American Axle & Manufacturing Holdings (AAM) has reported its financial results for the second quarter 2019 and updated its full year financial outlook.

Second Quarter 2019 Results

• Sales of $1.7 billion
• Net income attributable to AAM of $52.5 million, or 3.1% of sales 
• Adjusted EBITDA of $266 million, or 15.6% of sales 
• Diluted earnings per share of 45 cents; Adjusted earnings per share of 55 cents
• Net cash provided by operating activities of $217.1 million; Adjusted free cash flow of $119.3 million

“In the second quarter of 2019, AAM continued to improve its operational performance with sequential quarterly margin increases and strong free cash flow generation. However, we exited the second quarter with softer sales than anticipated and we expect this to continue to impact us in the second half of 2019,” said AAM’s Chairman and CEO David Dauch. “As we look toward the second half of 2019, we are focused on efficiently operating our business and adapting to the changing market demand.”

AAM’s sales in the second quarter of 2019 were $1.7 billion as compared to $1.9 billion in the second quarter of 2018.

AAM’s net income in the second quarter of 2019 was $52.5 million, or 45 cents per share, as compared to $151.1 million, or $1.30 per share in the second quarter of 2018.

AAM defines Adjusted earnings per share to be diluted earnings per share excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, gain on sale of business, goodwill impairments and non-recurring items, including the tax effect thereon. Adjusted earnings per share in the second quarter of 2019 were 55 cents compared to $1.23 in the second quarter of 2018.

AAM defines EBITDA to be earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, gain on sale of business, goodwill impairments and non-recurring items.  In the second quarter of 2019, Adjusted EBITDA was $266 million, or 15.6% of sales, as compared to $347.9 million, or 18.3% of sales, in the second quarter of 2018.

AAM’s 2019 Financial Outlook
AAM is experiencing lower metal market pass-throughs and lower than projected global production volumes for certain programs it supports, including in Asia, primarily China, and global engine and transmission products. As a result, AAM has revised its full year 2019 financial targets as follows: 

• AAM is targeting sales in the range of $6.9 – $7 billion in 2019. 
• AAM is targeting Adjusted EBITDA in the range of $1.05 – $1.10 billion in 2019. 
• AAM is targeting Adjusted free cash flow of approximately $250 million in 2019, including the reduction of estimated capital expenditures from approximately $515 million to approximately $485 million.

AAM’s revised full year 2019 financial targets reflect:

• An estimate of production volumes for the remainder of 2019 based on internal and external sources and the current metal market environment 
• A reduction in profitability primarily associated with lower sales and an increase in engineering, research and development expenditures to support our future e-AAM hybrid and electric driveline growth and 
• Continued operational improvements in-line with previous commentary.