American Axle & Manufacturing Reports Record Second Quarter
Sales and Earnings Non-GM sales increase 16% DETROIT, July 22
/PRNewswire-FirstCall/ -- American Axle & Manufacturing
Holdings, Inc. (AAM), which is traded as AXL on the NYSE, today
reported record sales and earnings for the second quarter of 2004.
Second Quarter 2004 highlights * Record second quarter net sales of
$929.6 million versus $913.6 million in 2003 * Sales to customers
other than GM increased 16% to $191 million, or 21% of total sales
* Earnings of $55.3 million, a new quarterly record for AAM *
Diluted earnings per share of $1.02, the highest quarterly result
in AAM's history * First-ever quarterly cash dividend as a public
company of $0.15 per share paid on June 28, 2004 AAM's second
quarter diluted earnings per share grew 5% to $1.02 per share as
compared to 97 cents per share earned in the second quarter of
2003. Net income for the quarter increased 8% to $55.3 million as
compared to $51.0 million in the second quarter of 2003. AAM's
second quarter operating results include a charge of $12.5 million,
or $0.15 per share, related to a voluntary separation program
established with the UAW. Nearly 250 hourly associates participated
in this voluntary program and terminated their employment with AAM.
"Despite changes in product mix and lower light truck production
from our largest customer, AAM was able to achieve record levels of
sales and earnings in the quarter. We are pleased with our solid
operating performance in the quarter as it was driven in large part
through our ability to provide new, advanced product technology to
our customers and to continuously drive costs out of the entire
value chain," said American Axle & Manufacturing Co-Founder,
Chairman of the Board & CEO Richard E. Dauch. Sales rose in the
second quarter to a record of $929.6 million, a slight increase
from the $913.6 million in sales in the second quarter of 2003.
Sales to non-GM customers increased 16% to $190.6 million in the
second quarter of 2004 versus the same period in 2003. Sales to
non-GM customers now represent 21% of AAM's total sales versus 18%
in the second quarter of 2003. For the first half of 2004, sales
were $1.9 billion, approximately the same as in the first six
months of 2003. AAM sales continue to be favorably affected by
strong demand for the Chrysler Group's heavy-duty Dodge Ram in the
second quarter. Despite continued strong growth in AAM's non-GM
business, a 2% decrease in General Motors light truck production
had a negative effect on our sales in the quarter. AAM's shipments
for GM's mid-sized pick-up trucks and SUVs, which carry a
lower-than-average AAM sales content per vehicle, increased 11% on
a quarter-over-quarter basis. These anticipated changes in
production volume and mix resulted in a slight decrease in AAM
content per vehicle to $1,162. Gross margin was 14.4% for the
second quarter of 2004 versus 15.1% margin in the second quarter of
2003. Operating income was $89.2 million or 9.6% of sales in the
second quarter of 2004 as compared to $89.3 million or 9.8% of
sales for the second quarter of 2003. As indicated above, gross
profit in the second quarter of 2004 was negatively affected by a
charge of $12.5 million related to the voluntary separation program
we established with the UAW. For the first half of 2004, gross
margin was 14.3% versus 15.0% for the first half of 2003. Operating
income for the first half of 2004 was $176.1 million or 9.4% of
sales versus $185.1 million or 9.8% of sales for the first half of
2003. For the first half of 2004, earnings were $91.8 million.
Excluding 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, earnings for the first half of 2004 were $107.2
million or $1.96 per share. Capital spending for the first half of
2004 was $95.7 million. With $124.1 million in cash flow provided
by operating activities, net cash flow after capital expenditures
was $28.4 million. For the first half of 2004, research and
development (R&D) spending rose 11% to $33.8 million versus
$30.4 million for the same period of 2003. The increase is
consistent with the company's focus on the development of future
products targeted at growth segments of the market. As a result of
this R&D commitment, AAM generated nearly 88% of its first half
of 2004 sales from new products introduced to the market since
mid-1998. A conference call to review the second-quarter results is
scheduled today at 3:00 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 July 22, 2004
until 5:00 p.m. EDT July 29, 2004 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
8306854. Recent developments On June 28, 2004, AAM announced the
payment of its first ever dividend as a public company. The
quarterly cash dividend of $0.15 per share was paid on June 28,
2004, to stockholders of record of the company's issued and
outstanding common stock as of June 7, 2004. 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
forged products for light trucks, sport utility vehicles and
passenger cars. In addition to its 14 locations in the United
States (in Michigan, New York and Ohio), AAM also has offices and
facilities in Brazil, England, Germany, India, Japan, Mexico and
Scotland. 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;
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 attract and retain key associates; 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); 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. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three months
ended Six months ended ------------------- ----------------- June
30, June 30, 2004 2003 2004 2003 -------- -------- --------
--------- (In millions, except per share data) Net sales $929.6
$913.6 $1,882.4 $1,888.9 Cost of goods sold 796.2 775.8 1,612.6
1,606.4 -------- -------- -------- --------- Gross profit 133.4
137.8 269.8 282.5 Selling, general and administrative expenses 44.2
