AXL - Earnings call transcript Q2 2020 | American Axle & Manufacturing Holdings, Inc.

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Operator

Good morning. My name is Alisa, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the American Axle & Manufacturing’s Second Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. reminder, is a recorded. As Instructions] today's being call [Operator call to Mr. I like the over would now turn to Jason Parsons, Director of Investor Relations. Please go ahead, Mr. Parsons.

Jason Parsons

and is AAM's announcement. Alisa, welcome released our Earlier you, good XXXX would we I Thank earnings quarter like this everyone morning, who quarter joining second on second us earnings call. morning, to

www.aam.com, this PR newswire the access Investor can through on You Relations page and the announcement of our website, services.

as page well. slides for listen this call of You our of also PM Investors website access code replay can find supplemental a will XXXXXXXX. can you This X:XX at Eastern till dial To PM beginning replay on to XX:XX conference August call, Time replay the this available today be X-XXX-XXX-XXXX, Xth.

to in operations results matters that and and or discussed. like remind which and contain to comments predicted cause Before everyone this and materially statements may which future we discussed of are subject from uncertainties, quantified those to may forward-looking differ risks I the call be begin, cannot would activities

non-GAAP well is these to as as information, that and David you Dauch. of certain things Chairman Securities CEO, this to the our with Also, these filings the on Commission. Information Exchange and over we reconciliation ask additional financial turn measures. measures, information our me get measures available regarding financial let With website. to may AAM's refer call, we non-GAAP refer to to For non-GAAP during

David Dauch

And Jason. you, everyone. Thank morning good

today $X.X for factors. revenues reflects quarter the which decrease sales I impacted will in COVID-XX our billion The extending Vice in as shutdowns the the on to pandemic. compared Simonte, production million my today, basis To and some Officer. president; primarily a adversely AAM global Joining quarter remarks two quarter Chief XXXX. begin second the of me and second of XXXX Chris are on $XXX resulting President were were on May, from financial year-over-year AAM's today AAM's by call second Mike comments results, AAM's provide Financial

reduction relates in that first The of and the to due of this shutdowns pandemic. second approximately estimate unfavorable $XXX the demand COVID-XX consumer an XXXX. impact had production to the million in quarter global We

second iron the related operations. sales $XXX This million second In business casting sales of of included addition, for therefore the second at $XXX XXXX. quarter in part EBITDA million, XXXXwas U.S. XXXX, in loss December and compared our base was of a in Adjusted to to quarter XXXX an XXXX. quarter sold of our this our no $XX.X adjusted EBITDA longer is million of

was second estimated basis impacts of $XXX with quarter down unfavorable COVID-XX primarily result at as Our EBITDA adjusted associated year-over-year significantly million. the a a

million second In addition, adjusted to our U.S. operations. EBITDA related casting quarter iron of XXXX our included$XX

that free adjusted much XXXX. upside, cost in adjusted as launch perspective, result was in the as we an second of XXXX. million. first This to expected actions the the the of response costs. the sales of per reduction lower loss we benefit was $X.XX quarter for as XXXX the due well lower share second Adjusted to On realized initiated flow production in cash cash the compared the per to half $X.XX a occurred a earnings that $XXX.X quarter of the of From of shutdowns was use share given flow expected pandemic,

largest also our structure. our of to I challenges quarter reflect cost have performance for we highlighted Supplier the was special accomplishment difficult resiliency A our the year the great company, the believe we While the the of flexibility of adjust Despite all row. the operations and of most second financial today quickly second results our quarter the our AAM. faced our some face ability and at challenges Year the in quarter recognition XXXX, AAM named important we of second also several in highlights in from fourth accomplished GM a quarter. customer.

During significant first EXXX supporting interest the launched strengthen our Liuzhou AAM maturity rate favorable the joint order in China in our unsecured Plus new and at venture to e-drive most we program a refinance we also And program. quarter near-term our finally, at issued debt debt a new maturity profile. Baojun

While this quarter strengthen costs, Most and was and industry structurally the unprecedented this took global economy, an financial the operations, to reduce as adjust profile. our AAM. an opportunity for and We our our our safety we operating importantly, steps necessary promote the adjust taken the further XX,XXX midst actions to worldwide pandemic. COVID-XX to in of associates global the of have and the our procedures health

