• Net Sales: Decreased 3% year-over-year to $766 million.
• Gross Profit: Increased to $378 million from $366 million in the same period in 2024.
• Net Income: Increased to $192 million from $169 million in the same period in 2024.
• Diluted Earnings Per Share: Increased 17% year-over-year to $2.23.
• Adjusted EBITDA Margin: Increased by 90 basis points to 37.5%.
• Net Cash Provided by Operating Activities: Increased to $181 million from $173 million in the same period in 2024.
• Net Leverage Ratio: Ended the quarter at 1.43x.
• Cash and Available Credit: $753 million in cash and $744 million in available revolving credit facility commitments.
• Stock Repurchase: Repurchased over $150 million of common stock, with nearly $1.4 billion of authorization remaining.
• 2025 Guidance - Net Sales: Expected to be in the range of $3.2 billion to $3.3 billion.
• 2025 Guidance - Net Income: Expected to be in the range of $735 million to $785 million.
• 2025 Guidance - Adjusted EBITDA: Expected to be in the range of $1.170 billion to $1.230 billion.
• 2025 Guidance - Net Cash Provided by Operating Activities: Expected to be in the range of $800 million to $860 million.
• 2025 Guidance - Capital Expenditures: Expected to be in the range of $165 million to $175 million.
• 2025 Guidance - Adjusted Free Cash Flow: Expected to be in the range of $635 million to $685 million.

• Warning! GuruFocus has detected 3 Warning Sign with ALSN.

Release Date: May 01, 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) reported a 10% increase in net sales in the defense end market, driven by price increases on certain products.
• The company achieved a gross profit of $378 million, an increase of $12 million from the same period in 2024, primarily due to price increases and the absence of UAW contract-signing incentives.
• Net income for the quarter rose to $192 million, a $23 million increase from the previous year, supported by higher gross profit and unrealized mark-to-market adjustments for marketable securities.
• Allison Transmission Holdings Inc (NYSE:ALSN) announced a $1 billion increase in its stock repurchase program authorization, with over $150 million of common stock repurchased in the first quarter.
• The company reaffirmed its full-year 2025 guidance, expecting net sales between $3.2 billion and $3.3 billion, indicating confidence in its market position and strategic initiatives.

Negative Points

• Year-over-year net sales decreased by 3% to $766 million, driven by lower demand for medium-duty trucks despite a 4% increase in the North America On-Highway end market.
• The parts business experienced a sequential step-down, with a 7.5% year-over-year decline, attributed to lower support equipment sales and general weakness across global service parts.
• Medium-duty truck demand in North America is expected to be down year-over-year, consistent with broader market expectations.
• Ongoing geopolitical tensions and shifting trade policies are creating uncertainty across Allison Transmission Holdings Inc (NYSE:ALSN)'s end markets.
• The company faces potential impacts from tariffs and global trade uncertainties, although it plans to offset these through its supply chain and manufacturing footprint.

Q & A Highlights

Q: Could you unpack the solid margin results in the quarter, especially considering the higher-margin parts business was down? A: Fred Bohley, CFO, explained that the year-over-year margin expansion was driven by a $39 million increase in price, lower expenses due to non-recurrence of UAW signing incentives, and a favorable price impact offsetting volume mix. Gross margins expanded from 46.4% to 49.3%, and EBITDA margins increased by 90 basis points.

Q: Could you provide high-level thoughts on the vocational demand environment and any signs of weakness? A: David Graziosi, CEO, noted that the vocational market remains robust, consistent with expectations. The company benefits from significant market position and investments in capacity. Municipalities continue to be active buyers, and recent government support for investment in the US is favorable.

Q: How are you thinking about capital allocation, especially regarding M&A? A: David Graziosi, CEO, and Fred Bohley, CFO, emphasized a shareholder-friendly approach, including increased dividends and share repurchases. They are fully funding organic growth and exploring M&A opportunities, although the current market is challenging. The company maintains a strong financial profile to pursue potential acquisitions.

Q: Any implications from the EPA '27 regulation review on your business? A: David Graziosi, CEO, stated that Allison's products require minimal modification to align with new emissions regulations. The company is well-positioned with fuel efficiency features and is monitoring regulatory developments closely. The impact on pre-buys and demand will depend on final regulations.

Q: Can you comment on the step-down in the parts business sequentially and its impact on the full-year view? A: Fred Bohley, CFO, mentioned that the decline was due to lower unit sales and general weakness in global service parts. The company is coming off strong years in 2023 and 2024, and the initial guide for the parts business was a slight decline, consistent with current trends.

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