Allison Q4 Profit Rises 21% on Vocational Strength

Executives Optimistic About 2024 and Beyond, See Price Increases in 2025
Allison transmissions
Newly manufactured transmissions. (Allison Transmission)

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Allison Transmission Holdings Inc. profits increased 21% year-over-year in the fourth quarter of 2023 behind North American Class 8 vocational truck market strength the company expects to extend through 2024 and beyond.

The company posted net income of $170 million, or $1.91 per diluted share, in the three months that ended Dec. 31, compared with $141 million, $1.52, in the same period in 2022.

“The increase was principally driven by higher gross profit,” Chief Financial Officer Fred Bohley said during the company’s quarterly earnings call.

Allison’s gross profit in Q4 totaled $371 million, a 10% increase from $338 million for the same period in 2022.

“The [gross profit] increase was principally driven by increased net sales and price increases on certain products, partially offset by higher direct material costs,” Bohley said during the Feb. 13 call.

The 2024 outlook for our North America On-Highway end market remains robust.

Dave Graziosi

Dave Graziosi


Allison’s net sales in Q4 totaled $775 million, an 8% or $57 million increase from $718 million in the same period in 2022.

“Allison’s fourth quarter marks the highest fourth-quarter revenue in our history, leading to a record year driven by strong demand in our largest end markets,” CEO David Graziosi said in a statement accompanying the results.

Sales by the Indianapolis-based company into the North American On-Highway market (its largest) totaled $380 million in the most recent three-month period, up $47 million, or 14.1%, compared with $333 million a year earlier.

Allison’s net income for the full year 2023 was $673 million, up 27% compared with 2022’s $531 million.

Allison logo

Full-year sales were a record $3.035 billion, an increase of 10% or $266 million compared with 2022’s $2.769 billion.

The company said the record year was built on a 13% increase in North American On-Highway sales to $1.529 billion due to customer demand for Class 8 vocational and medium-duty trucks, plus an 18% jump in sales by Allison’s Service Parts, Support Equipment and Other segment as a result of higher demand for parts and aluminum die cast components.

Looking forward, Allison issued net income guidance for 2024 of $635 million to $685 million. Allison expects net sales of between $3.05 billion and $3.15 billion.

The company expects a 2% year-over-year decline in North American On-Highway sales revenues in 2024.

“We hold a favorable outlook for our largest end market into 2024 and beyond, as we believe the market has not fully satisfied pent-up demand and upcoming emissions changes in 2027,” Graziosi said during the analyst call.

“The 2024 outlook for our North America On-Highway end market remains robust as infrastructure spending is expected to continue to support Class 8 vocational demand,” he added.

Allison’s optimism extends beyond 2024.

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“For 2024, I think, as most of you are aware, over 90% of our North American On-Highway end market, our largest end market, is covered by long-term agreements with defined pricing,” Bohley told analysts. “So, as we progress through these really high inflationary times, we’ve certainly honored those agreements.”

“But looking out to 2025, over 60% of the North American On-Highway end market will be available to price,” he said. “So, as we’ve mentioned in previous earnings calls, as OEM prices increase, our value proposition to the end user continues to increase.”

“So, as the vehicle prices continue to increase, whether that’s inflationary cost pressure or Outside North America moving up the emissions curve and adding safety features, we are really well positioned to both take advantage of this from a pricing standpoint, but also from a market share standpoint,” he added.