DETROIT, Oct. 30 /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
2007. Third Quarter 2007 highlights -- Third quarter sales of
$774.3 million -- 4% year-over-year increase in total light truck
production volumes as compared to the third quarter of 2006 --
Content-per-vehicle of $1,303, approximately 8% higher than the
prior year -- Gross profit of $80.7 million, or 10.4% of sales --
Operating income of $28.7 million, or 3.7% of sales -- Net earnings
of $13.1 million or $0.25 per share -- Net cash provided by
operating activities of $331.6 million year-to- date, more than
double the prior year AAM's earnings in the third quarter of 2007
were $13.1 million or $0.25 per share. This compares to a net loss
of $62.9 million or $1.25 per share in the third quarter of 2006.
AAM's earnings in the third quarter of 2007 reflect the impact of
special charges and other non-recurring operating costs of $7.8
million, or $0.13 per share, primarily related to the redeployment
of machinery and equipment and other actions to rationalize
underutilized capacity. Also included in this total were charges of
$2.7 million, or $0.04 per share, associated with a voluntary
separation program offered to hourly associates represented by the
UAW at AAM's Buffalo Gear, Axle & Linkage facility in Buffalo,
New York. AAM's earnings in the third quarter of 2007 also reflect
the impact of a work stoppage experienced by our largest customer,
GM, during the last week of September. AAM estimates the impact of
lost sales and other costs and expenses related to this work
stoppage to be approximately $2.8 million, or $0.04 per share, in
the third quarter of 2007. AAM's earnings in the third quarter of
2006 included a special charge of $91.2 million related to the
supplemental unemployment benefits estimated to be payable to UAW
associates who were expected to be permanently idled through the
end of the current contract period in February 2008. AAM also
recorded a $1.9 million special charge in the third quarter of 2006
related to estimated postemployment costs for associates at our
European operations. "In the third quarter of 2007, AAM continued
to achieve solid gains in productivity and made steady progress on
its ongoing structural cost-reduction initiatives," said AAM's
Co-Founder, Chairman of the Board & CEO Richard E. Dauch. "AAM
will continue to take the necessary actions to achieve sustainable
market cost competitiveness in our global operations. This includes
a strategic emphasis on improving AAM's manufacturing capacity
utilization and jointly developing new innovative labor agreements
to enhance AAM's operating efficiency and flexibility." Net sales
in the third quarter of 2007 were $774.3 million as compared to
$701.2 million in the third quarter of 2006. Customer production
volumes for the full-size truck and SUV programs AAM currently
supports for GM and Chrysler were approximately the same as
compared to the prior year. AAM estimates that customer production
volumes for its mid-sized truck and SUV programs increased
approximately 25% in the quarter on a year-over-year basis. Non-GM
sales represented approximately 24% of AAM's total sales in the
third 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 Chrysler's heavy duty Dodge Ram pickup
trucks. In the third quarter of 2007, AAM's content-per-vehicle
increased approximately 8% to $1,303 as compared to $1,204 in the
third quarter of 2006. Gross margin in the third quarter of 2007
was 10.4% as compared to a negative 8.8% in the third quarter of
2006. Operating income was $28.7 million or 3.7% of sales in the
quarter as compared to an operating loss of $110.0 million or
negative 15.7% of sales in the third quarter of 2006. In addition
to the impact of the special charges and other non-recurring
operating costs described above, AAM's improved gross margin and
operating income performance in the third quarter of 2007 primarily
reflects the impact of higher sales, productivity gains and
structural cost reductions resulting from the attrition programs
and other ongoing restructuring actions. Net sales in the first
three quarters of 2007 were $2.5 billion, as compared to $2.4
billion in the first three quarters of 2006. Gross margin was 11.2%
in the first three quarters of 2007 as compared to 3.8% for the
first three quarters of 2006. Operating income for the first three
quarters of 2007 was $123.5 million or 5.0% of sales as compared to
an operating loss of $54.5 million or negative 2.3% of sales for
the first three quarters of 2006. AAM's SG&A spending in the
third quarter of 2007 was $52.0 million as compared to $48.0
million in the third quarter of 2006. In the first three quarters
