AAM Reports First Quarter 2025 Financial Results
- Operating cash flow improved to $55.9 million from $17.8 million YoY
- Adjusted free cash flow improved to -$3.9 million from -$21.4 million YoY
- Maintained relatively stable Adjusted EBITDA margin at 12.6% vs 12.8% YoY
- Sales declined to $1.41 billion from $1.61 billion YoY
- Net income decreased to $7.1 million from $20.5 million YoY
- Lowered 2025 guidance for sales, EBITDA, and free cash flow
- Adjusted earnings per share dropped to $0.09 from $0.18 YoY
Insights
AAM reported lower Q1 results with revenue/profit declines, reduced 2025 guidance, but improved cash flow performance driven by cost control measures.
AAM's Q1 2025 results show significant financial headwinds with sales dropping to $1.41 billion from $1.61 billion in Q1 2024. This 12.4% revenue decline came alongside a more pronounced 65.4% decrease in net income to just $7.1 million, with profit margins compressed from 1.3% to mere 0.5% of sales.
The earnings deterioration is evident across multiple metrics. Diluted EPS fell to $0.06 (from $0.17), adjusted EPS declined to $0.09 (from $0.18), and adjusted EBITDA decreased to $177.3 million (from $205.6 million), with EBITDA margins slightly contracting from 12.8% to 12.6%.
The lone bright spot appears in cash management - operating cash flow improved substantially to $55.9 million compared to $17.8 million in Q1 2024, while adjusted free cash flow improved to $(3.9) million from $(21.4) million. This cash flow enhancement despite profit erosion demonstrates effective cost discipline and working capital management.
More concerning is management's downward revision of full-year guidance. AAM now targets:
- Sales of $5.65-5.95 billion (reduced from $5.8-6.05 billion)
- Adjusted EBITDA of $665-745 million (reduced from $700-760 million)
- Adjusted free cash flow of $165-215 million (reduced from $200-230 million)
This guidance reset signals management's expectation that volume challenges will persist throughout 2025. The company specifically noted its guidance assumes North American light vehicle production of approximately 14.0-15.1 million units and that "substantially all incremental tariff costs are passed on to customers."
Volume declines hit AAM's performance, while strategic transformation continues with pending Dowlais combination and planned divestiture of Indian CV axle business.
AAM's Q1 results reflect the challenging environment facing automotive suppliers, with the company explicitly attributing its revenue decline to "overall lower volumes." This volume softness is impacting the entire supply chain, with many OEMs adjusting production schedules amid economic uncertainty.
Strategically, AAM continues to reshape its portfolio and market positioning. The company emphasized "excellent progress" on its pending combination with Dowlais, which represents a major transformational move. Additionally, AAM's guidance assumes completion of the sale of its commercial vehicle axle business in India by July 1, 2025, further streamlining operations.
CEO David Dauch highlighted the "uncertain geopolitical trade policy environment" as a key challenge, suggesting tariff concerns and trade tensions are complicating the operational landscape. The assumption that "substantially all incremental tariff costs are passed on to customers" is notable, as it implies confidence in pricing power despite the volume headwinds.
The guidance assumes North American light vehicle production of 14.0-15.1 million units for 2025, providing a baseline for expected market conditions. Importantly, the guidance explicitly excludes costs related to the Dowlais combination, which will impact actual results.
Management's focus on "cost control and productivity" delivered tangible benefits in cash flow, suggesting AAM is effectively managing factors within its control despite the broader industry challenges. This disciplined approach to operations could help AAM weather the current volume environment while positioning for the potential benefits of its strategic transformation.
Increased Year-Over-Year Operating Cash Flow
First Quarter 2025 Results
- Sales of
$1.41 billion - Net income of
$7.1 million 0.5% of sales - Adjusted EBITDA of
$177.3 million 12.6% of sales - Diluted earnings per share of
$0.06 $0.09 - Net cash provided by operating activities of
$55.9 million $(3.9) million
"AAM delivered positive year-over-year operating cash flow performance driven by a combination of cost control and productivity," said AAM's Chairman and Chief Executive Officer, David C. Dauch. "AAM will stay focused on managing factors under our control while operating in an uncertain geopolitical trade policy environment. In addition, we continue to make excellent progress on our transformational Dowlais combination."
