American Axle & Manufacturing Holdings, Inc. (AAM) has reported its financial results for the fourth quarter and full year 2023. In the fourth quarter of 2023, AAM recorded sales of $1.46 billion, a net loss of $(19.1) million, and adjusted EBITDA of $169.5 million. For the full year 2023, the company reported sales of $6.08 billion, a net loss of $(33.6) million, and adjusted EBITDA of $693.3 million.
David C. Dauch, AAM's Chairman and Chief Executive Officer, commented on the performance, stating, "AAM’s fourth quarter performance was on track with our improvement objectives, ending a challenging 2023 on a better trajectory. As we look ahead, AAM will leverage its strong core business while selectively building a product portfolio to drive the future pivot to electrification."
AAM's sales in the fourth quarter of 2023 showed improvement, totaling $1.46 billion compared to $1.39 billion in the fourth quarter of 2022. However, the company reported a net loss for the quarter, in contrast to a net income in the same period of 2022. The full year 2023 results also reflected a net loss, compared to a net income in 2022.
Looking forward, AAM has outlined its financial targets for the full year 2024, including sales in the range of $6.05 - $6.35 billion, adjusted EBITDA in the range of $685 - $750 million, and adjusted free cash flow in the range of $200 - $240 million.
Additionally, AAM provided insight into its 2024-2026 new business backlog, estimating approximately $600 million in future annual sales. It expects electrification to account for approximately 50% of the new business backlog, reflecting the company's focus on the pivot to electrification.
The company's shares have experienced a -2.6% movement, currently trading at a price of $8.32.
A conference call to review AAM's fourth quarter results is scheduled, where further details may be discussed.
The company's full 8-K submission is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $7,270 | $6,531 | $4,711 | $5,157 | $5,802 | $6,009 |
| Gross Margins | 16% | 14% | 12% | 14% | 12% | 11% |
| Net Margins | -1% | -7% | -12% | 0% | 1% | 0% |
| Net Income (M) | -$58 | -$484 | -$561 | $6 | $64 | -$1 |
| Net Interest Expense (M) | $216 | $217 | $212 | $195 | $174 | $194 |
| Depreciation & Amort. (M) | $529 | $537 | $522 | $544 | $492 | $491 |
| Diluted Shares (M) | 112 | 112 | 113 | 114 | 116 | 117 |
| Earnings Per Share | -$0.51 | -$4.31 | -$4.96 | $0.05 | $0.53 | -$0.01 |
| EPS Growth | n/a | -745.1% | -15.08% | 101.01% | 960.0% | -101.89% |
| Avg. Price | $15.76 | $11.48 | $6.97 | $9.78 | $8.0 | $8.365 |
| P/E Ratio | -30.9 | -2.66 | -1.41 | 195.6 | 14.81 | -836.5 |
| Free Cash Flow (M) | $247 | $126 | $239 | $357 | $278 | $300 |
| CAPEX (M) | $525 | $433 | $216 | $181 | $171 | $192 |
| EV / EBITDA | 8.11 | 18.88 | 29.25 | 4.69 | 4.51 | 4.8 |
| Total Debt (M) | $3,876 | $3,692 | $3,455 | $3,104 | $2,921 | $2,834 |
| Net Debt / EBITDA | 5.35 | 13.43 | 23.02 | 3.28 | 3.27 | 3.35 |
| Current Ratio | 1.5 | 1.81 | 1.92 | 1.78 | 1.66 | 1.71 |
Based on the provided information, American Axle & Manufacturing's stock appears to be fairly valued at the current price of $8.32. The company has experienced significant growth in earnings per share, with a compelling annualized growth rate over the last 6 years. However, there are concerning factors that should be taken into consideration.
One positive aspect is the company's improving operating margins, which have been growing at a notable yearly rate. However, the operating margins still fall significantly below the industry average, indicating potential competitiveness challenges. The declining revenues and capital expenditures also raise concerns about the company's ability to sustain its growth trajectory in the long term. Additionally, the thin gross margins compared to the industry average suggest potential profitability issues.
In terms of value factors, American Axle & Manufacturing's high total liabilities relative to its current assets and the highly leveraged balance sheet, as indicated by the Net Debt / EBITDA ratio, are significant negatives.
