Net cash provided by operating activities nearly doubles to $367.9 million
for full year 2007
DETROIT, Feb. 1 /PRNewswire-FirstCall/ -- American Axle & Manufacturing
Holdings, Inc. (AAM), which is traded as AXL on the NYSE, today reported
its financial results for the fourth quarter and full year 2007.
Full Year 2007 Results
-- Full year sales of $3.25 billion
-- Net earnings of $37.0 million, or $0.70 per share
-- Special charges and other non-recurring operating costs of
$88.4 million, or $1.11 per share, primarily related to attrition
programs, asset impairments, the redeployment of machinery and
equipment and other actions to rationalize underutilized capacity
-- Debt refinancing costs of $5.5 million, or $0.07 per share
-- Net cash provided by operating activities of $367.9 million, nearly
double the prior year
-- 3.5% year-over-year decline in total light truck production volumes as
compared to the full year 2006
-- Content-per-vehicle of $1,293, approximately 5% higher than the
previous year
-- Non-GM sales of $712.3 million, or 22% of total net sales
AAM's results in the fourth quarter of 2007 were a net loss of $25.5
million or $0.50 per share. This compares to a net loss of $188.6 million,
or $3.74 per share, in the fourth quarter of 2006.
AAM's earnings for the full year 2007 were $37.0 million, or $0.70 per
share. This compares to a net loss of $222.5 million, or $4.42 per share,
in 2006.
In the third and fourth quarter of 2007, AAM recorded special charges
relating to a voluntary separation program accepted by 558 UAW represented
associates at the Buffalo Gear, Axle & Linkage facility in Buffalo, New
York. Production at this facility was idled in December 2007. Also in 2007,
AAM incurred additional special charges and non-recurring operating costs
relating to other attrition programs, asset impairments, the redeployment
of machinery and equipment and other actions to rationalize underutilized
capacity. In total, AAM's 2007 results reflect the impact of charges
amounting to $88.4 million, or $1.11 per share, relating to these items,
including pension and other postretirement benefit curtailments and special
termination benefits. In the fourth quarter of 2007, AAM recorded $70.6
million, or $0.92 per share, of these total restructuring charges.
AAM's full year 2007 earnings also reflect the impact of an additional
$5.5 million charge, or $0.07 per share, for the write-off of unamortized
debt issuance costs and other costs related to the prepayment of the $250
million term loan due 2010.
In the fourth quarter of 2006, AAM recorded special charges relating to
a special attrition program (SAP) accepted by approximately 1,500 UAW
represented associates at AAM's master agreement facilities. AAM also
recorded a special charge in 2006 for supplemental unemployment benefits
(SUB) estimated to be payable to UAW associates who were expected to be
permanently idled through the end of the current collective bargaining
agreement that expires in February 2008. AAM recorded additional special
charges associated with salaried workforce reductions and other attrition
programs offered to its associates. In total, these special charges
increased AAM's operating costs in 2006 by $181.4 million. In addition to
these special charges, AAM also recorded asset impairment charges of $196.5
million in the fourth quarter of 2006 associated with plans to idle a
portion of AAM's production capacity in the U.S. dedicated to its mid-size
light truck product range and other capacity reduction initiatives.
"In 2007, AAM made excellent progress in our plan to achieve
sustainable market cost competitiveness in our global operations," said
AAM's Co-Founder, Chairman of the Board & CEO Richard E. Dauch. "AAM has a
strong balance sheet and will continue to focus on the appropriate cost
structure adjustments, technology innovations, new business launches and an
accelerated expansion of our global manufacturing and sourcing footprint to
gain momentum in 2008. We are excited about what AAM can, and will,
accomplish in what is sure to be a most difficult, demanding and tough year
for the entire domestic automotive industry."
Net sales in the fourth quarter of 2007 were $755.3 million as compared
to $781.1 million in the fourth quarter of 2006. Customer production
volumes for the full-size truck and SUV programs AAM currently supports for
GM and Chrysler were down approximately 5% in the fourth quarter of 2007 as
compared to the prior year. AAM estimates that customer production volumes
for its mid-sized truck and SUV programs were down approximately 1.4% in
the fourth quarter of 2007 on a year-over-year basis. Non-GM sales
represented 20% of total sales in the fourth quarter of 2007.
