Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 12, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 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, $0.01 par value | |
Trading Symbol | ALSN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 89,484,712 | |
Entity Central Index Key | 0001411207 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Current Assets | ||
Cash and cash equivalents | $ 501 | $ 232 |
Accounts receivable - net of allowance for doubtful accounts of $4 and $5, respectively | 372 | 363 |
Inventories | 281 | 224 |
Other current assets | 63 | 47 |
Total Current Assets | 1,217 | 866 |
Property, plant and equipment, net | 763 | 763 |
Intangible assets, net | 844 | 878 |
Goodwill | 2,075 | 2,075 |
Marketable securities | 21 | 22 |
Other non-current assets | 67 | 67 |
TOTAL ASSETS | 4,987 | 4,671 |
Current Liabilities | ||
Accounts payable | 238 | 195 |
Product warranty liability | 23 | 33 |
Current portion of long-term debt | 6 | 6 |
Deferred revenue | 44 | 38 |
Other current liabilities | 193 | 208 |
Total Current Liabilities | 504 | 480 |
Product warranty liability | 36 | 24 |
Deferred revenue | 94 | 93 |
Long-term debt | 2,498 | 2,501 |
Deferred income taxes | 511 | 536 |
Other non-current liabilities | 160 | 163 |
TOTAL LIABILITIES | 3,803 | 3,797 |
Commitments and contingencies (see NOTE P) | ||
STOCKHOLDERS’ EQUITY | ||
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Paid in capital | 1,885 | 1,848 |
Accumulated deficit | (670) | (953) |
Accumulated other comprehensive loss, net of tax | (32) | (22) |
TOTAL STOCKHOLDERS’ EQUITY | 1,184 | 874 |
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | 4,987 | 4,671 |
Voting Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | 1 | 1 |
Non-voting Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 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) | 89,550,756 | 91,788,885 |
Common stock, shares outstanding (in shares) | 89,550,756 | 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 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net sales | $ 736 | $ 710 | $ 2,260 | $ 2,051 |
Cost of sales | 379 | 382 | 1,161 | 1,092 |
Gross profit | 357 | 328 | 1,099 | 959 |
Selling, general and administrative | 86 | 78 | 265 | 231 |
Engineering — research and development | 49 | 47 | 140 | 136 |
Operating income | 222 | 203 | 694 | 592 |
Interest expense, net | (27) | (29) | (83) | (88) |
Other (expense) income, net | (2) | (15) | 10 | (28) |
Income before income taxes | 193 | 159 | 621 | 476 |
Income tax expense | (35) | (20) | (118) | (86) |
Net income | $ 158 | $ 139 | $ 503 | $ 390 |
Basic earnings per share attributable to common stockholders | $ 1.76 | $ 1.46 | $ 5.53 | $ 4.02 |
Diluted earnings per share attributable to common stockholders | $ 1.76 | $ 1.45 | $ 5.53 | $ 4.02 |
Comprehensive income, net of tax | $ 151 | $ 138 | $ 493 | $ 402 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 503 | $ 390 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation of property, plant and equipment | 81 | 82 |
Amortization of intangible assets | 33 | 35 |
Deferred income taxes | (22) | 1 |
Stock-based compensation | 17 | 14 |
Technology-related investments gain | (3) | (6) |
Unrealized (gain) loss on marketable securities | (1) | 20 |
Loss on intercompany foreign exchange | 0 | 5 |
Other | 4 | 5 |
Changes in assets and liabilities: | ||
Accounts receivable | (12) | (89) |
Inventories | (60) | (28) |
Accounts payable | 34 | 36 |
Other assets and liabilities | (28) | (32) |
Net cash provided by operating activities | 546 | 433 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions of long-lived assets | (73) | (75) |
Proceeds from technology-related investments | 2 | 6 |
Business acquisitions | 0 | (23) |
Investment in equity method investee | 0 | (1) |
Net cash used for investing activities | (71) | (93) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repurchases of common stock | (157) | (216) |
Dividend payments | (63) | (61) |
Proceeds from exercise of stock options | 27 | 1 |
Taxes paid related to net share settlement of equity awards | (7) | (4) |
Payments on long-term debt | (5) | (5) |
Payments on revolving credit facility | 0 | (95) |
Borrowings on revolving credit facility | 0 | 95 |
Net cash used for financing activities | (205) | (285) |
Effect of exchange rate changes on cash | (1) | (2) |
Net increase in cash and cash equivalents | 269 | 53 |
Cash and cash equivalents at beginning of period | 232 | 127 |
Cash and cash equivalents at end of period | 501 | 180 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Income taxes paid | (164) | (85) |
Interest paid | (95) | (84) |
Interest received from interest rate swaps | 8 | 0 |
Non-cash investing activities: | ||
Capital expenditures in liabilities | $ 19 | $ 23 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Total | Common Stock Voting Common Stock | Paid-in Capital | Accumulated (Deficit) Income | Accumulated Other Comprehensive (Loss) Income, net of tax |
Beginning Balance at Dec. 31, 2021 | $ 634 | $ 1 | $ 1,832 | $ (1,126) | $ (73) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 14 | 14 | |||
Pension and OPEB liability adjustment | (6) | (6) | |||
Foreign currency translation adjustment | (20) | (20) | |||
Interest rate swaps | 38 | 38 | |||
Issuance of common stock | (3) | (3) | |||
Repurchase of common stock | (224) | (224) | |||
Dividends on common stock | (61) | (61) | |||
Net Income (Loss) | 390 | 390 | |||
Ending Balance at Sep. 30, 2022 | 762 | 1 | 1,843 | (1,021) | (61) |
Beginning Balance at Jun. 30, 2022 | 749 | 1 | 1,839 | (1,031) | (60) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 5 | 5 | |||
Pension and OPEB liability adjustment | (2) | (2) | |||
Foreign currency translation adjustment | (12) | (12) | |||
Interest rate swaps | 13 | 13 | |||
Issuance of common stock | (1) | (1) | |||
Repurchase of common stock | (109) | (109) | |||
Dividends on common stock | (20) | (20) | |||
Net Income (Loss) | 139 | 139 | |||
Ending Balance at Sep. 30, 2022 | 762 | 1 | 1,843 | (1,021) | (61) |
Beginning Balance at Dec. 31, 2022 | 874 | 1 | 1,848 | (953) | (22) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 17 | 17 | |||
Pension and OPEB liability adjustment | (7) | (7) | |||
Foreign currency translation adjustment | (5) | (5) | |||
Interest rate swaps | 2 | 2 | |||
Issuance of common stock | 20 | 20 | |||
Repurchase of common stock | (157) | (157) | |||
Dividends on common stock | (63) | (63) | |||
Net Income (Loss) | 503 | 503 | |||
Ending Balance at Sep. 30, 2023 | 1,184 | 1 | 1,885 | (670) | (32) |
Beginning Balance at Jun. 30, 2023 | 1,056 | 1 | 1,868 | (788) | (25) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 6 | 6 | |||
Pension and OPEB liability adjustment | (2) | (2) | |||
Foreign currency translation adjustment | (5) | (5) | |||
Issuance of common stock | 11 | 11 | |||
Repurchase of common stock | (20) | (20) | |||
