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ALSN

Allison Transmission


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Earnings

2026Q1 Review (Claude)

ALSN | Earnings Review

Allison Transmission Holdings, Inc. | 2026 Q1 reported May 4, 2026 AMC | Analysis date: May 5, 2026 | Daloopa company_id 9173
Revenue
+83.6% YoY (acq)
$1.41B vs $1.37B Street; +83.6% YoY incl. Allison Off-Highway acq (Jan 1, 2026); legacy organic still -4.3% YoY (~$733M)
Adj EPS
$2.57 (+6% YoY)
Beat ~$2.42 Street; GAAP $1.33 vs $2.03 = optical miss on ~$115M Off-Highway acq accounting charges; record Adj EBITDA $362M (+22%)
Defense
+64% YoY
Mgmt: "balance of year looks like Q1"; Hanwha K9, Borsuk Poland, Kaplan Turkey, BAE Hägglunds, India FICV; eGen Force/OMFV optionality (SOP 2029)
FY26 Guide
REAFFIRMED ($1.44B EBITDA mid)
Rev $5.575-5.925B; EBITDA $1.365-1.515B (25% mid margin) — BELOW $1.47B Street; FCF $655-805M; Off-Hwy synergies ($120M run-rate) NOT in 2026 guide = pure 2027 upside
Operational beat with optical GAAP miss; FY26 reaffirmed below Street while sandbagging Off-Highway synergies. Revenue $1.41B beat $1.37B Street; +83.6% YoY driven entirely by Allison Off-Highway acquisition (closed Jan 1, 2026; ~$650M annual rev run-rate; formerly Dana Off-Highway Drive & Motion). Three-line operational beat: Adj EBITDA $362M (+22% YoY) beat $351.6M Street by +3%; Adj EPS $2.57 (+6% YoY) beat ~$2.42; Adj EBITDA margin 25.7%. Optical GAAP miss: GAAP EPS $1.33 vs $2.03 expected — entirely driven by ~$115M of Off-Highway acquisition accounting charges (stepped-up basis amortization, intangibles, integration). Adj EBITDA margin compressed to 25.7% from ~37% prior trend = dilutive effect of lower-margin acquired Off-Highway business + purchase-accounting step-ups. Guidance: REAFFIRMED, NOT raised — FY26 rev $5.575-5.925B mid $5.75B; Adj EBITDA $1.365-1.515B (25% mid margin) ~$30M below ~$1.47B Street; Adj FCF $655-805M; Adj EPS not formally re-guided. Q1 ~$10M EBITDA beat NOT flowed through — instead absorbed by quietly raised integration costs ($70M → >$100M pretax). Zero of $120M Off-Highway run-rate synergies in 2026 guide — pure 2027 upside; financial benefits begin 2H'26, full run-rate Year 4. LT margin target 27-29% pro forma (vs 25% FY26 mid) within "a few years." Legacy organic deceleration: legacy ALT segment ~$733M Q1'26 still -4.3% YoY but stable sequentially — early trough signal, not confirmed inflection. NA on-highway peaked Q3'24 at $457M, troughed Q3'25 at $327M (-28% from peak), recovered to $361M Q4'25; Class 8 straight came in stronger than guide; medium-duty still very soft. Service parts slipped from $663M FY24 to $643M FY25. Defense is the standout at +64% YoY ($267M FY25 to ~$78-80M Q1'26 implied) with mgmt guiding "balance of year looks like Q1." High-margin and decoupled from NA truck cycle. Tone: confident reaffirmation, but quantitative detail on synergies and Off-Highway end-market baselines deferred. 11 of 14 Q&A well answered, 3 partial (no deflections). Notable: refused to provide Off-Highway 2025 historical end-market data; vague margin-target timing; Wertheimer's direct ask for deal "negatives" got no quantification. 