American Axle increases Q3 earnings to $48.6M

Michael Wayland
The Detroit News

American Axle & Manufacturing Holdings on Friday reported strong financial gains for the third quarter, driven by increased demand for driveline components for pickups and a new car all-wheel drive system.

The Detroit auto supplier earned $48.6 million, or 63 cents per share, from July through September. That’s a 53.8 percent increase from the third quarter of 2013.

“AAM’s financial results in the third quarter of 2014 were highlighted by strong cash flow and solid profitability driven by our continued sales growth and improvements in our operational stability and productivity,” said David C. Dauch, AAM’s chairman, president and CEO during a Friday conference call with financial analysts.

Net sales in the third quarter of 2014 increased approximately 15.8 percent to $950.8 million, compared to $820.8 million in the third quarter of 2013.

Chief Financial Officer Michael K. Simonte said sales were driven by increased demand for driveline components for General Motors Co. and Chrysler Group pickups; AAM sales of car and crossovers parts were up 60 percent compared to a year ago, primarily due to an all-wheel drive system for the Jeep Cherokee and Chrysler 200.

Chrysler, officials said, is expected to add the system to another vehicle in 2015. Simonte would not elaborate on how many more models the system could expand to.

AAM’s net sales in the first nine months of 2014 increased by 16 percent to $2.76 billion. That compares to $2.38 billion in the first nine months of 2013.

“We’ve been working hard over the last couple three years to set ourselves up for an inflection point on cash flow, profitability and growth and diversification,” Simonte said. “It’s all happening now.”

AAM confirmed its sales expectations for 2014 of $3.7 billion, which was previously cut from $3.75 billion to $3.8 billion it had predicted in February. It did slightly trim its 2014 revenue outlook to $3.675 billion from $3.7 billion, which is in line with Wall Street estimates.

For fiscal year 2014, analysts estimate that AAM to earn $2.29 per share. Through the first nine months of the year, net income was $134.4 million, or $1.74 per share. The company earned $64.7 million, or $0.84 per share, in the third-quarter of 2013.

AAM shares closed Thursday at $18.24, up 10 cents. The stock closed Friday at $19.33, up $1.09, or 6 percent.

The company also announced that results of a voluntary pension buyout offered to about 6,000 former AAM workers will be announced in January. The offers were sent out at the beginning of October.

Simonte said the company “anticipates a good acceptance rate” for the program, which opened Oct. 2 and closes Nov. 12.

American Axle was founded in 1994 when investors bought five former GM plants. Historically, the company primarily relied on GM products, but sales to other automakers continue to increase.

Non-GM sales in the first nine months of 2014 increased approximately 36.5 percent on a year-over-year basis to $882.7 million as compared to $646.6 million in the first nine months of 2013.

Simonte said the company expects to make products for 15 major new vehicle programs in 2015, in line with its launches this year.

“We’re really looking forward,” he said. “We think the future is very bright for our company.”

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