Allison Transmission Holdings Inc (ALSN): Results of Operations and Financial Condition
Allison Transmission Holdings Inc (ALSN) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Allison Announces Second Quarter 2026 Results * 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 b
How this was made
The 30-second read
Why it matters
Traders can update models for revenue growth, adjusted profitability, and cash generation, and reassess the pace of acquisition integration and leverage progress based on the new quarter’s operating cash flow and free cash flow figures.
Market read
The filing is a direct earnings and cash-flow update with acquisition integration context, giving traders concrete numbers to reprice near-term fundamentals.
What to watch
Off-Highway segment profitability is still low (segment operating profit 7% of net sales, adjusted EBITDA margin 15%), so the market may scrutinize how quickly synergies translate into sustainable margins and leverage reduction.
Allison Announces Second Quarter 2026 Results
Net sales rose 92% year over year to $1,566 million, adjusted EBITDA increased 29% year over year to $404 million, and adjusted diluted EPS increased 8% year over year to $2.73. GAAP net income declined to $181 million amid acquisition-related operating costs, higher interest expense and unrealized marketable-securities adjustments, while the company increased full-year 2026 guidance.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Consolidated net salesGAAP | $1,566 million | – | up 92% year over year |
| Gross profitGAAP | $515 million | – | an increase of $112 million |
| Gross marginGAAP | 33 percent | – | – |
| Selling, general and administrative expensesGAAP | $168 million | – | an increase of $64 million |
| Engineering – research and development expensesGAAP | $56 million | – | an increase of $13 million |
| Net incomeGAAP | $181 million | – | a decrease of $14 million |
| Diluted EPSGAAP | $2.15 | – | a year over year decrease of 6 percent |
| Adjusted net incomenon-GAAP | $229 million | – | – |
| Adjusted diluted EPSnon-GAAP | $2.73 | – | a year over year increase of 8 percent |
| Adjusted EBITDAnon-GAAP | $404 million | – | an increase of $91 million |
| Adjusted EBITDA marginnon-GAAP | 26 percent | – | – |
| Net cash provided by operating activitiesGAAP | $312 million | – | a year over year increase of 70 percent |
| Adjusted free cash flownon-GAAP | $281 million | – | a year over year increase of 84 percent |
| Allison Transmission gross profitGAAP | $397 million | – | a decrease of $6 million |
| Allison Transmission gross marginGAAP | 46 percent | – | – |
| Allison Transmission selling, general and administrative expensesGAAP | $75 million | – | an increase of $3 million |
| Allison Transmission engineering – research and development expensesGAAP | $41 million | – | a decrease of $2 million |
| Allison Transmission segment operating profitGAAP | $281 million | – | – |
| Allison Transmission segment operating profit marginGAAP | 33 percent of net sales | – | – |
| Allison Transmission adjusted EBITDAnon-GAAP | $318 million | – | – |
| Allison Transmission adjusted EBITDA marginnon-GAAP | 37 percent | – | – |
| Allison Off-Highway gross profitGAAP | $118 million | – | – |
| Allison Off-Highway gross marginGAAP | 17 percent of net sales | – | – |
| Allison Off-Highway selling, general and administrative expensesGAAP | $56 million | – | – |
| Allison Off-Highway engineering – research and development expensesGAAP | $15 million | – | – |
| Allison Off-Highway segment operating profitGAAP | $47 million | – | – |
| Allison Off-Highway segment operating profit marginGAAP | 7 percent of net sales | – | – |
| Allison Off-Highway adjusted EBITDAnon-GAAP | $104 million | – | – |
| Allison Off-Highway adjusted EBITDA marginnon-GAAP | 15 percent | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Allison TransmissionExecution of growth initiatives in the Defense end market and continued momentum in the North American truck market led to record quarterly net sales. | $860 million | – | increased 6 percent from the same period in 2025 |
| Allison Off-HighwayStrong year over year growth was particularly driven by the Construction & Material Handling and Mining end markets as demand continues to rebound from trough levels. | $706 million | – | – |
Full Year 2026 outlook
- RevenueConsolidated net sales in the range of $5,800 to $6,000 million
- NoteConsolidated net income in the range of $600 to $700 million
- NoteNet income guidance includes approximately $140 million of one-time, pre-tax 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.