4 contradictions identified: (1) MATERIAL — EBITDA margin trajectory: prior commentary held ~37% midpoint with peak return to 40% talk; FY26 consolidated guide implies 25% midpoint with 27-29% post-synergy ceiling — a ~12 pt headline reset; (2) MODERATE — NA truck cycle "deferral, not destruction" framing across Q2/Q3/Q1'26 sits awkwardly with FY26 guide locking in trough run-rates; (3) MODERATE — M&A posture: Q4'25 emphasized integration discipline + 2x leverage target; Q1'26 reactivated active M&A pipeline language while still ~3x levered; (4) MINOR — EV/electrification: Q2'25 bullish eGen Flex/Force commercial vs Q4'25 $29M electrification impairment (defense EV intact, commercial EV being written down). Buyback throttled: $20M Q1 vs $328M FY25 — prioritizing deleveraging from ~3x to 2x net leverage. Top catalysts: (1) Off-Highway integration $120M run-rate synergies — financial benefits begin 2H'26, full run-rate Year 4 = 2027 step-function; (2) International defense ramp (Hanwha K9, Borsuk Poland, Kaplan Turkey, BAE Hägglunds, India FICV; eGen Force/OMFV optionality SOP 2029); (3) NA Class 8 vocational + EPA 2027 prebuy optionality — 2026 guide bakes in NO recovery and NO prebuy = asymmetric upside. Read: setup is sandbag-biased given (a) Q1 beat absorbed not raised, (b) zero synergies in guide, (c) defense ramp commitment, (d) potential medium-duty EPA 2027 prebuy. Near-term stock pressure from optical GAAP miss + EBITDA below Street; 2027 sets up as the synergy story year.
Key Metrics Trends
Metric Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026
Total net sales $789M $816M $824M $796M $766M $814M $693M $737M $1.4B
Total net sales YoY % - - - - -2.9% -0.2% -15.9% -7.4% +83.6%
NA on-highway $420M $456M $457M $419M $435M $417M $327M $361M -
NA on-highway YoY % - - - - +3.6% -8.6% -28.4% -13.8% -
Defense $48M $43M $53M $68M $53M $63M $78M $73M -
Defense YoY % - - - - +10.4% +46.5% +47.2% +7.4% -
Outside NA on-highway $115M $128M $126M $124M $112M $142M $122M $131M -
Outside NA on-highway YoY % - - - - -2.6% +10.9% -3.2% +5.6% -
Service parts/support eq./other $160M $166M $168M $169M $148M $176M $159M $160M -
Service parts/support eq./other YoY % - - - - -7.5% +6.0% -5.4% -5.3% -
Gross profit $366M $394M $396M $373M $378M $402M $329M $354M $406M
Gross profit YoY % - - - - +3.3% +2.0% -16.9% -5.1% +7.4%
Operating income $234M $263M $260M $235M $249M $256M $204M $171M $195M
Operating income YoY % - - - - +6.4% -2.7% -21.5% -27.2% -21.7%
Adjusted EBITDA $289M $301M $305M $270M $287M $313M $256M $265M $362M
Adjusted EBITDA YoY % - - - - -0.7% +4.0% -16.1% -1.9% +26.1%
Adj EBITDA margin % 36.6% 36.9% 37.0% 33.9% 37.5% 38.5% 36.9% 36.0% 25.7%
Adj EBITDA margin % YoY chg (bps) - - - - +90 +160 -10 +210 -1180
GAAP Diluted EPS $1.90 $2.13 $2.27 $2.01 $2.23 $2.29 $1.63 $1.18 $1.33
GAAP Diluted EPS YoY % - - - - +17.4% +7.5% -28.2% -41.3% -40.4%
_Trajectory: Cyclically troughed legacy core; transformative inorganic step-up. Legacy Allison Transmission peaked Q3'24 at $824M, rolled into a 4-quarter downcycle bottoming Q3-Q4'25: NA On-Highway -28% from peak ($457M → $327M); EPS -41% YoY at the trough. Q1'26 legacy segment of ~$733M still -4.3% YoY but stable sequentially — early trough signal, not confirmed inflection. Off-Highway acquisition (segment ~$673M Q1'26) reset company size: reported Adj EBITDA $362M +26% YoY masks soft legacy. Adj EBITDA margin compressed to 25.7% from prior 37% trend due to lower-margin acquired business + PPA step-ups. Defense the only consistently positive end-market: $48M Q1'24 → $73M Q4'25 → continued ramp Q1'26 (+64% YoY); FY25 +26% YoY. Service parts soft (FY24 $663M → FY25 $643M). Total revenue contracted -6.7% FY25 from FY24 after 3 years of growth. Margin discipline held FY25 (37.5% vs 36.1% FY24) despite revenue decline. Verdict: legacy organic deceleration through 2025, trough signal Q1'26, M&A reset of company size, defense as standout. Next 2-3 quarters reveal whether legacy on-highway re-accelerates or whether the deal carries the entire growth narrative._

