Allison Transmission Q3 Earnings Miss Estimates, Guidance Trimmed

Allison Transmission Holdings ALSN reported third-quarter 2025 earnings of $1.63 per share, which missed the Zacks Consensus Estimate of $1.95 and fell 28% year over year. Quarterly revenues of $693 million declined 16% from the year-ago quarter and missed the Zacks Consensus Estimate of $756 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

In the reported quarter, net sales in the North America On-Highway end market fell 28% year over year to $327 million and missed the Zacks Consensus Estimate of $368 million. Demand softness for Class 8 vocational and medium-duty trucks affected results. 

The Outside North America On-Highway end market’s net sales were $122 million, a fall of 3% from the corresponding quarter of 2024, due to lower demand in Asia. The metric also missed the Zacks Consensus Estimate of $130.83 million.

Net sales in the Global Off-Highway end market plunged to $7 million from $20 million reported in the year-ago period. The figure missed the Zacks Consensus Estimate of $17.77 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 47% year over year to $78 million, driven by higher demand for Tracked vehicle applications, price increases on certain products and the continued execution of growth initiatives. The reported figure also beat the Zacks Consensus Estimate of $60 million. 

Net sales in the Service Parts, Support Equipment & Other end markets fell 5% year over year to $159 million in the quarter due to lower demand for aluminum die cast components and support equipment. The reported figure also missed the Zacks Consensus Estimate of $169 million.

ALSN’s Financial Position

Allison reported gross profit of $329 million, which decreased from $396 million in the year-ago quarter due to lower volumes and unfavorable direct material costs.

Adjusted EBITDA in the quarter was $256 million, which decreased from $305 million reported a year ago.

Selling, general and administrative expenses in the quarter were $82 million, down 4% year over year. Engineering, research and development expenses decreased to $43 million from $51 million reported in the third quarter of 2024.

Allison Transmission had cash and cash equivalents of $902 million as of Sept. 30, 2025, up from $781 million recorded as of Dec. 31, 2024. Long-term debt was $2.39 billion, unchanged from 2024-end levels.

Net cash provided by operating activities totaled $228 million. Adjusted free cash flow in the reported quarter totaled $184 million, down from $210 million generated a year ago.

ALSN’s 2025 Outlook Revised

Allison Transmission has updated its full-year 2025 outlook. The company now anticipates net sales between $2,975 million and $3,025 million compared with the previous projection of $3,075-$3,175 million. Net income is expected in the range of $620 million to $650 million compared with the prior estimation of $640 to $680 million. Adjusted EBITDA is expected between $1,090 million and $1,125 million compared with the previous estimate of $1,130 million to $1,180 million.  

Additionally, net cash provided by operating activities is expected to be in the range of $765 million to $795 million compared with the prior estimated range of $785 million to $835 million. Capital expenditures are projected at $165 million to $175 million. Adjusted free cash flow is now expected between $600 million and $620 million, down from the previous range of $620 million to $660 million.  

Allison’s Zacks Rank & Key Picks

ALSN carries a Zacks Rank #3 (Hold) at present. 

Some better-ranked stocks in the auto space are CooperStandard Holdings Inc. CPS, Garrett Motion, Inc. GTX and Autoliv, Inc. ALV. While CPS and GTX sport a Zacks Rank #1 (Strong Buy) at present, ALV carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CPS’ 2025 sales and earnings implies year-over-year growth of 2.5% and 137.8%, respectively. EPS estimates for 2025 and 2026 have improved 36 cents and 23 cents, respectively, in the past 30 days. 

The Zacks Consensus Estimate for GTX’s 2025 sales and earnings implies year-over-year growth of 2.6% and 16.7%, respectively. EPS estimates for 2025 and 2026 have improved 8 cents and 18 cents, respectively, in the past seven days.  

The Zacks Consensus Estimate for ALV’s 2025 sales and earnings indicates year-over-year growth of 2.8% and 14.2%, respectively. EPS estimates for 2025 have improved 6 cents in the past seven days. EPS estimates for 2026 improved 37 cents in the past 30 days.  

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

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