• Fourth Quarter 2024 Sales: $1.4 billion.
• Full Year 2024 Sales: Approximately $6.1 billion.
• Fourth Quarter 2024 Adjusted EBITDA: $161 million or 11.6% of sales.
• Full Year 2024 Adjusted EBITDA: $749 million or 12.2% of sales.
• Fourth Quarter 2024 Adjusted EPS: Loss of $0.06 per share.
• Full Year 2024 Adjusted EPS: $0.51 per share.
• Fourth Quarter 2024 Adjusted Free Cash Flow: $79 million.
• Full Year 2024 Adjusted Free Cash Flow: $230 million.
• Fourth Quarter 2024 Gross Profit: $154.3 million.
• Fourth Quarter 2024 SG&A Expense: $89 million or 6.4% of sales.
• Fourth Quarter 2024 Net Interest Expense: $37.3 million.
• Fourth Quarter 2024 Income Tax Expense: $6.8 million.
• Fourth Quarter 2024 GAAP Net Loss: $13.7 million or $0.12 per share.
• Fourth Quarter 2024 Net Cash Provided by Operating Activities: $151.2 million.
• Fourth Quarter 2024 Capital Expenditures: $77.6 million.
• End of 2024 Net Debt: $2.1 billion.
• End of 2024 Total Available Liquidity: Approximately $1.5 billion.
• 2025 Sales Outlook: $5.8 billion to $6.05 billion.
• 2025 Adjusted EBITDA Outlook: $700 million to $760 million.
• 2025 Adjusted Free Cash Flow Outlook: $200 million to $230 million.

• Warning! GuruFocus has detected 5 Warning Signs with AXL.

Release Date: February 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• American Axle & Mfg Holdings Inc (NYSE:AXL) closed the year strong with solid operational progress and generated $79 million in adjusted free cash flow in the fourth quarter.
• The company secured a contract extension to supply power transfer units for Ford Maverick and Bronco Sport vehicles, ensuring future business stability.
• AAM's transformational combination with Dowlais is expected to create a leading global driveline and metal forming supplier, enhancing shareholder value.
• The company achieved its financial targets for 2024, coming in at the high end of its adjusted EBITDA range and exceeding the midpoint of its adjusted free cash flow target.
• AAM's 2025 financial outlook includes targeting sales between $5.8 billion to $6.05 billion and adjusted EBITDA of approximately $700 million to $760 million, indicating a stable financial trajectory.

Negative Points

• AAM's adjusted earnings per share in the fourth quarter of 2024 was a loss of $0.06 per share, indicating profitability challenges.
• The company's sales in the fourth quarter of 2024 were $1.38 billion, down from $1.46 billion in the fourth quarter of 2023, reflecting a decline in sales volume.
• Adjusted EBITDA in the fourth quarter of 2024 decreased to $160.8 million from $169.5 million in the previous year, showing a decline in profitability.
• AAM's net debt remains high at $2.1 billion, with a net leverage ratio of 2.8x, indicating significant financial obligations.
• The company anticipates higher cash taxes in 2025, ranging from $60 million to $70 million, which could impact cash flow.

Q & A Highlights

Q: Can you discuss the mix and volume expectations for GM trucks and Ram HD in 2025? A: Christopher May, CFO, explained that they expect GM full-size truck production to range from 1.3 million to 1.4 million units for the year. The Ram HD platform is expected to be relatively flat year-over-year, with lower volumes in Q1 but increasing production in Q2 and beyond. The mix is expected to remain relatively flat, with strong demand for heavy-duty and SUV models.

Q: Is the reduction in R&D and CapEx for 2025 purely organic, or is it influenced by the upcoming Dowlais combination? A: Christopher May confirmed that the reductions are purely organic and part of AAM's stand-alone guidance. The company is optimizing its spend to reflect current market requirements.

Q: What are the potential revenue synergies from the Dowlais combination? A: David Dauch, CEO, highlighted that the combination of AAM and Dowlais brings together complementary businesses, creating cross-selling opportunities globally. Both companies are well-positioned in electrification, which will drive future revenue growth as markets evolve.

Q: How does AAM plan to manage its leverage and capital allocation post-Dowlais merger? A: Christopher May stated that AAM aims to reduce leverage to 2.5x before considering additional capital allocation priorities. The focus will remain on organic growth and debt repayment, with a balanced approach to capital allocation once the target leverage is achieved.

Q: How is AAM addressing commodity risks, such as tariffs and steel prices? A: David Dauch explained that AAM's strategy of buying and building locally helps mitigate tariff risks. The company has minimal exposure to steel and aluminum tariffs as these materials are sourced locally. Additionally, AAM has pass-through mechanisms for commodity cost fluctuations, insulating it from market volatility.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.