DETROIT, April 29 /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 2005.
First Quarter 2005 highlights
* First quarter sales of $818.9 million
* 19% year-over-year decline in production volumes
* Non-GM sales were 21% of total sales, totaling $169.2 million
* Net earnings of $13.3 million or $0.26 per share
First quarter earnings were $13.3 million or $0.26 per share. This
compares to earnings of $36.5 million or $0.66 per share in the first quarter
of 2004. AAM's earnings in the first quarter of 2004 included the impact of a
one-time charge of $23.5 million or $0.28 per share related to debt
refinancing and redemption activities.
"This was a very challenging quarter for AAM due to the impact of lower
production levels and higher steel and metallic material prices," said AAM's
Co-Founder, Chairman of the Board & CEO Richard E. Dauch. "Despite these
tough industry conditions, AAM remains focused on its operations to flawlessly
execute thirteen product and process launches during 2005. More importantly,
AAM is continuing to make significant investments in product, process and
system technology to further expand our product offerings, customer
diversification and global manufacturing presence."
Net sales in the first quarter of 2005 were $818.9 million as compared to
$952.8 million in the first quarter of 2004. Sales to non-GM customers for
the quarter were $169.2 million and now represent 21% of AAM's total sales.
AAM sales for the quarter reflect an estimated 19% year-over-year decline in
its customers' production volumes for the major North American light truck
programs it currently supports. AAM's content per vehicle in the quarter of
$1,183 was approximately the same as $1,182 in the first quarter of 2004.
Gross margin in the first quarter of 2005 was 8.8% as compared to 14.3% in
the first quarter of 2004. Operating income was $25.7 million or 3.1% of
sales in the quarter as compared to $86.9 million or 9.1% of sales in the
first quarter of 2004.
AAM's research and development spending (R&D) in the first quarter of 2005
was $17.6 million as compared to $16.9 million in the first quarter of 2004.
In addition to supporting the 2005 calendar year launch of products supporting
the all-new HUMMER H3, Dodge Ram Power Wagon, Dodge Ram Mega Cab and vehicles
for Ssangyong Motor Corporation, AAM continues to invest in the development
and validation of products supporting rear wheel drive and all-wheel drive
driveline systems for passenger cars and crossover vehicles. Products
supporting this growth segment of the market, such as independent front drive
axles (IFDA), power transfer units (PTU) and rear drive modules (RDM) now
represent approximately 25% of AAM's $1 billion new business backlog.
AAM defines free cash flow to be net cash provided by (or used in)
operating activities less capital expenditures and dividends paid. AAM's free
cash flow in the first quarter of 2005 was a use of $116.3 million. AAM's
free cash flow deficit of $42.3 million in the first quarter of 2004 included
a $36.3 million lump-sum bonus payment to its hourly associates represented by
the UAW in connection with the ratification of the current four-year master
agreement. It is normal for the company to use cash in the first quarter due
to seasonal differences in sales activity.
Net cash flow used in operating activities was $34.1 million in the first
quarter of 2005 as compared to $4.4 million of cash provided by operating
activities in the first quarter of 2004. AAM's working capital investment in
accounts receivable in the first quarter of 2005 reflects the impact of higher
metal market pass-throughs as compared to the first quarter of 2004. AAM's
inventories have increased in the first quarter of 2005 versus the first
quarter of 2004 due to higher steel and metallic material prices, higher
amounts of inventory in transit associated with an expansion in global
sourcing activities and higher levels of on-hand raw material stocks to
protect against supply interruption.
Capital spending in the first quarter of 2005 was $74.8 million as
compared to $46.7 million for the same period in 2004. AAM's quarterly cash
dividend, which commenced in the second quarter of 2004, was $7.4 million in
the current quarter.
AAM also updated its full-year 2005 earnings outlook.
On January 13, 2005, AAM announced earnings guidance for 2005 based on its
assumption that its customers' production volumes for the major North American
light truck programs it currently supports would be approximately 8% lower
than in 2004. Due to the impact of additional production cuts scheduled by
its customers, AAM now estimates that such production volumes will be down
approximately 15% in 2005, as compared to the prior year. Based on this
revised production outlook and the assumed continuation of steel and metallic
material cost increases, AAM now expects its earnings in 2005 to range from
$1.40 to $1.55 per share.
