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Allison (ALSN) Down Despite Q1 Earnings Beat, Raised '21 View
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Allison Transmission’s (ALSN - Free Report) shares failed to gain despite first-quarter earnings beat, announced on Apr 28. In fact, over the past four trading sessions since its earnings release, the stock inched down 0.8%. Investors were most likely disappointed as the company’s profit and sales tailed off year over year.
The world's largest manufacturer of fully automatic commercial-duty transmissions posted first-quarter earnings of $1.07 a share, topping the Zacks Consensus Estimate of 90 cents. Higher-than-expected revenues from On-Highway segments and the Defense unit led to the outperformance. However, the bottom line declined 10.8% on a year-over-year basis. Quarterly revenues of $588 contracted 7.7% from the comparable year-ago period but managed to surpass the consensus mark of $571 million.
Segmental Performance
Allison segregates its 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 dipped 9% year over year to $319 million on dwindling demand for products amid coronavirus woes. Nonetheless, the metric beat the Zacks Consensus Estimate of $294 million.
For the January-March period, net sales in the North America Off-Highway end market plummeted 75% from the prior-year quarter to $2 million amid weakness in hydraulic fracturing applications.
For the first quarter, net sales in the Defense end market rose 13% year over year to $45 million on higher tracked vehicle demand. Further, the figure also surpassed the consensus estimate of $42 million.
The Outside North America On-Highway end market’s net sales increased 17% year on year to $84 million for the March-end quarter driven by robust demand in Asia. The metric also topped the consensus mark of $65 million.
Net sales in the Outside North America Off-Highway end market slumped 41% year on year to $16 million for the first quarter due to dismal demand in the energy sector.
Net sales in the Service Parts, Support Equipment & Other end market slipped 12% year on year to $122 million for the reported quarter, owing to shrinking demand for North America service parts and support equipment.
Financial Position & Updated ’21 View
Allison Transmission — whose peers include Magna International (MGA - Free Report) , Adient plc (ADNT - Free Report) and Meritor — had cash and cash equivalents of $295 million on Mar 31, 2021 compared with $310 million as of 2020-end. As of Mar 31, long-term debt was $2,506 million, essentially unchanged from the 2020-end level. Adjusted free cash flow for the reported quarter was $107 million, down from the prior-year quarter’s $127 million.
Encouragingly, the Zacks Rank #2 (Buy) company raised its full-year guidance. Allison currently projects net sales in the band of $2,325-$2,475 million, up from the prior guided range of $2,265-$2,415 million. Net income and adjusted EBITDA are now envisioned in the band of $395-$465 million and $795-$885 million, up from $375-$445 million and $770-$860 million projected earlier, respectively. Adjusted free cash flow is expected within $415-$475 million, implying a year-over-year increase of 6% at the midpoint of the guided range. Capex projection remains unchanged between $170 million and $180 million.
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Allison (ALSN) Down Despite Q1 Earnings Beat, Raised '21 View
Allison Transmission’s (ALSN - Free Report) shares failed to gain despite first-quarter earnings beat, announced on Apr 28. In fact, over the past four trading sessions since its earnings release, the stock inched down 0.8%. Investors were most likely disappointed as the company’s profit and sales tailed off year over year.
The world's largest manufacturer of fully automatic commercial-duty transmissions posted first-quarter earnings of $1.07 a share, topping the Zacks Consensus Estimate of 90 cents. Higher-than-expected revenues from On-Highway segments and the Defense unit led to the outperformance. However, the bottom line declined 10.8% on a year-over-year basis. Quarterly revenues of $588 contracted 7.7% from the comparable year-ago period but managed to surpass the consensus mark of $571 million.
Segmental Performance
Allison segregates its 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 dipped 9% year over year to $319 million on dwindling demand for products amid coronavirus woes. Nonetheless, the metric beat the Zacks Consensus Estimate of $294 million.
For the January-March period, net sales in the North America Off-Highway end market plummeted 75% from the prior-year quarter to $2 million amid weakness in hydraulic fracturing applications.
For the first quarter, net sales in the Defense end market rose 13% year over year to $45 million on higher tracked vehicle demand. Further, the figure also surpassed the consensus estimate of $42 million.
The Outside North America On-Highway end market’s net sales increased 17% year on year to $84 million for the March-end quarter driven by robust demand in Asia. The metric also topped the consensus mark of $65 million.
Net sales in the Outside North America Off-Highway end market slumped 41% year on year to $16 million for the first quarter due to dismal demand in the energy sector.
Net sales in the Service Parts, Support Equipment & Other end market slipped 12% year on year to $122 million for the reported quarter, owing to shrinking demand for North America service parts and support equipment.
Financial Position & Updated ’21 View
Allison Transmission — whose peers include Magna International (MGA - Free Report) , Adient plc (ADNT - Free Report) and Meritor — had cash and cash equivalents of $295 million on Mar 31, 2021 compared with $310 million as of 2020-end. As of Mar 31, long-term debt was $2,506 million, essentially unchanged from the 2020-end level. Adjusted free cash flow for the reported quarter was $107 million, down from the prior-year quarter’s $127 million.
Encouragingly, the Zacks Rank #2 (Buy) company raised its full-year guidance. Allison currently projects net sales in the band of $2,325-$2,475 million, up from the prior guided range of $2,265-$2,415 million. Net income and adjusted EBITDA are now envisioned in the band of $395-$465 million and $795-$885 million, up from $375-$445 million and $770-$860 million projected earlier, respectively. Adjusted free cash flow is expected within $415-$475 million, implying a year-over-year increase of 6% at the midpoint of the guided range. Capex projection remains unchanged between $170 million and $180 million.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
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