Non-GM sales increase 18% to $207.2 million, or 24% of sales
DETROIT, Oct. 27 /PRNewswire-FirstCall/ -- American Axle &
Manufacturing Holdings, Inc. (AAM), which is traded as AXL on the
NYSE, today reported sales and earnings for the third quarter of
2005. Third Quarter 2005 highlights * Third quarter sales of $848.1
million * Overall 4% year-over-year decline in production volumes *
Non-GM sales increase 18% to $207.2 million, or 24% of total sales
* Net earnings of $19.3 million or $0.38 per share Third quarter
earnings were $19.3 million or $0.38 per share. This compares to
earnings of $36.4 million or $0.68 per share in the third quarter
of 2004. AAM's earnings in the third quarter of 2005 reflect the
impact of a retroactive metal market cost recovery agreement under
which AAM was reimbursed for costs incurred in the first half of
2005. This retroactive benefit was partly offset by costs related
to other provisions of the metal market recovery agreement and
other retroactive purchased material cost adjustments we incurred
in the quarter. The net favorable impact of these agreements was
$6.2 million in the quarter or $0.08 per share. "AAM continues to
be profitable in a challenging operating environment for the
domestic automotive industry and the Tier I supply chain," said
AAM's Co- Founder, Chairman of the Board & CEO Richard E.
Dauch. "Although lower production levels and increased steel and
metallic material prices continue to pressure sales and inflate
costs, we are encouraged by the progress we have made this year to
increase the diversity of our sales mix." Net sales in the third
quarter of 2005 were $848.1 million as compared to $841.6 million
in the third quarter of 2004. Sales to non-GM customers increased
18% to $207.2 million, representing 24% of AAM's total sales in the
quarter. AAM sales for the quarter reflect approximately a 4%
year-over-year decline in customer production volumes for the major
North American light truck programs it currently supports. AAM's
content per vehicle in the quarter grew to $1,240 as compared to
$1,163 in the third quarter of 2004. Mix shifts favoring four-wheel
drive and all-wheel drive (4WD/AWD) versions of our full-size and
mid-size light truck programs continue to favorably impact
content-per-vehicle in 2005. For the quarter, AAM's 4WD/AWD
penetration rate was 65.9% as compared to 61.4% in the third
quarter of 2004. AAM defines its 4WD/AWD penetration rate as the
total number of front axles produced divided by the number of rear
axles produced for the vehicle programs on which it sells product.
Gross margin in the third quarter of 2005 was 9.8% as compared to
12.8% in the third quarter of 2004. Operating income was $34.9
million or 4.1% of sales in the third quarter as compared to $60.9
million or 7.2% of sales in the third quarter of 2004. Net sales in
the first three quarters of 2005 were approximately $2.5 billion as
compared to $2.7 billion in the first three quarters of 2004. Gross
margin was 9.5% in the first three quarters of 2005 as compared to
13.9% in first three quarters of 2004. Operating income for the
first three quarters of 2005 was $97.0 million or 3.8% of sales
versus $237.0 million or 8.7% of sales for the same period in 2004.
For the nine months ended September 30, 2005, AAM's earnings were
$51.5 million or $1.01 per share. AAM's earnings for the nine
months ended September 30, 2004 were $128.2 million, or $2.37 per
share, and reflect a one- time charge of $23.5 million or $0.28 per
share related to debt refinancing and redemption activities in the
first quarter of 2004. AAM defines free cash flow to be net cash
provided by (or used in) operating activities less capital
expenditures and dividends paid. Capital spending to support new
product programs and other safety, quality and productivity
initiatives for the nine months ended September 30, 2005 was $243.6
million as compared to $158.8 million for the nine months ended
September 30, 2004. Pursuant to its quarterly cash dividend
program, AAM paid $22.7 million in dividends in the first three
quarters of 2005. Reflecting the impact of AAM's capital investment
and dividend payout, AAM's free cash flow for the nine months ended
September 30, 2005 was a use of $122.9 million. AAM's research and
development spending (R&D) for the nine months ended September
30, 2005 increased to $54.7 million as compared to $51.5 million
for the same period in 2004. AAM continues to invest heavily in the
development and validation of products targeted for growth segments
of the global driveline market, especially rear-wheel drive and
all-wheel drive driveline systems for passenger cars and crossover
vehicles. AAM's long-term commitment to applied R&D and product
line diversification is the primary catalyst for growth in AAM's
new business backlog, which has grown to approximately $1.3 billion
in future annual sales. 2005 Outlook AAM also confirmed its
earnings guidance for 2005. AAM expects its full-year 2005 earnings
to be in a range of $1.40 - $1.45 per share. This outlook includes
a charge of $8.9 million, or $0.12 per share, related to voluntary
lump-sum separation payments accepted by 162 hourly associates in
the second quarter of 2005. AAM previously issued full- year 2005
guidance of $1.40 - $1.55 per share during its quarterly conference
call on April 29, 2005. AAM expects to increase its capital
spending in 2005 to $300 million, a significant portion of which
will support the accelerated launch of the GMT 900 program in the
2007 model year and increased capacity for the Chrysler Group's
heavy duty Dodge Ram program and derivatives. AAM is also incurring
capital expenditures in 2005 to expand its international footprint
with new manufacturing capacity outside of the U.S. in support of
its $1.3 billion new business backlog. Reflecting the increase in
capital expenditures, as well as higher working capital investments
in accounts receivable and inventories than were previously
anticipated due to significantly higher production requirements in
the fourth quarter of 2005 and a stronger mix of non-GM sales, AAM
expects its free cash flow for 2005 to approximate a use of $60
million. Based on this earnings and cash flow guidance, AAM expects
its net debt to capital ratio to approximate 33% at December 31,
2005. "Our task for the remainder of 2005 and 2006 is to stay
focused on world- class quality, warranty and delivery standards
while flawlessly executing the accelerated product launch of GM's
new full-size truck products," said Mr. Dauch. "At the same time,
we will continue to diligently pursue our long-term strategic goals
of further developing our product offerings, customer
diversification, served market, and global manufacturing presence
to prepare for future profitable growth." A conference call to
review AAM's third quarter 2005 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 Noon EDT on October 27, 2005 until 5:00 p.m.
