Allison Transmission aims for prudent capital structure, flexibility

By Devika Patel

Knoxville, Tenn., March 21 – Allison Transmission Holdings, Inc.’s management expects that the company’s prudent capital structure – with a targeted leverage ratio between 3x and 4x – will give it flexibility and options.

“Our job is to create performance and that typically results in flexibility and options,” president, chief financial officer and treasurer David S. Graziosi said at the 2017 Bank of America Merrill Lynch Global Industrials & E.U. Autos Conference in London on Tuesday.

“It all starts with what’s a prudent capital structure for our business.

“We target 3x to 3.5x [debt to EBITDA], with some ability to flex up or down,” he said.

In 2016, the company had $530 million in free cash flow.

Indianapolis-based Allison Transmission manufactures fully automatic transmissions for medium- and heavy-duty commercial vehicles as well as hybrid-propulsion systems for city buses.

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