American Axle & Manufacturing (US:AXL)2022-08-05 16:49Financial Performance - Net sales for the three months ended June 30, 2022, were $1,438.3 million, an increase from $1,283.3 million in the same period of 2021, representing a growth of 12.1%[11] - Gross profit for the three months ended June 30, 2022, was $173.5 million, down from $190.0 million in the same period of 2021, indicating a decrease of 8.0%[11] - Operating income for the three months ended June 30, 2022, was $57.7 million, compared to $66.4 million in the same period of 2021, reflecting a decline of 13.1%[11] - Net income for the three months ended June 30, 2022, was $22.9 million, up from $16.0 million in the same period of 2021, showing an increase of 43.1%[12] - Basic earnings per share for the three months ended June 30, 2022, were $0.19, compared to $0.13 for the same period in 2021, representing a growth of 46.2%[11] - Comprehensive income (loss) for the three months ended June 30, 2022, was $(19.8) million, a decrease from $35.5 million in the same period of 2021[12] - Net income for the six months ended June 30, 2022, was $23.9 million, a decrease of 56.2% from $54.6 million in the same period of 2021[15] - Income before income taxes for the three months ended June 30, 2022, was $23.5 million, an increase from $18.4 million in the same period of 2021, reflecting a growth of approximately 27.7%[133] Expenses and Costs - Selling, general and administrative expenses for the three months ended June 30, 2022, were $84.8 million, slightly down from $86.2 million in the same period of 2021[11] - The company incurred restructuring and acquisition-related costs of $9.6 million for the three months ended June 30, 2022, compared to $15.9 million in the same period of 2021[11] - The company reported an interest expense of $(42.7) million for the three months ended June 30, 2022, down from $(49.9) million in the same period of 2021[11] - The company incurred total restructuring costs of approximately $8.0 million under the 2020 Program and $3.6 million related to the anticipated closure of the Emporium facility in the first half of 2022[27] - The company incurred total restructuring and acquisition-related charges of $9.6 million and $18.5 million for the three and six months ended June 30, 2022, respectively[29] Assets and Liabilities - Total current assets increased to $2,055.8 million as of June 30, 2022, up from $1,856.0 million at December 31, 2021, representing an increase of 10.7%[14] - Total liabilities increased to $5,299.5 million, up from $5,177.9 million, indicating a rise of 2.4%[14] - Long-term debt decreased slightly to $3,034.8 million from $3,085.7 million, a reduction of 1.6%[14] - Cash and cash equivalents at the end of the period were $501.4 million, down from $530.2 million, a decrease of 5.1%[15] - The accumulated deficit improved to $(290.0) million from $(313.9) million, showing a positive change in retained earnings[14] Inventory and Receivables - Accounts receivable rose to $929.3 million, a significant increase of 22% compared to $762.8 million in the previous period[14] - Total inventories as of June 30, 2022, were $470.8 million, an increase from $410.4 million as of December 31, 2021[32] - Gross inventories as of June 30, 2022, amounted to $500.1 million, up from $429.0 million as of December 31, 2021, indicating a 16.6% increase[32] Acquisitions and Investments - The acquisition of Tekfor Group was completed on June 1, 2022, for a total purchase price of $94.4 million, aimed at diversifying the geographic and customer sales mix[107] - The fair values of the assets acquired from Tekfor Group will be allocated based on the respective fair values of the assets and liabilities as per ASC 805[107] - The total consideration transferred for the acquisition was $94.4 million, with net assets acquired amounting to $106.0 million[109] - For the period from June 1, 2022, to June 30, 2022, net sales attributable to Tekfor Group were approximately $29 million, and net income was $7 million, including a gain on bargain purchase of $11.6 million[111] Cash Flow and Financing - Net cash provided by operating activities was $215.2 million, down from $346.2 million in the prior year, reflecting a decline of 37.8%[15] - The company reported a net cash used in investing activities of $150.2 million, compared to $74.3 million in the previous year, indicating increased investment activity[15] - The company issued $220.7 million in long-term debt during the period, compared to $22.8 million in the same period of the previous year, reflecting a significant increase in financing activities[15] - The company had $893.5 million available under the Revolving Credit Facility as of June 30, 2022[45] Economic Outlook and Challenges - The company anticipates continued challenges due to global economic conditions and supply chain disruptions, impacting future performance[8] - The company expects to incur costs associated with the closure of the Emporium facility through 2022[25] - The company faces risks related to supply chain disruptions, including semiconductor shortages affecting the automotive industry[9] - The company anticipates potential disruptions in production and sales due to global economic conditions and public health crises, including COVID-19[9] Tax and Regulatory Matters - The effective income tax rate for the three months ended June 30, 2022, was 2.6%, significantly lower than the 13.0% for the same period in 2021, primarily due to a $11.6 million gain on bargain purchase of business[79] - The company recorded a liability for unrecognized income tax benefits of $36.4 million as of June 30, 2022, an increase from $23.4 million as of December 31, 2021[85] - The company has not recorded any impact from the IRS's proposed adjustment regarding foreign base company sales income, estimating a potential additional income tax expense of $275 million to $325 million if unsuccessful in contesting the matter[81]