AAM Reports Third Quarter 2023 Financial Results
- Sales for the third quarter of 2023 were $1.55 billion, slightly higher than the same period in 2022.
- Adjusted EBITDA for the third quarter of 2023 was $156.8 million, a decrease from the third quarter of 2022.
- Net cash provided by operating activities for the third quarter of 2023 was $178.3 million, a significant increase compared to the same period in 2022.
- AAM reported a net loss of $(17.4) million for the third quarter of 2023.
- Adjusted EBITDA decreased in the third quarter of 2023 compared to the same period in 2022.
- The diluted loss per share for the third quarter of 2023 was $(0.15).
Generates Strong Cash Flow
Third Quarter 2023 Results
- Sales of
$1.55 billion - Net loss of
$(17.4) million - Adjusted EBITDA of
$156.8 million 10.1% of sales - Diluted loss per share of
$(0.15) $(0.11) - Net cash provided by operating activities of
$178.3 million $135.8 million
"AAM's third quarter financial performance reflected greater than anticipated downtime at key customers, operational inefficiencies and the UAW work stoppage," said AAM's Chairman and Chief Executive Officer, David C. Dauch. "Despite these challenges, AAM generated strong free cash flow during the quarter and continues to focus on cementing its leadership in electric propulsion technology for future profitable growth."
AAM's sales in the third quarter of 2023 were
AAM's net loss in the third quarter of 2023 was
Adjusted loss per share in the third quarter of 2023 was
In the third quarter of 2023, Adjusted EBITDA was
AAM's net cash provided by operating activities for the third quarter of 2023 was
AAM's Adjusted free cash flow for the third quarter of 2023 was
AAM's 2023 Updated Financial Outlook
AAM's updated full year 2023 financial targets are now as follows:
- AAM is targeting sales in the range of
$6.0 $6.1 billion - AAM is targeting Adjusted EBITDA in the range of
$660 $685 million - Outlook assumes production begins to resume during the first week of November from the UAW work stoppage and an estimated work stoppage impact of
$70 $100 million $25 $40 million - AAM is targeting Adjusted free cash flow in the range of
$200 $215 million 3.0% -3.5% of sales.
These updated 2023 targets are based on the following:
- The current macro operating environment.
- AAM's production estimates of key programs that we support.
Third Quarter 2023 Conference Call Information
A conference call to review AAM's third 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 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.
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 settlements, 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 settlements, 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 | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(in millions, except per share data) | |||||||
Net sales | $ 1,551.9 | $ 1,535.2 | $ 4,616.5 | $ 4,409.7 | |||
Cost of goods sold | 1,421.3 | 1,357.8 | 4,147.1 | 3,872.0 | |||
Gross profit | 130.6 | 177.4 | 469.4 | 537.7 | |||
Selling, general and administrative expenses | 81.8 | 85.7 | 271.2 | 256.6 | |||
Amortization of intangible assets | 21.4 | 21.5 | 64.2 | 64.4 | |||
Restructuring and acquisition-related costs | 3.5 | 7.9 | 16.2 | 26.4 | |||
Operating income | 23.9 | 62.3 | 117.8 | 190.3 | |||
Interest expense | (50.8) | (44.8) | (151.5) | (132.2) | |||
Interest income | 7.1 | 5.4 | 18.9 | 11.6 | |||
Other income (expense): | |||||||
Debt refinancing and redemption costs | (0.3) | (0.2) | (0.3) | (6.0) | |||
Gain on bargain purchase of business | — | 1.4 | — | 13.0 | |||
Unrealized loss on equity securities | (1.2) | (2.3) | (1.2) | (24.0) | |||
Other income (expense), net | 1.9 | (1.0) | 5.1 | (4.4) | |||
Income (loss) before income taxes | (19.4) | 20.8 | (11.2) | 48.3 | |||
Income tax expense (benefit) | (2.0) | (5.7) | 3.3 | (2.1) | |||
