AAM Reports Fourth Quarter and Full Year 2022 Financial Results
American Axle & Manufacturing Holdings (AXL) reported strong financial performance for Q4 and full year 2022. Q4 sales reached $1.39 billion, net income was $13.9 million, and adjusted EBITDA stood at $157.7 million. For the full year, sales totaled $5.80 billion with net income of $64.3 million. AAM's 2023 outlook targets sales between $5.95 billion and $6.25 billion and adjusted EBITDA of $725 million to $800 million. The company also highlights a $725 million new business backlog expected to boost electrification initiatives.
- Q4 2022 sales increased to $1.39 billion from $1.24 billion year-over-year.
- Full year 2022 sales rose to $5.80 billion compared to $5.16 billion in 2021.
- Net income for Q4 2022 improved to $13.9 million versus a loss of $46.3 million in Q4 2021.
- Adjusted free cash flow for full year 2022 was $313 million, despite a decrease from $422.9 million in 2021.
- Adjusted EBITDA decreased from 13.3% of sales in Q4 2021 to 11.3% in Q4 2022.
- Full year adjusted EBITDA fell from $833.3 million in 2021 to $747.3 million in 2022.
- Net cash provided by operating activities declined from $538.4 million in 2021 to $448.9 million in 2022.
AAM Concludes 2022 With Strong Cash Flow Delivery
Fourth Quarter 2022 Results
- Sales of
$1.39 billion - Net income attributable to AAM of
$13.9 million 1.0% of sales, which includes Malvern fire recoveries, net - Adjusted EBITDA of
$157.7 million 11.3% of sales - Diluted earnings per share of
$0.11 $(0.07) - Net cash provided by operating activities of
$148.5 million $99.0 million
Full Year 2022 Results
- Sales of
$5.80 billion - Net income attributable to AAM of
$64.3 million 1.1% of sales - Adjusted EBITDA of
$747.3 million 12.9% of sales - Diluted earnings per share of
$0.53 $0.60 - Net cash provided by operating activities of
$448.9 million $313.0 million
"AAM delivered strong cash flow performance in 2022 while navigating customer production schedule volatility and ongoing supply chain challenges," said AAM's Chairman and Chief Executive Officer,
AAM's sales in the fourth quarter of 2022 were
AAM's sales for full year 2022 were
AAM's net income in the fourth quarter of 2022 was
AAM defines Adjusted earnings (loss) per share to be diluted earnings (loss) per share excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, loss on sale of business, impairment charges, pension settlements, certain accelerated depreciation, unrealized gains or losses on equity securities and non-recurring items, including the tax effect thereon. Adjusted loss per share in the fourth quarter of 2022 was
AAM defines EBITDA to be earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, loss on sale of business, impairment charges, pension settlements, unrealized gains or losses on equity securities and non-recurring items. In the fourth quarter of 2022, Adjusted EBITDA was
For full year 2022, AAM's Adjusted EBITDA was
AAM's net cash provided by operating activities for the fourth quarter of 2022 was
AAM defines free cash flow to be net cash provided by operating activities less capital expenditures net of proceeds from the sale of property, plant and equipment. Adjusted free cash flow is defined as free cash flow excluding the impact of cash payments for restructuring and acquisition-related costs, and cash payments related to the Malvern fire, including payments for capital expenditures, net of recoveries. AAM's adjusted free cash flow for the fourth quarter of 2022 was
AAM's 2023 Financial Outlook
AAM's full year 2023 financial targets are as follows:
- AAM is targeting sales in the range of
$5.95 $6.25 billion - AAM is targeting Adjusted EBITDA in the range of
$725 $800 million - Reflects the impact of increased R&D spending to support new programs and electrification growth opportunities
- AAM is targeting Adjusted free cash flow in the range of
$225 $300 million 3.5% -4.0% of sales.
These targets are based on the following assumptions for 2023:
- North American light vehicle production of approximately 14.5 - 15.1 million units.
