ALSN

A month has gone by since the last earnings report for Allison Transmission (ALSN). Shares have added about 0.1% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Allison Transmission due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers. Allison reported adjusted earnings of $2.73 per share for the second quarter of 2026, up 19.2% year over year and above the Zacks Consensus Estimate of $2.60 by 5%. Quarterly revenues of $1,566 million jumped 92% and beat the consensus estimate of $1,508 million by 3.8%. The top-line surge reflected the addition of Allison Off-Highway and record quarterly sales in the legacy Transmission unit. Defense revenue climbed 57% to $99 million, underscoring strength in a key growth market. Gross profit increased to $515 million from $403 million, primarily reflecting the addition of Allison Off-Highway. Gross margin was 32.9%. Selling, general and administrative expenses rose $64 million to $168 million, while engineering, research and development costs increased $13 million to $56 million. GAAP net income declined $14 million to $181 million, while diluted earnings fell 6% to $2.15 per share. Higher operating costs tied to the acquisition, including increased depreciation and amortization, along with higher net interest expense and unrealized mark-to-market adjustments on marketable securities, weighed on results. The Allison Transmission business generated net sales of $860 million, up 6% year over year. Segment operating profit was $281 million, or 32.7% of sales, while adjusted EBITDA totaled $318 million with a 37.0% margin. North America on-highway sales rose 3% to $430 million, while outside North America on-highway sales fell 7% to $132 million. Global off-highway sales increased 38% to $22 million, and service parts, support equipment and other sales advanced 1% to $177 million. Recent defense wins included major programs with BAE Hägglunds, Arquus and General Dynamics European Land Systems. Allison Off-Highway recorded net sales of $706 million. Gross profit was $118 million, representing a 16.7% margin. Segment operating profit reached $47 million, or 6.7% of sales, while adjusted EBITDA was $104 million with a 14.7% margin. Construction and material handling contributed $249 million, followed by agriculture and service parts, specialty and other at $152 million each. Industrial sales were $99 million and mining generated $54 million. Management cited strength in European construction and mining, while agriculture had yet to turn positive overall. The company continues to target $120 million of annual run-rate synergies from the Off-Highway acquisition. Procurement and logistics account for 60% of the expected savings, while operations and footprint optimization and SG&A and people initiatives each represent 20%. Allison expects to capture 40% of the target by the end of 2027, 80% by the end of 2028 and the full amount by the end of 2029. Management said 90% of the identified synergies are already in the execution stage, with resource planning completed and capital appropriated. Net cash provided by operating activities rose 70% year over year to $312 million. Adjusted free cash flow increased 84% to a quarterly record of $281 million. During the quarter, ALSN repaid the remaining $150 million under its revolving credit facility, repurchased $46 million of stock and paid a dividend of $0.29 per share. The company ended June with $399 million in cash and cash equivalents and $995 million of available revolver capacity. Total debt was $4,114 million and net debt stood at $3,715 million, with management maintaining a near-term net leverage target of about 2.0 times. For 2026, Allison now expects net sales of $5,800-$6,000 million, up from the previous estimate of $5,575-$5,925 million. Adjusted EBITDA is now projected at $1,465-$1,575 million versus the prior estimated range of $1,365-$1,515 million. Net income guidance was narrowed to $600-$700 million from the prior outlook of $600-$750 million. Net cash from operating activities is now expected at $1,025-$1,125 million, while capital expenditures are forecast at $260-$280 million. Adjusted free cash flow guidance increased to $745-$865 million from the previous estimate of $655-$805 million. Since the earnings release, investors have witnessed a downward trend in estimates review. At this time, Allison Transmission has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for value investors. Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Allison Transmission has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. Allison Transmission Holdings stock has quietly put up very strong multi year returns, and at around US$124.99 per share it still screens as undervalued on broader valuation checks. This raises the question of how much optimism is already reflected in the price after the latest upbeat revenue news. Over the past 5 years, Allison Transmission Holdings has delivered a total return of about 257.6%, which puts current investors in a very different position than those looking at the stock for the first time today. Stronger recent revenue momentum can support higher earnings expectations, while the miss on profit compared with market expectations highlights the risk that margins and cash generation may not rise in line with the new sales backdrop. On Simply Wall St's broader checks, Allison Transmission Holdings is assessed as undervalued in 5 of 6 areas, and this high value score suggests the stock still looks cheap across multiple valuation lenses. The issue now is whether the current share price already reflects the strong multi year run in Allison Transmission Holdings or if there is still room for further upside based on its valuation profile. Allison Transmission Holdings delivered 38.5% returns over the last year. See how this stacks up to the rest of the Machinery industry. The P/E multiple suits Allison Transmission Holdings because the stock is widely followed on its earnings profile. At a current P/E of about 19.5x, Allison Transmission trades below the Machinery industry average of roughly 27.7x and below the peer group average of around 29.2x, even after the recent share price move. The fair P/E ratio from broader checks is about 28.5x, which is higher than where the stock trades today. This indicates that investors are paying a lower price for each dollar of Allison Transmission Holdings earnings than both the tailored fair multiple and sector benchmarks suggest. Despite the recent revenue surprise and raised full year sales guidance reported in August 2026, the current P/E still reflects a discount relative to what the company screens for on earnings. On the P/E multiple, Allison Transmission Holdings stock currently appears undervalued compared with both its fair ratio and industry peers. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Allison Transmission Holdings sit between the current valuation gap and the question of what the stock is really pricing in. Each narrative spells out a clear set of assumptions for Allison Transmission Holdings' future growth, margins and risk profile, and ties its numbers back to a concrete view you can return to as new results and information come through on the Community page. Community views on Allison Transmission Holdings sit far apart, with one side focused on new contracts and acquisitions and the other on long term technology risk. Bull case: 10% undervalued Read the full Bull Case to see why Allison Transmission Holdings could be undervalued Bear case: 19% overvalued Read the full Bear Case to see why Allison Transmission Holdings could be overvalued Do you think there's more to the story for Allison Transmission Holdings? Head over to our Community to see what others are saying! Allison Transmission Holdings still screens as undervalued on market multiples, even after a strong five year run and the recent revenue news. The stock trades at a discount to both sector averages and the tailored fair P/E, which points to a valuation that does not fully reflect the current earnings profile. What matters from here is whether margins and cash generation can match the higher sales backdrop. The key question for investors is whether the discount is compensation for long term technology and demand risks or an opportunity if Allison Transmission Holdings can sustain its current earnings power. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ALSN. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 8:00 a.m. ET Executive Director of Treasury and Investor Relations - Jacalyn Bolles Chair, President and Chief Executive Officer - David Graziosi Chief Financial Officer and Treasurer - Scott Mell Chief Operating Officer and Allison Transmission Business Unit Leader - Fred Bohley Allison Off-Highway Business Unit Leader - Craig Price Operator: Good afternoon, and thank you for standing by. Welcome to Allison's Second Quarter 2026 Earnings Conference Call. My name is Sherry, and I will be your conference call operator today. [Operator Instructions] After the prepared remarks, Allison's executives will conduct a question-and-answer session and conference call participants will be given instructions at that time. As a reminder, this conference call is being recorded. [Operator Instructions] I would now like to turn the conference over to Jackie Bolles, Executive Director of Treasury and Investor Relations. Please go ahead, Jackie. Jacalyn Bolles: Thank you, Sherry. Good afternoon, and thank you for joining us for our Second Quarter 2026 Earnings Conference Call. With me this afternoon are Dave Graziosi, our Chair, President and Chief Executive Officer; Scott Mell, our Chief Financial Officer and Treasurer; Fred Bohley, Allison's Chief Operating Officer and Allison Transmission Business Unit Leader; and Craig Price, Allison Off-Highway Business Unit Leader. As a reminder, this conference call, webcast and this afternoon's presentation are available on the Investor Relations section of allisontransmission.com. A replay of this call will be available through August 17. As noted on Slide 2 of the presentation, many of our remarks today contain forward-looking statements based on current expectations. These forward-looking statements are subject to known and unknown risks, including those set forth in our annual report on Form 10-K for the year ended December 31, 2025. Should one or more of these risks or uncertainties