Allison Transmission Records High Sales Amid Labor Bonus Costs

Allison Transmission Holdings, based in Indianapolis, saw a slight dip in profits for the first quarter of 2024 due to signing bonuses associated with a recent labor agreement, even though the company achieved record sales driven by robust demand for U.S. Class 8 vocational trucks. Despite a $14 million expense from the signing bonuses as part of a labor contract approved in January, the company reported a net income of $169 million, a marginal decrease from the previous year’s $170 million.

Earnings per share rose to $1.90 from $1.85, benefiting from a strategic share buyback over the past year. By the end of the first quarter, Allison’s outstanding shares had reduced to 89 million from 92 million a year earlier.

David Graziosi, CEO of Allison Transmission, highlighted the company’s exceptional performance across various markets. “Our record net sales this quarter were fueled by strong global on-highway demand and growth in our international off-highway and defense sectors,” he remarked. Particularly in North America, the demand for Class 8 vocational and medium-duty trucks pushed revenues to new heights, with significant contributions also coming from Asia.

The company’s total quarterly sales increased by 6.5% to $789 million, up from $741 million in the same period last year. North American on-highway sales alone jumped 11.7% to $420 million, spurred by sustained demand and strategic price adjustments.

Graziosi shared insights during the earnings call about ongoing demand trends, noting a carryover of pent-up demand from 2023 into early 2024. He anticipates continued strong sales in the second quarter, with a slight dip expected later in the year due to seasonal fluctuations.

The medium-duty market is stabilizing after a post-pandemic supply shortage, according to Graziosi. He sees steady demand ahead, driven by fleet resizing and ongoing market adjustments.

Fred Bohley, Chief Financial Officer, pointed out that dealership inventories remain tight, indicating sustained demand.

Significant growth was also noted in Allison’s defense sector, with first-quarter sales soaring 77.8% to $48 million, up from $27 million the previous year, primarily due to increased demand for tracked vehicle applications.

International sales were also strong, with Allison’s outside North America on-highway operations generating $115 million, up 6.5% year-over-year, largely due to robust demand in Asia, despite some softening in European markets.