- NoteNet income guidance also includes $50 million of additional depreciation.
- NoteConsolidated adjusted EBITDA in the range of $1,465 to $1,575 million
- NoteConsolidated 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
- NoteConsolidated capital expenditures in the range of $260 to $280 million, including one-time separation and integration capital expenditures of approximately $30 million
- NoteConsolidated adjusted free cash flow in the range of $745 to $865 million
Capital returns
- Repurchased $46 million of its common stock.
- Paid a quarterly dividend of $0.29 per share.
- $1,125 million of authorization remained under its stock repurchase program.
What drove it
- The addition of the Allison Off-Highway business unit contributed $706 million in net sales and principally drove the consolidated gross-profit increase.
- Allison Transmission net sales increased 6 percent from the same period in 2025, supported by Defense growth initiatives and North American truck-market momentum.
- Allison Off-Highway demand rebounded particularly in Construction & Material Handling and Mining.
- Allison Transmission gross profit was pressured by unfavorable direct material costs and higher manufacturing expense, partly offset by price increases on certain products.
- Reduced product initiatives spending lowered Allison Transmission engineering – research and development expenses.
Concerns
- Net income decreased by $14 million from $195 million for the same period in 2025 due to acquisition-related operating costs, including increased depreciation and amortization expense.
- The net-income decline also reflected higher interest expense, net, and unrealized mark-to-market adjustments for marketable securities.
- Selling, general and administrative expenses included $9 million of one-time acquisition-related expenses.
- The Agriculture end market has yet to inflect positively despite signs of recovery in certain segments and regions.
- Full-year net income guidance is subject to completion of purchase price accounting associated with the acquisition of the Allison Off-Highway business unit.
What to watch
- Execution of planned synergies and strategic benefits from integration of the Allison Off-Highway business unit.
- Demand conditions in the Agriculture end market.
- The effect of approximately $140 million of one-time, pre-tax separation, integration and restructuring expenses included in net income guidance.
- Progress toward the company’s leverage target after repayment of the remaining $150 million outstanding under the revolving credit facility.
- Delivery against increased full-year 2026 consolidated net sales, adjusted EBITDA, operating cash flow and adjusted free cash flow guidance.
Balance sheet and cash flow
- Net cash provided by operating activities was $312 million.
- Adjusted free cash flow was $281 million.
- Ended the second quarter with nearly $400 million of cash and cash equivalents.
- Ended the second quarter with $995 million of available borrowing capacity under its revolving credit facility.
- Ended the second quarter with total debt of $4,114 million and net debt of $3,715 million.
- Repaid the remaining $150 million outstanding under its revolving credit facility.
Analysis
Second-quarter consolidated net sales were $1,566 million, up 92% year over year, with $706 million contributed by the Allison Off-Highway business unit acquired on January 1, 2026. The legacy Allison Transmission business delivered record quarterly net sales of $860 million, up 6 percent from the same period in 2025, supported by Defense initiatives and North American truck-market momentum. Off-Highway growth was strongest in Construction & Material Handling and Mining as demand rebounded from trough levels, while Agriculture remained a lagging end market.
The acquisition expanded the consolidated earnings base, lifting gross profit to $515 million from $403 million and adjusted EBITDA to $404 million from $313 million. Consolidated gross margin was 33 percent and adjusted EBITDA margin was 26 percent. The business mix shows a significant profitability difference: Allison Transmission reported a 46 percent gross margin and 37 percent adjusted EBITDA margin, while Allison Off-Highway reported 17 percent of net sales in gross profit and a 15 percent adjusted EBITDA margin.