Beat/Miss

Guidance

Catalysts

Street Q&A

Contradictions

Read-Throughs

This Quarter vs Consensus
MetricConsensusActualVarianceRead
Revenue$1.37B$1.41B+$40M / +2.9%Beat — but +83.6% YoY is acquisition-driven
Reported Revenue YoY+83.6%Off-Highway acq Jan 1, 2026
Legacy organic Revenue~$733M-4.3% YoYStable sequentially — early trough signal
Adj EBITDA$351.6M$362M+$10M / +3%Beat — record
Adj EBITDA margin~25%25.7%+70 bpsCompressed from 37% prior trend on acq mix
Adj Diluted EPS~$2.42$2.57+$0.15 / +6.2%Beat
GAAP Diluted EPS$2.03$1.33-$0.70 / -34.5%Optical miss — ~$115M Off-Hwy acq charges
Defense+64% YoYStandout — Hanwha K9, Borsuk, Kaplan
L4Q Adj EBITDA beat rate~3/4 = 75%Restored cadence post-Q3'25 miss
L8Q beat rate~6/8 = 75%Q3'25 was the demand-driven double-miss
FY26 EBITDA Guide vs Street$1.47B$1.44B mid (reaffirmed)-$30M / -2%Below Street consensus
Pattern: clean operational beat extends multi-year ~75% L8Q beat cadence after the Q3'25 demand-driven double-miss. Q1'26 was a 3-line operational beat (rev/EBITDA/EPS) with an optical GAAP EPS miss entirely driven by ~$115M of Off-Highway acquisition accounting charges (stepped-up basis amortization, intangibles, integration). FY26 guide REAFFIRMED (not raised) with $1.44B EBITDA mid below ~$1.47B Street consensus — Q1's ~$10M EBITDA cushion was NOT flowed through, instead absorbed by raised integration costs ($70M → >$100M pretax). Mgmt's variance commentary: "Disciplined cost management," defense ramp +64% YoY ("balance of year looks like Q1"), Class 8 straight "a little stronger in Q1, steady," medium-duty still extremely soft. The integration cost creep + buyback throttle ($20M Q1 vs $328M FY25 — deleveraging from ~3x to 2x) suggest mgmt is preserving optionality. The Adj-vs-GAAP bridge is the cleanest single explanation.
Guidance Deep Dive
MetricPrior (Q4'25 / Feb'26)New (May'26)ΔRead
FY26 Revenue$5.575-5.925B mid $5.75B$5.575-5.925B mid $5.75BReaffirmedQ1 beat absorbed
FY26 Adj EBITDA$1.365-1.515B mid $1.44B$1.365-1.515B mid $1.44BReaffirmedBelow ~$1.47B Street consensus
FY26 Adj EBITDA margin (mid)25%25%MaintainedBelow 27-29% LT target
FY26 Adj FCF$655-805M mid $730M$655-805MReaffirmed
FY26 CapexReaffirmedIncludes $45M one-time Off-Hwy integration
FY26 Net leverageTargeting 2xTargeting 2x (~3x today)MaintainedBuyback throttled to fund deleveraging
FY26 Buyback paceActive ($328M FY25)$20M Q1 (throttled)SlowedDeleveraging priority
Off-Hwy integration costs~$70M pretax>$100M pretax (raised)+$30M+Quietly raised
Off-Hwy PPA step-up (Q1)$76M (in adj EBITDA add-backs)Disclosed
Off-Hwy one-time cash outlays$55M FY26Disclosed
Off-Hwy one-time integration capex$45M FY26Disclosed
Off-Highway $120M run-rate synergiesYear 4 full run-rateReaffirmed: 2H'26 financial benefits beginMaintainedZERO in 2026 guide = pure 2027 upside
LT pro forma EBITDA margin target27-29%27-29% ("within a few years")MaintainedFrom 25% FY26 mid
NA Class 8 cycleSteady (no recovery)Slight strength Q1, steady balance of yearMarginal positiveTrough signal
Medium-duty truckVery softVery soft (no recovery)MaintainedEPA 2027 prebuy optionality not in guide
