American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) reported mixed results for fourth-quarter 2019, wherein earnings topped the Zacks Consensus Estimate but revenues lagged the same. While the UAW-General Motors (GM - Free Report) strike affected the company’s performance, better-than-expected EBITDA in the Driveline and Metal Forming segments led to the outperformance.
The Detroit-based global automotive parts supplier posted adjusted earnings of 13 cents per share, topping the Zacks Consensus Estimate of 1 cent. The bottom-line figure, however, slumped 71.1%, year on year. The company reported revenues of $1,430 million, missing the Zacks Consensus Estimate of $1,492 million. The revenue number also came in lower than the year-ago figure of $1,694 million.
American Axle & Manufacturing Holdings, Inc. Price, Consensus and EPS Surprise
Segmental Highlights
The firm’s Driveline segment recorded sales of $1,015.6 million, down 13.4% year over year. Negative impact of the 40-day strike of its largest customer GM, a choppy metal market and unfavorable foreign-currency translation resulted in this decline. The unit EBITDA also declined 23.7% from the prior-year quarter to $124.9 million. However, the figure surpassed the Zacks Consensus Estimate of $123 million.
The company’s Metal Forming business generated revenues of $401.2 million, lower than the year-ago figure of $464.3 million. Its EBITDA also decreased $7.6 million year on year to $66.2 million. However, it beat the Zacks Consensus Estimate of $54 million. While lower North American and European production volumes marred the unit’s performance, improved launch and operating performance offset the losses.
The Casting unit posted revenues of $127.5 million, significantly lower than the year-ago level of $184.2 million. The segment EBITDA also declined to $2.4 million from the $6.4 million recorded in fourth-quarter 2018. It also missed the Zacks Consensus Estimate of $12.8 million.
Costs & Financial Position
American Axle’s SG&A (selling, general & administrative) expenses were $90 million in fourth-quarter 2019 comparison with the $97.1 million incurred in the prior-year period.
For the three-month period ended Dec 31, 2019, the company’s adjusted free cash flow (FCF) was $116.5 million compared with the $142.4 million witnessed in the year-earlier period. Capital spending in the quarter came in at $95 million, down from the year-ago quarter’s $131.2 million.
As of Dec 31, 2019, American Axle had cash and cash equivalents of $532 million, and net long-term debt of $3,612.3 million, representing a debt-to-capital ratio of 78.8%.
2020 Outlook
For 2020, American Axle anticipates sales of $5.8-$6 billion. While adjusted EBITDA is expected in the $930-$960 million band, adjusted EBITDA margin is likely to be around 16% of sales. Adjusted FCF is projected at $300 million, which assumes capital spending of 5.5% of sales.
Zacks Rank & Stocks to Consider
American Axle currently carries a Zacks Rank of 3 (Hold).
Some better-ranked stocks in the Auto-Tires-Trucks sector include BRP Inc. (DOOO - Free Report) and SPX Corporation (SPXC - Free Report) , both carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
BRP has a projected earnings growth rate of 20.17% for 2020. Its shares have surged 99.7% over the past year.
SPX has an expected earnings growth rate of 6.52% for the current year. The stock has rallied 39.4% in the past year.
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American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) reported mixed results for fourth-quarter 2019, wherein earnings topped the Zacks Consensus Estimate but revenues lagged the same. While the UAW-General Motors (GM - Free Report) strike affected the company’s performance, better-than-expected EBITDA in the Driveline and Metal Forming segments led to the outperformance.
The Detroit-based global automotive parts supplier posted adjusted earnings of 13 cents per share, topping the Zacks Consensus Estimate of 1 cent. The bottom-line figure, however, slumped 71.1%, year on year. The company reported revenues of $1,430 million, missing the Zacks Consensus Estimate of $1,492 million. The revenue number also came in lower than the year-ago figure of $1,694 million.
American Axle & Manufacturing Holdings, Inc. Price, Consensus and EPS Surprise
Segmental Highlights
The firm’s Driveline segment recorded sales of $1,015.6 million, down 13.4% year over year. Negative impact of the 40-day strike of its largest customer GM, a choppy metal market and unfavorable foreign-currency translation resulted in this decline. The unit EBITDA also declined 23.7% from the prior-year quarter to $124.9 million. However, the figure surpassed the Zacks Consensus Estimate of $123 million.
The company’s Metal Forming business generated revenues of $401.2 million, lower than the year-ago figure of $464.3 million. Its EBITDA also decreased $7.6 million year on year to $66.2 million. However, it beat the Zacks Consensus Estimate of $54 million. While lower North American and European production volumes marred the unit’s performance, improved launch and operating performance offset the losses.
The Casting unit posted revenues of $127.5 million, significantly lower than the year-ago level of $184.2 million. The segment EBITDA also declined to $2.4 million from the $6.4 million recorded in fourth-quarter 2018. It also missed the Zacks Consensus Estimate of $12.8 million.
Costs & Financial Position
American Axle’s SG&A (selling, general & administrative) expenses were $90 million in fourth-quarter 2019 comparison with the $97.1 million incurred in the prior-year period.
For the three-month period ended Dec 31, 2019, the company’s adjusted free cash flow (FCF) was $116.5 million compared with the $142.4 million witnessed in the year-earlier period. Capital spending in the quarter came in at $95 million, down from the year-ago quarter’s $131.2 million.
As of Dec 31, 2019, American Axle had cash and cash equivalents of $532 million, and net long-term debt of $3,612.3 million, representing a debt-to-capital ratio of 78.8%.
2020 Outlook
For 2020, American Axle anticipates sales of $5.8-$6 billion. While adjusted EBITDA is expected in the $930-$960 million band, adjusted EBITDA margin is likely to be around 16% of sales. Adjusted FCF is projected at $300 million, which assumes capital spending of 5.5% of sales.
Zacks Rank & Stocks to Consider
American Axle currently carries a Zacks Rank of 3 (Hold).
Some better-ranked stocks in the Auto-Tires-Trucks sector include BRP Inc. (DOOO - Free Report) and SPX Corporation (SPXC - Free Report) , both carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
BRP has a projected earnings growth rate of 20.17% for 2020. Its shares have surged 99.7% over the past year.
SPX has an expected earnings growth rate of 6.52% for the current year. The stock has rallied 39.4% in the past year.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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