Allison Transmission Secures $80.6 Million Contract for Abrams Tank Program

Rhea-AI Summary

Allison Transmission has secured an $80.6 million contract for the Abrams Main Battle Tank Program for the 2025 program year. The contract involves providing upgraded and new X1100 cross-drive transmissions for the latest variants of Abrams tanks used by U.S. Army and Foreign Military Sales customers.

The agreement supports transmission demand at the Joint Systems Manufacturing Center (JSMC) in Lima, Ohio, for new tank manufacturing, and includes kits for overhaul and repair activities at Anniston Army Depot. The contract scope encompasses transmission repair kits, new transmissions, and upgraded units in the most current configuration, along with system technical support for maintaining essential drawings and technical data packages. Deliveries are scheduled for 2025.

Positive

• Secured significant $80.6 million military contract for 2025
• Continuation of multi-year agreement indicates stable revenue stream
• Contract includes both new units and repair kits, diversifying revenue sources

Negative

• None.

Insights

Defense Industry Analyst

The <money>$80.6 million</money> Abrams tank transmission contract demonstrates Allison's continued dominance in military vehicle powertrains. The dual-purpose nature of the contract - supporting both new production at JSMC and maintenance at Anniston Army Depot - creates multiple revenue streams. The upgraded X1100 transmissions provide better value proposition through modernized components at lower costs compared to entirely new units.

This contract's timing aligns with increased global defense spending and modernization efforts, particularly as geopolitical tensions drive demand for heavy armor. The Foreign Military Sales component suggests potential follow-on orders from U.S. allies. The contract's structure, combining new production, upgrades and technical support, indicates a comprehensive lifecycle approach that should generate steady revenue beyond the initial <money>$80.6 million</money>.

Financial Analyst

For a company with a <money>$9.6 billion</money> market cap, this <money>$80.6 million</money> contract represents approximately <percent>0.84%</percent> of market value, but its strategic importance exceeds its monetary value. The contract provides steady, predictable revenue with high margins typical of defense contracts. The multi-year nature and inclusion of ongoing technical support services creates recurring revenue opportunities.

Particularly noteworthy is the cost-effective upgrade approach, which should translate to higher profit margins compared to new unit production. The Foreign Military Sales component adds geographic revenue diversification while maintaining U.S. government contract protections. This continues the positive momentum from the 2024 program year award, suggesting strong positioning for future contract renewals.

INDIANAPOLIS, Jan. 7, 2025 /PRNewswire/ -- Allison Transmission today announced an award of an $80.6 million contract supporting the Abrams Main Battle Tank Program for the 2025 program year. Under this new agreement, Allison will provide upgraded and new X1100 cross-drive transmissions, essential for the latest variants of the Abrams tanks used by U.S. Army and Foreign Military Sales customers. This award follows an announcement early last year regarding the 2024 program year.

Allison Transmission awarded $80.6 million contract supporting the Abrams Main Battle Tank Program for 2025.

The contract supports transmission demand at the Joint Systems Manufacturing Center (JSMC) in Lima, Ohio, supporting manufacturer of new tanks. Additionally, kits purchased by the Integrated Logistics Support Center (ILSC) will support overhaul and repair activities at Anniston Army Depot.

"We are honored to continue our collaboration with the U.S. Army and our international allies through our involvement with the Abrams Main Battle Tank program," said Dana Pittard, Vice President for Defense Programs, Allison Transmission. "This  represents another milestone in our ongoing multiyear agreement. We are committed to delivering excellence and support to our partners for many years ahead."

The contract includes transmission repair kits as well as delivery of new transmissions.  The contract also delivers upgraded transmissions to the customer in the most current configuration with zero miles on critical components at significant savings when compared to new units. Contract provisions include Allison system technical support to maintain essential drawings and technical data packages. Deliveries under this contract are expected to occur in 2025.

Learn how Allison cross-drive transmissions maximize performance and minimize Operation and Support (O&S) costs at allisontransmission.com.

About Allison Transmission
Allison Transmission (NYSE: ALSN) is a leading designer and manufacturer of propulsion solutions for commercial and defense vehicles and the largest global manufacturer of medium- and heavy-duty fully automatic transmissions that Improve the Way the World Works. Allison products are used in a wide variety of applications, including on-highway vehicles (distribution, refuse, construction, agriculture, fire and emergency), buses (school, transit and coach), motorhomes, off-highway vehicles and equipment (energy, mining and construction applications) and defense vehicles (tactical wheeled and tracked). Founded in 1915, the company is headquartered in Indianapolis, Indiana, USA. With a presence in more than 150 countries, Allison has regional headquarters in the Netherlands, China and Brazil, manufacturing facilities in the USA, Hungary and India, as well as global engineering resources, including electrification engineering centers in Indianapolis, Indiana, Auburn Hills, Michigan and London in the United Kingdom. Allison also has approximately 1,600 independent distributor and dealer locations worldwide. For more information, visit allisontransmission.com.

Forward-Looking Statements
This press release contains forward-looking statements. The words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Although forward-looking statements reflect management's good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements speak only as of the date the statements are made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to: our participation in markets that are competitive; our ability to prepare for, respond to and successfully achieve our objectives relating to technological and market developments, competitive threats and changing customer needs, including with respect to electric hybrid and fully electric commercial vehicles; increases in cost, disruption of supply or shortage of labor, freight, raw materials, energy or components used to manufacture or transport our products or those of our customers or suppliers, including as a result of geopolitical risks, wars and pandemics; global economic volatility; general economic and industry conditions, including the risk of recession; labor strikes, work stoppages or similar labor disputes, which could significantly disrupt our operations or those of our principal customers or suppliers; the highly cyclical industries in which certain of our end users operate; uncertainty in the global regulatory and business environments in which we operate; the concentration of our net sales in our top five customers and the loss of any one of these; the failure of markets outside North America to increase adoption of fully automatic transmissions; the success of our research and development efforts, the outcome of which is uncertain; U.S. and foreign defense spending; risks associated with our international operations, including acts of war and increased trade protectionism; the discovery of defects in our products, resulting in delays in new model launches, recall campaigns and/or increased warranty costs and reduction in future sales or damage to our brand and reputation; our ability to identify, consummate and effectively integrate acquisitions and collaborations; risks related to our indebtedness; and other risks and uncertainties associated with our business described in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. All information is as of the date of this press release, and we undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in expectations and risks related to our indebtedness.

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SOURCE Allison Transmission, Inc.

FAQ

What is the value of Allison Transmission's (ALSN) new Abrams tank contract for 2025?

Allison Transmission (ALSN) secured an $80.6 million contract for the Abrams Main Battle Tank Program for the 2025 program year.

What products will ALSN deliver under the 2025 Abrams tank contract?

Under the contract, ALSN will provide upgraded and new X1100 cross-drive transmissions, transmission repair kits, and technical support for the Abrams tanks.

Where will ALSN's transmissions be used in the 2025 Abrams program?

The transmissions will be used at the Joint Systems Manufacturing Center in Lima, Ohio, for new tanks, and at Anniston Army Depot for overhaul and repair activities.

When will ALSN begin deliveries for the 2025 Abrams tank contract?

Deliveries under this contract are expected to occur in 2025.