AAM Reports Fourth Quarter and Full Year 2014 Financial Results
(Thomson Reuters ONE) -
Detroit, Michigan, February 23, 2015 -- American Axle & Manufacturing Holdings,
Inc. (AAM), which is traded as AXL on the NYSE, today reported its financial
results for the fourth quarter and full year 2014.
Fourth Quarter 2014 Results
* Fourth quarter 2014 sales of $939.5 million, up approximately 13% on a year-
over-year basis
* Non-GM sales grew over 13% on a year-over-year basis to $317.2 million
* Gross profit of $111.2 million, or 11.8% of sales
* Net income of $13.2 million, or $0.17 per share
* AAM's quarterly results reflect a non-cash charge of $35.5 million related
to a voluntary one-time lump sum cash payment to certain eligible terminated
vested participants in our U.S. pension plans (2014 Pension Payout Offer)
* Adjusted EBITDA (earnings before interest, taxes, depreciation and
amortization, excluding the impact of the non-cash charge related to the
2014 Pension Payout Offer) of $135.1 million, or 14.4% of sales
* Free cash flow (net cash provided by operating activities less capital
expenditures net of proceeds from the sale of property, plant and equipment
and government grants) of $39.2 million
Full Year 2014 Results
* Full year 2014 sales of $3.7 billion, up approximately 15% on a year-over-
year basis
* Non-GM sales grew nearly 30% on a year-over-year basis to $1.2 billion
* Gross profit of $522.8 million, or 14.1% of sales
* Net income of $143.0 million, or $1.85 per share
* Adjusted EBITDA of $512.0 million, or 13.9% of sales
* Free cash flow of $123.1 million
AAM's net income in the fourth quarter of 2014 was $13.2 million, or $0.17 per
share. In the fourth quarter of 2014, AAM's results reflect the impact of a non-
cash charge of $35.5 million related to the 2014 Pension Payout Offer. This
compares to net income of $29.8 million, or $0.39 per share, in the fourth
quarter of 2013.
In the fourth quarter of 2013, AAM's results reflect the impact of $25.6 million
of debt refinancing and redemption costs.
For the full year 2014, AAM's net income was of $143.0 million, or $1.85 per
share. This compares to net income of $94.5 million, or $1.23 per share in
2013.
On a full year basis in 2013, AAM incurred $36.8 million of debt refinancing and
redemption costs and $5.8 million of other special items.
"2014 was a very successful year for AAM. AAM's sales growth outpaced the
industry in 2014 and our financial performance was highlighted by improved
profitability and a positive inflection in cash flow generation," said AAM's
Chairman, President and Chief Executive Officer, David C. Dauch. "As we look to
the future, we remain focused on delivering our plan to sustain strong free cash
flow performance while leveraging AAM's technology leadership to develop
innovative, market driven products to achieve profitable growth and business
diversification."
Net sales in the fourth quarter of 2014 increased 13% to $939.5 million as
compared to $831.3 million in the fourth quarter of 2013. Non-GM sales grew
13.2% on a year-over-year basis to $317.2 million in the fourth quarter of 2014
as compared to $280.1 million in the fourth quarter of 2013.
AAM's content-per-vehicle is measured by the dollar value of its product sales
supporting our customers' North American light truck and SUV programs. In the
fourth quarter of 2014, AAM's content-per-vehicle was $1,697 as compared to
$1,579 in the fourth quarter of 2013. For the full year 2014, AAM's content-per-
vehicle was $1,667 as compared to $1,550 in 2013.
Net sales for the full year 2014 increased by 15.2% to $3.70 billion as compared
to $3.21 billion in 2013. Non-GM sales grew 29.5% on a year-over-year basis to
$1.2 billion in 2014 as compared to $926.7 million in 2013.
AAM's gross profit in the fourth quarter of 2014 was $111.2 million, or 11.8% of
sales. For the full year 2014, AAM's gross profit was $522.8 million, or 14.1%
of sales.
In the fourth quarter of 2014, AAM's operating income was $38.6 million, or
4.1% of sales. For the full year 2014, AAM's operating income was $267.6
million, or 7.2% of sales.
AAM's SG&A spending in the fourth quarter of 2014 was $72.6 million, or 7.7% of
sales, as compared to $60.5 million, or 7.3% of sales, in the fourth quarter of
2013. AAM's R&D spending in the fourth quarter of 2014 was $27.3 million as
compared to $24.0 million in the fourth quarter of 2013. Approximately $4.3
million of the non-cash charge for the 2014 Pension Payout Offer was recognized
in SG&A.
