American Axle & Manufacturing (AXL) 2025 Conference August 12, 2025 10:20 AM ET Speaker0Okay. We're going to get going with the next presentation. Once again, I'm Ryan Brinkman, U. S. Automotive Equity Research Analyst at JPMorgan.Very excited to have with us Chris May, Executive Vice President and Chief Financial Officer of American Axle and Manufacturing and David Lim, Head of Investor Relations. I think Chris has got a few minutes of prepared remarks, a slide or two, and then we'll engage in a fireside c ...

Core Insights - American Axle & Manufacturing Holdings (AXL) reported second-quarter 2025 adjusted earnings of 21 cents per share, exceeding the Zacks Consensus Estimate of 13 cents, and up from 19 cents in the same quarter last year [1][8] - The company generated quarterly revenues of $1.54 billion, surpassing the Zacks Consensus Estimate of $1.51 billion, although this represents a 5.5% decline year-over-year [1][8] Segment Performance - The Driveline segment recorded sales of $1.08 billion, down 3.7% year-over-year, but exceeded the estimate of $1.05 billion, with adjusted EBITDA of $148.9 million, a 2% decline year-over-year, yet above the estimate of $139.4 million [2] - The Metal Forming business generated revenues of $598.4 million, an 8.4% decrease from the previous year, missing the estimate of $609.9 million, with adjusted EBITDA of $53.3 million, down 5.8% year-over-year, but beating the estimate of $41.1 million [3] Financial Position - SG&A expenses for the second quarter totaled $100.8 million, down from $105.2 million in the prior year [4] - Net cash provided by operating activities was $91.9 million, a decrease from $142.8 million year-over-year [4] - Capital spending increased to $52.9 million from $46.6 million in the same quarter last year [4] - Free cash flow for the quarter was $39 million, down from $96.2 million in the year-ago period [5] - As of June 30, 2025, cash and cash equivalents stood at $586.5 million, up from $552.9 million at the end of 2024, while net long-term debt increased to $2.60 billion from $2.58 billion [5] Revised Outlook for 2025 - AXL revised its 2025 revenue guidance to a range of $5.75-$5.95 billion, up from the previous range of $5.65-$5.95 billion [6] - Adjusted EBITDA is now estimated to be between $695-$745 million, revised from the prior guidance of $665-$745 million [6] - Adjusted free cash flow is anticipated to be between $175 million and $215 million, up from the previous target of $165-$215 million [6] Zacks Rank & Comparisons - AXL currently holds a Zacks Rank 3 (Hold) [7] - Other better-ranked stocks in the auto sector include Ferrari N.V. (RACE), PHINIA Inc. (PHIN), and Modine Manufacturing Company (MOD), each with a Zacks Rank 1 (Strong Buy) [7]

Financial Data and Key Metrics Changes - In Q1 2025, the company achieved record bookings of $800 million and forecasts total bookings of $5 billion for the full year [12][22] - North America operations generated $2.2 billion in revenue during 2024, with $1.3 billion from U.S. operations and $900 million from Mexico operations [19] Business Line Data and Key Metrics Changes - The company launched 23 new programs in Q1 2025, including 14 for battery electric vehicle platforms and 19 for new or conquest business [8] - Electric powered steering accounted for 36% of new business bookings, while columns accounted for 45% [12] Market Data and Key Metrics Changes - Nearly 40% of total bookings are from China OEMs, indicating alignment with growth megatrends in China [12] - The company is experiencing strong demand for by-wire technology, particularly in the China market [24] Company Strategy and Development Direction - The company is focused on expanding its motion by wire technology, which includes steer by wire and brake by wire systems, to enhance precision and efficiency in EV platforms [15][23] - The strategy includes reducing fixed costs, optimizing footprint, and improving supply chain efficiency to drive margin expansion [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing challenges such as a dynamic tariff environment and supply chain restrictions but remains optimistic about strong customer schedules and revenue growth [6][30] - The company is well-positioned to navigate tariff impacts and is actively working with customers to mitigate costs [22] Other Important Information - The company successfully resecured an important column business with a North American customer, which had been lost to a competitor [11] - The company expects to start production of rear wheel steering contracts with leading Chinese OEMs in 2026 [14] Q&A Session Summary Question: Updates on the latest trend in the North America market - Management noted that year-to-date volumes in North America are performing according to expectations, with strong customer schedules [27][30] Question: Changes in customer order trends due to new tariffs - Management indicated that customer production schedules remain strong and have not changed significantly due to the new tariffs [31] Question: Clarification on USMCA tariff compliance - Management confirmed that for USMCA compliant shipments, there is no tariff if 75% of content comes from North America; otherwise, a 25% tariff applies [33][34]

Financial Data and Key Metrics Changes - The company reported $800 million in bookings for Q1 2025 and forecasts $5 billion in bookings for the full calendar year [11] - North America operations generated $2.2 billion in revenue during 2024, with $1.3 billion from U.S. operations and $900 million from Mexico operations [17] - The company expects above-market revenue growth of 200 to 300 basis points year over year for 2025 [20] Business Line Data and Key Metrics Changes - In Q1 2025, the company achieved 23 new program launches, including 14 for battery electric vehicle platforms [7] - Electric powered steering accounted for 36% of year-to-date new business bookings, while columns accounted for 45% [11] - The company secured significant steer by wire bookings, including contracts with a global EV leader and a leading Chinese NEV OEM [21] Market Data and Key Metrics Changes - Nearly 40% of total bookings are from Chinese OEMs, indicating alignment with growth megatrends in China [12] - The company is experiencing strong customer schedules in North America, with no significant changes related to recent tariff impacts [28] Company Strategy and Development Direction - The company is focusing on motion by wire technology as a central part of its long-term growth strategy, transitioning from hydraulic to electric control systems [21] - The company aims to expand its motion by wire chassis portfolio, including steer by wire and brake by wire technologies [10][14] - The strategy includes reducing fixed costs, optimizing footprint, and improving supply chain efficiency to drive margin expansion [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges such as dynamic tariff environments and supply chain restrictions but expressed confidence in navigating these issues [5][20] - The company remains optimistic about the North American market, despite potential volatility due to tariffs [26][27] Other Important Information - The company launched several new programs at the Shanghai Auto Show, emphasizing its commitment to innovative technology [6] - The company is actively working to mitigate tariff costs through changing sourcing locations and negotiating recoveries with customers [19] Q&A Session Summary Question: Updates on the latest trend in the North America market - Management noted that North America volumes are performing according to expectations, with strong customer schedules in the near term [24][26] Question: Changes in customer order trends due to new tariffs - Management indicated that customer production schedules remain strong and have not changed significantly due to the new tariffs [28] Question: Clarification on USMCA tariff compliance - Management confirmed that to be USMCA compliant, 75% of content must come from North America, and compliant goods can be imported with zero tariffs [30][31]