationships – defense 62 ( 56 ) 6 62 ( 53 ) 9 Proprietary technology 484 ( 479 ) 5 484 ( 477 ) 7 Non-compete agreement 1 ( 1 ) — 1 ( 1 ) — Total $ 2,202 $ ( 1,369 ) $ 833 $ 2,202 $ ( 1,324 ) $ 878 |
Schedule of Amortization Expense Related to Other Intangible Assets for Next Five Fiscal Years | Amortization expense re lated to other intangible assets for the next five years is expected to be (dollars in millions): 2024 2025 2026 2027 2028 Amortization expense $ 10 $ 7 $ 3 $ 3 $ 2 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value of Financial Assets and (Liabilities) | The following table summarizes the fair value of the Company’s financial assets and (liabilities) as of December 31, 2023 and 2022 (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Significant Other TOTAL 2023 2022 2023 2022 2023 2022 Cash equivalents $ 421 $ 111 $ — $ — $ 421 $ 111 Marketable securities 20 22 — — 20 22 Rabbi trust assets 18 15 — — 18 15 Deferred compensation obligation ( 18 ) ( 15 ) — — ( 18 ) ( 15 ) Derivative assets — — 12 18 12 18 Total $ 441 $ 133 $ 12 $ 18 $ 453 $ 151 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Summary of Long-Term Debt and Maturities | Long-term debt and maturities are as follows (dollars in millions): December 31, 2023 December 31, 2022 Long-term debt: Senior Secured Credit Facility Term Loan, variable, due 2026 $ 618 $ 625 Senior Notes, fixed 4.75 %, due 2027 400 400 Senior Notes, fixed 5.875 %, due 2029 500 500 Senior Notes, fixed 3.75 %, due 2031 1,000 1,000 Total long-term debt $ 2,518 $ 2,525 Less: current maturities of long-term debt 6 6 deferred financing costs, net (see Note 2) 15 18 Total long-term debt, net $ 2,497 $ 2,501 |
Principal Payments Required on Long Term Debt | Principal payments required on long-term debt during the nex t five years are as follows (dollars in millions): 2024 2025 2026 2027 2028 Payments $ 6 $ 6 $ 606 $ 400 $ — |
Derivatives (Tables)
Derivatives (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and their Impact on Financial Condition | The following tabular disclosures further describe the Company’s interest rate derivatives qualifying and designated for hedge accounting and their impact on the financial condition of the Company (dollars in millions): Fair Value Balance Sheet December 31, December 31, Derivative Assets: Interest rate swaps Other current assets $ 7 $ 7 Other non-current assets 5 11 Total derivative assets $ 12 $ 18 |
Product Warranty Liabilities (T
Product Warranty Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Guarantees and Product Warranties [Abstract] | |
Product Warranty Liability Activities | Product warranty liability activities consisted of the following (dollars in millions): Year ended Year ended Year ended Beginning balance $ 57 $ 53 $ 66 Payments ( 41 ) ( 31 ) ( 30 ) Increase in liability (warranty issued during period) 28 17 16 Net adjustments to liability 15 18 1 Ending balance $ 59 $ 57 $ 53 |
Deferred Revenue (Tables)
Deferred Revenue (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Summary of Deferred Revenue Activity | Deferred revenue activity consisted of the following (dollars in millions): Year ended Year ended Year ended Beginning balance $ 131 $ 136 $ 143 Increases 52 35 29 Revenue earned ( 53 ) ( 40 ) ( 36 ) Ending balance $ 130 $ 131 $ 136 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Schedule of Lease Maturity, Current Guidance | The following table reconciles future undiscounted cash flows for operating leases as of December 31, 2023 to total operating lease liabilities: December 31, 2024 $ 5 2025 5 2026 4 2027 3 2028 3 Thereafter 4 Total lease payments $ 24 Less: Interest 6 Present value of operating lease liabilities $ 18 |
Schedule of Right of Use Assets | The below table depicts the ROU assets held by the Company based on the underlying asset: December 31, December 31, Buildings $ 15 $ 15 Equipment 2 — Land 1 1 Vehicles 1 1 Total ROU assets $ 19 $ 17 |
Other Income (Expense), Net (Ta
Other Income (Expense), Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Other Income and Expenses [Abstract] | |
Computation of Other Income (Expense), Net | Other income (expense), net consists of the following (dollars in millions): Years ended December 31, 2023 2022 2021 Post-retirement benefit plan amendment credits $ 9 $ 9 $ 10 Technology-related investments gain 3 6 4 Rabbi trust assets gain (loss) 3 ( 3 ) 2 Loss on foreign exchange ( 2 ) ( 13 ) ( 2 ) Unrealized (loss) gain on marketable securities ( 1 ) ( 22 ) 4 Other 3 2 1 Total $ 15 $ ( 21 ) $ 19 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Other Current Liabilities | Other current liabilities consist of the following (dollars in millions): December 31, December 31, Payroll and related costs $ 89 $ 72 Sales incentives 41 42 Accrued interest payable 24 24 Vendor buyback obligation 18 16 Taxes payable 17 31 Lease liability 4 4 Other accruals 19 19 Total $ 212 $ 208 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Retirement Benefits [Abstract] | |
Reconciliation of Changes in Benefit Obligations, Funded Status and Amounts Recognized in Consolidated Balance Sheets | The following table provides a reconciliation of the changes in the benefit obligations, funded status and amounts recognized in the Consolidated Balance Sheets for the years ended December 31, 2023 and 2022 (dollars in millions): Pension Plans Post-retirement Benefits Year ended Year ended Year ended Year ended Benefit Obligations: Benefit obligation at beginning of year $ 161 $ 220 $ 73 $ 102 Service cost 4 7 — 1 Interest cost 8 6 4 3 Benefits paid ( 12 ) ( 15 ) ( 5 ) ( 4 ) Actuarial loss (gain) 8 ( 57 ) ( 8 ) ( 29 ) Benefit obligation at end of year $ 169 $ 161 $ 64 $ 73 Fair Value of Plan Assets: Fair value of plan assets at beginning of year $ 158 $ 213 $ — $ — Actual return on plan assets 10 ( 43 ) — — Employer contributions 8 3 5 4 Benefits paid ( 12 ) ( 15 ) ( 5 ) ( 4 ) Fair value of plan assets at end of year $ 164 $ 158 $ — $ — Net Funded Status $ ( 5 ) $ ( 3 ) $ ( 64 ) $ ( 73 ) Amounts Recognized in Balance Sheet: Non-current assets $ 1 $ 3 $ — $ — Current liabilities — — ( 4 ) ( 4 ) Non-current liabilities ( 6 ) ( 6 ) ( 60 ) ( 69 ) Total liabilities $ ( 5 ) $ ( 3 ) $ ( 64 ) $ ( 73 ) Accumulated Other Comprehensive Loss: Prior service credit $ 1 $ 1 $ 14 $ 24 Actuarial (gain) loss ( 7 ) ( 1 ) 33 27 Total $ ( 6 ) $ — $ 47 $ 51 |
Projected Benefit Obligation in Excess of Plan Assets and Accumulated Benefit Obligation in Excess of Plan Assets | As of December 31, 2023 and 2022, the projected benefit obligation, the accumulated benefit obligation, and the fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets and for pension plans with an accumulated benefit obligation in excess of plan assets were as follows (dollars in millions): Hourly Plan Salary Plan As of December 31, 2023 2022 2023 2022 Plans with projected benefit obligation in excess of plan assets: Projected benefit obligation N/A 1 N/A 1 $ 83 $ 79 Fair value of plan assets N/A 1 N/A 1 $ 77 $ 73 Plans with accumulated benefit obligation in excess of plan assets: Accumulated benefit obligation N/A 1 N/A 1 $ 79 $ 76 Fair value of plan assets N/A 1 N/A 1 $ 77 $ 73 (1) As of December 31, 2023 and 2022, the hourly defined pension plan had plan assets greater than the p rojected benefit obligation and the accumulated benefit obligation. |
Net Periodic Benefit Costs | Information about the net periodic benefit cost (credit) and other changes recognized in AOCL for the pension and post-retirement benefit plans is as follows (dollars in millions): Pension Plans Post-retirement Benefits Year ended Year ended Year ended Year ended Year ended Year ended Net Periodic Benefit Cost (Credit): Service cost $ 4 $ 7 $ 9 $ — $ 1 $ 1 Interest cost 8 6 5 4 3 3 Expected return on assets ( 8 ) ( 8 ) ( 8 ) — — — Prior service credit — ( 1 ) — ( 10 ) ( 10 ) ( 10 ) Recognized actuarial loss (gain) — 1 1 ( 2 ) — — Net Periodic Benefit Cost (Credit) $ 4 $ 5 $ 7 $ ( 8 ) $ ( 6 ) $ ( 6 ) Other changes in other Net loss (gain) $ 6 $ ( 6 ) $ ( 6 ) $ ( 8 ) $ ( 29 ) $ ( 5 ) Amortizations — — ( 1 ) 12 10 10 Total recognized – other $ 6 $ ( 6 ) $ ( 7 ) $ 4 $ ( 19 ) $ 5 |
