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A month has gone by since the last earnings report for American Axle & Manufacturing (AXL). Shares have added about 17.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is American Axle due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
American Axle's Q3 Earnings Top Estimates, Down Y/Y
American Axle delivered mixed 2019 third-quarter results, wherein the earnings topped the Zacks Consensus Estimates, but the revenues lagged the same. While the company’s results were negatively impacted by UAW-General Motors strike, operational efficiency offset the results. Detroit-based global automotive parts supplier posted adjusted earnings of 58 cents per share, topping the Zacks Consensus Estimate of 41 cents. Nonetheless, the bottom line reduced 7.9% year-over-year. The company reported revenues of $1,677 million, missing the Zacks Estimate of $1,697 million and also below the year ago figure of $1,817 million.
Segmental Highlights
The firm’s driveline segment recorded sales of $1,146.7 million, down 6.6% year-over-year. The EBITDA from the unit also declined 3% to come in at $171.6 million. Unfavorable impact from the 40-day strike of its largest customer General Motors (GM) led to weaker contribution. However, American Axle was able to improve its EBITDA margin from 14.4% to 14.9% in the quarter under review on the back of operational efficiency along with lower project and launch costs.
The company’s metal forming business generated revenues of $476.6 million, lower than the year-ago figure of $509 million. The EBITDA also scaled down 3.9% year-over-year to $80.4 million. While work stoppage at General Motors impacted the unit’s results, lower launch costs and synergy benefits offset the losses.
Casting unit posted revenues of $209 million, comparing unfavorably with the year-ago level of $219.1 million. The EBITDA from the segment also declined to $13.8 million from $14.5 million recorded in the third quarter of 2018. The segment bore the brunt of high operating costs and lower sales in commercial and industrial market.
Costs & Financial Position
American Axle’s SG&A (selling, general & administrative) expenses were $92.7 million for thirdd-quarter 2019 in comparison with $96.3 million in the prior-year quarter.
For the three months ending Sep 30, the company’s adjusted free cash flow (FCF) was $160.5 million compared with $121.3 million for the same period of last year. Capital spending in the quarter came in at $97.5 million, declining from $116.5 million in the year-quarter figure.