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Allison Transmission First Quarter 2025 Results

On May 1, 2025, Allison Transmission Holdings Inc. (NYSE: ALSN) announced its financial results for the first quarter of 2025, revealing a solid performance in net sales and income. The company reported net sales of $766 million, marking a slight decrease compared to the previous year's $789 million but demonstrating growth in specific market segments.

Strong Financial Performance

Noteworthy highlights from Allison's financial report include:

• - Net income: $192 million, an increase of 14% from $169 million in Q1 2024, which represents 25.1% of net sales, an improvement of 370 basis points year-over-year.
• - Diluted EPS: Rose to $2.23, up 17% from Q1 2024.
• - Adjusted EBITDA margin: Increased to 37.5%, reflecting a growth of 90 basis points compared to the previous year.

The increase in net income can be attributed to improved gross profits, which reached $378 million, up from $366 million in the first quarter of 2024, driven primarily by price increases on selected products and higher demand in North America.

Market Insights

Allison's success was driven by the North America On-Highway and Defense end markets. Specifically, net sales within the North America On-Highway sector saw a rise of $15 million due to strong demand for Class 8 vocational trucks, despite a slight downturn in the medium-duty truck category. In the Defense segment, Allison achieved a $5 million increase in net sales, again largely fueled by price escalations on various products.

Conversely, the Outside North America On-Highway market experienced a small decrease of $3 million, driven by reduced demand in Europe. Furthermore, net sales in the Service Parts, Support Equipment, and Other category dropped by $12 million, mainly due to lower demand, although partially offset by price increases.

Strategic Positioning

David S. Graziosi, Chairman and CEO of Allison Transmission, commented, "Allison is well-positioned to navigate current trade uncertainties, utilizing our global footprint to provide our North American customers with Made in USA products while supplying our Outside North America customers with products manufactured abroad."

The company is also focusing on shareholder-friendly capital allocation; it has declared its sixth consecutive annual dividend increase and has authorized a significant $1 billion increase to its stock repurchase program. In Q1, Allison repurchased over $150 million of its common stock, accounting for nearly 2% of outstanding shares, and ended the quarter with a remaining authorization of nearly $1.4 billion.

Outlook for 2025

Looking ahead, Allison reaffirmed its full-year guidance for 2025, projecting net sales between $3.2 to $3.3 billion, net income ranging from $735 to $785 million, and an expected Adjusted EBITDA of $1.17 to $1.23 billion. The forecast reflects the company’s confidence in maintaining a solid market presence and navigating potential economic fluctuations.

Conclusion

While there is always uncertainty in global markets, Allison Transmission's ability to increase both net sales and profitability during the first quarter of 2025 signifies its strength and operational resilience. The company continues to focus on strategic expansion, technological advancements, and fulfilling customer needs both domestically and abroad.