Weighted-Average Actuarial Assumptions | The table below provides the weighted-average actuarial assumptions used to determine the benefit obligations of the Company’s plans. Pension Plans Post-retirement Benefits As of December 31, 2023 2022 2023 2022 Discount rate 5.00 % 5.20 % 5.00 % 5.20 % Rate of compensation increase (salaried) 3.00 % 3.00 % N/A N/A The table below provides the weighted-average actuarial assumptions used to determine the net periodic benefit cost (credit). Pension Plans Post-retirement Benefits Year ended Year ended Year ended Year ended Year ended Year ended Discount rate 5.20 % 2.70 % 2.30 % 5.20 % 2.80 % 2.40 % Rate of compensation 3.00 % 3.00 % 3.00 % N/A N/A N/A Expected return on assets 5.30 % 3.80 % 3.70 % N/A N/A N/A |
Fair Value of Plan Assets | The fair values of plan assets for the Company’s pension plans as of December 31, 2023 and 2022 are as follows (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Significant Other TOTAL 2023 2022 2023 2022 2023 2022 Diversified debt securities $ 12 $ 8 $ 123 $ 123 $ 135 $ 131 Diversified equity securities 18 18 7 7 25 25 Cash equivalents 4 2 — — 4 2 Total $ 34 $ 28 $ 130 $ 130 $ 164 $ 158 |
Schedule of Allocation of Plan Assets | To achieve these objectives the Company has established the following targets: Target Asset Category Hourly Salary Cash equivalents 2 % 2 % Diversified equity securities 15 15 Diversified debt securities 83 83 Total 100 % 100 % |
Expected Cash Flows for Pension and Post-Retirement Benefit Plans | Information about expected cash flows for the Company’s pension and post-retirement benefit plans is as follows (dollars in millions): Pension Post-retirement Employer Contributions: 2024 expected contributions $ — $ 4 Expected Benefit Payments: 2024 11 4 2025 12 5 2026 12 4 2027 12 4 2028 12 4 2029-2033 66 23 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Loss Before Income Taxes | Income before income taxes included the following (dollars in millions): Years ended December 31, 2023 2022 2021 U.S. income $ 776 $ 621 $ 513 Foreign income 51 24 59 Total $ 827 $ 645 $ 572 |
Provision for Income Tax Expense | The provision for income tax expense was estimated as follows (dollars in millions): Years ended December 31, 2023 2022 2021 Current income taxes: U.S. federal $ 144 $ 98 $ 48 U.S. state and local 16 11 8 Foreign 11 9 10 Total Current 171 118 66 Deferred income tax expense, net: U.S. federal ( 15 ) 5 56 U.S. state and local 2 ( 3 ) 8 Foreign ( 4 ) ( 6 ) — Total Deferred ( 17 ) ( 4 ) 64 Total income tax expense $ 154 $ 114 $ 130 |
Reconciliation of Provision for Income Tax Expense | A reconciliation of the provision for income tax expense compared with the amounts at the U.S. federal statutory rate is as follow s (dollars in millions): Years ended December 31, 2023 2022 2021 Tax at U.S. statutory income tax rate $ 174 $ 136 $ 120 Tax credits ( 15 ) ( 9 ) ( 4 ) State tax expense (excluding tax rate changes) 13 12 12 Non-deductible expenses ( 13 ) 2 — Effect of tax rate changes ( 4 ) ( 15 ) 2 Valuation allowance 2 ( 6 ) ( 1 ) Other adjustments ( 3 ) ( 6 ) 1 Total income tax expense $ 154 $ 114 $ 130 |
Deferred Tax Assets and Liabilities | Temporary differences and carryforwards that gave rise to deferred tax assets and liabilities included the following (dollars in millions): December 31, December 31, Deferred tax assets: Capitalized research $ 43 $ 29 Other accrued liabilities 35 30 Deferred revenue 28 29 Warranty accrual 14 11 Stock-based compensation 8 10 Tax credits 8 7 Inventories 7 7 Sales incentives 7 7 Other 16 18 Total deferred tax assets 166 148 Valuation allowances ( 9 ) ( 7 ) Deferred tax liabilities: Goodwill ( 414 ) ( 413 ) Trade name ( 178 ) ( 179 ) Property, plant and equipment ( 61 ) ( 53 ) Post-retirement ( 6 ) ( 6 ) Intangibles ( 3 ) ( 12 ) Other ( 5 ) ( 6 ) Total deferred tax liabilities ( 667 ) ( 669 ) Net deferred tax liability $ ( 510 ) $ ( 528 ) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Changes in Accumulated Other Comprehensive Loss by Component | The changes in components of AOCL consisted of the following (dollars in millions): Pension Interest Foreign Total AOCL as of December 31, 2020 $ ( 19 ) $ ( 46 ) $ ( 24 ) $ ( 89 ) Other comprehensive income (loss) before reclassifications 12 14 ( 8 ) 18 Amounts reclassified from AOCL ( 9 ) 15 — 6 Income tax expense ( 1 ) ( 7 ) — ( 8 ) Net current period other comprehensive income (loss) $ 2 $ 22 $ ( 8 ) $ 16 AOCL as of December 31, 2021 $ ( 17 ) $ ( 24 ) $ ( 32 ) $ ( 73 ) Other comprehensive income (loss) before reclassifications 39 44 ( 10 ) 73 Amounts reclassified from AOCL ( 10 ) 6 — ( 4 ) Income tax expense ( 7 ) ( 11 ) — ( 18 ) Net current period other comprehensive income (loss) $ 22 $ 39 $ ( 10 ) $ 51 AOCL as of December 31, 2022 $ 5 $ 15 $ ( 42 ) $ ( 22 ) Other comprehensive income before reclassifications 3 7 2 12 Amounts reclassified from AOCL ( 12 ) ( 12 ) — ( 24 ) Income tax benefit 2 1 — 3 Net current period other comprehensive (loss) income $ ( 7 ) $ ( 4 ) $ 2 $ ( 9 ) AOCL as of December 31, 2023 $ ( 2 ) $ 11 $ ( 40 ) $ ( 31 ) |
Reclassification out of Accumulated Other Comprehensive Loss | The following table shows the location in the Consolidated Statements of Comprehensive Income affected by reclassifications from AOCL (dollars in millions): Amounts reclassified from AOCL AOCL Components Year ended December 31, 2023 Year ended December 31, 2022 Year ended December 31, 2021 Affected line item in the Interest rate swaps $ 12 $ ( 6 ) $ ( 15 ) Interest expense, net Prior service credit 10 11 10 Other income (expense), net Recognized actuarial gain (loss) 2 ( 1 ) ( 1 ) Other income (expense), net Total reclassifications, before tax 24 4 ( 6 ) Income before income taxes Income tax (expense) benefit ( 5 ) ( 1 ) 1 Income tax expense Total reclassifications $ 19 $ 3 $ ( 5 ) |
Concentration of Risk (Tables)
Concentration of Risk (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Risks and Uncertainties [Abstract] | |
Schedules of Concentration of Risk by Risk Factor | cu stomers accounted for 10% or more of the Company's net sales within the last three years presented. Years ended December 31, % of net sales 2023 2022 2021 Daimler AG 18 % 20 % 20 % Traton SE 11 % 10 % 10 % PACCAR Inc. 11 % 9 % 10 % cust omers accounted for 10% or more of the Company's outstanding accounts receivable within the last two years presented. % of accounts receivable December 31, December 31, Daimler AG 16 % 17 % Traton SE 14 % 11 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Numerators and Denominators Used to Calculate Basic EPS and Diluted EPS | The following table reconciles the numerators and denominators used to calculate basic EPS and diluted EPS (in millions, except per share data): Years ended December 31, 2023 2022 2021 Net income $ 673 $ 531 $ 442 Weighted average shares of common stock outstanding 90 96 107 Dilutive effect of stock-based awards 1 — — Diluted weighted average shares of common stock outstanding 91 96 107 Basic earnings per share attributable to common stockholders $ 7.48 $ 5.53 $ 4.13 Diluted earnings per share attributable to common $ 7.40 $ 5.53 $ 4.13 |
Geographic Information (Tables)
Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Net Sales by Country | The Company had the following net sales by country, based on the location of the customer (dollars in millions): Years ended December 31, 2023 2022 2021 United States $ 2,171 $ 1,944 $ 1,706 China 164 196 122 Japan 102 103 109 Canada 65 57 62 Mexico 51 41 50 Germany 49 44 34 Other 433 384 319 Total $ 3,035 $ 2,769 $ 2,402 |
Schedule of Disclosure of Long-Lived Assets by Geographic Location | The Company had the following net long-lived assets by country (dollars in millions): Years ended December 31, 2023 2022 2021 United States $ 738 $ 730 $ 680 India 20 19 11 Hungary 10 10 11 Other 6 4 4 Total $ 774 $ 763 $ 706 |
Overview - Additional Informati
