DETROIT, Oct. 30 /PRNewswire-FirstCall/ -- American Axle &
Manufacturing Holdings, Inc. (AAM), which is traded as AXL on the NYSE,
today reported sales and earnings for the third quarter of 2007.
Third Quarter 2007 highlights
-- Third quarter sales of $774.3 million
-- 4% year-over-year increase in total light truck production volumes as
compared to the third quarter of 2006
-- Content-per-vehicle of $1,303, approximately 8% higher than the prior
year
-- Gross profit of $80.7 million, or 10.4% of sales
-- Operating income of $28.7 million, or 3.7% of sales
-- Net earnings of $13.1 million or $0.25 per share
-- Net cash provided by operating activities of $331.6 million year-to-
date, more than double the prior year
AAM's earnings in the third quarter of 2007 were $13.1 million or $0.25
per share. This compares to a net loss of $62.9 million or $1.25 per share
in the third quarter of 2006.
AAM's earnings in the third quarter of 2007 reflect the impact of
special charges and other non-recurring operating costs of $7.8 million, or
$0.13 per share, primarily related to the redeployment of machinery and
equipment and other actions to rationalize underutilized capacity. Also
included in this total were charges of $2.7 million, or $0.04 per share,
associated with a voluntary separation program offered to hourly associates
represented by the UAW at AAM's Buffalo Gear, Axle & Linkage facility in
Buffalo, New York.
AAM's earnings in the third quarter of 2007 also reflect the impact of
a work stoppage experienced by our largest customer, GM, during the last
week of September. AAM estimates the impact of lost sales and other costs
and expenses related to this work stoppage to be approximately $2.8
million, or $0.04 per share, in the third quarter of 2007.
AAM's earnings in the third quarter of 2006 included a special charge
of $91.2 million related to the supplemental unemployment benefits
estimated to be payable to UAW associates who were expected to be
permanently idled through the end of the current contract period in
February 2008. AAM also recorded a $1.9 million special charge in the third
quarter of 2006 related to estimated postemployment costs for associates at
our European operations.
"In the third quarter of 2007, AAM continued to achieve solid gains in
productivity and made steady progress on its ongoing structural
cost-reduction initiatives," said AAM's Co-Founder, Chairman of the Board &
CEO Richard E. Dauch. "AAM will continue to take the necessary actions to
achieve sustainable market cost competitiveness in our global operations.
This includes a strategic emphasis on improving AAM's manufacturing
capacity utilization and jointly developing new innovative labor agreements
to enhance AAM's operating efficiency and flexibility."
Net sales in the third quarter of 2007 were $774.3 million as compared
to $701.2 million in the third quarter of 2006. Customer production volumes
for the full-size truck and SUV programs AAM currently supports for GM and
Chrysler were approximately the same as compared to the prior year. AAM
estimates that customer production volumes for its mid-sized truck and SUV
programs increased approximately 25% in the quarter on a year-over-year
basis. Non-GM sales represented approximately 24% of AAM's total sales in
the third quarter of 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. In the third quarter of
2007, AAM's content-per-vehicle increased approximately 8% to $1,303 as
compared to $1,204 in the third quarter of 2006.
Gross margin in the third quarter of 2007 was 10.4% as compared to a
negative 8.8% in the third quarter of 2006. Operating income was $28.7
million or 3.7% of sales in the quarter as compared to an operating loss of
$110.0 million or negative 15.7% of sales in the third quarter of 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 the third quarter of 2007 primarily reflects the
impact of higher sales, productivity gains and structural cost reductions
resulting from the attrition programs and other ongoing restructuring
actions.
Net sales in the first three quarters of 2007 were $2.5 billion, as
compared to $2.4 billion in the first three quarters of 2006. Gross margin
was 11.2% in the first three quarters of 2007 as compared to 3.8% for the
first three quarters of 2006. Operating income for the first three quarters
of 2007 was $123.5 million or 5.0% of sales as compared to an operating
loss of $54.5 million or negative 2.3% of sales for the first three
quarters of 2006.
AAM's SG&A spending in the third quarter of 2007 was $52.0 million as
compared to $48.0 million in the third quarter of 2006. In the first three
quarters of 2007, AAM's SG&A spending was $155.1 million or 6.2% of sales
as compared to $145.9 million or 6.1% of sales in the first three quarters
of 2006. This year-over-year increase in AAM's SG&A expense was
attributable to higher profit sharing accruals and higher stock-based
compensation expense due to increased profitability and stock price
appreciation. AAM's R&D spending in the first three quarters of 2007 was
approximately $61.9 million as compared to $60.6 million in the first three
quarters 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 three quarters of 2007 more
than doubled to $331.6 million as compared to $161.7 million in the first
three quarters of 2006. Capital spending in the first three quarters of
2007 was down $110.6 million on a year-over-year basis to $132.9 million.