materialize or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those that we express today. In addition, as noted on Slide 3 of the presentation, some of our remarks today contain non-GAAP financial measures as defined by the SEC. You can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures attached as an appendix to the presentation and to our second quarter 2026 earnings press release. Today's call is set to end at 5:45 p.m. Eastern Time. In order to maximize participation opportunities on the call, we'll take just one question from each analyst. Please turn to Slide 4 of the presentation for the call agenda. During today's call, Dave Graziosi will provide a business update, including recent announcements across Allison, along with the synergy capture strategy update and a brief review of each business unit's net sales performance for the second quarter. Scott Mell will then review Allison's second quarter 2026 financial performance and our full year guidance update prior to commencing the Q&A. Now I'll turn the call over to Dave. David Graziosi: Thank you, Jackie. Good afternoon, and thank you for joining us. Please turn to Slide 5 of the presentation for our second quarter business update. Before we begin, I would like to take a moment to introduce the new Allison in Action page on our corporate website. The creation of Allison in Action is an important development in our global communications strategy and serves as a new platform for engaging with our investors, customers and partners. While we continue to use press releases to communicate significant company announcements and major milestones, Allison in Action serves as a content-rich platform to highlight the value we provide to our customers, the trust they place in our products and the measurable impact our solutions offer across a broad range of industries and markets. This site brings together compelling customer stories from around the world, showcasing in-depth testimonials, engaging multimedia content, product achievements and real-world business outcomes that demonstrate the value Allison delivers every day. By sharing these successes, we will provide greater visibility into the global momentum that continues to drive our long-term growth. To explore these stories, simply visit our corporate website, allisontransmission.com, click on Newsroom in the top menu and select Allison in Action. If you would like to stay informed directly, we encourage you to subscribe to our Allison in Action e-mail alerts. You can sign up by clicking the link at the top of the Allison in Action page. Going forward, we will reference Allison in Action stories alongside newly distributed press releases. We look forward to sharing the innovations, partnerships and achievements that continue to shape Allison's growth and success. Moving on, we continue to build meaningful momentum with defense customers, securing 3 significant program wins that underscore both the strength of our existing product portfolio and the success of our new product development strategy. These program awards reinforce our position as a trusted propulsion partner for leading global defense OEMs at a time when rising defense budgets and heightened national security priorities are driving sustained investment in modernization programs. Importantly, these wins demonstrate growth across both our established and emerging product portfolio. First, Allison's proven 4500 Specialty Series fully automatic transmission was selected for the French Land Forces next-generation PL6T tactical truck program, supporting more than 7,000 vehicles over the next decade. This award highlights the continued demand for our core propulsion solution in mission-critical wheel defense applications. At the same time, we are seeing strong customer adoption of our newest defense technologies. We secured a landmark $250 million contract with BAE Hägglunds to supply our all-new 4040 MX cross-drive transmission for the CV90 MkIV infantry fighting vehicle, representing the largest track defense order in Allison's history and the inaugural production application for this next-generation product. This achievement validates our continued investment in innovation and expands our opportunity within the rapidly growing tracked combat vehicle market. Finally, we announced a significant order with General Dynamics European Land Systems to supply Allison's 2500 Specialty Series fully automatic transmissions for EAGLE Series armored vehicles with deliveries expected to begin in 2027. This order covers approximately 3,000 vehicles with an option for up to an additional 2,000 units. The outlook for global defense market remains highly constructive, supported by multiyear increases in spending, particularly in Europe. There are robust NATO rearmament initiatives with elevated geopolitical tensions and government's renewed focus on defense readiness. Across the defense industry, companies are reporting record order backlogs, expanding manufacturing capacity and increased investment in next-generation platforms to support sustained growth. These industry conditions have created a supportive backdrop for suppliers like Allison with differentiated technologies and long-standing customer relationships. As we look forward to providing further updates in this space, we continue to execute on our growth initiatives, illustrating how our strategy of leveraging our proven legacy products while investing in next-generation propulsion solutions is creating long-term profitable growth. Moving now to a brief update on second quarter sales performance and end markets outlooks for both our business units. Second quarter net sales of $1.566 billion was a year-over-year increase of 92%. In addition to $706 million from the Allison Off-Highway business unit, revenue in the Allison Transmission business unit increased 6% year-over-year to a quarterly record of $860 million. Within the Allison Transmission business unit, the defense end market continues to drive top line growth, increasing 57% year-over-year with second quarter revenue of nearly $100 million. As I just mentioned, we hold a favorable outlook for the defense end market. Also a driver for year-over-year performance in the Allison Transmission business unit, revenue in the North America On-Highway end market increased 3% year-over-year. Second quarter volumes in this end market were only slightly higher on a year-over-year basis with the revenue increase driven primarily by favorable pricing. Although we continue to see end-user purchasing decisions influenced by geopolitical impacts, including tariffs and emissions regulations, we expect sequential improvement in volumes in the second half of 2026 for medium-duty and Class 8 vocational trucks. For the Allison Off-Highway business unit, second quarter revenue was $706 million. We saw a strong year-over-year growth in construction and material handling and mining end markets as demand continues to rebound from trough levels. The agriculture end market, although showing signs of recovery in certain segments and regions, has yet to inflect positively. Regionally, Europe is performing well on a year-over-year basis, particularly the construction and material handling end market. Asia Pacific and India also showed year-over-year growth across all end markets, while as a whole, the Americas region decreased year-over-year, driven primarily by the construction, material handling and agriculture end markets. The mining end market continues to show year-over-year strength, driven by elevated commodity prices. The first half of 2026 reflected strong commercial execution by the Allison Off-Highway team with notable program wins across the construction material handling, mining and agriculture end markets. These program awards, representing more than $50 million of annual run-rate net new business underscore the strength of our growth pipeline and its contribution to incremental revenue. They also reinforce our position as a leading partner in the end markets we serve, reflecting strong endorsements from major OEMs. You can find detailed breakdowns by end market for both business units on Slides 6 and 7 of the presentation. Before turning the call over to Scott for an overview of our second quarter financial performance, please turn to Slide 8 of the presentation for an update on our synergy capture strategy. On the left side of the slide, you'll note our expected synergy realization is built around 3 primary categories. The first category, procurement and logistics holds the largest opportunity for value creation with 60% of our expected $120 million annual run rate synergies. Our key initiatives in this category include strategic sourcing efforts designed to consolidate supplier spend across the combined organization, thereby enabling more favorable pricing and commercial terms as well as the establishment of long-term strategic partners -- partnerships with key suppliers. We are also evaluating opportunities to expand vertical integration and in-sourcing, improving supply security while reducing total costs. As we integrate our supply chains, we will simplify our bill of materials, optimizing scale and category leverage. This reduces complexity for both our manufacturing operations and our suppliers while allowing us to leverage higher purchasing volumes. At the same time, we will continue to strengthen supply chain resilience by qualifying multiple sources for critical materials and components, reducing the risk of supply disruptions while fostering competitive pricing. By integrating our procurement organizations, we expect to significantly improve our purchasing economics while enhancing supply continuity and reducing complexity across the enterprise. Our second category for synergy capture is optimizing how and where Allison manufactures its products. As we continue to combine our operations, we are positioned to leverage the strength of each business unit's manufacturing network to establish a more agile, lean and efficient footprint. Allison's overarching objective is to ensure that we are producing the right products in the right locations while maintaining the flexibility to respond quickly to changing customer demand and market conditions. A key element of this strategy is our local-for-local approach, aligning manufacturing closer to the customers and markets we serve. Producing products closer to end