Overview - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2023 Customer | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | |
Worldwide independent distributor and dealer locations | 1,600 |
Sales Revenue, Net | North America | Geographic Concentration Risk | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | |
Concentration of risk, percentage | 75% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) shares in Millions | 12 Months Ended | |||
Dec. 31, 2023 USD ($) Segment | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Mar. 31, 2015 shares | |
Segment Reporting | ||||
Number of operating segment | Segment | 1 | |||
Number of reportable segment | Segment | 1 | |||
Deferred Financing Costs | ||||
Amortization of deferred financing costs | $ 4,000,000 | $ 4,000,000 | $ 4,000,000 | |
Revenue Recognition | ||||
Military price reduction reserve | 54,000,000 | 54,000,000 | ||
Net sales | 3,035,000,000 | 2,769,000,000 | 2,402,000,000 | |
Stock-Based Compensation | ||||
Aggregate number of shares of common stock available for issuance under the 2015 Plan | shares | 15 | |||
Investments | ||||
Goodwill impairment | 0 | |||
Restricted Stock And Restricted Stock Unit | ||||
Stock-Based Compensation | ||||
Incentive compensation expense | 11,000,000 | 9,000,000 | 6,000,000 | |
Performance Awards | ||||
Stock-Based Compensation | ||||
Incentive compensation expense | 5,000,000 | 5,000,000 | 5,000,000 | |
Stock Options | ||||
Stock-Based Compensation | ||||
Incentive compensation expense | $ 6,000,000 | 4,000,000 | 3,000,000 | |
Vesting Schedule One | Restricted Stock Units (RSUs) | ||||
Stock-Based Compensation | ||||
Option vesting period | 1 year | |||
Vesting Schedule One | Restricted Stock And Restricted Stock Unit | ||||
Stock-Based Compensation | ||||
Option vesting period | 1 year | |||
Vesting Schedule One | Non-qualified Stock Option Grants | ||||
Stock-Based Compensation | ||||
Option vesting period | 1 year | |||
Vesting Schedule Three | Restricted Stock Units (RSUs) | ||||
Stock-Based Compensation | ||||
Option vesting period | 3 years | |||
Vesting Schedule Three | Restricted Stock And Restricted Stock Unit | ||||
Stock-Based Compensation | ||||
Option vesting period | 3 years | |||
Vesting Schedule Three | Non-qualified Stock Option Grants | ||||
Stock-Based Compensation | ||||
Option vesting period | 3 years | |||
Vesting Schedule Two | Restricted Stock And Restricted Stock Unit | ||||
Stock-Based Compensation | ||||
Option vesting period | 2 years | |||
Engineering Services | ||||
Revenue Recognition | ||||
Net sales | $ 26,000,000 | $ 21,000,000 | $ 21,000,000 | |
Minimum | ||||
Revenue Recognition | ||||
ETC sales recognized period | 1 year | |||
Maximum | ||||
Revenue Recognition | ||||
ETC sales recognized period | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Property Plant and Equipment Estimated Lives (Details) | Dec. 31, 2023 |
Land and land improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 5 years |
Land and land improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 30 years |
Buildings and building improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 10 years |
Buildings and building improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 40 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 2 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 20 years |
Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 2 years |
Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 5 years |
Special tooling | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 2 years |
Special tooling | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 10 years |
Revenue - Additional Informatio
Revenue - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2023 USD ($) Segment | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Deferred Revenue Arrangement [Line Items] | |||
Material adjustments based on variable consideration | $ | $ 0 | $ 0 | $ 0 |
Credit term period | 30 days | ||
Contract assets | $ | $ 0 | $ 0 | |
Number of operating segment | Segment | 1 | ||
Number of reportable segment | Segment | 1 | ||
Minimum | |||
Deferred Revenue Arrangement [Line Items] | |||
ETC sales recognized period | 1 year | ||
Maximum | |||
Deferred Revenue Arrangement [Line Items] | |||
ETC sales recognized period | 5 years |
Revenue - Disaggregated Revenue
Revenue - Disaggregated Revenue by Categories (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Total Net Sales | $ 3,035 | $ 2,769 | $ 2,402 |
North America On-Highway | |||
Disaggregation of Revenue [Line Items] | |||
Total Net Sales | 1,529 | 1,359 | 1,177 |
North America Off-Highway | |||
Disaggregation of Revenue [Line Items] | |||
Total Net Sales | 63 | 86 | 58 |
Defense | |||
Disaggregation of Revenue [Line Items] | |||
Total Net Sales | 166 | 146 | 186 |
Outside North America On-Highway | |||
Disaggregation of Revenue [Line Items] | |||
Total Net Sales | 477 | 463 | 381 |
Outside North America Off-Highway | |||
Disaggregation of Revenue [Line Items] | |||
Total Net Sales | 104 | 127 | 83 |
Service Parts, Support Equipment and Other | |||
Disaggregation of Revenue [Line Items] | |||
Total Net Sales | $ 696 | $ 588 | $ 517 |
Inventories - Schedule of Compo
Inventories - Schedule of Components of Inventories (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Purchased parts and raw materials | $ 152 | $ 115 |
Work in progress | 17 | 7 |
Service parts | 54 | 53 |
Finished goods | 53 | 49 |
Total inventories | $ 276 | $ 224 |
Property, Plant and Equipment -
Property, Plant and Equipment - Schedule of Property Plant and Equipment Cost and Accumulated Depreciation (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | |||
Construction in progress | $ 68 | $ 107 | |
Property, plant and equipment, gross | 2,016 | 1,950 | |
Accumulated depreciation | (1,242) | (1,187) | |
Property, plant and equipment, net | 774 | 763 | $ 706 |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 937 | 845 | |
Buildings and building improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 528 | 517 | |
Special tooling | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 259 | 268 | |
Software | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 195 | 186 | |
Land and land improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 29 | $ 27 |
Property, Plant and Equipment_2
Property, Plant and Equipment - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation of property, plant and equipment | $ 109 | $ 109 | $ 104 |
Goodwill And Other Intangible_3
Goodwill And Other Intangible Assets - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 2,076,000,000 | $ 2,075,000,000 | |
Amortization of intangible assets | 45,000,000 | 46,000,000 | $ 46,000,000 |
Trade name impairment | $ 0 | $ 0 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Schedule of Other Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross, Total | $ 2,202 | $ 2,202 |
Accumulated amortization | (1,369) | (1,324) |
Intangible assets, net, Total | 833 | 878 |
Trade name | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Indefinite lived intangible assets | 791 | 791 |
In process research and development | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Indefinite lived intangible assets | 25 | 25 |
Customer relationships - commercial | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 839 | 839 |
Accumulated amortization | (833) | (793) |
Intangible assets, net | 6 | 46 |
Customer relationships - defense | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 62 | 62 |
Accumulated amortization | (56) | (53) |
Intangible assets, net | 6 | 9 |
Proprietary technology | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 484 | 484 |
Accumulated amortization | (479) | (477) |
Intangible assets, net | 5 | 7 |
Non-compete agreement | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 1 | 1 |
Accumulated amortization | $ (1) | $ (1) |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Schedule of Amortization Expense Related to Other Intangible Assets for Next Five Fiscal Years (Details) $ in Millions | Dec. 31, 2023 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2024 | $ 10 |