Dividends on common stock | (20) | (20) | |||
Net Income (Loss) | 158 | 158 | |||
Ending Balance at Sep. 30, 2023 | $ 1,184 | $ 1 | $ 1,885 | $ (670) | $ (32) |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 158 | $ 139 | $ 503 | $ 390 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 shares | Sep. 30, 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 September 30, 2023: Trading Arrangement Name Title Action Date Rule 10b5-1* Non-Rule 10b5-1** Total Shares to be Sold Expiration Date Thomas D. Eifert Vice President, Quality, Planning & Program Management Adopted 8/9/2023 X 5,047 12/31/2024 * Intended to satisfy the affirmative defense of Rule 10b5-1(c) ** No t intended to satisfy the affirmative defense of Rule 10b5-1(c) | |
Name | Thomas D. Eifert | |
Title | Vice President, Quality, Planning & Program Management | |
Rule 10b5-1 Arrangement Adopted | true | |
Non-Rule 10b5-1 Arrangement Adopted | false | |
Adoption Date | 8/9/2023 | |
Aggregate Available | 5,047 | 5,047 |
Overview
Overview | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Overview | NOTE A. 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 is traded on the New York Stock Exchange under the symbol, “ALSN”. Although approximately 74 % of revenues were generated in North America in 2022, the Company has a global presence by serving customers in Asia, Europe, South America and Africa. The Company serves customers through an independent network of approximately 1,600 independent distributor and dealer locations worldwide. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary for the fair statement of the results for the periods presented. The condensed consolidated financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated. These condensed consolidated financial statements present the financial position, results of comprehensive income, cash flows and statements of stockholders’ equity of the Company. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the Securities and Exchange Commission on February 16, 2023 . The interim period financial results for the three- and nine-month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year. 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, environmental liabilities, determination of discount rate and other assumptions for pension and other post-retirement benefit ("OPEB") expense, determination of discount rate and period for leases, 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. Recently Issued Accounting Pronouncements The Company considers the applicability and impact of all newly issued Financial Accounting Standards Board Accounting Standard Updates ("ASUs"). All ASUs issued during the nine months ended September 30, 2023 were assessed as either not applicable to the Company or were not expected to have a material impact on the Company's financial statements. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | NOTE C. 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 extended transmission coverage ("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 for either of the three or nine months ended September 30, 2023 or 2022. 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 September 30, 2023 and December 31, 2022. See "Note J. Deferred Revenue” for more information, including the amount of revenue earned during each of the three and nine months ended September 30, 2023 and 2022 that had been previously deferred. The Company had no material contract assets as of either September 30, 2023 or December 31, 2022. The Company has one ope rating 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): Three Months Ended Nine Months Ended 2023 2022 2023 2022 North America On-Highway $ 376 $ 340 $ 1,149 $ 1,026 North America Off-Highway 9 24 58 62 Defense 43 35 103 99 Outside North America On-Highway 118 118 349 332 Outside North America Off-Highway 19 36 66 98 Service Parts, Support Equipment and Other 171 157 535 434 Total Net Sales $ 736 $ 710 $ 2,260 $ 2,051 NOTE J. DEFERRED REVENUE As of September 30, 2023, current and non-current deferred revenue was $ 44 million and $ 94 million, respectively. As of September 30, 2022, current and non-current deferred revenue was $ 39 million and $ 95 million, respectively. Deferred revenue activity consisted of the following (dollars in millions): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Beginning balance $ 139 $ 135 $ 131 $ 136 Increases 13 8 42 28 Revenue earned ( 14 ) ( 9 ) ( 35 ) ( 30 ) Ending balance $ 138 $ 134 $ 138 $ 134 Deferred revenue recorded in current and non-current liabilities related to ETC as of September 30, 2023 was $ 29 million and $ 86 million, respectively. Deferred revenue recorded in current and non-current liabilities related to ETC as of September 30, 2022 was $ 30 million and $ 86 million, respectively. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE D. INVENTORIES Inventories consisted of the following components (dollars in millions): September 30, December 31, Purchased parts and raw materials $ 147 $ 115 Work in progress 20 7 Service parts 55 53 Finished goods 59 49 Total inventories $ 281 $ 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 L. Other Current Liabilities” for more information. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | NOTE E. GOODWILL AND OTHER INTANGIBLE ASSETS As of both September 30, 2023 and December 31, 2022, the carrying value of the Company’s Goodwill was $ 2,075 million. The following presents a summary of other intangible assets (dollars in millions): September 30, 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 ( 823 ) 16 839 ( 793 ) 46 Proprietary technology 484 ( 478 ) 6 484 ( 477 ) 7 Customer relationships — defense 62 ( 56 ) 6 62 ( 53 ) 9 Non-compete agreements 1 ( 1 ) — 1 ( 1 ) — Total $ 2,202 $ ( 1,358 ) $ 844 $ 2,202 $ ( 1,324 ) $ 878 Amortization expense related to other intangible assets for the next five fiscal years is expected to be (dollars in millions): 2024 2025 2026 2027 2028 Amortization expense $ 9 $ 5 $ 2 $ 1 $ 1 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE F. 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 September 30, 2023 and December 31, 2022, the Company did no t have any L evel 3 financial 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 Condensed Consolidated Balance Sheets. See "Note H. 