markets helps reduce transportation cost, improve delivery performance, shorten lead times and lessen exposure to geopolitical and trade-related risk. Allison will also expand its manufacturing capabilities in best cost countries, ensuring we maintain the highest standards of quality while improving our overall cost competitiveness. Together, our initiatives surrounding operations and footprint optimization are expected to contribute approximately 20% of our $120 million annual run rate synergy target. The third category of our synergy capture plan focuses on building a more efficient organization that can support future growth. As we combine our operations, we will integrate Allison's corporate functions, eliminating redundancies and duplicative activities, aligning our organizational structure with the needs of the combined business. Our goal is to reduce complexity while ensuring we continue to invest in the capabilities that differentiate us in the marketplace. Finally, we also see significant opportunity to leverage our global talent more effectively by aligning work with regional centers that offer the right combination of expertise, we can better serve our customers while creating additional opportunities for employee success across our organization. Collectively, our 3 step synergy capture categories will enhance our cost structure and cash flows, strengthen operational resilience, improve organizational agility and position Allison to deliver sustained long-term value for our stakeholders. On the right side of the slide, you'll note the expected timing of synergy realization over the next few years. We expect to realize approximately 40% of our $120 million annual run rate synergy target by the end of 2027. Further, we expect to realize another 40% by the end of 2028 and full realization by the end of 2029. Importantly, the majority of our identified strategies are currently in various stages of execution. The underlying initiatives have been identified. Detailed implementation plans have been developed, accountable owners have been assigned and the necessary resource planning has been completed. Where capital investments are required to enable these initiatives, funding has already been appropriated, allowing execution to proceed without delay. This high level of execution provides a strong foundation for achieving our targeted time line with a high degree of confidence. In addition, we continue to evaluate further opportunities that could provide incremental value beyond our current target as the integration teams work closely collaborating on identifying additional efficiencies. Now I'll turn the call over to Scott for a review of Allison's second quarter 2026 financial performance and full year 2026 guidance update. Scott? Scott Mell: Thank you, Dave, and thanks to those of you joining us on the call. Please flip to Slide 9 of the presentation. As Dave covered in his prepared remarks, net sales in the second quarter increased 92% year-over-year to $1.566 billion. The year-over-year increase was driven by the addition of the Allison Off-Highway business unit, along with a 6% increase in the Allison Transmission business unit with record quarterly net sales of $860 million. Consolidated adjusted EBITDA for the quarter was $404 million, a $91 million increase year-over-year, representing a 25.8% margin. Second quarter adjusted diluted EPS was $2.73, increasing 8% year-over-year. Cash generation remained exceptionally strong in the second quarter with record quarterly adjusted free cash flow of $281 million, an 84% increase year-over-year. Enabled by our disciplined operational execution, we delivered strong cash generation despite headwinds from higher steel and aluminum costs as well as broader inflationary pressures. Importantly, while commodity cost inflation is creating a near-term margin headwind, we ultimately recover a substantial portion of these higher costs from customers on a 6- to 12-month lag. Regarding capital allocation, I will briefly reiterate our priorities. First and foremost, we intend to fund the business for growth. In the near term, we will also continue to reduce debt to reach our near-term leverage target of 2x. During the second quarter, we remain committed to deleveraging by repaying the remaining $150 million of amounts outstanding under our revolving credit facility. Excess cash will continue to be returned to shareholders through our quarterly dividend and share repurchases. During the second quarter, we repurchased $46 million of our common stock and paid a quarterly dividend of $0.29 per share. Before moving on, as a reminder, reconciliations for non-GAAP financial measures can be found in the appendix of the second quarter earnings presentation and earnings press release. You can find further detail on financial performance by segment on Slide 10 of the presentation. There will also be more detail provided in our Form 10-Q to be published later this week. Please turn to Slide 11 for our full year guidance update for 2026. Given our second quarter results and improving conditions across our end markets, we are increasing our full year 2026 guidance. For 2026 revenue, we expect consolidated net sales in the range of $5.8 billion to $6 billion. For earnings, we expect consolidated net income in the range of $600 million to $700 million, subject to the completion of purchase price accounting associated with the acquisition of the Off-Highway business unit. Our net income guidance for 2026 includes approximately $140 million of onetime pretax expenses associated with the separation, integration and restructuring of the Allison Off-Highway business unit, including approximately $75 million of expenses related to the stepped-up basis in inventory. Despite these onetime costs, we expect the Allison Off-Highway acquisition to be accretive to net income and earnings per share in 2026. Further, we expect consolidated adjusted EBITDA in the range of $1.465 billion to $1.575 billion. At the midpoint, this implies an approximate 26% adjusted EBITDA margin. For our 2026 cash flow guidance, we anticipate consolidated net cash provided by operating activities in the range of $1.025 billion to $1.125 billion, consolidated capital expenditures in the range of $260 million to $280 million, including onetime separation and integration spending of approximately $30 million and consolidated adjusted net -- pardon me, consolidated adjusted free cash flow in the range of $745 million to $865 million. Please note that our consolidated net cash provided by operating activities guidance includes approximately $55 million of onetime cash outlays associated with our acquisition of the Allison Off-Highway business unit. This concludes our prepared remarks. Sherry, please open the call for questions. Operator: [Operator Instructions] Our first question is from Rob Wertheimer with Melius Research. Robert Wertheimer: My question is basically, I know we touched on this a bit last call, but on margin in the legacy business, do you feel like there's more inflation out there, more materials costs? Do you need to take more pricing to cover kind of the cost inflation and margin headwinds you've seen? Scott Mell: Yes. It's Scott. So certainly, looking at the legacy business, the year-over-year margin was compressed. A number of factors contributed to that. Primarily, to your point, material costs. We had, I'll call it, mid-teens year-over-year headwinds from material costs, aluminum and steel. And you point out, we do have recovery mechanisms in place. But as I mentioned on the call, there is a timing lag in those. So what you're seeing in the quarter is really a reflection of somewhat of the very quick increase primarily in aluminum costs. If you look quarter-over-quarter, they're up almost 25%. And so we will recover those costs, some of those costs vis-a-vis our indexing. But obviously, that takes a bit of time. I don't know, Fred, if you have a question on the -- or response on the pricing. G. Bohley: Yes. Thanks, Scott. Yes, Rob, this is Fred. Relative to pricing, obviously, we've secured meaningful pricing post pandemic. And the cost of the vehicles we go in continue to inflate up the cost of the new emissions. So we feel we're delivering a tremendous amount of value and are in a position where we can continue to get price above, kind of, the pre-pandemic levels where we would average 50 to 75 basis points. We've got good visibility for, obviously, the balance of the year and a lot of the larger customers under long-term agreements going into 2027. So certainly, maintaining -- improving our margins is critical to us, and we feel like we're very well positioned to do that. Operator: Our next question is from Tim Thein with Raymond James. Timothy Thein: The question is just on the revenue guide. Maybe we could dig in a bit in terms of what changed between the legacy Allison business versus Off-Highway. And as I think about just the -- effectively, the midpoint is -- implies no change in terms of first half to second half. And if I look at current build rates, OEM build plans rather for Class 8 vocational and medium up, call it, circa 10% second half over first. And so I get that there's some seasonality in the Off-Highway business, but I guess I'm just trying to think through maybe some of the moving pieces relative to that midpoint, how we think about second half versus the first. Scott Mell: Yes, Tim, that's a very good question. This is Scott. You're right. It's a bit of a tale of 2 cities. When you look at our full year guide, we are expecting sequential improvement within the legacy transmission business first half to second half. Again, driven by some of the macro factors that Dave mentioned in his comments. On the other side of that, the second half of the year for the new Off-Highway business unit, as you pointed out, does have some seasonality associated with it, including the European business being shut down a bit next month, or I guess, this month now, and then obviously, the holidays. But I think Craig and Fred probably can speak a bit more in detail on their individual business units. Craig Price: Yes. So the off-highway business, the third quarter is generally our weakest quarter in terms of revenue. As Scott alluded to, the European shutdown, almost half of our business comes out of Europe. So that's impacting the third quarter. And then we step up