Updates Full-year 2007 Earnings Guidance
DETROIT, April 27 /PRNewswire-FirstCall/ -- American Axle &
Manufacturing Holdings, Inc. (AAM), which is traded as AXL on the NYSE,
today reported sales and earnings for the first quarter of 2007.
First Quarter 2007 highlights
-- First quarter sales of $802.2 million
-- 9% year-over-year decline in production volumes as compared to the
first quarter of 2006
-- 4% sequential increase in production volumes as compared to fourth
quarter of 2006
-- Gross profit increased $21.3 million, or 34% to $84.8 million as
compared to the prior year
-- Operating income more than doubled to $35.9 million as compared to the
prior year
-- Net earnings were $15.4 million or $0.30 per share
AAM's earnings in the first quarter of 2007 were $15.4 million or $0.30
per share. This compares to earnings of $8.6 million or $0.17 per share in
the first quarter of 2006.
AAM's earnings in the first quarter of 2007 reflect the impact of
special charges and other non-recurring operating costs of $2.9 million, or
$0.04 per share, primarily related to incremental attrition program
activity. AAM's earnings in the first quarter of 2006 included a favorable
tax adjustment of $3.1 million, or $0.06 per share, related to the
settlement of federal and state tax liabilities from prior years.
"In the first quarter of 2007, AAM benefited from structural cost
reductions relating to the special attrition program and other
restructuring actions we initiated in 2006," said AAM's Co-Founder,
Chairman of the Board & CEO Richard E. Dauch. "AAM is on track to deliver
significant gains in profitability and cash flow in 2007, while at the same
time reducing debt levels, improving our balance sheet strength and
enhancing stockholder value."
Net sales in the first quarter of 2007 were $802.2 million as compared
to $834.8 million in the first quarter of 2006. Sales in the quarter
reflect an approximate 2% decrease in customer production volumes for the
major full-size truck and SUV programs AAM currently supports for GM and
The Chrysler Group as compared to the prior year. AAM estimates that
customer production volumes for its mid-sized truck and SUV programs were
down 32% in the quarter on a year-over-year basis. Non-GM sales represented
20% of AAM's total sales in the first quarter of 2007.
AAM's content per vehicle increased by nearly 4% to $1,252 in the first
quarter of 2007 as compared to $1,205 in the first quarter of 2006. This
increase is due primarily to the impact of new AAM content appearing on
GM's all-new, award-winning full-size pickup trucks.
Gross margin in the first quarter of 2007 was 10.6% as compared to 7.6%
in the first quarter of 2006. Operating income was $35.9 million or 4.5% of
sales in the quarter as compared to $15.1 million or 1.8% of sales in the
first quarter of 2006. AAM's improved gross margin and operating income
performance in the first quarter of 2007 reflects the impact of
productivity gains, purchased material cost savings and structural cost
reductions resulting from the special attrition program and other
restructuring actions initiated in 2006.
AAM's SG&A spending in the first quarter of 2007 was $48.9 million as
compared to $48.4 million in the first quarter of 2006. AAM increased its
R&D spending by 4%, to $20.1 million in the quarter as compared to $19.3
million in the first quarter of 2006.
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 2007 was $9.8
million as compared to $7.0 million in the first quarter of 2006. Capital
spending was down $38.3 million in the first quarter of 2007 on a
year-over-year basis to $42.5 million. Reflecting the impact of this
activity and dividend payments of $7.8 million, AAM's free cash flow use of
$40.5 million in the first quarter of 2007 improved by over $40 million as
compared to the first quarter of 2006.
2007 Outlook
AAM increased its full-year 2007 earnings guidance to a range of $1.30
- $1.55 per share. This updated outlook is based on the assumption that its
customers' production volumes for the major North American light truck
programs AAM currently supports will be approximately 2% lower as compared
to 2006. AAM's 2007 earnings outlook also reflects its plans to incur an
additional $25 million of additional special charges and other
non-recurring operating costs related to incremental attrition program
activity, the redeployment of machinery and equipment and other steps to
rationalize underutilized production capacity.
Reflecting the impact of its updated 2007 earnings outlook, a reduction
in AAM's capital spending in 2007 to a range of $225 million to $230
million and the continuation of its quarterly cash dividend program, AAM
also reconfirmed that it expects free positive cash flow to exceed $100
million in 2007.
"AAM's plan to generate more than $100 million of free positive cash
flow in 2007 will enhance our ability to invest in the continuing
diversification of our product portfolio, customer base and global
manufacturing footprint," said AAM's Co-Founder, Chairman of the Board &
CEO Richard E. Dauch. "With the addition of our new low-cost, high-quality
regional manufacturing facilities in Changshu, China and Olawa, Poland, as
well as the continuing development of new products supporting passenger car
and crossover vehicle applications, AAM is well positioned for profitable
growth and diversification in 2007 and beyond."
A conference call to review AAM's first quarter 2007 results is
scheduled today at 10:00 a.m. EDT. 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. EDT on April 27, 2007 until 5:00 p.m. EDT May 4, 2007 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 2819284.
