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Allison Transmission Holdings (ALSN - Free Report) delivered second-quarter 2023 earnings of $1.92 per share, which rose 52% year over year and topped the Zacks Consensus Estimate of $1.61 on higher-than-expected sales from the North America On-Highway segment. Quarterly revenues of $783 million grew 18% from the year-ago period and crossed the Zacks Consensus Estimate of $743 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 rose 17% year over year to $397 million and surpassed our estimate of $357 million. High demand for medium-duty and Class 8 vocational trucks and price increases on certain products resulted in sales outperformance.
Net sales in the North America Off-Highway end market jumped 25% to $25 million from the year-ago period and exceeded our expectation of $23.7 million.
In the reported quarter, net sales in the Defense end market rose 14% year over year to $33 million but lagged our estimate of $35.5 million.
The Outside North America On-Highway end market’s net sales increased 17% year over year to $123 million in the quarter and surpassed our forecast of $119 million. Strong demand in Europe and Asia, the continued execution of growth initiatives and price increases on certain products resulted in the outperformance.
Net sales in the Outside North America Off-Highway end market contracted 25% year over year to $24 million and lagged our estimate of $31.1 million.
Net sales in the Service Parts, Support Equipment & Other end markets grew 31% year over year to $181 million in the quarter and crossed our estimate of $162.4 million. The outperformance was driven by high demand for global service parts and support equipment and price increases on certain products.
Financial Position
Allison saw a gross profit of $381 million, a 23% increase from $311 million for the same period in 2022, mainly driven by higher net sales and price increases on certain products.
Adjusted EBITDA in the quarter came in at $288 million, an increase of 26.9% from $227 million a year ago. The growth was led by higher gross profit.
Selling, general and administrative expenses in the quarter increased to $92 million from $78 million for the same period in 2022, driven by higher commercial activity expenses, incentive compensation expenses and product warranty expenses. Engineering – research and development expenses were $47 million compared with $46 million recorded in the corresponding quarter of 2022.
Allison had cash and cash equivalents of $351 million on Jun 30, 2023, up from $232 million as of Dec 31, 2022. Long-term debt was $2,499 million compared with $2,501 million as of Dec 31, 2022.
Net cash provided by operating activities increased to $141 million from $64 million in the same period in 2022. Adjusted free cash flow in the reported quarter was $122 million, an increase from $34 million a year ago.
During the second quarter, the company paid a quarterly dividend of 23 cents/share and repurchased 2 million outstanding shares.
2023 Outlook Raised
Allison’s full-year 2023 net sales are now estimated in the band of $2,960-$3,040 million, up from the previously guided range of $2,900 - $3,000 million.
Net income is now expected in the band of $575-$625 million, up from the previous guidance of $550-$600 million.
Adjusted EBITDA is estimated within $1,050-$1,110 million, up from the previous outlook of $1,010-$1,090 million.
Adjusted free cash flow is estimated within $550-$590 million, up from the prior guidance of $510-$560 million.
Its expected net cash provided by operating activities is between $675-$725 million, up from the previous guidance of $635-$695 million.
Capex is expected in the band of $125-$135 million, the same as the prior guidance.
Zacks Rank & Key Picks
Allison currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the auto space include Ford Motor Company (F - Free Report) , Oshkosh Corporation (OSK - Free Report) and Lear Corporation (LEA - Free Report) . While F sports a Zacks Rank #1 (Strong Buy), LEA and OSK each carry a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for F’s 2023 sales implies year-over-year growth of 4.9%. The 2023 EPS estimate has been revised upward by 5 cents in the past seven days. The EPS estimate for 2024 has moved north by 5 cents in the past seven days.
The Zacks Consensus Estimate for LEA’s 2023 sales and earnings implies year-over-year growth of 16% and 75.4%, respectively. The EPS estimate for 2023 has moved north by 20 cents in the past seven days. The 2024 EPS estimate has moved up by 24 cents in the past seven days.
The Zacks Consensus Estimate for OSK’s 2023 sales and earnings implies year-over-year growth of 7.2% and 282.9%, respectively. The EPS estimate for 2023 has moved up by a cent in the past seven days. The 2024 EPS estimate has remained unchanged in the past seven days.
