Allison Transmission Holdings Inc. on Monday reported gains in both profit and revenue for the final quarter of last year and for all of 2014.
Net income totaled $50.5 million in the final quarter compared to $42.9 million a year earlier, or diluted earnings per share of 28 cents versus 23 cents. Net sales on the fourth quarter were $544 million, an 11% increase from the same period in 2013.
The increase in net sales was principally driven by the continued recoveries in the North America on-highway and off-highway end markets, and higher demand in the service parts, support equipment and other end market, partially offset by lower demand in the outside North America on-highway and North America hybrid-propulsion systems for transit bus end markets, according to the Indiana-based maker of transmissions for medium-duty and heavy-duty vehicles.
For all of last year, Allison had net income of $228.6 million compared $165.4 a year earlier, or diluted earnings per share of $1.25 compared to 88 cents during the same comparable time periods.
“Our fourth quarter 2014 results exceed the guidance ranges we provided to the market on Oct. 2,” said Lawrence E. Dewey, chairman, president and CEO. “Allison continued to demonstrate strong operating margins and free cash flow while investing in growth opportunities despite challenging conditions in the outside North America end markets.”
North America on-highway end market net sales were up 22% from the same period in 2013, principally driven by higher demand for Rugged Duty series models and flat on a sequential basis due to higher demand for Highway Series models, according to the company.
Allison said outside North America, on-highway end market net sales were down 24% from the same period in 2013, reflecting weakness in China’s bus and the European truck market, and down 11% on a sequential basis due to lower demand in China’s bus and truck markets and Japan’s truck market.
The company’s service parts, support equipment and other end market net sales were up 13% from the same period in 2013 principally driven, it said, by higher demand for North America off-highway service parts, and down 4% on a sequential basis due to lower demand for North America on-highway service parts consistent with seasonal aftermarket activity levels and global on-highway support equipment commensurate with decreased transmission unit volumes, partially offset by higher demand for North America off-highway service parts.
Allison expects 2015 net sales to be in the range of flat to down 5% compared to 2014.
“Our 2015 net sales guidance reflects a cautious approach given the heightened level of uncertainty and the lack of near-term visibility and confidence in the global Off-Highway end markets,” the company said in a statement. “Allison's 2015 net sales outlook also assumes a continued recovery in the North America on-highway end market, previously considered reductions in U.S. defense spending, continued weakness in the outside North America on-highway end market and lower demand for North America hybrid-propulsion systems for transit bus due to engine emissions improvements and non-hybrid alternatives”
While Allison did not provider specific first quarter 2015 guidance, it does expect first quarter net sales to be higher than the same period in 2014.
“The anticipated year-over-year increase in first quarter net sales is principally driven by higher demand in the North America on-highway and off-highway end markets, partially offset by previously considered reductions in defense net sales and lower demand in the North America hybrid-propulsion systems for transit bus end market,” the company said.