American Axle & Manufacturing Holdings, Inc. (AXL)

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American Axle & Manufacturing Holdings, Inc. (AXL)

Merrill Lynch & Co., Inc.'s 2013 New York Auto Summit

March 27, 2013 10:20 am ET

Executives

David C. Dauch - Chief Executive Officer, President, Director and Member of Strategy Committee

Michael K. Simonte - Chief Financial Officer, Chief Accounting Officer and Executive Vice President of Finance

Analysts

John Murphy - BofA Merrill Lynch, Research Division

Presentation

John Murphy - BofA Merrill Lynch, Research Division

The other companies we've introduced before. I'd highlight that American Axle's market cap last year was, at this time, about $840 million. Now it's just about $1 billion, so that's about a 20% return last year this time to where we are right now, so, once again, another great story that I think you guys should be paying attention to.

American Axle is the largest maker of axles and drivetrain components here in North America. It's got great opportunity overseas and in the commercial vehicle market, so there's a lot of headway in front of this company. And we're very happy to have them here. Presenting from American Axle will be David Dauch, President and CEO; Mike Simonte, Executive Vice President and CFO. We also are very lucky to have Chris Son, who's the Director of Investor Relations who wears many hats at the company. He's been always incredibly helpful, and his partner in crime, Liz Ventimiglia [ph] , who's joined Investor Relations, I think, in the last 2 years? Last year? Last year. It's been such a great year with Liz, we thought it was 2. But with that, I'd love to turn it over to David Dauch to present American Axle.

David C. Dauch

Thank you, John, and good morning, everybody. Just jump right into our presentation. Can you all hear me okay? Okay. We just want to touch on a few things here today. First and foremost, I just want to touch on the highlights and our 2013 outlook, and then I'll clearly address some of the performance issues that we had in the second quarter or second half of last year, specifically our Brazilian operations and our Mexican operations and then really focus it more -- of our time on the aligned business strategy and what accomplishments we've already realized to date but more importantly, what we have in front of us on a global basis as John just referred to.

So just jumping right into things as far as some of our recent accomplishments. I mean, we set out a plan back in the 2009 period of time when we restructured, resized our business and recovered our business from a profitability standpoint that we needed to introduce diversity into our business, both from a consumer standpoint and a product standpoint. And we've clearly been able to do that from a product standpoint, where we have expanded into the passenger car rear-wheel-drive business, the front-wheel-drive, all-wheel-drive passenger car business, as well as the commercial vehicle business, while also being -- maintaining our strength in the truck and the SUV markets.

With that, product technology and our expanded global footprint that where we spend a lot of time, a lot of money over the last several years, we've been able to grow our business profitably, and we now have a backlog of new business that's sitting at $1.25 billion covering the 2013 through the 2015 period of time. And the cadence on that business is $400 million this year, $550 million that following year and $300 million the year thereafter. In addition, I think everybody understands that the pains and the trials and tribulations that we went through back in the 2008 with respect to the legacy labor that we had to deal within our organization, but we are committed to getting our entire cost structure to be market competitive whether it be from the salary side of things to the hourly labor costs, and we've been able to accomplish that in all of our facilities. And we now have a global market competitive footprint around the world to support our customers.

And then this past year in the third quarter and already here in the first quarter, Mike and the team have taken a lot of actions in order to strengthen our capital structure, refinance some of our debt that's out there and extend the runway as it relates to the financial requirements and maturities. But then also, we dealt with a lot of our pension obligation and prefunded some of that pension obligation last year, so we don't have any major pension obligations in the near term. Still, we have some out there, but we think the market and the interest rates may take care of some of that as we move forward.

So just looking at 2013. We've already provided guidance to the Street earlier. We just clarified what our top line sales would be at $3.25 billion this year. That's up approximately 11%, 10%, 11% from the $2.9 billion that we were last year. This year, our EBITDA guidance is in the 13% to 13.5% for the full year. As we've been very clear to people, it'd be more in the 11% to 12% range the first half of the year and then growing into the 14% range the second half of the year, as we work our way through a number of launches and we address some of the operational issues that we experienced in Brazil and Mexico.

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