AAM's SG&A spending for the full year 2014 was $255.2 million, or 6.9% of sales,
as compared to $238.4 million, or 7.4% of sales, for the full year 2013. AAM's
R&D spending for the full year 2014 was $103.9 million as compared to $103.4
million in 2013.
Other income in the fourth quarter of 2014 was $6.4 million as compared to a
loss of $0.5 million in the fourth quarter of 2013. For the full year 2014,
other income was $6.9 million as compared to a loss of $1.9 million in 2013. The
primary components of other income in 2013 and 2014 are foreign exchange gains
and losses and earnings from our unconsolidated Hefei (China) joint venture.
In the fourth quarter of 2014, AAM's net income was $13.2 million, or 1.4% of
sales. Diluted earnings per share were $0.17 per share in the fourth quarter of
2014. For the full year 2014, AAM's net income was $143.0 million, or 3.9% of
sales. Diluted earnings per share were $1.85 per share for the full year 2014.
AAM defines EBITDA to be earnings before interest, taxes, depreciation and
amortization. For 2014, adjusted EBITDA is defined as EBITDA excluding the
impact of the non-cash charge related to the 2014 Pension Payout Offer.
In the fourth quarter of 2014, AAM's Adjusted EBITDA was $135.1 million or
14.4% of sales. For the full year 2014, AAM's Adjusted EBITDA was $512.0
million, or 13.9% of sales.
AAM defines free cash flow to be net cash provided by (or used in) operating
activities less capital expenditures net of proceeds from the sale of property,
plant and equipment and government grants.
Net cash provided by operating activities for the full year 2014 was $318.4
million. Capital expenditures net of proceeds from the sale of property, plant
and equipment and government grants, for the full year 2014 was $195.3 million.
Reflecting the impact of this activity, AAM generated positive free cash flow of
$123.1 million for the full year 2014.
A conference call to review AAM's fourth quarter and full year 2014 results is
scheduled today at 10:00 a.m. ET. Interested participants may listen to the live
conference call by logging onto AAM's investor web site at
http://investor.aam.com or calling (855) 681-2072 from the United States or
(973) 200-3383 from outside the United States. A replay will be available from
2:00 p.m. ET on February 23, 2015 until 5:00 p.m. ET March 2, 2015 by dialing
(855) 859-2056 from the United States or (404) 537-3406 from outside the United
States. When prompted, callers should enter conference reservation number
34605151.
Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles
generally accepted in the United States of America (GAAP) included within this
press release, AAM has provided certain information, which includes non-GAAP
financial measures. Such information is reconciled to its closest GAAP measure
in accordance with Securities and Exchange Commission rules and is included in
the attached supplemental data.
Management believes that these non-GAAP financial measures are useful to both
management and its stockholders in their analysis of the Company's business and
operating performance. Management also uses this information for operational
planning and decision-making purposes.
Non-GAAP financial measures are not and should not be considered a substitute
for any GAAP measure. Additionally, non-GAAP financial measures as presented by
AAM may not be comparable to similarly titled measures reported by other
companies.
AAM is a world leader in the manufacture, engineering, design and validation of
driveline and drivetrain systems and related components and modules, chassis
systems and metal-formed products for light trucks, sport utility vehicles,
passenger cars, crossover vehicles and commercial vehicles. In addition to
locations in the United States (Michigan, Ohio, Pennsylvania and Indiana), AAM
also has offices or facilities in Brazil, China, Germany, India, Japan,
Luxembourg, Mexico, Poland, Scotland, South Korea, Sweden and Thailand.
