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Allison Transmission Holdings (ALSN - Free Report) posted third-quarter earnings of $1.45 a share, which topped the Zacks Consensus Estimate of $1.31 owing to higher-than-anticipated sales from North America Off-Highway, Outside North America On-Highway, Outside North America Off-Highway and Service Parts, Support Equipment & Other end markets. The bottom line increased 63% on a year-over-year basis from 89 cents a share. Quarterly revenues of $710 million grew 25% from the year-ago period and crossed the consensus mark of $691 million.
Allison Transmission Holdings, Inc. Price, Consensus and EPS Surprise
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 24% 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 $356 million.
Net sales in the North America Off-Highway end market rose 20% to $24 million from the year-ago period and crossed the Zacks Consensus Estimate of $22.4 million.
In the reported quarter, net sales in the Defense end market declined 10% year over year to $35 million. The figure also lagged the consensus estimate of $39.65 million
The Outside North America On-Highway end market’s net sales rose 27% year over year to $118 million in the quarter, led by improved demand in Europe, Asia and South America and outpaced the consensus mark of $109 million.
Net sales in the Outside North America Off-Highway end market shot up 157% year over year to $36 million and beat the consensus mark of $24.37 million.
Net sales in the Service Parts, Support Equipment & Other end market rose 25% year over year to $157 million in the quarter, owing to higher demand for global service parts and support equipment, and aluminum die-cast components. Moreover, the figure crossed the consensus mark of $139 million.
Financial Position
Allison saw a gross profit of $328 million, a 26% increase from $261 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 $245 million, an increase of nearly 30% from $189 million a year ago. The growth was led by higher gross profit.
Allison had cash and cash equivalents of $180 million on Sep 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 $182 million, an increase from $153 million a year ago due to lower capital expenditures and higher net cash provided by operating activities.
Net cash provided by operating activities increased to $207 million from $196 million for the same period in 2021 on higher gross profit.
Selling, general and administrative expenses in the quarter increased to $78 million from $73 million for the same period in 2021, driven by higher commercial activities spending. Engineering – research and development expenses were $47 million, an increase from $42 million on a year-over-year basis, primarily led by increased product initiatives spending.
In the third quarter, Allison repurchased $109 million of its common stock. It paid a quarterly dividend of 21 cents per share.
2022 Outlook
Allison raised its full-year 2022 guidance midpoints and narrowed ranges. Its estimated net sales are now in the band of $2,690-$2,740 million instead of the prior range of $2,650-$2,750 million. Net income is now expected in the band of $490-$510 million, up from the prior estimate of $450-$500 million, and adjusted EBITDA is now estimated within $915-$945 million from $885-$955 million. Adjusted free cash flow is now estimated within $460-$480 million from $420-$480 million projected previously. Its expected net cash provided by operating activities is within $620-$650 million, up from $590-$660 million.
Capex numbers are in the band of $160-$170 million, slightly down from $170-$180 million. 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.
Cummins has an expected earnings growth rate of 18.4% for the current year. The Zacks Consensus Estimate for CMI’s current-year earnings has been revised 1% upward in the past 30 days.
CarParts has an expected earnings growth rate of 45% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant over the past 30 days.
Genuine Parts has an expected earnings growth rate of 18.4% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 2.7% downward over the past 30 days.
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Allison's (ALSN) Q3 Earnings & Sales Beat, '22 View Revised
Allison Transmission Holdings (ALSN - Free Report) posted third-quarter earnings of $1.45 a share, which topped the Zacks Consensus Estimate of $1.31 owing to higher-than-anticipated sales from North America Off-Highway, Outside North America On-Highway, Outside North America Off-Highway and Service Parts, Support Equipment & Other end markets. The bottom line increased 63% on a year-over-year basis from 89 cents a share. Quarterly revenues of $710 million grew 25% from the year-ago period and crossed the consensus mark of $691 million.
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 24% 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 $356 million.
Net sales in the North America Off-Highway end market rose 20% to $24 million from the year-ago period and crossed the Zacks Consensus Estimate of $22.4 million.
In the reported quarter, net sales in the Defense end market declined 10% year over year to $35 million. The figure also lagged the consensus estimate of $39.65 million
The Outside North America On-Highway end market’s net sales rose 27% year over year to $118 million in the quarter, led by improved demand in Europe, Asia and South America and outpaced the consensus mark of $109 million.
Net sales in the Outside North America Off-Highway end market shot up 157% year over year to $36 million and beat the consensus mark of $24.37 million.
Net sales in the Service Parts, Support Equipment & Other end market rose 25% year over year to $157 million in the quarter, owing to higher demand for global service parts and support equipment, and aluminum die-cast components. Moreover, the figure crossed the consensus mark of $139 million.
Financial Position
Allison saw a gross profit of $328 million, a 26% increase from $261 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 $245 million, an increase of nearly 30% from $189 million a year ago. The growth was led by higher gross profit.
Allison had cash and cash equivalents of $180 million on Sep 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 $182 million, an increase from $153 million a year ago due to lower capital expenditures and higher net cash provided by operating activities.
Net cash provided by operating activities increased to $207 million from $196 million for the same period in 2021 on higher gross profit.
Selling, general and administrative expenses in the quarter increased to $78 million from $73 million for the same period in 2021, driven by higher commercial activities spending. Engineering – research and development expenses were $47 million, an increase from $42 million on a year-over-year basis, primarily led by increased product initiatives spending.
In the third quarter, Allison repurchased $109 million of its common stock. It paid a quarterly dividend of 21 cents per share.
2022 Outlook
Allison raised its full-year 2022 guidance midpoints and narrowed ranges. Its estimated net sales are now in the band of $2,690-$2,740 million instead of the prior range of $2,650-$2,750 million. Net income is now expected in the band of $490-$510 million, up from the prior estimate of $450-$500 million, and adjusted EBITDA is now estimated within $915-$945 million from $885-$955 million. Adjusted free cash flow is now estimated within $460-$480 million from $420-$480 million projected previously. Its expected net cash provided by operating activities is within $620-$650 million, up from $590-$660 million.
Capex numbers are in the band of $160-$170 million, slightly down from $170-$180 million. 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 & Other Key Picks
ALSN currently has a Zacks Rank #2 (Buy).
Some other top-ranked players in the auto space are Cummins Inc. (CMI - Free Report) , CarParts.com (PRTS - Free Report) and Genuine Parts Company (GPC - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Cummins has an expected earnings growth rate of 18.4% for the current year. The Zacks Consensus Estimate for CMI’s current-year earnings has been revised 1% upward in the past 30 days.
CarParts has an expected earnings growth rate of 45% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant over the past 30 days.
Genuine Parts has an expected earnings growth rate of 18.4% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 2.7% downward over the past 30 days.