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 September 30, 2023 and December 31, 2022 (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Significant Other TOTAL September 30, December 31, September 30, December 31, September 30, December 31, Cash equivalents $ 323 $ 111 $ — $ — $ 323 $ 111 Marketable securities 21 22 — — 21 22 Derivative assets — — 21 18 21 18 Rabbi trust assets 17 15 — — 17 15 Deferred compensation obligation ( 17 ) ( 15 ) — — ( 17 ) ( 15 ) Total $ 344 $ 133 $ 21 $ 18 $ 365 $ 151 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | NOTE G. DEBT Long-term debt and maturities are as follows (dollars in millions): September 30, December 31, Long-term debt: Senior Secured Credit Facility Term Loan, variable, due 2026 $ 620 $ 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 $ 2,520 $ 2,525 Less: current maturities of long-term debt 6 6 deferred financing costs, net 16 18 Total long-term debt, net $ 2,498 $ 2,501 As of September 30, 2023, the Company had $ 2,520 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 $ 620 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 Secure d Credit Facility”). The fair value of the Company’s long-term debt obligations as of September 30, 2023 was $ 2,269 million. The fair value is based on quoted Level 2 market prices of the Company’s debt as of September 30, 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 September 30, 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 September 30, 2023, the Company elected to pay the lowest all-in rate of Adjusted Term SOFR plus the applicable margin, or 7.17 %, 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 September 30, 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 Credit Facility, net of an allowance for up to $ 75 million in outstanding letters of credit commitments. During the nine months ended September 30, 2023 , the Company made no withdrawals on the Revolving Credit Facility. As of September 30, 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 September 30, 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 September 30, 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 September 30, 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 0.11 x ratio. Additionally, within the terms of the Senior Secured Credit Facility, a first lien net leverage ratio at or below 4.00 x results 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 September 30, 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 September 30, 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. ATI may redeem up to 40 % of the 3.75 % Senior Notes prior to January 30, 2024 by paying a price equal to 103.750 % of the principal amount being redeemed. On or after January 30, 2024 and 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 | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | NOTE H. 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 September 30, 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 Accumulated other comprehensive loss, net of tax (“AOCL”) in the Condensed Consolidated Balance Sheets. Balances in AOCL are reclassified to earnings when transactions related to the underlying risk are settled. See "Note F. 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 Location September 30, December 31, Derivative Assets: Interest rate swaps Other current assets $ 11 $ 7 Other non-current assets 10 11 Total derivative assets $ 21 $ 18 The balance of net derivative gains recorded in AOCL as of September 30, 2023 and December 31, 2022 was $ 21 million and $ 18 million, respectively. See "Note O. Accumulated Other Comprehensive Loss” for information regarding activity recorded as a component of AOCL during the three and nine months ended September 30, 2023 and 2022. As of September 30, 2023, the Company had $ 14 million of derivative gains recorded in AOCL expected to be reclassified to earnings within the next twelve months. |
Product Warranty Liabilities
Product Warranty Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Guarantees and Product Warranties [Abstract] | |
Product Warranty Liabilities | NOTE I. PRODUCT WARRANTY LIABILITIES As of September 30, 2023, current and non-current product warranty liabilities were $ 23 million and $ 36 million, respectively. As of September 30, 2022, current and non-current product warranty liabilities were $ 26 million and $ 20 million, respectively. Product warranty liability activities consisted of the following (dollars in millions): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Beginning balance $ 60 $ 53 $ 57 $ 53 Payments ( 12 ) ( 9 ) ( 30 ) ( 24 ) Increase in liability (warranty issued during period) 5 4 20 13 Net adjustments to liability 6 ( 2 ) 12 4 Ending balance $ 59 $ 46 $ 59 $ 46 |
Deferred Revenue
Deferred Revenue | 9 Months Ended |
Sep. 30, 2023 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Deferred Revenue | NOTE C. 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 extended transmission coverage ("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 for either of the three or nine months ended September 30, 2023 or 2022. 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 September 30, 2023 and December 31, 2022. See "Note J. Deferred Revenue” for more information, including the amount of revenue earned during each of the three and nine months ended September 30, 2023 and 2022 that had been previously deferred. The Company had no material contract assets as of either September 30, 2023 or December 31, 2022. The Company has one ope rating 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): Three Months Ended Nine Months Ended 2023 2022 2023 2022 North America On-Highway $ 376 $ 340 $ 1,149 $ 1,026 North America Off-Highway 9 24 58 62 Defense 43 35 103 99 Outside North America On-Highway 118 118 349 332 Outside North America Off-Highway 19 36 66 98 Service Parts, Support Equipment and Other 171 157 535 434 Total Net Sales $ 736 $ 710 $ 2,260 $ 2,051 NOTE J. DEFERRED REVENUE As of September 30, 2023, current and non-current deferred revenue was $ 44 million and $ 94 million, respectively. As of September 30, 2022, current and non-current deferred revenue was $ 39 million and $ 95 million, respectively. Deferred revenue activity consisted of the following (dollars in millions): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Beginning balance $ 139 $ 135 $ 131 $ 136 Increases 13 8 42 28 Revenue earned ( 14 ) ( 9 ) ( 35 ) ( 30 ) Ending balance $ 138 $ 134 $ 138 $ 134 Deferred revenue recorded in current and non-current liabilities related to ETC as of September 30, 2023 was $ 29 million and $ 86 million, respectively. Deferred revenue recorded in current and non-current liabilities related to ETC as of September 30, 2022 was $ 30 million and $ 86 million, respectively. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | NOTE K. LEASES 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 September 30, 2023, the Company was not a party t o 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 at 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 September 30, 2023 and December 31, 2022 was 4.58 % and 4.43 %, respectively. As of September 30, 2023 , the Company recorded current and non-current operating lease liabilities of $ 4 million and $ 11 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 September 30, 2023 to total operating lease liabilities: September 30, For the remainder of 2023 $ 1 2024 4 2025 3 2026 2 2027 2 Thereafter 5 Total lease payments $ 17 Less: Interest 2 Present value of operating lease liabilities $ 15 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: September 30, December 31, Buildings $ 13 $ 15 Land 1 1 Equipment 1 — Vehicles — 1 Total ROU assets $ 15 $ 17 The weighted average remaining lease term as of September 30, 2023 and September 30, 2022 was 5.8 years and 6.7 years , respectively. Operating lease expense was $ 2 million and $ 5 million for the three and nine months ended September 30, 2023 , respectively, and $ 1 million and $ 4 million for the three and nine months ended September 30, 2022 , respectively. Operating lease expense was recorded within Selling, general and administrative expense and Engineering — research and development on the Company's Condensed Consolidated Statements of Comprehensive Income. There was no material short-term operating lease expense for any of the three or nine months ended September 30, 2023 or 2022. During each of the nine months ended September 30, 2023 and 2022, there were $ 2 million in new ROU assets obtained in exchange for lease obligations. |
