American Axle and Manufacturing Inc.
) reported a profit of $5.2 million or 7 cents per share in the
third quarter of 2012, down significantly by 86% from $38.3
million or 50 cents in the year-ago quarter. The third-quarter
2012 results excluded impacts of debt refinancing and redemption
costs of $10.1 million or 14 cents and restructuring costs of
$3.2 million or 4 cents while 2011 results excluded asset
impairments and other non-recurring operating costs of $11.9
million or 15 cents and special charges of $1.6 million or 2
AMER AXLE & MFG (AXL): Free Stock Analysis
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The company's profit also considerably lagged the Zacks Consensus
Estimate by 27 cents. Meanwhile, on a reported basis, the company
incurred a loss of $8.1 million or 11 cents per share compared
with a profit of $24.8 million or 33 cents in the third quarter
However, the company's revenues increased 8.5% year over year to
$702.9 million during the quarter and surpassed the Zacks
Consensus Estimate of $692.0 million. The company's
content-per-vehicle (calculated by dollar value of the product
sales supporting the company's customers' North American light
truck and SUV programs) was flat at $1,466 on a year-over-year
Management believes that growth in sales volume and improved
business diversification based on global launch activity had
favorable impacts on the company's results. However, complexity
of the new products, process and facility launches, and lower
capacity utilization due to a decrease in customers in certain
existing programs had negative impact on the result.
Cost of goods sold rose 12.5% to $612.2 million from $544.1
million a year ago. As a result, gross profit went down 12.4% to
$90.7 million from $103.5 million in the third quarter of 2011.
Gross margin was 12.9% compared to 16% in the year-ago quarter.
Selling, general and administrative expenses increased 2.7% to
$60.6 million or 8.6% of sales from $59.0 million or 9.1% of
sales in the 2011 quarter. Research and development spending
decreased marginally to $31.4 million from $31.8 million in the
comparable quarter of 2011. Operating income plunged 32.3% to
$30.1 million from $44.5 million, while operating margin was 4.3%
versus 6.9% in the prior year.
The company progressed well in diversifying its customer base
during the quarter. The company has a high exposure to customers
General Motors Company
) and Chrysler. Non-GM sales increased 14% to $198.8 million
(28.3% of sales) in the quarter from $173.9 million (27%) in the
third quarter of 2011.
Adjusted earnings before interest expense, income taxes and
depreciation and amortization fell 24.8% to $70.1 million (10% of
sales) from $93.2 million (14.4%) a year ago.
American Axle had cash and cash equivalents of $209.0 million as
of September 30, 2012, down from $169.2 million as of December
31, 2011. Long-term debt increased to $1.6 billion as of
September 30, 2012 from $1.2 billion as of December 31, 2011.
In the first nine months of 2012, American Axle's cash flow used
in operating activities increased to $196.6 million from $65.4
million in the same period of 2011. Capital expenditures (net)
increased to $141.5 million from $103.1 million in the first nine
months of 2011. This led to a free operating cash flow use of
$338.1 million in the first nine months of the year compared with
$168.5 million in the same period of 2011.
American Axle 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 and passenger cars.
The company expects to benefit from its expansion in Asia,
Brazil, China, India, Mexico, Poland and Thailand. Growing demand
in these markets is likely to boost the production volumes of the
company. However, the company faces challenges owing to its high
American Axle retains a Zacks #4 Rank on its shares, which
translates into a short-term (1-3 months) Sell rating. We also
have a long-term (more than 6 months) Neutral recommendation on