DETROIT, April 25 /PRNewswire-FirstCall/ -- American Axle &
Manufacturing Holdings, Inc. (AAM), which is traded as AXL on the NYSE,
today reported its financial results for the first quarter of 2008.
First Quarter 2008 results
-- First quarter sales of $587.6 million
-- Net loss of $27.0 million, or $0.52 per share
-- AAM's quarterly results reflect the adverse impact of the ongoing
strike called by the International UAW at AAM's original U.S.
locations in Michigan and New York; AAM estimates the reduction in
sales and operating income resulting from the International UAW strike
to be $132.6 million and $45.8 million (or $0.56 per share),
respectively
-- Special charges and other non-recurring operating costs of $3.5
million, or $0.04 per share, primarily related to the redeployment of
machinery and equipment and other actions to rationalize underutilized
capacity
-- 33% year-over-year decline in total light truck production volumes as
compared to the first quarter of 2007
-- Content-per-vehicle of $1,326, approximately 6% higher than the
previous year
AAM's results in the first quarter of 2008 were a net loss of $27.0
million or $0.52 per share. This compares to net earnings of $15.7 million,
or $0.30 per share, in the first quarter of 2007.
Upon expiration of the four-year master labor agreement between AAM and
the UAW at 11:59 p.m. on February 25, 2008, the International UAW called a
strike against AAM. The expiring master labor agreement covered
approximately 3,650 associates at AAM's original U.S. locations in Michigan
and New York. AAM estimates the reduction in sales and operating income
resulting from the International UAW strike to be $132.6 million and $45.8
million ($0.56 per share), respectively.
In the first quarter of 2008, AAM incurred $3.5 million, or $0.04 per
share, of special charges and non-recurring operating costs, primarily
related to the redeployment of machinery and equipment. In the first
quarter of 2007, AAM recorded special charges of $2.9 million, or $0.04 per
share, primarily related to attrition program activity.
"AAM's first quarter 2008 results were severely impacted by the strike
called by the International UAW at AAM's original U.S. locations on
February 25, 2008," said AAM Co-Founder, Chairman of the Board & Chief
Executive Officer Richard E. Dauch. "AAM must have a U.S. market cost
competitive labor agreement for the original U.S. locations with operating
flexibility. This is needed to compete for new business and match the
operational flexibility and efficiency of our competitors. While it would
be tragic to dismantle AAM's original U.S. manufacturing base, AAM will be
forced to consider additional restructuring and capacity rationalization
actions if the International UAW refuses to accept the structural and
permanent changes needed to achieve market cost competitiveness at these
facilities."
Net sales in the first quarter of 2008 were $587.6 million as compared
to $802.2 million in the first quarter of 2007. AAM estimates that
approximately $132.6 million of this decrease was attributable to the
International UAW strike. Customer production volumes for the full-size
truck and SUV programs AAM currently supports for GM and Chrysler were down
approximately 31% in the first quarter of 2008 as compared to the prior
year. AAM estimates that customer production volumes for its mid-sized
truck and SUV programs were down approximately 43% in the first quarter of
2008 on a year-over-year basis. Non-GM sales represented 26% of total sales
in the first quarter of 2008.
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 first quarter 2008,
AAM's content-per-vehicle increased approximately 6% to $1,326 as compared
to $1,252 in the first quarter of 2007.
Gross margin for the first quarter of 2008 was 2.2% as compared to
10.6% in first quarter 2007. Operating loss was $36.7 million or a negative
6.2% of sales in the first quarter of 2008 as compared to operating income
of $36.4 million or 4.5% of sales in the first quarter of 2007.
AAM's SG&A spending for the first quarter of 2008 was $49.4 million as
compared to $48.9 million in the first quarter of 2007. AAM's R&D spending
for the first quarter of 2008 was approximately $20.2 million as compared
to $20.1 million in the first quarter of 2007.
AAM defines free cash flow to be net cash provided by (or used in)
operating activities less capital expenditures and dividends paid. Net cash
provided by operating activities in the first quarter of 2008 was $8.2
million. Capital spending for the first quarter of 2008 was $33.3 million
as compared to $42.5 million in the first quarter of 2007. Reflecting the
impact of this activity and dividend payments of $8.0 million, AAM's free
cash flow use of $33.1 million in the first quarter of 2008 represents an
improvement of $7.4 million, or 18%, as compared to the first quarter of
2007.
A conference call to review AAM's first quarter of 2008 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 April 25, 2008 until 5:00 p.m. ET May 2, 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 39482270.
