American Axle and Manufacturing Inc. (AXL) posted a profit of $38.8 million or 52 cents per share in the third quarter of 2010, in sharp contrast to a loss of $9.7 million or 18 cents per share (excluding special items) in the same quarter of prior year.
With this, the auto parts maker has surpassed the Zacks Consensus Estimate by 12 cents per share. The improvement was profit was driven by a 50% rise in revenues to $618.2 million during the quarter. Sales were higher than the Zacks Consensus Estimate of $560 million for the quarter.
American Axle’s gross profit was $113.9 million (18.4% of sales) compared with $88.5 million (21.6%) in the third quarter of 2009. The company’s operating profit was $60.7 million (9.8% of sales), up from $44.5 million (10.9% of sales) in the third quarter of the prior year.
The company progressed well in diversifying its customer base during the quarter. American Axle has a high exposure to customers, including General Motors (MTLQQ) or GM and Chrysler. This reflected in its non-GM sales, which nearly doubled to $147.1 million on a year-over-year basis during the quarter.
American Axle’s content-per-vehicle (dollar value of its product sales supporting GM’s North American light truck and SUV programs and Chrysler’s heavy duty Dodge Ram pickup trucks) improved 4.4% to $1,458 from $1,396 in the quarter.
Financial Position
American Axle had cash and cash equivalents of $240.2 million as of September 30, 2010, up from $173.1 million as of September 30, 2009. Long-term debt amounted to $1.01 billion as of the above date, reflecting a debt-to-equity ratio of 1.87.
In the first nine months of 2010, American Axle’s operating net cash flow improved to $193.5 million compared with an outflow of $19.7 million in the same period of 2009. Meanwhile, capital expenditures reduced to $61.7 million from $115.5 million a year ago.
In the same period, free cash flow was $133 million in contrast to an outflow of $104.4 million in the prior-year period. The free cash flow reflected the impact of cash payments of $42.6 million for restructuring actions related to the company’s obligations under hourly and salaried attrition programs and the buydown program for United Auto Workers-represented associates at its manufacturing facilities in Detroit, Michigan; Three Rivers, Michigan; and Cheektowaga, New York.
American Axle, a Zacks #3 Rank (Hold) stock, supplies 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 has a 38% share of the driveshaft market in the U.S. and 11% share across the world.
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