DETROIT, July 28 /PRNewswire-FirstCall/ -- American Axle &
Manufacturing Holdings, Inc. (AAM), which is traded as AXL on the
NYSE, today reported its financial results for the second quarter
of 2006. Second Quarter 2006 highlights * Second quarter sales of
$874.6 million versus $867.7 million in the second quarter of 2005
* 2% year-over-year decline in production volumes, offset by a 3%
increase in content per vehicle * Non-GM sales increased by 10.5%
to $204.5 million, totaling 23% of net sales * Net earnings of
$20.4 million or $0.40 per share * Year-to-date improvement of $52
million in free cash flow * Increased available liquidity by
successfully closing on a $200 million unsecured term loan AAM's
earnings in the second quarter of 2006 were $20.4 million or $0.40
per share. This compares to earnings of $18.9 million or $0.37 per
share in the second quarter of 2005. AAM's second quarter earnings
in 2006 reflect the impact of a one-time non-cash charge of $2.4
million, or approximately $0.03 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 2024. An
additional $21.6 million of these Notes remain outstanding as of
June 30, 2006. AAM's second quarter earnings in 2006 also reflect
the impact of an unfavorable tax adjustment of $2.6 million, or
$0.05 per share, related to the settlement of prior year foreign
jurisdiction tax liabilities. AAM's earnings in the second quarter
of 2005 included a charge of $8.9 million, or $0.12 per share,
related to voluntary lump-sum separation payments accepted by 162
hourly associates. Net sales in the second quarter of 2006 were
$874.6 million as compared to $867.7 million in the second quarter
of 2005. Non-GM sales in the quarter were $204.5 million and now
represent 23% of AAM's total sales. On a year-to- date basis
through the second quarter of 2006, AAM's non-GM sales have
increased $53.9 million or 15% over the prior year. "In the second
quarter of 2006, AAM benefited from strong demand for GM's
full-size utility vehicles and the increase in our content
appearing on these outstanding new vehicles. We look forward to
supporting the launch of GM's new full-size pick-ups later this
year," said American Axle & Manufacturing Co-Founder, Chairman
of the Board & CEO, Richard E. Dauch. "AAM is also looking
forward to the launch of production at our new regional
manufacturing facilities in Changshu, China and Olawa, Poland. With
the addition of these new low-cost manufacturing facilities, as
well as the continuing development of our products supporting
passenger car and crossover vehicle applications, AAM is well
positioned for profitable growth and diversification in 2007 and
beyond." AAM sales in the quarter reflect an estimated 5% increase
in customer production volumes for the major full-size truck and
SUV programs it currently supports for GM and The Chrysler Group as
compared to the second quarter of 2005. AAM estimates that customer
production volumes for its mid-sized pick- up truck and SUV
programs were down approximately 23% in the quarter on a
year-over-year basis. AAM's content per vehicle increased by
approximately 3% to $1,216 in the second quarter of 2006 as
compared to $1,185 in the second quarter of 2005. This increase is
due primarily to the impact of new AAM content appearing on GM's
full-size utility vehicles, as well as production mix shifts
favoring AAM's axles and driveline systems for the Dodge Ram
heavy-duty series pick-ups and the four-wheel-drive HUMMER H3 in
the mid-size SUV segment. Gross margin in the second quarter of
2006 was 10.3% as compared to 9.8% in the second quarter of 2005.
Operating income was $40.5 million or 4.6% of sales in the quarter
as compared to $36.4 million or 4.2% of sales in the second quarter
of 2005. Net sales in the first half of 2006 were $1.7 billion,
approximately the same as the first half of 2005. Gross margin was
9.0% in the first half of 2006 as compared to 9.4% for the first
half of 2005. Operating income for the first half of 2006 was $55.5
million or 3.2% of sales as compared to $62.1 million or 3.7% of
sales for the first half of 2005. AAM's gross margin and operating
margin performance in the first half of 2006 reflects the impact of
higher non-cash expenses related to depreciation, amortization,
pension and postretirement benefits and stock-based compensation.
