AAM Reports Fourth Quarter and Full Year 2023 Financial Results
- AAM reported Q4 2023 sales of $1.46 billion with a net loss of $(19.1) million, representing a sequential margin improvement.
- Full year 2023 sales for AAM amounted to $6.08 billion with a net loss of $(33.6) million, showing a slight decrease in profitability compared to the previous year.
- Adjusted EBITDA for Q4 2023 stood at $169.5 million, reflecting a positive trend in operational performance.
- AAM's 2024 financial targets include sales in the range of $6.05 - $6.35 billion, Adjusted EBITDA in the range of $685 - $750 million, and Adjusted free cash flow in the range of $200 - $240 million, with assumptions based on production estimates and customer launch schedules.
- None.
Insights
The financial results of American Axle & Manufacturing Holdings, Inc. (AAM) for Q4 2023 show a sequential margin improvement but also reveal a net loss situation. The reported net loss of $(19.1) million, contrasted with the net income of $13.9 million in the same quarter of the previous year, indicates a significant year-over-year downturn. This performance might raise concerns among investors about the company's profitability and its ability to maintain a positive earnings trajectory amidst market challenges. However, the Adjusted EBITDA margin of 11.6% is a modest increase from 11.3% in the previous year, suggesting some operational efficiency gains.
From a cash flow perspective, the Adjusted free cash flow of $4.5 million for Q4 and $219.0 million for the full year, while lower than the previous year, indicates that AAM is still generating cash after accounting for capital expenditures. This is a critical factor for the company's ability to invest in growth initiatives, such as their pivot to electrification. The capital spending target of 4.0%-4.5% of sales for 2024 also demonstrates a commitment to strategic investments, which could be a positive sign for long-term growth prospects.
AAM's financial outlook for 2024, with sales targets ranging from $6.05 to $6.35 billion and Adjusted EBITDA between $685 and $750 million, reflects a cautiously optimistic stance in a challenging automotive market. The North American light vehicle production estimate of 15.8 million units for 2024 plays a critical role in this forecast, as AAM's performance is closely tied to the automotive production cycle. The market should also note the shift in AAM's product portfolio towards electrification, with approximately 50% of the new business backlog being related to electric vehicles. This strategic pivot could position AAM favorably as the automotive industry continues to transition towards sustainable mobility solutions.
The new business backlog estimated at $600 million in future annual sales from 2024 to 2026, with a launch cadence skewed towards the earlier years, suggests a robust pipeline that could potentially offset current losses. However, the actual realization of these backlogs will depend on AAM's execution capabilities and market conditions. Investors should monitor the company's progress on these fronts to gauge the potential impact on future earnings and market share.
The reported net losses for Q4 and the full year of 2023 are indicative of the broader pressures facing the automotive industry, including potential supply chain disruptions, labor challenges as evidenced by the UAW work stoppage and increased competition in the electrification space. AAM's focus on leveraging its core business while building a product portfolio for electrification reflects an industry-wide trend where traditional automotive suppliers are diversifying to stay relevant in the era of electric vehicles.
The electrification mix in AAM's new business backlog is particularly noteworthy. With approximately 50% of the backlog dedicated to electrification, AAM is signaling its commitment to adapting to the evolving automotive landscape. This strategic focus is not only a response to OEM powertrain trends but also a proactive measure to capture market share in a segment that is expected to grow significantly in the coming years. The success of this transition will be a key factor in AAM's future financial health and competitive positioning.
AAM Delivers Sequential Margin Improvement
Fourth Quarter 2023 Results
- Sales of
$1.46 billion - Net loss of
$(19.1) million - Adjusted EBITDA of
$169.5 million 11.6% of sales - Diluted loss per share of
$(0.16) $(0.09) - Net cash provided by operating activities of
$52.9 million $4.5 million
Full Year 2023 Results
- Sales of
$6.08 billion - Net loss of
$(33.6) million - Adjusted EBITDA of
$693.3 million 11.4% of sales - Diluted loss per share of
$(0.29) $(0.09) - Net cash provided by operating activities of
$396.1 million $219.0 million
"AAM's fourth quarter performance was on track with our improvement objectives, ending a challenging 2023 on a better trajectory," said AAM's Chairman and Chief Executive Officer, David C. Dauch. "As we look ahead, AAM will leverage its strong core business while selectively building a product portfolio to drive the future pivot to electrification."
