New business backlog increased by 30% to $1.3 billion
DETROIT, July 28 /PRNewswire-FirstCall/ -- American Axle & Manufacturing
Holdings, Inc. (AAM), which is traded as AXL on the NYSE, today reported sales
and earnings for the second quarter of 2005.
Second Quarter 2005 highlights
- Second quarter sales of $867.7 million
- 10% year-over-year decline in production volumes
- Non-GM sales of $185.0 million, or 21% of total sales
- Net earnings of $18.9 million or $0.37 per share
- $8.9 million charge ($0.12 per share in the quarter) for voluntary
separation program
- Secured program awards that increase AAM's new business backlog by 30%
to $1.3 billion
- Successfully launched AAM's first-ever rear drive module ("RDM") for
SsangYong Motor Corporation
Second quarter earnings were $18.9 million or $0.37 per share. This
compares to earnings of $55.3 million or $1.02 per share in the second quarter
of 2004. AAM's second quarter results in 2005 include a charge of $8.9
million, or $0.12 per share, related to voluntary lump-sum separation payments
accepted by 162 hourly associates. AAM's earnings in the second quarter of
2004 included a charge of $12.5 million, or $0.15 per share, related to a
similar voluntary separation program.
"2005 continues to be a very challenging year for the domestic automotive
industry and the Tier I supply chain. Lower production levels and higher
steel and metallic material prices are pressuring sales and inflating costs,"
said AAM's Co-Founder, Chairman of the Board & CEO Richard E. Dauch. "Despite
these tough conditions, AAM continues to focus on its long-term strategic
goals of further developing our product offerings, increasing customer
diversification and expanding our global manufacturing presence. The
continued expansion of AAM's new business backlog is evidence that we are
successfully delivering on these initiatives. We are especially pleased with
the growth in our backlog of orders for our newest driveline technology
supporting all-wheel-drive applications for passenger cars and crossover
vehicles."
Net sales in the second quarter of 2005 were $867.7 million as compared to
$929.6 million in the second quarter of 2004. Sales to non-GM customers in
the quarter were $185.0 million and now represent 21% of AAM's total sales.
AAM sales for the quarter reflect an estimated 10% year-over-year decline
in customer production volumes for the major North American light truck
programs it currently supports. AAM's content per vehicle in the quarter grew
to $1,185 as compared to $1,162 in the second quarter of 2004. Mix shifts
favoring four-wheel-drive and all-wheel drive versions of mid-size light truck
products, including the all new 2006 HUMMER H3, and higher production volumes
of our largest axles supporting heavy-duty versions of the full-size pick-up
truck programs were the primary drivers of content growth in the quarter.
Gross margin in the second quarter of 2005 was 9.8% as compared to 14.4%
in the second quarter of 2004. Operating income was $36.4 million or 4.2% of
sales in the quarter as compared to $89.2 million or 9.6% of sales in the
second quarter of 2004.
Net sales in the first half of 2005 were $1.7 billion as compared to $1.9
billion in the first half of 2004. Gross margin was 9.4% in the first half of
2005 versus 14.3% for the first half of 2004. Operating income for the first
half of 2005 was $62.1 million or 3.7% of sales versus $176.1 million or 9.4%
of sales for the first half of 2004.
AAM defines free cash flow to be net cash provided by (or used in)
operating activities less capital expenditures and dividends paid. Capital
spending to support new product programs and other safety, quality and
productivity initiatives in the first half of 2005 was $161.2 million as
compared to $95.7 million in the first half of 2004. Pursuant to its
quarterly cash dividend program, which commenced in the second quarter of
2004, AAM paid $15.0 million in dividends for the first half of 2005.
Reflecting the impact of AAM's increased capital investment and dividend
payout, AAM's free cash flow in the first half of 2005 was a use of
$123.8 million.
AAM's research and development spending (R&D) in the first half of 2005
increased to $36.5 million as compared to $33.8 million in the first half of
2004. AAM continues to emphasize the integration of electronics in its
product portfolio. Product development in this area has recently resulted in
a new, high-volume 2007 model year production contract for AAM's Smartbar(TM),
an electronically actuated roll control system.