EST November 3, 2005 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
9905977. 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 (SEC) 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
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, England, Germany, India, Japan, Mexico, Scotland and
South Korea. Certain statements in this press release are
forward-looking in nature and relate to trends and events that may
affect our future financial position and operating results. Such
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The terms "will,"
"expect," "anticipate," "intend," "project," and similar words or
expressions are intended to identify forward-looking statements.
These statements speak only as of the date of this press release.
The statements 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: reduced demand of our customers'
products (particularly light trucks and SUVs produced by GM and
DaimlerChrysler); reduced purchases of our products by GM,
DaimlerChrysler or other customers; supply shortages or price
fluctuations in raw materials, utilities or other operating
supplies; our ability to maintain satisfactory labor relations and
avoid work stoppages; our customers' and their suppliers' ability
to maintain satisfactory labor relations and avoid work stoppages;
our ability to attract and retain key associates; our ability and
our customers' and their suppliers' ability to successfully launch
new product programs; our ability to respond to changes in
technology or increased competition; adverse changes in laws,
government regulations or market conditions affecting our products
or our customers' products (including the Corporate Average Fuel
Economy regulations and fuel costs); adverse changes in the
economic conditions or political stability of our principal markets
(particularly North America, Europe, South America and Asia);
liabilities arising from legal proceedings to which we are or may
become a party or claims against us or our products; 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, R&D or other general corporate purposes; other
unanticipated events and conditions that may hinder our ability to
compete. It is not possible to foresee or identify all such factors
and we make no commitment to update any forward- looking statement
or to disclose any facts, events or circumstances after the date
hereof that may affect the accuracy of any forward-looking
statements. For more information... Carrie L.P. Gray Christopher M.
Son Director, Corporate Relations Director, Investor Relations
(313) 758-4880 (313) 758-4814 Or visit the AAM website at
http://www.aam.com/ AMERICAN AXLE & MANUFACTURING HOLDINGS,
INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three months
ended Nine months ended September 30, September 30,
------------------ ------------------ 2005 2004 2005 2004 --------
------- -------- ------- (In millions, except per share data) Net
sales $848.1 $841.6 $2,534.7 $2,724.0 Cost of goods sold 764.8
733.7 2,293.7 2,346.3 ------- ------- --------- --------- Gross
profit 83.3 107.9 241.0 377.7 Selling, general and administrative
expenses 48.4 47.0 144.0 140.7 ------- ------- --------- ---------
Operating income 34.9 60.9 97.0 237.0 Net interest expense (7.3)
(5.9) (20.0) (20.2) Other income (expense) Debt refinancing and
redemption costs - - - (23.5) Other income (expense), net 1.2 (0.9)
(0.2) 1.0 ------- ------- --------- --------- Income before income
taxes 28.8 54.1 76.8 194.3 Income taxes 9.5 17.7 25.3 66.1 -------
------- --------- --------- Net income $19.3 $36.4 $51.5 $128.2
======= ======= ========= ========= Diluted earnings per share
$0.38 $0.68 $1.01 $2.37 ======= ======= ========= ========= Diluted
shares outstanding 51.4 53.4 51.1 54.2 ======= ======= =========
========= AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31,
2005 2004 -------------- ------------- (Unaudited) (In millions)
ASSETS Current assets Cash and cash equivalents $6.4 $14.4 Accounts
receivable, net 452.9 334.9 Inventories, net 214.0 196.8 Prepaid
expenses and other 43.4 39.1 Deferred income taxes 15.3 7.4
-------- -------- Total current assets 732.0 592.6 Property, plant
and equipment, net 1,813.0 1,713.0 Deferred income taxes 7.8 6.8
Goodwill 147.8 147.8 Other assets and deferred charges 72.3 78.6
-------- -------- Total assets $2,772.9 $2,538.8 ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts
payable $430.4 $398.6 Other accrued expenses 166.2 181.9 --------
-------- Total current liabilities 596.6 580.5 Long-term debt 560.0
448.0 Deferred income taxes 117.8 114.5 Postretirement benefits and
other long-term liabilities 491.8 440.3 -------- -------- Total
liabilities 1,766.2 1,583.3 Stockholders' equity 1,006.7 955.5
