American Axle and Manufacturing (AXL) returned to profitability in the fourth quarter of 2009 after reporting losses since the first quarter of 2008. The company has posted a net income of $8.3 million or 14 cents per share (before special items), compared to a loss of $42.6 million or 83 cents per share (before special items) in the fourth quarter of 2008.
American Axle also surpassed the Zacks Consensus Estimate of 11 cents per share for the quarter. The company has achieved transformational improvements in its cost structure, operating flexibility and capacity utilization.
Net sales in the quarter slipped 8% to $464 million, driven by lower production volumes (7%) for the North American light truck and SUV programs that the company currently supports for GM and Chrysler due to lower production of mid-sized light truck programs.
Annual Results
In 2009, American Axle reported a narrower loss of $66 million or $1.25 per share (before special items), compared to $214.6 million or $4.63 per share in 2008.
Net sales dipped 25% to $1.5 billion, driven by lower production volumes (30%) for the North American light truck and SUV programs that the company currently supports for GM and Chrysler due to their extended production shutdowns on account of their bankruptcies. The company has estimated the reduction in sales and operating income resulting from these shutdowns to be approximately $304 million and $95 million, respectively
However, American Axle’s content-per-vehicle (measured by the 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) in 2009 increased to $1,403 from $1,391 in 2008.
Financial Position
American Axle had cash and cash equivalents of $178.1 million as of December 31, 2009, compared to $198.8 million as on December 31, 2008. Long-term debt amounted to $1.07 billion as of December 31, 2009, reflecting a debt-to-equity ratio of 1.9.
In 2009, American Axle had a net cash flow of $17.3 million from operating activities in sharp contrast to an outflow of $163.1 million in 2008. Meanwhile, capital expenditures remained almost flat at $141.5 million in the year.
Outlook
For 2010, American Axle anticipates sales in the range of $1.9–$2.1 billion, representing an annual sales growth of approximately 25%–40% on a year-over-year basis. This is based on the assumption that the Seasonally Adjusted Annual Rate of light vehicle sales in the U.S. increases from 10.4 million vehicle units in 2009 to a range of 11.0 million–11.5 million vehicles in 2010. Based on the sales projection, the company expects to be profitable for the year and generate positive free cash flow assuming capital spending in the range of 4%–5% of sales.
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