2025 | 7 |
2026 | 3 |
2027 | 3 |
2028 | $ 2 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value measurement guidance and hierarchy levels, description | Fair value is the price (exit price) that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The accounting guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy defined by the relevant guidance are as follows: Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Level 2 — Inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes financial instruments that are valued using quoted prices in markets that are not active and those financial instruments that are valued using models or other valuation methodologies in which all significant value-drivers are observable in active markets or are supported by observable levels at which transactions are executed in the marketplace. Level 3 — Certain inputs are unobservable or have little or no market data available. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. At each balance sheet date, the Company performs an analysis of all instruments subject to authoritative accounting guidance and includes, in Level 3, all of those whose fair value is based on significant unobservable inputs. As of December 31, 2023 and 2022, the Company did not have any Level 3 financial assets or liabilities. | |
Equity securities without readily determinable fair value, amount | $ 5,000,000 | $ 0 |
Fair Value, Inputs, Level 3 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Financial assets | 0 | 0 |
Financial liabilities | $ 0 | $ 0 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Summary of Fair Value of Financial Assets and (Liabilities) (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 421 | $ 111 |
Marketable Securities | $ 20 | $ 22 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Assets | Assets |
Rabbi trust assets | $ 18 | $ 15 |
Deferred compensation obligation | (18) | (15) |
Total | 453 | 151 |
Derivatives Designated as Hedging Instruments | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative assets | 12 | 18 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash equivalents | 421 | 111 |
Marketable Securities | 20 | 22 |
Rabbi trust assets | 18 | 15 |
Deferred compensation obligation | (18) | (15) |
Total | 441 | 133 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivatives Designated as Hedging Instruments | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Marketable Securities | 0 | 0 |
Rabbi trust assets | 0 | 0 |
Deferred compensation obligation | 0 | 0 |
Total | 12 | 18 |
Significant Other Observable Inputs (Level 2) | Derivatives Designated as Hedging Instruments | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 12 | $ 18 |
Debt - Summary of Long-Term Deb
Debt - Summary of Long-Term Debt and Maturities (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 2,518 | $ 2,525 |
Current portion of long-term debt | 6 | 6 |
deferred financing costs, net | 15 | 18 |
Long-term debt | 2,497 | 2,501 |
Senior Secured Credit Facility Term Loan, Variable, Due 2026 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 618 | 625 |
Senior Notes, Fixed 4.75%, Due 2027 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 400 | 400 |
Senior Notes, Fixed 5.875%, Due 2029 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 500 | 500 |
Senior Notes, Fixed 3.75%, Due 2031 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 1,000 | $ 1,000 |
Debt - Summary of Long-Term D_2
Debt - Summary of Long-Term Debt and Maturities (Parenthetical) (Details) | Dec. 31, 2023 | Dec. 31, 2022 |
Senior Secured Credit Facility Term Loan, Variable, Due 2026 | ||
Debt Instrument [Line Items] | ||
Debt instrument, due date | 2026 | 2026 |
Senior Notes, Fixed 4.75%, Due 2027 | ||
Debt Instrument [Line Items] | ||
Debt instrument, due date | 2027 | 2027 |
Debt instrument, stated interest rate | 4.75% | 4.75% |
Senior Notes, Fixed 5.875%, Due 2029 | ||
Debt Instrument [Line Items] | ||
Debt instrument, due date | 2029 | 2029 |
Debt instrument, stated interest rate | 5.875% | 5.875% |
Senior Notes, Fixed 3.75%, Due 2031 | ||
Debt Instrument [Line Items] | ||
Debt instrument, due date | 2031 | 2031 |
Debt instrument, stated interest rate | 3.75% | 3.75% |
Debt - Principal Payments Requi
Debt - Principal Payments Required on Long Term Debt (Details) $ in Millions | Dec. 31, 2023 USD ($) |
Debt Disclosure [Abstract] | |
2024 | $ 6 |
2025 | 6 |
2026 | 606 |
2027 | 400 |
2028 | $ 0 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Long-term debt | $ 2,518 | $ 2,525 |
Fair value of long-term debt obligations | 2,388 | |
Senior Notes, Fixed 4.75%, Due 2027 | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 400 | $ 400 |
Debt instrument, stated interest rate | 4.75% | 4.75% |
Debt instrument, maturity month and year | 2027-10 | |
Senior Notes, Fixed 5.875%, Due 2029 | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 500 | $ 500 |
Debt instrument, stated interest rate | 5.875% | 5.875% |
Debt instrument, maturity month and year | 2029-06 | |
Senior Notes, Fixed 3.75%, Due 2031 | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 1,000 | $ 1,000 |
Debt instrument, stated interest rate | 3.75% | 3.75% |
Debt instrument, maturity month and year | 2031-01 | |
Senior Secured Credit Facility Term Loan, Variable, Due 2026 | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 618 | $ 625 |
Debt instrument, maturity month and year | 2026-03 | |
Debt Instrument, Redemption, Period Two | Senior Notes, Fixed 5.875%, Due 2029 | ||
Debt Instrument [Line Items] | ||
Debt instrument, redemption end date | Jun. 01, 2024 | |
Percentage of principal amount redeemed | 100% | |
Debt Instrument, Redemption, Period Two | Senior Notes, Fixed 3.75%, Due 2031 | ||
Debt Instrument [Line Items] | ||
Debt instrument, redemption end date | Jan. 30, 2026 | |
Percentage of principal amount redeemed | 100% | |
Debt Instrument, Redemption, Period Three | Senior Notes, Fixed 5.875%, Due 2029 | ||
Debt Instrument [Line Items] | ||
Debt instrument redemption start date | Jun. 01, 2024 | |
Debt Instrument, Redemption, Period Three | Senior Notes, Fixed 3.75%, Due 2031 | ||
Debt Instrument [Line Items] | ||
Debt instrument, redemption end date | Jan. 30, 2026 | |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt instrument, maturity month and year | 2025-09 | |
Credit facility, commitments amount | $ 650 |
Debt - Senior Secured Credit Fa
Debt - Senior Secured Credit Facility - Additional Information (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
Feb. 28, 2023 | Dec. 31, 2023 | |
Debt Instrument [Line Items] | ||
Balance of letters of credit | $ 5,000,000 | |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Credit facility, commitments amount | $ 650,000,000 | |
Debt instrument, maturity month and year | 2025-09 | |
Available revolving credit facility | $ 645,000,000 | |
Commitment fee percentage | 0.25% | |
Amount outstanding | $ 0 | |
Achieved senior secured leverage ratio | 0.06 | |
SOFR | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Applicable margin over base rate | 1.25% | |
SOFR | First Lien Net Leverage Ratio is Above 4.00x | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Applicable margin over base rate | 1.75% | |
SOFR | First Lien Net Leverage Ratio is Equal to or Less Than 4.00x and above 3.50x | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Applicable margin over base rate | 1.50% | |
SOFR | First Lien Net Leverage Ratio is Equal to or Below 3.50x | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Applicable margin over base rate | 1.25% | |
Base Rate | First Lien Net Leverage Ratio is Above 4.00x | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Applicable margin over base rate | 0.75% | |
Base Rate | First Lien Net Leverage Ratio is Equal to or Less Than 4.00x and above 3.50x | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Applicable margin over base rate | 0.50% | |
