Allison Transmission Holdings (1A7) Q3 2026 Earnings Report

The call was strongly positive overall. Allison reported substantial revenue, EBITDA, EPS, and free-cash-flow growth, raised full-year guidance for the second consecutive quarter, highlighted robust demand in key on-highway, mining, construction, and defense markets, and described significant portfolio and synergy opportunities from the Off-Highway acquisition. The main challenges were raw-material inflation, muted industrial and agricultural demand, limited high-voltage electrification adoption, seasonal Off-Highway weakness, and one-time acquisition-related costs, but management maintained a positive margin and earnings outlook.

For 2026, Allison expects consolidated net sales in the range of $5.975 billion to $6.075 billion, consolidated net income in the range of $645 million to $685 million subject to the completion of purchase price accounting associated with the acquisition of the Allison Off-Highway business unit, consolidated adjusted EBITDA in the range of $1.53 billion to $1.58 billion, implying a 25.8% adjusted EBITDA margin at the midpoint, consolidated net cash provided by operating activities in the range of $1.11 billion to $1.14 billion, consolidated capital expenditures in the range of $240 million to $260 million including onetime separation and integration spending approximately $20 million, and consolidated adjusted free cash flow in the range of $850 million to $900 million; net income guidance includes approximately $125 million of 1-time pretax expenses, including approximately $65 million of expenses related to the stepped up basis in the inventory, and approximately $60 million of 1-time cash outlays, while the Allison Off-Highway acquisition is expected to be accretive to net income and earnings per share in 2026, SG&A is expected to be approximately 7% of sales going forward, and the company clearly expects to be price cost positive in 2027.