30% year-over-year sales increase in AAM's third consecutive profitable quarter
(PRNewswire) — American Axle & Manufacturing Holdings, Inc. (AAM), which is traded as AXL on the NYSE, today reported its financial results for the first quarter of 2010.First Quarter 2010 Results
- First quarter 2010 sales of $521.9 million
- Non-GM sales of $124.1 million, nearly 24% of total net sales
- Gross profit of $87.3 million, or 16.7% of sales
- Operating income of $42.0 million, or 8.0% of sales
- Net income of $16.3 million, or $0.22 per share
- Net cash provided by operating activities of $79.0 million, includes a $48.8 million U.S. income tax refund
- Free cash flow (net cash provided by operating activities less capital expenditures net of proceeds from the sales of equipment) of $61.1 million, a $126.7 year-over-year increase
AAM's results in the first quarter were net earnings of $16.3 million or $0.22 per share. This compares to a net loss of $32.7 million or $0.59 per share in the first quarter of 2009.
In the first quarter of 2009, AAM incurred $12.3 million, or $0.22 per share, of special charges and non-recurring operating costs, primarily related to hourly and salaried workforce reductions (including attrition programs and related statutory benefits), plant closures and other actions to redeploy underutilized assets to avoid future capital spending.
"AAM's financial results for the first quarter of 2010 continued a positive trend of improved profit and cash flow performance," said AAM's Co-Founder, Chairman of the Board and Chief Executive Officer, Richard E. Dauch. "These results reflect the favorable impact of improving global industry conditions and the structural benefit of our focused and continuing efforts to sustain reductions in AAM's fixed cost structure and operating breakeven level."
Net sales in the first quarter of 2010 increased approximately 30% on a year-over-year basis to $521.9 million as compared to $402.4 million in the first quarter of 2009. On a sequential basis, net sales in the quarter increased approximately 12% as compared to the fourth quarter of 2009.
Customer production volumes for the North American light truck and SUV programs that AAM currently supports for GM and Chrysler were up approximately 25% in the first quarter of 2010 as compared to the first quarter of 2009.
Non-GM sales in the first quarter of 2010 increased approximately 30% on a year-over-year basis to $124.1 million, or 23.8% of total sales. On a sequential basis, non-GM sales in the quarter increased approximately 21% as compared to the fourth quarter of 2009.
AAM's content-per-vehicle is measured by the dollar value of its product sales supporting GM's North American light truck and SUV programs and Chrysler's heavy duty Dodge Ram pickup trucks. For the first quarter of 2010, AAM's content-per-vehicle was $1,390.
Gross profit in the first quarter of 2010 increased $60.2 million on a year-over-year basis to $87.3 million, or 16.7% of sales, as compared to the first quarter of 2009. On a sequential basis, gross profit in the quarter increased approximately 28% as compared to the fourth quarter of 2009.
Gross profit in the first quarter of 2010 reflects the adverse impact of an arbitration ruling related to the transfer of certain production from the Detroit Manufacturing Complex to another AAM facility. In connection with the arbitrator's ruling, AAM recorded a liability for back wages and benefits owed to certain UAW represented associates at the Detroit Manufacturing Complex.
Operating income in the first quarter of 2010 was $42.0 million, or 8.0% of sales.
Net income in the first quarter of 2010 was $16.3 million, or 3.1% of sales.
AAM's SG&A spending in the first quarter of 2010 was $45.3 million as compared to $43.8 million in the first quarter of 2009. AAM's R&D spending for the first quarter of 2010 was approximately $19.1 million as compared to $18.7 million in 2009.
AAM defines free cash flow to be net cash provided by (or used in) operating activities less capital expenditures net of proceeds from the sales of equipment. Net cash provided by operating activities in the first quarter of 2010 was $79.0 million. Capital spending net of proceeds from the sales of equipment in the first quarter of 2010 was $17.9 million. Reflecting the impact of this activity, AAM generated $61.1 million of positive free cash flow in the quarter. In the first quarter of 2009, AAM's free cash flow use was $65.6 million.
Included in AAM's first quarter of 2010 free cash flow is a $48.8 million U.S. income tax refund AAM received in connection with a special 5-year net operating loss carryback election included in the Worker, Home Ownership and Business Act of 2009.
