Allison Transmission Holdings Inc. reported second quarter net sales of $1,566 million with an adjusted EBITDA margin of 26% and net cash provided by operating activities of $312 million.
David S. Graziosi, chair, president and CEO of Allison, said, “In the Allison Transmission business unit, execution of our growth initiatives in the Defense end market and continued momentum in the North American truck market led to record quarterly net sales of $860 million for the second quarter. We also saw strong year-over-year growth in the Allison Off-Highway business unit, particularly in the Construction & Material Handling and Mining end markets as demand continues to rebound from trough levels. The Agriculture end market, although showing signs of recovery in certain segments and regions, has yet to inflect positively.”
Graziosi continued, “The successful integration of the Allison Off-Highway business unit, including capturing planned synergies and realizing the strategic benefits of the combined operations, remains a top priority. At the same time, Allison continues to execute across both business units, converting improving demand conditions into strong cash generation, reflected in record quarterly adjusted free cash flow of $281 million in the second quarter. Alongside repurchasing $46 million of our common stock and paying a quarterly dividend, we also made additional progress toward our leverage target by repaying the remaining $150 million outstanding under our revolving credit facility.”
Second quarter results include segment reporting for Allison Transmission, the company’s legacy business, excluding certain costs now accounted for within the Allison Central Group, and Allison Off-Highway, the business acquired from Dana Incorporated on Jan. 1. The Allison Central Group is a centralized cost center which includes certain functional costs that support the company’s global operations.
Allison Consolidated Second Quarter Financial Results
Net sales for the quarter were $1,566 million, including the addition of $706 million in net sales for the Allison Off-Highway business unit.
Gross profit for the quarter was $515 million, an increase of $112 million from $403 million for the same period in 2025. The increase was principally driven by the addition of the Allison Off-Highway business unit. Gross margin for the quarter was 33%.
Selling, general and administrative expenses for the quarter were $168 million, an increase of $64 million from $104 million for the same period in 2025. The increase was principally driven by the addition of the Allison Off-Highway business unit. Selling general and administrative expenses for the second quarter include $9 million of one-time acquisition-related expenses.
Engineering – research and development expenses for the quarter were $56 million, an increase of $13 million from $43 million for the same period in 2025. The increase was principally driven by the addition of the Allison Off-Highway business unit, partially offset by reduced product initiatives spending in the Allison Transmission business unit.
Net income for the quarter was $181 million, a decrease of $14 million from $195 million for the same period in 2025. The decrease was principally driven by increased operating costs due to the acquisition of the Allison Off-Highway business unit, including increased depreciation and amortization expense. The year-over-year decrease in net income was also driven by higher interest expense, net, and unrealized mark-to-market adjustments for marketable securities. The decrease in net income was partially offset by increased gross profit driven by the addition of the Allison Off-Highway business unit. Diluted EPS for the second quarter was $2.15, a year over year decrease of 6%.
Excluding the effect of certain noncash, nonrecurring, infrequent or unusual items, including the costs associated with the acquisition of the Allison Off-Highway business unit, adjusted net income, a non-GAAP financial measure, was $229 million for the second quarter and adjusted diluted EPS was $2.73, a year over year increase of 8%.
Adjusted EBITDA, a non-GAAP financial measure, was $404 million for the second quarter, an increase of $91 million from $313 million for the same period in 2025. Adjusted EBITDA margin for the quarter was 26%.
Net cash provided by operating activities for the quarter was $312 million, a year-over-year increase of 70%. Adjusted free cash flow, a non-GAAP financial measure, for the quarter was $281 million, a year over year increase of 84%.
Allison ended the second quarter with nearly $400 million of cash and cash equivalents and $995 million of available borrowing capacity under its revolving credit facility. Allison ended the second quarter with total debt of $4,114 million and net debt of $3,715 million.
During the second quarter, Allison paid a quarterly dividend of $0.29 per share and repurchased $46 million of its common stock, with $1,125 million of authorization remaining under its stock repurchase program.