In this earnings release, we make statements concerning our expectations,
beliefs, plans, objectives, goals, strategies, and future events or
performance. Such statements are "forward-looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and relate to
trends and events that may affect our future financial position and operating
results. The terms such as "will," "may," "could," "would," "plan," "believe,"
"expect," "anticipate," "intend," "project," "target," and similar words or
expressions, as well as statements in future tense, are intended to identify
forward-looking statements. Forward-looking statements should not be read as a
guarantee of future performance or results, and will not necessarily be accurate
indications of the times at, or by, which such performance or results will be
achieved. Forward-looking statements are based on information available at the
time those statements are made and/or management's good faith belief as of that
time with respect to future events and are subject to risks and may differ
materially from those expressed in or suggested by the forward-looking
statements. Important factors that could cause such differences include, but are
not limited to: reduced purchases of our products by General Motors Company
(GM), FCA US LLC, formerly known as Chrysler Group LLC (Chrysler), or other
customers; reduced demand for our customers' products (particularly light trucks
and sport utility vehicles (SUVs) produced by GM and Chrysler); Our ability to
develop and produce new products that reflect market demand; lower-than-
anticipated market acceptance of new or existing products; our ability to
attract new customers and programs for new products; our ability to respond to
changes in technology, increased competition or pricing pressures; our ability
to achieve the level of cost reductions required to sustain global cost
competitiveness; supply shortages or price increases in raw materials, utilities
or other operating supplies for us or our customers as a result of natural
disasters or otherwise; our ability to successfully implement upgrades to our
enterprise resource planning systems; global economic conditions; risks inherent
in our international operations (including adverse changes in political
stability, taxes and other law changes, potential disruptions of production and
supply, and currency rate fluctuations); liabilities arising from warranty
claims, product recall or field actions, product liability and legal proceedings
to which we are or may become a party, or the impact of product recall or field
actions on our customers; our ability to maintain satisfactory labor relations
and avoid work stoppages; our suppliers', our customers' and their suppliers'
ability to maintain satisfactory labor relations and avoid work stoppages; our
ability or our customers' and suppliers' ability to successfully launch new
product programs on a timely basis; our ability to realize the expected revenues
from our new and incremental business backlog; negative or unexpected tax
consequences; price volatility in, or reduced availability of, fuel; our ability
to consummate and integrate acquisitions and joint ventures; our ability to
attract and retain key associates; our ability to protect our intellectual
property and successfully defend against assertions made against us;
availability of financing for working capital, capital expenditures, research
and development (R&D) or other general corporate purposes including
acquisitions, as well as our ability to comply with financial covenants; our
customers' and suppliers' availability of financing for working capital, capital
expenditures, R&D or other general corporate purposes; changes in liabilities
arising from pension and other postretirement benefit obligations; risks of
noncompliance with environmental laws and regulations or risks of environmental
issues that could result in unforeseen costs at our facilities; adverse changes
in laws, government regulations or market conditions affecting our products or
our customers' products (such as the Corporate Average Fuel Economy (CAFE)
regulations); our ability or our customers' and suppliers' ability to comply
with the Dodd-Frank Act and other regulatory requirements and the potential
costs of such compliance; and other unanticipated events and conditions that may
hinder our ability to compete. It is not possible to foresee or identify all
such factors and we make no commitment to update any forward-looking statement
or to disclose any facts, events or circumstances after the date hereof that may
affect the accuracy of any forward-looking statement.
# # #
For more information...
Christopher M. Son
Director, Investor Relations,
Corporate Communications & Marketing
(313) 758-4814
chris.son(at)aam.com
Vitalie Stelea
Manager Investor Relations
(313) 758-4635
vitalie.stelea(at)aam.com
Or visit the AAM website at www.aam.com.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
-------------------------- --------------------------
2014 2013 2014 2013
----------- -------------- ------------- ------------
(in millions, except per (in millions, except per