As of March 31, 2010, AAM had total available liquidity greater than $500 million, consisting of available cash, short-term investments and committed borrowing capacity on AAM's U.S. credit facilities. This compares to a committed liquidity position of approximately $481 million at December 31, 2009.
A conference call to review AAM's first quarter 2010 results is scheduled today at 10:00 a.m. ET. Interested participants may listen to the live conference call by logging onto AAM's investor web site at http://investor.aam.com or calling (877) 278-1452 from the United States or (973) 200-3383 from outside the United States. A replay will be available from Noon. ET on April 30, 2010 until 5:00 p.m. ET May 7, 2010 by dialing (800) 642-1687 from the United States or (706) 645-9291 from outside the United States. When prompted, callers should enter conference reservation number 67946814.
Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles generally accepted in the United States of America (GAAP) included within this press release, AAM has provided certain information, which includes non-GAAP financial measures. Such information is reconciled to its closest GAAP measure in accordance with the Securities and Exchange Commission rules and is included in the attached supplemental data.
Management believes that these non-GAAP financial measures are useful to both management and its stockholders in their analysis of the Company's business and operating performance. Management also uses this information for operational planning and decision-making purposes.
Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measure. Additionally, non-GAAP financial measures as presented by AAM may not be comparable to similarly titled measures reported by other companies.
AAM is a world leader in the manufacture, engineering, design and validation of driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for trucks, sport utility vehicles, passenger cars and crossover utility vehicles. In addition to locations in the United States (Indiana, Michigan, New York, Ohio, and Pennsylvania), AAM also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea, Thailand and the United Kingdom.
Certain statements contained in this press release are "forward-looking statements" and relate to the Company's plans, projections, strategies or future performance. Such statements, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, are based on our current expectations, are inherently uncertain, are subject to risks and should be viewed with caution. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and may differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to: global economic conditions; our ability to comply with the definitive terms and conditions of various commercial and financing arrangements with GM; reduced purchases of our products by GM, Chrysler or other customers; reduced demand for our customers' products (particularly light trucks and SUVs produced by GM and Chrysler); availability of financing for working capital, capital expenditures, R&D or other general corporate purposes, including our ability to comply with financial covenants; our customers' and suppliers' availability of financing for working capital, capital expenditures, R&D or other general corporate purposes; the impact on us and our customers of requirements imposed on, or actions taken by, our customers in response to the U.S. government's ownership interest, the Troubled Asset Relief Program or similar programs; our ability to achieve cost reductions through ongoing restructuring actions; additional restructuring actions that may occur; our ability to achieve the level of cost reductions required to sustain global cost competitiveness; our ability to maintain satisfactory labor relations and avoid future work stoppages; our suppliers', our customers' and their suppliers' ability to maintain satisfactory labor relations and avoid work stoppages; our ability to continue to implement improvements in our U.S. labor cost structure; supply shortages or price increases in raw materials, utilities or other operating supplies; currency rate fluctuations; our ability or our customers' and suppliers' ability to successfully launch new product programs on a timely basis; our ability to realize the expected revenues from our new and incremental business backlog; our ability to attract new customers and programs for new products; our ability to develop and produce new products that reflect market demand; lower-than-anticipated market acceptance of new or existing products; our ability to respond to changes in technology, increased competition or pricing pressures; price volatility in, or reduced availability of fuel; adverse changes in laws, government regulations or market conditions affecting our products or our customers' products (such as the Corporate Average Fuel Economy ("CAFE") regulations); adverse changes in the political stability of our principal markets (particularly North America, Europe, South America and Asia); liabilities arising from warranty claims, product liability and legal proceedings to which we are or may become a party; changes in liabilities arising from pension and other postretirement benefit obligations; risks of noncompliance with environmental regulations or risks of environmental issues that could result in unforeseen costs at our facilities; our ability to attract and retain key associates; and other unanticipated events and conditions that may hinder our ability to compete. For additional discussion, see "Risk factors related to our business" in our most recent 10K filing.
It is not possible to foresee or identify all such factors and we assume no obligation to update any forward-looking statements or to disclose any subsequent facts, events or circumstances that may affect their accuracy.
