• Net Sales: Record high of $3.2 billion for full-year 2024.
• North America On-Highway Net Sales: $1.8 billion, a 15% increase from 2023.
• Defense End Market Net Sales: Increased 28% year over year to $212 million.
• Outside North America On-Highway Net Sales: Record $493 million.
• Diluted EPS: Record $8.31, a 12% increase from 2023.
• Q4 2024 Net Sales: $796 million, a 3% increase year over year.
• Q4 2024 Gross Profit: $373 million, up $2 million from Q4 2023.
• Q4 2024 Net Income: $175 million, a $5 million increase from Q4 2023.
• Q4 2024 Adjusted EBITDA: $270 million, compared to $277 million in Q4 2023.
• Q4 2024 Diluted EPS: $2.01, a 5% increase year over year.
• Q4 2024 Adjusted Free Cash Flow: $136 million, compared to $186 million in Q4 2023.
• 2024 Adjusted Free Cash Flow: $658 million.
• Debt Repayment: Over $100 million of existing term loan debt paid down in 2024.
• Share Repurchase: Over $250 million repurchased in 2024, with over $500 million authorization remaining.
• 2025 Net Sales Guidance: $3.2 billion to $3.3 billion.
• 2025 Net Income Guidance: $735 million to $785 million.
• 2025 Adjusted EBITDA Guidance: $1.170 billion to $1.230 billion.
• 2025 Net Cash Provided by Operating Activities Guidance: $800 million to $860 million.
• 2025 Capital Expenditures Guidance: $165 million to $175 million.
• 2025 Adjusted Free Cash Flow Guidance: $635 million to $685 million.

• Warning! GuruFocus has detected 7 Warning Signs with ALSN.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Allison Transmission Holdings Inc (NYSE:ALSN) achieved record net sales of $3.2 billion in 2024, driven by strong demand in the North America On-Highway market.
• The company reported a 28% year-over-year increase in net sales in the Defense end market, reaching a decade high of $212 million.
• Allison Transmission Holdings Inc (NYSE:ALSN) achieved a record diluted EPS of $8.31, marking a 12% increase from 2023.
• The company successfully expanded its product offerings, including the debut of the 6000 Series transmissions for wide body dump applications.
• Allison Transmission Holdings Inc (NYSE:ALSN) maintained a strong capital allocation strategy, repurchasing over 1% of its outstanding shares in the fourth quarter and increasing its quarterly dividend by 67% over the last five years.

Negative Points

• The company experienced a decrease in adjusted free cash flow for the fourth quarter, dropping to $136 million from $186 million in the same period in 2023.
• Allison Transmission Holdings Inc (NYSE:ALSN) faced unfavorable foreign exchange impacts, which negatively affected their financial results.
• The company anticipates a softer medium-duty market in North America for 2025, which could impact overall volume.
• Despite strong performance, the Outside North America On-Highway market is expected to remain flat in 2025, presenting a challenge for growth.
• The company is facing cost pressures from raw materials and purchased components, which could impact margins despite price increases.

Q & A Highlights

Q: Could you give us some color on the North America On-Highway guide, specifically the volume versus price components? A: Hi Tami, this is Fred. We have secured price increases across all end markets, including North America On-Highway, which is a significant driver. The guide reflects a 1% growth, with volume expectations down year-over-year, primarily driven by medium duty. This aligns with vehicle OEMs and industry forecasters' views.

Q: Are there other components beyond pricing in the long-term agreements? A: Sure, Tim. Beyond pricing, these contracts often include commodity pass-throughs for materials like aluminum and steel. About two-thirds of steel and closer to 80% of aluminum costs are passed through in long-term contracts. These agreements are advantageous to both us and our OEM customers.

Q: Can you elaborate on the North American On-Highway volume assumptions for 2025? A: Hey, Kyle, it's Dave. We expect a softer medium duty market compared to 2024, consistent with OEMs and forecasters. Vocational demand remains robust, with no significant changes expected in capacity numbers. Medium duty is softer year-over-year, while vocational demand remains stable.

Q: Do you expect to flow all cash to shareholders in 2025, and what about cash flow guidance? A: Rob, this is Fred. We paid down $100 million of term loan debt in 2024. Our capital allocation remains the same, focusing on organic growth, strategic acquisitions, and returning capital to shareholders. We believe share repurchases are a good return given our current valuation.

Q: Could you provide insights on FX headwinds and tailwinds? A: Ian, this is Fred. We're relatively naturally hedged, but balance sheet revaluations can impact us. Year-over-year, FX was negative, affecting EBITDA margin by about 100 basis points. The dollar's strength against foreign currencies caused more negative impacts than usual this quarter.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.