North profits With and to this and American a over cash ramp positive operations, to back the China optimistic up normal. of Well, and our things new are flow environment. are free market operations we European about ability not stabilization our operating generate in

global operating adapting has that of to guide job team done AAM and change outstanding staying Our associates adjusting an and while and delivering to disciplined principles power day. every focused each

to significant relates as While it COVID-XX financial and amount and of uncertainty XXXX continued refraining exists result we vehicle have as And a seen consumer are that we levels. updating outlook. its impact from withdrawn still production on there previously a recently developments pandemic the positive demand is light our

continue production ramp in up new to demand adjust we the second of our the half As XXXX. to business market

are beyond compression lower we than a focused the of positioning production in future and we and through utilizing for the navigate presented, future. we health to positive generate investing associates, be We launches, challenges XXXX, what operational are expect our also high our several ever in focused successful as to and we And of year our years. del customer and on on schedules safety excellence numerous performance financial environment, the experienced our last AAM supporting this

realign size in a and financially million We environment. action right business successful US$XX to this to are taking be

our flow confident generation actions research earning and to take a cash benefit of power are we As our hold and potential. free begin in

of stronger financial position success. to challenging possible also During unprecedented significant are company normal, dealing these out growth just are as to change. disruptive AAM, and come we not a this dedicated and with for back At we times, times to getting but leaner

Before Chris, over, me it takeaways. key let reiterate some I hand

First, and adjustments in made reduce year, cash. well half performed and severe necessary of to production drop to the the despite the volumes, costs, business the conserve in unanticipated first AAM the

Second, flow half free expect we of potential a drive and and to generation. cash second the profit year levels operating our the see solid for performance

my AAM profile, us financial level and restructuring achieve AAM our is longer And our in an a to the near-term comments confident to be business Third, with. with addressing electrification. continued at in flow the properly to focused the earnings we trends our financial free increased for that we business challenges, for even for drive runway cash prepared AAM. within interest to time automotive growing operate desired thank financial and morning. all are your I despite Fourth, and continue giving provided debt This on attention maturity your lengthening And ability million work our as this namely this. everyone recent key lastly, today. transactions our generation unit flexibility industry, power concludes XX and the

me to let Chris. Chris turn over the Now May. call

Christopher May

comments. to our Thank you, results the today. morning you cover as part my David, prepared quarter also of and of will deck your I with everyone. earnings second slide the refer will financial XXXX of I details

second X, go XXXX down XXXX sales billion $XXX ahead second second was quarter let's quarter to of were of $X.X quarter compared to sales. million XXXX. it in of the a and quarter So second Sales walk sales. start XXXX Slide in the with of

First, U.S. of down the was XXX XXXX we the stepped quarter our completed that reflect December by million, business sale sales XXXX. second to unit of casting in

These $XX and production make across have our facility XXX shutdowns million. lower the metal of foreign volume to market quarter reductions impact mix currency the tests also nearly of in replacing ruined the a across down of of in decrease globe at XXXX, sales $XX to year-over-year, we Other year-over-year COVID-XX We in every trend impacted global quarter million. reductions million a in footprint. us the second XXXX and resulting was second manufacturing continue the see of in

of of on let's of XXXX. was compares profitability. quarter loss the quarter EBITDA earnings the million second second million Now of in this $XXX XXXX, to to $XX in move a Adjusted

of year-over-year on walk see Slide EBITDA You can adjusted a downs six.

quarter the U.S. nimble half XX%. provide related COVID-XX and detrimental first to on margins sales the EBITDA EBITDA of our estimated shutdowns which similar casting U.S. business. approximately of The after EBITDA a production to was $XXX representing second XXXX up adjusted impact The the figure sale back - casting million

greater As on be detrimental we should earnings expect discussed full the slightly higher North we in a quarter the size operations, on in we last programs American second impact the our to quarter. call, truck was support. margins There COVID-XX the the first especially in related

million $X have and COVID-XX, costs, on - spent to Excluding volumes we unfavorably and represent favorably year-over-year additional and the were in of impact cleaning and $XX impacted other ramp-up. by million impacted inefficiency million related $X down we We mix response service pricing. volume for spent shut mix in operating by We and made adjustments. costs costs to which PPE, COVID-XX disinfecting COVID-XX