- Current customer production and launch schedules and operating environment.
AAM's 2023-2025 New Business Backlog
As disclosed at AAM's Technology Day (
Fourth Quarter 2022 Conference Call Information
A conference call to review AAM's fourth quarter results is scheduled today at
Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles generally accepted in
Certain of the forward-looking financial measures included in this earnings release are provided on a non-GAAP basis. A reconciliation of non-GAAP forward-looking financial measures to the most directly comparable forward-looking financial measures calculated and presented in accordance with GAAP has been provided. The amounts in these reconciliations are based on our current estimates and actual results may differ materially from these forward-looking estimates for many reasons, including potential event driven transactional and other non-core operating items and their related effects in any future period, the magnitude of which may be significant.
Management believes that these non-GAAP financial measures are useful to management, investors, and banking institutions 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.
Company Description
As a leading global Tier 1 Automotive and Mobility Supplier, AAM (NYSE: AXL) designs, engineers and manufactures Driveline and Metal Forming technologies to support electric, hybrid and internal combustion vehicles. Headquartered in
Forward-Looking Statements
In this earnings release, we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 and relate to trends and events that may affect our future financial position and operating results. The terms such as "will," "may," "could," "would," "plan," "believe," "expect," "anticipate," "intend," "project," "target," and similar words or expressions, as well as statements in future tense, are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and may differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to: global economic conditions, including the impact of inflation, recession or recessionary concerns, or slower growth in the markets in which we operate; reduced purchases of our products by General Motors Company (GM), Stellantis N.V. (Stellantis), Ford Motor Company (Ford) or other customers; our ability to respond to changes in technology, increased competition or pricing pressures; our ability to develop and produce new products that reflect market demand; lower-than-anticipated market acceptance of new or existing products; our ability to attract new customers and programs for new products; reduced demand for our customers' products (particularly light trucks and sport utility vehicles (SUVs) produced by
For more information:
Investor Contact
David H. Lim
Head of Investor Relations
(313) 758-2006
david.lim@aam.com
Media Contact
Vice President,
(313) 758-4814
chris.son@aam.com
Or visit the AAM website at www.aam.com.
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Three Months Ended | Twelve Months Ended | ||||||||
2022 | 2021 | 2022 | 2021 | ||||||
(in millions, except per share data) | |||||||||
Net sales | $ 1,392.7 | $ 1,235.1 | $ 5,802.4 | $ 5,156.6 | |||||
Cost of goods sold | 1,225.5 | 1,095.1 | 5,097.5 | 4,433.9 | |||||
Gross profit | 167.2 | 140.0 | 704.9 | 722.7 | |||||
Selling, general and administrative expenses | 88.5 | 77.5 | 345.1 | 344.2 | |||||
Amortization of intangible assets | 21.3 | 21.5 | 85.7 | 85.8 | |||||
Restructuring and acquisition-related costs | 3.8 | 8.6 | 30.2 | 49.4 | |||||
Loss on sale of business | — | — | — | 2.7 | |||||
Operating income | 53.6 | 32.4 | 243.9 | 240.6 | |||||
Interest expense | (42.3) | (44.5) | (174.5) | (195.2) | |||||