Net sales for the full year 2007 were $3.25 billion as compared to
$3.19 billion in 2006. Customer production volumes for the full-size truck
and SUV programs AAM currently supports for GM and Chrysler were down
approximately 1.5% in 2007 as compared to the prior year. AAM estimates
that customer production volumes for its mid-sized truck and SUV programs
were down approximately 11% in 2007 on a year-over-year basis. Non-GM sales
represented 22% of total sales in 2007.
AAM's content-per-vehicle is measured by the dollar value of its
product sales supporting GM's North American truck and SUV platforms and
Chrysler's heavy duty Dodge Ram pickup trucks. For the full year 2007,
AAM's content-per- vehicle increased approximately 5% to $1,293 as compared
to $1,225 in 2006.
Gross margin in for the full year 2007 was 8.6% as compared to a
negative 4.0% in 2006. Operating income was $75.6 million or 2.3% of sales
in 2007 as compared to an operating loss of $326.0 million or negative
10.2% of sales in 2006. In addition to the impact of the special charges
and other non-recurring operating costs described above, AAM's improved
gross margin and operating income performance in 2007 primarily reflects
the impact of higher sales, productivity gains and structural cost
reductions resulting from the attrition programs and other ongoing
restructuring actions.
AAM defines free cash flow to be net cash provided by (or used in)
operating activities less capital expenditures and dividends paid. As
compared to the prior year, net cash provided by operating activities for
the full year 2007 nearly doubled to $367.9 million. Capital spending for
the full year 2007 was $186.5 million as compared to $286.6 million in
2006. Reflecting the impact of this activity and dividend payments of $31.8
million, AAM's free cash flow of $149.6 million in 2007 represents an
improvement of $281.5 million as compared to the full year 2006.
A conference call to review AAM's fourth quarter and full year 2007
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 (706) 643-3736 from outside the United States. A replay will be
available from 5:00 p.m. ET on February 1, 2008 until 5:00 p.m. ET February
8, 2008 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 29997749.
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 (Michigan, New York, Ohio and
Indiana), AAM also has offices or facilities in Brazil, China, Germany,
India, Japan, Luxembourg, Mexico, Poland, South Korea 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 are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and are
based on our current expectations, are inherently uncertain, are subject to
risks and should be viewed with caution. Actual results and experience may
differ materially from the forward-looking statements as a result of many
factors, including but not limited to: adverse changes in the economic
conditions or political stability of our principal markets (particularly
North America, Europe and South America); reduced demand of our customers'
products or volume reductions, particularly for light trucks and SUVs
produced by GM and Chrysler LLC's heavy-duty Dodge Ram full-size pickup
trucks, or the Dodge Ram program; our ability to maintain satisfactory
labor relations and avoid work stoppages; our ability to achieve cost
reductions through accelerated attrition programs; reduced purchases of our
products by GM, Chrysler LLC or other customers; our ability and our
customers' ability to successfully launch new product programs; our ability
to respond to changes in technology or increased competition; supply
shortages or price fluctuations in raw materials, utilities or other
operating supplies; work stoppages at GM or Chrysler LLC or a key supplier
to GM or Chrysler LLC; risks of noncompliance with environmental
regulations or risks of environmental issues that could result in
unforeseen costs at our facilities; liabilities arising from legal
proceedings to which we are or may become a party or claims against us or
our products; availability of financing for working capital, capital
expenditures, research and development or other general corporate purposes,
including our ability to comply with financial covenants; adverse changes
in laws, government regulations or market conditions affecting our products
or our customers' products (including the Corporate Average Fuel Economy
regulations); 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 "Item 1A. Risk Factors" in our most recent
annual report on Form 10-K and quarterly reports on Form 10-Q. 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.