share data) share data)
Net sales $ 939.5 $ 831.3 $ 3,696.0 $ 3,207.3
Cost of goods sold 828.3 704.4 3,173.2 2,728.6
----------- -------------- ------------- ------------
Gross profit 111.2 126.9 522.8 478.7
Selling, general and
administrative expenses 72.6 60.5 255.2 238.4
----------- -------------- ------------- ------------
Operating income 38.6 66.4 267.6 240.3
Interest expense (24.7 ) (28.0 ) (99.9 ) (115.9 )
Investment income 0.8 0.2 2.1 0.6
Other income (expense)
Debt refinancing and
redemption costs - (25.6 ) - (36.8 )
Other, net 6.4 (0.5 ) 6.9 (1.9 )
----------- -------------- ------------- ------------
Income before income
taxes 21.1 12.5 176.7 86.3
Income tax expense
(benefit) 7.9 (17.3 ) 33.7 (8.2 )
----------- -------------- ------------- ------------
Net income $ 13.2 $ 29.8 $ 143.0 $ 94.5
----------- -------------- ------------- ------------
Diluted earnings per
share $ 0.17 $ 0.39 $ 1.85 $ 1.23
----------- -------------- ------------- ------------
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
---------------------- ----------------------
2014 2013 2014 2013
----------- ---------- ----------- ----------
(in millions)
Net income $ 13.2 $ 29.8 $ 143.0 $ 94.5
Other comprehensive income
(loss), net of tax
Defined benefit plans, net of tax (49.0 ) 60.9 (42.7 ) 76.6
Foreign currency translation
adjustments (18.4 ) (11.9 ) (30.3 ) (26.2 )
Change in derivatives (6.6 ) 0.2 (7.7 ) (2.0 )
----------- ---------- ----------- ----------
Other comprehensive income (loss
) (74.0 ) 49.2 (80.7 ) 48.4
----------- ---------- ----------- ----------
Comprehensive income (loss) $ (60.8 ) $ 79.0 $ 62.3 $ 142.9
----------- ---------- ----------- ----------
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December December
31, 31,
2014 2013
------------- ------------
(in millions)
ASSETS
Current Assets
Cash and cash equivalents $ 249.2 $ 154.0
Accounts receivable, net 532.7 458.5
Inventories, net 248.8 261.8
Deferred income taxes 40.2 34.9
Prepaid expenses and other current assets 68.6 87.1
------------- ------------
Total current assets 1,139.5 996.3
Property, plant and equipment, net 1,061.1 1,058.5
Deferred income taxes 368.8 341.8
Goodwill 155.0 156.4
GM postretirement cost sharing asset 274.5 242.0
Other assets and deferred charges 260.3 232.5
------------- ------------
Total assets $ 3,259.2 $ 3,027.5
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 13.0 $ -
Accounts payable 444.3 437.4
Accrued compensation and benefits 109.1 110.1
Deferred revenue 22.1 17.0
Deferred income taxes 0.1 0.1
Accrued expenses and other current liabilities 98.6 94.1
------------- ------------
Total current liabilities 687.2 658.7
Long-term debt 1,523.4 1,559.1
Deferred income taxes 9.1 9.8
Deferred revenue 94.2 76.4
Postretirement benefits and other long-term
liabilities 831.9 683.0
------------- ------------
Total liabilities 3,145.8 2,987.0
Total stockholders' equity 113.4 40.5
------------- ------------
Total liabilities and stockholders' equity $ 3,259.2 $ 3,027.5
------------- ------------
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
----------------------- ----------------------
2014 2013 2014 2013
----------- ----------- ----------- ----------
(in millions) (in millions)
Operating Activities
Net income $ 13.2 $ 29.8 $ 143.0 $ 94.5
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation and
amortization 53.8 47.6 199.9 177.0
Other 19.8 43.3 (24.5 ) (48.5 )
----------- ----------- ----------- ----------
Net cash provided by operating
activities 86.8 120.7 318.4 223.0
----------- ----------- ----------- ----------
Investing Activities
Purchases of property, plant &
equipment (50.3 ) (73.7 ) (206.5 ) (251.9 )
Proceeds from sale of
property, plant & equipment 0.6 3.3 9.1 9.1
Proceeds from sale-leaseback
of equipment - 0.6 - 24.1
Proceeds from government
grants 2.1 - 2.1 -
----------- ----------- ----------- ----------
Net cash used in investing
activities (47.6 ) (69.8 ) (195.3 ) (218.7 )
----------- ----------- ----------- ----------
Financing Activities
Net increase (decrease) in
long-term debt and other (5.3 ) (11.0 ) (22.0 ) 104.8
Debt issuance costs - (3.8 ) (0.3 ) (16.7 )
Purchase of treasury stock - - (0.3 ) (0.4 )
Employee stock option
exercises - 0.3 1.2 1.1
----------- ----------- ----------- ----------
Net cash provided by (used in)
financing activities (5.3 ) (14.5 ) (21.4 ) 88.8
----------- ----------- ----------- ----------
Effect of exchange rate
changes on cash (3.7 ) (1.0 ) (6.5 ) (1.5 )
----------- ----------- ----------- ----------
Net increase in cash and cash
equivalents 30.2 35.4 95.2 91.6
Cash and cash equivalents at
beginning of period 219.0 118.6 154.0 62.4
----------- ----------- ----------- ----------
Cash and cash equivalents at
end of period $ 249.2 $ 154.0 $ 249.2 $ 154.0
----------- ----------- ----------- ----------
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
SUPPLEMENTAL DATA
(Unaudited)
The supplemental data presented below is a reconciliation of certain financial
measures which is intended
to facilitate analysis of American Axle & Manufacturing Holdings, Inc. business
and operating performance.