GAAP net income declined to $181 million from $195 million despite higher gross profit. The filing attributes the decline to acquisition-related operating costs, including higher depreciation and amortization, higher interest expense, net, and unrealized mark-to-market adjustments for marketable securities. Adjusted net income was $229 million, adjusted diluted EPS was $2.73, up 8 percent year over year, and the quarter included $9 million of one-time acquisition-related selling, general and administrative expenses.
Cash generation strengthened, with net cash provided by operating activities of $312 million and adjusted free cash flow of $281 million, up 70 percent and 84 percent year over year, respectively. Allison repurchased $46 million of common stock, paid a quarterly dividend of $0.29 per share, and repaid the remaining $150 million outstanding under its revolving credit facility. It ended the quarter with nearly $400 million of cash and cash equivalents, total debt of $4,114 million and net debt of $3,715 million.
Management increased full-year 2026 guidance after the second-quarter results and improving end-market conditions. The outlook calls for consolidated net sales of $5,800 to $6,000 million, adjusted EBITDA of $1,465 to $1,575 million and adjusted free cash flow of $745 to $865 million. Net income guidance of $600 to $700 million includes approximately $140 million of one-time, pre-tax Off-Highway separation, integration and restructuring expenses and $50 million of additional depreciation, making integration execution and attainment of planned synergies central watch items.
Management, verbatim
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.
David S. Graziosi, Chair, President and Chief Executive Officer
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.
David S. Graziosi, Chair, President and Chief Executive Officer
Not in the filing
stated, not guessed- Period-end date for the second quarter 2026.
- Consolidated operating income.
- Consolidated operating margin.
- Consolidated prior-year net sales amount.
- Prior-year gross margin.
- Prior-year selling, general and administrative expenses percentage change.
- Prior-year engineering – research and development expenses percentage change.
- Prior-year diluted EPS amount.
- Prior-year adjusted net income.
- Prior-year adjusted diluted EPS amount.
- Prior-year adjusted EBITDA margin.
- Prior-year net cash provided by operating activities amount.
- Prior-year adjusted free cash flow amount.
- Prior-quarter comparisons for reported metrics.
- Tax rate.
- Previous full-year 2026 guidance ranges, which were not provided as a previous outlook document.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is an SEC Form 8-K with Exhibit 99.1 reporting Allison Transmission Holdings’ second quarter 2026 results, including segment reporting for the Allison Off-Highway business acquired from Dana on Jan 1, 2026.
Ticker impact
Allison reported Q2 2026 net sales of $1,566M, adjusted EPS $2.73, and record adjusted free cash flow of $281M.
Likely positive bias for the next session as traders focus on record sales, EBITDA margin, and strong free cash flow, despite lower GAAP net income.
The filing includes multiple time-sensitive metrics (sales, EPS, EBITDA margin, operating cash flow, free cash flow) and balance-sheet actions (repurchase, dividend, revolver repayment progress) tied to the acquisition integration narrative.
Market effects
Improving demand commentary in defense, North American trucks, and construction/mining end markets may support sentiment across commercial vehicle and drivetrain suppliers.
North America truck momentum and construction/mining rebound could be read as supportive for industrial cyclicals tied to US and Canada freight and equipment demand.
Defense execution and global integration of the Off-Highway unit can influence how investors underwrite industrial M&A integration risk and margin durability globally.
Counterpoint
GAAP net income fell year over year due to acquisition-related operating costs, higher interest expense, and mark-to-market items, which could limit upside if investors focus on earnings quality rather than adjusted metrics.
Key entities
- issuerAllison Transmission Holdings Inc
Reported Q2 2026 results, including record net sales and adjusted free cash flow, and discussed Off-Highway integration and leverage actions.
- segmentAllison Off-Highway business unit
Acquired from Dana on Jan 1, 2026, now included in segment reporting with Q2 net sales of $706M and adjusted EBITDA margin of 15%.
- financingRevolving credit facility
Company repaid $150M outstanding during the quarter as part of progress toward its leverage target.
