NYSE:ALSN
Allison Transmission Holdings Inc
A premier designer and manufacturer of automatic transmissions and powertrain solutions for commercial and military vehicle fleets worldwide.
Key Metrics
Investment Thesis
Bull Case
Allison offers a compelling value play with its massive $2.08B goodwill indicating significant intangible asset strength and established market dominance in the transmission sector. The company's ability to generate substantial operating profit of $880M despite recent revenue compression suggests pricing power and efficient cost management, while consistent share repurchases and dividends support total shareholder return.
Bear Case
The decline in net income from a peak of $731M in 2024 to $623M in 2025 signals potential vulnerability to macroeconomic headwinds impacting trucking demand. High levels of long-term debt at $2.88B combined with negative non-operating income of $-76M create financial leverage risks that could be exacerbated if interest rates remain elevated or freight volumes contract further.
About Allison Transmission Holdings Inc
Allison Transmission Holdings Inc designs and manufactures advanced power transmission systems for heavy-duty trucks, off-road vehicles, and industrial machinery. Serving global markets including North America, Europe, and Asia, the company leverages its proprietary torque converter technology to improve fuel efficiency and performance across various transportation sectors.
Analysis
Management Discussion
Despite a year-over-year revenue decline from $3.23B in 2024 to $3.01B in 2025, the company maintained strong operational cash flow of $836M and delivered net profit of $623M. The shift from peak 2024 revenue likely reflects normalizing truck sales cycles rather than a fundamental deterioration in demand, while healthy cash reserves of $1.5B provide flexibility for capital expenditures and shareholder returns.
Industry Overview
The global powertrain industry is undergoing a rapid transition toward electrification and autonomous driving technologies, creating both disruption opportunities and challenges for legacy transmission manufacturers. Allison must navigate this shift by integrating electric drive solutions while maintaining profitability in its traditional internal combustion engine market which currently drives the majority of its revenue.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $2.77B | $3.04B | $3.23B | $3.01B |
| Cost of Revenue | $1.47B | $1.56B | $1.70B | $1.55B |
| Gross Profit | $1.30B | $1.47B | $1.53B | $1.46B |
| Operating Expenses | $513.0M | $551.0M | $537.0M | $583.0M |
| Operating Income | $784.0M | $919.0M | $992.0M | $880.0M |
| R&D | $185.0M | $194.0M | $200.0M | $174.0M |
| G&A | $328.0M | $357.0M | $337.0M | $380.0M |
| Stock-Based Comp | $18.0M | $22.0M | $26.0M | $27.0M |
| Depreciation | $109.0M | $109.0M | $111.0M | $117.0M |
| Amortization | $46.0M | $45.0M | $10.0M | $7.0M |
| Other OpEx | $0 | $0 | $0 | $29.0M |
| Non-Operating Income | $-139.0M | $-92.0M | $-95.0M | $-76.0M |
| Pre-Tax Income | $645.0M | $827.0M | $897.0M | $804.0M |
| Income Tax | $114.0M | $154.0M | $166.0M | $181.0M |
| Continuing Ops | $531.0M | $673.0M | $731.0M | $623.0M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $531.0M | $673.0M | $731.0M | $623.0M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $531.0M | $673.0M | $731.0M | $623.0M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $866.0M | $1.25B | $1.54B | $2.23B |
| Cash & Equivalents | $232.0M | $555.0M | $781.0M | $1.50B |
| Accounts Receivable | $363.0M | $356.0M | $360.0M | $333.0M |
| Inventory | $224.0M | $276.0M | $315.0M | $316.0M |
| Other Current Assets | $47.0M | $63.0M | $82.0M | $89.0M |
| Long-Term Assets | $3.81B | $3.77B | $3.80B | $3.85B |
| PP&E (Net) | $763.0M | $774.0M | $803.0M | $862.0M |
| Intangibles | $878.0M | $833.0M | $822.0M | $794.0M |
| Goodwill | $2.08B | $2.08B | $2.08B | $2.08B |
| Operating Leases | $17.0M | $19.0M | $20.0M | $18.0M |
| LT Securities | $22.0M | $20.0M | $11.0M | $24.0M |
| Other LT Assets | $50.0M | $53.0M | $67.0M | $76.0M |
| Total Assets | $4.67B | $5.03B | $5.34B | $6.08B |
| Current Liabilities | $480.0M | $501.0M | $506.0M | $460.0M |
| Accounts Payable | $195.0M | $210.0M | $212.0M | $190.0M |
| Current Debt | $6.0M | $6.0M | $5.0M | $5.0M |
| Current Leases | $4.0M | $4.0M | $6.0M | $5.0M |
| Deferred Revenue | $38.0M | $41.0M | $41.0M | $34.0M |
| Other Current Liab | $237.0M | $240.0M | $242.0M | $226.0M |
| Long-Term Liabilities | $3.32B | $3.29B | $3.18B | $3.75B |
| Long-Term Debt | $2.50B | $2.50B | $2.40B | $2.88B |
| LT Operating Leases | $13.0M | $14.0M | $14.0M | $13.0M |
| Other LT Liab | $710.0M | $691.0M | $675.0M | $754.0M |
| Total Liabilities | $3.80B | $3.79B | $3.69B | $4.21B |
| Shareholders' Equity | $874.0M | $1.23B | $1.65B | $1.87B |
| Retained Earnings | $-953.0M | $-628.0M | $-239.0M | $-38.0M |
| AOCI | $-22.0M | $-31.0M | $-51.0M | $-56.0M |
| Total L&E | $4.67B | $5.03B | $5.34B | $6.08B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $531.0M | $673.0M | $731.0M | $623.0M |
| Non-Cash Adjustments | $25.0M | $18.0M | $-9.0M | $258.0M |
| Working Capital Changes | $101.0M | $93.0M | $79.0M | $-45.0M |
| Cash from Operations | $657.0M | $784.0M | $801.0M | $836.0M |
| Capital Expenditures | $167.0M | $125.0M | $143.0M | $175.0M |
| Cash from Investing | $-183.0M | $-129.0M | $-147.0M | $-184.0M |
| Debt Issuances | — | — | — | $500.0M |
| Share Buybacks | $278.0M | $263.0M | $254.0M | $328.0M |
| Dividends Paid | $80.0M | $83.0M | $87.0M | $91.0M |
| Cash from Financing | $-367.0M | $-332.0M | $-427.0M | $57.0M |
| FX Effect | $-2.0M | $0 | $-1.0M | $5.0M |
| Net Change in Cash | $105.0M | $323.0M | $226.0M | $714.0M |
| Beginning Cash | $127.0M | $232.0M | $555.0M | $781.0M |
| Ending Cash | $232.0M | $555.0M | $781.0M | $1.50B |
Frequently Asked Questions
How does Allison Transmission Holdings Inc make money?
Primary revenue streams include transmissions and driveline components for heavy-duty trucks, off-highway equipment, and light-duty vehicles, supplemented by services such as remanufacturing and aftermarket parts sales.
What are the main risks for ALSN?
Cyclical nature of the heavy-duty trucking industry tied to economic downturns and freight volume fluctuations; exposure to volatile raw material costs including steel, copper, and rare earth elements; geopolitical tensions affecting global supply chain logistics and defense contracts.
What is ALSN's competitive advantage?
Proprietary torque converter technology that enhances fuel economy and reduces emissions; strong global brand recognition with deep integration into major OEM supply chains; and a robust service network providing lifecycle support for existing fleets.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.