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Allison (ALSN) Q2 Earnings & Sales Miss, FY'22 View Modified

·5-min read

Allison Transmission Holdings ALSN posted second-quarter earnings of $1.26 a share, which missed the Zacks Consensus Estimate of $1.35 owing to lower-than-anticipated sales from all segments except Outside North America Off-Highway and Service Parts, Support Equipment & Other end markets. The bottom line, however, increased 25% on a year-over-year basis from $1.01 a share. Quarterly revenues of $664 million grew 10% from the year-ago period but lagged the consensus mark of $699 million.

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

Allison Transmission Holdings, Inc. Price, Consensus and EPS Surprise
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 jumped 13% year over year to $340 million amid continued robust customer demand for last-mile delivery, regional haul and vocational trucks. But the metric lagged the Zacks Consensus Estimate of $361 million.

Net sales in the North America Off-Highway end market shot up 122% to $20 million from the year-ago period. Yet the metric marginally missed the Zacks Consensus Estimate of $20.25 million.

In the reported quarter, net sales in the Defense end market plummeted 40% year over year to $29 million. The figure also lagged the consensus estimate of $44 million.

The Outside North America On-Highway end market’s net sales rose 7% year over year to $105 million in the quarter, led by improved demand in Europe and South America. The figure, nonetheless, missed the consensus mark of $108 million.

Net sales in the Outside North America Off-Highway end market surged 78% year over year to $32 million and outpaced the consensus mark of $27 million.

Net sales in the Service Parts, Support Equipment & Other end market rose 8% year over year to $138 million in the quarter, owing to higher demand for North America service parts and global support equipment. Moreover, the figure crossed the consensus mark of $136 million.

Financial Position

Allison saw a gross profit of $311 million, an 8% increase from $288 million for the same period in 2021, mainly driven by higher net sales and price increases on certain products.

Adjusted EBITDA in the quarter came in at $227 million, an increase of nearly 6.6% from $213 million a year ago. The increase was led by higher gross profit.

Allison had cash and cash equivalents of $122 million on Jun 30, 2022, down from $127 million as of Dec 31, 2021. Long-term debt was $2,502 million, marginally down from $2,504 million as of Dec 31, 2021. Adjusted free cash flow in the reported quarter was $36 million, down from the prior-year quarter’s $95 million on lower net cash provided by operating activities.

Net cash provided by operating activities sharply decreased to $66 million from $140 million for the same period in 2021 on higher operating working capital funding requirements and higher cash income taxes.

Selling, general and administrative expenses fell to $78 million from $80 million due to lower commercial activities spending. Engineering – research and development expenses in the quarter increased to $46 million from $41 million in the year-ago quarter, primarily driven by higher product initiatives spending.

In the second quarter, Allison settled $34 million of share repurchases. It paid a quarterly dividend of 21 cents per share. As of Jun 30, Allison had repurchased 3% of outstanding shares year to date.

2022 Outlook

Allison modified the guidance for 2022. Its estimated net sales are now in the band of $2,650-$2,750 million compared with $2,625-$2,775 million predicted earlier. Net income is now expected in the band of $450-$500 million, changed from $430-$520 million and adjusted EBITDA is now estimated within $885-$955 million from $865-$975 million. Adjusted free cash flow is now estimated within $420-$480 million from the previous range of $400-$500 million. Its expected net cash provided by operating activities is within $590-$660 million, changed from $570-$680 million. Capex numbers are unchanged in the band of $170-$180 million. However, it reaffirmed that it expects a demand boost in the Global On-Highway, Global Off-Highway and Service Parts, Support Equipment & Other end markets. Its sales guidance also reflects price hikes on certain products.

Zacks Rank & Key Picks

ALSN carries a Zacks Rank #3 (Hold), currently.

Better-ranked players in the auto space include Harley-Davidson HOG, Genuine Parts Company GPC and PACCAR Inc. PCAR, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Harley-Davidson has an expected earnings growth rate of 6.9% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 7% upward in the past 30 days.

Harley-Davidson’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. HOG pulled off a trailing four-quarter earnings surprise of 49.52%, on average. The stock has declined 4.3% in the past year.

Genuine Parts has an expected earnings growth rate of 15% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 1.3% upward in the past 30 days.

Genuine Parts’ earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GPC pulled off a trailing four-quarter earnings surprise of 11.03%, on average. The stock has risen 21.6% over the past year.

PACCAR has an expected earnings growth rate of 45.3% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 7.4% in the past 30 days.

PACCAR’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. PCAR pulled off a trailing four-quarter earnings surprise of 7.44%, on average. The stock has risen 13.4% in the past year.


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