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Allison (ALSN) Beats on Q3 Earnings, Raises 2018 Guidance
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Allison Transmission Holdings Inc.’s (ALSN - Free Report) third-quarter 2018 adjusted earnings were $1.27 per share, beating the Zacks Consensus Estimate of $1.09. In the year-ago quarter, the bottom line was 75 cents. Net income was $167 million compared with $111 million in third-quarter 2017.
In the reported quarter, net sales rose 16% to $692 million from $595 million a year ago. Moreover, it outpaced the Zacks Consensus Estimate of $652 million. Favorable demand in the end market — including global on-highway, Outside North America Off-Highway, and Service Parts, Support Equipment & Other — has led to rise in sales.
During the reported quarter, gross profit was $368 million compared with $302 million in the year-ago quarter. Gross margin was 53.2% compared with 50.8% recorded in the same period of 2017. This rise was primarily driven by improved net sales and price increases on certain products and positive material costs. However, this was partly offset by high manufacturing costs.
Allison Transmission Holdings, Inc. Price, Consensus and EPS Surprise
Allison has segregated revenues by the end markets it provide its services to, which are as follows:
Net sales for the North America On-Highway end market increased 10% to $332 million, driven by higher demand for rugged duty series models.
Net sales for the North America Off-Highway end market declined 29% to $12 million. The fall was due to lower demand from hydraulic fracturing applications.
Net sales for the Defense end market went up 20% to $42 million, driven by elevated Tracked and Wheeled demand.
Outside North America On-Highway end market net sales moved up 8% to $96 million, driven by higher demand in Asia. This figure was partly offset by lower demand in Europe.
Net sales for the Outside North America Off-Highway end market jumped to $46 million compared with $14 million in third-quarter 2017, driven by improved demand in energy, mining and construction sectors.
Net sales from the Service Parts, Support Equipment & Other end market were up 18% to $164 million, primarily due to higher demand for North America service parts and global support equipment.
Financial Details
Allison had cash and cash equivalents of $221 million as of Sep 30, 2018, compared with $199 million as of Dec 31, 2017. Long-term debt was $2.52 billion as of Sep 30, 2018, almost in line with the figure recorded on Dec 31, 2017.
In third-quarter 2018, Allison’s net cash provided by operating activities was $239 million compared with $215 million a year ago.
2018 Outlook Update
For 2018, the company anticipates net sales to increase by 18-19% from $2.3 billion recorded in 2017. The prior expectation was rise of 15-18%. This anticipation is encouraged by an augmented demand for global on- and off-highway products, price increases on few products, and Allison’s continued growth initiatives. Further, net income is estimated to be $600-$620 million compared with $570-$600 million stated earlier.
AutoZone has an expected long-term growth rate of 12.2%. Over the past six months, shares of the company have moved up 17.6%.
CarMax has an expected long-term growth rate of 3.3%. Over the past six months, shares of the company have moved up 10.2%.
Advance Auto has an expected long-term growth rate of 12.3%. Shares of the company have risen 42.4% over the past six months.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Allison (ALSN) Beats on Q3 Earnings, Raises 2018 Guidance
Allison Transmission Holdings Inc.’s (ALSN - Free Report) third-quarter 2018 adjusted earnings were $1.27 per share, beating the Zacks Consensus Estimate of $1.09. In the year-ago quarter, the bottom line was 75 cents. Net income was $167 million compared with $111 million in third-quarter 2017.
In the reported quarter, net sales rose 16% to $692 million from $595 million a year ago. Moreover, it outpaced the Zacks Consensus Estimate of $652 million. Favorable demand in the end market — including global on-highway, Outside North America Off-Highway, and Service Parts, Support Equipment & Other — has led to rise in sales.
During the reported quarter, gross profit was $368 million compared with $302 million in the year-ago quarter. Gross margin was 53.2% compared with 50.8% recorded in the same period of 2017. This rise was primarily driven by improved net sales and price increases on certain products and positive material costs. However, this was partly offset by high manufacturing costs.
Allison Transmission Holdings, Inc. Price, Consensus and EPS Surprise
Allison Transmission Holdings, Inc. Price, Consensus and EPS Surprise | Allison Transmission Holdings, Inc. Quote
Quarter in Detail
Allison has segregated revenues by the end markets it provide its services to, which are as follows:
Net sales for the North America On-Highway end market increased 10% to $332 million, driven by higher demand for rugged duty series models.
Net sales for the North America Off-Highway end market declined 29% to $12 million. The fall was due to lower demand from hydraulic fracturing applications.
Net sales for the Defense end market went up 20% to $42 million, driven by elevated Tracked and Wheeled demand.
Outside North America On-Highway end market net sales moved up 8% to $96 million, driven by higher demand in Asia. This figure was partly offset by lower demand in Europe.
Net sales for the Outside North America Off-Highway end market jumped to $46 million compared with $14 million in third-quarter 2017, driven by improved demand in energy, mining and construction sectors.
Net sales from the Service Parts, Support Equipment & Other end market were up 18% to $164 million, primarily due to higher demand for North America service parts and global support equipment.
Financial Details
Allison had cash and cash equivalents of $221 million as of Sep 30, 2018, compared with $199 million as of Dec 31, 2017. Long-term debt was $2.52 billion as of Sep 30, 2018, almost in line with the figure recorded on Dec 31, 2017.
In third-quarter 2018, Allison’s net cash provided by operating activities was $239 million compared with $215 million a year ago.
2018 Outlook Update
For 2018, the company anticipates net sales to increase by 18-19% from $2.3 billion recorded in 2017. The prior expectation was rise of 15-18%. This anticipation is encouraged by an augmented demand for global on- and off-highway products, price increases on few products, and Allison’s continued growth initiatives. Further, net income is estimated to be $600-$620 million compared with $570-$600 million stated earlier.
Zacks Rank and Other Stocks to Consider
Allison currently sports a Zacks Rank #1 (Strong Buy). A few other top-ranked stocks in the auto space are AutoZone, Inc. (AZO - Free Report) CarMax, Inc. (KMX - Free Report) and Advance Auto Parts, Inc. (AAP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AutoZone has an expected long-term growth rate of 12.2%. Over the past six months, shares of the company have moved up 17.6%.
CarMax has an expected long-term growth rate of 3.3%. Over the past six months, shares of the company have moved up 10.2%.
Advance Auto has an expected long-term growth rate of 12.3%. Shares of the company have risen 42.4% over the past six months.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>