AXL American Axle and Manufacturing Holdings Inc

American Axle and Manufacturing Inc. (AXL) posted a profit of $37.7 million or 50 cents per share in the first quarter of 2011 that more than doubled from $16.3 million or 22 cents per share in the year-ago quarter.

With this, the company has beaten the Zacks Consensus Estimate by 12 cents per share. The increase in profit was attributable to improved capacity utilization and sustained reductions in fixed cost structure.

Revenues in the quarter grew 24% to $645.6 million, up from the Zacks Consensus Estimate of $591 million. Customer production volumes for the North American light truck and SUV programs that the company currently supports for General Motors Co. (GM) and Chrysler went up 11% from the prior-year the quarter.

The company progressed well in diversifying its customer base during the quarter. The company had a high exposure to customers, including GM and Chrysler. However, the company’s non-GM sales rose 44% to $178.4 million (27.6% of sales) in the quarter.

Content-per-vehicle (measured by the dollar value of its product sales supporting the company’s customers’ North American light truck and SUV programs) inched up 6% to $1,478 from $1,390 in the first quarter of 2010. Gross profit in the quarter increased $28.1 million to $115.4 million (17.9% of sales) from the first quarter of 2010.

Financials

American Axle had cash and cash equivalents of $217.4 million as of March 31, 2011, up from $244.6 million in the prior-year period. Long-term debt remained almost unchanged at $1.01 billion compared with the corresponding period of prior year, reflecting a debt-to-equity ratio of 1.70.

In the quarter, American Axle’s operating net cash flow deteriorated significantly to $1 million from $79 million in the 2010 quarter due to unfavorable adjustments. Meanwhile, capital expenditures (net) increased to $30 million from $21.9 million a year ago. Consequently, the company’s free cash flow was a use of $29.0 during the quarter versus a positive cash flow of $61.1 million in the prior year.

Outlook

American Axle expects its sales to grow in excess of $3 billion by 2013 through product launches. It also aims to improve its business diversification in terms of product mix, customer base and served markets.

However, the company’s high exposure to General Motors and Chrysler could adversely affect its operating results in the near term. Furthermore, weak SUV demand, high commodity costs and pricing pressure by OEMs remain causes for concern. These factors have led the company to retain a Zacks #4 Rank on its stock, which translates to a “Sell” rating for the short term (1 to 3 months).

Grafico Azioni American Axle and Manufa... (NYSE:AXL)
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Grafico Azioni American Axle and Manufa... (NYSE:AXL)
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