Allison Transmission Holdings Inc. (ALSN) said Monday it expects sales for the first quarter to come in below Street estimates, due mostly to weak demand in the hydraulic fracturing market in North America and reduced U.S. defense sales. Shares of the company lost more than six percent in morning trade on the New York Stock Exchange.
Allison makes fully-automatic transmissions for medium- and heavy-duty commercial vehicles, U.S. defense vehicles, as well as hybrid-propulsion systems for transit buses.
The Indiana-based company expects first-quarter net sales of $455 million to $460 million. Analysts polled by Thomson Reuters currently expect sales of $471.57 million for the quarter.
Allison's results reflect low levels of demand in the North America energy sector's hydraulic fracturing market, reductions in U.S. defense spending, and lower demand in the North America Hybrid-Propulsion Systems for Transit Bus end market due to municipal spending constraints.
For fiscal year 2013, Allison continues to expect net sales to decline in the range of 6 to 8 percent. Analysts on consensus currently estimate sales of $2.02 billion for the year.
The company reiterated that the majority of the full year net sales reduction implied by the midpoint of its guidance will have occurred in the first quarter, followed by growth in the Global On-Highway end markets for the balance of the year.
The company expects capital expenditures of $80 to $90 million for the year.
Allison has announced an increase in its quarterly cash dividend from $0.06 to $0.12 per share, payable on May 31 to stockholders as of May 17.
Allison also announced a proposed secondary offering of 22 million shares of its common stock by investment funds affiliated with The Carlyle Group (CG) and Onex Corp. (OCX.TO). A group led by BofA Merrill Lynch, Citigroup and J.P. Morgan will act as the underwriters in the proposed registered offering.
Shares of Allison are trading at $22.20, down $1.59 or 6.68%.
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