Allison(ALSN) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial & Operational Highlights Allison Transmission reported Q2 2025 net sales of $814 million, record diluted EPS of $2.29, and announced the acquisition of Dana's Off-Highway business - Announced a definitive agreement to acquire Dana Incorporated's Off-Highway business for approximately $2.7 billion, with the transaction expected to close in late Q4 2025[2] Q2 2025 Key Financial Metrics | Metric | Value | YoY Change | | :--- | :--- | :--- | | Net Sales | $814 million | -0.2% | | Net Income | $195 million | +4% | | Diluted EPS | $2.29 (Record) | +8% | | Adjusted EBITDA | $313 million | +4% | | Adjusted EBITDA Margin | 38.5% | +160 bps | - Continued strength in the Defense end market and record quarterly net sales of $142 million in the Outside North America On-Highway end market were key top-line drivers[2][3] - Repurchased $102 million of common stock during the quarter, representing over 1% of outstanding shares, with year-to-date repurchases amounting to 3% of outstanding shares[3] Financial Performance Analysis Net sales were flat at $814 million, with Defense and Outside North America On-Highway growth offsetting North America declines, leading to a 4% net income increase Net Sales by End Market Q2 Net Sales by End Market ($M) | End Market | Q2 2025 | Q2 2024 | Variance ($M) | | :--- | :--- | :--- | :--- | | North America On-Highway | $417 | $456 | ($39) | | Outside North America On-Highway | $142 | $128 | $14 | | Global Off-Highway | $16 | $23 | ($7) | | Defense | $63 | $43 | $20 | | Service Parts, Support Equipment & Other | $176 | $166 | $10 | | Total Net Sales | $814 | $816 | ($2) | - Key drivers for sales changes include: Defense increased by $20 million due to execution of growth initiatives; Outside North America On-Highway increased by $14 million from higher demand in South America and Europe; North America On-Highway decreased by $39 million due to lower demand for medium-duty trucks, partially offset by price increases[6] Key Financial Metrics (Income Statement & Cash Flow) - Gross profit increased by $8 million to $402 million, primarily driven by price increases on certain products, which offset lower volumes and unfavorable material costs[8] - Selling, general and administrative (SG&A) expenses rose by $20 million to $102 million, principally due to $15 million of expenses related to the announced acquisition of the Dana Off-Highway business[9] - Net income increased by $8 million to $195 million, driven by higher gross profit and unrealized gains on marketable securities, partially offset by the increased SG&A expenses[10] - Net cash provided by operating activities increased by $13 million to $184 million, mainly due to lower working capital requirements and higher gross profit[11] 2025 Guidance Update The company revised its full-year 2025 guidance, reflecting market conditions, acquisition expenses, and tax impacts, while maintaining its Adjusted EBITDA margin midpoint Revised Full Year 2025 Guidance ($M) | Metric | Range | | :--- | :--- | | Net Sales | $3,075 - $3,175 | | Net Income | $640 - $680 | | Adjusted EBITDA | $1,130 - $1,180 | | Net Cash from Operating Activities | $785 - $835 | | Capital Expenditures | $165 - $175 | | Adjusted Free Cash Flow | $620 - $660 | Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including Statements of Operations, Balance Sheets, and Cash Flows, for Q2 and YTD 2025 versus 2024 Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (Unaudited, $M) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Net sales | $814 | $816 | $1,580 | $1,605 | | Gross profit | $402 | $394 | $780 | $760 | | Operating income | $256 | $263 | $505 | $497 | | Net income | $195 | $187 | $387 | $356 | | Diluted EPS | $2.29 | $2.13 | $4.50 | $4.05 | Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (Unaudited, $M) | | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | ASSETS | | | | Cash and cash equivalents | $778 | $781 | | Total Current Assets | $1,587 | $1,538 | | TOTAL ASSETS | $5,411 | $5,336 | | LIABILITIES & EQUITY | | | | Total Current Liabilities | $472 | $506 | | Long-term debt | $2,394 | $2,395 | | TOTAL LIABILITIES | $3,658 | $3,685 | | TOTAL STOCKHOLDERS' EQUITY | $1,753 | $1,651 | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Unaudited, $M) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Net cash provided by operating activities | $184 | $171 | $365 | $344 | | Net cash used for investing activities | ($33) | ($20) | ($59) | ($32) | | Net cash used for financing activities | ($132) | ($54) | ($316) | ($218) | | Net increase (decrease) in cash | $25 | $97 | ($3) | $93 | Reconciliation of GAAP to Non-GAAP Financial Measures This section details adjustments from GAAP to non-GAAP measures, including Adjusted EBITDA and Adjusted Free Cash Flow, for Q2 2025 and full-year guidance Q2 Reconciliation of Net Income to Adjusted EBITDA ($M) | | Three months ended June 30, | | :--- | :--- | | | 2025 | 2024 | | Net income (GAAP) | $195 | $187 | | Income tax expense | $47 | $47 | | Depreciation & Amortization | $30 | $29 | | Interest expense, net | $22 | $22 | | Acquisition-related expenses | $15 | $— | | Stock-based compensation | $8 | $8 | | Other adjustments | ($4) | $8 | | Adjusted EBITDA (Non-GAAP) | $313 | $301 | Full Year 2025 Guidance Reconciliation ($M) | | Low | High | | :--- | :--- | :--- | | Net Income to Adjusted EBITDA | | | | Net income (GAAP) | $640 | $680 | | Adjustments (Taxes, Interest, D&A, etc.) | $490 | $500 | | Adjusted EBITDA (Non-GAAP) | $1,130 | $1,180 | | Operating Cash Flow to Adj. FCF | | | | Net cash provided by Operating activities (GAAP) | $785 | $835 | | Additions of long-lived assets | ($165) | ($175) | | Adjusted free cash flow (Non-GAAP) | $620 | $660 |