Allison Rides Demand to Higher Q3 Results
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Allison Transmission Holdings Inc. notched higher third-quarter net income and revenue amid demand rising to near pre-pandemic levels.
“Customer demand remains robust; and despite global supply chain issues that are tempering commercial vehicle industry production, global demand is approaching pre-pandemic levels,” Allison CEO Dave Graziosi said during the earnings call.
Net income for the period ended Sept. 30 rose to $94 million, or 89 cents per diluted share, compared with $77 million, 68 cents, a year earlier.
The company reported the increase was principally driven by lower selling, general and administrative expenses and higher gross profit partially offset by increased product initiatives spending.
Selling, general and administrative expenses fell to $73 million compared with $93 million a year earlier. The decrease was principally driven by unfavorable 2020 product warranty adjustments that did not recur in 2021 partially offset by higher commercial activities spending.
Gross profit rose to $261 million compared with $254 million a year earlier. The increase in gross profit was principally driven by higher net sales and price increases on certain products offset by unfavorable material costs and higher manufacturing expense commensurate with higher net sales.
Engineering research and development rose to $42 million compared with $33 million a year earlier.
Revenue grew to $567 million compared with $532 million in the 2020 period as all business segments posted higher sales except North America on-highway, its largest, ($275 million, down 2%) and defense ($39 million, off 30%).
The largest revenue gain, 1,900%, came from its North America off-highway business, which hit $20 million compared with $1 million in the 2020 period, amid improving demand for hydraulic fracturing applications, according to the Indianapolis-based company.
Graziosi added, “The availability and utilization of labor, global shortages of electronic components across all industries, logistics disruptions — including air and ocean freight — import delays, as well as the limited availability of raw materials will all continue to impact the industry’s ability to align with accelerating customer demand for the foreseeable future.”
Graziosi said Allison’s model 3414 transmission for the regional-haul market is fully available, and regional haul is about 30% of the day cab market. “So it’s a significant opportunity for us with very low penetration today. We continue to be well positioned in the Class 8 vocational segment.”
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