Allison Transmission (ALSN) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 2024 net sales of $824 million, up 12% year-over-year, driven by strong demand in North America On-Highway, Defense, and Outside North America On-Highway markets, as well as price increases.

• Net income rose 27% to $200 million, with diluted EPS up 29% to $2.27, reflecting higher gross profit and lower interest expense.

• Adjusted EBITDA increased to $305 million, up from $267 million, supported by higher net sales and gross profit.

• Investments in supply chain and manufacturing, including a major expansion in India, are set to support long-term growth and global capacity.

• Strategic partnerships and product innovations are advancing growth in mining, defense, and alternative fuel vehicle markets.

Financial highlights

• Gross profit increased to $396 million, up $39 million year-over-year, with gross margin at 48%.

• Operating income rose to $260 million, up from $222 million in Q3 2023.

• Adjusted free cash flow was $210 million, up from $182 million in Q3 2023.

• Net cash from operating activities was $246 million, up 16% year-over-year.

• CapEx increased 20% to $36 million, mainly due to intra-year timing.

Outlook and guidance

• Raised full-year 2024 guidance: net sales expected between $3,135 million and $3,215 million.

• Net income forecasted at $675 million–$725 million; adjusted EBITDA at $1,115 million–$1,175 million.

• Adjusted free cash flow projected at $605 million–$655 million; capital expenditures at $135 million–$145 million.

• Q4 expected to be seasonally soft due to fewer OEM workdays and normalizing post-pandemic trends.

• Liquidity expected to remain strong, with sufficient cash and borrowing capacity for the next twelve months and beyond.