a little bit in the fourth quarter, again, but still lower than the first half driven by the end of year holiday period. G. Bohley: Tim, this is Fred. I mean, obviously, strong Q2 total revenue up 6%. Some of your questions were directed at North America On-Highway, where revenue was up 3% year-over-year, but probably more importantly, up 15% sequentially. In fact, all of our end markets in the ATBU were up over 10% sequentially. So certainly nice to see that inflection. Obviously, the first half of '26 was always going to have the more difficult comps compared to the first half of 2025. And then as we look at North America On-Highway specifically, for us, Class 8 straight truck has continued to be steady. In the medium duty, we saw some pickup in the second quarter, which was encouraging. That's really the first time we've seen any sort of pickup there. And obviously, you have the emission changes going on. So we are confident that we'll see sequential improvement in the second half of '26 for our largest end market, North America On-Highway. Operator: Our next question is from Ian Zaffino with Oppenheimer & Company. Isaac Sellhausen: This is Isaac Sellhausen on for Ian. Just wondering if you could provide some details on the off-highway business around price and volume performance in the quarter? And then maybe any additional commentary you can provide on the margins in the business as you capture synergies into 2027 and beyond? Craig Price: So I would say from the pricing side, obviously, we don't have the same luxury or position as the transmission side. But we have -- I would say, price for us is not meaningful up or down year-over-year from -- for our business. From the margin profile, I think you can align it to the revenue, the first half being slightly higher than the second half. But as we continue to win new business as we go forward, we will expect to increase that area. Scott Mell: Yes. And I'll just add, it's Scott. I think the off-highway business, there's a lot less volatility relative to material costs, just given the nature of that business's ability to pass those on a more timely basis than what you have seen historically with the transmission business. And I'll just say, I think we are pleased with the margin performance for the off-highway business now that we've had it for 2 quarters. And obviously, as we've talked about, we expect to realize synergies across the entirety of the enterprise. Some of those will impact and benefit the off-highway business, and we'll be talking more about that certainly as we get into next year and talk about expectations for 2027. Operator: Our next question is from Jerry Revich with Wells Fargo. Jerry Revich: Congratulations and nice quarter. I wanted to ask the sources of cost savings, pretty procurement heavy. I'm wondering how has the source of opportunity evolved versus maybe a year ago? And then can we just talk about just the pieces that you folks have highlighted over the course of the call as we think about what '27 might look like? So Fred, you spoke about price cost in the core business, 50 to 75 basis points. We spoke about the synergy benefit of about 50 basis points. Anything else that we need to keep in mind, market agnostic as we think about the business '27 versus '26? G. Bohley: Jerry, this is Fred. Let me hit on pricing. Historical pre-pandemic, the ATB would get 50 to 75 basis points. We have very, very high level of confidence that we'll secure more than that level in 2027. David Graziosi: Jerry, it's Dave. On the value capture questions you have there. So very briefly in terms of what -- the comments I provided, if you compare that to certainly our expectations going into the acquisition diligence or otherwise, I would say, overall, it's relatively consistent with what we laid out here this afternoon, right, in terms of contributions between the 3 categories. I would also offer as the teams have been working together across the BUs as well as the group team as well. For us, it's also become clearer in terms of what our initial expectations were and overall capabilities of the organization. I would tell you that our ability to react to issues, whether those are some of the geopolitical events, developments, expectations, uncertainties has really changed for us vis-a-vis the acquisition. And I think our expectations going in were certainly high. But I would tell you, in terms of the teams working together, being able to react very quickly from a regional perspective with the footprint that we now have is frankly beyond what we are expecting. So unfortunately, given some developments in the Middle East that everybody is familiar with, I think that's allowed us to have an opportunity to further test those capabilities. And I would say that the team has done a phenomenal job there. That being said, the $120 million is our annual run rate target, as we've talked about many times. Certainly, as we're getting further into this, and it was in the prepared comments at the end, but it would not surprise us if there's more opportunity there. It's really a question of getting the teams together to get some things done. There's a number of activities that are very time sensitive related to transition agreements, et cetera, getting all that done. It's a very heavy level of work this year for the team. So in other words, I think we would be probably further along in some other areas, but trying to get some of this foundational work behind us is taking up a fair bit of time. So -- thus the time line that I laid out, the 40-40 balance and then the 20 is really our current view. So -- but again, I think we're certainly very pleased with where we've landed so far and look forward to providing further updates as we get towards the end of the year and certainly with our 2027 guidance at that point. Operator: Our next question is from Tami Zakaria with JPMorgan. Tami Zakaria: I wanted to get some clarity on 2 things. One is the midpoint of your revenue guide is, I think, up $150 million. Could you clarify how much of that is driven by improvement in your outlook for on-highway versus off-highway in the back half of this year? And then the second point is, do you have any synergies baked into this new EBITDA guidance that you have? Scott Mell: Tami, it's Scott. I would tell you that the preponderance of the increase in the midpoint for the full year is driven by a more optimistic look on the Allison Transmission business unit, just given some of the first half performance we've seen and what we're seeing and hearing more recently from some of our customers. I would describe the outlook for the Off-Highway business unit to be the same more or less as what we guided to, the same to maybe slightly up to what we guided to in February. But the most -- the biggest component of it is coming out of the transmission business unit. With regards to the synergies for the full year, the short answer, there's no material or meaningful synergies built into the EBITDA guide for the full year. What you're seeing there from the increase is really around incremental volume and then management of operating costs is driving that increase. Operator: Our next question is from Angel Castillo with Morgan Stanley. Angel Castillo Malpica: Congrats on the strong quarter here. Just wanted to ask a little bit bigger picture on the EPA '27 proposal, just whether there's any implications where you're hearing anything in terms of underlying demand and how that will unfold kind of second half '26 versus '27 just as it pertains to customer demand for potential prebuy versus just waiting and getting the current engine next year. Just anything that you're hearing from customers there? And then also would love to hear maybe a little bit more color on what you're seeing in your defense segment, which continues to be pretty strong and what you expect there? David Graziosi: Angel, it's Dave. Let me tackle your EPA question, and Fred can address your defense question. So as you referenced, early last month, the EPA released their proposal that everybody was waiting for, frankly. The outcome of that was largely, I think, as the market had expected. So with the -- I think the most relevant change in there really being the emissions warranty periods that was purported to be a pretty significant cost driver. So with that, in terms of your question, frankly, all of the OEMs are still assessing the EPA proposal as well as, as you can imagine, their supply base, including us in terms of expected reactions there. The OEMs are speaking with end users and fleets, et cetera, and so forth. So the short answer to all that is there will have to be some trade-offs at the end user level between the noncompliance penalties presumably and what the expected cost is for the 2027 vehicles, if you will. So -- and that's really yet to be, I would say, fully understood by the OEMs in terms of market pricing for 2027 vehicles, et cetera. So having said all of that, as our team does, we're in constant contact with OEMs and fleets certainly look forward to providing an update here with the comment period, as you know, still open for the EPA proposal, a lot of things out there that may impact ultimately the balance of 2026 volumes as well as the overall outlook as we get into '27. But to Fred's earlier comments, we continue to see steady -- regardless, frankly, of what the EPA has proposed, steady Class 8 vocational market and some improvement in medium duty. And I think overall, with the continued availability of '26 engines, if you will, that really is, I think, intended to mitigate ultimately the impact. So unlike some prior changes, emissions changes that I'm sure you're familiar with, the magnitude of those versus what's being proposed ultimately here are very different. The other reality is that this late into a year in terms of build schedules, it becomes, I think, relatively challenging for the industry players to make significant changes. And I think at least the public OEM comments for this quarter would certainly imply relatively full order books, which then also would tell us there's a limited amount of ability to change or frankly, add significantly into what their '26 build plans are for the second half. G. Bohley: Angel, this is Fred. Relative to the defense end market, Obviously, very strong performance year-to-date on a year-over-year basis, up 60% from a revenue