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American Axle (AXL) Beats on Q2 Earnings; Shares Rise
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American Axle & Manufacturing Holdings Inc.’s (AXL - Free Report) shares increased 0.6% to close at $17.51 on Aug 1, after the company reported better-than-expected earnings for the second quarter of 2016. American Axle posted earnings of 90 cents per share for the second quarter that comfortably beat the Zacks Consensus Estimate of 80 cents. Moreover, earnings increased from 75 cents per share recorded in the second quarter of 2015.
The company reported net income of $71 million in the second quarter of 2016 compared with $58.6 million in the year-ago quarter.
Revenues improved marginally to $1.02 billion in the reported quarter from $1 billion a year ago. However, the top line fell short of the Zacks Consensus Estimate of $1.03 billion.
American Axle’s content-per-vehicle – dollar value of product sales supporting customers’ North American light truck and sport utility vehicle (“SUV”) programs – dropped to $1,609 from $1,637 in second-quarter 2015. The company’s non-General Motors Company (GM - Free Report) sales declined to $333.9 million from $343.1 million in the year-ago quarter.
Gross profit increased to $191.4 million (18.7% of sales) in second-quarter 2016 from $164.5 million (16.4% of sales) in the prior-year quarter. Meanwhile, operating income improved to $111.5 million from $93.9 million a year ago.
In the second quarter of 2016, the company repurchased 100,000 shares at an average price of $15.02. As of Jun 30, 2016, it had around shares worth $98.5 million remaining for repurchase under the program.
Financial Position
American Axle had cash and cash equivalents of $388.4 million as of Jun 30, 2016, up from $282.5 million as of Dec 31, 2015. Long-term debt was $1.41 billion as of Jun 30, 2016, compared to $1.38 billion at the end of 2015.
Cash flow from operations in the first half of 2016 was $183.5 million, compared with $154.3 million in first-half 2015. Net capital spending of the company was $105.1 million in first-half 2016, compared with $91.3 million in the year-ago period. Therefore, American Axle’s free cash outflow was $81.2 million in the said period compared with $63 million a year ago.
2016 Outlook
For 2016, sales are expected to be $4 billion, marginally higher than $3.9 billion recorded in 2015. The sales expectation is based on the launch of programs in the company’s new and incremental business backlog. The company also assumes that U.S. industry sales on a seasonally adjusted annualized rate (“SAAR”) basis will be around 17.5 million light vehicle units in 2016.
Earnings before income taxes, depreciation and amortization (EBITDA) margin will likely be the range of 15%–15.5% in 2016, up from the prior estimate of 14.5%–15%. The company raised the guidance based on strong operational and financial performance in the first half of 2016.
For 2016, American Axle expects free cash flow in the range of $140−$160 million. In addition, capital spending will be around 6% of sales this year.
Zacks Rank
Currently, American Axle carries a Zacks Rank #3 (Hold).
Some better-ranked automobile stocks include The Goodyear Tire & Rubber Company (GT - Free Report) and Johnson Controls Inc. (JCI - Free Report) , both carrying a Zacks Rank #2 (Buy).
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American Axle (AXL) Beats on Q2 Earnings; Shares Rise
American Axle & Manufacturing Holdings Inc.’s (AXL - Free Report) shares increased 0.6% to close at $17.51 on Aug 1, after the company reported better-than-expected earnings for the second quarter of 2016. American Axle posted earnings of 90 cents per share for the second quarter that comfortably beat the Zacks Consensus Estimate of 80 cents. Moreover, earnings increased from 75 cents per share recorded in the second quarter of 2015.
The company reported net income of $71 million in the second quarter of 2016 compared with $58.6 million in the year-ago quarter.
Revenues improved marginally to $1.02 billion in the reported quarter from $1 billion a year ago. However, the top line fell short of the Zacks Consensus Estimate of $1.03 billion.
American Axle’s content-per-vehicle – dollar value of product sales supporting customers’ North American light truck and sport utility vehicle (“SUV”) programs – dropped to $1,609 from $1,637 in second-quarter 2015. The company’s non-General Motors Company (GM - Free Report) sales declined to $333.9 million from $343.1 million in the year-ago quarter.
Gross profit increased to $191.4 million (18.7% of sales) in second-quarter 2016 from $164.5 million (16.4% of sales) in the prior-year quarter. Meanwhile, operating income improved to $111.5 million from $93.9 million a year ago.
AMER AXLE & MFG Price, Consensus and EPS Surprise
AMER AXLE & MFG Price, Consensus and EPS Surprise | AMER AXLE & MFG Quote
Share Repurchase
In the second quarter of 2016, the company repurchased 100,000 shares at an average price of $15.02. As of Jun 30, 2016, it had around shares worth $98.5 million remaining for repurchase under the program.
Financial Position
American Axle had cash and cash equivalents of $388.4 million as of Jun 30, 2016, up from $282.5 million as of Dec 31, 2015. Long-term debt was $1.41 billion as of Jun 30, 2016, compared to $1.38 billion at the end of 2015.
Cash flow from operations in the first half of 2016 was $183.5 million, compared with $154.3 million in first-half 2015. Net capital spending of the company was $105.1 million in first-half 2016, compared with $91.3 million in the year-ago period. Therefore, American Axle’s free cash outflow was $81.2 million in the said period compared with $63 million a year ago.
2016 Outlook
For 2016, sales are expected to be $4 billion, marginally higher than $3.9 billion recorded in 2015. The sales expectation is based on the launch of programs in the company’s new and incremental business backlog. The company also assumes that U.S. industry sales on a seasonally adjusted annualized rate (“SAAR”) basis will be around 17.5 million light vehicle units in 2016.
Earnings before income taxes, depreciation and amortization (EBITDA) margin will likely be the range of 15%–15.5% in 2016, up from the prior estimate of 14.5%–15%. The company raised the guidance based on strong operational and financial performance in the first half of 2016.
For 2016, American Axle expects free cash flow in the range of $140−$160 million. In addition, capital spending will be around 6% of sales this year.
Zacks Rank
Currently, American Axle carries a Zacks Rank #3 (Hold).
Some better-ranked automobile stocks include The Goodyear Tire & Rubber Company (GT - Free Report) and Johnson Controls Inc. (JCI - Free Report) , both carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>