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Allison (ALSN) Q3 Earnings Beat Estimates, Revenues Miss
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Allison Transmission Holdings (ALSN - Free Report) delivered third-quarter 2023 earnings of $1.76 per share, which rose 21% year over year and topped the Zacks Consensus Estimate of $1.72. Quarterly revenues of $736 million grew 4% from the year-ago period but missed the Zacks Consensus Estimate of $764 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 11% year over year to $376 million and surpassed the Zacks Consensus Estimate of $363 million. High demand for medium-duty and Class 8 vocational trucks and price increases on certain products resulted in the sales outperformance.
Net sales in the North America Off-Highway end market tanked 63% to $9 million from the year-ago period and lagged the consensus mark of $26.51 million.
In the reported quarter, net sales in the Defense end market rose 23% year over year to $43 million and beat the Zacks Consensus Estimate of $40.08 million, driven by higher demand for Tracked and Wheeled vehicle applications.
The Outside North America On-Highway end market’s net sales remained unchanged from prior-year quarter levels at $118 million and fell short of the consensus mark of $127 million.
Net sales in the Outside North America Off-Highway end market contracted 47% year over year to $19 million and lagged the Zacks Consensus Estimate of $33.02 million.
Net sales in the Service Parts, Support Equipment & Other end markets grew 9% year over year to $171 million in the quarter and crossed our estimate of $168 million. The outperformance was driven by high demand for North America On-Highway service parts and support equipment along with price increases on certain products.
Financial Position
Allison saw a gross profit of $357 million, an increase from $328 million for the same period in 2022, mainly driven by price increases on certain products.
Adjusted EBITDA in the quarter came in at $267 million, an increase from $245 million a year ago. The growth was led by higher gross profit.
Selling, general and administrative expenses in the quarter increased to $86 million from $78 million for the same period in 2022. Engineering – research and development expenses were $49 million compared with $47 million recorded in the corresponding quarter of 2022.
Allison had cash and cash equivalents of $501 million on Sep 30, 2023, up from $232 million as of Dec 31, 2022. Long-term debt was $2,498 million compared with $2,501 million as of Dec 31, 2022.
Net cash provided by operating activities increased to $212 million from $207 million in the same period in 2022. Adjusted free cash flow in the reported quarter was $182 million, flat from the year-ago period levels.
During the third quarter, the company paid a quarterly dividend of 23 cents/share and repurchased $20 million shares.
2023 Outlook Reaffirmed
Allison’s full-year 2023 net sales are estimated in the band of $2,960-$3,040 million. Net income is expected in the band of $575-$625 million. Adjusted EBITDA is estimated within $1,050-$1,110 million. It expects net cash provided by operating activities between $675 million and $725 million. Capex is expected in the band of $125-$135 million. Adjusted free cash flow is estimated within $550-$590 million.
The Zacks Consensus Estimate for TM’s fiscal 2024 sales and EPS implies year-over-year growth of 10.5% and 27.5%, respectively. The earnings estimate for fiscal 2024 and 2025 has been revised upward by 4 cents and 21 cents in the past 30 days.
The Zacks Consensus Estimate for HMC’s fiscal 2024 sales and EPS implies year-over-year growth of 7.7% and 29.4%, respectively. The earnings estimate for fiscal 2024 and 2025 has been revised upward by 1 cent and 18 cents in the past 30 days.
The Zacks Consensus Estimate for NSANY’s fiscal 2024 EPS implies year-over-year growth of 12.6%. The earnings estimate for fiscal 2024 and 2025 has been revised upward by 10 cents and 3 cents, respectively, in the past 30 days.
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Allison (ALSN) Q3 Earnings Beat Estimates, Revenues Miss
Allison Transmission Holdings (ALSN - Free Report) delivered third-quarter 2023 earnings of $1.76 per share, which rose 21% year over year and topped the Zacks Consensus Estimate of $1.72. Quarterly revenues of $736 million grew 4% from the year-ago period but missed the Zacks Consensus Estimate of $764 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 11% year over year to $376 million and surpassed the Zacks Consensus Estimate of $363 million. High demand for medium-duty and Class 8 vocational trucks and price increases on certain products resulted in the sales outperformance.
Net sales in the North America Off-Highway end market tanked 63% to $9 million from the year-ago period and lagged the consensus mark of $26.51 million.
In the reported quarter, net sales in the Defense end market rose 23% year over year to $43 million and beat the Zacks Consensus Estimate of $40.08 million, driven by higher demand for Tracked and Wheeled vehicle applications.
The Outside North America On-Highway end market’s net sales remained unchanged from prior-year quarter levels at $118 million and fell short of the consensus mark of $127 million.
Net sales in the Outside North America Off-Highway end market contracted 47% year over year to $19 million and lagged the Zacks Consensus Estimate of $33.02 million.
Net sales in the Service Parts, Support Equipment & Other end markets grew 9% year over year to $171 million in the quarter and crossed our estimate of $168 million. The outperformance was driven by high demand for North America On-Highway service parts and support equipment along with price increases on certain products.
Financial Position
Allison saw a gross profit of $357 million, an increase from $328 million for the same period in 2022, mainly driven by price increases on certain products.
Adjusted EBITDA in the quarter came in at $267 million, an increase from $245 million a year ago. The growth was led by higher gross profit.
Selling, general and administrative expenses in the quarter increased to $86 million from $78 million for the same period in 2022. Engineering – research and development expenses were $49 million compared with $47 million recorded in the corresponding quarter of 2022.
Allison had cash and cash equivalents of $501 million on Sep 30, 2023, up from $232 million as of Dec 31, 2022. Long-term debt was $2,498 million compared with $2,501 million as of Dec 31, 2022.
Net cash provided by operating activities increased to $212 million from $207 million in the same period in 2022. Adjusted free cash flow in the reported quarter was $182 million, flat from the year-ago period levels.
During the third quarter, the company paid a quarterly dividend of 23 cents/share and repurchased $20 million shares.
2023 Outlook Reaffirmed
Allison’s full-year 2023 net sales are estimated in the band of $2,960-$3,040 million. Net income is expected in the band of $575-$625 million. Adjusted EBITDA is estimated within $1,050-$1,110 million. It expects net cash provided by operating activities between $675 million and $725 million. Capex is expected in the band of $125-$135 million. Adjusted free cash flow is estimated within $550-$590 million.
Zacks Rank & Key Picks
Allison currently carries a Zacks Rank #3 (Hold).
A few top-ranked players in the auto space include Toyota (TM - Free Report) , Honda (HMC - Free Report) and Nissan (NSANY - Free Report) . While TM and HMC sport a Zacks Rank #1 (Strong Buy) each, NSANY carries a Zacks Rank #2 (Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TM’s fiscal 2024 sales and EPS implies year-over-year growth of 10.5% and 27.5%, respectively. The earnings estimate for fiscal 2024 and 2025 has been revised upward by 4 cents and 21 cents in the past 30 days.
The Zacks Consensus Estimate for HMC’s fiscal 2024 sales and EPS implies year-over-year growth of 7.7% and 29.4%, respectively. The earnings estimate for fiscal 2024 and 2025 has been revised upward by 1 cent and 18 cents in the past 30 days.
The Zacks Consensus Estimate for NSANY’s fiscal 2024 EPS implies year-over-year growth of 12.6%. The earnings estimate for fiscal 2024 and 2025 has been revised upward by 10 cents and 3 cents, respectively, in the past 30 days.