American Axle & Manufacturing Reports First Quarter 2008 Financial Results
April 25 2008 - 9:00AM
PR Newswire (US)
DETROIT, April 25 /PRNewswire-FirstCall/ -- American Axle &
Manufacturing Holdings, Inc. (AAM), which is traded as AXL on the
NYSE, today reported its financial results for the first quarter of
2008. First Quarter 2008 results -- First quarter sales of $587.6
million -- Net loss of $27.0 million, or $0.52 per share -- AAM's
quarterly results reflect the adverse impact of the ongoing strike
called by the International UAW at AAM's original U.S. locations in
Michigan and New York; AAM estimates the reduction in sales and
operating income resulting from the International UAW strike to be
$132.6 million and $45.8 million (or $0.56 per share), respectively
-- Special charges and other non-recurring operating costs of $3.5
million, or $0.04 per share, primarily related to the redeployment
of machinery and equipment and other actions to rationalize
underutilized capacity -- 33% year-over-year decline in total light
truck production volumes as compared to the first quarter of 2007
-- Content-per-vehicle of $1,326, approximately 6% higher than the
previous year AAM's results in the first quarter of 2008 were a net
loss of $27.0 million or $0.52 per share. This compares to net
earnings of $15.7 million, or $0.30 per share, in the first quarter
of 2007. Upon expiration of the four-year master labor agreement
between AAM and the UAW at 11:59 p.m. on February 25, 2008, the
International UAW called a strike against AAM. The expiring master
labor agreement covered approximately 3,650 associates at AAM's
original U.S. locations in Michigan and New York. AAM estimates the
reduction in sales and operating income resulting from the
International UAW strike to be $132.6 million and $45.8 million
($0.56 per share), respectively. In the first quarter of 2008, AAM
incurred $3.5 million, or $0.04 per share, of special charges and
non-recurring operating costs, primarily related to the
redeployment of machinery and equipment. In the first quarter of
2007, AAM recorded special charges of $2.9 million, or $0.04 per
share, primarily related to attrition program activity. "AAM's
first quarter 2008 results were severely impacted by the strike
called by the International UAW at AAM's original U.S. locations on
February 25, 2008," said AAM Co-Founder, Chairman of the Board
& Chief Executive Officer Richard E. Dauch. "AAM must have a
U.S. market cost competitive labor agreement for the original U.S.
locations with operating flexibility. This is needed to compete for
new business and match the operational flexibility and efficiency
of our competitors. While it would be tragic to dismantle AAM's
original U.S. manufacturing base, AAM will be forced to consider
additional restructuring and capacity rationalization actions if
the International UAW refuses to accept the structural and
permanent changes needed to achieve market cost competitiveness at
these facilities." Net sales in the first quarter of 2008 were
$587.6 million as compared to $802.2 million in the first quarter
of 2007. AAM estimates that approximately $132.6 million of this
decrease was attributable to the International UAW strike. Customer
production volumes for the full-size truck and SUV programs AAM
currently supports for GM and Chrysler were down approximately 31%
in the first quarter of 2008 as compared to the prior year. AAM
estimates that customer production volumes for its mid-sized truck
and SUV programs were down approximately 43% in the first quarter
of 2008 on a year-over-year basis. Non-GM sales represented 26% of
total sales in the first quarter of 2008. 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. For the first quarter 2008, AAM's
content-per-vehicle increased approximately 6% to $1,326 as
compared to $1,252 in the first quarter of 2007. Gross margin for
the first quarter of 2008 was 2.2% as compared to 10.6% in first
quarter 2007. Operating loss was $36.7 million or a negative 6.2%
of sales in the first quarter of 2008 as compared to operating
income of $36.4 million or 4.5% of sales in the first quarter of
2007. AAM's SG&A spending for the first quarter of 2008 was
$49.4 million as compared to $48.9 million in the first quarter of
2007. AAM's R&D spending for the first quarter of 2008 was
approximately $20.2 million as compared to $20.1 million in the
first quarter of 2007. 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 quarter of 2008 was $8.2 million. Capital
