American Axle & Manufacturing Posts Third Quarter 2009 Earning

Nov 05, 2009 (Close-Up Media via COMTEX) -- AXL | Quote | Chart | News | PowerRating -- American Axle & Manufacturing Holdings, Inc. (AAM), which is traded as AXL on the NYSE, today reported its financial results for the third quarter of 2009.

In a release on October 30, the Company noted that third quarter 2009 results include:

-- Third quarter sales of $409.6 million is AAM's highest quarterly sales

total in 2009

-- Net income of $19.6 million, or $0.35 per share, marks AAM's first

quarterly profit in two years

-- AAM's quarterly results reflect the favorable impact of pension and

postretirement benefit curtailment gains of $42.3 million (or $0.76

per share); these gains were partially offset by special charges and

restructuring costs of $13.0 million (or $0.23 per share), primarily

relating to salaried workforce reductions, capacity rationalization

activities and the successful closing of a settlement and commercial

agreement with GM and amendment of AAM's Revolving Credit Facility and

Term Loan agreements that position AAM to complete its restructuring

outside of a bankruptcy process

-- 18 percent year-over-year decline in total light truck production volumes as

compared to the third quarter of 2008

-- Content-per-vehicle of $1,396, approximately the same as in the second

quarter of 2009

-- Non-GM sales of $75.1 million, or approximately 18.3 percent of total net

sales

AAM's net income in the third quarter of 2009 was $19.6 million (or $0.35 per share). This compares to a net loss of $440.9 million (or $8.54 per share) in the third quarter of 2008. AAM's third quarter of 2009 net profit is the first profitable quarterly result AAM has reported since the third quarter of 2007.

AAM's results in the third quarter of 2009 were adversely impacted by the extended production shutdowns of General Motors Company (GM) and Chrysler Group LLC (Chrysler). AAM estimates the reduction in sales and operating income resulting from these shutdowns to be approximately $100.6 million and approximately $29.3 million (or $0.52 per share), respectively.

In the third quarter of 2009, AAM recorded pension and postretirement benefit curtailment gains of $42.3 million (or $0.76 per share). These gains were partially offset by special charges and restructuring costs of $13.0 million (or $0.23 per share), primarily relating to salaried attrition programs, capacity rationalization activities and the successful closing of a settlement and commercial agreement with GM and amendment of AAM's Revolving Credit Facility and Term Loan agreements that position AAM to complete its restructuring outside of a bankruptcy process.

In the third quarter of 2008, AAM recorded $398.0 million (or $7.71 per share), of special charges, asset impairments and non-recurring operating costs, primarily related to hourly and salaried attrition programs and benefit reductions (including pension and other postretirement benefit curtailments and special and contractual termination benefits), plant closures and other capacity rationalization activities.

"We believe the third quarter of 2009 marks a positive turning point for AAM," said AAM's Co-Founder, Chairman of the Board and Chief Executive Officer, Richard E. Dauch. "By finalizing new business agreements with General Motors Company and amending our senior credit agreements, we have successfully resolved the short-term liquidity concerns that were facing AAM. We have also preserved the significant value inherent in AAM's unparalleled manufacturing and engineering expertise; product, process and systems technology; and expanding new business backlog for our many key stakeholders. With these important objectives successfully achieved and AAM's operational restructuring now nearly complete, we can once again focus on delivering outstanding value to our customers on a daily basis, profitably growing AAM's global businesses and continuing to diversify AAM's customer base, product portfolio and global manufacturing and sourcing footprint."

Net sales in the third quarter of 2009 were $409.6 million as compared to $528.1 million in the third quarter of 2008. On a sequential basis, AAM's sales in the quarter were up 67 percent as compared to $245.6 million in the second quarter of 2009.

Customer production volumes for the North American light truck and SUV programs AAM currently supports for GM and Chrysler were down approximately 18 percent in the third quarter of 2009 as compared to the third quarter of 2008, substantially all of which is attributable to lower customer production of mid-sized light truck programs.

Non-GM sales represented approximately 18.3 percent of total sales in the third quarter of 2009. On a year-to-date basis, AAM's non-GM sales represented approximately 21.6 percent of total sales.

AAM's content-per-vehicle is measured by the dollar value of its product sales supporting GM's North American light truck and SUV programs and Chrysler's Heavy Duty Dodge Ram pickup trucks. For the third quarter of 2009, AAM's content-per-vehicle was $1,396, approximately the same as the second quarter of 2009. AAM's content-per-vehicle was $1,453 in the third quarter of 2008.

Net sales in the first three quarters of 2009 were $1.1 billion as compared to $1.6 billion in the first three quarters of 2008. AAM's net loss in the first three quarters of 2009 was $301.7 million as compared to a net loss of $1.1 billion in the first three quarters of 2008.

AAM's results in the first three quarters of 2009 were adversely impacted by the extended production shutdowns of GM and Chrysler. AAM estimates the reduction in sales and operating income resulting from these shutdowns to be approximately $304.3 million and approximately $95.0 million (or $1.83 per share), respectively.

AAM's SG&A spending in the third quarter of 2009 was $44.0 million as compared to $43.0 million in the third quarter of 2008. Included in AAM's SG&A spending in the third quarter of 2009 was $6.3 million of special charges and restructuring costs. In the third quarter of 2008, AAM recorded a $1.4 million special gain in SG&A.

AAM's R&D spending in the third quarter of 2009 was approximately $15.1 million as compared to $21.2 million in the third quarter of 2008. On a year-to-date basis, AAM's R&D spending for the first three quarters of 2009 was approximately $50.7 million as compared to $63.4 million in the first three quarters of 2008.

AAM defines free cash flow to be net cash provided by (or used in) operating activities and proceeds from the issuance of warrants to GM, less capital expenditures net of proceeds from the sales of equipment and dividends paid.

Net cash used in operating activities in the first three quarters of 2009 was $19.7 million as compared to $97.3 million used in operating activities during the first three quarters of 2008. In conjunction with the settlement and commercial agreement with GM, AAM received a $110 million cash payment from GM in the quarter, $79.7 million of which was recorded in operating activities and $30.3 million of which was recognized as a financing activity. For purposes of measuring free cash flow in 2009, AAM includes the entire $110 million cash payment. Capital spending and deposits for the acquisition of property and equipment, net of proceeds from the sale of equipment in the first three quarters of 2009 was $115.0 million as compared to $100.5 million in the first three quarters of 2008. Reflecting the impact of this activity, AAM's free cash flow was a use of $104.4 million in the first three quarters of 2009. In the first three quarters of 2008, AAM's free cash flow was a use of $215.1 million.

Included in the first three quarters of 2009 cash flow results, AAM paid $119.7 million for special charges and restructuring costs, which primarily related to hourly and salaried attrition programs and related statutory benefits.

AAM is a company focusing on the manufacture, engineering, design and validation of driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for trucks, sport utility vehicles, passenger cars and crossover utility vehicles. In addition to locations in the United States (Michigan, New York, Ohio and Indiana), AAM also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea, Thailand and the United Kingdom.

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