Base Rate | First Lien Net Leverage Ratio is Equal to or Below 3.50x | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Applicable margin over base rate | 0.25% | |
Minimum | First Lien Net Leverage Ratio is Above 4.00x | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Net leverage ratio | 4 | |
Senior Secured Credit Facility | ||
Debt Instrument [Line Items] | ||
Net leverage ratio | 4 | |
Required senior secured leverage ratio | 5.5 | |
Senior Secured Credit Facility | Letter of Credit | ||
Debt Instrument [Line Items] | ||
Credit facility, commitments amount | $ 75,000,000 | |
Credit facility, withdrawal amount | $ 0 | |
Senior Secured Credit Facility | SOFR benchmark | ||
Debt Instrument [Line Items] | ||
Applicable margin over base rate | 0.10% | |
Credit spread adjustment rate | 0.10% | |
Senior Secured Credit Facility | Minimum | First Lien Net Leverage Ratio is Equal to or Less Than 4.00x and above 3.50x | ||
Debt Instrument [Line Items] | ||
Net leverage ratio | 3.50 | |
Senior Secured Credit Facility | Maximum | First Lien Net Leverage Ratio is Equal to or Less Than 4.00x and above 3.50x | ||
Debt Instrument [Line Items] | ||
Net leverage ratio | 4 | |
Senior Secured Credit Facility | Maximum | First Lien Net Leverage Ratio is Equal to or Below 3.50x | ||
Debt Instrument [Line Items] | ||
Net leverage ratio | 3.50 | |
Term Loan | ||
Debt Instrument [Line Items] | ||
Debt instrument effective interest rate | 7.21% | |
Debt instrument, maturity month and year | 2026-03 | |
Term Loan | SOFR | ||
Debt Instrument [Line Items] | ||
Applicable margin over base rate | 0.75% | |
Term Loan | Base Rate | ||
Debt Instrument [Line Items] | ||
Applicable margin over base rate | 0.50% | |
Term Loan | Minimum | ||
Debt Instrument [Line Items] | ||
Principal payments on term loans | $ 2,000,000 | |
Term Loan | Minimum | SOFR | ||
Debt Instrument [Line Items] | ||
Applicable margin over base rate | 1.75% | |
Term Loan | Minimum | Base Rate | ||
Debt Instrument [Line Items] | ||
Applicable margin over base rate | 1% | |
Floor rate | 1% |
Derivatives - Additional Inform
Derivatives - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Derivative [Line Items] | ||
Derivative, description of terms | The Company is subject to interest rate risk related to the Senior Secured Credit Facility and entered into interest rate swaps to manage a portion of this exposure. The Company amended the contractual terms of its interest rate swaps in the second quarter of 2023. These amendments transitioned the reference rates from LIBOR to the forward-looking term rate based on SOFR ("Term SOFR") and were only a result of reference rate reform. During this transition period, the Company utilized optional expedients permitting the Company not to de-designate the existing cash flow hedging relationships and to continue to qualify for hedge accounting based upon a qualitative subsequent assessment concluding that the hedging relationships remained highly effective. When the transition of the reference rates was completed, the Company performed an initial quantitative assessment that demonstrated a highly effective hedging relationship that qualifies for hedge accounting under the hypothetical derivative method. As of December 31, 2023, the Company held interest rate swap contracts that, in the aggregate, effectively hedge $500 million of the variable rate debt associated with the Term Loan at the Term SOFR weighted average fixed rate of 2.81% through September 2025. Fair value adjustments are recorded as a component of AOCL in the Consolidated Balance Sheets. Balances in AOCL are reclassified to earnings when transactions related to the underlying risk are settled. | |
Derivative gains in AOCL expected to be reclassified within next twelve months | $ 10 | |
Interest Rate Swaps | ||
Derivative [Line Items] | ||
Derivative, amount of hedged item | 500 | |
Available-for-sale securities and interest rate swaps | ||
Derivative [Line Items] | ||
Accumulated other comprehensive loss, net of tax | $ 12 | $ 18 |
SOFR | Interest Rate Swaps | ||
Derivative [Line Items] | ||
Weighted average LIBOR fixed rate | 2.81% |
Derivatives - Derivative Instru
Derivatives - Derivative Instruments and their Impact on Financial Condition (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Derivative [Line Items] | ||
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Assets | Assets |
Derivatives Designated as Hedging Instruments | ||
Derivative [Line Items] | ||
Total derivative assets | $ 12 | $ 18 |
Derivatives Designated as Hedging Instruments | Interest Rate Swaps | ||
Derivative [Line Items] | ||
Total derivative assets | 12 | 18 |
Derivatives Designated as Hedging Instruments | Interest Rate Swaps | Other current assets | ||
Derivative [Line Items] | ||
Interest rate swaps, assets | 7 | 7 |
Derivatives Designated as Hedging Instruments | Interest Rate Swaps | Other non-current assets | ||
Derivative [Line Items] | ||
Interest rate swaps, assets | $ 5 | $ 11 |
Product Warranty Liabilities -
Product Warranty Liabilities - Additional Information (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Guarantees [Abstract] | ||
Product warranty liability, current | $ 32 | $ 33 |
Product warranty liability, non-current | $ 27 | $ 24 |
Product Warranty Liabilities _2
Product Warranty Liabilities - Product Warranty Liability Activities (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Guarantees [Abstract] | |||
Beginning balance | $ 57 | $ 53 | $ 66 |
Payments | (41) | (31) | (30) |
Increase in liability (warranty issued during period) | 28 | 17 | 16 |
Net adjustments to liability | 15 | 18 | 1 |
Ending balance | $ 59 | $ 57 | $ 53 |
Deferred Revenue - Additional I
Deferred Revenue - Additional Information (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Disaggregation of Revenue [Line Items] | ||
Deferred revenue current liabilities | $ 41 | $ 38 |
Deferred revenue non-current liabilities | 89 | 93 |
ETC contracts | ||
Disaggregation of Revenue [Line Items] | ||
Deferred revenue current liabilities | 30 | 30 |
Deferred revenue non-current liabilities | $ 85 | $ 85 |
Deferred Revenue - Summary of D
Deferred Revenue - Summary of Deferred Revenue Activity (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue Recognition and Deferred Revenue [Abstract] | |||
Beginning balance | $ 131 | $ 136 | $ 143 |
Increases | 52 | 35 | 29 |
Revenue earned | (53) | (40) | (36) |
Ending balance | $ 130 | $ 131 | $ 136 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases [Abstract] | ||
Operating lease weighted average discount rate percent | 4.75% | 4.43% |
Current lease liabilities | $ 4,000,000 | $ 4,000,000 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other current liabilities | Other current liabilities |
Non-current lease liabilities | $ 14,000,000 | $ 13,000,000 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other non-current liabilities | Other non-current liabilities |
Remaining lease term | 5 years 7 months 6 days | 6 years 3 months 18 days |
Operating expense | $ 6,000,000 | $ 5,000,000 |
Material short term operating lease expense | 0 | 0 |
New ROU assets | $ 6,000,000 | $ 4,000,000 |
Leases - Schedule of Lease Matu
Leases - Schedule of Lease Maturity, Current Guidance (Details) $ in Millions | Dec. 31, 2023 USD ($) |
Leases [Abstract] | |
2024 | $ 5 |
2025 | 5 |
2026 | 4 |
2027 | 3 |
2028 | 3 |
Thereafter | 4 |
Total lease payments | 24 |
Less: Interest | 6 |
Present value of operating lease liabilities | $ 18 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilities |
Leases - Schedule of Right of U
Leases - Schedule of Right of Use Assets (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Lessee, Lease, Description [Line Items] | ||
Total ROU assets | $ 19 | $ 17 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
Buildings | ||
Lessee, Lease, Description [Line Items] | ||
Total ROU assets | $ 15 | $ 15 |
Equipment | ||
Lessee, Lease, Description [Line Items] | ||
Total ROU assets | 2 | 0 |
Land | ||
Lessee, Lease, Description [Line Items] | ||