Interest income | 5.4 | 2.7 | 17.0 | 10.9 | |||||
Other income (expense): | |||||||||
Debt refinancing and redemption costs | (0.4) | — | (6.4) | (34.0) | |||||
Gain on bargain purchase of business | 0.6 | — | 13.6 | — | |||||
Pension settlement charges | — | (42.3) | — | (42.3) | |||||
Unrealized gain (loss) on equity securities | (1.5) | 5.0 | (25.5) | 24.4 | |||||
Other income (expense), net | 2.6 | (1.9) | (1.8) | (3.2) | |||||
Income (loss) before income taxes | 18.0 | (48.6) | 66.3 | 1.2 | |||||
Income tax expense (benefit) | 4.1 | (2.3) | 2.0 | (4.7) | |||||
Net income (loss) attributable to AAM | $ 13.9 | $ (46.3) | $ 64.3 | $ 5.9 | |||||
Diluted earnings (loss) per share | $ 0.11 | $ (0.41) | $ 0.53 | $ 0.05 | |||||
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(in millions) | |||
ASSETS | |||
Current assets | |||
Cash and cash equivalents | $ 511.5 | $ 530.2 | |
Accounts receivable, net | 820.2 | 762.8 | |
Inventories, net | 463.9 | 410.4 | |
Prepaid expenses and other | 197.8 | 152.6 | |
Total current assets | 1,993.4 | 1,856.0 | |
Property, plant and equipment, net | 1,903.0 | 1,996.1 | |
Deferred income taxes | 119.0 | 121.1 | |
181.6 | 183.8 | ||
Other intangible assets, net | 616.2 | 697.2 | |
127.6 | 201.1 | ||
Operating lease right-of-use asset | 107.2 | 123.7 | |
Other assets and deferred charges | 421.4 | 456.7 | |
Total assets | $ 5,469.4 | $ 5,635.7 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities | |||
Current portion of long-term debt | $ 75.9 | $ 18.8 | |
Accounts payable | 734.0 | 612.8 | |
Accrued compensation and benefits | 186.6 | 195.2 | |
Deferred revenue | 28.1 | 28.1 | |
Current portion of operating lease liabilities | 21.1 | 24.6 | |
Accrued expenses and other | 153.6 | 160.4 | |
Total current liabilities | 1,199.3 | 1,039.9 | |
Long-term debt, net | 2,845.1 | 3,085.7 | |
Deferred revenue | 73.4 | 94.8 | |
Deferred income taxes | 10.7 | 13.5 | |
Long-term portion of operating lease liabilities | 87.2 | 99.9 | |
Postretirement benefits and other long-term liabilities | 626.4 | 844.1 | |
Total liabilities | 4,842.1 | 5,177.9 | |
Total AAM stockholders' equity | 627.3 | 457.8 | |
Noncontrolling interests in subsidiaries | — | — | |
Total stockholders' equity | 627.3 | 457.8 | |
Total liabilities and stockholders' equity | $ 5,469.4 | $ 5,635.7 | |
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Three Months Ended | Twelve Months Ended | |||||||
2022 | 2021 | 2022 | 2021 | |||||
(in millions) | ||||||||
Operating activities | ||||||||
Net income (loss) | $ 13.9 | $ (46.3) | $ 64.3 | $ 5.9 | ||||
Adjustments to reconcile net income (loss) to net cash provided by | ||||||||
Depreciation and amortization | 125.0 | 123.1 | 492.1 | 544.3 | ||||
Other | 9.6 | 25.6 | (107.5) | (11.8) | ||||
Net cash provided by operating activities | 148.5 | 102.4 | 448.9 | 538.4 | ||||
Investing activities | ||||||||
Purchases of property, plant and equipment | (53.5) | (65.4) | (171.4) | (181.2) | ||||
Proceeds from sale of property, plant and equipment | 0.4 | 0.2 | 4.7 | 2.0 | ||||
Acquisition of business, net of cash acquired | (0.6) | — | (88.9) | (4.9) | ||||
Proceeds from sale of business, net | — | 0.1 | — | 1.0 | ||||
Other | 8.1 | (1.1) | 12.6 | 22.0 | ||||
Net cash used in investing activities | (45.6) | (66.2) | (243.0) | (161.1) | ||||
Financing activities | ||||||||
Net debt activity | (65.6) | (5.7) | (216.8) | (392.1) | ||||
Other | (3.8) | (1.5) | (0.4) | (9.3) | ||||
Net cash used in financing activities | (69.4) | (7.2) | (217.2) | (401.4) | ||||
Effect of exchange rate changes on cash | 5.7 | 0.5 | (7.4) | (2.7) | ||||
Net increase (decrease) in cash and cash equivalents | 39.2 | 29.5 | (18.7) | (26.8) | ||||