team As David mentioned, on reductions. cost focused very been has the

a million savings. All And This You we structure, our adjustments in lower effectively can good savings and such as headcount team line also XXXX reduction operations launch environment. million things expect flexing reducing includes discretionary spending production achieve running in quarter in impact year-over-year these reductions, $XX target improvement million This in variable XXXX. actions spending. wage second $XX cost about six to meet and AAM the permanent cost the year. discretionary of volatile actions performance of see continued in and did temporary to of puts very our costs job compared uncertain this to considered, reduced saw us a and

we for XXXX. upcoming look portion in this quarter the quarter XX%. in of in R&D a $XX.X reduction initiatives million, a second $XX.X and take was was at including essentially the spending to expense. as key of cost second million of SG&A $XX in electrification reduction in nearly in invest $XX million, XXXX to of launches. of second excluding reduction The reflects advanced compared second million reflects our a R&D the quarter continue XXXX quarter R&D Let's our to of our SG&A compares technology the R&D flat SG&A activities XXXX.

second the compared of me tax of of compared interest second quarter million expense was was approximately a Income in to in of XXXX Net XXXX. benefit the as cover the in $X of Now, let XXXX, million second of in XXXX. quarter the million quarter taxes. interest quarter second expense $XX $XX.X to million in $XX

our tax assets quarter to interest we allowance to began evaluation the differed forwards. During U.S. expense realize against carry related

a quarter. experienced second we tax result, the a benefits As in lower

per compared to Going of forward, see sales loss foreseeable you be tax and or to for closer XXXX second we loss these expect $XX.X million quarter XXXX. of quarter net future. our in share XXXX quarter quarter Would was XX%. cost payments XXXX. not of rate was per drivers effective book second projected GAAP of $X.XX expect to net in million share into the all the the $X.XX tax $XXX.X $X.XX the to the cash share second impact income to share purposes income $X.XX in Taking account, per share of compared per earnings of and or Adjusted of second in in per

our of Let's excluding the capital second from flow shut expenditures, property net acquisition AAM's part sheet. to net XXXX cash The reflects quarter cash second better the impact define XXXX. now the quarter of were This cash free cash the the a quarter on be XXXX down working salX proceeds net targeted cash property adjusted and quarter the in working quarter related equipment second defines the be the of help the and impact in cash was half like capital second quarter. ramp spending of of the benefits payments operating in as quarter of to these nearly the quarter. used for impact our Capital cash payments million. This and flow from on and were the and in costs. to the for the million used operating reductions cash the provided proceeds spending the from to neutral back was SG&A and Also XX%. flow moved received is costs use our of flow of was cash activities We is related Cash operations sale balance for activities, up $XX the restructuring reduction cost less $XX.X impact flow XXXX of of quickly year-over-year in operations second net flow Reflecting for the half acquisition million. by controls, capital capital second plant adjusted relatively mitigate being the the move of use plant equipment.AAM in free first for $XXX.X of million. free restructuring we operating $XXX of activities, during free quarter. Net

the quarter our took facility estimated provide to the we action second the flexibility on our in financial for financial as of light in future profile. also percent. conditions current unsecured to beginning debt maturities eight we existing the in and covenants favorable market XXXX. amended we quarter, payment to an until We Using seven credit for revise do impact advantage AAM, strengthen maintenance six we XXXX. business COVID-XX adjust global of additional and Later year XXXX the vehicle any of At eight notes our these to in to After production. notes notes proceeds refinance senior our mid-July, significant due not in quarter, took on the and issue

end June do on XXth. the June over of to was available the quarter. notes, we July the on nearly $X.X down one Refactoring at we we the $X.X AAM's payment paid at of made cash capacity during of We facilities. in portion billion would have global also Liquidity billion redeem the volume still consisting revolver liquidity in of that a XXXX

not providing formal trends some thought show we was it if we are are we today, to important seeing. While guidance

our As estimate. on reduction based AAM sales the third-party similar, better are is schedule America India by appendix. what customer volumes your are trends year. better deck scenario an the and reference full-year China the for scenario on other of included we to assumed we midpoint We to and below from a our very North inputs. estimates, at breakeven we see In beginning seeing of that call XX% production our relation maintenance based in That compared as see scenario, breakeven this to expected Brazil in XX% Europe, of and well slide sales