Other Current Liabilities
Other Current Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | NOTE L. OTHER CURRENT LIABILITIES Other current liabilities consist of the following (dollars in millions): September 30, December 31, Payroll and related costs $ 70 $ 72 Sales incentives 35 42 Accrued interest payable 26 24 Vendor buyback obligation 19 16 Taxes payable 16 31 Construction holdback 4 4 OPEB liability 4 4 Lease liability 4 4 Other accruals 15 11 Total $ 193 $ 208 |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | NOTE M. EMPLOYEE BENEFIT PLANS Components of net periodic benefit cost (credit) consist of the following (dollars in millions): Pension Plans Post-retirement Benefits For the Three Months For the Three Months 2023 2022 2023 2022 Net periodic benefit cost (credit): Service cost $ 1 $ 1 $ — $ — Interest cost 2 1 1 1 Expected return on assets ( 2 ) ( 2 ) — — Prior service credit — — ( 2 ) ( 3 ) Recognized actuarial loss (gain) — 1 ( 1 ) — Net periodic benefit cost (credit) $ 1 $ 1 $ ( 2 ) $ ( 2 ) Pension Plans Post-retirement Benefits For the Nine Months For the Nine Months 2023 2022 2023 2022 Net periodic benefit cost (credit): Service cost $ 3 $ 5 $ — $ 1 Interest cost 6 4 3 2 Expected return on assets ( 6 ) ( 6 ) — — Prior service credit — — ( 7 ) ( 8 ) Recognized actuarial loss (gain) — 1 ( 2 ) — Net periodic benefit cost (credit) $ 3 $ 4 $ ( 6 ) $ ( 5 ) The components of net periodic benefit cost (credit) other than the service cost component are included in Other (expense) income, net in the Condensed Consolidated Statements of Comprehensive Income. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE N. INCOME TAXES For the three and nine months ended September 30, 2023, the Company recorded total income tax expense of $ 35 million and $ 118 million, respectively. The effective tax rate for the three and nine months ended September 30, 2023 was 18 % and 19 %, respectively. For the three and nine months ended September 30, 2022, the Company recorded total income tax expense of $ 20 million and $ 86 million, respectively. The effective tax rate for the three and nine months ended September 30, 2022 was 13 % and 18 %, respectively. The lower effective tax rate for the three months ended September 30, 2022 was due to enacted state tax rate legislation that resulted in a non-recurring deferred tax benefit in 2022. 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 authoritative accounting guidance. 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 carry-forward 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 continues to provide for a valuation allowance on certain of its foreign deferred tax assets. The Company has determined, based on the evaluation of both objective and subjective evidence available, that this valuation allowance is necessary and that it is more likely than not that the deferred tax assets are not fully realizable. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | NOTE O. ACCUMULATED OTHER COMPREHENSIVE LOSS The following tables reconcile changes in AOCL by component (net of tax, dollars in millions): Three months ended Pension Interest Foreign Total AOCL as of June 30, 2022 $ ( 21 ) $ 1 $ ( 40 ) $ ( 60 ) Other comprehensive income (loss) before reclassifications — 16 ( 12 ) 4 Amounts reclassified from AOCL ( 2 ) 1 — ( 1 ) Income tax expense — ( 4 ) — ( 4 ) Net current period other comprehensive (loss) income $ ( 2 ) $ 13 $ ( 12 ) $ ( 1 ) AOCL as of September 30, 2022 $ ( 23 ) $ 14 $ ( 52 ) $ ( 61 ) AOCL as of June 30, 2023 $ — $ 17 $ ( 42 ) $ ( 25 ) Other comprehensive income (loss) before reclassifications — 4 ( 5 ) ( 1 ) Amounts reclassified from AOCL ( 3 ) ( 3 ) — ( 6 ) Income tax benefit (expense) 1 ( 1 ) — — Net current period other comprehensive loss $ ( 2 ) $ — $ ( 5 ) $ ( 7 ) AOCL as of September 30, 2023 $ ( 2 ) $ 17 $ ( 47 ) $ ( 32 ) Nine months ended Pension Interest Foreign Total AOCL as of December 31, 2021 $ ( 17 ) $ ( 24 ) $ ( 32 ) $ ( 73 ) Other comprehensive income (loss) before reclassifications — 43 ( 20 ) 23 Amounts reclassified from AOCL ( 7 ) 7 — — Income tax benefit (expense) 1 ( 12 ) — ( 11 ) Net current period other comprehensive (loss) income $ ( 6 ) $ 38 $ ( 20 ) $ 12 AOCL as of September 30, 2022 $ ( 23 ) $ 14 $ ( 52 ) $ ( 61 ) AOCL as of December 31, 2022 $ 5 $ 15 $ ( 42 ) $ ( 22 ) Other comprehensive income (loss) before reclassifications — 11 ( 5 ) 6 Amounts reclassified from AOCL ( 9 ) ( 8 ) — ( 17 ) Income tax benefit (expense) 2 ( 1 ) — 1 Net current period other comprehensive (loss) income $ ( 7 ) $ 2 $ ( 5 ) $ ( 10 ) AOCL as of September 30, 2023 $ ( 2 ) $ 17 $ ( 47 ) $ ( 32 ) Amounts reclassified from AOCL AOCL Components Three months ended Three months ended Affected line item in the Condensed Interest rate swaps $ 3 $ ( 1 ) Interest expense, net Prior service credit 2 3 Other (expense) income, net Recognized actuarial gain (loss) 1 ( 1 ) Other (expense) income, net Total reclassifications, before tax $ 6 $ 1 Income before income taxes Income tax expense ( 1 ) — Income tax expense Total reclassifications, net of tax $ 5 $ 1 Amounts reclassified from AOCL AOCL Components Nine months ended Nine months ended Affected line item in the Condensed Interest rate swaps $ 8 $ ( 7 ) Interest expense, net Prior service credit 7 8 Other (expense) income, net Recognized actuarial gain (loss) 2 ( 1 ) Other (expense) income, net Total reclassifications, before tax $ 17 $ — Income before income taxes Income tax expense ( 4 ) — Income tax expense Total reclassifications, net of tax $ 13 $ — Prior service credits and actuarial gains (losses) are included in the computation of the Company’s net periodic benefit cost (credit). See "Note M. Employee Benefit Plans” for additional details. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE P. 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 condensed 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. