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American Axle Earnings Lag Despite Y/Y Jump

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American Axle and Manufacturing Holdings Inc. (AXL - Analyst Report) reported third-quarter 2013 adjusted earnings of 42 cents per share, missing the Zacks Consensus Estimate of 55 cents. However, earnings per share increased significantly from 7 cents per share in the comparable quarter of 2012 (excluding special items). Net income jumped to $32.1 million from $5.2 million reported in the third quarter of 2012.

On a reported basis, the company reported profit of $31.6 million or 41 cents per share compared to a loss of $8.1 million or 11 cents in the third quarter of 2012.

Revenues went up 16.8% to $820.8 million compared with $702.9 million in the third quarter of 2012.  However, it missed the Zacks Consensus Estimate of $859 million. The results benefited from new business launches, and higher production volumes of General Motors Company’s (GM - Analyst Report) full-size pickups and SUVs and Chrysler's new Ram Heavy Duty series pickups.

American Axle’s content-per-vehicle – dollar value of product sales supporting North American light truck and SUV programs – increased 6.4% to $1,560 from $1,466 in the third quarter of 2012. The company’s non-General Motors sales increased 18.1% to $234.7 million from $198.8 million in the year-ago quarter.

Gross profit improved 38.1% to $125.3 million or 15.3% of sales in third quarter 2013 from $90.7 million or 12.9% in the year-ago quarter. Meanwhile, operating income more than doubled to $67.5 million or 8.2% of sales from $30.1 million or 4.3% of sales a year ago.

Financial Position

American Axle had cash and cash equivalents of $118.6 million as of Sep 30, 2013, down from $209.0 million as of Sep 30, 2012. Long-term debt was $1.6 million as of Sep 30, 2013, which was in line with the year-ago quarter.

Cash flow from operations in the first nine months of 2013 was $102.3 million compared with cash outflow of $196.6 million in the first nine months of 2012. Net capital spending of the company was $148.9 million compared with $141.5 million in the same period of 2012. Therefore, American Axle had free cash flow use of $46.6 million in the period compared with $338.1 million in the corresponding period in 2012.

Our Take

American Axle is a leading supplier of driveline systems, modules and components for the light vehicle market. The company makes axles, driveshaft and chassis components for light trucks, sport utility vehicles and passenger cars. Currently, it retains a Zacks Rank #3 (Hold).

Stocks that are worth looking for in the same industry include Denso Corp. and Gentex Corp. (GNTX - Snapshot Report). They carry a Zacks Rank #1 (Strong Buy).
 

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