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, 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 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: the effect of the strike called by
the International United Automobile, Aerospace and Agricultural Implement
Workers of America on February 25, 2008; our ability to restore and
maintain satisfactory labor relations and avoid future work stoppages; our
ability to improve our U.S. labor cost structure; our suppliers' ability to
maintain satisfactory labor relations and avoid work stoppages; reduced
purchases of our products by GM, Chrysler LLC or other customers; reduced
demand of our customers' products or volume reductions (particularly light
trucks and SUVs produced by GM and Chrysler); 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 consummate
and integrate acquisitions; supply shortages or price increases in raw
materials, utilities or other operating supplies; 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 customers' and
suppliers' ability to maintain satisfactory labor relations and avoid work
stoppages; our ability to attract new customers and programs for new
products; our ability to develop new products that reflect market demand;
our ability to respond to changes in technology, increased competition or
pricing pressures; adverse changes in laws, government regulations or
market conditions affecting our products or our customers' products
(including the Corporate Average Fuel Economy regulations); adverse changes
in the economic conditions or 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;
availability of financing for working capital, capital expenditures,
research and development or other general corporate purposes, including our
ability to comply with financial covenants; 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
March 31,
-----------------------------
2008 2007
----------- ----------
(In millions, except per share data)
Net sales $587.6 $802.2
Cost of goods sold 574.9 716.9
----------- ----------
Gross profit (loss) 12.7 85.3
Selling, general and administrative
expenses 49.4 48.9
----------- ----------
Operating income (loss) (36.7) 36.4
Interest expense (15.3) (14.6)
Interest income 2.6 0.6
Other income (expense), net
Debt refinancing cost - -
Other, net 0.5 0.1
----------- ----------
Income (loss) before income taxes (48.9) 22.5
Income tax expense (benefit) (21.9) 6.8
----------- ----------
Net income (loss) $(27.0) $15.7
=========== ==========
Diluted earnings (loss) per share $(0.52) $0.30
=========== ==========
Diluted shares outstanding 51.6 52.1
=========== ==========
-------------------------------------------------------------------------
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
-------------------------------------------------------------------------
March 31, December 31,
2008 2007
-------- --------
(In millions)
ASSETS
------
Current assets
Cash and cash equivalents $315.5 $343.6
Accounts receivable, net 187.3 264.0
Inventories, net 248.3 242.8
Prepaid expenses and other 74.4 73.4
Deferred income taxes 17.7 19.5
-------- --------
Total current assets 843.2 943.3
Property, plant and equipment, net 1,678.8 1,696.2
Deferred income taxes 104.5 78.7
Goodwill 147.8 147.8
Other assets and deferred charges 55.3 57.4
-------- --------
Total assets $2,829.6 $2,923.4
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable $266.6 $313.8
Other accrued expenses 168.6 197.8
-------- --------
Total current liabilities 435.2 511.6
Long-term debt 864.1 858.1
Deferred income taxes 6.4 6.6
Postretirement benefits and other
long-term liabilities 646.7 647.7
-------- --------
Total liabilities 1,952.4 2,024.0
Stockholders' equity 877.2 899.4
-------- --------
Total liabilities and stockholders'
equity $2,829.6 $2,923.4
======== ========
------------------------------------------------------------------------
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
------------------------------------------------------------------------
Three months ended
March 31,
--------------------------
2008 2007
-------- --------
(In millions)
Operating activities
Net income (loss) $(27.0) $15.7
Depreciation and amortization 56.6 56.4
Other (21.4) (62.3)
-------- --------
Net cash flow provided by operating
activities 8.2 9.8
Purchases of property, plant &
equipment (33.3) (42.5)
-------- --------
Net cash flow after purchases of
property, plant & equipment (25.1) (32.7)
-------- --------
Net cash flow provided by (used in)
operations (25.1) (32.7)
Net increase (decrease) in long-term debt 4.8 169.4
Debt issuance costs - (5.2)
Repurchase of treasury stock (0.1) -
Employee stock option exercises 0.3 4.4
Dividends paid (8.0) (7.8)
-------- --------
Net cash flow provided by (used in)
financing activities (3.0) 160.8
Effect of exchange rate changes on cash - 0.3
-------- --------
Net increase in cash and cash
equivalents (28.1) 128.4
Cash and cash equivalents at
beginning of period 343.6 13.5
-------- --------
Cash and cash equivalents at end of period $315.5 $141.9
======== ========
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
March 31,
2008 2007
-------- --------
(In millions)
Net income (loss) $(27.0) $15.7
Interest expense 15.3 14.6
Income taxes (21.9) 6.8
Depreciation and amortization 56.6 56.4
-------- --------
EBITDA $23.0 $93.5
======== ========
Net debt(b) to capital
March 31, December 31,
2008 2007
-------- --------
(In millions, except percentages)
Total debt $864.1 $858.1
Less: cash and cash equivalents 315.5 343.6
-------- --------
Net debt at end of period 548.6 514.5
Stockholders' equity 877.2 899.4
-------- --------
Total invested capital at end of period $1,425.8 $1,413.9
======== ========
Net debt to capital(c) 38.5% 36.4%
======== ========
Net Operating Cash Flow and Free Cash Flow(d)
Three months ended
March 31,
2008 2007
-------- --------
(In millions)
Net cash provided by operating activities $8.2 $9.8
Less: purchases of property, plant &
equipment (33.3) (42.5)
-------- --------
Net operating cash flow (25.1) (32.7)
Less: dividends paid (8.0) (7.8)
-------- --------
Free cash flow $(33.1) $(40.5)
======== ========
-------------------------------------------------------------------------
(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.
(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.
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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