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | NOTE Q. EARNINGS PER SHARE The following table reconciles the numerators and denominators used to calculate basic EPS and diluted EPS (dollars in millions, except per share data): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Net income $ 158 $ 139 $ 503 $ 390 Weighted average shares of common stock outstanding 90 95 91 97 Dilutive effect of stock-based awards — 1 — — Diluted weighted average shares of common stock outstanding 90 96 91 97 Basic earnings per share attributable to common stockholders $ 1.76 $ 1.46 $ 5.53 $ 4.02 Diluted earnings per share attributable to common stockholders $ 1.76 $ 1.45 $ 5.53 $ 4.02 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. For each of the three and nine months ended September 30, 2023 , there were no outstanding stock options excluded from the diluted EPS calculation because they were anti-dilutive. For each of the three and nine months ended September 30, 2022, there were 2 million 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. |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Common Stock | NOTE R. 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 the three and nine months ended September 30, 2023, the Company repurchased $ 20 million and $ 157 million, respectively, of its common stock under the Repurchase Program, leaving $ 878 million of authorized repurchases remaining under the Repurchase Program as of September 30, 2023. The Repurchase Program has no ter mination 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. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary for the fair statement of the results for the periods presented. The condensed consolidated financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated. These condensed consolidated financial statements present the financial position, results of comprehensive income, cash flows and statements of stockholders’ equity of the Company. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the Securities and Exchange Commission on February 16, 2023 . The interim period financial results for the three- and nine-month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year. |
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, environmental liabilities, determination of discount rate and other assumptions for pension and other post-retirement benefit ("OPEB") expense, determination of discount rate and period for leases, 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. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The Company considers the applicability and impact of all newly issued Financial Accounting Standards Board Accounting Standard Updates ("ASUs"). All ASUs issued during the nine months ended September 30, 2023 were assessed as either not applicable to the Company or were not expected to have a material impact on the Company's financial statements. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 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): Three Months Ended Nine Months Ended 2023 2022 2023 2022 North America On-Highway $ 376 $ 340 $ 1,149 $ 1,026 North America Off-Highway 9 24 58 62 Defense 43 35 103 99 Outside North America On-Highway 118 118 349 332 Outside North America Off-Highway 19 36 66 98 Service Parts, Support Equipment and Other 171 157 535 434 Total Net Sales $ 736 $ 710 $ 2,260 $ 2,051 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Components of Inventories | Inventories consisted of the following components (dollars in millions): September 30, December 31, Purchased parts and raw materials $ 147 $ 115 Work in progress 20 7 Service parts 55 53 Finished goods 59 49 Total inventories $ 281 $ 224 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Other Intangible Assets | The following presents a summary of other intangible assets (dollars in millions): September 30, 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 ( 823 ) 16 839 ( 793 ) 46 Proprietary technology 484 ( 478 ) 6 484 ( 477 ) 7 Customer relationships — defense 62 ( 56 ) 6 62 ( 53 ) 9 Non-compete agreements 1 ( 1 ) — 1 ( 1 ) — Total $ 2,202 $ ( 1,358 ) $ 844 $ 2,202 $ ( 1,324 ) $ 878 |
Schedule of Amortization Expense Related to Other Intangible Assets for Next Five Fiscal Years | Amortization expense related to other intangible assets for the next five fiscal years is expected to be (dollars in millions): 2024 2025 2026 2027 2028 Amortization expense $ 9 $ 5 $ 2 $ 1 $ 1 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2023 and December 31, 2022 (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Significant Other TOTAL September 30, December 31, September 30, December 31, September 30, December 31, Cash equivalents $ 323 $ 111 $ — $ — $ 323 $ 111 Marketable securities 21 22 — — 21 22 Derivative assets — — 21 18 21 18 Rabbi trust assets 17 15 — — 17 15 Deferred compensation obligation ( 17 ) ( 15 ) — — ( 17 ) ( 15 ) Total $ 344 $ 133 $ 21 $ 18 $ 365 $ 151 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Summary of Long-Term Debt and Maturities | Long-term debt and maturities are as follows (dollars in millions): September 30, December 31, Long-term debt: Senior Secured Credit Facility Term Loan, variable, due 2026 $ 620 $ 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 $ 2,520 $ 2,525 Less: current maturities of long-term debt 6 6 deferred financing costs, net 16 18 Total long-term debt, net $ 2,498 $ 2,501 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 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 Location September 30, December 31, Derivative Assets: Interest rate swaps Other current assets $ 11 $ 7 Other non-current assets 10 11 Total derivative assets $ 21 $ 18 |
Product Warranty Liabilities (T
Product Warranty Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Guarantees and Product Warranties [Abstract] | |
Product Warranty Liability Activities | Product warranty liability activities consisted of the following (dollars in millions): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Beginning balance $ 60 $ 53 $ 57 $ 53 Payments ( 12 ) ( 9 ) ( 30 ) ( 24 ) Increase in liability (warranty issued during period) 5 4 20 13 Net adjustments to liability 6 ( 2 ) 12 4 Ending balance $ 59 $ 46 $ 59 $ 46 |
Deferred Revenue (Tables)
Deferred Revenue (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Summary of Deferred Revenue Activity | Deferred revenue activity consisted of the following (dollars in millions): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Beginning balance $ 139 $ 135 $ 131 $ 136 Increases 13 8 42 28 Revenue earned ( 14 ) ( 9 ) ( 35 ) ( 30 ) Ending balance $ 138 $ 134 $ 138 $ 134 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Lease Maturity, Current Guidance | The following table reconciles future undiscounted cash flows for operating leases as of September 30, 2023 to total operating lease liabilities: September 30, For the remainder of 2023 $ 1 2024 4 2025 3 2026 2 2027 2 Thereafter 5 Total lease payments $ 17 Less: Interest 2 Present value of operating lease liabilities $ 15 |
