Allison Transmission Holdings Inc. reported higher first-quarter net profit and revenue amid strength in the North American On-Highway market.
For the period ended March 31, net income climbed to $167 million, or $1.32 per diluted share, on increased revenue of $675 million.
That compared with net income of $151 million, or $1.08, and revenue of $663 million a year earlier.
The increase in net income was “principally driven by increased gross profit and lower selling and general and administrative expenses, partially offset by increased interest expense and increased product initiatives spending,” Allison CEO David Graziosi said during an earnings conference call April 23.
Revenue gains were partially offset by lower demand in the service parts and support equipment, and North America Off-Highway end markets, according to the Indianapolis-based company — the leading global provider of medium- and heavy-duty fully automatic transmissions.
In the quarter, North America On-Highway end market net sales were $377 million, up 11% from the same period in 2018, principally driven by higher demand for Rugged Duty Series and Highway Series models. Net sales include electric hybrid propulsion systems for Transit Bus.
North America is the company’s largest market.
During the earnings call, Allison emphasized the importance of two acquisitions announced the same day that extend its reach into the electric vehicle market.
We are pleased to announce that we are now part of the Allison Transmission family - the global leader in fully automatic propulsion systems. Read more: https://t.co/0FBuGn4fqC pic.twitter.com/C1DNYKd69i— Vantage Power (@VantagePower) April 23, 2019
Allison purchased Vantage Power and AxleTech’s electric vehicle systems division.
Vantage Power is a London-based technology company specializing in developing electrified-propulsion and connected-vehicle technologies for medium- and heavy-duty vehicle manufacturers and their suppliers.
Vantage has a particular focus on battery technology development, vehicle integration and control systems, as well as vehicle connectivity and telemetry. Vantage Power technologies have been deployed in a wide range of applications, including complete electric hybrid repower systems for buses to grid energy storage.
Allison Transmission acquires @theaxletech’s on-highway electric vehicle business, global designer and manufacturer of powertrains, along with @VantagePower, leading name in #UK electrification, to accelerate growth in #electrification.— Allison Transmission (@AllisonTrans) April 23, 2019
Read more: https://t.co/kxa2AC4qCe pic.twitter.com/1NNw4khFUu
AxleTech designs, engineers, manufactures, sells and services axles and integrated electrified axle solutions for on- and off-highway heavy-duty commercial vehicles. The EV systems division is located at AxleTech’s headquarters in Troy, Mich.
Graziosi said of that EV market, “I think it’s going to be a development-focused effort. Original equipment manufacturers are going to have to make a number of decisions around systems and components that they choose, end users are going to have to really decide where, what level of investment they’re willing to make. All that will drive the investment case for us and thus the commitments around incremental spending, if you will.”