American Axle reported earnings of $0.63 in the third-quarter 2014,
in line with the Zacks Consensus Estimate and 50% better than the
third quarter of 2013. The year-over-year improvement was driven by
strong cash flow and enhanced profits, backed by improved sales,
productivity and operational stability. Revenues increased 15.8% to
$950.8 million, marginally surpassing the Zacks Consensus Estimate
of $949 million. American Axle is poised to benefit from its
backlog of new and incremental business, along with its efforts to
increase non-GM sales. However, pricing pressure by original
equipment manufacturers and high dependence on GM remain concerns.
Thus, we are maintaining a Neutral recommendation on American Axle.
American Axle & Manufacturing Holdings, Inc. (AXL) is a
leading supplier of driveline systems, modules and components for
the light vehicle market. The company makes axles, driveshafts and
chassis components for light trucks, sport utility vehicles (SUVs)
and passenger cars. It has a 38% share of the driveshaft market in
the U.S. and an 11% share across the world. Driveline systems are
components that transfer power from the engine to the driving
wheels of a vehicle.
The principal manufacturing facilities of American Axle are
located in the U.S. (Michigan, New York and Ohio), Brazil, Mexico,
Germany, India, China, Japan and the U.K. Its major customers
include General Motors and Chrysler. The North American market
alone accounts for about 91% of annual revenues. Among the
company's diverse products, rear and front axles as well as
driveshafts contribute about 82% to annual sales, while drivetrain
components, forged products, and others generate the remaining 18%.
About two-thirds of the sales are of light trucks.
American Axle & Manufacturing Holdings Inc.
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