Reflecting the impact of this activity and dividend payments of $23.8
million, AAM's free cash flow of $174.9 million in the first three quarters
of 2007 represents an improvement of $279.9 million as compared to the
first three quarters of 2006.
A conference call to review AAM's third quarter 2007 results is
scheduled today at 2:00 p.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 October 30, 2007 until 5:00 p.m. EDT November 6, 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 17920748.
Recent Developments
On August 14, 2007, AAM announced it would offer a voluntary separation
program (Buffalo Separation Program or BSP) to all hourly associates
represented by the UAW at its Buffalo Gear, Axle & Linkage facility in
Buffalo, New York. The program commenced in September 2007 and is related
to AAM's previously announced plans to idle a portion of its U.S.
production capacity dedicated to the mid-sized light truck product range.
Under the BSP, AAM has offered a range of early retirement incentives and
buy-outs to approximately 650 eligible hourly associates. AAM currently
expects to incur special charges of as much as $85 million for the BSP,
including pension and other postretirement benefit curtailments and special
termination benefits. As discussed above, AAM incurred $2.7 million in
charges related to this voluntary separation program in the third quarter
of 2007.
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 (Indiana, 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 Chrysler's heavy-duty Dodge Ram full-size pickup trucks,
or the Dodge Ram program; work stoppages at GM or Chrysler or a key
supplier to GM or Chrysler; our ability to achieve cost reductions through
accelerated attrition programs; reduced purchases of our products by GM,
Chrysler 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:
Renee B. Rogers
Manager, Corporate Communications and Media Relations
(313) 758-4882
renee.rogers@aam.com
Investor relations contact:
Jamie M. Little
Director, Investor Relations
(313) 758-4831
jamie.little@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 Nine months ended
September 30, September 30,
------------------ -----------------
2007 2006 2007 2006
-------- ------- --------- ---------
(In millions, except per share data)
Net sales $774.3 $701.2 $2,493.0 $2,410.6
Cost of goods sold 693.6 763.2 2,214.4 2,319.2
-------- ------- --------- ---------
Gross profit (loss) 80.7 (62.0) 278.6 91.4
Selling, general and administrative
expenses 52.0 48.0 155.1 145.9
-------- ------- --------- ---------
Operating income (loss) 28.7 (110.0) 123.5 (54.5)
Net interest expense (11.5) (11.7) (40.8) (27.0)
Other income (expense), net
Debt refinancing cost - (0.3) (5.5) (2.7)
Other, net (1.2) 10.1 0.1 11.4
-------- ------- --------- ---------
Income (loss) before income taxes 16.0 (111.9) 77.3 (72.8)
Income taxes 2.9 (49.0) 14.8 (38.9)
-------- ------- --------- ---------
Net income (loss) $13.1 $(62.9) $62.5 $(33.9)
======== ======= ========= =========
Diluted earnings (loss) per share $0.25 $(1.25) $1.19 $(0.67)
======== ======= ========= =========
Diluted shares outstanding 53.0 50.3 52.6 50.3
======== ======= ========= =========
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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
--------------------------------------------------------------------------
September 30, December 31,
2007 2006
------------- ------------
(In millions)
ASSETS
------
Current assets
Cash and cash equivalents $362.1 $13.5
Accounts receivable, net 320.5 327.6
Inventories, net 248.1 198.4
Prepaid expenses and other 79.0 69.2
Deferred income taxes 28.1 30.7
------------- ------------
Total current assets 1,037.8 639.4
Property, plant and equipment, net 1,715.4 1,731.7
Deferred income taxes 49.8 35.7
Goodwill 147.8 147.8
Other assets and deferred charges 60.9 42.9
------------- ------------
Total assets $3,011.7 $2,597.5
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable $396.4 $328.9
Other accrued expenses 207.2 212.4
------------- ------------
Total current liabilities 603.6 541.3
Long-term debt 845.6 672.2
Deferred income taxes 6.3 6.8
Postretirement benefits and other
long-term liabilities 683.8 563.5
------------- ------------
Total liabilities 2,139.3 1,783.8
Stockholders' equity 872.4 813.7
