American Axle & Manufacturing Holdings Inc. AXL posted adjusted earnings of 86 cents per share for the third quarter, beating the Zacks Consensus Estimate of 64 cents. The reported figure excludes the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, plus non-recurring items, including the tax effect. In third-quarter 2016, adjusted earnings were 83 cents. The company reported net income of $86.2 million or 75 cents per share in the third quarter of 2017 compared with $62 million or 78 cents in the year-ago quarter.
Revenues increased to $1.72 billion in the reported quarter from the year-ago figure of $1.01 billion. The top line also surpassed the Zacks Consensus Estimate of $1.62 billion.
American Axle’s SG&A (Selling, General & Administrative) expenses were $102 million for the reported period in comparison to $78.6 million in the prior-year quarter.
American Axle & Manufacturing Holdings, Inc. Price, Consensus and EPS Surprise
American Axle & Manufacturing Holdings, Inc. Price, Consensus and EPS Surprise | American Axle & Manufacturing Holdings, Inc. Quote
Gross profit increased to $298 million in third-quarter 2017 from $181.2 million in the prior-year quarter. Operating income increased to $148.2 million from $101.3 million a year ago.
Financial Position
American Axle had cash and cash equivalents of $550 million as of Sep 30, 2017, up from $481 million as of Dec 31, 2016. Long-term debt was $4.2 billion as of Sep 30, 2017 compared with $1.4 billion on Dec 31, 2016.
Cash flow from operations in third-quarter 2017 was $208 million in comparison to the prior-year’s figure of $108 million. American Axle’s adjusted free cash flow for the third quarter was $88 million compared with $55 million for the same period last year. The figure excludes the impact of cash payments for restructuring and acquisition-related costs, settlements of pre-existing accounts payable balances with acquired entities and interest payments upon the settlement of acquired company debt.
Debt Repayment
American Axle has issued a notice of redemption of outstanding 5.125% senior notes due 2019, having an aggregate principal amount of $200 million on par. Plus, accrued and unpaid interest to the redemption date of Dec 4, 2017 will also be paid.
A strong free cash flow generation has enabled the company to repay its debt.
2017 Outlook
For fiscal 2017, the company’s sales expectation lies within the range of $6.2-$6.25 billion compared with the previous projection of approximately $6.1 billion. The sales expectation is also higher than $3.95 billion recorded last year. This estimate is based on the launch of programs in the company’s new and incremental business backlog. The company also assumes that the U.S. industry sales on a seasonally adjusted annualized rate (SAAR) basis will be around 17 million light vehicle units in 2017.
Adjusted earnings before income taxes, depreciation and amortization (EBITDA) are expected to be approximately $1.1 billion in 2017. American Axle reiterated its guidance for adjusted free cash to be approximately 5% of sales in 2017. In addition, capital spending will be around 8% of sales this year.
Zacks Rank & Key Picks
American Axle carries a Zacks Rank #3 (Hold).
Some better-ranked companies in the auto space are Navistar International Corporation NAV, Cummins Inc. CMI and Ford Motor Company F. Navistar and Cummins sport a Zacks Rank#1 (Strong Buy), whereas Ford carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Navistar has an expected long-term growth rate of 5%.
Cummins has an expected long-term growth rate of 12.4%.
Ford has an expected long-term growth rate of 10.7%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment