Allison Transmission Holdings Inc. reported first quarter net sales of $1,406 million with adjusted EBITDA margin of 26% and net cash provided by operating activities of $156 million.
David S. Graziosi, chair, president and chief executive officer of Allison, commented, “Encouraging momentum in key end markets supported solid demand for both Allison business units in the first quarter. Despite ongoing geopolitical uncertainty, we will look to capitalize on further improvement in end markets conditions throughout the year, while continuing to integrate the Allison Off-Highway business unit, maintaining focus and confidence in our synergy capture target in support of our long-term growth and value creation strategy. For the first quarter, adjusted diluted EPS was $2.57, with expectation for the acquisition of the Allison Off-Highway business unit to be accretive to net income and diluted EPS in 2026.”
Graziosi continued, “During the first quarter, we announced the seventh consecutive annual increase to our quarterly dividend and repurchased more than $20 million of our common stock, demonstrating Allison’s consistent commitment to returning cash to shareholders as part of our capital allocation priorities. Also during the quarter, as we progress toward our 2.0x net leverage target with prudent balance sheet management, our strong cash flow generation enabled us to repay $150 million of amounts outstanding under our revolving credit facility.”
First 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 First Quarter Financial Results
Net sales for the quarter were $1,406 million, including the addition of $673 million in net sales for the Allison Off-Highway business unit.
Gross profit for the quarter was $406 million, an increase of $28 million from $378 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 decreased gross profit in the Allison Transmission business unit. Gross profit for the quarter was negatively impacted by approximately $76 million of expenses related to the acquisition of the Allison Off-Highway business unit, primarily inventory step-up costs and incremental depreciation expense related to the stepped-up basis in property, plant and equipment. Gross margin for the quarter was 29%.
Selling, general and administrative expenses for the quarter were $157 million, an increase of $70 million from $87 million for the same period in 2025. The increase was principally driven by the addition of the Allison Off-Highway business unit, including $21 million of amortization expense for intangible asset recognition and approximately $17 million of one-time acquisition-related integration costs.
Engineering – research and development expenses for the quarter were $54 million, an increase of $12 million from $42 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 $112 million, a decrease of $80 million from $192 million for the same period in 2025. The decrease was principally driven by costs related to the acquisition of the Allison Off-Highway business unit. The year over year decrease in net income was also driven by higher interest expense, net, partially offset by lower income tax expense. Diluted EPS for the first quarter was $1.33.
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 $216 million for the first quarter and adjusted diluted EPS was $2.57.
Adjusted EBITDA, a non-GAAP financial measure, was $362 million for the first quarter, an increase of $66 million from $296 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 $156 million. Adjusted free cash flow, a non-GAAP financial measure, for the quarter was $103 million.
Allison ended the first quarter with $311 million of cash and cash equivalents and $845 million of available borrowing capacity under its revolving credit facility. Allison ended the first quarter with total debt of $4,292 million and net debt of $3,981 million.
During the first quarter, Allison paid a quarterly dividend of $0.29 per share and repurchased over $20 million of its common stock, with $1,171 million of authorization remaining under its stock repurchase program.
Allison Transmission First Quarter Financial Highlights
Net sales for the quarter were $733 million, a 4% decrease from the same period in 2025.
Gross profit for the quarter was $356 million, a decrease of $22 million from $378 million for the same period in 2025. The decrease was principally driven by lower volumes and unfavorable direct material costs, partially offset by price increases on certain products. Gross margin for the first quarter was nearly 49%.
Selling, general and administrative expenses for the quarter were $65 million, flat from the same period in 2025 when reflecting allocations of certain selling, general and administrative expenses in the Allison Central Group.
Engineering – research and development expenses for the quarter were $39 million, a decrease of $3 million from $42 million for the same period in 2025. The decrease was principally driven by reduced product initiatives spending.
Segment operating profit was $252 million, or 34% of net sales, for the first quarter. Adjusted EBITDA, a non-GAAP financial measure, was $276 million for the first quarter. Adjusted EBITDA margin for the quarter was 38%.
