Allison expects 50-percent drop in quarterly earnings

Allison Transmission Holdings Inc. said Monday that it expects its first-quarter earnings to fall by more than half, but that would still beat current Wall Street predictions.

The Indianapolis-based company, which makes automatic transmissions for commercial, military and transit vehicles, also said it's doubling its quarterly cash dividend and announced that some of its shareholders plan to sell 22 million shares of its stock in an offering.

For the quarter ended March 31, Allison projected earnings of $27.5 million, down from $58 million in the year-ago period. Revenue is expected to total between $455 million and $460 million, compared with $601.9 million a year ago.

Analysts, on average, expect earnings of $21.2 million on $459.3 million in revenue, according to FactSet.

The company said the quarter's results reflect considerably lower North American demand for equipment used in hydraulic fracturing, along with lower defense sales.

Allison reaffirmed its full-year guidance of a sales decline of between 6 percent and 8 percent. Based on the company's 2012 results, the guidance implies 2013 revenue of between $1.97 billion and $2.01 billion. Analysts expect $1.99 billion.

The company said that for the full-year, it still expects low demand from the North Americas hydraulic fracturing market, reductions to U.S. defense spending, along with lower demand for North American hybrid-propulsion systems used in buses.

The company also said that its board approved the increase of its quarterly cash dividend by 6 cents to 12 cents. The dividend will be paid on May 31 to shareholders of record as of May 17.

Allison also said that a group of its investors plans to sell 22 million shares of its common stock. The offering's underwriters also have the option to buy an additional 3.3 million shares.

After the offering, the group will still own about 70 percent of Allison's common stock, or about 68 percent if the underwriters fully exercise their option.

Allison shares fell $1.13, or 4.8 percent, to $22.66 in Monday morning trading. Its shares peaked for the past year at $24.24 on Feb. 19. They traded as low as $15.82 last July.