Announces $400 million increase in 2008 - 2012 new business backlog
DETROIT, July 27 /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
2007. Second Quarter 2007 highlights -- Second quarter sales of
$916.5 million -- 3% year-over-year decline in total production
volumes as compared to the second quarter of 2006 --
Content-per-vehicle of $1,318, approximately 8% higher than the
prior year -- Gross profit of $113.1 million, or 12.3% of sales --
Operating income of $58.9 million, or 6.4% of sales -- Net earnings
of $34.0 million or $0.64 per share -- Net cash provided by
operating activities of $224.8 million -- Increased 2008 - 2012 new
business backlog to approximately $1.2 billion AAM's earnings in
the second quarter of 2007 were $34.0 million or $0.64 per share.
This compares to earnings of $20.4 million or $0.40 per share in
the second quarter of 2006. AAM's earnings in the second quarter of
2007 reflect the impact of special charges and other non-recurring
operating costs of $7.0 million, or $0.11 per share, primarily
related to incremental attrition program activity. AAM's second
quarter earnings in 2007 also reflect the impact of an additional
$5.5 million charge, or $.09 per share, for the write-off of
unamortized debt issuance costs and other costs related to the
prepayment of the $250 million term loan due 2010. AAM's earnings
in the second quarter of 2006 included a one-time non-cash charge
of $2.4 million, or approximately $.03 per share, to write off
unamortized debt issuance costs related to the cash conversion of
approximately $128.4 million of AAM's Senior Convertible Notes due
in 2024. AAM's earnings in the second quarter of 2006 also reflect
the impact of an unfavorable tax adjustment of $2.6 million, or
$.05 per share, related to the settlement of foreign jurisdiction
tax liabilities. "Through the first half of 2007, AAM is on track
to achieve its annual objectives for sales growth, margin expansion
and free cash flow generation," said AAM's Co-Founder, Chairman of
the Board & CEO Richard E. Dauch. "Our solid operating
performance and strong cash flow in the second quarter of 2007
reflects AAM's continuing emphasis on productivity gains, process
efficiencies and structural cost reductions. We will continue to
focus on these and other initiatives as part of our long-term
strategic commitment to achieving sustainable global cost
competitiveness." Net sales in the second quarter of 2007 were
$916.5 million as compared to $874.6 million in the second quarter
of 2006. Customer production volumes for the full-size truck and
SUV programs AAM currently supports for GM and The Chrysler Group
were approximately the same as compared to the prior year. AAM
estimates that customer production volumes for its mid-sized truck
and SUV programs were down 18% in the quarter on a year-over-year
basis. Non-GM sales represented approximately 24% of AAM's total
sales in the second 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 The Chrysler Group's
heavy duty Dodge Ram pickup trucks. In the second quarter of 2007,
AAM's content-per-vehicle increased approximately 8% to $1,318 as
compared to $1,216 in the second quarter of 2006. Gross margin in
the second quarter of 2007 was 12.3% as compared to 10.3% in the
second quarter of 2006. Operating income was $58.9 million or 6.4%
of sales in the quarter as compared to $40.5 million or 4.6% of
sales in the second quarter of 2006. AAM's improved gross margin
and operating income performance in the second quarter of 2007
primarily reflects the impact of higher sales, productivity gains
and structural cost reductions resulting from the special attrition
program and other ongoing restructuring actions. Net sales in the
first half of 2007 were $1.7 billion, approximately the same as the
first half of 2006. Gross margin was 11.5% in the first half of
2007 as compared to 9.0% for the first half of 2006. Operating
income for the first half of 2007 was $94.8 million or 5.5% of
sales as compared to $55.5 million or 3.2% of sales for the first
half of 2006. AAM's SG&A spending in the second quarter of 2007
was $54.2 million as compared to $49.4 million in the second
quarter of 2006. In the first half of 2007, AAM's SG&A spending
was $103.1 million or 6.0% of sales as compared to $97.9 million or
5.7% of sales in the first half of 2006. This year-over-year
increase in AAM's SG&A expense was primarily 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 half of 2007 was
approximately $39.7 million as compared to $40.1 million in the
first half 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 half of 2007 was $234.6 million as compared
to $99.7 million in the first half of 2006. Capital spending in the
first half of 2007 was down $80.5 million on a year-over-year basis
to $75.5 million. Reflecting the impact of this activity and
dividend payments of $15.8 million, AAM's free cash flow of $143.3
million in the first half of 2007 represents an improvement of
$215.1 million as compared to the first half of 2006. 2008-2012 New
Business Backlog AAM today announced it has increased its backlog
of new and incremental business by approximately $400 million to an
estimated $1.2 billion for programs launching in 2008 through 2012.
