Allison Transmission Holdings Inc. has reported net sales for 1Q16 of US$462 million, an 8% decrease from the same period in 2015.

The decrease in net sales was principally driven by lower demand in the global Off-Highway and Service Parts, Support Equipment & Other end markets.

Adjusted Net Income, a non-GAAP financial measure, for the quarter was US$109 million, a decrease of US$41 million. Adjusted EBITDA, a non-GAAP financial measure, for the quarter was US$162 million, or 35.1% of net sales, compared to US$190 million, for the same period in 2015. Adjusted Free Cash Flow, a non-GAAP financial measure, for the quarter was US$113 million, or US$0.66 per diluted share.

Lawrence E. Dewey, Chairman and Chief Executive Officer of Allison Transmission, commented: “Allison’s first quarter 2016 results are within the full year guidance ranges we provided to the market on February 8. The year-over-year reductions in the global Off-Highway and Service Parts, Support Equipment & Other end markets net sales are consistent with the previously contemplated impact of low energy and commodity prices. Allison demonstrated solid operating margins and free cash flow while executing its prudent and well-defined approach to capital structure and allocation. During the first quarter, we settled US$33 million of share repurchases, paid a dividend of US$0.15 per share and repaid $6 million of debt. We anticipate no meaningful relief from the global Off-Highway end market challenges and are affirming our full year net sales guidance of a decrease in the range of 6.5 to 9.5%.”

Highlights

North America On-Highway end market net sales were down 4%, driven by lower demand for Rugged Duty Series models and up 2% on a sequential basis principally driven by higher demand for Pupil Transport/Shuttle Series models.

North America Hybrid-Propulsion Systems for Transit Bus end market net sales were down 6% and down 26% sequentially.

North America Off-Highway end market net sales were down 77% from the same period in 2015 and down 55% on a sequential basis principally driven by lower demand from hydraulic fracturing applications.

Defense end market net sales were flat with the same period in 2015 and flat sequentially, principally driven by higher demand for Wheeled Defense offset by lower demand for Tracked Defense.

Outside North America On-Highway end market net sales were up 23% from the same period in 2015 principally driven by higher demand in Europe and Japan and up 8% on a sequential basis principally driven by higher demand in Japan.

Outside North America Off-Highway end market net sales were down 81% and down 57% sequentially.

Service Parts, Support Equipment & Other end market net sales were down 13%.

Gross profit for the quarter was US$215 million, a decrease of 10% from US$239 million for the same period in 2015. Gross margin for the quarter was 46.5%, a decrease of 100 basis points from a gross margin of 47.5% for the same period in 2015.

Selling, general and administrative expenses for the quarter were US$83 million.