Allison Transmission Q2 Earnings Beat Estimates, Guidance Updated

Allison Transmission Holdings ALSN delivered second-quarter 2025 earnings of $2.29 per share, which beat the Zacks Consensus Estimate of $2.20 and rose 7.5% year over year. Quarterly revenues of $814 million fell 0.2% from the year-ago period's level but beat the Zacks Consensus Estimate of $794 million.

Allison Transmission Holdings, Inc. Price, Consensus and EPS Surprise

Allison Transmission Holdings, Inc. price-consensus-eps-surprise-chart | Allison Transmission Holdings, Inc. Quote

ALSN’s Segmental Performance

Allison Transmission segregates revenues in terms of end markets served, which are as follows:

In the reported quarter, net sales in the North America On-Highway end market fell 8.6% year over year to $417 million and missed the Zacks Consensus Estimate of $442 million. Lower demand for medium-duty trucks resulted in a sales slump. The Outside North America On-Highway end market’s net sales of $142 million increased from $128 million generated in the corresponding quarter of 2024 due to higher demand in South America and Europe. The metric also beat the Zacks Consensus Estimate of $123 million.

Net sales in the Global Off-Highway end market plunged to $16 million from $23 million reported in the year-ago period and missed the Zacks Consensus Estimate of $18.45 million, amid softer demand from the energy, mining and construction sectors outside of North America.

In the reported quarter, net sales in the Defense end market rose 46.5% year over year to $63 million, driven by concentrated growth initiatives. The reported figure also beat the Zacks Consensus Estimate of $52 million. 

Net sales in the Service Parts, Support Equipment & Other end markets grew 6% year over year to $176 million in the quarter due to higher demand for service parts, added with price increases on certain products. The reported figure beat the Zacks Consensus Estimate of $162 million.

ALSN’s Financial Position

Allison Transmission saw a gross profit of $402 million, which increased from $394 million reported in the year-ago quarter, mainly driven by price increases on certain products.

Adjusted EBITDA in the quarter was $313 million, which increased from $301 million reported a year ago. 

Selling, general and administrative expenses in the quarter were $102 million, up 24.4% year over year. Engineering – research and development expenses decreased to $44 million from $49 million reported in the second quarter of 2024.

Allison Transmission had cash and cash equivalents of $778 million as of June 30, 2025, down from $781 million recorded as of Dec. 31, 2024. Long-term debt was $2.4 billion, unchanged from 2024-end levels.

Net cash provided by operating activities totaled $184 million. Adjusted free cash flow in the reported quarter totaled $153 million, up from $150 million generated in the year-ago period.

ALSN’s 2025 Outlook Revised

Allison Transmission expects full-year 2025 net sales in the band of $3,075-$3,175 million compared with the previous expectation of $3,200-$3,300 million reported. Net income is expected in the band of $640-$680 million, down from the prior guidance of $735-$785 million. Adjusted EBITDA is estimated in the range of $1,130-$1,180 million, down from $1,170-$1,230 million expected earlier.

ALSN expects net cash provided by operating activities between $785 million and $835 million compared with the previous estimate of $800-$860 million. Capex is expected in the band of $165-$175 million. Adjusted free cash flow is estimated between $620 million and $660 million compared with the previous estimate of $635-$685 million.

Allison’s Zacks Rank & Key Picks

ALSN carries a Zacks Rank #5 (Strong Sell) at present.

Some better-ranked stocks in the auto space are PHINIA Inc. PHIN, Ferrari N.V. RACE and Gentex Corporation GNTX. While PHIN sports a Zacks Rank #1 (Strong Buy) at present, RACE and GNTX carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for PHIN’s 2025 sales and earnings implies year-over-year growth of 0.58% and 13.99%, respectively. EPS estimates for 2025 and 2026 have improved 23 cents and 19 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for RACE’s fiscal 2025 earnings and sales indicates year-over-year growth of 13.65% and 13.76%, respectively. EPS estimates for fiscal 2025 and 2026 have improved 14 cents and 12 cents, respectively, in the past seven days.   

The Zacks Consensus Estimate for GNTX’s 2025 sales and earnings indicates year-over-year growth of 9.24% and 0.57%, respectively. EPS estimates for 2025 and 2026 have improved 5 cents and 7 cents, respectively, in the past 30 days.

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This article originally published on Zacks Investment Research (zacks.com).

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