Shares of Allison Transmission (ALSN) tumbled 6.85% in after-hours trading on Wednesday following the release of its third-quarter earnings report, which fell short of analyst expectations and showed a significant decline in sales and net income.

The heavy-duty transmission manufacturer reported quarterly earnings of $1.63 per share, missing the analyst consensus estimate of $1.84 by 11.32%. This represents a 28.19% decrease from earnings of $2.27 per share in the same period last year. The company's Q3 sales came in at $693 million, falling well below the analyst estimate of $780 million and marking a 15.9% decrease from the $824 million reported in the previous year.

Allison Transmission's net income for the quarter was $137 million, reflecting a substantial $63 million decrease from the same period last year. The company attributed the disappointing results primarily to demand uncertainty in the North America On-Highway market, which impacted sales by approximately $130 million. Despite these challenges, Allison maintained an adjusted EBITDA margin of 37% and reported growth in its Defense market segment, driven by increased demand for tracked vehicle applications and price increases.