Net income (loss) | $ (17.4) | $ 26.5 | $ (14.5) | $ 50.4 | |||
Diluted earnings (loss) per share | $ (0.15) | $ 0.22 | $ (0.12) | $ 0.42 | |||
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | |||
September 30, 2023 | December 31, 2022 | ||
(in millions) | |||
ASSETS | |||
Current assets | |||
Cash and cash equivalents | $ 615.6 | $ 511.5 | |
Accounts receivable, net | 885.2 | 820.2 | |
Inventories, net | 460.4 | 463.9 | |
Prepaid expenses and other | 178.0 | 197.8 | |
Total current assets | 2,139.2 | 1,993.4 | |
Property, plant and equipment, net | 1,765.4 | 1,903.0 | |
Deferred income taxes | 152.0 | 119.0 | |
Goodwill | 181.0 | 181.6 | |
Other intangible assets, net | 553.3 | 616.2 | |
GM postretirement cost sharing asset | 126.6 | 127.6 | |
Operating lease right-of-use assets | 113.6 | 107.2 | |
Other assets and deferred charges | 443.9 | 421.4 | |
Total assets | $ 5,475.0 | $ 5,469.4 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities | |||
Current portion of long-term debt | $ 24.5 | $ 75.9 | |
Accounts payable | 811.7 | 734.0 | |
Accrued compensation and benefits | 196.8 | 186.6 | |
Deferred revenue | 15.5 | 28.1 | |
Current portion of operating lease liabilities | 21.5 | 21.1 | |
Accrued expenses and other | 178.7 | 153.6 | |
Total current liabilities | 1,248.7 | 1,199.3 | |
Long-term debt, net | 2,833.9 | 2,845.1 | |
Deferred revenue | 67.1 | 73.4 | |
Deferred income taxes | 6.7 | 10.7 | |
Long-term portion of operating lease liabilities | 93.7 | 87.2 | |
Postretirement benefits and other long-term liabilities | 611.2 | 626.4 | |
Total liabilities | 4,861.3 | 4,842.1 | |
Total AAM stockholders' equity | 613.7 | 627.3 | |
Total liabilities and stockholders' equity | $ 5,475.0 | $ 5,469.4 | |
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(in millions) | |||||||
Operating activities | |||||||
Net income (loss) | $ (17.4) | $ 26.5 | $ (14.5) | $ 50.4 | |||
Adjustments to reconcile net income (loss) to net cash | |||||||
Depreciation and amortization | 120.4 | 124.8 | 365.8 | 367.1 | |||
Other | 75.3 | (66.1) | (8.1) | (117.1) | |||
Net cash provided by operating activities | 178.3 | 85.2 | 343.2 | 300.4 | |||
Investing activities | |||||||
Purchases of property, plant and equipment | (47.9) | (46.7) | (138.6) | (117.9) | |||
Proceeds from sale of property, plant and equipment | 0.4 | 0.1 | 0.8 | 4.3 | |||
Acquisition of business, net of cash acquired | (0.6) | (0.7) | (1.9) | (88.3) | |||
Other | (0.7) | 0.1 | 13.0 | 4.5 | |||
Net cash used in investing activities | (48.8) | (47.2) | (126.7) | (197.4) | |||
Financing activities | |||||||
Net debt activity | (17.5) | (56.9) | (82.9) | (151.2) | |||
Other | (3.3) | (4.2) | (25.3) | 3.4 | |||
Net cash used in financing activities | (20.8) | (61.1) | (108.2) | (147.8) | |||
Effect of exchange rate changes on cash | (4.2) | (6.0) | (4.2) | (13.1) | |||
Net increase (decrease) in cash and cash equivalents | 104.5 | (29.1) | 104.1 | (57.9) | |||
Cash and cash equivalents at beginning of period | 511.1 | 501.4 | 511.5 | 530.2 | |||
Cash and cash equivalents at end of period | $ 615.6 | $ 472.3 | $ 615.6 | $ 472.3 | |||
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) and Adjusted EBITDA(a) | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(in millions) | |||||||
Net income (loss) | $ (17.4) | $ 26.5 | $ (14.5) | $ 50.4 | |||
Interest expense | 50.8 | 44.8 | 151.5 | 132.2 | |||
Income tax expense (benefit) | (2.0) | (5.7) | 3.3 | (2.1) | |||
Depreciation and amortization | 120.4 | 124.8 | 365.8 | 367.1 | |||
EBITDA | 151.8 | 190.4 | 506.1 | 547.6 | |||
Restructuring and acquisition-related costs | 3.5 | 7.9 | 16.2 | 26.4 | |||
Debt refinancing and redemption costs | 0.3 | 0.2 | 0.3 | 6.0 | |||
Unrealized loss on equity securities | 1.2 | 2.3 | 1.2 | 24.0 | |||
Non-recurring items: | |||||||