spending for the first quarter of 2008 was $33.3 million as
compared to $42.5 million in the first quarter of 2007. Reflecting
the impact of this activity and dividend payments of $8.0 million,
AAM's free cash flow use of $33.1 million in the first quarter of
2008 represents an improvement of $7.4 million, or 18%, as compared
to the first quarter of 2007. A conference call to review AAM's
first quarter of 2008 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) 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. ET on April 25, 2008 until 5:00 p.m. ET May 2, 2008 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 39482270. 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 trucks, sport utility
vehicles, passenger cars and crossover utility vehicles. In
addition to locations in the United States (Michigan, New York,
Ohio and Indiana), AAM also has offices or facilities in Brazil,
China, Germany, India, Japan, Luxembourg, Mexico, Poland, South
Korea, Thailand 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: the effect of the strike called by the
International United Automobile, Aerospace and Agricultural
Implement Workers of America on February 25, 2008; our ability to
restore and maintain satisfactory labor relations and avoid future
work stoppages; our ability to improve our U.S. labor cost
structure; our suppliers' ability to maintain satisfactory labor
relations and avoid work stoppages; reduced purchases of our
products by GM, Chrysler LLC or other customers; reduced demand of
our customers' products or volume reductions (particularly light
trucks and SUVs produced by GM and Chrysler); our ability to
achieve cost reductions through ongoing restructuring actions;
additional restructuring actions that may occur; our ability to
achieve the level of cost reductions required to sustain global
cost competitiveness; our ability to consummate and integrate
acquisitions; supply shortages or price increases in raw materials,
utilities or other operating supplies; our ability or our
customers' and suppliers' ability to successfully launch new
product programs on a timely basis; our ability to realize the
expected revenues from our new and incremental business backlog;
our customers' and suppliers' ability to maintain satisfactory
labor relations and avoid work stoppages; our ability to attract
new customers and programs for new products; our ability to develop
new products that reflect market demand; our ability to respond to
changes in technology, increased competition or pricing pressures;
adverse changes in laws, government regulations or market
conditions affecting our products or our customers' products
(including the Corporate Average Fuel Economy regulations); adverse
changes in the economic conditions or political stability of our
principal markets (particularly North America, Europe, South
America and Asia); liabilities arising from warranty claims,
product liability and legal proceedings to which we are or may
become a party; changes in liabilities arising from pension and
other postretirement benefit obligations; risks of noncompliance
with environmental regulations or risks of environmental issues
that could result in unforeseen costs at our facilities;
availability of financing for working capital, capital
expenditures, research and development or other general corporate
purposes, including our ability to comply with financial covenants;
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 additional
information: Media relations contact: Investor relations contact:
Renee B. Rogers Jamie M. Little Manager, Corporate Communications
Director, Investor Relations and Media Relations (313) 758-4831
(313) 758-4882 Or visit the AAM website at http://www.aam.com/
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
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Three months ended March 31, ----------------------------- 2008
2007 ----------- ---------- (In millions, except per share data)
Net sales $587.6 $802.2 Cost of goods sold 574.9 716.9 -----------
---------- Gross profit (loss) 12.7 85.3 Selling, general and
administrative expenses 49.4 48.9 ----------- ---------- Operating
income (loss) (36.7) 36.4 Interest expense (15.3) (14.6) Interest
income 2.6 0.6 Other income (expense), net Debt refinancing cost -
- Other, net 0.5 0.1 ----------- ---------- Income (loss) before
income taxes (48.9) 22.5 Income tax expense (benefit) (21.9) 6.8