AAM's sales in the first quarter of 2025 were
AAM's net income in the first quarter of 2025 was
Adjusted earnings per share in the first quarter of 2025 was
In the first quarter of 2025, Adjusted EBITDA was
AAM's net cash provided by operating activities for the first quarter of 2025 was
AAM's Adjusted free cash flow for the first quarter of 2025 was
AAM's 2025 Updated Financial Outlook
AAM's full year 2025 financial targets are as follows:
- AAM is targeting sales in the range of
$5.65 $5.95 billion $5.8 $6.05 billion - AAM is targeting Adjusted EBITDA in the range of
$665 $745 million $700 $760 million - AAM is targeting Adjusted free cash flow in the range of
$165 $215 million $200 $230 million 5% of sales.
These targets are based on the following assumptions for 2025:
- North American light vehicle production of approximately 14.0 - 15.1 million units.
- AAM's production estimates of key programs that we support.
- AAM's outlook assumes the sale of AAM's commercial vehicle axle business in
India is completed by July 1, 2025. - Does not reflect any costs and expenses relating to the announced combination with Dowlais, which will impact actual results. Reflects guidance for AAM on a stand-alone pre-combination basis only.
- Substantially all incremental tariff costs are passed on to our customers.
First Quarter 2025 Conference Call Information
A conference call to review AAM's first quarter results is scheduled for today at 10:00 a.m. ET. Interested participants may listen to the live conference call by logging onto AAM's investor web site at http://investor.aam.com or calling (877) 883-0383 from
Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles generally accepted in
Certain of the forward-looking financial measures included in this earnings release are provided on a non-GAAP basis. A reconciliation of non-GAAP forward-looking financial measures to the most directly comparable forward-looking financial measures calculated and presented in accordance with GAAP has been provided. The amounts in these reconciliations are based on our current estimates and actual results may differ materially from these forward-looking estimates for many reasons, including potential event driven transactional and other non-core operating items and their related effects in any future period, the magnitude of which may be significant.
Management believes that these non-GAAP financial measures are useful to management, investors, and banking institutions in their analysis of AAM's business and operating performance. Management also uses this information for operational planning and decision-making purposes.
Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measure. Additionally, non-GAAP financial measures as presented by AAM may not be comparable to similarly titled measures reported by other companies.
Definition of Non-GAAP Financial Measures
AAM defines Adjusted earnings per share to be diluted earnings per share excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, gains or losses on the derivative associated with our business combination with Dowlais, gains or losses on equity securities, pension curtailment and settlement charges, impairment charges, and non-recurring items, including the tax effect thereon.
AAM defines EBITDA to be earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, gains or losses on the derivative associated with our business combination with Dowlais, gains or losses on equity securities, pension curtailment and settlement charges, impairment charges and non-recurring items.
AAM defines free cash flow to be net cash provided by operating activities less capital expenditures net of proceeds from the sale of property, and plant and equipment. Adjusted free cash flow is defined as free cash flow excluding the impact of cash payments for restructuring and acquisition-related costs.
Company Description
As a leading global Tier 1 Automotive and Mobility Supplier, AAM (NYSE: AXL) designs, engineers and manufactures Driveline and Metal Forming technologies to support electric, hybrid and internal combustion vehicles. Headquartered in
Forward-Looking Statements
In this earnings release, we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 and relate to trends and events that may affect our future financial position and operating results. The terms such as "will," "may," "could," "would," "plan," "believe," "expect," "anticipate," "intend," "project," "target," and similar words or expressions, as well as statements in future tense, are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and may differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to: global economic conditions, including the impact of inflation, recession or recessionary concerns, or slower growth in the markets in which we operate; reduced purchases of our products by General Motors Company (GM), Stellantis N.V. (Stellantis), Ford Motor Company (Ford) or other customers; our ability to respond to changes in technology, increased competition or pricing pressures; our ability to develop and produce new products that reflect market demand; lower-than-anticipated market acceptance of new or existing products; our ability to attract new customers and programs for new products; reduced demand for our customers' products (particularly light trucks and sport utility vehicles (SUVs) produced by GM, Stellantis and Ford); our ability to consummate strategic initiatives and successfully integrate acquisitions and joint ventures; risks inherent in our global operations (including tariffs and the potential consequences thereof to us, our suppliers, and our customers and their suppliers, adverse changes in trade agreements, such as
Additional Information
This earnings release may be deemed to be solicitation material in respect of AAM's proposed combination with Dowlais Group plc (the "Business Combination"), including the issuance of AAM's shares of common stock in respect of the Business Combination. In connection with the foregoing proposed issuance of AAM's shares of common stock, AAM expects to file a proxy statement on Schedule 14A (together with any amendments and supplements thereto, the "Proxy Statement") with the
Participants in the Solicitation
AAM and its directors, executive officers and certain other members of management and employees will be participants in the solicitation of proxies from AAM's shareholders in respect of the Business Combination, including the proposed issuance of AAM's shares of common stock in connection with the Business Combination. Information regarding AAM's directors and executive officers is contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on February 14, 2025, the definitive proxy statement on Schedule 14A for AAM's 2025 annual meeting of stockholders, which was filed with the SEC on March 20, 2025 and the Current Report on Form 8-K of AAM, which was filed with the SEC on March 17, 2025. Additional information regarding the identity of participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the Proxy Statement when it is filed with the SEC. To the extent holdings of AAM's securities by its directors or executive officers change from the amounts set forth in the Proxy Statement, such changes will be reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC by AAM. These documents may be obtained free of charge from the SEC's website at www.sec.gov and AAM's website at https://www.aam.com/investors.
