Yahoo Finance Allison's (ALSN) Q2 Earnings Beat Estimates, Decline Y/Y
Allison Transmission Holdings Inc.’s ALSN second-quarter 2020 earnings came in at 20 cents per share, marginally beating the Zacks Consensus Estimate of 19 cents. It delivered better-than-expected results on higher-than-expected revenues from the North America Off-Highway, Defense, Outside North America On-Highway and Outside North America Off-Highway end markets.
The bottom line, however, is lower than the year-ago quarter’s earnings of $1.46 per share.
Net income in the second quarter was $23 million compared with the $181 million recorded in the year-ago quarter. This downside primarily resulted from lower gross profit and restructuring charges.
In the reported quarter, net sales plunged 49% year over year to $377 million on bleak demand across all end markets, except for Defense, amid the coronavirus crisis. The figure also missed the Zacks Consensus Estimate of $410 million. Gross profit plummeted 58% year over year to $165 million. Gross margin was 43.8% compared with the prior-year quarter’s 52.8%. This downside primarily stemmed from lower net sales and restructuring charges, partially offset by favorable material costs.
Allison Transmission Holdings, Inc. Price, Consensus and EPS Surprise
Allison Transmission Holdings, Inc. price-consensus-eps-surprise-chart | Allison Transmission Holdings, Inc. Quote
Quarter in Detail
Allison segregates its revenues by the end markets served, which are as follows:
Net sales in the North America On-Highway end market dipped 59% year over year to $164 million on waning demand for Rugged Duty series and Highway series models. The reported figure also missed the Zacks Consensus Estimate of $189 million.
Net sales in the North America Off-Highway end market tanked 67% year over year to $3 million. Fluctuations in the demand for hydraulic fracturing applications resulted in this decline. However, the sales figure surpassed the Zacks Consensus Estimate of $0.9 million.
Net sales in the Defense end market climbed 14% to $42 million on higher tracked vehicle demand. The figure also outpaced the Zacks Consensus Estimate of $40.8 million.
The Outside North America On-Highway end market’s net sales slid 43% to $60 million, thanks to soft global demand amid the pandemic. The figure, however, beat the Zacks Consensus Estimate of $54 million.
Net sales in the Outside North America Off-Highway end market dropped 53% to $19 million, due to lackluster demand in the energy, mining and construction sectors. The reported figure, however, beat the Zacks Consensus Estimate of $18.67 million.
Net sales in the Service Parts, Support Equipment & Other end market slipped 39% to $89 million, due to dismal demand for North America service parts and support equipment. It, however, missed the Zacks Consensus Estimate of $112 million.
Financial Position
Allison had cash and cash equivalents of $434 million as of Jun 30, 2020, compared with $192 million as of Dec 31, 2019. As of Jun 30, 2020, long-term debt stood at $2,786 million, as compared to $2,512 million as of Dec 31,2019.
In the June-end quarter, the company’s net cash provided by operating activities was $92 million compared with the year-ago quarter’s $239 million. Adjusted free cash flow in the reported quarter was $67 million compared with the prior-year quarter’s $214 million.
2020 Outlook
Allison scrapped the previously-issued 2020 guidance as it expects that the pandemic’s impact to strain its operations in the days to come.
For 2020, the company has lowered the capital expenditure target by approximately 35% from the one reported in 2019.
Zacks Rank & Stocks to Consider
Allison currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the auto sector include AutoNation AN, LCI Industries LCII and Geely Automobile Holdings Ltd. GELYY. While AutoNation and LCI Industries sport a Zacks Rank of 1, Geely Automobile carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of AutoNation have rallied 8.2%, year to date, compared with the industry’s gain of 7.5%.
Shares of LCI Industries have appreciated 19.1%, year to date, as against the industry’s decline of 6.2%.
Shares of Geely Automobile have climbed 11.8%, year to date, as against the industry’s decline of 13.4%.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AutoNation, Inc. (AN) : Free Stock Analysis Report
Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report
Geely Automobile Holdings Ltd. (GELYY) : Free Stock Analysis Report
LCI Industries (LCII) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