AAM's sales in the fourth quarter of 2023 were
AAM's net loss in the fourth quarter of 2023 was
In the fourth quarter of 2023, AAM's Adjusted EBITDA was
AAM's net cash provided by operating activities for the fourth quarter of 2023 was
AAM's Adjusted free cash flow for the fourth quarter of 2023 was
AAM's 2024 Financial Outlook
AAM's full year 2024 financial targets are as follows:
- AAM is targeting sales in the range of
$6.05 $6.35 billion - AAM is targeting Adjusted EBITDA in the range of
$685 $750 million - AAM is targeting Adjusted free cash flow in the range of
$200 $240 million 4.0% -4.5% of sales.
These targets are based on the following assumptions for 2024:
- North American light vehicle production of approximately 15.8 million units.
- AAM's production estimates of key programs that we support.
- Current customer launch schedules and operating environment.
AAM's 2024-2026 New Business Backlog
AAM's gross new and incremental business backlog launching from 2024 - 2026 is estimated at approximately
Fourth Quarter 2023 Conference Call Information
A conference call to review AAM's fourth quarter results is scheduled today at 10:00 a.m. ET. 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) 883-0383 from
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 AAM'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.
Definition of Non-GAAP Financial Measures
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, pension curtailment and settlement charges, unrealized gains or losses on equity securities and non-recurring items, including the tax effect thereon.
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, pension curtailment and settlement charges, unrealized gains or losses on equity securities and non-recurring items.
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.
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 GM, Stellantis and Ford); risks inherent in our global operations (including tariffs and the potential consequences thereof to us, our suppliers, and our customers and their suppliers, adverse changes in trade agreements, such as
For more information:
Investor Contact
David H. Lim
Head of Investor Relations
(313) 758-2006
david.lim@aam.com
Media Contact
Christopher M. Son
Vice President, Marketing & Communications
(313) 758-4814
chris.son@aam.com
Or visit the AAM website at www.aam.com.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(in millions, except per share data) | |||||||
Net sales | $ 1,463.0 | $ 1,392.7 | $ 6,079.5 | $ 5,802.4 | |||
Cost of goods sold | 1,308.1 | 1,225.5 | 5,455.2 | 5,097.5 | |||
Gross profit | 154.9 | 167.2 | 624.3 | 704.9 | |||
Selling, general and administrative expenses | 95.7 | 88.5 | 366.9 | 345.1 | |||
Amortization of intangible assets | 21.4 | 21.3 | 85.6 | 85.7 | |||
Restructuring and acquisition-related costs | 9.0 | 3.8 | 25.2 | 30.2 | |||
Operating income | 28.8 | 53.6 | 146.6 | 243.9 | |||
Interest expense | (50.2) | (42.3) | (201.7) | (174.5) | |||
Interest income | 7.3 | 5.4 | 26.2 | 17.0 | |||
Other income (expense): | |||||||
Debt refinancing and redemption costs | (1.0) | (0.4) | (1.3) | (6.4) | |||
Gain on bargain purchase of business | — | 0.6 | — | 13.6 | |||
Pension curtailment and settlement charges | (1.3) | — | (1.3) | — | |||
Unrealized gain (loss) on equity securities | 0.1 | (1.5) | (1.1) | (25.5) | |||
Other income (expense), net | 3.0 | 2.6 | 8.1 | (1.8) | |||
Income (loss) before income taxes | (13.3) | 18.0 | (24.5) | 66.3 | |||
Income tax expense | 5.8 | 4.1 | 9.1 | 2.0 | |||
Net income (loss) | $ (19.1) | $ 13.9 | $ (33.6) | $ 64.3 | |||
Diluted earnings (loss) per share | $ (0.16) | $ 0.11 | $ (0.29) | $ 0.53 | |||
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | |||
December 31, | December 31, | ||
(in millions) | |||
ASSETS | |||
Current assets | |||
Cash and cash equivalents | $ 519.9 | $ 511.5 | |
Accounts receivable, net | 818.5 | 820.2 | |
Inventories, net | 482.9 | 463.9 | |