Earnings before interest expense, income taxes and depreciation and amortization
(EBITDA) and adjusted EBITDA((a))
Three months ended Twelve months ended
December 31, December 31,
----------------------- ----------------------
2014 2013 2014 2013
----------- ----------- ----------- ----------
(in millions) (in millions)
Net income $ 13.2 $ 29.8 $ 143.0 $ 94.5
Interest expense 24.7 28.0 99.9 115.9
Income tax expense (benefit) 7.9 (17.3 ) 33.7 (8.2 )
Depreciation and amortization 53.8 47.6 199.9 177.0
----------- ----------- ----------- ----------
EBITDA 99.6 88.1 476.5 379.2
Debt refinancing and redemption
costs - 25.6 - 36.8
Other special charges and
restructuring costs((b)) 35.5 - 35.5 5.8
----------- ----------- ----------- ----------
ADJUSTED EBITDA $ 135.1 $ 113.7 $ 512.0 $ 421.8
----------- ----------- ----------- ----------
Net debt((c) )to capital
December December
31, 2014 31, 2013
--------------- --------------
(in millions, except
percentages)
Total debt $ 1,536.4 $ 1,559.1
Less: cash and cash equivalents 249.2 154.0
--------------- --------------
Net debt at end of period 1,287.2 1,405.1
Stockholders' equity 113.4 40.5
--------------- --------------
Total invested capital at end of period $ 1,400.6 $ 1,445.6
--------------- --------------
Net debt to capital((d)) 91.9 % 97.2 %
--------------- --------------
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
SUPPLEMENTAL DATA
(Unaudited)
The supplemental data presented below is a reconciliation of certain financial
measures which is intended
to facilitate analysis of American Axle & Manufacturing Holdings, Inc. business
and operating performance.
Free Cash Flow((e))
Three months ended Twelve months ended
December 31, December 31,
---------------------- ----------------------
2014 2013 2014 2013
---------- ----------- ----------- ----------
(in millions) (in millions)
Net cash provided by operating
activities $ 86.8 $ 120.7 $ 318.4 $ 223.0
Less: Capital expenditures net of
proceeds from the
sale of property, plant &
equipment, the sale-
leaseback of equipment and
government grants (47.6 ) (69.8 ) (195.3 ) (218.7 )
---------- ----------- ----------- ----------
Free cash flow $ 39.2 $ 50.9 $ 123.1 $ 4.3
---------- ----------- ----------- ----------
________________________________________
a. We define EBITDA to be earnings before interest, taxes, depreciation and
amortization. For 2014, adjusted EBITDA is defined as EBITDA excluding the
impact of the non-cash charge associated with a voluntary one-time lump sum
cash payment to certain eligible terminated vested participants in our U.S.
pension plans in the fourth quarter of 2014 ("the 2014 Pension Payout
Offer"). For 2013, Adjusted EBITDA is defined as EBITDA excluding the impact
of debt refinancing and redemption costs and other special charges and
restructuring costs. We believe that EBITDA and Adjusted EBITDA are
meaningful measures of performance as they are commonly utilized by
management and investors to analyze operating performance and entity
valuation. Our management, the investment community and the banking
institutions routinely use EBITDA, together with other measures, to measure
our operating performance relative to other Tier 1 automotive suppliers.
EBITDA and Adjusted EBITDA should not be construed as income from
operations, net income or cash flow from operating activities as determined
under GAAP. Other companies may calculate EBITDA and Adjusted EBITDA
differently.
b. Special charges of $35.5 million for the three and twelve months ended
December 31, 2014 relate to the 2014 Pension Payout Offer. Special charges
of $5.8 million for the twelve months ended December 31, 2013 primarily
relate to a net charge of $5.3 million related to the acceleration of
expense for stock-based compensation and other benefits earned and vested
due to the passing of our Co-Founder and Executive Chairman of the Board of
Directors and $0.5 million for the settlement of a National Labor Relations
Board proceeding related to the closure of our Detroit Manufacturing Complex
and Cheektowaga Manufacturing Facility.
c. Net debt is equal to total debt less cash and cash equivalents.
d. Net debt to capital is equal to net debt divided by the sum of stockholders'
equity and net debt. We believe that net debt to capital is a meaningful
measure of financial condition as it is commonly utilized by management,
investors and creditors to assess relative capital structure risk. Other
companies may calculate net debt to capital differently.
e. We define free cash flow to be net cash provided by (or used in) operating
activities less capital expenditures net of proceeds from the sale of
property, plant and equipment, the sale-leaseback of equipment and
government grants. For purposes of calculating free cash flow, AAM excludes
the impact of purchase buyouts of leased equipment, if any. We believe free
cash flow is a meaningful measure as it is commonly utilized by management
and investors to assess our ability to generate cash flow from business
operations to repay debt and return capital to our stockholders. Free cash
flow is also a key metric used in our calculation of incentive
compensation. Other companies may calculate free cash flow differently.
Publishing_AXL-Q4_2014-Press Release:
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Source: American Axle & Manufacturing Holdings, Inc via GlobeNewswire
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