Allison Transmission Announces Fourth Quarter and Full Year 2025 Results

Core Insights - Allison Transmission reported full year 2025 net sales of $3 billion, with an Adjusted EBITDA margin of 37.5% and net income of $623 million, reflecting a disciplined approach to cost management amid macroeconomic challenges [1][2] Financial Performance - Full year Adjusted EBITDA was $1,130 million, representing a year-over-year increase of 140 basis points [1] - Net income for the year was $623 million, equating to 21% of net sales, with diluted EPS at $7.33 [1] - Fourth quarter net sales reached $737 million, with a 7% increase in the Defense end market and a 6% increase in the Outside North America On-Highway end market [1] Market Segmentation - Full year net sales in the Defense end market were $267 million, a 26% increase year-over-year [1] - Outside North America On-Highway net sales for the year were $507 million, driven by higher demand in Europe and South America [1] - North America On-Highway net sales decreased by $212 million year-over-year, totaling $1,540 million [1] Acquisition Impact - The acquisition of Dana's Off-Highway business was completed on January 1, 2026, expected to enhance Allison's presence in the global mobility market [1][2] - The acquisition is anticipated to be accretive to net income and diluted EPS in 2026, despite incurring approximately $70 million in one-time, pre-tax expenses related to integration [2] Cash Flow and Expenses - Net cash provided by operating activities for the year was $836 million, with adjusted free cash flow at $661 million [1] - Selling, general and administrative expenses for the fourth quarter increased by $26 million to $110 million, primarily due to acquisition-related costs [1] - Gross profit for the fourth quarter was $354 million, a decrease from $373 million in the same period of 2024, attributed to lower volumes and unfavorable direct material costs [1]