Schedule of Right of Use Assets | The below table depicts the ROU assets held by the Company based on the underlying asset: September 30, December 31, Buildings $ 13 $ 15 Land 1 1 Equipment 1 — Vehicles — 1 Total ROU assets $ 15 $ 17 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Other Current Liabilities | Other current liabilities consist of the following (dollars in millions): September 30, December 31, Payroll and related costs $ 70 $ 72 Sales incentives 35 42 Accrued interest payable 26 24 Vendor buyback obligation 19 16 Taxes payable 16 31 Construction holdback 4 4 OPEB liability 4 4 Lease liability 4 4 Other accruals 15 11 Total $ 193 $ 208 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Components of Net Periodic Benefit Cost (Credit) | Components of net periodic benefit cost (credit) consist of the following (dollars in millions): Pension Plans Post-retirement Benefits For the Three Months For the Three Months 2023 2022 2023 2022 Net periodic benefit cost (credit): Service cost $ 1 $ 1 $ — $ — Interest cost 2 1 1 1 Expected return on assets ( 2 ) ( 2 ) — — Prior service credit — — ( 2 ) ( 3 ) Recognized actuarial loss (gain) — 1 ( 1 ) — Net periodic benefit cost (credit) $ 1 $ 1 $ ( 2 ) $ ( 2 ) Pension Plans Post-retirement Benefits For the Nine Months For the Nine Months 2023 2022 2023 2022 Net periodic benefit cost (credit): Service cost $ 3 $ 5 $ — $ 1 Interest cost 6 4 3 2 Expected return on assets ( 6 ) ( 6 ) — — Prior service credit — — ( 7 ) ( 8 ) Recognized actuarial loss (gain) — 1 ( 2 ) — Net periodic benefit cost (credit) $ 3 $ 4 $ ( 6 ) $ ( 5 ) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Changes in Accumulated Other Comprehensive Loss by Component | The following tables reconcile changes in AOCL by component (net of tax, dollars in millions): Three months ended Pension Interest Foreign Total AOCL as of June 30, 2022 $ ( 21 ) $ 1 $ ( 40 ) $ ( 60 ) Other comprehensive income (loss) before reclassifications — 16 ( 12 ) 4 Amounts reclassified from AOCL ( 2 ) 1 — ( 1 ) Income tax expense — ( 4 ) — ( 4 ) Net current period other comprehensive (loss) income $ ( 2 ) $ 13 $ ( 12 ) $ ( 1 ) AOCL as of September 30, 2022 $ ( 23 ) $ 14 $ ( 52 ) $ ( 61 ) AOCL as of June 30, 2023 $ — $ 17 $ ( 42 ) $ ( 25 ) Other comprehensive income (loss) before reclassifications — 4 ( 5 ) ( 1 ) Amounts reclassified from AOCL ( 3 ) ( 3 ) — ( 6 ) Income tax benefit (expense) 1 ( 1 ) — — Net current period other comprehensive loss $ ( 2 ) $ — $ ( 5 ) $ ( 7 ) AOCL as of September 30, 2023 $ ( 2 ) $ 17 $ ( 47 ) $ ( 32 ) Nine months ended Pension Interest Foreign Total AOCL as of December 31, 2021 $ ( 17 ) $ ( 24 ) $ ( 32 ) $ ( 73 ) Other comprehensive income (loss) before reclassifications — 43 ( 20 ) 23 Amounts reclassified from AOCL ( 7 ) 7 — — Income tax benefit (expense) 1 ( 12 ) — ( 11 ) Net current period other comprehensive (loss) income $ ( 6 ) $ 38 $ ( 20 ) $ 12 AOCL as of September 30, 2022 $ ( 23 ) $ 14 $ ( 52 ) $ ( 61 ) AOCL as of December 31, 2022 $ 5 $ 15 $ ( 42 ) $ ( 22 ) Other comprehensive income (loss) before reclassifications — 11 ( 5 ) 6 Amounts reclassified from AOCL ( 9 ) ( 8 ) — ( 17 ) Income tax benefit (expense) 2 ( 1 ) — 1 Net current period other comprehensive (loss) income $ ( 7 ) $ 2 $ ( 5 ) $ ( 10 ) AOCL as of September 30, 2023 $ ( 2 ) $ 17 $ ( 47 ) $ ( 32 ) |
Reclassification out of Accumulated Other Comprehensive Loss | Amounts reclassified from AOCL AOCL Components Three months ended Three months ended Affected line item in the Condensed Interest rate swaps $ 3 $ ( 1 ) Interest expense, net Prior service credit 2 3 Other (expense) income, net Recognized actuarial gain (loss) 1 ( 1 ) Other (expense) income, net Total reclassifications, before tax $ 6 $ 1 Income before income taxes Income tax expense ( 1 ) — Income tax expense Total reclassifications, net of tax $ 5 $ 1 Amounts reclassified from AOCL AOCL Components Nine months ended Nine months ended Affected line item in the Condensed Interest rate swaps $ 8 $ ( 7 ) Interest expense, net Prior service credit 7 8 Other (expense) income, net Recognized actuarial gain (loss) 2 ( 1 ) Other (expense) income, net Total reclassifications, before tax $ 17 $ — Income before income taxes Income tax expense ( 4 ) — Income tax expense Total reclassifications, net of tax $ 13 $ — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 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 (dollars in millions, except per share data): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Net income $ 158 $ 139 $ 503 $ 390 Weighted average shares of common stock outstanding 90 95 91 97 Dilutive effect of stock-based awards — 1 — — Diluted weighted average shares of common stock outstanding 90 96 91 97 Basic earnings per share attributable to common stockholders $ 1.76 $ 1.46 $ 5.53 $ 4.02 Diluted earnings per share attributable to common stockholders $ 1.76 $ 1.45 $ 5.53 $ 4.02 |
Overview - Additional Informati
Overview - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2022 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 | 74% |
Revenue - Additional Informatio
Revenue - Additional Information (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) Segment | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Revenue from Contract with Customer [Abstract] | |||||
Material adjustments based on variable consideration | $ | $ 0 | $ 0 | $ 0 | $ 0 | |
Credit term period | 30 days | ||||
Contract assets | $ | $ 0 | $ 0 | $ 0 | ||
Number of operating segment | Segment | 1 | ||||
Number of reportable segment | Segment | 1 |
Revenue - Disaggregated Revenue
Revenue - Disaggregated Revenue by Categories (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total Net Sales | $ 736 | $ 710 | $ 2,260 | $ 2,051 |
North America On-Highway | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net Sales | 376 | 340 | 1,149 | 1,026 |
North America Off-Highway | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net Sales | 9 | 24 | 58 | 62 |
Defense | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net Sales | 43 | 35 | 103 | 99 |
Outside North America On-Highway | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net Sales | 118 | 118 | 349 | 332 |
Outside North America Off-Highway | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net Sales | 19 | 36 | 66 | 98 |
Service Parts, Support Equipment and Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net Sales | $ 171 | $ 157 | $ 535 | $ 434 |
Inventories - Schedule of Compo
Inventories - Schedule of Components of Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Purchased parts and raw materials | $ 147 | $ 115 |
Work in progress | 20 | 7 |
Service parts | 55 | 53 |
Finished goods | 59 | 49 |
Total inventories | $ 281 | $ 224 |
Goodwill And Other Intangible_3