Malvern fire insurance recoveries, net | — | (1.0) | — | (6.4) | |||
Acquisition-related fair value inventory adjustment | — | — | — | 5.0 | |||
Gain on bargain purchase of business | — | (1.4) | — | (13.0) | |||
Adjusted EBITDA | $ 156.8 | $ 198.4 | $ 523.8 | $ 589.6 | |||
Adjusted earnings (loss) per share(b) | |||||||
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Diluted earnings (loss) per share | $ (0.15) | $ 0.22 | $ (0.12) | $ 0.42 | |||
Restructuring and acquisition-related costs | 0.04 | 0.07 | 0.14 | 0.22 | |||
Debt refinancing and redemption costs | — | — | — | 0.05 | |||
Unrealized loss on equity securities | 0.01 | 0.02 | 0.01 | 0.20 | |||
Non-recurring items: | |||||||
Malvern fire insurance recoveries, net | — | (0.01) | — | (0.05) | |||
Acquisition-related fair value inventory adjustment | — | — | — | 0.04 | |||
Gain on bargain purchase of business | — | (0.01) | — | (0.11) | |||
Tax effect of adjustments | $ (0.01) | (0.02) | (0.03) | (0.10) | |||
Adjusted earnings (loss) per share | $ (0.11) | $ 0.27 | $ — | $ 0.67 | |||
Adjusted earnings (loss) per share are based on weighted average diluted shares outstanding of 117.1 million and 121.1 million for the three months ended September 30, 2023 and 2022 respectively, and 116.5 million and 120.2 million for the nine months ended September 30, 2023 and 2022 respectively. |
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 | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(in millions) | |||||||
Net cash provided by operating activities | $ 178.3 | $ 85.2 | $ 343.2 | $ 300.4 | |||
Capital expenditures net of proceeds from the sale of property, | (47.5) | (46.6) | (137.8) | (113.6) | |||
Free cash flow | $ 130.8 | $ 38.6 | $ 205.4 | $ 186.8 | |||
Cash payments for restructuring and acquisition-related costs | 5.0 | 4.7 | 16.1 | 21.2 | |||
Cash payments (insurance proceeds) related to Malvern fire, net | — | 2.5 | (7.0) | 6.0 | |||
Adjusted free cash flow | $ 135.8 | $ 45.8 | $ 214.5 | $ 214.0 | |||
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 | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(in millions) | |||||||
Segment Sales | |||||||
Driveline | $ 1,061.2 | $ 1,043.2 | $ 3,161.5 | $ 3,113.3 | |||
Metal Forming | 624.8 | 634.1 | 1,878.1 | 1,716.9 | |||
Total Sales | 1,686.0 | 1,677.3 | 5,039.6 | 4,830.2 | |||
Intersegment Sales | (134.1) | (142.1) | (423.1) | (420.5) | |||
Net External Sales | $ 1,551.9 | $ 1,535.2 | $ 4,616.5 | $ 4,409.7 | |||
Segment Adjusted EBITDA(a) | |||||||
Driveline | $ 137.3 | $ 137.0 | $ 403.5 | $ 392.2 | |||
Metal Forming | 19.5 | 61.4 | 120.3 | 197.4 | |||
Total Segment Adjusted EBITDA | $ 156.8 | $ 198.4 | $ 523.8 | $ 589.6 | |||
Full Year 2023 Financial Outlook | |||
Adjusted EBITDA | |||
Low End | High End | ||
(in millions) | |||
Net loss | $ (65) | $ (45) | |
Interest expense | 200 | 200 | |
Income tax expense | 15 | 20 | |
Depreciation and amortization | 490 | 490 | |
Full year 2023 targeted EBITDA | 640 | 665 | |
Restructuring and acquisition-related costs | 20 | 20 | |
Full year 2023 targeted Adjusted EBITDA | $ 660 | $ 685 | |
Adjusted Free Cash Flow | |||
Low End | High End | ||
(in millions) | |||
Net cash provided by operating activities | $ 380 | $ 395 | |
Capital expenditures net of proceeds from the sale of property, | (200) | (200) | |
Full year 2023 targeted Free Cash Flow | 180 | 195 | |
Cash payments for restructuring and acquisition-related costs | 25 | 25 | |
Other | (5) | (5) | |
Full year 2023 targeted Adjusted Free Cash Flow | $ 200 | $ 215 | |
___________
(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 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 per share excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, loss on sale of a business, pension settlements, 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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