standpoint. We've announced numerous wins, most of those outside North America, including the 3 that we highlighted in our prepared remarks. Very good visibility for the balance of the year, expect H2 to look a lot like H1 and really looking out into 2027, pretty much full order board. These are long-lead products. We're launching new products into the space, our 3040 MX, our 4040 MX, very excited about those. And we've announced opportunities in Poland with the Borsuk, Turkey with the Corecut, within India. So again, very good outlook. The investments that we've made are coming to fruition, and we're very, very bullish on the end market. Operator: Our final question is from Kyle Menges with Citigroup. Kyle Menges: I just wanted to follow up on the pricing discussion a little bit. I understand the confidence in getting some price next year above the pre-pandemic level. I'm just trying to understand how much of that is just pricing from pass-through mechanisms to offset quite elevated material costs versus, I guess, more real price increases. And I understand you usually pass on about 75% of raw material costs. So are you also confident you can get enough price to be price/cost positive and offset the other 25% of raw materials that's not automatically passed through? G. Bohley: Kyle, this is Fred. I would say the comments relative to pricing will really focus on true commercial pricing relative to the long-term agreements that we have in place. Definitely, there will be the benefit of the commodity pass-throughs. Obviously, we're still looking to see how the full year shakes out from a raw material pricing standpoint and what the assumptions look like out into 2027. Scott mentioned that the bulk of this is on somewhere from a 6-month to a 12-month lag. So back to your -- the basis of your question, from a price/cost standpoint, I mean it's something we're very focused on and are really looking to continue to drive margins. And think about the guide, we came out at the midpoint, I think, of 25% margins. We're up to 25.8%. We've got $120 million of synergies identified. That's another 200 basis points across the combined company. So there's numerous activities we're working on from a cost standpoint to offset what are some pretty meaningful inflation pressures that we've seen. Operator: We have reached the end of our question-and-answer session. I would like to turn the floor back over to Dave for closing remarks. David Graziosi: Thank you, Sherry, and thank you for your continued interest in Allison and for participating on today's call. Enjoy your evening. Operator: Thank you. This will conclude today's conference. Thank you for your participation. You may now disconnect. Before you buy stock in Allison Transmission, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Allison Transmission wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $399,832!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,374,595!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 10, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Allison Transmission. The Motley Fool has a disclosure policy. Allison Transmission (ALSN) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

INDIANAPOLIS, Aug. 11, 2026 /PRNewswire/ -- Allison Transmission Holdings Inc. (NYSE: ALSN), a global leader in high-performance mobility and work solutions built for the needs of the modern industrial world, announced today that its Board of Directors has declared a cash dividend of $0.29 per share on the Company's common stock for the third quarter of 2026. Payment will be made on August 31, 2026, to stockholders of record at the close of business on August 21, 2026. The payment of any future dividends will be at the discretion of the Board of Directors and will be dependent upon Allison's financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by the Board of Directors. About AllisonAllison (NYSE: ALSN) is a global leader in high-performance mobility and work solutions built for the needs of the modern industrial world. Allison operates through two business units: Allison Transmission and Allison Off-Highway Drive & Motion Systems. Headquartered in Indianapolis, Indiana, USA, the Company manufactures solutions which offer industry-leading value propositions across vital sectors such as infrastructure, mining, energy, agriculture, construction, transportation and national security. For over 110 years, Allison has been recognized as a reliable partner of choice, keeping essential industries moving anytime, in over 150 countries around the world. For more information, visit https://allisontransmission.com. Forward-Looking StatementsThis press release contains forward-looking statements. The words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Although forward-looking statements reflect management's good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements speak only as of the date the statements are made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to: the significant costs we are expected to incur in connection with the integration of the Off-Highway Drive & Motion Systems business of Dana Incorporated (now referred to as the "Allison Off-Highway Business"); our ability to successfully integrate the Allison Off-Highway Business and its operations in the expected time frame; our ability to realize all of the anticipated benefits from the integration of the Allison Off-Highway Business and its operations and to effectively manage our expanded operations; our participation in markets that are competitive; our ability to prepare for, respond to and successfully achieve our objectives relating to technological and market developments, competitive threats and changing customer needs, including with respect to electric hybrid and fully electric commercial vehicles; increases in cost, disruption of supply or shortage of labor, freight, raw materials, energy or components used to manufacture or transport our products or those of our customers or suppliers, including as a result of geopolitical risks, natural disasters, extreme weather events, wars and public health crises such as pandemics; global economic volatility; general economic and industry conditions, including the risk of prolonged inflation and recession; labor strikes, work stoppages or similar labor disputes, which could significantly disrupt our operations or those of our principal customers or suppliers; the highly cyclical industries in which certain of our end users operate; uncertainty in the global regulatory and business environments in which we operate; the concentration of our net sales in our top five customers and the loss of any one of these customers; cybersecurity risks to our operational systems, security systems or infrastructure owned by us or our third-party vendors and suppliers; the failure of markets outside North America to increase adoption of fully automatic transmissions; the success of our research and development efforts, the outcome of which is uncertain; U.S. and foreign defense spending; risks associated with our international operations, including acts of war and increased trade protectionism and tariffs; the discovery of defects in our products, resulting in delays in new model launches, recall campaigns and/or increased warranty costs and reduction in future sales or damage to our brand and reputation; our ability to identify, consummate and effectively integrate acquisitions and collaborations; and risks related to our indebtedness. 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Allison Transmission’s second quarter saw a strong positive market response, with investors reacting favorably to robust sales growth and major contract wins in the defense sector. Management attributed the revenue surge to both the integration of the Off-Highway business unit and higher demand in key market segments, particularly defense and North America On-Highway. CEO David Graziosi highlighted new program awards with European defense customers and ongoing recovery in construction and mining as important factors supporting the quarter’s top-line performance. Is now the time to buy ALSN? Find out in our full research report (it’s free). Revenue: $1.57 billion vs analyst estimates of $1.52 billion (92.4% year-on-year growth, 3.1% beat) Adjusted EPS: $2.73 vs analyst estimates of $2.59 (5.5% beat) Adjusted EBITDA: $404 million vs analyst estimates of $392.5 million (25.8% margin, 2.9% beat) The company lifted its revenue guidance for the full year to $5.9 billion at the midpoint from $5.75 billion, a 2.6% increase EBITDA guidance for the full year is $1.52 billion at the midpoint, above analyst estimates of $1.50 billion Operating Margin: 18.6%, down from 31.4% in the same quarter last year Market Capitalization: $9.82 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Rob Wertheimer (Melius Research) asked if further pricing actions are needed to offset material cost inflation in the legacy business. CFO Scott Mell explained that while material costs have risen sharply, most increases will be recovered with a lag, and COO Fred Bohley affirmed confidence in achieving pricing above pre-pandemic levels through long-term agreements. Timothy Thein (Raymond James) questioned the sequential revenue guidance split between the legacy and Off-Highway segments. Mell clarified that legacy transmission is expected to improve in the second half, while Off-Highway faces typical third-quarter seasonality due to European plant shutdowns and holidays. Isaac Sellhausen (Oppenheimer & Company) asked about pricing and volume trends in Off-Highway and the potential for margin improvement as synergies are realized. Business unit leader Craig Price noted flat pricing year-over-year but expects margin gains as new business ramps and synergies are captured. Jerry Revich (Wells Fargo) inquired about the composition and timing of synergy capture, especially relative to earlier expectations. CEO Graziosi indicated that the synergy plan remains on track, with procurement and operational agility improving post-acquisition, and potential for upside if integration progresses ahead of plan. Tami Zakaria (JPMorgan) sought clarification on how much of the guidance raise stems from legacy versus Off-Highway outlook, and if synergies are included in EBITDA guidance. Mell responded that most of the guidance increase comes from the legacy business, with little synergy benefit baked into the current year’s EBITDA outlook. In the coming quarters, the StockStory team will be watching (1) whether recent defense contract wins translate into sustained top-line growth and backlog visibility, (2) the pace of synergy realization from the Off-Highway integration and its impact on margins, and (3) Allison’s ability to recover commodity cost inflation through commercial pricing and contract mechanisms. Monitoring the trajectory of end-market demand in construction, mining, and agriculture will also be critical. Allison Transmission currently trades at $120.34, up from $116.31 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members). ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

