Allison Transmission Q4 Earnings Beat Expectations, Revenues Decline Y/Y

Allison Transmission Holdings ALSN reported fourth-quarter 2025 earnings of $1.70 per share, which beat the Zacks Consensus Estimate of $1.56 but declined 15.4% year over year. Quarterly revenues of $737 million declined 7.4% year over year but surpassed the Zacks Consensus Estimate of $722 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 declined 13.8% year over year to $361 million but exceeded the Zacks Consensus Estimate of $335 million.

The Outside North America On-Highway end market’s net sales were $131 million, reflecting an increase of 5.7% year over year due to higher demand in Europe. The metric also beat the Zacks Consensus Estimate of $125 million.

Net sales in the Global Off-Highway end market plunged to $12 million from $16 million reported in the year-ago period. The figure, however, beat the Zacks Consensus Estimate of $11.57 million.

Net sales in the Defense end market rose 7.4% year over year to $73 million, driven by continued execution of growth initiatives. The reported figure, however, missed the Zacks Consensus Estimate of $86 million. 

Net sales in the Service Parts, Support Equipment & Other end markets fell 5.3% year over year to $160 million. The reported figure also missed the Zacks Consensus Estimate of $167 million.

ALSN’s Financial Position

Allison reported gross profit of $354 million, which decreased from $373 million in the year-ago quarter due to lower volumes and unfavorable direct material costs.

Adjusted EBITDA in the quarter was $265 million, which decreased from $270 million reported a year ago.

Selling, general and administrative expenses amounted to $110 million, up 31% year over year. Engineering, research and development expenses decreased to $44 million from $54 million in the fourth quarter of 2024 due to lower spending on product initiatives as the company adjusted costs and programs to better align with end-market demand conditions.

Allison Transmission had cash and cash equivalents of $1.5 billion as of Dec. 31, 2025, up from $781 million recorded as of Dec. 31, 2024. Long-term debt was $2.89 billion, up from $2.4 billion.

Net cash provided by operating activities totaled $243 million. Adjusted free cash flow in the reported quarter totaled $169 million, up from $136 million generated a year ago.

ALSN’s 2026 Outlook

Allison Transmission has provided its full-year 2026 outlook. The company now anticipates Allison Transmission net sales to be between $3,025 million and $3,175 million compared with $3,010 million reported in 2025. Net income is expected to be in the range of $600-$750 million compared with $623 million reported in 2025. Adjusted EBITDA is expected to be between $1,365 million and $1,515 million compared with $1,130 million reported in 2025.  

Net cash provided by operating activities is expected to be in the range of $970-$1,100 million compared with $836 million reported in 2025. Capital expenditures are projected to be in the band of $295-$315 million. Adjusted free cash flow is now expected to be between $655 million and $805 million compared with $661 million a year ago.

Allison’s Zacks Rank & Other Key Picks

ALSN carries a Zacks Rank #2 (Buy) at present. 

Some other top-ranked stocks in the auto space are Ford Motor F, Modine Manufacturing MOD and Strattec Security STRT, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for F’s 2026 sales and earnings implies year-over-year growth of 0.6% and 39.5%, respectively. The EPS estimate for 2026 and 2027 has improved 10 cents and 22 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for MOD’s fiscal 2026 sales and earnings implies year-over-year growth of 21.3% and 19%, respectively. The EPS estimate for fiscal 2026 and 2027 has improved 1 cent and 4 cents, respectively, in the past seven days.

The Zacks Consensus Estimate for STRT’s fiscal 2026 sales and earnings implies year-over-year growth of 2.1% and 16.2%, respectively. The EPS estimate for fiscal 2026 and fiscal 2027 has improved $1.01 and 48 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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