For additional information:
Media relations contact: Investor relations contact:
Renee B. Rogers Jamie M. Little
Manager, Corporate Communications Director, Investor Relations
and Media Relations (313) 758-4831
(313) 758-4882 jamie.little@aam.com
renee.rogers@aam.com
Or visit the AAM website at http://www.aam.com
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
--------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
-------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
(In millions, except (In millions, except
per share data) per share data)
Net sales $755.3 $781.1 $3,248.2 $3,191.7
---------- ---------- ---------- ----------
Cost of goods sold 755.4 1,001.1 2,969.8 3,320.3
---------- ---------- ---------- ----------
Gross profit (loss) (0.1) (220.0) 278.4 (128.6)
Selling, general and
administrative expenses 47.7 51.6 202.8 197.4
---------- ---------- ---------- ----------
Operating income (loss) (47.8) (271.6) 75.6 (326.0)
Interest expense (14.9) (11.9) (61.6) (39.0)
Interest income 3.3 0.1 9.3 0.2
Other income (expense), net
Debt refinancing cost - - (5.5) (2.7)
Other, net (0.3) 0.6 (0.2) 12.0
---------- ---------- ---------- ----------
Income (loss) before income
taxes (59.7) (282.8) 17.6 (355.5)
Income taxes (34.2) (94.2) (19.4) (133.0)
---------- ---------- ---------- ----------
Net income (loss) $(25.5) $(188.6) $37.0 $(222.5)
========== ========== ========== ==========
Diluted earnings (loss)
per share $(0.50) $(3.74) $0.70 $(4.42)
========== ========== ========== ==========
Diluted shares outstanding 51.5 50.5 52.7 50.4
========== ========== ========== ==========
--------------------------------------------------------------------------
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
--------------------------------------------------------------------------
December 31, December 31,
2007 2006
------------ ------------
(In millions)
ASSETS
Current assets
Cash and cash equivalents $343.6 $13.5
Accounts receivable, net 264.0 327.6
Inventories, net 229.0 198.4
Prepaid expenses and other 73.4 69.2
Deferred income taxes 24.6 30.7
---------- ----------
Total current assets 934.6 639.4
Property, plant and equipment, net 1,696.2 1,731.7
Deferred income taxes 78.7 35.7
Goodwill 147.8 147.8
Other assets and deferred charges 57.4 42.9
---------- ----------
Total assets $2,914.7 $2,597.5
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $313.8 $328.9
Other accrued expenses 197.8 212.4
---------- ----------
Total current liabilities 511.6 541.3
Long-term debt 858.1 672.2
Deferred income taxes 6.6 6.8
Postretirement benefits and other
long-term liabilities 647.7 563.5
---------- ----------
Total liabilities 2,024.0 1,783.8
Stockholders' equity 890.7 813.7
---------- ----------
Total liabilities and stockholders' equity $2,914.7 $2,597.5
========== ==========
--------------------------------------------------------------------------
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
--------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
-------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
(In millions) (In millions)
Operating activities
Net income (loss) $(25.5) $(188.6) $37.0 $(222.5)
Depreciation and
amortization 58.4 52.7 229.4 206.0
Other 3.4 159.9 101.5 202.2
-------- -------- -------- --------
Net cash flow provided by
operating activities 36.3 24.0 367.9 185.7
Purchases of property,
plant & equipment (53.5) (43.1) (186.5) (286.6)
-------- -------- -------- --------
Net cash flow after
purchases of property,
plant & equipment (17.2) (19.1) 181.4 (100.9)
-------- -------- -------- --------
Purchase buyouts of leased
equipment - (17.5) - (37.0)
-------- -------- -------- --------
Net cash flow provided by
(used in) operations (17.2) (36.6) 181.4 (137.9)
Net increase (decrease) in
long-term debt 4.8 43.0 172.3 180.5
Debt issuance costs - (1.3) (7.5) (4.4)
Employee stock option
exercises 0.9 0.9 13.5 1.3
Tax benefit on stock options 1.2 1.0 3.8 1.0
Dividends paid (8.0) (7.7) (31.8) (31.0)
Purchase of treasury of stock (0.1) - (2.0) (0.1)
-------- -------- -------- --------
Net cash flow provided by
(used in) financing
activities (1.2) 35.9 148.3 147.3
Effect of exchange rate
changes on cash (0.1) 0.3 0.4 0.4
-------- -------- -------- --------
Net increase in cash and
cash equivalents (18.5) (0.4) 330.1 9.8
Cash and cash equivalents at
beginning of period 362.1 13.9 13.5 3.7
-------- -------- -------- --------
Cash and cash equivalents
at end of period $343.6 $13.5 $343.6 $13.5
======== ======== ======== ========
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
SUPPLEMENTAL DATA
(Unaudited)
--------------------------------------------------------------------------
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.