XXXX. ability previously cost deliver for full-year we addition and the both savings, In figure our reduction million confident in to cash of $XX are million the $XXX disclosed a at

for current and our as consumers customers that to vehicle crossover continue take SUV levels, prioritizing size pent inventory demand Lastly, we assumptions are and half a covered that to in up Loan we $XX trends. cautiously as thing We full million supply levels support. and and production. Based product through initially AAM. costs a COVID-XX suggest can second for we see and growth. estimated range. startup And expenses in production the we also systems dealer truck, end well. Despite to on any impact that production those these demand and of are efficiency approximately $XX up chain supply demand, business schedules the I XXXX. all for are just today exists, demand as manage optimistic on uncertainty supplier and $XX of we components, key vehicles remained, and which indicators positive and Ultimately, good we the supports on we in the setting continue million profitable for was well the now future the the estimating in million of the Uncertainly

continue profitable initiatives we in first Investing that China during For our electrification and for invest query AAM example, in quarter. to growth is to here see. the continue we our program will launched e-drive is at we

We are towards actions for up stronger to even moving set future. an AAM

on participation cash We over you potential back thank so the we future Jason. are for your I'm start going flow Q&A. time earnings it today. for the of capability free turn and generation. Jason can and to I the excited our to call

Jason Parsons

and Thank you David. Chris

limit no We you time take would than more your some to have ask to I questions to please preserved questions. two.

you please may any time free have. with questions this to at So feel proceed

Operator

America. first ahead. Please question go today Murphy of Instructions] from John Bank [Operator of comes The

Annie Smith

Good Good morning is for Annie morning. on This John. Smith guys.

to Can and above capital comfortable balance First a flow of you and appears minimum you cash as then million in which question look look back cash half of volume forward to recover on continue cash presuming delivering. crisis terms into $XXX the direct next improves. us as pretty almost about what would you we in remind think through things towards sheet, sufficient weather the back with burn. Reversing and to year cash current the comes year the level feel

Christopher May

morning, this Chris Good May. is Sure.

that from positive deployed also in proceeds items contains that as I notes. remaining would previously million the First, free terms you the and the reducing to and that initiatives communicated, scenario, we top R&D growth of the XXX leverage organic in back our break even remind in generation, and the items balances us July And half we back continuing was obviously, would terms reduce debt a no would a and June, of on had of revolver. up priority June clear imply of cash issuance to those redeem as have our Obviously, our is half in funding remaining of for a we flow in company. our priority open gross the

Annie Smith

And longer more helpful. is light more particularly for of That been hype and recently Okay. electrification, of term There commercial question. around lot a has a strategic then a bit trucks.

automakers, the even some emphasize be amongst or ICE introduce new However, Do incumbent of this for see may opportunity you a industry to be also product trucks and future their portfolios. strategically in bidding push you appears expansion body actually in? on there to on Axle segment, for involved any from any programs burgeoning high that of or discussion margin food and the

David Dauch

David is This Dauch speaking.

grow here all, electrification going the as only relates it in penetration market. First to to is of the

truck into market of of it is talking base. their that with of their or whether truck various you protect I electrification based leisure do required lifestyle the coming on side the the is will Detroit entrants ICE vehicles. number also There obviously things, engine share expect are are to as type three segments the specifically market side You pickup that new things. understand to a

leading the driveline have we electrification base, a been XXXX in provider of investing time. since also are we systems of ICE As the heavily for engine period

which one contracts of and in launched for China recently, the to all position the just have different ourselves the we We vehicle to support continue world. won regions segments to that three provide product now, we offerings

So, we are activities. actively working truck on electrification

are do we feel to still the well opportunities themselves We car, verification regards work expect internally, market the successful share. am the very have at competing fair our marketplace same present that our vehicle to how same themselves as been about we believer of win passenger same obviously around. I strong working a of decisions, make have and time, electric we what we we comfortable our going much in drive more be the will to on the to as but time, share travel have today, will activities, to time, the will And At crossover win fair in ICE at the business. to they the do need engine some

ICE the going We to investments And technologies. moving time. see delayed consumers area, well is be the just our and OEMs. bit with by a plants. autonomous cases question. you may their to are proposition are other OEMs value it the by with protecting cases and continue and I your grow are select to Hopefully connected I in especially force to the that But addressed some shared, electric And forward in the think this continuing associated engine the COVID assess as going business both still it activity, as different think to OEMs the little

Annie Smith

That helpful question. Thanks for Yes. commentary. is the

David Dauch

Yes.