Goodwill And Other Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 2,075 | $ 2,075 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Schedule of Other Intangible Assets (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross, Total | $ 2,202 | $ 2,202 |
Accumulated amortization | (1,358) | (1,324) |
Intangible assets, net, Total | 844 | 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 | (823) | (793) |
Intangible assets, net | 16 | 46 |
Proprietary technology | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 484 | 484 |
Accumulated amortization | (478) | (477) |
Intangible assets, net | 6 | 7 |
Customer relationships - defense | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 62 | 62 |
Accumulated amortization | (56) | (53) |
Intangible assets, net | 6 | 9 |
Non-compete agreements | ||
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 | Sep. 30, 2023 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2024 | $ 9 |
2025 | 5 |
2026 | 2 |
2027 | 1 |
2028 | $ 1 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Additional Information (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 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 September 30, 2023 and December 31, 2022, the Company did not have any Level 3 financial assets or liabilities. | |
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 | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 323 | $ 111 |
Marketable securities | $ 21 | $ 22 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Assets | Assets |
Rabbi trust assets | $ 17 | $ 15 |
Deferred compensation obligation | (17) | (15) |
Total | 365 | 151 |
Derivatives Designated as Hedging Instruments | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative assets | 21 | 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 | 323 | 111 |
Marketable securities | 21 | 22 |
Rabbi trust assets | 17 | 15 |
Deferred compensation obligation | (17) | (15) |
Total | 344 | 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 | 21 | 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 | $ 21 | $ 18 |
Debt - Summary of Long-Term Deb
Debt - Summary of Long-Term Debt and Maturities (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 2,520 | $ 2,525 |
Current portion of long-term debt | 6 | 6 |
deferred financing costs, net | 16 | 18 |
Long-term debt | 2,498 | 2,501 |
Senior Secured Credit Facility Term Loan, Variable, Due 2026 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 620 | 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) | Sep. 30, 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 - Additional Information (
Debt - Additional Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Long-term debt | $ 2,520 | $ 2,525 |
Fair value of long-term debt obligations | 2,269 | |
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 | $ 620 | $ 625 |
Debt instrument, maturity month and year | 2026-03 | |
Debt Instrument, Redemption, Period One | Senior Notes, Fixed 3.75%, Due 2031 | ||
Debt Instrument [Line Items] | ||
Debt instrument, redemption end date | Jan. 30, 2024 | |
Percentage of principal amount redeemed | 103.75% | |
Percentage of principal amount redeemable | 40% | |
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 start date | Jan. 30, 2024 | |
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 | 9 Months Ended |
Feb. 28, 2023 | Sep. 30, 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 | 0.11 | |
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] | ||
Required senior secured leverage ratio | 5.50 | |
Net leverage ratio | 4 | |
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 | 7.17% | |
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 | 9 Months Ended | |
Sep. 30, 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 September 30, 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 Accumulated other comprehensive loss, net of tax (“AOCL”) in the Condensed 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 | $ 14 | |
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 | $ 21 | $ 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 | Sep. 30, 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 | $ 21 | $ 18 |
Derivatives Designated as Hedging Instruments | Interest Rate Swaps | ||
Derivative [Line Items] | ||
Total derivative assets | 21 | 18 |
Derivatives Designated as Hedging Instruments | Interest Rate Swaps | Other current assets | ||
Derivative [Line Items] | ||
Interest rate swaps, assets | 11 | 7 |
Derivatives Designated as Hedging Instruments | Interest Rate Swaps | Other non-current assets | ||
Derivative [Line Items] | ||
Interest rate swaps, assets | $ 10 | $ 11 |
Product Warranty Liabilities -
Product Warranty Liabilities - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 |
Guarantees [Abstract] | |||
Product warranty liability, current | $ 23 | $ 33 | $ 26 |
Product warranty liability, non-current | $ 36 | $ 24 | $ 20 |
Product Warranty Liabilities _2
Product Warranty Liabilities - Product Warranty Liability Activities (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Guarantees [Abstract] | ||||
Beginning balance | $ 60 | $ 53 | $ 57 | $ 53 |
Payments | (12) | (9) | (30) | (24) |
Increase in liability (warranty issued during period) | 5 | 4 | 20 | 13 |
Net adjustments to liability | 6 | (2) | 12 | 4 |
Ending balance | $ 59 | $ 46 | $ 59 | $ 46 |
Deferred Revenue - Additional I
Deferred Revenue - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 |
Disaggregation of Revenue [Line Items] | |||
Deferred revenue current liabilities | $ 44 | $ 38 | $ 39 |
Deferred revenue non-current liabilities | 94 | $ 93 | 95 |
ETC contracts | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue current liabilities | 29 | 30 | |
Deferred revenue non-current liabilities | $ 86 | $ 86 |
Deferred Revenue - Summary of D
Deferred Revenue - Summary of Deferred Revenue Activity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue Recognition and Deferred Revenue [Abstract] | ||||
Beginning balance | $ 139 | $ 135 | $ 131 | $ 136 |
Increases | 13 | 8 | 42 | 28 |
Revenue earned | (14) | (9) | (35) | (30) |
Ending balance | $ 138 | $ 134 | $ 138 | $ 134 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Leases [Abstract] | |||||
Lessee lease description | 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 September 30, 2023, 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. | ||||
Operating lease weighted average discount rate percent | 4.58% | 4.58% | 4.43% | ||
Current lease liabilities | $ 4,000,000 | $ 4,000,000 | $ 4,000,000 | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other current liabilities | Other current liabilities | Other current liabilities | ||
Non-current lease liabilities | $ 11,000,000 | $ 11,000,000 | $ 13,000,000 | ||
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other non-current liabilities | Other non-current liabilities | Other non-current liabilities | ||
Remaining lease term | 5 years 9 months 18 days | 6 years 8 months 12 days | 5 years 9 months 18 days | 6 years 8 months 12 days | |
