American Axle & Manufacturing Holdings: Staying The Course

Company Overview - American Axle & Manufacturing Holdings operates as an automotive and mobility supplier, focusing on driveline and metal forming technologies for internal combustion, electric, and hybrid vehicles [2] Financial Performance - For the first nine months of 2023, the company reported sales of $4.62 billion, a 4.7% increase from $4.41 billion in the same period of 2022, largely driven by the acquisition of Tekfor, which contributed $178 million to the sales increase [3] - Net profits turned from $50.4 million in the first nine months of 2022 to a loss of $14.5 million in the same period of 2023, with EBITDA decreasing from $589.6 million to $520.8 million [4][5] - The company expects total revenue for 2023 to be between $6 billion and $6.1 billion, up from $5.80 billion in 2022, but anticipates EBITDA to decline to between $660 million and $685 million from $747.3 million in 2022 [5] Debt and Leverage - The company has a net debt of $2.24 billion, significantly higher than its market capitalization of $938.8 million, resulting in a net leverage ratio of 3.34 based on midpoint EBITDA guidance for 2023 [6] - There are no significant debt repayments due until the 2026 fiscal year, with a larger amount of debt maturing in 2027 [6] Market Position and Future Outlook - Management aims to capture over 10% of the electric vehicle market by 2030, investing in parts specifically for electric vehicles and has received awards for its eDrive platform [7] - The company's shares are currently trading at a price to adjusted operating cash flow multiple of 2.3 and an EV to EBITDA multiple of 4.7, making it cheaper than several comparable firms [8][9] Investment Perspective - Despite the risks associated with elevated leverage and recent financial performance, American Axle & Manufacturing Holdings presents attractive investment prospects, with potential for stock price recovery as long as no significant negative developments arise [10]