Higher fringe benefit costs, including supplemental unemployment
benefits paid to certain of AAM's hourly associates, also pressured
margins in the first half of 2006. AAM's SG&A spending in the
second quarter of 2006 was $49.4 million as compared to $49.0
million in the second quarter of 2005. In the first half of 2006,
AAM's SG&A spending was $97.9 million or 5.7% of sales as
compared to $95.6 million or 5.7% of sales in the first half of
2005. AAM increased its R&D spending in the first half of 2006
by $3.6 million on a year-over-year basis. AAM has also increased
SG&A spending in 2006 to support its expanded foreign business
and technical offices. 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 2006 was $99.7 million as compared
to $52.4 million in the first half of 2005. Capital spending in the
first half of 2006 was down $5.2 million on a year-over-year basis
to $156.0 million. Reflecting the impact of this activity and
dividend payments of $15.5 million, AAM's free cash flow in the
first half of 2006 improved by $52 million as compared to the first
half of 2005. A conference call to review AAM's second quarter 2006
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 July 28, 2006 until 5:00 p.m. EDT August 4, 2006 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 2270427. Recent Developments On June
8, 2006, AAM announced that it had received financing commitments
for a $200 million senior unsecured term loan. Proceeds from this
financing, which closed on June 28, 2006, will be used for general
corporate purposes and to finance payments made upon the cash
conversion of American Axle & Manufacturing Holdings, Inc.
Senior Convertible Notes due 2024. AAM also announced on June 8,
2006 that it expects its full year 2006 earnings to be in the range
of $1.00 - $1.10 per share to reflect the anticipated impact of the
term loan financing. On May 31, 2006, AAM announced that it had
purchased a manufacturing building in Olawa, Poland. In addition,
AAM purchased approximately 75 acres of land in an industrial park
adjacent to the building for future development. AAM has designed a
new 170,000 square-foot, state-of-the-art manufacturing plant for
that site, to accommodate future manufacturing requirements.
Operations will begin in late 2006. 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
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, England, Germany, India, Japan,
Mexico, Poland, Scotland and South Korea. Certain statements
contained in this press release are "forward-looking statements"
and relate to the Company's plans, projections 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, particularly 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; 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; 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. 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: Media
relations contact: Investor relations contact: 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. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three
months ended Six months ended June 30, June 30, ----------------
------------------ 2006 2005 2006 2005 -------- ------- --------
-------- (In millions, except per share data) Net sales $874.6
$867.7 $1,709.4 $1,686.6 Cost of goods sold 784.7 782.3 1,556.0
1,528.9 -------- ------- -------- -------- Gross profit 89.9 85.4
153.4 157.7 Selling, general and administrative expenses 49.4 49.0
97.9 95.6 -------- ------- -------- -------- Operating income 40.5
36.4 55.5 62.1 Net interest expense (7.9) (6.6) (15.3) (12.7) Other
income (expense) Debt refinancing costs (2.4) - (2.4) - Other, net
0.7 (1.7) 1.4 (1.4) -------- ------- -------- -------- Income
before income taxes 30.9 28.1 39.2 48.0 Income taxes 10.5 9.2 10.1
15.8 -------- ------- -------- -------- Net income $20.4 $18.9
$29.1 $32.2 ======== ======= ======== ======== Diluted earnings per
share $0.40 $0.37 $0.57 $0.63 ======== ======= ======== ========
Diluted shares outstanding 51.2 50.9 51.1 50.9 ======== =======
======== ======== AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2006
2005 ------------ ------------ (Unaudited) (In millions) ASSETS
Current assets Cash and cash equivalents $10.8 $3.7 Accounts
receivable, net 428.1 328.0 Inventories, net 226.0 207.2 Prepaid
expenses and other 57.7 45.5 Deferred income taxes 19.8 17.0
------------ ------------ Total current assets 742.4 601.4
Property, plant and equipment, net 1,910.2 1,836.0 Deferred income
taxes 6.0 3.0 Goodwill 147.8 147.8 Other assets and deferred
charges 72.5 78.4 ------------ ------------ Total assets $2,878.9