Visit the AAM website at www.aam.com.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. | |||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
(Unaudited) | |||||
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| Three months ended | |||
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| March 31, | |||
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| 2010 |
| 2009 | |
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| (In millions, except per share data) | |||
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Net sales |
| $ 521.9 |
| $ 402.4 | |
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Cost of goods sold |
| 434.6 |
| 375.3 | |
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Gross profit |
| 87.3 |
| 27.1 | |
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Selling, general and administrative expenses | 45.3 |
| 43.8 | ||
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Operating income (loss) |
| 42.0 |
| (16.7) | |
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Interest expense |
| (22.7) |
| (20.4) | |
Investment income |
| 0.4 |
| 1.0 | |
Other income (expense), net | (1.5) |
| (0.8) | ||
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Income (loss) before income taxes | 18.2 |
| (36.9) | ||
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Income tax expense (benefit) | 2.0 |
| (4.2) | ||
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Net income (loss) |
| 16.2 |
| (32.7) | |
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Net loss attributable to noncontrolling interest | 0.1 |
| - | ||
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Net income (loss) attributable to AAM | $ 16.3 |
| $ (32.7) | ||
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Diluted earnings (loss) per share | $ 0.22 |
| $ (0.59) | ||
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Diluted shares outstanding | 74.6 |
| 55.4 | ||
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(Unaudited) | ||||
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| March 31, |
| December 31, | |
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| 2009 | |
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| (In millions) | |||
ASSETS |
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Current assets |
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Cash and cash equivalents | $ 176.6 |
| $ 178.1 | |
Short-term investments | 2.8 |
| 4.2 | |
Accounts receivable, net | 166.8 |
| 129.7 | |
Inventories, net | 99.8 |
| 90.6 | |
Prepaid expenses and other | 71.2 |
| 114.0 | |
Total current assets | 517.2 |
| 516.6 | |
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Property, plant and equipment, net | 939.5 |
| 946.7 | |
GM postretirement cost sharing asset | 214.4 |
| 219.9 | |
Goodwill | 147.8 |
| 147.8 | |
Other assets and deferred charges | 148.7 |
| 155.8 | |
Total assets | $ 1,967.6 |
| $ 1,986.8 | |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current liabilities |
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Accounts payable | $ 256.5 |
| $ 200.9 | |
Accrued expenses and other | 261.0 |
| 244.6 | |
Total current liabilities | 517.5 |
| 445.5 | |
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Long-term debt | 1,015.2 |
| 1,071.4 | |
Deferred revenue | 170.5 |
| 189.7 | |
Postretirement benefits and other long-term liabilities | 809.8 |
| 840.1 | |
Total liabilities | 2,513.0 |
| 2,546.7 | |
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Stockholders' deficit | (545.4) |
| (559.9) | |
Total liabilities and stockholders' deficit | $ 1,967.6 |
| $ 1,986.8 | |
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(Unaudited) | ||||
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| Three months ended | |||
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| March 31, | |||
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| 2009 | |
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| (In millions) | |||
Operating activities |
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Net income (loss) | $ 16.2 |
| $ (32.7) | |
Depreciation and amortization | 31.6 |
| 35.9 | |
Other | 31.2 |
| (24.5) | |
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Net cash flow provided by (used in) operating activities | 79.0 |
| (21.3) | |
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Purchases of property, plant & equipment | (18.8) |
| (44.8) | |
Purchase buyouts of leased equipment | (4.0) |
| - | |
Investment in joint venture | - |
| (10.2) | |
Proceeds from sales of equipment | 0.9 |
| 0.5 | |
Redemption of short-term investments | 1.4 |
| 58.9 | |
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Net cash flow provided by (used in) investing activities | (20.5) |
| 4.4 | |
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Net decrease in long-term debt | (55.5) |
| (45.0) | |
Debt issuance costs | (2.2) |
| - | |
Repurchase of treasury stock | (1.2) |
| - | |
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Net cash flow used in financing activities | (58.9) |
| (45.0) | |
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Effect of exchange rate changes on cash | (1.1) |
| 0.2 | |
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Net decrease in cash and cash equivalents | (1.5) |
| (61.7) | |
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Cash and cash equivalents at beginning of period | 178.1 |
| 198.8 | |
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Cash and cash equivalents at end of period | $ 176.6 |
| $ 137.1 | |
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. | ||||||||||||
SUPPLEMENTAL DATA | ||||||||||||
(Unaudited) | ||||||||||||
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The supplemental data presented below is a reconciliation of certain financial measures which is intended | ||||||||||||
