American Axle & Manufacturing Announces Record Third Quarter Earnings
21 October 1999
American Axle & Manufacturing Announces Record Third Quarter Earnings
Net sales, net income and EPS at all-time third quarter highs
DETROIT, Oct. 21 -- American Axle & Manufacturing Holdings,
Inc. today reported third quarter 1999 net income of $25.4
million, an increase of $46.5 million over a loss of $21.1 million reported in
the third quarter of 1998, which was impacted by a strike at GM. Earnings per
share were 50 cents on a diluted basis, versus a loss of 65 cents per share
during the same period last year.
Overall revenues increased 97% to $718.8 million for the third quarter of
1999 as compared to $364.8 million in the third quarter of 1998. The impact
of recent acquisitions (Albion Automotive (Holdings) Limited; Colfor
Manufacturing, Inc.; and MSP Industries Corp.) and the absence of the GM
strike that occurred in the second and third quarters of 1998 accounted for
some of the increase. Adjusting for these factors, year-over-year comparable
revenue showed strong 36% growth. The primary factor for this growth is
continued strong demand for the company's products.
For the nine months ended September 30, 1999, sales revenue was $2.217
billion, representing an increase of $806 million, or 57%, from the $1.411
billion generated over the first nine months of 1998. Net income for the nine
months ended September 30, 1999 was $88.1 million, or $1.78 per share on a
diluted basis, versus a loss of $11.2 million, or 35 cents per share, for the
same period last year.
Operating income improved to $55.1 million, or 7.7% of sales in the
quarter, as compared to an operating loss of $20.6 million for the third
quarter of 1998. For the nine months ended September 30, 1999, operating
income was $182.6 million, or 8.2% of revenue, versus $14.3 million, or 1.0%
for the same period in 1998.
American Axle & Manufacturing Chairman, CEO & President Richard E. Dauch
said, "We are delighted to continue our solid first half performance with a
strong third quarter. We continue to demonstrate our ability to profitably
meet very high customer schedules with high quality products."
Recent developments
The company is making significant progress on its strategies of
diversifying and strengthening its customer base and expanding its product
offerings. During the third quarter, AAM announced new programs including
production of steering linkages for Nissan Motor Manufacturing Corporation for
its Frontier pick-up truck for the 2000 model year, supplying a new generation
of rear axles to DaimlerChrysler for a six-ton Mercedes transporter van for
model year 2001, production of wheel bearing hubs and races for SKF USA Inc.
and production of forged products including rotating wheel hubs and a wheel
spindle for Koyo Corporation of U.S.A.
Richard E. Dauch added: "We are pleased that these business initiatives
further demonstrate to a global marketplace the value of AAM's advanced
technologies in the design, development, manufacturing and delivery of world-
class driveline systems, chassis systems and forged products."
These new programs 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 comprised approximately 85% of
the company's total revenues for the third quarter 1999 versus 93% for the
year ended December 31, 1998.
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 Brazil, England, Germany, Japan, Mexico and Scotland.
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 Nine months ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
------- ------- ------- -------
(In millions, except per share amounts)
Net sales $718.8 $364.8 $2,217.3 $1,411.0
Cost of goods sold 629.4 362.8 1,927.4 1,325.0
------- ------- ------- -------
Gross profit 89.4 2.0 289.9 86.0
Selling, general and administrative
expenses 33.2 22.6 105.0 71.7
Goodwill amortization 1.1 0.0 2.3 0.0
------- ------- ------- -------
Operating income (loss) 55.1 (20.6) 182.6 14.3
Net interest expense (14.3) (12.8) (41.4) (32.4)
Other (expense) income, net 0.0 (0.2) (1.4) 0.2
------- ------- ------- -------
Income (loss) before income taxes 40.8 (33.6) 139.8 (17.9)
Income taxes (benefit) 15.4 (12.5) 51.7 (6.7)
------- ------- ------- -------
Net income (loss) $25.4 ($21.1) $88.1 ($11.2)
======= ======= ======= =======
Basic earnings (loss) per share $0.64 ($0.65) $2.27 ($0.35)
======= ======= ======= =======
Diluted earnings (loss) per share $0.50 ($0.65) $1.78 ($0.35)
======= ======= ======= =======
Average shares outstanding:
Basic 39.5 32.5 38.7 32.4
======= ======= ======= =======
Diluted 50.1 32.5 49.3 32.4
======= ======= ======= =======
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1999 1998
(Unaudited)
------------ -----------
(In millions)
ASSETS
Current assets:
Cash and equivalents $172.9 $4.5
Accounts receivable, net 245.6 123.8
Inventories 121.4 137.1
Prepaid expenses and other 21.3 28.6
-------- --------
Total current assets 561.2 294.0
======== ========
Property, plant and equipment, net 851.0 829.3
Goodwill and other assets 250.3 102.9
-------- --------
Total assets $1,662.5 $1,226.2
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $467.9 $362.9
Long-term debt and capital lease obligations 795.3 693.4
Postretirement benefits and other long-term
liabilities 163.2 129.5
-------- --------
Total liabilities 1,426.4 1,185.8
Stockholders' equity 236.1 40.4
-------- --------
Total liabilities and stockholders' equity $1,662.5 $1,226.2
======== ========
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
1998 PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (a)
(Unaudited)
Pro forma
---------------------------------
Three months Nine months
ended ended
September 30, 1998 September 30, 1998
------------------ ------------------
(In millions, except per share amounts)
Net sales $477.0 $1,637.5
Cost of goods sold 422.4 1,441.5
-------------- --------------
Gross profit 54.6 196.0
Selling, general and administrative
expenses 22.6 71.7
Goodwill amortization 0.0 0.0
-------------- --------------
Operating income 32.0 124.3
Net interest expense (12.8) (32.4)
Other (expense) income, net (0.2) 0.2
-------------- --------------
Income before income taxes 19.0 92.1
Income taxes 7.0 34.1
-------------- --------------
Net income $12.0 $58.0
============== ==============
Basic earnings per share $0.37 $1.79
============== ==============
Diluted earnings per share $0.28 $1.34
============== ==============
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.