American Axle & Manufacturing Announces Earnings For the Q2 of 1999
21 July 1999
American Axle & Manufacturing Announces Record Earnings For the Second Quarter of 1999
Net sales, net income and EPS at all-time highs
DETROIT, July 21 -- American Axle & Manufacturing Holdings,
Inc. today reported second quarter 1999 net income of $33.7
million, an increase of $40.7 million over the $7 million loss reported in the
GM/UAW- strike-impacted second quarter of 1998. Earnings per share were 67
cents on a diluted basis, versus the 16 cents per share loss during the same
period last year.
Overall revenues increased 73% to $800.8 million for the second quarter of
1999 as compared to $462.9 million in the second quarter of 1998. The impact
of the recent acquisitions (Albion Automotive, Colfor Manufacturing, Inc., and
MSP Industries Corp.) and the absence of the GM/UAW strike that occurred in
the second quarter of 1998 accounted for some of the growth. However,
adjusting for these factors, year-over-year comparable revenue showed strong
growth at 29%. The primary factor for this growth is continued strong demand
for the company's new products.
For the six months ended June 30, 1999, sales revenue was $1.498 billion,
representing an increase of $452 million, or 43%, from the $1.046 billion
generated over the first six months of 1998. Net income for the six months
ended June 30, 1999, was $62.7 million, or $1.28 per share on a diluted basis,
versus $9.9 million, or 23 cents per share, for the same period last year.
Operating income improved to $69.3 million, or 8.7% of sales in the
quarter, as compared to an operating loss of $1.4 million for the second
quarter of 1998. For the six months ended June 30, 1999, operating income was
$127.5 million, or 8.5% of revenue, versus $34.9 million, or 3.3% for the same
period in 1998.
American Axle & Manufacturing Chairman, CEO & President Richard E. Dauch
said, "We are delighted to follow a solid first quarter performance with an
even stronger second quarter. We demonstrated our ability to continue meeting
very high schedules from our customers with precision quality and on-time
delivery."
The company also completed a $138 million sale leaseback transaction
during June 1999, and has completed $187 million in sale leaseback
transactions year to date.
The company's cash balance of $215.4 million at June 30, 1999, along with
approximately $375 million available under its bank credit facilities, will be
available to fund the company's growth strategy.
Other significant accomplishments
The company is making significant progress on its strategies of
diversifying and strengthening its customer base and expanding its product
offerings. On April 1, 1999, it closed transactions to purchase two
forging/machining companies, Colfor Manufacturing, Inc. ("Colfor") and MSP
Industries Corporation ("MSP"), for an aggregate purchase price of
approximately $225 million.
From a strategic standpoint, these acquisitions provide additional
capacity and make the company a stronger competitor in the North American
automotive forging market, where it has a leading market share. They also
further diversify the company's product portfolio and customer base. Taking
into account the company's recent acquisitions and its ability to secure new
customers, GM revenues will comprise approximately 85% of the company's total
revenues on a pro forma basis. For the year ended December 31, 1998, GM
business accounted for approximately 93% of company revenues.
Colfor specializes in precision cold, warm and hot forgings and machining
components primarily used in the automotive industry and operates three
manufacturing facilities in Ohio. Giving effect as of January 1, 1998 to
Colfor's October 1998 acquisition of Valley Forge, Inc., Colfor's pro forma
1998 sales would have been approximately $126 million. MSP manufactures
precision forged powertrain, driveline, chassis and other components for the
automotive industry using cold and warm forging processes at three
manufacturing facilities in Michigan. MSP's 1998 sales were $56 million.
Another recent development from an operational and strategic standpoint is
the company's acquisition of a facility in Cheektowaga, New York. This
facility is located near the company's Tonawanda Forge Plant. It will machine
forgings manufactured at the Tonawanda facility. Operations at this new
facility are expected to begin in late 1999. This will allow the company to
bring in-house operations which are currently performed by outside suppliers
and add greater value to its forged products.