No Offer or Solicitation
This earnings release is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Profit Forecasts and Estimates
The statements in this press release setting out targets for Adjusted EBITDA and Adjusted free cash flow of AAM for FY25 (together, the "FY25 Updated Profit Forecast") constitute profit forecasts of AAM for the purposes of Rule 28.1(a) of the
Other than the FY25 Updated Profit Forecast, nothing in this press release (including any statement of estimated cost savings or synergies) is intended, or is to be construed, as a profit forecast or profit estimate for any period or is to be interpreted to mean that earnings or earnings per share of AAM or Dowlais for the current or future financial years will necessarily match or exceed the published earnings or earnings per share of AAM or Dowlais, as appropriate.
AAM Directors' Confirmation
In accordance with Rule 28.1(c)(i) of the Code, the AAM directors confirm that, as at the date of this press release, the FY25 Updated Profit Forecast is valid and has been properly compiled on the basis of the assumptions stated in AAM's
For more information:
Investor Contact
David H. Lim
Head of Investor Relations
(313) 758-2006
david.lim@aam.com
Media Contact
Christopher M. Son
Vice President, Marketing & Communications
(313) 758-4814
chris.son@aam.com
Or visit the AAM website at www.aam.com.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
| |||
Three Months Ended | |||
March 31, | |||
2025 | 2024 | ||
(in millions, except per share data) | |||
Net sales | $ 1,411.3 | $ 1,606.9 | |
Cost of goods sold | 1,237.4 | 1,408.4 | |
Gross profit | 173.9 | 198.5 | |
Selling, general and administrative expenses | 90.9 | 98.3 | |
Amortization of intangible assets | 20.6 | 20.7 | |
Restructuring and acquisition-related costs | 19.7 | 2.5 | |
Operating income | 42.7 | 77.0 | |
Interest expense | (42.9) | (49.0) | |
Interest income | 5.6 | 8.3 | |
Other income (expense): | |||
Debt refinancing and redemption costs | (3.3) | — | |
Gain on Business Combination Derivative | 21.9 | — | |
Gain on equity securities | — | 0.1 | |
Other expense, net | (2.9) | — | |
Income before income taxes | 21.1 | 36.4 | |
Income tax expense | 14.0 | 15.9 | |
Net income | $ 7.1 | $ 20.5 | |
Diluted earnings per share | $ 0.06 | $ 0.17 | |
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
| |||
March 31, 2025 | December 31, 2024 | ||
(Unaudited) | |||
ASSETS | (in millions) | ||
Current assets | |||
Cash and cash equivalents | $ 549.2 | $ 552.9 | |
Accounts receivable, net | 817.4 | 709.1 | |
Inventories, net | 434.3 | 442.5 | |
Prepaid expenses and other | 164.3 | 152.2 | |
Current assets held-for-sale | 67.8 | 58.1 | |
Total current assets | 2,033.0 | 1,914.8 | |
Property, plant and equipment, net | 1,614.6 | 1,622.8 | |
Deferred income taxes | 198.3 | 199.5 | |
Goodwill | 172.8 | 172.0 | |
Other intangible assets, net | 436.2 | 456.7 | |
GM postretirement cost sharing asset | 113.5 | 111.7 | |
Operating lease right-of-use assets | 109.2 | 110.3 | |
Other assets and deferred charges | 461.8 | 472.1 | |
Total assets | $ 5,139.4 | $ 5,059.9 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities | |||
Current portion of long-term debt | $ 10.5 | $ 47.9 | |
Accounts payable | 745.3 | 700.5 | |
Accrued compensation and benefits | 167.2 | 193.0 | |
Deferred revenue | 25.0 | 14.2 | |
Current portion of operating lease liabilities | 24.1 | 22.8 | |
Accrued expenses and other | 177.9 | 172.4 | |
Current liabilities held-for-sale | 34.1 | 24.4 | |