Cash and cash equivalents at beginning of period | 472.3 | 500.7 | 530.2 | 557.0 | ||||
Cash and cash equivalents at end of period | $ 511.5 | $ 530.2 | $ 511.5 | $ 530.2 | ||||
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The supplemental data presented below is a reconciliation of certain financial measures which is intended to | |||||||
Earnings before interest expense, income taxes and depreciation and amortization (EBITDA) and Adjusted EBITDA(a) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(in millions) | |||||||
Net income (loss) | $ 13.9 | $ (46.3) | $ 64.3 | $ 5.9 | |||
Interest expense | 42.3 | 44.5 | 174.5 | 195.2 | |||
Income tax expense (benefit) | 4.1 | (2.3) | 2.0 | (4.7) | |||
Depreciation and amortization | 125.0 | 123.1 | 492.1 | 544.3 | |||
EBITDA | 185.3 | 119.0 | 732.9 | 740.7 | |||
Restructuring and acquisition-related costs | 3.8 | 8.6 | 30.2 | 49.4 | |||
Debt refinancing and redemption costs | 0.4 | — | 6.4 | 34.0 | |||
Loss on sale of business | — | — | — | 2.7 | |||
Unrealized loss (gain) on equity securities | 1.5 | (5.0) | 25.5 | (24.4) | |||
Pension settlements | — | 42.3 | — | 42.3 | |||
Non-recurring items: | |||||||
Malvern fire insurance recoveries, net of charges | (32.7) | (0.3) | (39.1) | (11.4) | |||
Acquisition-related fair value inventory adjustment | — | — | 5.0 | — | |||
Gain on bargain purchase of business | (0.6) | — | (13.6) | — | |||
Adjusted EBITDA | $ 157.7 | $ 164.6 | $ 747.3 | $ 833.3 | |||
Adjusted earnings (loss) per share(b) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Diluted earnings (loss) per share | $ 0.11 | $ (0.41) | $ 0.53 | $ 0.05 | |||
Restructuring and acquisition-related costs | 0.03 | 0.08 | 0.25 | 0.42 | |||
Debt refinancing and redemption costs | — | — | 0.05 | 0.29 | |||
Loss on sale of business | — | — | — | 0.02 | |||
Unrealized loss (gain) on equity securities | 0.01 | (0.04) | 0.21 | (0.21) | |||
Pension settlements | — | 0.36 | — | 0.36 | |||
Accelerated depreciation(c) | — | — | — | 0.27 | |||
Non-recurring items: | |||||||
Malvern fire insurance recoveries, net of charges | (0.26) | — | (0.32) | (0.10) | |||
Gain on bargain purchase of business | (0.01) | — | (0.11) | — | |||
Acquisition-related fair value inventory adjustment | — | — | 0.04 | — | |||
Tax effect of adjustments | 0.05 | (0.08) | (0.05) | (0.17) | |||
Adjusted earnings (loss) per share | $ (0.07) | $ (0.09) | $ 0.60 | $ 0.93 | |||
Adjusted earnings (loss) per share are based on weighted average diluted shares outstanding of 114.6 million and 114.1 million for the three months ended
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The supplemental data presented below is a reconciliation of certain financial measures which is intended | |||||||
Free cash flow and Adjusted free cash flow(d) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(in millions) | |||||||
Net cash provided by operating activities | $ 148.5 | $ 102.4 | $ 448.9 | $ 538.4 | |||
Capital expenditures net of proceeds from the sale of property, | (53.1) | (65.2) | (166.7) | (179.2) | |||
Free cash flow | 95.4 | $ 37.2 | 282.2 | 359.2 | |||
Cash payments for restructuring and acquisition-related costs | 6.6 | 9.8 | 27.8 | 57.7 | |||
Cash payments (insurance proceeds) related to Malvern fire, net | (3.0) | (3.4) | 3.0 | 6.0 | |||
Adjusted free cash flow | $ 99.0 | $ 43.6 | $ 313.0 | $ 422.9 | |||
Segment Financial Information | |||||||
Three Months Ended | Twelve Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(in millions) | |||||||
Segment Sales | |||||||
Driveline | $ 967.2 | $ 913.0 | $ 4,130.8 | $ 3,744.9 | |||
Metal Forming | 527.1 | 410.1 | 2,113.0 | 1,762.2 | |||
Total Sales | 1,494.3 | 1,323.1 | 6,243.8 | 5,507.1 | |||
