Earnings call transcript: Allison Transmission beats Q2 2025 earnings forecast

Allison Transmission reported its second-quarter 2025 earnings, surpassing analysts’ expectations with an EPS of $2.29 against a forecast of $2.21. The company also exceeded revenue forecasts, reporting $814 million compared to the anticipated $803.68 million. Trading at an attractive P/E ratio of 10.07x and showing strong profitability metrics, analysis suggests the stock is currently undervalued. Following the earnings announcement, Allison Transmission’s stock rose 1.19% in aftermarket trading, reflecting investor confidence.

Key Takeaways
Allison Transmission exceeded EPS expectations by 3.62%. Revenue topped forecasts with a 1.28% surprise. Stock price increased by 1.19% in aftermarket trading. Defense market sales surged 47% year-over-year. The company announced a significant acquisition of Dana’s off-highway business.

Company Performance
Allison Transmission demonstrated robust performance in Q2 2025, with net sales remaining flat year-over-year at $814 million. The company achieved a gross profit of $402 million, an increase of $8 million compared to the same quarter last year. Net income also rose by $8 million to $195 million. These results reflect Allison’s strong foothold in the defense and transit markets, despite challenges in the global off-highway sector.

Financial Highlights
Revenue: $814 million (flat year-over-year)
Earnings per share: $2.29 (+8% YoY)
Gross profit: $402 million (+$8 million YoY)
Net income: $195 million (+$8 million YoY)
Adjusted EBITDA: $313 million (+4% YoY)

Earnings vs. Forecast
Allison Transmission reported an EPS of $2.29, beating the forecast of $2.21 by 3.62%. Revenue also exceeded expectations, reaching $814 million compared to the forecasted $803.68 million, marking a 1.28% surprise. This performance is consistent with the company’s historical trend of surpassing projections.

Market Reaction
Following the earnings release, Allison Transmission’s stock experienced a 1.19% increase in aftermarket trading, reaching $88.73. This positive movement reflects investor optimism, particularly in light of the company’s strong performance in the defense sector and strategic acquisitions.

Outlook & Guidance
Allison Transmission provided guidance for 2025, projecting net sales between $3,175 million and $3,750 million. The company anticipates net income in the range of $640 million to $680 million and adjusted EBITDA of $1,130 million to $1,180 million. With an impressive Financial Health Score of 3.08 (rated as GREAT) by analysis, and a strong current ratio of 3.05x, the company appears well-positioned to execute its growth strategy. The acquisition of Dana’s off-highway business is expected to close in late Q4 2025, with anticipated synergies of $120 million annually.

Executive Commentary
"We believe the transaction will enable us to grow faster," stated Fred Bohley, COO, highlighting the strategic importance of the Dana acquisition. CEO Dave Graziosi commented on the North America on-highway market, noting, "North America on-highway is more of a defer versus a loss in longer-term demand."

Earnings call transcript: Allison Transmission beats Q2 2025 earnings forecast

Allison Transmission exceeded Q2 2025 earnings and revenue forecasts, with EPS of $2.29 vs. $2.21 and revenue of $814 million vs. $803.68 million. The company announced a significant acquisition of Dana’s off-highway business, reported strong financial metrics, and provided 2025 guidance. Its stock rose 1.19% post-announcement, reflecting investor confidence.