For the quarter ended June 2026, Allison Transmission (ALSN) reported revenue of $1.57 billion, up 92.4% over the same period last year. EPS came in at $2.73, compared to $2.29 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $1.51 billion, representing a surprise of +3.82%. The company delivered an EPS surprise of +5%, with the consensus EPS estimate being $2.60. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Allison Transmission performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Net Sales- Allison Transmission- North America On-Highway: $430 million versus the three-analyst average estimate of $389.46 million. The reported number represents a year-over-year change of +3.1%. Net Sales- Allison Transmission- Defense: $99 million versus the three-analyst average estimate of $87.15 million. The reported number represents a year-over-year change of +57.1%. Net Sales- Total Allison Off-Highway: $706 million compared to the $709.23 million average estimate based on three analysts. Net Sales- Total Allison Transmission: $860 million versus $805.59 million estimated by three analysts on average. Net Sales- Allison Transmission- Service Parts, Support Equipment and Other: $177 million versus the three-analyst average estimate of $178.94 million. The reported number represents a year-over-year change of +0.6%. Net Sales- Allison Transmission- Outside North America On-Highway: $132 million compared to the $134.9 million average estimate based on two analysts. The reported number represents a change of -7% year over year. Net Sales- Allison Transmission- Global Off-Highway: $22 million versus $11.36 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +37.5% change. View all Key Company Metrics for Allison Transmission here>>> Shares of Allison Transmission have returned -1.6% over the past month versus the Zacks S&P 500 composite's +0.2% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Net Sales of $1,566 million, up 92% year over year, including the addition of the Allison Off-Highway business unit acquired on January 1, 2026 Record quarterly net sales of $860 million for the Allison Transmission business unit Net Income of $181 million, 12% of Net Sales Diluted EPS of $2.15, Adjusted Diluted EPS of $2.73, up 8% year over year Adjusted EBITDA of $404 million, 26% of Net Sales, up 29% year over year INDIANAPOLIS, Aug. 3, 2026 /PRNewswire/ -- Allison Transmission Holdings Inc. (NYSE: ALSN), today reported second quarter net sales of $1,566 million with an adjusted EBITDA margin of 26 percent and net cash provided by operating activities of $312 million. David S. Graziosi, Chair, President and Chief Executive Officer of Allison commented, "In the Allison Transmission business unit, execution of our growth initiatives in the Defense end market and continued momentum in the North American truck market led to record quarterly net sales of $860 million for the second quarter. We also saw strong year over year growth in the Allison Off-Highway business unit, particularly in the Construction & Material Handling and Mining end markets as demand continues to rebound from trough levels. The Agriculture end market, although showing signs of recovery in certain segments and regions, has yet to inflect positively." Graziosi continued, "The successful integration of the Allison Off-Highway business unit, including capturing planned synergies and realizing the strategic benefits of the combined operations, remains a top priority. At the same time, Allison continues to execute across both business units, converting improving demand conditions into strong cash generation, reflected in record quarterly adjusted free cash flow of $281 million in the second quarter. Alongside repurchasing $46 million of our common stock and paying a quarterly dividend, we also made additional progress toward our leverage target by repaying the remaining $150 million outstanding under our revolving credit facility." Second quarter results include segment reporting for Allison Transmission, the Company's legacy business, excluding certain costs now accounted for within the Allison Central Group, and Allison Off-Highway, the business acquired from Dana Incorporated on January 1, 2026. The Allison Central Group is a centralized cost center which includes certain functional costs that support the Company's global operations. Allison Consolidated Second Quarter Financial Results Net sales for the quarter were $1,566 million, including the addition of $706 million in net sales for the Allison Off-Highway business unit. Gross profit for the quarter was $515 million, an increase of $112 million from $403 million for the same period in 2025. The increase was principally driven by the addition of the Allison Off-Highway business unit. Gross margin for the quarter was 33 percent. Selling, general and administrative expenses for the quarter were $168 million, an increase of $64 million from $104 million for the same period in 2025. The increase was principally driven by the addition of the Allison Off-Highway business unit. Selling general and administrative expenses for the second quarter include $9 million of one-time acquisition-related expenses. Engineering – research and development expenses for the quarter were $56 million, an increase of $13 million from $43 million for the same period in 2025. The increase was principally driven by the addition of the Allison Off-Highway business unit, partially offset by reduced product initiatives spending in the Allison Transmission business unit. Net income for the quarter was $181 million, a decrease of $14 million from $195 million for the same period in 2025. The decrease was principally driven by increased operating costs due to the acquisition of the Allison Off-Highway business unit, including increased depreciation and amortization expense. The year over year decrease in net income was also driven by higher interest expense, net, and unrealized mark-to-market adjustments for marketable securities. The decrease in net income was partially offset by increased gross profit driven by the addition of the Allison Off-Highway business unit. Diluted EPS for the second quarter was $2.15, a year over year decrease of 6 percent. Excluding the effect of certain non-cash, non-recurring, infrequent or unusual items, including the costs associated with the acquisition of the Allison Off-Highway business unit, adjusted net income, a non-GAAP financial measure, was $229 million for the second quarter and adjusted diluted EPS was $2.73, a year over year increase of 8 percent. Adjusted EBITDA, a non-GAAP financial measure, was $404 million for the second quarter, an increase of $91 million from $313 million for the same period in 2025. Adjusted EBITDA margin for the quarter was 26 percent. Net cash provided by operating activities for the quarter was $312 million, a year over year increase of 70 percent. Adjusted free cash flow, a non-GAAP financial measure, for the quarter was $281 million, a year over year increase of 84 percent. Allison ended the second quarter with nearly $400 million of cash and cash equivalents and $995 million of available borrowing capacity under its revolving credit facility. Allison ended the second quarter with total debt of $4,114 million and net debt of $3,715 million. During the second quarter, Allison paid a quarterly dividend of $0.29 per share and repurchased $46 million of its common stock, with $1,125 million of authorization remaining under its stock repurchase program. Allison Transmission Second Quarter Financial Highlights Net sales for the quarter increased 6 percent from the same period in 2025, leading to record quarterly net sales of $860 million. Gross profit for the quarter was $397 million, a decrease of $6 million from $403 million for the same period in 2025. The decrease was principally driven by unfavorable direct material costs and higher manufacturing expense, partially offset by price increases on certain products. Gross margin for the second quarter was 46 percent. Selling, general and administrative expenses for the quarter were $75 million, an increase of $3 million from $72 million for the same period in 2025 when adjusting for allocations of certain selling, general and administrative expenses to the Allison Central Group. The increase was principally driven by increased commercial activities spending. Engineering – research and development expenses for the quarter were $41 million, a decrease of $2 million from $43 million for the same period in 2025. The decrease was principally driven by reduced product initiatives spending. Segment operating profit was $281 million, or 33 percent of net sales, for the second quarter. Adjusted EBITDA, a non-GAAP financial measure, was $318 million for the second quarter. Adjusted EBITDA margin for the quarter was 37 percent. Allison Off-Highway Second Quarter Financial Highlights Net sales for the quarter were $706 million. Gross profit for the quarter was $118 million, representing 17 percent of net sales. Selling, general and administrative expenses for the quarter were $56 million. Engineering – research and development expenses for the quarter were $15 million. Segment operating profit was $47 million, or 7 percent of net sales, for the second quarter. Adjusted EBITDA, a non-GAAP financial measure, was $104 million for the second quarter. Adjusted EBITDA margin for the quarter was 15 percent. Full Year 2026 Guidance Update Given our second quarter results and improving conditions across our end markets, we are increasing our full year 2026 guidance provided to the market on May 4, 2026. Allison expects: Consolidated net sales in the range of $5,800 to $6,000 million