Allison Transmission (ALSN) Q4 2025 earnings summary

Executive summary

• Completed acquisition of Dana's Off-Highway Drive & Motion Systems in January 2026, expanding global reach and product portfolio, now operating in 25 countries with 14,000 employees.

• 2025 was challenging due to macroeconomic headwinds, but cost control and execution led to improved adjusted EBITDA margin despite lower revenue.

• Achieved record net sales in Outside North America On-Highway and strong Defense growth, with Defense net sales up 26% to $267 million.

• Integration efforts are underway, focusing on synergy capture, disciplined execution, and long-term value creation.

• Repurchased $328 million of common stock, representing 4% of outstanding shares, and increased quarterly dividend to $0.27 per share in 2025.

Financial highlights

• Full year 2025 net sales were $3,010 million, down $215 million year-over-year; Q4 2025 net sales were $737 million, down 7% year-over-year.

• Full year 2025 net income was $623 million (20.7% margin); Q4 net income was $99 million, impacted by a $29 million impairment and $26 million in acquisition expenses.

• Adjusted EBITDA margin for 2025 was 37.5%; Q4 2025 Adjusted EBITDA margin was 36.0%.

• Adjusted free cash flow for 2025 was $661 million; Q4 adjusted free cash flow was $169 million, up 24% year-over-year.

• Net cash from operating activities in Q4 was $243 million, up $32 million year-over-year; year-end cash and cash equivalents were $1,495 million.

Outlook and guidance

• 2026 consolidated net sales guidance: $5,575–$5,925 million; net income: $600–$750 million, including ~$70 million in one-time integration costs.

• Adjusted EBITDA guidance: $1,364–$1,515 million (25% margin midpoint); adjusted free cash flow: $655–$805 million.

• Off-Highway acquisition expected to be accretive to net income and EPS in 2026.

• 2026 capital expenditures guidance: $295–$315 million, including $45 million in one-time integration CapEx.

• No meaningful recovery modeled for North America Class 8 vocational trucks; Off-Highway end markets expected to remain at or near trough.