Allison Transmission Holdings ALSN delivered third-quarter 2024 earnings of $2.27 per share, which rose 29% year over year and beat the Zacks Consensus Estimate of $2.01. Record quarterly revenues of $824 million grew 12% from the year-ago period's level and outpaced the Zacks Consensus Estimate of $791 million.

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

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

Segmental Performance

Allison 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 rose 21.5% year over year to $457 million and surpassed the Zacks Consensus Estimate of $412 million. High demand for Class 8 vocational and medium-duty trucks and price increases on certain products resulted in sales growth.

Net sales in the North America Off-Highway end market plunged to $1 million from $9 million reported in the year-ago period and also lagged the Zacks Consensus Estimate of $3.32 million.

In the reported quarter, net sales in the Defense end market soared 23.2% year over year to $53 million, driven by higher demand for Tracked vehicle applications. However, the metric missed the Zacks Consensus Estimate of $56 million.

The Outside North America On-Highway end market’s net sales of $126 million increased from $118 million generated in the corresponding quarter of 2023, primarily due to robust demand from Asia and price increases on some products. The metric also outpaced the Zacks Consensus Estimate of $124 million.

Net sales in the Outside North America Off-Highway end market remained unchanged from the year-ago quarter at $19 million but missed the Zacks Consensus Estimate of $20.90 million.

Net sales in the Service Parts, Support Equipment & Other end markets decreased 1.7% year over year to $168 million in the quarter and also missed the Zacks Consensus Estimate of $170 million.

Financial Position

Allison saw a gross profit of $396 million, which increased from $357 million reported in the year-ago quarter, mainly driven by higher net sales and price increases in certain products.

Adjusted EBITDA in the quarter came in at $305 million, which rose from $267 million reported a year ago. The growth was led by higher gross profit.

Selling, general and administrative expenses in the quarter were $85 million compared with $86 million in the year-ago period. Engineering – research and development expenses totaled $51 million compared with $49 million recorded in the corresponding quarter of 2023.

Allison had cash and cash equivalents of $788 million as of Sept. 30, 2024, up from $555 million recorded as of Dec. 31, 2023. Long-term debt amounted to $2.39 billion compared with $2.49 billion as of Dec. 31, 2023.

Net cash provided by operating activities totaled $246 million. Adjusted free cash flow in the reported quarter totaled $210 million, up from $182 million generated in the year-ago period.

Updated 2024 Outlook

Allison now expects full-year 2024 net sales in the band of $3.13-$3.21 billion, up from the previously guided range of $3.09-$3.17 billion. Net income is expected in the band of $675-$725 million, up from the previous guidance of $650-$700 million. Adjusted EBITDA is estimated in the range of $1.11-$1.17 billion, up from the previous outlook of $1.08-$1.14 billion.

ALSN expects net cash provided by operating activities between $740 million and $800 million, up from the previous estimate of $715-$775 million. Capex is expected in the band of $135-$145 million. Adjusted free cash flow is estimated between $605 million and $655 million, up from the previous guidance of $590-$640 million.

Zacks Rank & Key Picks

Allison currently carries a Zacks Rank #3 (Hold).

A few top-ranked players in the auto space are Tesla TSLA, Toyota TM and REE Automotive REE, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for TSLA’s 2024 and 2025 EPS has moved north by 18 cents and 12 cents, respectively, in the past seven days.

The Zacks Consensus Estimate for TM’s 2024 and 2025 EPS has moved north by 56 cents and 65 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for REE’s 2024 and 2025 earnings indicates a year-over-year uptick of 64% and 13.3%, respectively.

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