Consolidated net income in the range of $600 to $700 million, subject to the completion of purchase price accounting associated with the acquisition of the Allison Off-Highway business unit Consolidated adjusted EBITDA in the range of $1,465 to $1,575 million Consolidated net cash provided by operating activities in the range of $1,025 to $1,125 million, including approximately $55 million of one-time cash outlays associated with the acquisition of the Allison Off-Highway business unit Consolidated capital expenditures in the range of $260 to $280 million, including one-time separation and integration capital expenditures of approximately $30 million Consolidated adjusted free cash flow in the range of $745 to $865 million Conference Call and Webcast The Company will host a conference call at 5:00 p.m. EDT on Monday, August 3, 2026 to discuss its second quarter 2026 results. The dial-in phone number for the conference call is +1-877-425-9470 and the international dial-in number is +1-201-389-0878. A live webcast of the conference call will also be available online at https://ir.allisontransmission.com. For those unable to participate in the conference call, a replay will be available from 9:00 p.m. EDT on August 3 until 11:59 p.m. EDT on August 17. The replay dial-in phone number is +1-844-512-2921 and the international replay dial-in number is +1-412-317-6671. The replay passcode is 13761420. About AllisonAllison (NYSE: ALSN) is a global leader in high-performance mobility and work solutions built for the needs of the modern industrial world. Allison operates through two business units: Allison Transmission and Allison Off-Highway Drive & Motion Systems. Headquartered in Indianapolis, Indiana, USA, the Company manufactures solutions which offer industry-leading value propositions across vital sectors such as infrastructure, mining, energy, agriculture, construction, transportation and national security. For over 110 years, Allison has been recognized as a reliable partner of choice, keeping essential industries moving anytime, in over 150 countries around the world. For more information, visit https://allisontransmission.com. Forward-Looking StatementsThis press release contains forward-looking statements. The words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Although forward-looking statements reflect management's good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements speak only as of the date the statements are made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to: the significant costs we are expected to incur in connection with the integration of the Off-Highway Drive & Motion Systems business of Dana Incorporated (now referred to as the "Allison Off-Highway Business"); our ability to successfully integrate the Allison Off-Highway Business and its operations in the expected time frame; our ability to realize all of the anticipated benefits from the integration of the Allison Off-Highway Business and its operations and to effectively manage our expanded operations; our participation in markets that are competitive; our ability to prepare for, respond to and successfully achieve our objectives relating to technological and market developments, competitive threats and changing customer needs, including with respect to electric hybrid and fully electric commercial vehicles; increases in cost, disruption of supply or shortage of labor, freight, raw materials, energy or components used to manufacture or transport our products or those of our customers or suppliers, including as a result of geopolitical risks, natural disasters, extreme weather events, wars and public health crises such as pandemics; global economic volatility; general economic and industry conditions, including the risk of prolonged inflation and recession; labor strikes, work stoppages or similar labor disputes, which could significantly disrupt our operations or those of our principal customers or suppliers; the highly cyclical industries in which certain of our end users operate; uncertainty in the global regulatory and business environments in which we operate; the concentration of our net sales in our top five customers and the loss of any one of these customers; cybersecurity risks to our operational systems, security systems or infrastructure owned by us or our third-party vendors and suppliers; the failure of markets outside North America to increase adoption of fully automatic transmissions; the success of our research and development efforts, the outcome of which is uncertain; U.S. and foreign defense spending; risks associated with our international operations, including acts of war and increased trade protectionism and tariffs; the discovery of defects in our products, resulting in delays in new model launches, recall campaigns and/or increased warranty costs and reduction in future sales or damage to our brand and reputation; our ability to identify, consummate and effectively integrate acquisitions and collaborations; and risks related to our indebtedness. Use of Non-GAAP Financial MeasuresThis press release contains information about Allison's financial results and forward-looking estimates of financial results that are not presented in accordance with accounting principles generally accepted in the United States ("GAAP"). Such non-GAAP financial measures are reconciled to their most directly comparable GAAP financial measures at the end of this press release. Non-GAAP financial measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures of other companies. We use adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA") and adjusted EBITDA as a percent of net sales ("adjusted EBITDA margin") to measure our operating profitability. We believe that adjusted EBITDA and adjusted EBITDA margin provide management, investors and creditors with useful measures of the operational results of our business and increase the period-to-period comparability of our operating profitability. Adjusted EBITDA margin is also used in the calculation of management's incentive compensation program. The most directly comparable GAAP measure to adjusted EBITDA and adjusted EBITDA margin is net income or segment operating profit (loss) in the case of our segments and net income as a percent of net sales ("net income margin") or segment operating profit (loss) as a percent of net sales in the case of our segments, respectively. Adjusted EBITDA is calculated as earnings before interest expense, net, income tax expense, amortization of intangible assets, depreciation of property, plant and equipment and other adjustments as defined by the Second Amended and Restated Credit Agreement dated as of March 29, 2019, as amended, governing Allison Transmission, Inc.'s term loans and revolving credit facility. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net sales. In addition, we believe adjusted net income, adjusted basic earnings per share attributable to common stockholders ("adjusted basic EPS") and adjusted diluted earnings per share attributable to common stockholders ("adjusted diluted EPS") provide management, investors and creditors with useful measures of our core business performance and trends and increase the period-to-period comparability of our results of operations. The most directly comparable GAAP measure to adjusted net income, adjusted basic EPS and adjusted diluted EPS is net income, basic earnings per share attributable to common stockholders ("basic EPS") and diluted earnings per share attributable to common stockholders ("diluted EPS"), respectively. Adjusted net income is calculated as net income excluding the effect of certain non-cash, non-recurring, infrequent or unusual items such as: amortization related to acquired intangible assets, depreciation of the stepped-up basis in property, plant and equipment related to acquired assets, stepped-up basis in acquired inventory, stock-based compensation expense, acquisition-related expenses, impairment charges, other one-off adjustments and the tax effect of the adjustments. Adjusted basic EPS is calculated by dividing adjusted net income by the weighted average shares of common stock outstanding and adjusted diluted EPS is calculated by dividing adjusted net income by the diluted weighted average shares of common stock outstanding. We use adjusted free cash flow to evaluate the amount of cash generated by our business that, after the capital investment needed to maintain and grow our business and certain mandatory debt service requirements, can be used for repayment of debt, stockholder distributions and strategic opportunities, including investing in our business. We believe that adjusted free cash flow enhances the understanding of the cash flows of our business for management, investors and creditors. Adjusted free cash flow is also used in the calculation of management's incentive compensation program. The most directly comparable GAAP measure to adjusted free cash flow is net cash provided by operating activities. Adjusted free cash flow is calculated as net cash provided by operating activities after cash used for additions of long-lived assets. Attachments Condensed Consolidated Statements of Operations Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows Reconciliations of GAAP to Non-GAAP Financial Measures Reconciliation of GAAP to Non-GAAP Financial Measures for Full Year Guidance 46 299057 Income tax expense47476788 Amortization expense211443 Recognition of the stepped-up basis in inventory (a)--63- Depreciation of the stepped up basis in property, plant and equipment (b) 18-31- Acquisition-related expenses (c)9152624 Stock-based compensation expense (d)1081714 Unrealized loss (gain) on marketable securities (e)12(5)9(8) Unrealized loss on foreign exchange (f)-131 Loss associated with impairment of long-lived assets (g)2-2- Other (h)4-6-Adjusted EBITDA (Non-GAAP)$ 404$ 313$ 766$ 609Net sales (GAAP)$ 1,566$ 814$ 2,972$ 1,580Net income as a percent of Net sales (GAAP)11.6 %24.0 %9.9 %24.5 %Adjusted EBITDA as a percent of Net sales (Non-GAAP)25.8 %38.5 %25.8 %38.5 %Net cash provided by operating activities (GAAP)$ 312$ 184$ 468$ 365Deductions to reconcile to Adjusted free cash flow: Additions of long-lived assets(31)(31)(84)(57)Adjusted free cash flow (Non-GAAP)$ 281$ 153$ 384$ 308 View original content to download multimedia:https://www.prnewswire.com/news-releases/allison-announces-second-quarter-2026-results-302841506.html