------------- ------------
Total liabilities and stockholders'
equity $3,011.7 $2,597.5
------------- ------------
--------------------------------------------------------------------------
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
--------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
------------------- -----------------
2007 2006 2007 2006
------------------- -----------------
(In millions) (In millions)
Operating activities
Net income (loss) $13.1 $(62.9) $62.5 $(33.9)
Depreciation and amortization 57.6 52.8 171.0 153.2
Other 26.3 72.1 98.1 42.4
---------- ------- ------- --------
Net cash flow provided by operating
activities 97.0 62.0 331.6 161.7
Purchases of property, plant &
equipment (57.5) (87.5) (132.9) (243.5)
---------- ------- ------- --------
Net cash flow after purchases of
property, plant & equipment 39.5 (25.5) 198.7 (81.8)
---------- ------- ------- --------
Purchase buyouts of leased equipment - - - (19.5)
---------- ------- ------- --------
Net cash flow provided by (used in)
operations 39.5 (25.5) 198.7 (101.3)
Net increase (decrease) in long-term
debt (2.0) 36.3 167.3 137.5
Purchase of treasury of stock (1.9) - (1.9) -
Debt issuance costs - - (7.5) (3.1)
Employee stock option exercises 3.9 0.2 15.2 0.3
Dividends paid (8.0) (7.8) (23.8) (23.3)
---------- ------- ------- --------
Net cash flow provided by (used in)
financing activities (8.0) 28.7 149.3 111.4
Effect of exchange rate changes on
cash (0.7) (0.1) 0.6 0.1
---------- ------- ------- --------
Net increase in cash and cash
equivalents 30.8 3.1 348.6 10.2
Cash and cash equivalents at
beginning of period 331.3 10.8 13.5 3.7
---------- ------- ------- --------
Cash and cash equivalents at end of
period $362.1 $13.9 $362.1 $13.9
========== ======= ======= ========
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 Nine months ended
September 30, September 30,
------------------ -----------------
2007 2006 2007 2006
------------------ -----------------
(In millions) (In millions)
Net income (loss) $13.1 $(62.9) $62.5 $(33.9)
Interest expense 14.6 11.8 46.8 27.1
Income taxes 2.9 (49.0) 14.8 (38.9)
Depreciation and amortization 57.6 52.8 171.0 153.2
-------- ------- ------- -------
EBITDA $88.2 $(47.3) $295.1 $107.5
======== ======= ======= =======
Net debt(b) to capital
September December
30, 31,
2007 2006
--------- --------
(In millions, except
percentages)
Total debt $845.6 $672.2
Less: cash and cash equivalents 362.1 13.5
--------- --------
Net debt at end of period 483.5 658.7
Stockholders' equity 872.4 813.7
--------- --------
Total invested capital at end of period $1,355.9 $1,472.4
========= ========
Net debt to capital(c) 35.7% 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 Nine months ended
September 30, September 30,
------------------ -----------------
2007 2006 2007 2006
------------------ -----------------
(In millions) (In millions)
Net cash provided by
operating activities $97.0 $62.0 $331.6 $161.7
Less: purchases of property,
plant & equipment (57.5) (87.5) (132.9) (243.5)
-------- -------- ------- --------
Net operating cash flow 39.5 (25.5) 198.7 (81.8)
Less: dividends paid (8.0) (7.8) (23.8) (23.3)
-------- -------- ------- --------
Free cash flow $31.5 $(33.3) $174.9 $(105.1)
======== ======== ======= ========
After-Tax Return on Invested Capital (ROIC)(e)
Trailing
Twelve
Quarter Ended Months
------------------------------------- Ended
Dec. 31, March 31, June 30, Sept. 30, Sept. 30,
2006 2007 2007 2007 2007
-------- --------- -------- --------- ---------
(In millions, except percentages)
Net income (loss) $(188.6) $15.4 $34.0 $13.1 $(126.1)
After-tax net interest
expense (f) 7.8 9.8 13.2 9.4 40.2
-------- --------- -------- --------- ---------
After-tax return $(180.8) $25.2 $47.2 $22.5 $(85.9)
======== ========= ======== ========= =========
Net debt at end of period $483.5
Stockholders' equity at end
of period 872.4
---------
Invested capital at end of
period 1,355.9
Invested capital at
beginning of period 1,565.3
---------
Average invested capital(g) $1,460.6
=========
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. 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 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://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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