----------- ---------- Net income (loss) $(27.0) $15.7 ===========
========== Diluted earnings (loss) per share $(0.52) $0.30
=========== ========== Diluted shares outstanding 51.6 52.1
=========== ==========
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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
-------------------------------------------------------------------------
March 31, December 31, 2008 2007 -------- -------- (In millions)
ASSETS ------ Current assets Cash and cash equivalents $315.5
$343.6 Accounts receivable, net 187.3 264.0 Inventories, net 248.3
242.8 Prepaid expenses and other 74.4 73.4 Deferred income taxes
17.7 19.5 -------- -------- Total current assets 843.2 943.3
Property, plant and equipment, net 1,678.8 1,696.2 Deferred income
taxes 104.5 78.7 Goodwill 147.8 147.8 Other assets and deferred
charges 55.3 57.4 -------- -------- Total assets $2,829.6 $2,923.4
======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------ Current liabilities Accounts
payable $266.6 $313.8 Other accrued expenses 168.6 197.8 --------
-------- Total current liabilities 435.2 511.6 Long-term debt 864.1
858.1 Deferred income taxes 6.4 6.6 Postretirement benefits and
other long-term liabilities 646.7 647.7 -------- -------- Total
liabilities 1,952.4 2,024.0 Stockholders' equity 877.2 899.4
-------- -------- Total liabilities and stockholders' equity
$2,829.6 $2,923.4 ======== ========
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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
------------------------------------------------------------------------
Three months ended March 31, -------------------------- 2008 2007
-------- -------- (In millions) Operating activities Net income
(loss) $(27.0) $15.7 Depreciation and amortization 56.6 56.4 Other
(21.4) (62.3) -------- -------- Net cash flow provided by operating
activities 8.2 9.8 Purchases of property, plant & equipment
(33.3) (42.5) -------- -------- Net cash flow after purchases of
property, plant & equipment (25.1) (32.7) -------- -------- Net
cash flow provided by (used in) operations (25.1) (32.7) Net
increase (decrease) in long-term debt 4.8 169.4 Debt issuance costs
- (5.2) Repurchase of treasury stock (0.1) - Employee stock option
exercises 0.3 4.4 Dividends paid (8.0) (7.8) -------- -------- Net
cash flow provided by (used in) financing activities (3.0) 160.8
Effect of exchange rate changes on cash - 0.3 -------- -------- Net
increase in cash and cash equivalents (28.1) 128.4 Cash and cash
equivalents at beginning of period 343.6 13.5 -------- --------
Cash and cash equivalents at end of period $315.5 $141.9 ========
======== AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
SUPPLEMENTAL DATA (Unaudited)
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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 March 31, 2008 2007 -------- -------- (In millions) Net
income (loss) $(27.0) $15.7 Interest expense 15.3 14.6 Income taxes
(21.9) 6.8 Depreciation and amortization 56.6 56.4 --------
-------- EBITDA $23.0 $93.5 ======== ======== Net debt(b) to
capital March 31, December 31, 2008 2007 -------- -------- (In
millions, except percentages) Total debt $864.1 $858.1 Less: cash
and cash equivalents 315.5 343.6 -------- -------- Net debt at end
of period 548.6 514.5 Stockholders' equity 877.2 899.4 --------
-------- Total invested capital at end of period $1,425.8 $1,413.9
======== ======== Net debt to capital(c) 38.5% 36.4% ========
======== Net Operating Cash Flow and Free Cash Flow(d) Three months
ended March 31, 2008 2007 -------- -------- (In millions) Net cash
provided by operating activities $8.2 $9.8 Less: purchases of
property, plant & equipment (33.3) (42.5) -------- -------- Net
operating cash flow (25.1) (32.7) Less: dividends paid (8.0) (7.8)
-------- -------- Free cash flow $(33.1) $(40.5) ======== ========
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(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. (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.
DATASOURCE: American Axle & Manufacturing Holdings, Inc.
CONTACT: Media, Renee B. Rogers, Manager, Corporate Communications
and Media Relations, +1-313-758-4882, , or Investors, Jamie M.
Little, Director, Investor Relations, +1-313-758-4831, , both of
American Axle & Manufacturing Holdings, Inc. Web site:
http://www.aam.com/ http://investor.aam.com/ Company News On-Call:
http://www.prnewswire.com/comp/033813.html
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