Operating expense | $ 2,000,000 | $ 1,000,000 | $ 5,000,000 | $ 4,000,000 | |
Material short term operating lease expense | $ 0 | $ 0 | 0 | 0 | |
New ROU assets | $ 2,000,000 | $ 2,000,000 |
Leases - Schedule of Lease Matu
Leases - Schedule of Lease Maturity, Current Guidance (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Leases [Abstract] | |
For the remainder of 2023 | $ 1 |
2024 | 4 |
2025 | 3 |
2026 | 2 |
2027 | 2 |
Thereafter | 5 |
Total lease payments | 17 |
Less: Interest | 2 |
Present value of operating lease liabilities | $ 15 |
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 | Sep. 30, 2023 | Dec. 31, 2022 |
Lessee, Lease, Description [Line Items] | ||
Total ROU assets | $ 15 | $ 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 | $ 13 | $ 15 |
Land | ||
Lessee, Lease, Description [Line Items] | ||
Total ROU assets | 1 | 1 |
Equipment | ||
Lessee, Lease, Description [Line Items] | ||
Total ROU assets | 1 | 0 |
Vehicles | ||
Lessee, Lease, Description [Line Items] | ||
Total ROU assets | $ 0 | $ 1 |
Other Current Liabilities - Sum
Other Current Liabilities - Summary of Other Current Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Payroll and related costs | $ 70 | $ 72 |
Sales incentives | 35 | 42 |
Accrued interest payable | 26 | 24 |
Vendor buyback obligation | 19 | 16 |
Taxes payable | 16 | 31 |
Construction holdback | 4 | 4 |
OPEB liability | 4 | 4 |
Lease liability | 4 | 4 |
Other accruals | 15 | 11 |
Total | $ 193 | $ 208 |
Employee Benefit Plans - Compon
Employee Benefit Plans - Components of Net Periodic Benefit Cost (Credit) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
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] | Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax | Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax | Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax | Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax |
Pension Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 1 | $ 1 | $ 3 | $ 5 |
Interest cost | 2 | 1 | 6 | 4 |
Expected return on assets | (2) | (2) | (6) | (6) |
Prior service credit | 0 | 0 | 0 | 0 |
Recognized actuarial loss (gain) | 0 | 1 | 0 | 1 |
Net periodic benefit cost (credit) | 1 | 1 | 3 | 4 |
Post-retirement Benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 0 | 0 | 0 | 1 |
Interest cost | 1 | 1 | 3 | 2 |
Expected return on assets | 0 | 0 | 0 | 0 |
Prior service credit | (2) | (3) | (7) | (8) |
Recognized actuarial loss (gain) | (1) | 0 | (2) | 0 |
Net periodic benefit cost (credit) | $ (2) | $ (2) | $ (6) | $ (5) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 35 | $ 20 | $ 118 | $ 86 |
Effective tax rate | 18% | 13% | 19% | 18% |
Valuation allowance, description | 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 authoritative accounting guidance. 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 carry-forward 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. |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Changes in Accumulated Other Comprehensive Loss by Component (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | $ 1,056 | $ 749 | $ 874 | $ 634 |
Ending Balance | 1,184 | 762 | 1,184 | 762 |
Pension and OPEB liability adjustments | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | (21) | 5 | (17) | |
Amounts reclassified from AOCL | (3) | (2) | (9) | (7) |
Income tax benefit (expense) | 1 | 2 | 1 | |
Net current period other comprehensive (loss) income | (2) | (2) | (7) | (6) |
Ending Balance | (2) | (23) | (2) | (23) |
Interest rate swaps | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | 17 | 1 | 15 | (24) |
Other comprehensive income (loss) before reclassifications | 4 | 16 | 11 | 43 |
Amounts reclassified from AOCL | (3) | 1 | (8) | 7 |
Income tax benefit (expense) | (1) | (4) | (1) | (12) |
Net current period other comprehensive (loss) income | 13 | 2 | 38 | |
Ending Balance | 17 | 14 | 17 | 14 |
Foreign currency items | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | (42) | (40) | (42) | (32) |
Other comprehensive income (loss) before reclassifications | (5) | (12) | (5) | (20) |
Net current period other comprehensive (loss) income | (5) | (12) | (5) | (20) |
Ending Balance | (47) | (52) | (47) | (52) |
Accumulated Other Comprehensive (Loss) Income, net of tax | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | (25) | (60) | (22) | (73) |
Other comprehensive income (loss) before reclassifications | (1) | 4 | 6 | 23 |
Amounts reclassified from AOCL | (6) | (1) | (17) | |
Income tax benefit (expense) | (4) | 1 | (11) | |
Net current period other comprehensive (loss) income | (7) | (1) | (10) | 12 |
Ending Balance | $ (32) | $ (61) | $ (32) | $ (61) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Loss - Amounts reclassified from AOCL (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Interest expense, net | $ (27) | $ (29) | $ (83) | $ (88) |
Other (expense) income, net | (2) | (15) | 10 | (28) |
Income before income taxes | 193 | 159 | 621 | 476 |
Income tax expense | (35) | (20) | (118) | (86) |
Net income | 158 | 139 | 503 | 390 |
Reclassified from AOCL | Interest rate swaps | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Interest expense, net | 3 | (1) | 8 | (7) |
Reclassified from AOCL | Prior service credit | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Other (expense) income, net | 2 | 3 | 7 | 8 |
Reclassified from AOCL | Recognized actuarial gain (loss) | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Other (expense) income, net | 1 | (1) | 2 | (1) |
Reclassified from AOCL | Pension and OPEB liability adjustment | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Income before income taxes | 6 | 1 | 17 | 0 |
Income tax expense | (1) | 0 | (4) | 0 |
Net income | $ 5 | $ 1 | $ 13 | $ 0 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Shares excluded from diluted EPS calculation (in shares) | 0 | 2 | 0 | 2 |
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 | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 158 | $ 139 | $ 503 | $ 390 |
Weighted average shares of common stock outstanding | 90 | 95 | 91 | 97 |
Dilutive effect of stock-based awards | 1 | |||
Diluted weighted average shares of common stock outstanding | 90 | 96 | 91 | 97 |
Basic earnings per share attributable to common stockholders | $ 1.76 | $ 1.46 | $ 5.53 | $ 4.02 |
Diluted earnings per share attributable to common stockholders | $ 1.76 | $ 1.45 | $ 5.53 | $ 4.02 |
Common Stock - Additional Infor
Common Stock - Additional Information (Details) - Repurchase Program | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | |
Common Stock Disclosure [Line Items] | ||
Common stock, repurchased during the period | $ 20,000,000 | $ 157,000,000 |
Stock repurchase program, remaining amount | 878,000,000 | 878,000,000 |
Maximum | ||
Common Stock Disclosure [Line Items] | ||
Stock repurchase program, authorized amount | $ 4,000,000,000 | $ 4,000,000,000 |