American Axle & Manufacturing Announces Q3 Earnings Per Share
25 October 2000
American Axle & Manufacturing Announces Third Quarter Earnings Per Share Meets Consensus Estimates
Nine month sales, net income and EPS at all-time highs
DETROIT, Oct. 25 American Axle & Manufacturing Holdings,
Inc. 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.
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.
Recent 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.
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
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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
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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
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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
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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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(a) EBITDA represents income from continuing operations before interest
expense, income taxes, depreciation and amortization. EBITDA should not be
construed as income from operations, net income or cash flow from operating
activities as determined by generally accepted accounting principles. Other
companies may calculate EBITDA differently.
Media relations contact: Investor relations contact:
Carrie L. P. Gray Robert A. Krause
Director, Corporate Relations Vice President & Treasurer
313-974-2598 313-974-3074
GrayC@aam.com krauser@aam.com