American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) today reported third quarter 2000 earnings of $24.2 million or 48 cents per share on a diluted basis, which met consensus estimates. This compared to the $25.4 million or 50 cents per share reported during the same period of the prior year. The company reported that its earnings for the nine months ended September 30, 2000 increased 18% to $104.3 million or $2.08 per share on a diluted basis as compared to $88.1 million and earnings per share of $1.78 for the year earlier period.
“We are pleased to have met earnings estimates in what we had projected all year to be a very tough third quarter due to customer model changeovers,” said American Axle & Manufacturing (AAM) Chairman, CEO & President Richard E. Dauch. “The results of our focus on increased margins were reflected in the third quarter and nine month numbers.”
Sales for the third quarter of 2000 were $675.5 million as compared to $718.8 million in the third quarter of 1999. Sales to General Motors Corporation decreased approximately 7% in the third quarter of 2000 as compared to the third quarter of 1999. The lower sales volume to GM in the third quarter of 2000 was due to lower truck production as compared to the third quarter of last year resulting from new model changeovers.
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Third quarter gross profit increased to 13.2% of sales or $89.1 million, as compared to 12.4% of sales or $89.4 million for the third quarter of 1999. The increase in the gross margin percentage was due principally to increased sales of higher value-added next generation products. Also contributing were the successful start-ups of production in the new Guanajuato, Mexico and Cheektowaga, New York manufacturing facilities.
Operating income increased to 7.8% of sales for the third quarter of 2000 or $52.7 million as compared to 7.6% of sales or $54.4 million in the same period of 1999. The increase in the operating margin percentage was due to the gross margin improvements discussed above offset by increased investments in research and development spending (R&D). R&D spending rose 20% to $11.5 million in the third quarter of 2000 as compared to $9.6 million in the third quarter of 1999 in concert with new product programs awarded to AAM in the past year. The company continues to focus on the development of new systems, products and processes particularly in the areas of mass reduction, noise, vibration and harshness improvements, durability enhancements and new product offerings such as systems and modules. Recent innovative product introductions include the Integrated Oil Pan (IOP) Front Axle Module with Electronic Disconnect and the PowerLite(TM) rear-axle system.
For the nine months ended September 30, 2000, sales increased 5% to $2.3 billion, as compared to the $2.2 billion generated in the first nine months of 1999. For the nine months ended September 30, 2000, operating income increased 14% to $206.3 million, or 8.8% of sales, as compared to $180.6 million, or 8.1% of sales for the same period of 1999.
GM revenues comprised approximately 84% of the company’s total sales for the third quarter and nine months ended September 30, 2000 as compared to 86% and 93% for the years ended December 31, 1999 and 1998, respectively. With the addition of new programs which begin in the years 2001 – 2004, the percentage of sales to GM will be further reduced to 76% on a pro forma basis.
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By GlobalDataRecent developments
During the third quarter, AAM announced that it will expand its manufacturing facilities in Guanajuato, Mexico to add a forging operation. The new forge facility will be located adjacent to the existing Guanajuato Gear & Axle plant and will bring AAM’s total manufacturing space in Guanajuato to nearly 850,000 square feet. The forge building will be completed by mid- 2001 with production to begin in mid-2002. This addition will add about 100 associates to the existing Guanajuato workforce of more than 400.
AAM is a world leader in the manufacture, engineering, design and validation of driveline systems, chassis systems and forged products for trucks, buses, sport utility vehicles, and passenger cars. In addition to 14 locations in the United States (in Michigan, Ohio and New York), AAM has offices and facilities in Brazil, England, Germany, Japan, Mexico and Scotland.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
(In millions, except per share data)
Net sales $675.5 $718.8 $2,331.1 $2,217.3
Cost of goods sold 586.4 629.4 2,002.2 1,927.4
------- ------- ------- -------
Gross profit 89.1 89.4 328.9 289.9
Selling, general and
administrative expenses 35.4 33.9 119.5 107.0
Goodwill amortization 1.0 1.1 3.1 2.3
------- ------- ------- -------
Operating income 52.7 54.4 206.3 180.6
Net interest expense (15.6) (14.3) (43.7) (41.4)
Other income, net - 0.7 1.6 0.6
------- ------- ------- -------
Income before income
taxes 37.1 40.8 164.2 139.8
Income taxes 12.9 15.4 59.9 51.7
------- ------- ------- -------
Net income $24.2 $25.4 $104.3 $88.1
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Diluted earnings
per share $0.48 $0.50 $2.08 $1.78
======= ======= ======= =======
Diluted shares
outstanding 50.1 50.1 50.1 49.3
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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2000 1999
(In millions)
ASSETS
Current assets:
Cash and equivalents $58.5 $140.2
Accounts receivable, net 308.2 194.0
Inventories 151.6 133.3
Prepaid expenses and other 53.5 42.0
------- -------
Total current assets 571.8 509.5
Property, plant and equipment, net 1,096.2 929.0
Goodwill and other assets 208.4 238.6
------- -------
Total assets $1,876.4 $1,677.1
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $475.0 $446.7
Long-term debt 814.9 774.9
Postretirement benefits and other long-term
liabilities 220.0 191.8
------- -------
Total liabilities 1,509.9 1,413.4
Stockholders' equity 366.5 263.7
------- -------
Total liabilities and stockholders' equity $1,876.4 $1,677.1
======= =======
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months Nine months
ended ended
September 30, September 30,
2000 1999 2000 1999
(In millions)
Operating activities
Net income $24.2 $25.4 $104.3 $88.1
Depreciation and amortization 26.6 21.4 77.0 65.8
Other 10.2 8.0 (60.4) 59.6
------- ------- ------- -------
Net cash provided by
operating activities 61.0 54.8 120.9 213.5
Capital expenditures (66.6) (96.1) (246.4) (206.1)
------- ------- ------- -------
Net cash flow (used in)
provided by operations (5.6) (41.3) (125.5) 7.4
Acquisitions, net of cash acquired - - - (225.9)
Proceeds from sale-leasebacks - - - 187.0
Financing activities, net (3.8) (1.2) 43.8 199.9
------- ------- ------- -------
Net (decrease) increase in
cash and equivalents (9.4) (42.5) (81.7) 168.4
Cash and equivalents at
beginning of period 67.9 215.4 140.2 4.5
------- ------- ------- -------
Cash and equivalents at
end of period $58.5 $172.9 $58.5 $172.9
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EBITDA (a) $81.1 $79.2 $290.4 $251.3
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