Allison Reports Lower Q3 Results
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Allison Transmission Holdings Inc. reported lower net income and revenue in the third quarter amid uneven demand in its markets.
“We are pleased to report that Allison’s third-quarter 2019 results are within the full-year guidance ranges provided to the market on July 31, and our North American on-highway end market remains on track for a third consecutive record year, led by the ongoing execution of our growth initiatives and recent market share gains in Class 4 and Class 5 trucks,” Allison CEO David Graziosi said in the earnings release.
Net income for the period ended Sept. 30 fell to $149 million, or $1.23 per diluted share, compared with $167 million, or $1.27 a year earlier.
Revenue dropped to $669 million compared with $692 million a year earlier.
Other results included an 11% rise in North America on-highway sales year-over-year, principally driven by higher demand for its rugged-duty series and highway series models.
North America off-highway market net sales were down $6 million from the same period in 2018, principally driven by lower demand from hydraulic fracturing applications.
Defense market net sales were down 5% from the same period in 2018, principally driven by lower wheeled vehicle demand.
Outside North America, on-highway market net sales were up 3% from the same period in 2018, principally driven by higher demand in Europe and South America, partially offset by lower demand in Asia.
Outside North America, off-highway market net sales were down $22 million from the same period in 2018, principally driven by lower demand in the mining and energy sectors.
Service Parts, Support Equipment & Other market net sales were down 20% from the same period in 2018 and down 11% sequentially, in both cases principally driven by lower demand for North America service parts.
Graziosi added: “Allison continues to demonstrate solid operating margins and free cash flow while executing its prudent and well-defined approach to capital structure and allocation. During the third quarter, we settled $46 million of share repurchases, paid a dividend of 15 cents per share, and closed the acquisitions of Walker Die Casting and C&R Tool and Engineering. In October, we completed an opportunistic repricing of our $646 million term loan due March 2026.”
Allison’s updated full-year 2019 guidance included revenue in the range of $2.65 billion to $2.7 billion; net income in the range of $555 million to $575 million; adjusted earnings before interest depreciation and amortization in the range of $1.03 billion to $1.06 billion; net cash provided by operating activities in the range of $745 million to $775 million; adjusted free cash flow in the range of $570 million to $610 million; and cash income taxes in the range of $95 million to $105 million.
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