On April 14, 2005, the Securities and Exchange Commission adopted a new
rule that amends the compliance dates for FASB Statement No. 123 (revised
2004), Share-Based Payment (Statement No. 123R). As a result, AAM now intends
to adopt this accounting standard on January 1, 2006.
AAM also announced revised estimates for its capital spending and free
cash flow in 2005. Due to additional productive capacity made available by
lower anticipated production volumes, changes in program timing requirements
and the favorable cost impact of various ongoing productivity initiatives, AAM
now expects its capital spending to range from $260 million - $280 million in
2005.
Reflecting the impact of these revisions to earnings and capital spending
estimates, AAM now expects its free cash flow to be approximately break-even
in 2005.
A conference call to review AAM's first quarter 2005 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 29, 2005 until 5:00 p.m. EDT May 6, 2005 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 5189382.
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
(SEC) 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 systems and related components and modules, chassis
systems and metal formed products for light trucks, sport utility vehicles,
passenger cars and crossover vehicles. In addition to locations in the United
States (in Michigan, New York and Ohio), AAM also has offices and facilities
in Brazil, China, England, Germany, India, Japan, Mexico, Scotland and South
Korea.
Certain statements in this press release are forward-looking in nature and
relate to trends and events that may affect our future financial position and
operating results. Such statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. The terms
"will," "expect," "anticipate," "intend," "project," and similar words or
expressions are intended to identify forward-looking statements. These
statements speak only as of the date of this press release. The statements
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: reduced demand of our customers'
products (particularly light trucks and SUVs produced by GM and
DaimlerChrysler); reduced purchases of our products by GM, DaimlerChrysler or
other customers; supply shortages or price fluctuations in raw materials,
utilities or other operating supplies; our ability to maintain satisfactory
labor relations and avoid work stoppages; our customers' ability to maintain
satisfactory labor relations and avoid work stoppages; our ability to attract
and retain key associates; our ability and our customers' ability to
successfully launch new product programs; our ability to respond to changes in
technology or increased competition; adverse changes in laws, government
regulations or market conditions affecting our products or our customers'
products (including the Corporate Average Fuel Economy regulations and fuel
costs); adverse changes in the economic conditions or political stability of
our principal markets (particularly North America, Europe, South America and
Asia); liabilities arising from legal proceedings to which we are or may
become a party or claims against us or our products; 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, R&D or other general corporate
purposes; other unanticipated events and conditions that may hinder our
ability to compete. It is not possible to foresee or identify all such
factors and we make no commitment to update any forward-looking statement or
to disclose any facts, events or circumstances after the date hereof that may
affect the accuracy of any forward-looking statements.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended
March 31,
------------------------------------
2005 2004
---------------- ----------------
(In millions, except per share data)
Net sales $818.9 $952.8
Cost of goods sold 746.6 816.4
---------------- ----------------
Gross profit 72.3 136.4
Selling, general and administrative
expenses 46.6 49.5
---------------- ----------------
Operating income 25.7 86.9
Net interest expense (6.1) (8.4)
Debt refinancing and redemption costs - (23.5)
Other income, net 0.3 0.7
---------------- ----------------
Income before income taxes 19.9 55.7
Income taxes 6.6 19.2
---------------- ----------------
Net income $13.3 $36.5
================ ================
Diluted earnings per share $0.26 $0.66
================ ================
Diluted shares outstanding 51.1 55.3
================ ================
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2005 2004
---------------- ----------------
(Unaudited)
(In millions)
ASSETS
Current assets:
Cash and cash equivalents $3.3 $14.4
Accounts receivable, net 367.2 334.9
Inventories, net 210.9 196.8
Prepaid expenses and other 49.7 39.1
Deferred income taxes 6.0 7.4
---------------- ----------------
Total current assets 637.1 592.6
Property, plant and equipment, net 1,743.6 1,713.0
Deferred income taxes 8.1 6.8
Goodwill 147.8 147.8
