Allison Transmission (ALSN) investor relations material

Executive summary

• Q3 2025 net sales were $693 million, down 16% year-over-year, mainly due to lower demand in North America On-Highway and Off-Highway markets, partially offset by a 47% increase in Defense sales.

• Net income for Q3 2025 was $137 million, a 32% decrease from Q3 2024, impacted by lower gross profit and $14 million in Dana acquisition expenses.

• Adjusted EBITDA margin held steady at 36.9%–37% despite market headwinds.

• The company is progressing toward closing the $2.7 billion acquisition of Dana's off-highway business, expected in Q4 2025, financed by cash and a $2 billion bridge loan.

• Continued focus on operational excellence, cost flexibility, and capital returns, including $27 million in share repurchases and $23 million in dividends in Q3.

Financial highlights

• Gross profit for Q3 2025 was $329 million (47% margin), down 17% year-over-year, mainly due to lower volumes and unfavorable direct material costs.

• Operating income dropped 22% to $204 million.

• Diluted EPS was $1.63, down 28% from the prior year.

• Net cash from operating activities was $228 million, down 7% year-over-year; adjusted free cash flow was $184 million, down 12%.

• Cash and cash equivalents at quarter-end were $902 million.

Outlook and guidance

• Full-year 2025 net sales expected between $2,975 million and $3,025 million.

• Net income guidance is $620 million to $650 million, including over $60 million in Dana acquisition expenses.

• Adjusted EBITDA forecasted at $1,090 million to $1,125 million; adjusted free cash flow at $600 million to $620 million.

• Net cash from operating activities projected at $765 million to $795 million; capital expenditures expected between $165 million and $175 million.

• Management expects continued softness in North America On-Highway, partially offset by price increases and strong Defense demand.