-------- -------- Total liabilities and stockholders' equity
$2,772.9 $2,538.8 ======== ======== AMERICAN AXLE &
MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited) Three months ended Nine months ended
September 30, September 30, ------------------ ------------------
2005 2004 2005 2004 -------- -------- -------- -------- (In
millions) Operating activities Net income $19.3 $36.4 $51.5 $128.2
Depreciation and amortization 46.2 43.4 135.0 125.4 Other 25.5 24.2
(43.1) (25.5) -------- -------- -------- -------- Net cash flow
provided by operating activities 91.0 104.0 143.4 228.1 Purchases
of property, plant & equipment (82.4) (63.1) (243.6) (158.8)
-------- -------- -------- -------- Net cash flow after purchases
of property, plant & equipment 8.6 40.9 (100.2) 69.3 --------
-------- -------- -------- Net cash flow provided by (used in)
operations 8.6 40.9 (100.2) 69.3 Net increase in long-term debt
(1.0) 10.6 110.7 381.5 Redemption of 9.75% Notes - - - (314.6) Debt
issuance costs - - - (9.7) Employee stock option exercises 0.9 1.7
4.3 12.0 Dividends paid (7.7) (7.7) (22.7) (15.5) Purchase of
treasury stock - (47.3) - (131.0) -------- -------- --------
-------- Net cash flow provided by (used in) financing activities
(7.8) (42.7) 92.3 (77.3) Effect of exchange rate changes on cash -
(0.3) (0.1) 0.1 -------- -------- -------- -------- Net increase
(decrease) in cash and cash equivalents 0.8 (2.1) (8.0) (7.9) Cash
and cash equivalents at beginning of period 5.6 6.6 14.4 12.4
-------- -------- -------- -------- Cash and cash equivalents at
end of period $6.4 $4.5 $6.4 $4.5 ======== ======== ========
======== 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 ended Nine months ended September 30,
September 30, ------------------ ------------------ 2005 2004 2005
2004 -------- -------- -------- -------- (In millions) Net income
$19.3 $36.4 $51.5 $128.2 Interest expense 7.6 5.9 20.5 20.5 Income
taxes 9.5 17.7 25.3 66.1 Depreciation and amortization 46.2 43.4
135.0 125.4 -------- -------- -------- -------- EBITDA $82.6 $103.4
$232.3 $340.2 ======== ======== ======== ======== Net debt(b) to
capital September 30, December 31, 2005 2004 -------------
------------ (In millions, except percentages) Total debt $560.0
$448.0 Less: cash and cash equivalents 6.4 14.4 -------------
------------ Net debt at end of period 553.6 433.6 Stockholders'
equity 1,006.7 955.5 ------------- ------------ Total invested
capital at end of period $1,560.3 $1,389.1 =============
============ Net debt to capital(c) 35.5% 31.2% =============
============ (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. 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 ended Nine months ended
September 30, September 30, ------------------ ------------------
2005 2004 2005 2004 -------- -------- -------- -------- (In
millions) Net cash provided by operating activities $91.0 $104.0
$143.4 $228.1 Less: purchases of property, plant & equipment
(82.4) (63.1) (243.6) (158.8) -------- -------- -------- --------
Net operating cash flow 8.6 40.9 (100.2) 69.3 Less: dividends paid
(7.7) (7.7) (22.7) (15.5) -------- -------- -------- -------- Free
cash flow $0.9 $33.2 $(122.9) $53.8 ======== ======== ========
======== After-Tax Return on Invested Capital (ROIC)(e) Quarter
Ended Trailing Twelve --------------------------------------------
Months Ended December 31, March 31, June 30, September 30,
September 30, 2004 2005 2005 2005 2005 ----------- ----------
---------- ---------- ---------- (In millions, except percentages)
Net income $31.3 $13.3 $18.9 $19.3 $82.8 After-tax net interest
expense (f) 3.8 4.1 4.4 4.9 17.2 ----------- ---------- ----------
---------- ---------- After-tax return $35.1 $17.4 $23.3 $24.2
$100.0 =========== ========== ========== ========== ========== Net
debt at end of period $553.6 Stockholder's equity at end of period
1,006.7 ---------- Invested capital at end of period 1,560.3
Invested capital at beginning of period 1,484.5 ---------- Average
invested capital(g) $1,522.4 ========== After-Tax ROIC(h) 6.6%
========== (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.
(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
companies may calculate ROIC differently. (f) After-tax net
interest expense is equal to multiplying net interest expense by
the applicable effective income tax rate 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: Carrie L.P. Gray, Director, Corporate
Relations, +1-313-758-4880, , or Christopher M. Son, Director,
Investor Relations, +1-313-758-4814, , both of American Axle &
Manufacturing Holdings, Inc. Web site: http://www.aam.com/
http://investor.aam.com/ Company News On-Call:
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