Other assets and deferred charges 75.5 78.6
---------------- ----------------
Total assets $2,612.1 $2,538.8
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $367.5 $398.6
Other accrued expenses 151.8 181.9
---------------- ----------------
Total current liabilities 519.3 580.5
Long-term debt 550.6 448.0
Deferred income taxes 116.5 114.5
Postretirement benefits and other
long-term liabilities 460.1 440.3
---------------- ----------------
Total liabilities 1,646.5 1,583.3
Stockholders' equity 965.6 955.5
---------------- ----------------
Total liabilities and stockholders'
equity $2,612.1 $2,538.8
================ ================
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
------------------------------------
2005 2004
---------------- ----------------
(In millions)
Operating activities
Net income $13.3 $36.5
Depreciation and amortization 43.4 41.3
Other (90.8) (73.4)
---------------- ----------------
Net cash provided by (used in)
operating activities (34.1) 4.4
Purchases of property, plant &
equipment (74.8) (46.7)
---------------- ----------------
Net cash used in investing activities (74.8) (46.7)
Net increase in long-term debt 103.1 419.9
Redemption of 9.75% Notes - (314.6)
Debt issuance costs - (9.7)
Employee stock option exercises 2.2 3.1
Dividends paid (7.4) -
Purchase of treasury stock - (63.0)
---------------- ----------------
Net cash provided by financing
activities 97.9 35.7
Effect of exchange rate changes on
cash (0.1) 0.2
---------------- ----------------
Net decrease in cash and cash
equivalents (11.1) (6.4)
Cash and cash equivalents at
beginning of period 14.4 12.4
---------------- ----------------
Cash and cash equivalents at end of
period $3.3 $6.0
================ ================
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,
------------------------------------
2005 2004
---------------- ----------------
(In millions)
Net income $13.3 $36.5
Interest expense 6.3 8.6
Income taxes 6.6 19.2
Depreciation and amortization 43.4 41.3
---------------- ----------------
EBITDA $69.6 $105.6
================ ================
Net debt(b) to capital
March 31, December 31,
2005 2004
---------------- ----------------
(In millions, except percentages)
Total debt $550.6 $448.0
Less: cash and cash equivalents 3.3 14.4
---------------- ----------------
Net debt at end of period 547.3 433.6
Stockholders' equity 965.6 955.5
---------------- ----------------
Total invested capital at end of
period $1,512.9 $1,389.1
================ ================
Net debt to capital(c) 36.2% 31.2%
================ ================
(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,
--------------------------
2005 2004
(In millions)
Net cash provided by operating activities $(34.1) $4.4
Less: purchases of property, plant & equipment (74.8) (46.7)
------------ ------------
Net operating cash flow (108.9) (42.3)
Less: dividends (7.4) -
------------ ------------
Free cash flow $(116.3) $(42.3)
============ ============
After-Tax Return on Invested Capital (ROIC)(e)
Quarter Ended Trailing Twelve
------------------------------------------------ Months Ended
June 30, September 30, December 31, March 31, March 31,
2004 2004 2004 2005 2005
----------- ----------- ----------- ----------- ------------
(In millions, except percentages)
Net income $55.3 $36.4 $31.3 $13.3 $136.3
After-tax net
interest
expense (f) 3.9 4.0 3.8 4.1 15.8
----------- ----------- ----------- ----------- ------------
After-tax
return $59.2 $40.4 $35.1 $17.4 $152.1
=========== =========== =========== =========== ============
Net debt at
end of period $547.3
Stockholder's
equity at end
of period 965.6
------------
Invested capital
at end of
period 1,512.9
Invested capital
at beginning
of period 1,498.4
------------
Average invested
capital(g) $1,505.7
============
After-Tax ROIC(h) 10.1%
============
(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. 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. ROIC is also a key metric used in our calculation of
incentive compensation. 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 for each presented
quarter.
(g) Average invested capital is equal to the average of beginning and
ending invested capital.
(h) After-tax ROIC is equal to after-tax return divided by average
invested capital.
For more information:
Media relations contact: Investor relations contact:
Carrie L.P. Gray Christopher M. Son
Director, Corporate Relations Director, Investor Relations
(313) 758-4880 (313) 758-4814
grayc@aam.com chris.son@aam.com
Or visit the AAM website at http://www.aam.com
SOURCE American Axle & Manufacturing Holdings, Inc.
 back to top
Related links:
http://www.aam.com
http://investor.aam.com
Company News On-Call:
http://www.prnewswire.com/comp/033813.html
CONTACT:
Media relations contact: Carrie L.P. Gray,
Director, Corporate Relations, +1-313-758-4880, grayc@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.
|
