Allison (ALSN) Q4 Earnings Top Estimates on Record Sales

Allison Transmission Holdings ALSN delivered fourth-quarter 2023 earnings of $1.91 per share, which rose 25.6% year over year and topped the Zacks Consensus Estimate of $1.42. The outperformance can be attributed to higher-than-expected sales from North America On-Highway, Defense and Outside North America Off-Highway end markets. Record quarterly revenues of $775 million grew 8% from the year-ago period and outpaced the Zacks Consensus Estimate of $755 million.

Thanks to robust results, shares of ALSN rallied roughly 14% yesterday to close at $70.10. The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Allison Transmission Holdings, Inc. Price, Consensus and EPS Surprise

Allison Transmission Holdings, Inc. Price, Consensus and EPS Surprise

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 14% year over year to $380 million and surpassed the Zacks Consensus Estimate of $358 million. High demand for Class 8 vocational medium-duty trucks resulted in sales outperformance.

Net sales in the North America Off-Highway end market tanked 79% to $5 million from the year-ago period and lagged the consensus mark of $18.77 million.

In the reported quarter, net sales in the Defense end market rose 34% year over year to $63 million and beat the Zacks Consensus Estimate of $51 million, driven by higher demand for Tracked and Wheeled vehicle applications.

The Outside North America On-Highway end market’s net sales of $128 million declined from $131 million generated in the corresponding quarter of 2022. The reported figure also fell short of the consensus mark of $138 million.

Net sales in the Outside North America Off-Highway end market surged 31% year over year to $38 million and surpassed the Zacks Consensus Estimate of $29.10 million thanks to high demand in the mining sector.

Net sales in the Service Parts, Support Equipment & Other end markets grew 4.5% year over year to $161 million in the quarter and came in line with the consensus estimate.

Financial Position

Allison saw a gross profit of $371 million, an increase from $338 million for the same period in 2022, mainly driven by price increases in certain products.

Adjusted EBITDA in the quarter came in at $277 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 decreased to $92 million from $97 million for the same period in 2022. Engineering – research and development expenses were $54 million compared with $49 million recorded in the corresponding quarter of 2022.

Allison had cash and cash equivalents of $555 million on Dec 31, 2023, up from $232 million as of Dec 31, 2022. Long-term debt was $2,497 million compared with $2,501 million as of Dec 31, 2022.

Net cash provided by operating activities totaled $238 million. Adjusted free cash flow in the reported quarter was $186 million, up from $132 million generated in the year-ago period.

During the fourth quarter, the company paid out a quarterly dividend of 23 cents/share and repurchased shares worth $105 million.

2024 Outlook

Allison’s full-year 2024 net sales are estimated in the band of $3.05-$3.15 billion. Net income is expected in the band of $635-$685 million. Adjusted EBITDA is estimated within $1.07-$1,13 billion. It expects net cash provided by operating activities between $700 million and $760 million. Capex is expected in the band of $125-$135 million. Adjusted free cash flow is estimated within $575-$625 million.

Peer Releases

Autoliv ALV released its fourth-quarter 2023 results on Jan 26. Its fourth-quarter 2023 adjusted earnings of $3.74 per share surpassed the Zacks Consensus Estimate of $3.25 and jumped 105% year over year. The company reported net sales of $2,751 million in the quarter, which topped the Zacks Consensus Estimate of $2,746 million and soared 18% year over year.

Autoliv had cash and cash equivalents of $498 million as of Dec 31, 2023. Long-term debt totaled $1.32 billion. It forecasts full-year 2024 organic sales growth of around 5%. The adjusted operating margin is anticipated to be approximately 10.5%. Operating cash flow is expected to be $1.2 billion in 2024.

Oshkosh Corp OSK reported fourth-quarter 2023 results on Jan 30. Its adjusted earnings of $2.56 per share topped the Zacks Consensus Estimate of $2.17. The bottom line also rose from $1.60 per share recorded in the year-ago period. In the quarter under review, consolidated net sales climbed 12% year over year to $2,466.8 million. However, the top line marginally missed the Zacks Consensus Estimate of $2,468 million.

Oshkosh had cash and cash equivalents of $125.4 million as of Dec 31, 2023. Long-term debt totaled $597.5 million. The company anticipates full-year 2024 sales to be around $10.4 billion. It expects diluted earnings of $9.45 per share and adjusted earnings of $10.25 per share.

BorgWarner BWA unveiled fourth-quarter 2023 results on Feb 8. It reported adjusted earnings of 90 cents per share, down from $1.26 recorded in the prior-year quarter. The bottom line also missed the Zacks Consensus Estimate of 93 cents. Net sales of $3.52 billion missed the Zacks Consensus Estimate of $3.61 billion and declined 14.4% year over year.

As of Dec 31, 2023, BorgWarner had $1.53 billion in cash/cash equivalents/restricted cash. Long-term debt stood at $3.71 billion. For 2024, the company anticipates net sales within $14.4-$14.9 billion, up from $14.2 reported in 2023. The adjusted operating margin is expected in the band of 8.5-8.9%. Adjusted earnings are estimated within $3.65-$4 per share.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Autoliv, Inc. (ALV) : Free Stock Analysis Report

BorgWarner Inc. (BWA) : Free Stock Analysis Report

Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report

Oshkosh Corporation (OSK) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Go to Source