AAM measures its backlog of new and incremental business ("new
business backlog") by the estimated annual sales value of
agreements with its customers to provide axles or other driveline
or drivetrain products for future product programs, as well as
incremental content or volume awards on existing programs including
customer requested engineering changes. AAM's new business backlog
may be impacted by various assumptions such as production volume
estimates, changes in program launch timing and fluctuation in
foreign currency exchange rates. AAM's new business backlog
reflects the company's successful efforts to expand its product
portfolio by adding all-wheel drive applications for passenger cars
and crossover vehicles, expanded electronics integration and new
drivetrain components such as transfer cases and power transfer
units. Other highlights of AAM's $1.2 billion new business backlog
include: -- Approximately 75% of the new business backlog has been
sourced to AAM's non-U.S. facilities. These awards will accelerate
the expansion of AAM's low cost, high quality, and highly flexible
manufacturing facilities in Guanajuato, Mexico; Changshu, China;
Araucaria, Brazil; and Olawa, Poland. These awards may also lead to
the construction of new facilities in other foreign markets. --
Approximately half of the new business backlog relates to awards
supporting rear-wheel-drive and all-wheel-drive passenger car and
crossover vehicle applications. These awards relate to programs to
be launched by four different customers launching in at least four
major regional markets. -- AAM will launch approximately two-thirds
of the new business backlog in the 2008, 2009 and 2010 calendar
years. The balance of the backlog will launch in 2011 and 2012. --
AAM has earned its first award from a major European-based global
OEM to supply rear axles for a new global vehicle program. -- AAM
has earned its first award from Chery Automobile Co., Ltd. to
produce rear-drive modules (RDM) for a 2009 model year crossover
vehicle. "AAM's world-class quality, warranty, delivery and launch
performance, and advanced technology are major differentiators in
today's global automotive supply market," said American Axle &
Manufacturing Co-Founder, Chairman of the Board & CEO, Richard
E. Dauch. "The continued expansion of AAM's new business backlog is
evidence that we are successfully delivering on our long-term
strategic goals of expanding our product portfolio, served markets,
customer base and global manufacturing footprint. We are especially
pleased with the growth in our backlog of orders from new customers
in fast-growing global markets." A conference call to review AAM's
second quarter 2007 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
1:00 p.m. EDT on July 27, 2007 until 5:00 p.m. EDT August 3, 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 4301941. 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 (in 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
DaimlerChrysler's heavy-duty Dodge Ram full-size pickup trucks, or
the Dodge Ram program; work stoppages at GM or DaimlerChrysler or a
key supplier to GM or DaimlerChrysler; our ability to achieve cost
reductions through accelerated attrition programs; reduced
purchases of our products by GM, DaimlerChrysler 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 Investor
relations contact: Jamie M. Little Director, Investor Relations
(313) 758-4831 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, ------------------ ---------------- 2007
2006 2007 2006 --------- -------- ------- -------- (In millions,
(In millions, except per share except per share data) data) Net
sales $916.5 $874.6 $1,718.7 $1,709.4 Cost of goods sold 803.4
784.7 1,520.8 1,556.0 ------ ------ ------- ------- Gross profit
113.1 89.9 197.9 153.4 Selling, general and administrative expenses
54.2 49.4 103.1 97.9 ------ ------ ------ ------ Operating income
58.9 40.5 94.8 55.5 Net interest expense (15.3) (7.9) (29.3) (15.3)
Other income (expense), net Debt refinancing cost (5.5) (2.4) (5.5)
(2.4) Other, net 1.2 0.7 1.3 1.4 ------ ------ ------ ------ Income
before income taxes 39.3 30.9 61.3 39.2 Income taxes 5.3 10.5 11.9
10.1 ------ ------ ------ ------ Net income $34.0 $20.4 $49.4 $29.1
====== ====== ====== ====== Diluted earnings per share $0.64 $0.40
$0.94 $0.57 ====== ====== ====== ====== Diluted shares outstanding
52.8 51.2 52.5 51.1 ====== ====== ====== ====== AMERICAN AXLE &
MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) June 30, December 31, 2007 2006 -----------
------------ (In millions) ASSETS Current assets Cash and cash
equivalents $331.3 $13.5 Accounts receivable, net 399.3 327.6
Inventories, net 221.8 198.4 Prepaid expenses and other 85.4 69.2
Deferred income taxes 27.5 30.7 -------- -------- Total current
assets 1,065.3 639.4 Property, plant and equipment, net 1,696.6
