Allison Transmission's Q3 highlights
Net sales for the third quarter of 2025 totaled $693 million. This included:
- A $25 million increase in net sales in the defense market driven by, among other things, an increased demand for tracked vehicle applications, price increases on some products.
- A $4 million decrease in net sales in the on-highway market outside of North America. Allison says demand has been lower in Asia but higher in Europe.
- A $9 million decrease in net sales in service parts and support equipment driven by lower demand for aluminum die cast components and support equipment, partially offset by price increases.
- A $13 million decrease in off-highway net sales globally. Allison says this is because of lower demand from energy, mining and construction sectors outside North America.
- A $120 million decrease in net sales in North America's on-highway market because of lower demand for Class 8 vocational and medium-duty trucks. This was partially offset by price increases on some products and market share gains for hybrid propulsion systems for transit buses.
Allison Transmission's net sales in the North American on-highway market plummeted by $130 million in the third quarter, the company reported. That represents around a 30% drop year over year.
"Throughout 2025, our largest end market, North America on-highway, has been negatively affected by global macroeconomic factors leading to demand uncertainty and shifting customer behaviors," says David S. Graziosi, chair and CEO. "During this period, we are fully focused on the things we can control, including our commitment to operational excellence, quality, customer service and maintaining strong execution across our business. We also continue to work diligently on closing the acquisition of Dana's off-highway business and are pleased with the progress to date."
Allison's third quarter by the numbers
Net sales for the quarter were $693 million, off about 20% year over year. Gross profit for the quarter was $329 million, down $67 million for the same period in 2024. Allison says the decrease was driven by lower volumes and unfavorable direct material costs, partially offset by price increases on certain products and lower manufacturing expense.
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"Allison remains agile and responsive to evolving market dynamics, ensuring we can quickly adapt as conditions change," Graziosi says. "Importantly, even in this challenging operating environment, we continue to generate strong cash flow, enabling continued investment in our strategic initiatives and capital allocation priorities, including the repurchase of $27 million of our common stock and $23 million of dividend payments during the third quarter."
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Net income for the quarter was $137 million, down $63 million from the same period in 2024. Net cash provided by operating activities for the quarter was $228 million. Adjusted free cash flow for the quarter was $184 million.
Selling, general and administrative expenses were $82 million, down $3 million from Q3 2024. Allison says this decrease was driven primarily by lower incentive compensation expenses and lower commercial activities spending to align costs and programs across the business with demand conditions as well as acquisition-related expenses of about $14 million.
What does Allison expect for the fourth quarter?
Allison expects net sales for this year in the range of $2,975-$3,025 million and net income in the range of $620-$650 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) is expected to be in the range of $1,090-$1,125 million. Net cash provided by operating activities will be $765-$795 million with capital expenditures in the range of $165-$175 million. Adjusted free cash flow is expected in the range of $600-$620 million.