Tone: confident reaffirmation but qualitative on synergies and Off-Highway baselines. Sandbag-biased setup. Mgmt didn't flow through Q1 EBITDA beat (~$10M cushion) — absorbed by quietly raised integration costs ($70M → >$100M). 11 of 14 analyst questions well-answered, 3 partial (Off-Highway 2025 historical end-market data refused; vague margin-target timing; no quantified deal "negatives" provided despite Wertheimer's direct ask). Risk caveats: (1) Adj EBITDA margin trajectory: ~12 pt headline reset from prior 37%+ midpoint commentary to FY26 25% mid (post-acq) with 27-29% LT target — material contradiction; (2) NA truck cycle "deferral, not destruction" framing has been consistent Q2/Q3/Q1'26 but FY26 guide still locks in trough run-rates; (3) M&A posture: Q4'25 emphasized integration discipline + 2x leverage target, Q1'26 reactivated active M&A pipeline language while still ~3x levered; (4) EV/electrification: Q4'25 $29M electrification impairment (commercial EV being written down) — defense EV intact via eGen Force/OMFV (SOP 2029). Watch: Q2'26 EBITDA cushion vs guide; EPA 2027 ruling clarity by Q4 → potential MD prebuy in 4Q26; international defense booking momentum; Off-Hwy synergy realization timing into 2H'26.
Upcoming Catalysts
#CatalystTimingWhat to WatchRead
1Allison Off-Highway integration + $120M run-rate synergies2H'26 onset; Year 4 full run-rateZERO synergies in 2026 guide = pure 2027 upside; drives consolidated Adj EBITDA margin from 25% mid toward 27-29% target2027 step-function
2International defense rampFY26 ongoingQ1'26 Defense +64% YoY; mgmt: "balance of year looks like Q1"; Korea (Hanwha K9), Poland (Borsuk), Turkey (Korkut/FNSS), India (FICV/3040 MX); eGen Force/OMFV (Bradley replacement, SOP 2029)High-margin, decoupled from NA truck cycle
3NA Class 8 vocational + EPA 2027 prebuy optionality4Q'26 → 1H'27Q1'26 Class 8 straight stronger than guide; 2026 guide bakes in NO recovery and NO prebuy = asymmetric upside on installed capacity; ALSN explicitly "not expecting a delay"Asymmetric upside not in guide
4Medium-duty EPA 2027 prebuy4Q'26MD still extremely soft Q1'26; pre-buy magnitude depends on EPA final rule timing; CMI delayed B-platform to Jan 2028 — ALSN paired benefitOptionality, EPA-rule dependent
5Off-Hwy integration cost / margin realization Q2-Q4'26Quarterly FY26$76M Q1 PPA step-up; $55M one-time cash outlays; $45M one-time integration capex; cost creep from $70M → >$100M is a watchpointCost creep is real
6Deleveraging trajectory ~3x → 2xFY26-FY27Buyback throttled to $20M Q1 vs $328M FY25; FCF priorityOptionality returns at 2x
7Off-Hwy 2025 historical end-market disclosureFuture callsALSN has refused this disclosure to date; key for analyst modelingWatch item
8Hydraulic fracking / oilfield powerOngoingMgmt-flagged upside in Off-Highway sideModest
9Mining commodity cycle (gold/copper/rare earths)OngoingOff-Highway exposure to mining strongTailwind
10EV transmission (eGen Power) commercialFY26-FY28$29M Q4'25 commercial EV write-down; defense EV intactSlow commercial adoption
11China bus / Brazil HD truckOngoingOutside NA on-highway $507M FY25 +3% YoYModest