Allison Transmission (ALSN) came out with quarterly earnings of $2.73 per share, beating the Zacks Consensus Estimate of $2.6 per share. This compares to earnings of $2.29 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +5.00%. A quarter ago, it was expected that this automatic transmission maker would post earnings of $2.54 per share when it actually produced earnings of $2.57, delivering a surprise of +1.18%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Allison Transmission, which belongs to the Zacks Automotive - Original Equipment industry, posted revenues of $1.57 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 3.82%. This compares to year-ago revenues of $814 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Allison Transmission shares have added about 17% since the beginning of the year versus the S&P 500's gain of 9.4%. While Allison Transmission has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Allison Transmission was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.41 on $1.45 billion in revenues for the coming quarter and $9.65 on $5.79 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Automotive - Original Equipment is currently in the bottom 30% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, LCI (LCII), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This recreational vehicle parts supplier is expected to post quarterly earnings of $2.63 per share in its upcoming report, which represents a year-over-year change of +10%. The consensus EPS estimate for the quarter has been revised 3.1% lower over the last 30 days to the current level. LCI's revenues are expected to be $1.13 billion, up 2% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report LCI Industries (LCII) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Allison Transmission Holdings, Inc.? Here are five stocks we like better. Allison Transmission reported strong second-quarter results, with sales up 92% year over year to $1.566 billion, adjusted EBITDA of $404 million and record adjusted free cash flow of $281 million. The company raised its 2026 outlook, including sales guidance of $5.8 billion to $6 billion. Legacy transmission revenue reached a quarterly record, supported by 57% growth in defense sales, while the Off-Highway unit saw recovery in construction, material handling and mining. Allison also secured more than $50 million in annual run-rate off-highway awards and major defense contracts supporting long-term demand. The company continues integrating the Off-Highway acquisition and targets $120 million in annual run-rate synergies by 2029. During the quarter, it repaid $150 million of debt, repurchased $46 million of stock and paid a $0.29-per-share dividend. 5 Stocks Using Buybacks to Drive Serious Upside Into 2026 Allison Transmission (NYSE:ALSN) reported second-quarter 2026 net sales of $1.566 billion, up 92% from a year earlier, as the addition of its Allison Off-Highway business unit and growth in its legacy transmission operations lifted revenue. The company raised its full-year outlook, citing second-quarter performance and improving conditions across its end markets. Adjusted EBITDA rose by $91 million year over year to $404 million, representing a 25.8% margin, while adjusted diluted earnings per share increased 8% to $2.73. Record quarterly adjusted free cash flow grew 84% to $281 million, Chief Financial Officer and Treasurer Scott Mell said. → Lost in Space: Why Aerospace Valuations Are Plummeting Right Now Massive Buybacks: 3 Stocks Returning Big Cash to Shareholders “Cash generation remained exceptionally strong in the second quarter,” Mell said, adding that the company generated cash despite higher steel and aluminum costs and broader inflationary pressure. Allison expects to recover a substantial portion of higher commodity costs from customers through existing mechanisms, though the recovery occurs with a six- to 12-month lag. Revenue in the Allison Transmission business unit increased 6% from a year earlier to a quarterly record of $860 million. Defense was a major contributor, with revenue in that end market rising 57% year over year to nearly $100 million. North American on-highway revenue increased 3%, driven primarily by pricing as volumes rose only slightly. → MarketBeat Week in Review – 07/27- 07/31 Chief Operating Officer Fred Bohley said North American on-highway revenue was up 15% sequentially in the second quarter, while all end markets in the transmission business unit increased more than 10% sequentially. The company expects further sequential improvement in medium-duty and Class 8 vocational truck volumes during the second half of 2026. Management said end-user purchasing decisions remain influenced by geopolitical conditions, tariffs and emissions regulations. Chairman, President and CEO David Graziosi said OEMs and their suppliers are still assessing the Environmental Protection Agency’s proposal related to 2027 emissions requirements. He said the availability of 2026 engines is expected to help mitigate the effects of the proposed changes. → GE HealthCare Stock Climbs on Vital Diagnostics Demand On pricing, Bohley said Allison has secured meaningful pricing since the pandemic and expects commercial pricing in 2027 to exceed the 50- to 75-basis-point annual pricing level the company historically achieved before the pandemic. He distinguished those commercial pricing expectations from commodity pass-through mechanisms. The Allison Off-Highway business unit generated $706 million in second-quarter revenue. Management said construction, material handling and mining markets posted strong year-over-year growth as demand rebounded from trough levels. Mining remained supported by elevated commodity prices. Agriculture showed signs of recovery in certain segments and regions but had not yet turned positive overall, according to Graziosi. Europe performed well year over year, particularly in construction and material handling, while Asia-Pacific and India grew across all end markets. Revenue in the Americas declined year over year, primarily because of construction, material handling and agriculture markets. Craig Price, president and business unit leader of Allison Off-Highway, said the unit’s third quarter is typically its weakest revenue period because nearly half of its business comes from Europe, where seasonal shutdowns affect operations. The fourth quarter is expected to improve from the third quarter but remain below first-half levels because of year-end holidays. Price said pricing was not meaningfully higher or lower year over year in the off-highway business. Mell said the business has less material-cost volatility than the transmission unit because it can pass higher costs through more quickly. Allison said its off-highway team secured program awards during the first half representing more than $50 million of annual run-rate net new business across construction, material handling, mining and agriculture. Allison highlighted three defense program wins, including selection of its 4500 Specialty Series fully automatic transmission for the French Land Forces’ PL6T tactical truck program, which is expected to support more than 7,000 vehicles over the next decade. The company also secured a $250 million contract with BAE Systems Hägglunds to supply its new 4040MX cross-drive transmission for the CV90 Mark 4 infantry fighting vehicle. Allison described the contract as its largest tracked-defense order and the inaugural production application for the 4040MX product. In addition, General Dynamics European Land Systems ordered Allison 2500 Specialty Series transmissions for EAGLE Series armored vehicles. Deliveries are expected to begin in 2027, with the order covering about 3,000 vehicles and including an option for up to 2,000 additional units. Bohley said defense revenue was up about 60% year to date and that the company has strong visibility for the balance of 2026, with second-half results expected to resemble the first half. He said the company’s 2027 defense order board is largely full and described Allison’s outlook for the market as bullish. Allison continues to target $120 million in annual run-rate synergies from integrating the off-highway business. Procurement and logistics initiatives account for 60% of the target, while manufacturing and footprint optimization represent 20%. Corporate-function integration and organizational efficiency initiatives make up the remaining 20%. The company expects to realize about 40% of the target by the end of 2027, another 40% by the end of 2028 and the full amount by the end of 2029. Mell said no material synergies are included in the updated 2026 EBITDA outlook. For full-year 2026, Allison now expects: Net sales of $5.8 billion to $6 billion. Net income of $600 million to $700 million, subject to completion of purchase price accounting for the off-highway acquisition. Adjusted EBITDA of $1.465 billion to $1.575 billion. Operating cash flow of $1.025 billion to $1.125 billion. Adjusted free cash flow of $745 million to $865 million. The net-income outlook includes about $140 million in one-time pretax separation, integration and restructuring costs associated with the off-highway business, including roughly $75 million related to stepped-up inventory basis. Allison said it still expects the acquisition to be accretive to net income and earnings per share in 2026. During the quarter, the company repaid the remaining $150 million outstanding on its revolving credit facility, repurchased $46 million of common stock and paid a quarterly dividend of $0.29 per share. Allison Transmission Holdings Inc is a global designer, manufacturer and seller of fully automatic transmissions and hybrid propulsion systems for commercial duty vehicles and off-highway equipment. The company's products are engineered to improve fuel efficiency, reduce emissions and enhance performance across a broad range of industries. Allison's core transmission portfolio serves applications such as on-highway trucks and buses, medium- and heavy-duty commercial vehicles, and military ground vehicles. In addition to conventional automatic transmissions, Allison offers advanced hybrid systems that integrate electric motors with mechanical transmission components. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Allison Transmission Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.