Allison Transmission Raises 2026 Outlook as Q3 Adjusted EPS Jumps 59% to $2.90 and Sales Double
Legacy Allison Transmission sales hit a record $881M, up 27%, while the Off-Highway acquisition more than doubled the top line and lifted cash flow guidance.
Allison Transmission (ALSN) reported third-quarter 2026 adjusted earnings of $2.90 per share, $0.58 above the $2.32 consensus, on net sales of $1.534 billion, up 121% from a year earlier. The company raised its full-year 2026 guidance for the second straight quarter, to net sales of $5.975 billion to $6.075 billion. Shares were up $5.08, or about 4.7%, at $113.13 on Monday, Nov. 2.
Q3 results
| Metric | Q3 2026 | Change |
|---|---|---|
| Net sales | $1,534M | +121% |
| Net income | $191M | vs. $137M |
| Diluted EPS | $2.30 | +41% |
| Adjusted diluted EPS | $2.90 | +59% |
| Adjusted EBITDA | $400M | +56% |
| Operating cash flow | $343M | +50% |
| Adjusted free cash flow | $278M | +51% |
The 121% sales jump is mostly acquisition-driven. Allison closed its purchase of Dana's off-highway business, now Allison Off-Highway, on Jan. 1, 2026. By our calculation, revenue beat the roughly $1.47 billion consensus by about 4.3%, and Off-Highway made up about 43% of Q3 sales.
Segments
| Segment | Net sales | Adjusted EBITDA | Margin |
|---|---|---|---|
| Allison Transmission | $881M, a record, up 27% | $333M | 38% |
| Allison Off-Highway | $653M | $83M | 13% |
CEO David Graziosi said the results reflect continued strength across most end markets. Demand accelerated for medium-duty and Class 8 vocational trucks, mining stayed strong, and construction and material handling grew in all regions. Industrial and agriculture demand stayed subdued because of geopolitical developments. Off-Highway's segment operating profit of $32 million included a $17 million footprint optimization charge, and the third quarter is seasonally its softest.
Raised 2026 guidance
| Item | New (Nov. 2) | Prior (Aug. 3) |
|---|---|---|
| Net sales | $5,975M to $6,075M | $5,800M to $6,000M |
| Net income | $645M to $685M | $600M to $700M |
| Adjusted EBITDA | $1,530M to $1,580M | $1,465M to $1,575M |
| Operating cash flow | $1,110M to $1,140M | $1,025M to $1,125M |
| Capital expenditures | $240M to $260M | $260M to $280M |
| Adjusted free cash flow | $850M to $900M | $745M to $865M |
By our calculation, the sales midpoint rose about $125 million, or 2.1%, to $6.025 billion, adjusted EBITDA rose about $35 million at the midpoint, and adjusted free cash flow rose about $70 million, or 8.7%. The new sales midpoint is about 1.4% above the $5.94 billion consensus, so the market treated it as roughly in line. Net income guidance is subject to completing purchase price accounting and includes about $125 million of one-time pre-tax acquisition-related costs. Capital expenditures of $240 million to $260 million include about $20 million of one-time separation and integration spending.
Balance sheet and capital returns
- Debt. Total debt was $4,012 million and net debt $3,515 million, with about $497 million of cash and $996 million of revolver availability. More than $400 million of debt has been repaid this year.
- Returns. Allison paid $23 million in dividends ($0.29 per share) and repurchased $57 million of stock, leaving $1,068 million under its buyback authorization.
- Leverage. By our calculation, net debt is about 2.3 times the midpoint of full-year adjusted EBITDA guidance.
What to watch
- Fourth quarter. Consensus calls for about $2.35 in EPS and $1.5 billion in revenue, so the pace of vocational truck demand matters.
- Off-Highway integration. Margin progress from the footprint changes, with the segment at 13% adjusted EBITDA margin.
- Industrial and agriculture. Whether the subdued demand tied to geopolitics improves.
- Capital use. The pace of debt paydown against buybacks and dividends.
- More earnings. See our coverage of Marriott, IDEXX and Tempus AI.
Sources: Allison's investor relations site and its third-quarter 2026 results release, with prior guidance from its second-quarter release. Consensus figures and the stock move come from published reports and may differ by source. Items labeled by our calculation are our own arithmetic. This article is informational only and is not investment advice.
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