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 light trucks, sport
utility vehicles and passenger cars. In addition to locations in the United
States (in Michigan, New York and Ohio), 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 DaimlerChrysler's heavy-duty Dodge Ram full-size pickup
trucks, or the Dodge Ram program; work stoppages at GM or DaimlerChrysler
or a key supplier to GM or DaimlerChrysler; our ability to achieve cost
reductions through accelerated attrition programs; reduced purchases of our
products by GM, DaimlerChrysler 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; our ability to maintain satisfactory labor relations
and avoid work stoppages; 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 more information:
Media relations contact: Investor relations contact:
Renee B. Rogers Christopher M. Son
Manager, Corporate Communications and Director, Investor Relations
Media Relations (313) 758-4814
(313) 758-4882 chris.son@aam.com
renee.rogers@aam.com
Or visit the AAM website at http://www.aam.com
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended
March 31,
----------------------------
2007 2006
---------- ----------
(In millions, except per share data)
Net sales $802.2 $834.8
Cost of goods sold 717.4 771.3
---------- ----------
Gross profit 84.8 63.5
Selling, general and administrative
expenses 48.9 48.4
---------- ----------
Operating income 35.9 15.1
Net interest expense (14.0) (7.4)
Other income (expense), net 0.1 0.6
---------- ----------
Income before income taxes 22.0 8.3
Income taxes 6.6 (0.3)
---------- ----------
Net income $15.4 $8.6
========== ==========
Diluted earnings per share $0.30 $0.17
========== ==========
Diluted shares outstanding 52.1 51.1
========== ==========
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2007 2006
---------- ----------
(In millions)
ASSETS
Current assets
Cash and cash equivalents $141.9 $13.5
Accounts receivable, net 422.1 327.6
Inventories, net 216.4 198.4
Prepaid expenses and other 79.7 69.2
Deferred income taxes 31.1 30.7
---------- ----------
Total current assets 891.2 639.4
Property, plant and equipment, net 1,712.2 1,731.7
Deferred income taxes 41.0 35.7
Goodwill 147.8 147.8
Other assets and deferred charges 45.7 42.9
---------- ----------
Total assets $2,837.9 $2,597.5
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $378.3 $328.9
Other accrued expenses 184.7 212.4
---------- ----------
Total current liabilities 563.0 541.3
Long-term debt 842.4 672.2
Deferred income taxes 8.9 6.8
Postretirement benefits and other
long-term liabilities 603.2 563.5
---------- ----------
Total liabilities 2,017.5 1,783.8
Stockholders' equity 820.4 813.7
---------- ----------
Total liabilities and stockholders'
equity $2,837.9 $2,597.5
========== ==========
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
----------------------------
2007 2006
---------- ----------
(In millions)
Operating activities
Net income $15.4 $8.6
Depreciation and amortization 56.4 49.4
Other (62.0) (51.0)
---------- ----------
Net cash flow provided by (used in)
operating activities 9.8 7.0
Purchases of property, plant &
equipment (42.5) (80.8)
---------- ----------
Net cash flow after purchases of
property, plant & equipment (32.7) (73.8)
---------- ----------
Net cash flow used in operations (32.7) (73.8)
Net increase in long-term debt 169.4 84.8
Debt issuance costs (5.2) -
Employee stock option exercises 4.4 0.1
Dividends paid (7.8) (7.7)
---------- ----------
Net cash flow provided by financing
activities 160.8 77.2
Effect of exchange rate changes on
cash 0.3 -
---------- ----------
Net increase in cash and cash
equivalents 128.4 3.4
Cash and cash equivalents at
beginning of period 13.5 3.7
---------- ----------
Cash and cash equivalents at end of
period $141.9 $7.1
========== ==========
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,
----------------------------
2007 2006
---------- ----------
(In millions)
Net income $15.4 $8.6
Interest expense 14.6 7.4
Income taxes 6.6 (0.3)
Depreciation and amortization 56.4 49.4
---------- ----------
EBITDA $93.0 $65.1
========== ==========
Net debt(b) to capital
March 31, December 31,
2007 2006
---------- ----------
(In millions, except percentages)
Total debt $842.4 $672.2
Less: cash and cash equivalents 141.9 13.5
---------- ----------
Net debt at end of period 700.5 658.7
Stockholders' equity 820.4 813.7
---------- ----------
Total invested capital at end of
period $1,520.9 $1,472.4
========== ==========
Net debt to capital(c) 46.1% 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
March 31,
----------------------------
2007 2006
---------- ----------
(In millions)
Net cash provided by operating
activities $9.8 $7.0
Less: purchases of property, plant &
equipment (42.5) (80.8)
---------- ----------
Net operating cash flow (32.7) (73.8)
Less: dividends paid (7.8) (7.7)
---------- ----------
Free cash flow $(40.5) $(81.5)
========== ==========
After-Tax Return on Invested Capital (ROIC)(e)
Trailing
Twelve
Quarter Ended Months
--------------------------------------------- Ended
June 30, September 30, December 31, March 31, March 31,
2006 2006 2006 2007 2007
--------- --------- --------- --------- ---------
(In millions, except percentages)
Net income $20.4 $(62.9) $(188.6) $15.4 $(215.7)
After-tax net
interest expense(f) 5.2 6.6 7.8 9.8 29.4
--------- --------- --------- --------- ---------
After-tax return $25.6 $(56.3) $(180.8) $25.2 $(186.3)
========= ========= ========= ========= =========
Net debt at end
of period $700.5
Stockholders'
equity at end of
period 820.4
---------
Invested capital at
end of period 1,520.9
Invested capital at
beginning of
period 1,570.0
---------
Average invested
capital(g) $1,545.5
=========
After-Tax ROIC(h) -12.1%
=========
(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
(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. ROIC is also a key metric used in
our calculation of incentive compensation. Other
(f) After-tax net interest expense is equal to tax effecting net interest
expense by the effective income tax rate (excluding one-time items)
for each presented quarter.
(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://www.prnewswire.com/comp/033813.html/
CONTACT:
Media relations contact: Renee B. Rogers,
Manager, Corporate Communications and Media Relations,
+1-313-758-4882, renee.rogers@aam.com, or Investor relations
contact: Christopher M. Son, Director, Investor Relations,
+1-313-758-4814, chris.son@aam.com, both of American Axle &
Manufacturing Holdings, Inc.
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