American Axle & Manufacturing has reported first quarter earnings of $13.3 million or $0.26 per share. This compares to earnings of $36.5 million or $0.66 per share in the first quarter of 2004. However, the result was in line with the average analyst estimate compiled by Thomson First Call.
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“This was a very challenging quarter for AAM due to the impact of lower production levels and higher steel and metallic material prices,” said AAM’s Co-Founder, Chairman of the Board & CEO Richard E. Dauch. “Despite these tough industry conditions, AAM remains focused on its operations to flawlessly execute thirteen product and process launches during 2005. More importantly, AAM is continuing to make significant investments in product, process and system technology to further expand our product offerings, customer diversification and global manufacturing presence.”
Net sales in the first quarter of 2005 were $818.9 million as compared to $952.8 million in the first quarter of 2004. Sales to non-GM customers for the quarter were $169.2 million and now represent 21% of AAM’s total sales. AAM sales for the quarter reflect an estimated 19% year-over-year decline in its customers’ production volumes for the major North American light truck programs it currently supports. AAM’s content per vehicle in the quarter of $1,183 was approximately the same as $1,182 in the first quarter of 2004.
Gross margin in the first quarter of 2005 was 8.8% as compared to 14.3% in the first quarter of 2004. Operating income was $25.7 million or 3.1% of sales in the quarter as compared to $86.9 million or 9.1% of sales in the first quarter of 2004.
AAM’s research and development spending (R&D) in the first quarter of 2005 was $17.6 million as compared to $16.9 million in the first quarter of 2004. In addition to supporting the 2005 calendar year launch of products supporting the all-new HUMMER H3, Dodge Ram Power Wagon, Dodge Ram Mega Cab and vehicles for Ssangyong Motor Corporation, AAM continues to invest in the development and validation of products supporting rear wheel drive and all-wheel drive driveline systems for passenger cars and crossover vehicles.
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By GlobalDataCapital spending in the first quarter of 2005 was $74.8 million as compared to $46.7 million for the same period in 2004. AAM’s quarterly cash dividend, which commenced in the second quarter of 2004, was $7.4 million in the current quarter.
AAM also updated its full-year 2005 earnings outlook.
On January 13, 2005, AAM announced earnings guidance for 2005 based on its assumption that its customers’ production volumes for the major North American light truck programs it currently supports would be approximately 8% lower than in 2004. Due to the impact of additional production cuts scheduled by its customers, AAM now estimates that such production volumes will be down approximately 15% in 2005, as compared to the prior year. Based on this revised production outlook and the assumed continuation of steel and metallic material cost increases, AAM now expects its earnings in 2005 to range from $1.40 to $1.55 per share.
