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Allison Transmission Holdings Inc. reported lower net income and revenue in the third quarter as its defense segment contributed higher sales.

For the period ended Sept. 30, it reported net income of $77 million, or 68 cents per diluted share, compared with $149 million, or $1.23 a year earlier.

Revenue fell to $532 million compared with $669 million in the 2019 period.

Allison CEO David Graziosi

Graziosi

Allison also noted a sequential improvement of 41% compared with the second quarter when the novel coronavirus first severely disrupted the economy and public health.

“The commitment, dedication and resilience of Allison’s employees, customers and suppliers have enabled the uninterrupted delivery of our products, and the continued generation of earnings and positive cash flow,” Allison CEO David Graziosi said in a release.

Its North American on-highway segment sales fell 24% to $281 million compared with $369 million a year earlier, driven by lower demand for Rugged Duty Series and Highway Series models due to the effects of the pandemic.

READ MORE: Allison Gears Up for E-Axles

North American off-highway sales fell 83% to $1 million compared with $6 million a year earlier, driven by lower demand for hydraulic fracturing applications.

The service parts, support equipment and other segment sales fell 9% to $119 million compared with $131 million a year earlier, principally driven by lower North American demand.

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That was partially offset by aluminum die-cast component volume associated with its acquisition in September 2019 of Walker Die Casting, according to the Indianapolis-based company.

Defense segment sales rose 40% to $56 million compared with $40 million a year earlier driven by Allison’s X1100 and X200 cross-drive transmissions in support of the U.S. Army’s long-term sustainment and combat readiness efforts.

Outside of North America, on-highway sales fell 28% to $71 million. Off-highway sales dropped 83% to $4 million.

In the quarter, research and development was $33 million compared with $39 million a year earlier.

The company reported it had $846 million in cash and available borrowing.

Allison provided a full-year outlook for revenue from $2.02 billion to $2.07 billion with net income of $285 million to $315 million.

The company noted the guidance reflects lower demand across all end markets except defense as a result of the pandemic, partially offset by price increases on certain products.

Allison is the world’s largest manufacturer of fully automatic transmissions for medium- and heavy-duty commercial vehicles and medium- and heavy-tactical U.S. defense vehicles. It also supplies commercial vehicle propulsion solutions, including electric hybrid and fully electric propulsion systems.

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