American Axle & Manufacturing Holdings, Inc. (AAM), (NYSE: AXL) today reported its financial results for the second quarter 2019 and updated its full year financial outlook.
Second Quarter 2019 Results
- Sales of $1.70 billion
- Net income attributable to AAM of $52.5 million, or 3.1% of sales
- Adjusted EBITDA of $266.0 million, or 15.6% of sales
- Diluted earnings per share of $0.45; Adjusted earnings per share of $0.55
- Net cash provided by operating activities of $217.1 million; Adjusted free cash flow of $119.3 million
“In the second quarter of 2019, AAM continued to improve its operational performance with sequential quarterly margin increases and strong free cash flow generation. However, we exited the second quarter with softer sales than anticipated and we expect this to continue to impact us in the second half of 2019,” said AAM’s Chairman and Chief Executive Officer, David C. Dauch. “As we look towards the second half of 2019, we are focused on efficiently operating our business and adapting to the changing market demand.”
AAM’s sales in the second quarter of 2019 were $1.70 billion as compared to $1.90 billion in the second quarter of 2018.
AAM’s net income in the second quarter of 2019 was $52.5 million, or $0.45 per share, as compared to $151.1 million, or $1.30 per share in the second quarter of 2018.
AAM defines Adjusted earnings per share to be diluted earnings per share excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, gain on sale of business, goodwill impairments and non-recurring items, including the tax effect thereon. Adjusted earnings per share in the second quarter of 2019 were $0.55 compared to $1.23 in the second quarter of 2018.
AAM defines EBITDA to be earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, gain on sale of business, goodwill impairments and non-recurring items. In the second quarter of 2019, Adjusted EBITDA was $266.0 million, or 15.6% of sales, as compared to $347.9 million, or 18.3% of sales, in the second quarter of 2018.
AAM’s net cash provided by operating activities for the second quarter of 2019 was $217.1 million.
AAM defines free cash flow to be net cash provided by operating activities less capital expenditures net of proceeds from the sale of property, plant and equipment. Adjusted free cash flow is defined as free cash flow excluding the impact of cash payments for restructuring and acquisition-related costs. AAM’s Adjusted free cash flow for the second quarter of 2019 was $119.3 million.
AAM’s 2019 Financial Outlook
AAM is experiencing lower metal market pass throughs and lower than projected global production volumes for certain programs we support including in Asia, primarily China, and global engine and transmission products. As a result, AAM has revised its full year 2019 financial targets as follows:
- AAM is targeting sales in the range of $6.9 – $7.0 billion in 2019.
- AAM is targeting Adjusted EBITDA in the range of $1.05 – $1.10 billion in 2019.
- AAM is targeting Adjusted free cash flow of approximately $250 million in 2019, including the reduction of estimated capital expenditures from approximately $515 million to approximately $485 million.
AAM’s revised full year 2019 financial targets reflect:
- An estimate of production volumes for the remainder of 2019 based on internal and external sources and the current metal market environment
- A reduction in profitability primarily associated with lower sales and an increase in engineering, research and development expenditures to support our future e-AAM hybrid and electric driveline growth and
- Continued operational improvements in-line with previous commentary.
Second Quarter 2019 Conference Call Information
A conference call to review AAM’s second quarter 2019 results is scheduled today at 10:00 a.m. ET. 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) 883-0383 from the United States or (412) 902-6506 from outside the United States with access code 7793867. A replay will be available one hour after the call is complete until August 9, 2019 by dialing (877) 344-7529 from the United States or (412) 317-0088 from outside the United States. When prompted, callers should enter replay access code 10132907.
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 as Adjusted EBITDA, Adjusted earnings per share and Adjusted free cash flow. Such information is reconciled to its closest GAAP measure in accordance with Securities and Exchange Commission rules and is included in the attached supplemental data.
Certain of the forward-looking financial measures included in this earnings release are provided on a non-GAAP basis. A reconciliation of non-GAAP forward-looking financial measures to the most directly comparable forward-looking financial measures calculated and presented in accordance with GAAP has been provided. The amounts in these reconciliations are based on our current estimates and actual results may differ materially from these forward-looking estimates for many reasons, including potential event driven transactional and other non-core operating items and their related effects in any future period, the magnitude of which may be significant.
Management believes that these non-GAAP financial measures are useful to management, investors, and banking institutions 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.