Richard E. Dauch added:
"I am very pleased with the progress we have made in the last several
months to expand our forging operations. The acquisitions we completed,
together with the recent decision to expand our own forging and machining
capabilities in Western New York, present great opportunities for AAM. By
completing the Colfor and MSP acquisitions earlier than originally
anticipated, we have already made some very positive leadership changes and
accelerated our timeline for achieving targeted synergies."
AAM is a world leader in the manufacture, engineering and design of
driveline systems, chassis systems and forged products for trucks, buses,
sport utility vehicles, and passenger cars. In addition to 13 locations in
the United States (in Michigan, Ohio and New York), AAM has offices and
facilities in Japan, England, Germany, and Scotland. A manufacturing facility
and business office is currently under construction in Mexico.
Certain statements contained in this press release which are not
historical facts contain forward-looking information with respect to the
company's plans, projections or future performance, the occurrence of which
involve risks and uncertainties that could cause the company's actual results
or plans to differ materially from those expected by the company which include
risk factors described in the company's filings with the Securities and
Exchange Commission.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
1999 1998 1999 1998
(In millions, except per share amounts)
Net sales $800.8 $462.9 $1,498.5 $1,046.2
Cost of goods sold 692.4 440.7 1,298.0 962.2
Gross profit 108.4 22.2 200.5 84.0
Selling, general and
administrative expenses 38.0 23.6 71.8 49.1
Goodwill amortization 1.1 0.0 1.2 0.0
Operating income (loss) 69.3 (1.4) 127.5 34.9
Net interest expense (15.1) (9.9) (27.1) (19.6)
Other (expense) income, net (1.2) 0.1 (1.4) 0.4
Income (loss) before
income taxes 53.0 (11.2) 99.0 15.7
Income taxes 19.3 (4.2) 36.3 5.8
Net income (loss) $33.7 ($7.0) $62.7 $9.9
Basic earnings (loss)
per share $0.85 ($0.21) $1.63 $0.31
Diluted earnings (loss)
per share $0.67 ($0.16) $1.28 $0.23
Average shares outstanding:
Basic 39.5 32.5 38.4 32.4
Diluted 50.1 43.3 49.0 43.2
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1999 1998
(Unaudited)
(In millions)
ASSETS
Current assets:
Cash and equivalents $215.4 $4.5
Accounts receivable, net 222.6 123.8
Inventories 114.9 137.1
Prepaid expenses and other 25.8 28.6
Total current assets 578.7 294.0
Property, plant and equipment, net 774.0 829.3
Goodwill and other assets 249.1 102.9
Total assets $1,601.8 $1,226.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $442.4 $362.9
Long-term debt and capital lease obligations 794.8 693.4
Postretirement benefits and other long-term
liabilities 154.7 129.5
Total liabilities 1,391.9 1,185.8
Stockholders' equity 209.9 40.4
Total liabilities and stockholders' equity $1,601.8 $1,226.2
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
1998 PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (a)
(Unaudited)
Pro forma
Three months Six months
ended ended
June 30, 1998 June 30, 1998
(In millions, except per share amounts)
Net sales $564.5 $1,160.5
Cost of goods sold 497.6 1,019.1
Gross profit 66.9 141.4
Selling, general and administrative
expenses 23.6 49.1
Goodwill amortization 0.0 0.0
Operating income 43.3 92.3
Net interest expense (9.9) (19.6)
Other (expense) income, net 0.1 0.4
Income before income taxes 33.5 73.1
Income taxes 12.4 27.1
Net income $21.1 $46.0
Basic earnings per share $0.65 $1.42
Diluted earnings per share $0.49 $1.06
Average shares outstanding:
Basic 32.5 32.4
Diluted 43.3 43.2
Note a: As adjusted for the adverse impact of the GM/UAW work stoppage
and the temporary payment reductions as described more fully in the Company's
filings with the Securities and Exchange Commission.