1,731.7 Deferred income taxes 46.8 35.7 Goodwill 147.8 147.8 Other
assets and deferred charges 49.2 42.9 -------- -------- Total
assets $3,005.7 $2,597.5 ======== ======== LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities Accounts payable $430.4
$328.9 Other accrued expenses 226.6 212.4 -------- -------- Total
current liabilities 657.0 541.3 Long-term debt 846.3 672.2 Deferred
income taxes 6.1 6.8 Postretirement benefits and other long-term
liabilities 639.8 563.5 -------- -------- Total liabilities 2,149.2
1,783.8 Stockholders' equity 856.5 813.7 -------- -------- Total
liabilities and stockholders' equity $3,005.7 $2,597.5 ========
======== AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three months Six
months ended ended June 30, June 30, ---------------
--------------- 2007 2006 2007 2006 ------- ------ ------- ------
(In millions) (In millions) Operating activities Net income $34.0
$20.4 $49.4 $29.1 Depreciation and amortization 57.0 51.1 113.4
100.4 Other 133.8 21.2 71.8 (29.8) ------ ------ ------ ------ Net
cash flow provided by operating activities 224.8 92.7 234.6 99.7
Purchases of property, plant & equipment (33.0) (75.2) (75.5)
(156.0) ------ ------ ------ ------ Net cash flow after purchases
of property, plant & equipment 191.8 17.5 159.1 (56.3) ------
------ ------ ------ Purchase buyouts of leased equipment - (19.5)
- (19.5) ------ ------ ------ ------ Net cash flow provided by
(used in) operations 191.8 (2.0) 159.1 (75.8) Net increase
(decrease) in long-term debt - 16.3 169.4 101.1 Debt issuance costs
(2.3) (3.1) (7.5) (3.1) Employee stock option exercises 6.9 0.1
11.3 0.2 Dividends paid (8.0) (7.8) (15.8) (15.5) ------ -----
------ ------ Net cash flow provided by (used in) financing
activities (3.4) 5.5 157.4 82.7 Effect of exchange rate changes on
cash 1.0 0.2 1.3 0.2 ------ ------ ------ ------ Net increase in
cash and cash equivalents 189.4 3.7 317.8 7.1 Cash and cash
equivalents at beginning of period 141.9 7.1 13.5 3.7 ------ ------
------ ------ Cash and cash equivalents at end of period $331.3
$10.8 $331.3 $10.8 ====== ====== ====== ====== 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
Six months ended ended June 30, June 30, ---------------
--------------- 2007 2006 2007 2006 ------- ------ ------- -----
(In millions) (In millions) Net income $34.0 $20.4 $49.4 $29.1
Interest expense 17.7 7.9 32.3 15.4 Income taxes 5.3 10.5 11.9 10.1
Depreciation and amortization 57.0 51.1 113.4 100.4 ------- ------
------ ------ EBITDA $114.0 $89.9 $207.0 $155.0 ======= ======
====== ====== Net debt(b) to capital June 30, December 31, 2007
2006 ---------- ------------ (In millions, except percentages)
Total debt $846.3 $672.2 Less: cash and cash equivalents 331.3 13.5
------- ------- Net debt at end of period 515.0 658.7 Stockholders'
equity 856.5 813.7 ------- ------- Total invested capital at end of
period $1,371.5 $1,472.4 ======== ======== Net debt to capital(c)
37.6% 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 routine (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 Six months ended ended June 30,
June 30, 2007 2006 2007 2006 (In millions) (In millions) Net cash
provided by operating activities $224.8 $92.7 $234.6 $99.7 Less:
purchases of property, plant & equipment (33.0) (75.2) (75.5)
(156.0) ------ ------ ------ ------ Net operating cash flow 191.8
17.5 159.1 (56.3) Less: dividends paid (8.0) (7.8) (15.8) (15.5)
------ ------ ------ ------ Free cash flow $183.8 $9.7 $143.3
$(71.8) ====== ====== ====== ====== After-Tax Return on Invested
Capital (ROIC)(e) Trailing Twelve Months Quarter Ended Ended
--------------------------------------- September December 30, 31,
March 31, June 30, June 30, 2006 2006 2007 2007 2007 ---------
-------- --------- -------- -------- (In millions, except
percentages) Net income $(62.9) $(188.6) $15.4 $34.0 $(202.1)
After-tax net interest expense (f) 6.6 7.8 9.8 13.2 37.4 ------
------ ------ ------ ------ After-tax return $(56.3) $(180.8) $25.2
$47.2 $(164.7) ====== ====== ====== ====== ====== Net debt at end
of period $515.0 Stockholders' equity at end of period 856.5 ------
Invested capital at end of period 1,371.5 Invested capital at
beginning of period 1,598.2 ------- Average invested capital(g)
$1,484.9 ======= After-Tax ROIC(h) -11.1% ======= (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 (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 (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. DATASOURCE: American Axle & Manufacturing
Holdings, Inc. CONTACT: Media relations, Renee B. Rogers, Manager,
Corporate Communications and Media Relations, +1-313-758-4882, , or
Investor relations, Jamie M. Little, Director, Investor Relations,
+1-313-758-4831, , both of American Axle & Manufacturing
Holdings, Inc. Web site: http://www.aam.com/ Company News On-Call:
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