Total ROU assets | 1 | 1 |
Vehicles | ||
Lessee, Lease, Description [Line Items] | ||
Total ROU assets | $ 1 | $ 1 |
Other Income (Expense), Net - C
Other Income (Expense), Net - Computation of Other Income (Expense), Net (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Other Income and Expenses [Abstract] | |||
Post-retirement benefit plan amendment credits | $ 9 | $ 9 | $ 10 |
Technology-related investments gain | 3 | 6 | 4 |
Rabbi trust assets gain (loss) | 3 | (3) | 2 |
Loss on foreign exchange | (2) | (13) | (2) |
Unrealized (loss) gain on marketable securities | (1) | (22) | 4 |
Other | 3 | 2 | 1 |
Total | $ 15 | $ (21) | $ 19 |
Other Current Liabilities - Sum
Other Current Liabilities - Summary of Other Current Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Payroll and related costs | $ 89 | $ 72 |
Sales incentives | 41 | 42 |
Accrued interest payable | 24 | 24 |
Vendor buyback obligation | 18 | 16 |
Taxes payable | 17 | 31 |
Lease liability | 4 | 4 |
Other accruals | 19 | 19 |
Total | $ 212 | $ 208 |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Health care cost ultimate trend year | 2048 | ||
Accumulated benefit obligation | $ 164,000,000 | $ 159,000,000 | |
Deferred compensation expense | 1,000,000 | 0 | $ 0 |
Deferred compensation obligation | $ 18,000,000 | 15,000,000 | |
Maximum | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Health care cost trend rate | 9.75% | ||
Health care cost ultimate trend rate | 4% | ||
Post-retirement Benefits | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net benefit obligation | $ 64,000,000 | 73,000,000 | 102,000,000 |
Retirement Savings Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined contribution plan expense | $ 18,000,000 | $ 16,000,000 | $ 14,000,000 |
Employee Benefit Plans - Reconc
Employee Benefit Plans - Reconciliation of Changes in Benefit Obligations, Funded Status and Amounts Recognized in Consolidated Balance Sheets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Pension Plans | |||
Benefit Obligations: | |||
Benefit obligation at beginning of year | $ 161 | $ 220 | |
Service cost | 4 | 7 | $ 9 |
Interest cost | 8 | 6 | 5 |
Benefits paid | (12) | (15) | |
Actuarial loss (gain) | 8 | (57) | |
Benefit obligation at end of year | 169 | 161 | 220 |
Fair Value of Plan Assets: | |||
Fair value of plan assets at beginning of year | 158 | 213 | |
Actual return on plan assets | 10 | (43) | |
Employer contributions | 8 | 3 | |
Benefits paid | (12) | (15) | |
Fair value of plan assets at end of year | 164 | 158 | 213 |
Net Funded Status | (5) | (3) | |
Amounts Recognized in Balance Sheet: | |||
Non-current assets | 1 | 3 | |
Current liabilities | 0 | 0 | |
Non-current liabilities | (6) | (6) | |
Total liabilities | (5) | (3) | |
Accumulated Other Comprehensive Loss: | |||
Prior service credit | 1 | 1 | |
Actuarial (loss) gain | (7) | (1) | |
Total | (6) | 0 | |
Post-retirement Benefits | |||
Benefit Obligations: | |||
Benefit obligation at beginning of year | 73 | 102 | |
Service cost | 0 | 1 | 1 |
Interest cost | 4 | 3 | 3 |
Benefits paid | (5) | (4) | |
Actuarial loss (gain) | (8) | (29) | |
Benefit obligation at end of year | 64 | 73 | 102 |
Fair Value of Plan Assets: | |||
Fair value of plan assets at beginning of year | 0 | 0 | |
Actual return on plan assets | 0 | 0 | |
Employer contributions | 5 | 4 | |
Benefits paid | (5) | (4) | |
Fair value of plan assets at end of year | 0 | 0 | $ 0 |
Net Funded Status | (64) | (73) | |
Amounts Recognized in Balance Sheet: | |||
Non-current assets | 0 | 0 | |
Current liabilities | (4) | (4) | |
Non-current liabilities | (60) | (69) | |
Total liabilities | (64) | (73) | |
Accumulated Other Comprehensive Loss: | |||
Prior service credit | 14 | 24 | |
Actuarial (loss) gain | 33 | 27 | |
Total | $ 47 | $ 51 |
Employee Benefit Plans - Weight
Employee Benefit Plans - Weighted-Average Actuarial Assumptions Used to Determine Benefit Obligations (Details) | Dec. 31, 2023 | Dec. 31, 2022 |
Pension Plans | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Discount rate | 5% | 5.20% |
Rate of compensation increase (salaried) | 3% | 3% |
Post-retirement Benefits | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Discount rate | 5% | 5.20% |
Employee Benefit Plans - Projec
Employee Benefit Plans - Projected Benefit Obligation in Excess of Plan Assets and Accumulated Benefit Obligation in Excess of Plan Assets (Details) - Salary Plan - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Plans with projected benefit obligation in excess of plan assets: | ||
Projected benefit obligation - salary | $ 83 | $ 79 |
Fair value of plan assets - salary | 77 | 73 |
Plans with accumulated benefit obligation in excess of plan assets: | ||
Accumulated benefit obligation - salary | 79 | 76 |
Fair value of plan assets - salary | $ 77 | $ 73 |
Employee Benefit Plans - Employ
Employee Benefit Plans - Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) Excluding Service Cost, Statement of Income or Comprehensive Income [Extensible Enumeration] | Total recognized - other comprehensive loss (income) | Total recognized - other comprehensive loss (income) | Total recognized - other comprehensive loss (income) |
Total recognized - other comprehensive loss (income) | $ 7 | $ (22) | $ (2) |
Pension Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Service cost | 4 | 7 | 9 |
Interest cost | 8 | 6 | 5 |
Expected return on assets | (8) | (8) | (8) |
Prior service credit | 0 | (1) | 0 |
Recognized actuarial loss (gain) | 0 | 1 | 1 |
Net Periodic Benefit Cost (Credit) | 4 | 5 | 7 |
Net loss (gain) | 6 | (6) | (6) |
Amortizations | 0 | 0 | (1) |
Total recognized - other comprehensive loss (income) | 6 | (6) | (7) |
Post-retirement Benefits | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Service cost | 0 | 1 | 1 |
Interest cost | 4 | 3 | 3 |
Expected return on assets | 0 | 0 | 0 |
Prior service credit | (10) | (10) | (10) |
Recognized actuarial loss (gain) | (2) | 0 | 0 |
Net Periodic Benefit Cost (Credit) | (8) | (6) | (6) |
Net loss (gain) | (8) | (29) | (5) |
Amortizations | 12 | 10 | 10 |
Total recognized - other comprehensive loss (income) | $ 4 | $ (19) | $ 5 |
Employee Benefit Plans - Weig_2
Employee Benefit Plans - Weighted-Average Actuarial Assumptions Used to Determine Net Periodic Benefit Cost (Details) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Pension Plans | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Discount rate | 5.20% | 2.70% | 2.30% |
Rate of compensation increase (salaried) | 3% | 3% | 3% |
Expected return on assets | 5.30% | 3.80% | 3.70% |
Post-retirement Benefits | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Discount rate | 5.20% | 2.80% | 2.40% |
Employee Benefit Plans - Fair V
Employee Benefit Plans - Fair Value of Plan Assets by Asset Category (Details) - Pension Plans - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fair Value of Plan Assets | $ 164,000,000 | $ 158,000,000 | $ 213,000,000 |
Diversified debt Securities | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fair Value of Plan Assets | 135,000,000 | 131,000,000 | |
Diversified equity Securities | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fair Value of Plan Assets | 25,000,000 | 25,000,000 | |
Cash and Cash Equivalents | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fair Value of Plan Assets | 4,000,000 | 2,000,000 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fair Value of Plan Assets | 34,000,000 | 28,000,000 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Diversified debt Securities | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fair Value of Plan Assets | 12,000,000 | 8,000,000 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Diversified equity Securities | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fair Value of Plan Assets | 18,000,000 | 18,000,000 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Cash and Cash Equivalents | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fair Value of Plan Assets | 4,000,000 | 2,000,000 | |