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Allison (ALSN) Q2 Earnings Beat Estimates, '23 View Raised
Allison Transmission Holdings (ALSN - Free Report) delivered second-quarter 2023 earnings of $1.92 per share, which rose 52% year over year and topped the Zacks Consensus Estimate of $1.61 on higher-than-expected sales from the North America On-Highway segment. Quarterly revenues of $783 million grew 18% from the year-ago period and crossed the Zacks Consensus Estimate of $743 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 rose 17% year over year to $397 million and surpassed our estimate of $357 million. High demand for medium-duty and Class 8 vocational trucks and price increases on certain products resulted in sales outperformance.
Net sales in the North America Off-Highway end market jumped 25% to $25 million from the year-ago period and exceeded our expectation of $23.7 million.
In the reported quarter, net sales in the Defense end market rose 14% year over year to $33 million but lagged our estimate of $35.5 million.
The Outside North America On-Highway end market’s net sales increased 17% year over year to $123 million in the quarter and surpassed our forecast of $119 million. Strong demand in Europe and Asia, the continued execution of growth initiatives and price increases on certain products resulted in the outperformance.
Net sales in the Outside North America Off-Highway end market contracted 25% year over year to $24 million and lagged our estimate of $31.1 million.
Net sales in the Service Parts, Support Equipment & Other end markets grew 31% year over year to $181 million in the quarter and crossed our estimate of $162.4 million. The outperformance was driven by high demand for global service parts and support equipment and price increases on certain products.
Financial Position
Allison saw a gross profit of $381 million, a 23% increase from $311 million for the same period in 2022, mainly driven by higher net sales and price increases on certain products.
Adjusted EBITDA in the quarter came in at $288 million, an increase of 26.9% from $227 million a year ago. The growth was led by higher gross profit.
Selling, general and administrative expenses in the quarter increased to $92 million from $78 million for the same period in 2022, driven by higher commercial activity expenses, incentive compensation expenses and product warranty expenses. Engineering – research and development expenses were $47 million compared with $46 million recorded in the corresponding quarter of 2022.
Allison had cash and cash equivalents of $351 million on Jun 30, 2023, up from $232 million as of Dec 31, 2022. Long-term debt was $2,499 million compared with $2,501 million as of Dec 31, 2022.
Net cash provided by operating activities increased to $141 million from $64 million in the same period in 2022. Adjusted free cash flow in the reported quarter was $122 million, an increase from $34 million a year ago.
During the second quarter, the company paid a quarterly dividend of 23 cents/share and repurchased 2 million outstanding shares.
2023 Outlook Raised
Allison’s full-year 2023 net sales are now estimated in the band of $2,960-$3,040 million, up from the previously guided range of $2,900 - $3,000 million.
Net income is now expected in the band of $575-$625 million, up from the previous guidance of $550-$600 million.
Adjusted EBITDA is estimated within $1,050-$1,110 million, up from the previous outlook of $1,010-$1,090 million.
Adjusted free cash flow is estimated within $550-$590 million, up from the prior guidance of $510-$560 million.
Its expected net cash provided by operating activities is between $675-$725 million, up from the previous guidance of $635-$695 million.
Capex is expected in the band of $125-$135 million, the same as the prior guidance.
Zacks Rank & Key Picks
Allison currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the auto space include Ford Motor Company (F - Free Report) , Oshkosh Corporation (OSK - Free Report) and Lear Corporation (LEA - Free Report) . While F sports a Zacks Rank #1 (Strong Buy), LEA and OSK each carry a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for F’s 2023 sales implies year-over-year growth of 4.9%. The 2023 EPS estimate has been revised upward by 5 cents in the past seven days. The EPS estimate for 2024 has moved north by 5 cents in the past seven days.
The Zacks Consensus Estimate for LEA’s 2023 sales and earnings implies year-over-year growth of 16% and 75.4%, respectively. The EPS estimate for 2023 has moved north by 20 cents in the past seven days. The 2024 EPS estimate has moved up by 24 cents in the past seven days.
The Zacks Consensus Estimate for OSK’s 2023 sales and earnings implies year-over-year growth of 7.2% and 282.9%, respectively. The EPS estimate for 2023 has moved up by a cent in the past seven days. The 2024 EPS estimate has remained unchanged in the past seven days.