American Axle Up on Q1 Earnings Beat - Analyst Blog

Share price of American Axle and Manufacturing Holdings Inc. AXL increased 2.5% on May 2, 2013 to $18.78 after the company reported earnings of 44 cents per share, surpassing the Zacks Consensus Estimate of 40 cents. Earnings also improved from 23 cents per share in the comparable quarter of 2013 (excluding special items). Net income jumped to $33.6 million from $18.6 million reported in the first quarter of 2013.

The year-ago quarter includes debt refinancing and redemption costs impact of $11.3 million or 13 cents per share.

Revenues went up 13.7% to $858.8 million from $755.6 million in the first quarter of 2013. The figure outpaced the Zacks Consensus Estimate of $853 million. The year-over-year improvement in revenues was driven by higher sales of Chrysler's all-new Jeep Cherokee and heavy-duty Ram full-size pickup trucks and its derivatives.

American Axle's content-per-vehicle – dollar value of product sales supporting customers' North American light truck and SUV programs – increased 10% to $1,655 from $1,504 in the year-earlier quarter. The company's non-General Motors Company GM sales rose 53% to $287.8 million from $188.1 million in the year-ago quarter.

Gross profit improved 16.9% to $121.9 million or 14.2% of sales in first-quarter 2014 from $104.3 million or 13.8% of sales in the year-ago quarter. Meanwhile, operating income surged 45% to $64.8 million or 7.5% of sales from $44.7 million or 5.9% of sales a year ago.

Financial Position

American Axle had cash and cash equivalents of $79.6 million as of Mar 31, 2014, down from $154 million as of Dec 31, 2013. Long-term debt stood at $1.58 billion as of Mar 31, 2014, up from $1.56 billion as of Dec 31, 2013.

Cash used in operations in the first three months of 2014 was $55.5 million compared with $26.8 million in the same period of the previous year. Net capital spending of the company stood at $40 million as against $43.9 million a year ago. Therefore, American Axle had free cash use of $95.5 million in the period compared with $70.7 million in the first three months of 2013.

American Axle is a leading supplier of driveline systems, modules and components for the light vehicle market. The company focuses on the launch of new business backlog, which is likely to prove more profitable, improve free cash flow generation and enhance business diversification. The company is committed to delivering world-class quality products in order to maintain operational excellence and technological leadership.  Currently, American Axle holds a Zacks Rank #3 (Hold).

Some other stocks worth considering in the same industry are Gentherm Incorporated THRM and Modine Manufacturing Company MOD. Both these stocks sport a Zacks Rank #1 (Strong Buy).