Prepaid expenses and other | 185.3 | 197.8 | |
Total current assets | 2,006.6 | 1,993.4 | |
Property, plant and equipment, net | 1,760.9 | 1,903.0 | |
Deferred income taxes | 169.4 | 119.0 | |
Goodwill | 182.1 | 181.6 | |
Other intangible assets, net | 532.8 | 616.2 | |
GM postretirement cost sharing asset | 111.9 | 127.6 | |
Operating lease right-of-use asset | 115.6 | 107.2 | |
Other assets and deferred charges | 477.0 | 421.4 | |
Total assets | $ 5,356.3 | $ 5,469.4 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities | |||
Current portion of long-term debt | $ 17.0 | $ 75.9 | |
Accounts payable | 773.9 | 734.0 | |
Accrued compensation and benefits | 200.1 | 186.6 | |
Deferred revenue | 16.6 | 28.1 | |
Current portion of operating lease liabilities | 21.9 | 21.1 | |
Accrued expenses and other | 172.1 | 153.6 | |
Total current liabilities | 1,201.6 | 1,199.3 | |
Long-term debt, net | 2,751.9 | 2,845.1 | |
Deferred revenue | 70.4 | 73.4 | |
Deferred income taxes | 16.5 | 10.7 | |
Long-term portion of operating lease liabilities | 95.5 | 87.2 | |
Postretirement benefits and other long-term liabilities | 615.5 | 626.4 | |
Total liabilities | 4,751.4 | 4,842.1 | |
Total stockholders' equity | 604.9 | 627.3 | |
Total liabilities and stockholders' equity | $ 5,356.3 | $ 5,469.4 | |
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
December 31, | December 31, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
(in millions) | ||||||||
Operating activities | ||||||||
Net income (loss) | $ (19.1) | $ 13.9 | $ (33.6) | $ 64.3 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||
Depreciation and amortization | 121.4 | 125.0 | 487.2 | 492.1 | ||||
Other | (49.4) | 9.6 | (57.5) | (107.5) | ||||
Net cash provided by operating activities | 52.9 | 148.5 | 396.1 | 448.9 | ||||
Investing activities | ||||||||
Purchases of property, plant and equipment | (56.0) | (53.5) | (194.6) | (171.4) | ||||
Proceeds from sale of property, plant and equipment | 0.1 | 0.4 | 0.9 | 4.7 | ||||
Acquisition of business, net of cash acquired | (0.6) | (0.6) | (2.5) | (88.9) | ||||
Other | (1.3) | 8.1 | 11.7 | 12.6 | ||||
Net cash used in investing activities | (57.8) | (45.6) | (184.5) | (243.0) | ||||
Financing activities | ||||||||
Net debt activity | (94.3) | (65.6) | (177.2) | (216.8) | ||||
Other | (3.0) | (3.8) | (28.3) | (0.4) | ||||
Net cash used in financing activities | (97.3) | (69.4) | (205.5) | (217.2) | ||||
Effect of exchange rate changes on cash | 6.5 | 5.7 | 2.3 | (7.4) | ||||
Net increase (decrease) in cash and cash equivalents | (95.7) | 39.2 | 8.4 | (18.7) | ||||
Cash and cash equivalents at beginning of period | 615.6 | 472.3 | 511.5 | 530.2 | ||||
Cash and cash equivalents at end of period | $ 519.9 | $ 511.5 | $ 519.9 | $ 511.5 | ||||
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. | |||||||
The supplemental data presented below is a reconciliation of certain financial measures which is intended | |||||||
Earnings before interest expense, income taxes and depreciation and amortization (EBITDA) and Adjusted EBITDA(a) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(in millions) | |||||||
Net income (loss) | $ (19.1) | $ 13.9 | $ (33.6) | $ 64.3 | |||
Interest expense | 50.2 | 42.3 | 201.7 | 174.5 | |||
Income tax expense | 5.8 | 4.1 | 9.1 | 2.0 | |||
Depreciation and amortization | 121.4 | 125.0 | 487.2 | 492.1 | |||
EBITDA | 158.3 | 185.3 | 664.4 | 732.9 | |||
Restructuring and acquisition-related costs | 9.0 | 3.8 | 25.2 | 30.2 | |||
Debt refinancing and redemption costs | 1.0 | 0.4 | 1.3 | 6.4 | |||
Unrealized loss (gain) on equity securities | (0.1) | 1.5 | 1.1 | 25.5 | |||
Pension curtailment and settlement charges | 1.3 | — | 1.3 | — | |||
Non-recurring items: | |||||||
Malvern fire insurance recoveries, net of charges | — | (32.7) | — | (39.1) | |||
Acquisition-related fair value inventory adjustment | — | — | — | 5.0 | |||
Gain on bargain purchase of business | — | (0.6) | — | (13.6) | |||