Significant Other Observable Inputs (Level 2) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fair Value of Plan Assets | 130,000,000 | 130,000,000 | |
Significant Other Observable Inputs (Level 2) | Diversified debt Securities | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fair Value of Plan Assets | 123,000,000 | 123,000,000 | |
Significant Other Observable Inputs (Level 2) | Diversified equity Securities | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fair Value of Plan Assets | 7,000,000 | 7,000,000 | |
Significant Other Observable Inputs (Level 2) | Cash and Cash Equivalents | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fair Value of Plan Assets | $ 0 | $ 0 |
Employee Benefit Plans - Plan A
Employee Benefit Plans - Plan Asset Allocation (Details) | Dec. 31, 2023 |
Hourly Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 100% |
Salary Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 100% |
Cash and Cash Equivalents | Hourly Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 2% |
Cash and Cash Equivalents | Salary Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 2% |
Diversified equity Securities | Hourly Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 15% |
Diversified equity Securities | Salary Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 15% |
Diversified debt Securities | Hourly Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 83% |
Diversified debt Securities | Salary Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 83% |
Employee Benefit Plans - Expect
Employee Benefit Plans - Expected Cash Flows for Pension and Post-Retirement Benefit Plans (Details) $ in Millions | Dec. 31, 2023 USD ($) |
Pension Plans | |
Employer Contributions: | |
2024 expected contributions | $ 0 |
Expected Benefit Payments: | |
2024 | 11 |
2025 | 12 |
2026 | 12 |
2027 | 12 |
2028 | 12 |
2029-2033 | 66 |
Post-retirement Benefits | |
Employer Contributions: | |
2024 expected contributions | 4 |
Expected Benefit Payments: | |
2024 | 4 |
2025 | 5 |
2026 | 4 |
2027 | 4 |
2028 | 4 |
2029-2033 | $ 23 |
Income Taxes - Income Before In
Income Taxes - Income Before Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||
U.S. income | $ 776 | $ 621 | $ 513 |
Foreign income | 51 | 24 | 59 |
Income before income taxes | $ 827 | $ 645 | $ 572 |
Income Taxes - Provision for In
Income Taxes - Provision for Income Tax Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Current income taxes: | |||
U.S. federal | $ 144 | $ 98 | $ 48 |
U.S. state and local | 16 | 11 | 8 |
Foreign | 11 | 9 | 10 |
Total Current | 171 | 118 | 66 |
Deferred income tax expense, net: | |||
U.S. federal | (15) | 5 | 56 |
U.S. state and local | 2 | (3) | 8 |
Foreign | (4) | (6) | 0 |
Total Deferred | (17) | (4) | 64 |
Total income tax expense | $ 154 | $ 114 | $ 130 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Contingency [Line Items] | ||
Effective tax rate | 19% | 18% |
Tax liability associated with foreign subsidiary | $ 3 | |
Valuation allowances | 9 | $ 7 |
Deferred tax asset, capitalized research and development expenditures | $ 43 | $ 29 |
Domestic | ||
Income Tax Contingency [Line Items] | ||
Deferred tax assets, research and development expenditures, amortization period | 5 years | |
Foreign | ||
Income Tax Contingency [Line Items] | ||
Deferred tax assets, research and development expenditures, amortization period | 15 years |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Provision for Income Tax Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||
Tax at U.S. statutory income tax rate | $ 174 | $ 136 | $ 120 |
Tax credits | (15) | (9) | (4) |
State tax expense (excluding tax rate changes) | 13 | 12 | 12 |
Non-deductible expenses | (13) | 2 | 0 |
Effect of tax rate changes | (4) | (15) | 2 |
Valuation allowance | 2 | (6) | (1) |
Other adjustments | (3) | (6) | 1 |
Total income tax expense | $ 154 | $ 114 | $ 130 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Capitalized research | $ 43 | $ 29 |
Other accrued liabilities | 35 | 30 |
Deferred revenue | 28 | 29 |
Warranty accrual | 14 | 11 |
Stock-based compensation | 8 | 10 |
Tax credits | 8 | 7 |
Inventories | 7 | 7 |
Sales incentives | 7 | 7 |
Other | 16 | 18 |
Total deferred tax assets | 166 | 148 |
Valuation allowances | (9) | (7) |
Deferred tax liabilities: | ||
Goodwill | (414) | (413) |
Trade name | (178) | (179) |
Property, plant and equipment | (61) | (53) |
Post-retirement | (6) | (6) |
Intangibles | (3) | (12) |
Other | (5) | (6) |
Total deferred tax liabilities | (667) | (669) |
Net deferred tax liability | $ (510) | $ (528) |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Changes in Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Beginning Balance | $ 874 | $ 634 | $ 756 |
Net current period other comprehensive income (loss) | (9) | 51 | 16 |
Ending Balance | 1,233 | 874 | 634 |
Pension and OPEB liability adjustments | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Beginning Balance | 5 | (17) | (19) |
Other comprehensive income (loss) before reclassifications | 3 | 39 | 12 |
Amounts reclassified from AOCL | (12) | (10) | (9) |
Income tax benefit (expense) | 2 | (7) | (1) |
Net current period other comprehensive income (loss) | (7) | 22 | 2 |
Ending Balance | (2) | 5 | (17) |
Interest rate swaps | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Beginning Balance | 15 | (24) | (46) |
Other comprehensive income (loss) before reclassifications | 7 | 44 | 14 |
Amounts reclassified from AOCL | (12) | 6 | 15 |
Income tax benefit (expense) | 1 | (11) | (7) |
Net current period other comprehensive income (loss) | (4) | 39 | 22 |
Ending Balance | 11 | 15 | (24) |
Foreign currency items | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Beginning Balance | (42) | (32) | (24) |
Other comprehensive income (loss) before reclassifications | 2 | (10) | (8) |
Net current period other comprehensive income (loss) | 2 | (10) | (8) |
Ending Balance | (40) | (42) | (32) |
Accumulated Other Comprehensive Loss, net of tax | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Beginning Balance | (22) | (73) | (89) |
Other comprehensive income (loss) before reclassifications | 12 | 73 | 18 |
Amounts reclassified from AOCL | (24) | (4) | 6 |
Income tax benefit (expense) | 3 | (18) | (8) |
Net current period other comprehensive income (loss) | (9) | 51 | 16 |
Ending Balance | $ (31) | $ (22) | $ (73) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Loss - Consolidated Statements of Comprehensive Income affected by reclassifications from AOCL (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Interest expense, net | $ (107) | $ (118) | $ (116) |
Other income (expense), net | 15 | (21) | 19 |
Income before income taxes | 827 | 645 | 572 |
Income tax (expense) benefit | (154) | (114) | (130) |
Net income | 673 | 531 | 442 |
Reclassified from AOCL | Interest rate swaps | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Interest expense, net | 12 | (6) | (15) |
Reclassified from AOCL | Prior service credit | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Other income (expense), net | 10 | 11 | 10 |
Reclassified from AOCL | Recognized actuarial gain (loss) | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Other income (expense), net | 2 | (1) | (1) |
Reclassified from AOCL | Pension and OPEB liability adjustments | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Income before income taxes | 24 | 4 | (6) |
Income tax (expense) benefit | (5) | (1) | 1 |
Net income | $ 19 | $ 3 | $ (5) |
Concentration of Risk - Additio
Concentration of Risk - Additional Information (Details) | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2024 | Dec. 31, 2023 Employee Customer | Dec. 31, 2022 Employee Customer | Dec. 31, 2021 Customer | |
Concentration Risk [Line Items] | ||||
Number of employees | Employee | 3,700 | 3,500 | ||
Subsequent Event | ||||
Concentration Risk [Line Items] | ||||
Collective bargaining expiration month and year | 2027-11 | |||
Number of Employees, Geographic Area | United States | Labor Force Concentration | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 89% | 89% | ||