AAM also continues to successfully develop and validate new products
targeted for growth segments of the global driveline market, especially rear
wheel drive and all-wheel drive driveline systems for passenger cars and
crossover vehicles. AAM's new business backlog now includes awards for these
new products supporting six passenger car and crossover vehicle programs that
represent annual sales volume of nearly $400 million. Products featuring
AAM's new passenger car and crossover vehicle technology include AAM's
successful launch of its first-ever RDM for SsangYong Motor Corporation in the
second quarter of 2005 and other vehicle programs that are scheduled to launch
in the 2008 - 2010 model years. As a result of these new awards, AAM's new
business backlog has grown to approximately $1.3 billion.
Other highlights of AAM's $1.3 billion new business backlog include:
- AAM's newest technology for passenger cars and crossover vehicles, which
includes power transfer units, driveshafts and RDMs.
- AAM's first award to supply transfer cases for a future vehicle program.
- Approximately $180 million of AAM's new business backlog relates to
product programs outside of North America.
- AAM has been awarded over $150 million with Asian OEMs and their
affiliate suppliers. One of these awards represents AAM's first
opportunity to provide front and rear axle modules to an Asian OEM for a
major North American product platform.
- AAM will launch approximately 55% of its new business backlog in the
2005, 2006 and 2007 calendar years. The balance of the business will be
launched in 2008 - 2010.
A conference call to review AAM's second 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 Noon EDT on July 28, 2005 until 5:00 p.m. EDT August 5, 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 7326619.
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 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,
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.
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
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
2005 2004 2005 2004
--------- -------- --------- --------
(In millions, except per share data)
Net sales $867.7 $929.6 $1,686.6 $1,882.4
Cost of goods sold 782.3 796.2 1,528.9 1,612.6
--------- -------- --------- --------
Gross profit 85.4 133.4 157.7 269.8
Selling, general and administrative
expenses 49.0 44.2 95.6 93.7
--------- -------- --------- --------
Operating income 36.4 89.2 62.1 176.1
Net interest expense (6.6) (5.9) (12.7) (14.3)
Other income (expense)
Debt refinancing and redemption
costs - - - (23.5)
Other, net (1.7) 1.2 (1.4) 1.9
--------- -------- --------- --------
Income before income taxes 28.1 84.5 48.0 140.2
Income taxes 9.2 29.2 15.8 48.4
--------- -------- --------- --------
Net income $18.9 $55.3 $32.2 $91.8
========= ======== ========= ========
Diluted earnings per share $0.37 $1.02 $0.63 $1.68
========= ======== ========= ========
Diluted shares outstanding 50.9 54.3 50.9 54.6
========= ======== ========= ========
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2005 2004
----------- -----------
(Unaudited)
(In millions)
ASSETS
Current assets
Cash and cash equivalents $5.6 $14.4
Accounts receivable, net 417.3 334.9
Inventories, net 211.8 196.8
Prepaid expenses and other 45.2 39.1
Deferred income taxes 6.8 7.4
----------- -----------
Total current assets 686.7 592.6
Property, plant and equipment, net 1,790.9 1,713.0
Deferred income taxes 8.7 6.8
Goodwill 147.8 147.8
Other assets and deferred charges 75.2 78.6
----------- -----------
Total assets $2,709.3 $2,538.8
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $399.0 $398.6
Other accrued expenses 169.2 181.9
----------- -----------
Total current liabilities 568.2 580.5
Long-term debt 560.6 448.0
Deferred income taxes 116.0 114.5
Postretirement benefits and other
long-term liabilities 476.8 440.3
----------- -----------
Total liabilities 1,721.6 1,583.3
Stockholders' equity 987.7 955.5
----------- -----------
Total liabilities and stockholders' equity $2,709.3 $2,538.8