Intersegment Sales | (101.6) | (88.0) | (441.4) | (350.5) | |||
Net External Sales | $ 1,392.7 | $ 1,235.1 | $ 5,802.4 | $ 5,156.6 | |||
Segment Adjusted EBITDA(a) | |||||||
Driveline | $ 126.7 | $ 127.5 | $ 547.0 | $ 577.7 | |||
Metal Forming | 31.0 | 37.1 | 200.3 | 255.6 | |||
Total Segment Adjusted EBITDA | $ 157.7 | $ 164.6 | $ 747.3 | $ 833.3 | |||
Full Year 2023 Financial Outlook | |||
Adjusted EBITDA | |||
Low End | High End | ||
(in millions) | |||
Net income | $ 10 | $ 65 | |
Interest expense | 200 | 200 | |
Income tax expense | — | 20 | |
Depreciation and amortization | 490 | 490 | |
Full year 2023 targeted EBITDA | 700 | 775 | |
Restructuring and acquisition-related costs | 25 | 25 | |
Full year 2023 targeted Adjusted EBITDA | $ 725 | $ 800 | |
Adjusted Free Cash Flow | |||
Low End | High End | ||
(in millions) | |||
Net cash provided by operating activities | $ 435 | $ 510 | |
Capital expenditures net of proceeds from the sale of property, | (230) | (230) | |
Full year 2023 targeted Free Cash Flow | 205 | 280 | |
Cash payments for restructuring and acquisition-related costs | 25 | 25 | |
Other | (5) | (5) | |
Full year 2023 targeted Adjusted Free Cash Flow | $ 225 | $ 300 | |
___________ | |
(a) | We define EBITDA to be earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, loss on sale of a business, impairment charges, pension settlements, unrealized gains or losses on equity securities and non-recurring items. We believe that EBITDA and Adjusted EBITDA are meaningful measures of performance as they are 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 and Adjusted EBITDA, together with other measures, to measure our operating performance relative to other Tier 1 automotive suppliers. We also use Segment Adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. EBITDA and Adjusted EBITDA are also key metrics used in our calculation of incentive compensation. EBITDA and Adjusted 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 and Adjusted EBITDA differently. |
(b) | We define Adjusted earnings (loss) per share to be diluted earnings (loss) per share excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, loss on sale of a business, impairment charges, pension settlements, certain accelerated depreciation, unrealized gains or losses on equity securities and non-recurring items, including the tax effect thereon. We believe Adjusted earnings (loss) per share is a meaningful measure as it is commonly utilized by management and investors in assessing ongoing financial performance that provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of core operating performance and which may obscure underlying business results and trends. Other companies may calculate Adjusted earnings (loss) per share differently. |
(c) | In the first quarter of 2021, one of our largest customers announced their intention to cease production operations in |
(d) | We define free cash flow to be net cash provided by operating activities less capital expenditures net of proceeds from the sale of property, plant and equipment. Adjusted free cash flow is defined as free cash flow excluding the impact of cash payments for restructuring and acquisition-related costs and cash payments related to the Malvern fire, including payments for capital expenditures, net of recoveries. We believe free cash flow and Adjusted 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. Free cash flow and Adjusted free cash flow are also key metrics used in our calculation of incentive compensation. Other companies may calculate free cash flow and Adjusted free cash flow differently. |
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