Workforce Subject to Collective Bargaining Arrangements | United States | Unionized employees subject to collective bargaining agreement | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 48% | 46% | ||
Sales Revenue, Net | Customer Concentration Risk | ||||
Concentration Risk [Line Items] | ||||
Number of significant customers | 3 | 3 | 3 | |
Accounts Receivable | Credit Concentration Risk | ||||
Concentration Risk [Line Items] | ||||
Number of significant customers | 2 | 2 |
Concentration of Risk - Custome
Concentration of Risk - Customers Accounted for Greater Than Ten Percent of Net Sales (Details) - Sales Revenue, Net - Customer Concentration Risk | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Daimler AG | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 18% | 20% | 20% |
PACCAR Inc. | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11% | 9% | 10% |
Traton SE | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11% | 10% | 10% |
Concentration of Risk - Custo_2
Concentration of Risk - Customers Accounted for Greater Than Ten Percent of Accounts Receivable (Details) - Accounts Receivable - Credit Concentration Risk | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Daimler AG | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 16% | 17% |
Traton SE | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 14% | 11% |
Common Stock - Additional Infor
Common Stock - Additional Information (Details) - Repurchase Program | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Common Stock Disclosure [Line Items] | |
Common stock, repurchased during the period | $ 263,000,000 |
Stock repurchase program, remaining amount | 773,000,000 |
Maximum | |
Common Stock Disclosure [Line Items] | |
Stock repurchase program, authorized amount | $ 4,000,000,000 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |||
Shares excluded from diluted EPS calculation (in shares) | 0 | 2 | 1 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Reconciliation of Numerators and Denominators Used to Calculate Basic EPS and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |||
Net Income (Loss) | $ 673 | $ 531 | $ 442 |
Weighted average shares of common stock outstanding | 90 | 96 | 107 |
Dilutive effect of stock-based awards | 1 | 0 | 0 |
Diluted weighted average shares of common stock outstanding | 91 | 96 | 107 |
Basic earnings per share attributable to common stockholders | $ 7.48 | $ 5.53 | $ 4.13 |
Diluted earnings per share attributable to common stockholders | $ 7.4 | $ 5.53 | $ 4.13 |
Geographic Information - Net Sa
Geographic Information - Net Sales by Country (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total Net Sales | $ 3,035 | $ 2,769 | $ 2,402 |
United States | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total Net Sales | 2,171 | 1,944 | 1,706 |
China | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total Net Sales | 164 | 196 | 122 |
Japan | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total Net Sales | 102 | 103 | 109 |
Canada | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total Net Sales | 65 | 57 | 62 |
Mexico | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total Net Sales | 51 | 41 | 50 |
Germany | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total Net Sales | 49 | 44 | 34 |
Other | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total Net Sales | $ 433 | $ 384 | $ 319 |
Geographic Information - Net Lo
Geographic Information - Net Long-Lived Assets by Country (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Property, plant and equipment, net | $ 774 | $ 763 | $ 706 |
United States | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Property, plant and equipment, net | 738 | 730 | 680 |
India | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Property, plant and equipment, net | 20 | 19 | 11 |
Hungary | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Property, plant and equipment, net | 10 | 10 | 11 |
Other | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Property, plant and equipment, net | $ 6 | $ 4 | $ 4 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) | 1 Months Ended |
Jan. 31, 2024 | |
Subsequent Event | |
Subsequent Event [Line Items] | |
Collective bargaining expiration month and year | 2027-11 |
Schedule I-Parent Company Onl_3
Schedule I-Parent Company Only Financial Statements - Balance Sheets (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Current Assets: | ||||
Cash | $ 555 | $ 232 | ||
Total Current Assets | 1,250 | 866 | ||
TOTAL ASSETS | 5,025 | 4,671 | ||
Current Liabilities: | ||||
Accounts payable | 210 | 195 | ||
Total Current Liabilities | 501 | 480 | ||
Capital stock | 1,233 | 874 | $ 634 | $ 756 |
Paid in capital | 1,891 | 1,848 | ||
Accumulated deficit | (628) | (953) | ||
Accumulated other comprehensive loss, net of tax | (31) | (22) | ||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | 5,025 | 4,671 | ||
Parent Company | ||||
Current Assets: | ||||
Cash | 0 | 0 | ||
Total Current Assets | 0 | 0 | ||
Investments in and advances to subsidiaries | 1,233 | 874 | ||
TOTAL ASSETS | 1,233 | 874 | ||
Current Liabilities: | ||||
Accounts payable | 0 | 0 | ||
Total Current Liabilities | 0 | 0 | ||
Capital stock | 1 | 1 | ||
Paid in capital | 1,891 | 1,848 | ||
Accumulated deficit | (628) | (953) | ||
Accumulated other comprehensive loss, net of tax | (31) | (22) | ||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ 1,233 | $ 874 |
Schedule I-Parent Company Onl_4
Schedule I-Parent Company Only Financial Statements - Comprehensive Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Condensed Financial Statements Captions [Line Items] | |||
Net sales | $ 3,035 | $ 2,769 | $ 2,402 |
Operating income | 919 | 784 | 669 |
Other income: | |||
Income before income taxes | 827 | 645 | 572 |
Income tax (expense) benefit | (154) | (114) | (130) |
Net income | 673 | 531 | 442 |
Comprehensive income, net of tax | 664 | 582 | 458 |
Parent Company | |||
Condensed Financial Statements Captions [Line Items] | |||
Net sales | 0 | 0 | 0 |
General and administrative fees | 0 | 0 | 0 |
Operating income | 0 | 0 | 0 |
Other income: | |||
Equity earnings of consolidated subsidiary | 673 | 531 | 442 |
Income before income taxes | 673 | 531 | 442 |
Income tax (expense) benefit | 0 | 0 | 0 |
Net income | 673 | 531 | 442 |
Comprehensive income, net of tax | $ 664 | $ 582 | $ 458 |
Schedule I-Parent Company Onl_5
Schedule I-Parent Company Only Financial Statements - Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net Income (Loss) | $ 673 | $ 531 | $ 442 |
Deduct items included in net income not providing cash: | |||
Net cash provided by operating activities | 784 | 657 | 635 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Net cash used for investing activities | (129) | (183) | (212) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Dividends | (83) | (80) | (81) |
Net cash used for financing activities | (332) | (367) | (604) |
Net increase (decrease) in cash and cash equivalents | 323 | 105 | (183) |
Cash and cash equivalents at beginning of period | 232 | 127 | 310 |
Cash and cash equivalents at end of period | 555 | 232 | 127 |
Parent Company | |||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net Income (Loss) | 673 | 531 | 442 |
Deduct items included in net income not providing cash: | |||
Equity in earnings in consolidated subsidiary | (673) | (531) | (442) |
Net cash provided by operating activities | 0 | 0 | 0 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Investments in subsidiaries | (28) | (2) | (3) |
Dividends | 83 | 80 | 81 |
Net cash used for investing activities | 55 | 78 | 78 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Capital contributions | 28 | 2 | 3 |
Dividends | (83) | (80) | (81) |
Net cash used for financing activities | (55) | (78) | (78) |
Net increase (decrease) in cash and cash equivalents | 0 | 0 | 0 |
Cash and cash equivalents at beginning of period | 0 | 0 | 0 |
Cash and cash equivalents at end of period | $ 0 | $ 0 | $ 0 |