of 2007, AAM's SG&A spending was $155.1 million or 6.2% of
sales as compared to $145.9 million or 6.1% of sales in the first
three quarters of 2006. This year-over-year increase in AAM's
SG&A expense was 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 three quarters of 2007 was approximately $61.9 million
as compared to $60.6 million in the first three quarters 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 three
quarters of 2007 more than doubled to $331.6 million as compared to
$161.7 million in the first three quarters of 2006. Capital
spending in the first three quarters of 2007 was down $110.6
million on a year-over-year basis to $132.9 million. Reflecting the
impact of this activity and dividend payments of $23.8 million,
AAM's free cash flow of $174.9 million in the first three quarters
of 2007 represents an improvement of $279.9 million as compared to
the first three quarters of 2006. A conference call to review AAM's
third quarter 2007 results is scheduled today at 2:00 p.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
5:00 p.m. EDT on October 30, 2007 until 5:00 p.m. EDT November 6,
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 17920748. Recent
Developments On August 14, 2007, AAM announced it would offer a
voluntary separation program (Buffalo Separation Program or BSP) to
all hourly associates represented by the UAW at its Buffalo Gear,
Axle & Linkage facility in Buffalo, New York. The program
commenced in September 2007 and is related to AAM's previously
announced plans to idle a portion of its U.S. production capacity
dedicated to the mid-sized light truck product range. Under the
BSP, AAM has offered a range of early retirement incentives and
buy-outs to approximately 650 eligible hourly associates. AAM
currently expects to incur special charges of as much as $85
million for the BSP, including pension and other postretirement
benefit curtailments and special termination benefits. As discussed
above, AAM incurred $2.7 million in charges related to this
voluntary separation program in the third quarter of 2007. 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 (Indiana,
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 Chrysler's heavy-duty Dodge Ram full-size
pickup trucks, or the Dodge Ram program; work stoppages at GM or
Chrysler or a key supplier to GM or Chrysler; our ability to
achieve cost reductions through accelerated attrition programs;
reduced purchases of our products by GM, Chrysler 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. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
--------------------------------------------------------------------------
Three months ended Nine months ended September 30, September 30,
------------------ ----------------- 2007 2006 2007 2006 --------
------- --------- --------- (In millions, except per share data)
Net sales $774.3 $701.2 $2,493.0 $2,410.6 Cost of goods sold 693.6
763.2 2,214.4 2,319.2 -------- ------- --------- --------- Gross
profit (loss) 80.7 (62.0) 278.6 91.4 Selling, general and
administrative expenses 52.0 48.0 155.1 145.9 -------- -------
--------- --------- Operating income (loss) 28.7 (110.0) 123.5
(54.5) Net interest expense (11.5) (11.7) (40.8) (27.0) Other
income (expense), net Debt refinancing cost - (0.3) (5.5) (2.7)
Other, net (1.2) 10.1 0.1 11.4 -------- ------- --------- ---------
Income (loss) before income taxes 16.0 (111.9) 77.3 (72.8) Income
taxes 2.9 (49.0) 14.8 (38.9) -------- ------- --------- ---------
Net income (loss) $13.1 $(62.9) $62.5 $(33.9) ======== =======
========= ========= Diluted earnings (loss) per share $0.25 $(1.25)
$1.19 $(0.67) ======== ======= ========= ========= Diluted shares
outstanding 53.0 50.3 52.6 50.3 ======== ======= =========
=========
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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
--------------------------------------------------------------------------
September 30, December 31, 2007 2006 ------------- ------------ (In
millions) ASSETS ------ Current assets Cash and cash equivalents
$362.1 $13.5 Accounts receivable, net 320.5 327.6 Inventories, net
248.1 198.4 Prepaid expenses and other 79.0 69.2 Deferred income
taxes 28.1 30.7 ------------- ------------ Total current assets
1,037.8 639.4 Property, plant and equipment, net 1,715.4 1,731.7
Deferred income taxes 49.8 35.7 Goodwill 147.8 147.8 Other assets
and deferred charges 60.9 42.9 ------------- ------------ Total
assets $3,011.7 $2,597.5 ============= ============ LIABILITIES AND
STOCKHOLDERS' EQUITY ------------------------------------ Current
liabilities Accounts payable $396.4 $328.9 Other accrued expenses
207.2 212.4 ------------- ------------ Total current liabilities
