Allison Transmission reports weaker Q4 across-the-board results

Allison Transmission HQ

Allison Transmission Holdings Inc. (NYSE: ALSN), reported lower sales and profits for the fourth quarter of 2019, mirroring the generally dour performance of other trucking industry suppliers.

Allison, the largest global provider of commercial duty automatic transmissions, said fourth-quarter sales of $617 million were 5% lower than the $647 million reported in the same period in 2018. The Indianapolis-based company said demand was lower for global off-highway transmissions, service parts, support equipment and other end markets.

Higher demand in the North America On-Highway end market partially offset the decline.

Net income in the quarter was $107 million, or $0.90 per fully diluted share, compared with $147 million, or $1.14 a share, in the October-December period of 2018. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter was $216 million.

For the full year of 2019, Allison reported net sales of $2.698 billion and net income of $604 million, or $4.91 per fully diluted share, compared with $2.713 billion and $639 million, or $4.78 a share in 2018. Full-year 2019 EBITDA was $1.083 billion.

“Full year 2019 results exceeded our guidance expectations, and both our North America and Outside North America OnHighway end markets concluded a third consecutive record revenue year,” Allison CEO David Graziosi said in a press release.

Following similar reports by other trucking industry suppliers, Allison expects lower first-quarter sales because the trucks, buses and off-highway equipment to which it provides transmissions are selling slowly after a buying spree in late 2018. 

Uncertainty surrounding the business impact from the coronavirus is another weight on the first quarter, Graziosi told analysts Thursday on the company’s earnings call.

“We have no way of handicapping that,” he said. “We assume that what we’ve been told will play out.”

Allison said it expects 2020 net sales to be in the range of $2.375 billion to $2.475 billion, with net income in the range of $425 million to $475 million. The company forecasts adjusted EBITDA will range between $855 million and $915 million.

“Our 2020 net sales guidance reflects lower demand in the Global On-Highway and Global Off-Highway end markets partially offset by increased demand in the Service Parts, Support Equipment & Other and Defense end markets and price increases on certain products,” the company said.