$2,666.6 ============ ============ LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities Accounts payable $432.6 $381.1 Other
accrued expenses 152.0 168.1 ------------ ------------ Total
current liabilities 584.6 549.2 Long-term debt 591.3 489.2 Deferred
income taxes 113.2 116.1 Postretirement benefits and other
long-term liabilities 572.0 517.3 ------------ ------------ Total
liabilities 1,861.1 1,671.8 Stockholders' equity 1,017.8 994.8
------------ ------------ Total liabilities and stockholders'
equity $2,878.9 $2,666.6 ============ ============ AMERICAN AXLE
& MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) Three months ended Six months
ended June 30, June 30, ---------------- ----------------- 2006
2005 2006 2005 -------- ------- -------- -------- (In millions)
Operating activities Net income $20.4 $18.9 $29.1 $32.2
Depreciation and amortization 51.1 45.4 100.4 88.8 Other 21.2 22.2
(29.8) (68.6) -------- ------- -------- -------- Net cash flow
provided by operating activities 92.7 86.5 99.7 52.4 Purchases of
property, plant & equipment (75.2) (86.4) (156.0) (161.2)
-------- ------- -------- -------- Net cash flow after purchases of
property, plant & equipment 17.5 0.1 (56.3) (108.8) --------
------- -------- -------- Purchase buyouts of leased equipment
(19.5) - (19.5) - -------- ------- -------- -------- Net cash flow
provided by (used in) operations (2.0) 0.1 (75.8) (108.8) Net
increase in long-term debt 16.3 8.6 101.1 111.7 Debt issuance costs
(3.1) - (3.1) - Employee stock option exercises 0.1 1.2 0.2 3.4
Dividends paid (7.8) (7.6) (15.5) (15.0) -------- ------- --------
-------- Net cash flow provided by financing activities 5.5 2.2
82.7 100.1 Effect of exchange rate changes on cash 0.2 - 0.2 (0.1)
-------- ------- -------- -------- Net increase (decrease) in cash
and cash equivalents 3.7 2.3 7.1 (8.8) Cash and cash equivalents at
beginning of period 7.1 3.3 3.7 14.4 -------- ------- --------
-------- Cash and cash equivalents at end of period $10.8 $5.6
$10.8 $5.6 ======== ======= ======== ======== 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 Six months ended June 30, June 30, ----------------
----------------- 2006 2005 2006 2005 -------- ------- --------
-------- (In millions) Net income $20.4 $18.9 $29.1 $32.2 Interest
expense 7.9 6.6 15.4 12.9 Income taxes 10.5 9.2 10.1 15.8
Depreciation and amortization 51.1 45.4 100.4 88.8 -------- -------
-------- -------- EBITDA $89.9 $80.1 $155.0 $149.7 ======== =======
======== ======== Net debt(b) to capital June 30, December 31, 2006
2005 ------------ ------------ (In millions, except percentages)
Total debt $591.3 $489.2 Less: cash and cash equivalents 10.8 3.7
------------ ------------ Net debt at end of period 580.5 485.5
Stockholders' equity 1,017.8 994.8 ------------ ------------ Total
invested capital at end of period $1,598.3 $1,480.3 ============
============ Net debt to capital(c) 36.3% 32.8% ============
============ (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 Six months ended June 30,
June 30, ---------------- ----------------- 2006 2005 2006 2005
-------- ------- -------- -------- (In millions) Net cash provided
by operating activities $92.7 $86.5 $99.7 $52.4 Less: purchases of
property, plant & equipment (75.2) (86.4) (156.0) (161.2)
-------- ------- -------- -------- Net operating cash flow 17.5 0.1
(56.3) (108.8) Less: dividends paid (7.8) (7.6) (15.5) (15.0)
-------- ------- -------- -------- Free cash flow $9.7 $(7.5)
$(71.8) $(123.8) ======== ======= ======== ======== After-Tax
Return on Invested Capital (ROIC)(e) Trailing Twelve Quarter Ended
Months -------------------------------------- Ended Sept. 30, Dec.
31, March 31, June 30, June 30, 2005 2005 2006 2006 2006 --------
-------- -------- -------- -------- (In millions, except
percentages) Net income $19.3 $4.5 $8.6 $20.4 $52.8 After-tax net
interest expense(f) 4.9 5.6 4.9 5.2 20.6 -------- -------- --------
-------- -------- After-tax return $24.2 $10.1 $13.5 $25.6 $73.4
======== ======== ======== ======== ======== Net debt at end of
period $580.5 Stockholders' equity at end of period 1,017.8
-------- Invested capital at end of period 1,598.3 Invested capital
at beginning of period 1,542.7 -------- Average invested capital(g)
$1,570.5 ======== After-Tax ROIC(h) 4.7% ======== (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: Media relations
contact: Carrie L.P. Gray, Director, Corporate Relations,
+1-313-758-4880, or Investor relations contact: 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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