Allison Transmission Holdings Inc. reported fourth‑quarter and full‑year 2025 results on February 23, 2026. Net sales fell 7% to $3.01 billion, a decline of $215 million from 2024, while fourth‑quarter sales dropped $59 million to $737 million. Adjusted EBITDA for the year was $1.130 billion, giving a margin of 37.5 percent, and adjusted free cash flow reached $661 million. Diluted earnings per share were $1.18, missing consensus estimates of $1.50–$1.58 by roughly $0.32–$0.40. The company completed the acquisition of Dana’s Off‑Highway business on January 1, 2026, a transaction that was not reflected in the 2025 results.
Revenue was slightly above expectations, beating the consensus range of $719–$727 million by $11–$18 million. The decline in full‑year sales was driven by softness in the North America On‑Highway market, particularly medium‑duty trucks, and a near‑trough in key Off‑Highway segments. In contrast, the Defense end market grew 26 percent and the Outside North America On‑Highway segment posted record revenue, offsetting some of the headwinds.
Adjusted EBITDA margin expanded by 140 basis points to 37.5 percent, and the fourth‑quarter margin rose over 200 basis points to 36 percent. The drop in Q4 adjusted EBITDA from the prior year was $5 million, not $19 million as previously reported, reflecting a modest decline from $270 million in Q4 2024 to $265 million in Q4 2025. The margin improvement was largely due to disciplined cost management and a favorable product mix that increased pricing power in higher‑margin segments.
The EPS miss was driven by one‑time charges, including $26 million in acquisition‑related expenses and a $29 million electrification impairment that reduced net income in Q4 2025. These items lowered earnings without affecting operating cash flow, explaining why adjusted free cash flow remained strong while EPS fell short of estimates.
For 2026, Allison guided for consolidated net sales of $5.575 billion to $5.925 billion, adjusted EBITDA of $1.36 billion to $1.515 billion, and adjusted free cash flow of $655 million to $805 million. Management highlighted continued softness in the North America On‑Highway market, especially for Class 8 vocational trucks, and noted that key Off‑Highway markets are expected to remain near trough levels. The guidance signals cautious optimism, with confidence in maintaining profitability through cost discipline while acknowledging macro‑economic headwinds.
"Although 2025 presented meaningful macroeconomic challenges, we remained disciplined and focused on the factors within our control. With a prioritization of cost management and execution aligned with end markets demand conditions, our full year results demonstrate the resilient earnings power of our business in difficult and uncertain operating environments. For the full year, we achieved an Adjusted EBITDA margin of 37.5 percent and generated Adjusted free cash flow of $661 million." – David S. Graziosi, Chair, President and Chief Executive Officer
"Earlier this year, we announced the completion of our acquisition of Dana's Off‑Highway business, a transformational moment in Allison history. With the combination of these two industry‑leading businesses, we have significantly expanded both our presence in the global mobility market and our portfolio of high‑quality and reliable products, creating a platform that will continue to deliver strong financial performance from both organic and inorganic growth." – David S. Graziosi
"The North America On‑Highway end market remains soft, with no meaningful recovery expected for Class 8 vocational trucks." – Scott A. Mell, Chief Financial Officer and Treasurer
"We expect to recover a meaningful amount of our tariff on a year‑over‑year basis through pricing actions that we have taken. But it certainly will be a net drag on margins on a year‑over‑year basis." – Scott A. Mell
The content on EveryTicker is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.