Total current liabilities | 1,184.1 | 1,175.2 | |
Long-term debt, net | 2,609.0 | 2,576.9 | |
Deferred revenue | 43.1 | 37.0 | |
Deferred income taxes | 9.9 | 11.8 | |
Long-term portion of operating lease liabilities | 87.2 | 89.9 | |
Postretirement benefits and other long-term liabilities | 609.8 | 606.3 | |
Total liabilities | 4,543.1 | 4,497.1 | |
Total AAM stockholders' equity | 596.3 | 562.8 | |
Total liabilities and stockholders' equity | $ 5,139.4 | $ 5,059.9 | |
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| |||
Three Months Ended | |||
March 31, | |||
2025 | 2024 | ||
(in millions) | |||
Operating activities | |||
Net income | $ 7.1 | $ 20.5 | |
Adjustments to reconcile net income to net cash provided by operating activities | |||
Depreciation and amortization | 112.2 | 117.8 | |
Other | (63.4) | (120.5) | |
Net cash provided by operating activities | 55.9 | 17.8 | |
Investing activities | |||
Purchases of property, plant and equipment | (69.3) | (48.0) | |
Proceeds from sale of property, plant and equipment | 0.6 | 3.1 | |
Acquisition of business, net of cash acquired | (0.6) | (0.6) | |
Proceeds from disposition of affiliates | 30.1 | — | |
Other | (1.0) | (2.7) | |
Net cash used in investing activities | (40.2) | (48.2) | |
Financing activities | |||
Net debt activity | (15.8) | (10.1) | |
Other | (8.2) | (5.9) | |
Net cash used in financing activities | (24.0) | (16.0) | |
Effect of exchange rate changes on cash | 4.6 | (3.7) | |
Net decrease in cash and cash equivalents | (3.7) | (50.1) | |
Cash and cash equivalents at beginning of period | 552.9 | 519.9 | |
Cash and cash equivalents at end of period | $ 549.2 | $ 469.8 | |
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
SUPPLEMENTAL DATA
(Unaudited)
The supplemental data presented below is a reconciliation of certain financial measures which is intended
to facilitate analysis of American Axle & Manufacturing Holdings, Inc.'s business and operating performance.
Earnings before interest expense, income taxes and depreciation and amortization (EBITDA) and Adjusted EBITDA(a)
| |||
Three Months Ended | |||
March 31, | |||
2025 | 2024 | ||
(in millions) | |||
Net income | $ 7.1 | $ 20.5 | |
Interest expense | 42.9 | 49.0 | |
Income tax expense | 14.0 | 15.9 | |
Depreciation and amortization | 112.2 | 117.8 | |
EBITDA | 176.2 | 203.2 | |
Restructuring and acquisition-related costs | 19.7 | 2.5 | |
Debt refinancing and redemption costs | 3.3 | — | |
Gain on Business Combination Derivative | (21.9) | — | |
Gain on equity securities | — | (0.1) | |
Adjusted EBITDA | $ 177.3 | $ 205.6 | |
Adjusted earnings per share(b)
| |||
Three Months Ended | |||
March 31, | |||
2025 | 2024 | ||
Diluted earnings per share | $ 0.06 | $ 0.17 | |
Restructuring and acquisition-related costs | 0.16 | 0.02 | |
Debt refinancing and redemption costs | 0.03 | — | |
Gain on Business Combination Derivative | (0.18) | — | |
Tax effect of adjustments | 0.02 | (0.01) | |
Adjusted earnings per share | $ 0.09 | $ 0.18 | |
Adjusted earnings per share are based on weighted average diluted shares outstanding of 122.6 million and 121.0 million for the three months ended March 31, 2025 and 2024 respectively.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
SUPPLEMENTAL DATA
(Unaudited)
The supplemental data presented below is a reconciliation of certain financial measures which is intended to facilitate analysis of American Axle & Manufacturing Holdings, Inc.'s business and operating performance.