=========== ===========
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------ ----------------
2005 2004 2005 2004
--------- -------- --------- --------
(In millions)
Operating activities
Net income $18.9 $55.3 $32.2 $91.8
Depreciation and amortization 45.4 40.7 88.8 82.0
Other 22.2 23.7 (68.6) (49.7)
--------- -------- --------- --------
Net cash flow provided by operating
activities 86.5 119.7 52.4 124.1
Purchases of property, plant &
equipment (86.4) (49.0) (161.2) (95.7)
--------- -------- --------- --------
Net cash flow after purchases of
property, plant & equipment 0.1 70.7 (108.8) 28.4
--------- -------- --------- --------
Net cash flow provided by (used in)
operations 0.1 70.7 (108.8) 28.4
Net increase in long-term debt 8.6 (49.0) 111.7 370.9
Redemption of 9.75% Notes - - - (314.6)
Debt issuance costs - - - (9.7)
Employee stock option exercises 1.2 7.2 3.4 10.3
Dividends paid (7.6) (7.8) (15.0) (7.8)
Purchase of treasury stock - (20.7) - (83.7)
--------- -------- --------- --------
Net cash flow provided by (used in)
financing activities 2.2 (70.3) 100.1 (34.6)
Effect of exchange rate changes on
cash - 0.2 (0.1) 0.4
--------- -------- --------- --------
Net increase (decrease) in cash and
cash equivalents 2.3 0.6 (8.8) (5.8)
Cash and cash equivalents at
beginning of period 3.3 6.0 14.4 12.4
--------- -------- --------- --------
Cash and cash equivalents at end of
period $5.6 $6.6 $5.6 $6.6
========= ======== ========= ========
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 Six months ended
June 30, June 30,
------------------ ----------------
2005 2004 2005 2004
------ ------ ------ ------
(In millions)
Net income $18.9 $55.3 $32.2 $91.8
Interest expense 6.6 6.0 12.9 14.6
Income taxes 9.2 29.2 15.8 48.4
Depreciation and amortization 45.4 40.7 88.8 82.0
------ ------ ------ ------
EBITDA $80.1 $131.2 $149.7 $236.8
====== ====== ====== ======
Net debt(b) to capital
June 30, December 31,
2005 2004
------------- -------------
(In millions, except percentages)
Total debt $560.6 $448.0
Less: cash and cash equivalents 5.6 14.4
------------- -------------
Net debt at end of period 555.0 433.6
Stockholders' equity 987.7 955.5
------------- -------------
Total invested capital at end of period $1,542.7 $1,389.1
============= =============
Net debt to capital(c) 36.0% 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 Six months ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- --------
(In millions)
Net cash provided by
operating activities $86.5 $119.7 $52.4 $124.1
Less: purchases of property,
plant & equipment (86.4) (49.0) (161.2) (95.7)
-------- -------- -------- --------
Net operating cash flow 0.1 70.7 (108.8) 28.4
Less: dividends paid (7.6) (7.8) (15.0) (7.8)
-------- -------- -------- --------
Free cash flow $(7.5) $62.9 $(123.8) $20.6
======== ======== ======== ========
After-Tax Return on Invested Capital (ROIC)(e)
Trailing
Twelve
Quarter Ended Months
--------------------------------------------- Ended
September 30, December 31, March 31, June 30, June 30,
2004 2004 2005 2005 2005
------------ ----------- --------- -------- --------
(In millions, except percentages)
Net income $36.4 $31.3 $13.3 $18.9 $99.9
After-tax net interest
expense (f) 4.0 3.8 4.1 4.4 16.3
------------ ----------- --------- -------- --------
After-tax return $40.4 $35.1 $17.4 $23.3 $116.2
============ =========== ========= ======== ========
Net debt at end of
period $555.0
Stockholder's equity
at end of period 987.7
--------
Invested capital at
end of period 1,542.7
Invested capital at
beginning of period 1,483.2
--------
Average invested
capital(g) $1,513.0
========
After-Tax ROIC(h) 7.7%
========
(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. 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 multiplying net interest
expense by the applicable effective income tax rate 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://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.
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