603.6 541.3 Long-term debt 845.6 672.2 Deferred income taxes 6.3
6.8 Postretirement benefits and other long-term liabilities 683.8
563.5 ------------- ------------ Total liabilities 2,139.3 1,783.8
Stockholders' equity 872.4 813.7 ------------- ------------ Total
liabilities and stockholders' equity $3,011.7 $2,597.5
------------- ------------
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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
--------------------------------------------------------------------------
Three months ended Nine months ended September 30, September 30,
------------------- ----------------- 2007 2006 2007 2006
------------------- ----------------- (In millions) (In millions)
Operating activities Net income (loss) $13.1 $(62.9) $62.5 $(33.9)
Depreciation and amortization 57.6 52.8 171.0 153.2 Other 26.3 72.1
98.1 42.4 ---------- ------- ------- -------- Net cash flow
provided by operating activities 97.0 62.0 331.6 161.7 Purchases of
property, plant & equipment (57.5) (87.5) (132.9) (243.5)
---------- ------- ------- -------- Net cash flow after purchases
of property, plant & equipment 39.5 (25.5) 198.7 (81.8)
---------- ------- ------- -------- Purchase buyouts of leased
equipment - - - (19.5) ---------- ------- ------- -------- Net cash
flow provided by (used in) operations 39.5 (25.5) 198.7 (101.3) Net
increase (decrease) in long-term debt (2.0) 36.3 167.3 137.5
Purchase of treasury of stock (1.9) - (1.9) - Debt issuance costs -
- (7.5) (3.1) Employee stock option exercises 3.9 0.2 15.2 0.3
Dividends paid (8.0) (7.8) (23.8) (23.3) ---------- ------- -------
-------- Net cash flow provided by (used in) financing activities
(8.0) 28.7 149.3 111.4 Effect of exchange rate changes on cash
(0.7) (0.1) 0.6 0.1 ---------- ------- ------- -------- Net
increase in cash and cash equivalents 30.8 3.1 348.6 10.2 Cash and
cash equivalents at beginning of period 331.3 10.8 13.5 3.7
---------- ------- ------- -------- Cash and cash equivalents at
end of period $362.1 $13.9 $362.1 $13.9 ========== ======= =======
======== 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,
------------------ ----------------- 2007 2006 2007 2006
------------------ ----------------- (In millions) (In millions)
Net income (loss) $13.1 $(62.9) $62.5 $(33.9) Interest expense 14.6
11.8 46.8 27.1 Income taxes 2.9 (49.0) 14.8 (38.9) Depreciation and
amortization 57.6 52.8 171.0 153.2 -------- ------- ------- -------
EBITDA $88.2 $(47.3) $295.1 $107.5 ======== ======= ======= =======
Net debt(b) to capital September December 30, 31, 2007 2006
--------- -------- (In millions, except percentages) Total debt
$845.6 $672.2 Less: cash and cash equivalents 362.1 13.5 ---------
-------- Net debt at end of period 483.5 658.7 Stockholders' equity
872.4 813.7 --------- -------- Total invested capital at end of
period $1,355.9 $1,472.4 ========= ======== Net debt to capital(c)
35.7% 44.7% ========= ========
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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. 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, ------------------ ----------------- 2007 2006 2007
2006 ------------------ ----------------- (In millions) (In
millions) Net cash provided by operating activities $97.0 $62.0
$331.6 $161.7 Less: purchases of property, plant & equipment
(57.5) (87.5) (132.9) (243.5) -------- -------- ------- --------
Net operating cash flow 39.5 (25.5) 198.7 (81.8) Less: dividends
paid (8.0) (7.8) (23.8) (23.3) -------- -------- ------- --------
Free cash flow $31.5 $(33.3) $174.9 $(105.1) ======== ========
======= ======== After-Tax Return on Invested Capital (ROIC)(e)
Trailing Twelve Quarter Ended Months
------------------------------------- Ended Dec. 31, March 31, June
30, Sept. 30, Sept. 30, 2006 2007 2007 2007 2007 -------- ---------
-------- --------- --------- (In millions, except percentages) Net
income (loss) $(188.6) $15.4 $34.0 $13.1 $(126.1) After-tax net
interest expense (f) 7.8 9.8 13.2 9.4 40.2 -------- ---------
-------- --------- --------- After-tax return $(180.8) $25.2 $47.2
$22.5 $(85.9) ======== ========= ======== ========= ========= Net
debt at end of period $483.5 Stockholders' equity at end of period
872.4 --------- Invested capital at end of period 1,355.9 Invested
capital at beginning of period 1,565.3 --------- Average invested
capital(g) $1,460.6 ========= After-Tax ROIC(h) -5.9% =========
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(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 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: 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:
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