Free cash flow and Adjusted free cash flow(c)
| |||
Three Months Ended | |||
March 31, | |||
2025 | 2024 | ||
(in millions) | |||
Net cash provided by operating activities | $ 55.9 | $ 17.8 | |
Less: Capital expenditures net of proceeds from the sale of property, plant and equipment | (68.7) | (44.9) | |
Free cash flow | $ (12.8) | $ (27.1) | |
Cash payments for restructuring and acquisition-related costs | 8.9 | 5.7 | |
Adjusted free cash flow | $ (3.9) | $ (21.4) | |
Segment Financial Information
| |||
Three Months Ended | |||
March 31, | |||
2025 | 2024 | ||
(in millions) | |||
Segment Sales | |||
Driveline | $ 957.8 | $ 1,106.4 | |
Metal Forming | 575.8 | 644.1 | |
Total Sales | 1,533.6 | 1,750.5 | |
Intersegment Sales | (122.3) | (143.6) | |
Net External Sales | $ 1,411.3 | $ 1,606.9 | |
Segment Adjusted EBITDA(a) | |||
Driveline | $ 125.3 | $ 157.4 | |
Metal Forming | 52.0 | 48.2 | |
Total Segment Adjusted EBITDA | $ 177.3 | $ 205.6 | |
Full Year 2025 Financial Outlook
The supplemental data presented below is a reconciliation of certain financial measures which is intended
to facilitate analysis of American Axle & Manufacturing Holdings, Inc.'s business and operating performance.
Adjusted EBITDA | |||
Low End | High End | ||
(in millions) | |||
Net loss | $ (65) | $ (10) | |
Interest expense | 170 | 180 | |
Income tax expense | 35 | 50 | |
Depreciation and amortization | 455 | 455 | |
Full year 2025 targeted EBITDA | 595 | 675 | |
Restructuring-related costs | 25 | 25 | |
Dowlais acquisition-related costs | 65 | 65 | |
Other, principally Business Combination Derivative | (20) | (20) | |
Full year 2025 targeted Adjusted EBITDA | $ 665 | $ 745 | |
Adjusted Free Cash Flow | |||
Low End | High End | ||
(in millions) | |||
Net cash provided by operating activities | $ 375 | $ 425 | |
Capital expenditures net of proceeds from the sale of property, plant and equipment | (300) | (300) | |
Full year 2025 targeted Free Cash Flow | 75 | 125 | |
Cash payments for restructuring-related costs | 25 | 25 | |
Cash payments for Dowlais acquisition-related costs | 65 | 65 | |
Full year 2025 targeted Adjusted Free Cash Flow | $ 165 | $ 215 | |
___________
(a) | We define EBITDA to be earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, gains or losses on the derivative associated with our business combination with Dowlais, gains or losses on equity securities, pension curtailment and settlement charges, impairment charges and non-recurring items. We believe that EBITDA and Adjusted EBITDA are meaningful measures of performance as they are commonly utilized by management and investors to analyze operating performance and entity valuation. Our management, the investment community and the banking institutions routinely use EBITDA and Adjusted EBITDA, together with other measures, to measure our operating performance relative to other Tier 1 automotive suppliers. We also use Segment Adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. EBITDA and Adjusted EBITDA are also key metrics used in our calculation of incentive compensation. EBITDA and Adjusted EBITDA should not be construed as income from operations, net income or cash flow from operating activities as determined under GAAP. Other companies may calculate EBITDA and Adjusted EBITDA differently. |
(b) | We define Adjusted earnings per share to be diluted earnings per share excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, gains or losses on the derivative associated with our business combination with Dowlais, gains or losses on equity securities, pension curtailment and settlement charges, impairment charges and non-recurring items, including the tax effect thereon. We believe Adjusted earnings per share is a meaningful measure as it is commonly utilized by management and investors in assessing ongoing financial performance that provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of core operating performance and which may obscure underlying business results and trends. Other companies may calculate Adjusted earnings per share differently. |
(c) | We define free cash flow to be net cash provided by operating activities less capital expenditures net of proceeds from the sale of property, plant and equipment. Adjusted free cash flow is defined as free cash flow excluding the impact of cash payments for restructuring and acquisition-related costs. We believe free cash flow and Adjusted free cash flow are meaningful measures as they are commonly utilized by management and investors to assess our ability to generate cash flow from business operations to repay debt and return capital to our stockholders. Free cash flow and Adjusted free cash flow are also key metrics used in our calculation of incentive compensation. Other companies may calculate free cash flow and Adjusted free cash flow differently. |
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SOURCE American Axle & Manufacturing Holdings, Inc.
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