12Active M&A pipeline reactivationTBDQ1'26 reactivated language while still ~3x leveredWatch — discipline question
Street Q&A
#Analyst (Firm)TopicMgmt ResponseQuality
1Tami Zakaria (JPMorgan)Off-Highway integration progress + $120M synergy run-rate timingReaffirmed $120M run-rate; financial benefits begin 2H'26, full run-rate Year 4; 27-29% pro forma EBITDA target within "a few years"Well Answered
2Jerry Revich (Wells Fargo)EPA 2027 ruling impact on MD prebuy + outlookALSN explicitly "not expecting a delay"; medium-duty still soft; no MD prebuy in 2026 guide; CMI's B-platform delay to Jan 2028 = ALSN paired benefitWell Answered
3Rob Wertheimer (Melius)Off-Highway acquisition NEGATIVES / risks?Mgmt declined to quantify; emphasized strategic fit and synergiesRefused — no quantified negatives
4VariousDefense growth durability / international platforms+64% Q1; balance of year looks like Q1; Korea Hanwha K9, Poland Borsuk, Turkey Kaplan, BAE Hägglunds, India FICV; eGen Force/OMFVWell Answered
5Stephen Volkmann (Jefferies)NA Class 8 vocational cycle + medium-duty trajectoryClass 8 straight came in stronger than guide; MD still extremely soft; lease-rental "early lean-in"Well Answered
6VariousOff-Highway 2025 historical end-market revenueMgmt declined to provide; commercially sensitivePartial — commercially sensitive
7Joel Tiss (BMO)FY26 EBITDA reaffirmed below StreetQ1 beat absorbed by raised integration costs ($70M → >$100M); zero synergies in 2026 = sandbag postureWell Answered
8Tim Thein (Raymond James)Capital allocation / buyback paceThrottled to $20M Q1 vs $328M FY25 to fund deleveraging from ~3x to 2x; M&A pipeline reactivatedWell Answered
9Tim Thein follow-upActive M&A pipeline language at ~3x levered?Vague — "opportunistic"; emphasized integration disciplinePartial — vague
10Steven Fisher (UBS)EBITDA margin trajectory toward 27-29% LT"A few years" — vague timing; 2H'26 synergies start to flow; 2027 step-functionPartial — vague timing
11VariousEV transmission (eGen Power) commercial trajectoryQ4'25 $29M electrification impairment in commercial EV; defense EV (eGen Force/OMFV) intact, SOP 2029Well Answered
12VariousHydraulic fracking / oilfield demandMgmt-flagged Off-Highway upside; modest contributionWell Answered
13VariousChina bus / Brazil HD truck outlookOutside NA on-hwy $507M FY25 +3% YoY; stableWell Answered
14VariousMining commodity cycle / Off-Hwy exposureMining strong on commodity prices; gold/copper/rare earthsWell Answered
Contradictions
#TopicSeverityStatement AStatement BWhy it's a tension
1EBITDA margin trajectory — ~12 pt headline resetMATERIALFY25 messaging: ~37%+ midpoint; Bohley floated return to 40% peakFY26 consolidated guide implies 25% midpoint with 27-29% post-synergy ceiling within "a few years"Prior commentary did not fully prepare investors for the dilutive effect of Off-Highway acquisition + PPA step-ups. Optical headline ~12 pt reset is a real narrative shift requiring repositioning.
2NA truck cycle "deferral, not destruction" framingMODERATEQ2/Q3/Q1'26: Repeated "deferral, not destruction" framing for NA truck cycleFY26 guide locks in trough run-rates and explicit dependence on EPA '27 warranty ruling for medium-duty recoveryIf demand was merely "deferred," why is the FY guide locked at trough? Either the cycle is more impaired than "deferral" implies, or the guide is sandbagged. Either way the framing is loose.
