INDIANAPOLIS - Allison Transmission, a leading manufacturer of propulsion solutions, has announced a contract with BAE Systems (LON:BAES) Hägglunds to supply the new Allison 4040 MX™ transmission for the CV90 Infantry Fighting Vehicle (IFV) programs. The production of these vehicles is slated to begin in 2028.
The 4040 MX transmission is an upgraded version of the 3040 MX™, which is currently used in the U.S. Army's M10 Booker Combat Vehicle. This partnership is expected to contribute to Allison's defense market growth, potentially resulting in an increase of $100 million in annual revenue.
Tommy Gustafsson-Rask, Managing Director of BAE Systems Hägglunds, expressed confidence in the continued collaboration with Allison, highlighting the CV90's strengthened position in the global market due to the reliable and modern driveline.
The CV90, designed and manufactured in Sweden, is known for its high level of protection for crew and passengers. It is operated by several European countries, with recent contracts for about 400 new vehicles in Slovakia and the Czech Republic.
Dana Pittard, Vice President of Defense Programs at Allison Transmission, emphasized the company's commitment to supporting BAE Systems Hägglunds and their impressive vehicle range. The 4040 MX is specifically designed for the CV90 Mk IV and aims to meet the demands of nations relying on the vehicle for critical missions.
Allison Transmission, headquartered in Indianapolis, Indiana, has a global presence in over 150 countries and is recognized for its fully automatic transmissions for a range of applications, including commercial and defense vehicles.
This partnership announcement is based on a press release statement and contains forward-looking statements regarding future events and financial performance, which involve risks and uncertainties. Allison Transmission advises not to place undue reliance on these forward-looking statements, which speak only as of the date they were made.
In other recent news, Allison Transmission reported record-breaking Q1 2024 net sales of $789 million, a 6% increase from the previous year. Despite a slight dip in net income, the company reaffirmed its full-year guidance, expecting net sales to be between $3.50 billion and $3.150 billion. The company has also seen significant internal changes, with the promotion of G. Frederick Bohley III to the position of Chief Operating Officer.
Bohley, a long-term employee since 1991, will continue his roles as Chief Financial Officer and Treasurer until a successor is appointed. On the investment front, Allison Transmission's venture capital arm, Allison Ventures, committed to a $10 million investment in venture capital firm EnerTech Capital, aiming to bolster their innovation strategy and market positioning.
In terms of analyst coverage, Citi initiated coverage on Allison Transmission, expressing concerns about the company's ability to maintain its high market share in the face of increasing zero-emission vehicle adoption, despite a solid outlook for revenue and earnings growth in the short term. These are among the recent developments for Allison Transmission.
InvestingPro Insights
As Allison Transmission (NYSE: ALSN) gears up for its significant partnership with BAE Systems Hägglunds, the company's financial health and market performance provide a promising backdrop. With a robust gross profit margin of 48.26% in the last twelve months as of Q1 2024, Allison Transmission stands out in its ability to efficiently manage production costs and maintain profitability. This is especially relevant as the company commits to the production of the upgraded 4040 MX™ transmission, where cost-efficiency will be crucial for success.
The company's dedication to shareholder returns is evident, having raised its dividend for 4 consecutive years, and maintaining dividend payments for 13 consecutive years. This consistent return to shareholders is complemented by a notable 1-week price total return of 10.75% and a 1-year price total return of 44.18%, reflecting investor confidence and a strong market presence as it trades near its 52-week high.
Investors looking to delve deeper into Allison Transmission's prospects can explore additional InvestingPro Tips that highlight the company's financial metrics and market behavior. With a total of 15 additional InvestingPro Tips available, including insights on the company's low P/E ratio relative to near-term earnings growth and its moderate level of debt, interested parties can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription for more detailed analysis and data.
As Allison Transmission continues to expand its footprint in the defense sector, these financial indicators and market performance metrics are not only a testament to the company's current stability but also signal potential for continued growth in the face of new opportunities.
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