Adjusted EBITDA | $ 169.5 | $ 157.7 | $ 693.3 | $ 747.3 | |||
Adjusted earnings (loss) per share(b) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Diluted earnings (loss) per share | $ (0.16) | $ 0.11 | $ (0.29) | $ 0.53 | |||
Restructuring and acquisition-related costs | 0.07 | 0.03 | 0.22 | 0.25 | |||
Debt refinancing and redemption costs | 0.01 | — | 0.01 | 0.05 | |||
Unrealized loss on equity securities | — | 0.01 | 0.01 | 0.21 | |||
Pension curtailment and settlement charges | 0.01 | — | 0.01 | — | |||
Non-recurring items: | |||||||
Malvern fire insurance recoveries, net of charges | — | (0.26) | — | (0.32) | |||
Acquisition-related fair value inventory adjustment | — | — | — | 0.04 | |||
Gain on bargain purchase of business | — | (0.01) | — | (0.11) | |||
Tax effect of adjustments | (0.02) | 0.05 | (0.05) | (0.05) | |||
Adjusted earnings (loss) per share | $ (0.09) | $ (0.07) | $ (0.09) | $ 0.60 | |||
Adjusted earnings (loss) per share are based on weighted average diluted shares outstanding of 117.1 million and 114.6 million for the | |||||||
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. | |||||||
Free cash flow and Adjusted free cash flow(c) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(in millions) | |||||||
Net cash provided by operating activities | $ 52.9 | $ 148.5 | $ 396.1 | $ 448.9 | |||
Capital expenditures net of proceeds from the sale of property, | (55.9) | (53.1) | (193.7) | (166.7) | |||
Free cash flow | (3.0) | $ 95.4 | 202.4 | 282.2 | |||
Cash payments for restructuring and acquisition-related costs | 7.5 | 6.6 | 23.6 | 27.8 | |||
Cash payments (insurance proceeds) related to Malvern fire, net | — | (3.0) | (7.0) | 3.0 | |||
Adjusted free cash flow | $ 4.5 | $ 99.0 | $ 219.0 | $ 313.0 | |||
Segment Financial Information | |||||||
On June 1, 2022, our acquisition of Tekfor became effective and we began consolidating the results of Tekfor on that date, which are | |||||||
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(in millions) | |||||||
Segment Sales | |||||||
Driveline | $ 1,015.2 | $ 950.2 | $ 4,176.7 | $ 4,063.5 | |||
Metal Forming | 576.2 | 563.8 | 2,454.3 | 2,280.7 | |||
Total Sales | 1,591.4 | 1,514.0 | 6,631.0 | 6,344.2 | |||
Intersegment Sales | (128.4) | (121.3) | (551.5) | (541.8) | |||
Net External Sales | $ 1,463.0 | $ 1,392.7 | $ 6,079.5 | $ 5,802.4 | |||
Segment Adjusted EBITDA(a) | |||||||
Driveline | $ 140.1 | $ 118.7 | $ 543.6 | $ 510.9 | |||
Metal Forming | 29.4 | 39.0 | 149.7 | 236.4 | |||
Total Segment Adjusted EBITDA | $ 169.5 | $ 157.7 | $ 693.3 | $ 747.3 | |||
Full Year 2024 Financial Outlook | |||
Adjusted EBITDA | |||
Low End | High End | ||
(in millions) | |||
Net income (loss) | $ (10) | $ 40 | |
Interest expense | 195 | 195 | |
Income tax expense | — | 15 | |
Depreciation and amortization | 480 | 480 | |
Full year 2024 targeted EBITDA | 665 | 730 | |
Restructuring and acquisition-related costs | 20 | 20 | |
Full year 2024 targeted Adjusted EBITDA | $ 685 | $ 750 | |
Adjusted Free Cash Flow | ||||||||||
Low End | High End | |||||||||
(in millions) | ||||||||||
Net cash provided by operating activities | $ 445 | $ 485 | ||||||||
Capital expenditures net of proceeds from the sale of property, | (265) | (265) | ||||||||
Full year 2024 targeted Free Cash Flow | 180 | 220 | ||||||||
Cash payments for restructuring and acquisition-related costs | 20 | 20 | ||||||||
Full year 2024 targeted Adjusted Free Cash Flow | $ 200 | $ 240 | ||||||||
(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, pension curtailment and settlement charges, 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, pension curtailment and settlement charges, 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) | 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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SOURCE American Axle & Manufacturing Holdings, Inc.
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