3M&A posture post-close — leverage / disciplineMODERATEQ4'25: Emphasized integration discipline and 2x leverage targetQ1'26: Reactivated active M&A pipeline language while still ~3x leveredDiscipline framing harder to defend at 3x leverage with M&A pipeline open.
4EV/electrification — commercial vs defense bifurcationMINORQ2'25: Bullish eGen Flex/Force commercial promotionQ4'25: $29M electrification impairment (commercial EV being written down); defense EV intact (eGen Force/OMFV SOP 2029)Soft contradiction. Commercial EV adoption slower than originally framed; defense EV intact.
Indirect Read-Throughs
NameRelationshipWhat ALSN signaledRead-through
PACCAR (PCAR) / Daimler Truck (DTRUY)Major NA HD/MD OEM customersClass 8 straight "a little stronger in Q1, steady"; MD still extremely soft; trough signal in Q1'26POSITIVE — Class 8 trough signal confirms CMI read
Cummins (CMI)Engine partner (paired with ALSN transmissions)Aligned with CMI's 'cycle inflecting earlier' narrative; CMI delayed B-platform to Jan 2028 = ALSN paired benefitPOSITIVE — confirms CMI cycle read
Volvo Group (VLVLY) / Traton/NavistarNA HD OEMsSame — Class 8 trough signal; medium-duty softPOSITIVE on Class 8 trough
General Dynamics (GD)Defense partner (Stryker, OMFV)ALSN Defense +64% YoY; eGen Force/OMFV (Bradley replacement, SOP 2029)POSITIVE — international defense ramp
Lockheed Martin (LMT) / Northrop (NOC) / RTXDefense primesInternational defense capex genuinely accelerating; Hanwha K9, Borsuk Poland, Kaplan Turkey programsPOSITIVE — international order books
Hanwha AerospaceDefense customer (named — K9 howitzer)Hanwha K9 program rampingPOSITIVE
BAE SystemsDefense customer (Hägglunds tracked vehicles)BAE Hägglunds program intactPOSITIVE
Rheinmetall (RHM.DE)European defenseInternational defense capex acceleratingPOSITIVE
Oshkosh (OSK)Defense / specialty vehicle peerDefense ramp confirms broader cyclePOSITIVE
Caterpillar (CAT) / Komatsu / Sandvik / EpirocOff-Highway mining adjacentsMining strong on commodity prices (gold/copper/rare earths); Off-Hwy exposurePOSITIVE — mining cycle
Deere (DE) / AGCOAg equipmentAg muted ex-India low-HP segmentNEUTRAL-NEGATIVE
Volvo CE / Liebherr / SanyConstruction equipmentEurope construction positive; NA construction slight negative; bifurcatingMIXED
Vertiv (VRT) / Generac / ETNPower gen / data center backstopNotable non-mention of D-Series genset / hyperscaler backstop power = slight negative for those alt-power narrativesMILD NEGATIVE — adoption curve slow
Tesla Semi / Nikola / Plug Power (PLUG)EV/H2 truck competitorsNotable non-mention of Tesla Semi / Nikola / Plug = slight negative for those EV narratives; commercial EV being written downNEGATIVE — adoption slow
Dana (DAN)Seller of Off-Highway business to ALSNClosed Jan 1, 2026; ~$650M annual rev run-rate transferredStrategic transfer
Euro at $1.17FX tailwindTailwind for Europe-exposed industrialsPOSITIVE

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