to facilitate analysis of American Axle & Manufacturing Holdings, Inc. business and operating performance. | ||||||||||||
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Earnings before interest expense, income taxes and depreciation and amortization (EBITDA)(a) | ||||||||||||
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| 2010 |
| 2009 | |
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| (In millions) | |||
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Net income (loss) attributable to AAM |
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| $ 16.3 |
| $ (32.7) | |
Interest expense |
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| 22.7 |
| 20.4 | |
Income taxes |
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| 2.0 |
| (4.2) | |
Depreciation and amortization |
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| 31.6 |
| 35.9 | |
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EBITDA |
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| $ 72.6 |
| $ 19.4 | |
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Net debt(b) to capital | ||||||||||||
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| March 31, |
| December 31, | |
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| 2010 |
| 2009 | |
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| (In millions, except percentages) | |||
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Total debt |
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| $ 1,015.2 |
| $ 1,071.4 | |
Less: cash and cash equivalents |
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| 176.6 |
| 178.1 | |
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Net debt at end of period |
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| 838.6 |
| 893.3 | |
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Stockholders' deficit |
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| (545.4) |
| (559.9) | |
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Total invested capital at end of period |
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| $ 293.2 |
| $ 333.4 | |
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Net debt to capital(c) |
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| 286.0% |
| 267.9% | |
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Net Operating Cash Flow and Free Cash Flow(d) | ||||||||||||
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| Three months ended | |||
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| 2010 |
| 2009 | |
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| (In millions) | |||
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Net cash provided by (used in) operating activities |
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| $ 79.0 |
| $ (21.3) | ||
Less: Purchases of property, plant & equipment, net of proceeds from sale of equipment |
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| (17.9) |
| (44.3) | ||||
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Net operating cash flow |
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| 61.1 |
| (65.6) | |
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Less: dividends paid |
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| - |
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Free cash flow |
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| $ 61.1 |
| $ (65.6) | |
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(a) We believe that EBITDA is a meaningful measure of performance as it is commonly utilized by management and investors to analyze operating performance and entity valuation. Our management, the investment community and the banking institutions routinely use EBITDA, together with other measures, to measure our operating performance relative to other Tier 1 automotive suppliers. EBITDA should not be construed as income from operations, net income or cash flow from operating activities as determined under GAAP. Other companies may calculate EBITDA differently. | ||||||||||||
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(b) Net debt is equal to total debt less cash and cash equivalents. | ||||||||||||
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(c) Net debt to capital is equal to net debt divided by the sum of stockholders' deficit and net debt. We believe that net debt to capital is a meaningful measure of financial condition as it is commonly utilized by management, investors and creditors to assess relative capital structure risk. Other companies may calculate net debt to capital differently. | ||||||||||||
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(d) We define net operating cash flow as net cash provided by operating activities less purchases of property and equipment net of proceeds from sales of assets. Free cash flow is defined as net operating cash flow less dividends paid. We believe net operating cash flow and free cash flow are meaningful measures as they are commonly utilized by management and investors to assess our ability to generate cash flow from business operations to repay debt and return capital to our stockholders. Net operating cash flow is also a key metric used in our calculation of incentive compensation. Other companies may calculate net operating cash flow and free cash flow differently. | ||||||||||||
For more information... |
| |
Christopher M. Son | David Tworek | |
Director, Investor Relations and | Manager, Communications | |
Corporate Communications | (313) 758-4883 | |
(313) 758-4814 | ||
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SOURCE American Axle & Manufacturing Holdings, Inc.
| Contact: |
| American Axle & Manufacturing Holdings, Inc.
Christopher M. Son, Director, Investor Relations and Corporate Communications Phone: +1-313-758-4814 Email Contact David Tworek, Manager, Communications Phone: +1-313-758-4883 Email Contact Web: http://www.aam.com |