Class 8 Vocational Demand Powers Allison Q4 Profit, Revenue
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Allison Transmission's profit and revenue rose in the fourth quarter of 2024 on the back of increased Class 8 vocational North American on-highway demand, the company said Feb. 11.
Executives at Indianapolis-based Allison said more of the same is expected this year.
The automatic manual transmission manufacturer posted net income for the most recent quarter of $175 million, up $5 million or 2.9% from $170 million in the year-ago period.
Net sales for the quarter totaled $796 million, up $21 million or 2.7% from $775 million in the 2023 period.
The company’s revenue beat consensus analyst expectations.
Allison Q4 2024 Earnings Presentation
A 10% increase in net sales in the North American on-highway market to $419 million from $380 million was principally driven by strength in demand for Class 8 vocational vehicles as well as price increases on certain products.
The full year saw the same story. Allison’s net income for the year totaled $731 million, up 8.6% compared with $673 million in 2023. The company’s full-year net sales were $3.225 billion, an increase of 6.3% from $3.035 billion in 2023.
A $223 million increase in net sales in the North American on-highway market to $1.752 billion from $1.529 billion was driven by demand for Class 8 vocational and medium-duty trucks.
Graziosi
“Closing out the year, unprecedented demand for Class 8 vocational vehicles persisted in the fourth quarter of 2024, leading to record full-year net sales of $1.8 billion in our North America On-Highway end market,” said CEO David Graziosi.
Allison anticipates vocational truck demand continuing along the same path.
The company expects “relatively robust demand” in that segment of the market in 2025, Graziosi said, adding that conditions have not changed since the company’s last earnings call.
“We don’t, at this point, expect a significant change in terms of overall capacity numbers for the industry in terms of vocational,” Graziosi said.
“As we’ve talked about several times, those constraints continue to be, we believe, in the broader market and again, in terms of what body builders are able to take,” he added, “but the inventory position on vocational is certainly different than what medium-duty is positioned at.”
Allison expects a weaker medium-duty market in North America, the company’s top executive said, adding that inventories have decreased and body builders remain a bit of a constraint.
Allison expects 2025 net sales in the range of $3.2 billion to $3.3 million and net income in the range of $735 million to $785 million. Of that total, the company’s North American On-Highway operations are expected to contribute around 1% above the $1.752 billion reported in 2024.
Wertheimer
The guidance is 3% below consensus analyst expectations, according to Melius Research founding partner Rob Wertheimer and even further below the research house’s own prognostication.
“The outlook has revenue up 1%, 4% below consensus, as many probably forecasted what we did, pricing up 5-6% overall with volumes flattish,” Wertheimer said in a research note issued Feb. 11 after the company’s analyst call.
“The 2025 revenue outlook was also a bit weaker than expected on North American truck volumes, though Cummins had recently called out softer medium-duty demand,” he added.
Cummins CEO Jennifer Rumsey said during the company’s Feb. 4 earnings call that the engine manufacturer expects 140,000 to 155,000 retail medium-duty truck sales in 2025, down 5% to 15% compared with 2024.
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