Earnings before interest expense, income taxes and depreciation and
amortization (EBITDA)(a)
Three months ended Twelve months ended
December 31, December 31,
-------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
(In millions) (In millions)
Net income (loss) $(25.5) $(188.6) $37.0 $(222.5)
Interest expense 14.9 11.9 61.6 39.0
Income taxes (34.2) (94.2) (19.4) (133.0)
Depreciation and amortization 58.4 52.7 229.4 206.0
-------- -------- -------- --------
EBITDA $13.6 $(218.2) $308.6 $(110.5)
======== ======== ======== ========
Net debt(b) to capital
December 31, December 31,
2007 2006
------------ ------------
(In millions, except percentages)
Total debt $858.1 $672.2
Less: cash and cash equivalents 343.6 13.5
---------- ----------
Net debt at end of period 514.5 658.7
Stockholders' equity 890.7 813.7
---------- ----------
Total invested capital at end of period $1,405.2 $1,472.4
========== ==========
Net debt to capital(c) 36.6% 44.7%
========== ==========
--------------------------------------------------------------------------
(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.
(b) Net debt is equal to total debt less cash and cash equivalents.
(c) Net debt to capital is equal to net debt divided by the sum of
stockholders' equity 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.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
SUPPLEMENTAL DATA (CONTINUED)
(Unaudited)
--------------------------------------------------------------------------
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.
Net Operating Cash Flow and Free Cash Flow(d)
Three months ended Twelve months ended
December 31, December 31,
-------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
(In millions) (In millions)
Net cash provided by
operating activities $36.3 $24.0 $367.9 $185.7
Less: purchases of property,
plant & equipment (53.5) (43.1) (186.5) (286.6)
-------- -------- -------- --------
Net operating cash flow (17.2) (19.1) 181.4 (100.9)
Less: dividends paid (8.0) (7.7) (31.8) (31.0)
-------- -------- -------- --------
Free cash flow $(25.2) $(26.8) $149.6 $(131.9)
======== ======== ======== ========
After-Tax Return on Invested Capital (ROIC)(e)
Trailing
Twelve
Quarter Ended Months
---------------------------------------- Ended
March 31, June 30, Sept. 30, Dec. 31, Dec. 31,
2007 2007 2007 2007 2007
Net income (loss) $15.4 $34.0 $13.1 $(25.5) $37.0
After-tax net interest
expense (f) 12.8 14.1 10.5 10.6 48.0
-------- -------- -------- -------- --------
After-tax return $28.2 $48.1 $23.6 $(14.9) $85.0
======== ======== ======== ======== ========
Net debt at end of
period $514.5
Stockholders' equity
at end of period 890.7
----------
Invested capital at
end of period 1,405.2
Invested capital at
beginning of period 1,472.4
----------
Average invested
capital(g) $1,438.8
==========
After-Tax ROIC(h) 5.9%
--------------------------------------------------------------------------
(d) We define net operating cash flow as net cash provided by operating
activities less purchases of property and equipment. 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.
(e) We believe that ROIC is a meaningful overall measure of business
performance because it reflects the company's earnings performance
relative to its investment level. Other companies may calculate ROIC
differently.
(f) After-tax net interest expense is equal to tax effecting net interest
expense by the applicable effective income tax rate (excluding
one-time items).
(g) Average invested capital is equal to the average of invested capital
at the beginning of the year and end of the year.
(h) After-tax ROIC is equal to after-tax return divided by average
invested capital.
SOURCE American Axle & Manufacturing Holdings, Inc.
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Related links:
http://www.aam.com
http://investor.aam.com
http://www.prnewswire.com/comp/033813.html/
CONTACT:
Media, Renee B. Rogers, Manager, Corporate
Communications and Media Relations, +1-313-758-4882,
renee.rogers@aam.com, or Investors, Jamie M. Little, Director,
Investor Relations, +1-313-758-4831, jamie.little@aam.com, both
of American Axle & Manufacturing Holdings, Inc.
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