48.5 93.7 97.4 -------- -------- -------- --------- Operating
income 89.2 89.3 176.1 185.1 Net interest expense (5.9) (12.0)
(14.3) (24.5) Debt refinancing and redemption costs - - (23.5) -
Other income, net 1.2 1.2 1.9 0.9 -------- -------- --------
--------- Income before income taxes 84.5 78.5 140.2 161.5 Income
taxes 29.2 27.5 48.4 56.5 -------- -------- -------- --------- Net
income $55.3 $51.0 $91.8 $105.0 ======== ======== ========
========= Diluted earnings per share $1.02 $0.97 $1.68 $2.00
======== ======== ======== ========= Diluted shares outstanding
54.3 52.8 54.6 52.5 ======== ======== ======== ========= AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS June 30, December 31, 2004 2003 ------------
------------- (Unaudited) (In millions) ASSETS -------- Current
assets: Cash and cash equivalents $6.6 $12.4 Accounts receivable,
net 404.9 339.2 Inventories, net 176.0 171.8 Prepaid expenses and
other 37.7 24.0 Deferred income taxes 17.0 16.3 ------------
------------- Total current assets 642.2 563.7 Property, plant and
equipment, net 1,647.6 1,629.5 Deferred income taxes 6.8 6.9
Goodwill 147.8 147.8 Other assets and deferred charges 70.3 49.9
------------ ------------- Total assets $2,514.7 $2,397.8
============ ============= LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------- Current liabilities:
Accounts payable $353.6 $335.7 Other accrued expenses 185.4 218.5
------------ ------------- Total current liabilities 539.0 554.2
Long-term debt 521.0 449.7 Deferred income taxes 88.9 73.0
Postretirement benefits and other long-term liabilities 397.0 366.2
------------ ------------- Total liabilities 1,545.9 1,443.1
Stockholders' equity 968.8 954.7 ------------ ------------- Total
liabilities and stockholders' equity $2,514.7 $2,397.8 ============
============= AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three
months ended Six months ended ------------------- -----------------
June 30, June 30, 2004 2003 2004 2003 -------- -------- --------
--------- (In millions) Operating activities Net income $55.3 $51.0
$91.8 $105.0 Depreciation and amortization 40.7 40.4 82.0 80.4
Other 23.7 66.2 (49.7) 8.5 -------- -------- -------- --------- Net
cash flow provided by operating activities 119.7 157.6 124.1 193.9
Purchases of property, plant & equipment (49.0) (51.0) (95.7)
(110.4) -------- -------- -------- --------- Net cash flow after
purchases of property, plant & equipment 70.7 106.6 28.4 83.5
Purchase buyouts of leased equipment - - - (3.0) -------- --------
-------- --------- Net cash flow provided by operations 70.7 106.6
28.4 80.5 Net increase in long-term debt (49.0) (86.4) 370.9 (65.3)
Redemption of 9.75% Notes - - (314.6) - Debt issuance costs - -
(9.7) - Employee stock option exercises 7.2 8.5 10.3 8.7 Dividends
paid (7.8) - (7.8) - Purchase of treasury stock (20.7) - (83.7) -
-------- -------- -------- --------- Net cash flow used in
financing activities (70.3) (77.9) (34.6) (56.6) Effect of exchange
rate changes on cash 0.2 0.5 0.4 0.5 -------- -------- --------
--------- Net increase (decrease) in cash and cash equivalents 0.6
29.2 (5.8) 24.4 Cash and cash equivalents at beginning of period
6.0 4.6 12.4 9.4 -------- -------- -------- --------- Cash and cash
equivalents at end of period $6.6 $33.8 $6.6 $33.8 ========
======== ======== ========= 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, 2004 2003
2004 2003 -------- -------- -------- -------- (In millions) Net
income $55.3 $51.0 $91.8 $105.0 Interest expense 6.0 12.2 14.6 24.9
Income taxes 29.2 27.5 48.4 56.5 Depreciation and amortization 40.7
40.4 82.0 80.4 -------- -------- -------- -------- EBITDA $131.2
$131.1 $236.8 $266.8 ======== ======== ======== ======== Net
debt(b) to capital June 30, December 31, 2004 2003 ----------
---------- (In millions, except percentages) Total debt $521.0
$449.7 Less: cash and cash equivalents 6.6 12.4 ----------
---------- Net debt at end of period 514.4 437.3 Stockholders'
equity 968.8 954.7 ---------- ---------- Total invested capital at
end of period $1,483.2 $1,392.0 ========== ========== Net debt to
capital(c) 34.7% 31.4% ========== ========== (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. Free Cash Flow(d) Three
months ended Six months ended ------------------- -----------------
June 30, June 30, 2004 2003 2004 2003 ------- ------ ------ ------
(In millions) Net cash flow provided by operating activities $119.7
$157.6 $124.1 $193.9 Less: purchases of property, plant &
equipment (49.0) (51.0) (95.7) (110.4) ------- ------- -------
-------- Free Cash Flow $70.7 $106.6 $28.4 $83.5 ======= =======
======= ======== After-Tax Return on Invested Capital (ROIC)(e)
Trailing Quarter Ended Twelve -------------------------------------
Months September December March June Ended 30, 31, 31, 30, June 30,
2003 2003 2004 2004 2004 --------- --------- -------- --------
-------- (In millions, except percentages) Net income $38.7 $53.4
$36.5 $55.3 $183.9 After-tax net interest expense (f) 7.3 7.2 5.5
3.9 23.9 --------- --------- -------- -------- -------- After-tax
return $46.0 $60.6 $42.0 $59.2 $207.8 ========= ========= ========
======== ======== Net debt at end of period $514.4 Stockholder's
equity at end of period 968.8 --------- Invested capital at end of
period 1,483.2 Invested capital at beginning of period 1,469.0
--------- Average invested capital(g) $1,476.1 ========= After-Tax
ROIC(h) 14.1% ========= (d) We define free cash flow as net cash
flow provided by operating activities less purchases of property
and equipment. We believe free cash flow is a meaningful measure as
it is 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. Free cash flow is also
a key metric used in our calculation of executive incentive
compensation. Other companies may calculate 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 executive 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/ Company
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