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Allison (ALSN) Q3 Earnings Match Estimates, Sales Beat

·3-min read

Allison Transmission ALSN posted third-quarter earnings of 89 cents a share, which matched the Zacks Consensus Estimate but increased 31% on a year-over-year basis. Quarterly revenues of $567 million grew 7% from the comparable year-ago period but fell short of the consensus mark of $588 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:

For the reported quarter, net sales in the North America On-Highway end market inched down 2% year over year to $275 million amid lower demand owing to supply disruptions and raw material constraints. The metric also missed the Zacks Consensus Estimate of $298 million.

For the July-September period, net sales in the North America Off-Highway end market jumped to $20 million from $1 million recorded in the year-ago period on higher demand for hydraulic fracturing applications. The metric also surpassed the Zacks Consensus Estimate of $6.75 million.

For the third quarter, net sales in the Defense end market contracted 30% year over year to $39 million on lower tracked vehicle demand. The figure also missed the consensus estimate of $47 million.

The Outside North America On-Highway end market’s net sales surged 31% year on year to $93 million for the September-end quarter, courtesy of growth initiatives and recovery of customer demand from pandemic-related disruptions in the corresponding period of 2020. The metric also topped the consensus mark of $89 million.

Net sales in the Outside North America Off-Highway end market skyrocketed 250% year on year to $14 million on higher demand from energy, mining and construction sectors. The metric, however, missed the consensus mark of $18 million.

Net sales in the Service Parts, Support Equipment & Other end market rose 6% year on year to $126 million for the reported quarter owing to higher demand for global service parts as well as support equipment. Nonetheless, the figure fell short of the consensus mark of $131 million.

Financial Position & ’21 View

Allison — whose peers include Magna International MGA, Adient plc ADNT, and Meritor MTOR — had cash and cash equivalents of $261 million on Sep 30, 2021 compared with $310 million as of 2020-end. As of Sep 30, long-term debt was $2,504 million, essentially unchanged from the 2020-end level. Adjusted free cash flow for the reported quarter was $153 million, up from the prior-year quarter’s $136 million.

Amid persistent supply chain disruptions, Allison has trimmed its full-year guidance. It now projects net sales in the band of $2,325-$2,400 million versus the prior estimate of $2,325-$2,475 million. Net income and adjusted EBITDA are now envisioned in the band of $395-$440 million and $795-$845 million, down from the previous projection of $395-$465 million and $795-$885 million, respectively. Adjusted free cash flow is expected within $415-$455 million, down from the prior guided range of $415-$475 million. Capex forecast remains unchanged in the band of $170-$180 million.

During the quarter under discussion, Allison — which presently carries a Zacks Rank #3 (Hold) — paid a quarterly dividend of 19 cents per share and bought back $100 million of common stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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