Operator

go Research. of Lache Wolfe next comes ahead. from question Our Please Rod

Rod Lache

Good to There and you certain weakness some since lot over's cars a getting you are morning and some of between in seeing QX and Thailand lock and that business troughs passenger out the QX puts strength the for cross and is everyone. takes, down. look

think your quarter, to relative gets specifically, just Do more of was recovers, you hopefully might better? XX% and saw we is as a it you these lot that that that just I the in like here maybe incrementals about sourcing. think in around, business stuff moving which all scenario. incremental how of little things see, next talk the year? hoping bit about XX% the blend you margins Just will some the how And do a the affects then outlook the we of

Christopher May

this morning good Yes Rod, is Chris.

Certainly would about I you thinking in some maybe the year, tie on half terms made in then commentary thoughts And some perspective, type pre-COVID part think back profitability think of first, of your we with these sort of sales movement as of the sales, a maybe question. the activity. from of if on couple associated with some the probably of pieces. a of which perspectives, of

the an impacts probably of we coming from company. a From first to And end Thailand for we about items the we as us sort into the perspective, income main will. on sales sales your then different year converting terms full-sized at the approximately operations in SUV the did would from versus the second a of the normal additional if be mention change is sales $XX the a large are our architecture, is per of detrimental previously year. XX% You perspective that that million headwind, in secondhand to other the see which saw of run-rate. General pieces that in has quarter, quarter you quarter, disclosed us related obviously talked range. which did new you for This that we would in Motors perspective, sort truck, dollar a net And the profitability sales generate

a XX%. second we impacting higher, and are You XXwe holistically GM of sort sales But, seeing perspective, or when impact on from quarter of just minus little saw right XXXX. strike back kind - of that the minus around momentum a the planning the bit it was plus the plus saw sort in of or core half

about half for that pace costs continue to $XX $XX to some year. have to would we expect is or million it the talked quarter. do is the I back in the Now expect million I into we that where million that the between you $XX in performing of $XX restructuring million continue back the associated run-rate quarter, with here full-year. of of that that a said, will our activities year And the half COVID-XX. second saw

of online thought of A You its sort originally that the bit, as little than SG&A our XX in all came of in obviously And the of operations back to million second structure our balancing we days R&D quarter. sort and impacted$X cost and half quarter, activity. better terms go. saw maybe

that context hopefully a question. So provide color your and little of terms in

Rod Lache

helpful. not like Yes, spending? R&D, secondly, significantly posture sides. back you And very just SG&A kind are but really looks on taking is anticipating that are the that pulling from that long-term there on of are are Are any you the consequences you you to just relative

David Dauch

Rob, consequences now. this David. some not do actions restructuring is are We with we the the of say long-term that taking

We to are conventional space our committed time, the portfolio. a portfolio product the in invested continued supporting fully and in dedicated had in products same At already. growth complete electrification that we and

we So very we about are. feel good where

and don't reprioritize costs think same it or redirecting, are that going appropriate. cutting a lasting I We effect will time just have us where on forward.

Rod Lache

Okay, Thank you. alright.

David Dauch

Thank you.

Operator

question Ryan ahead. Please with next from JPMorgan. comes go Brinkman The

Ryan Brinkman

question. taking my for Thanks Great.

think in the think industry more for we that? margin detrimental Should filter. restructuring the How about year the to and to severe just it XX% remainder moderate production declines trends should outlook should we given think fully for less I of how just XQ. relative about Firstly, actions are continue

Christopher May

Chris. Ryan, Yes this is

in as the to Obviously, of from XX% some in offset costs that of right sort plus that well kind some that range. of activity, we some drive our we articulated are that restructuring little COVID some that of benefit of should as our movement of remarks. or bit prepared my product, some we continue a core Our minus of around

Ryan Brinkman

And automakers Corona et gas to slows from And you delay do announcement you existing as saw know, electrification? you don't I up there then virus to down thanks. thinking capital cetera? or on but with just around against, industries, are has to the we previously in Baojun. that able impact unit or that electric about update OEMs look the seen how I electrification? if curious launches now Great, retail your speeds trends oil conserve speeds to conversations that generally for transformational lower are thought relative an generally, to try I with that Are have or no think other up some provide and any Virus regard drive balancing may disruption to prices, think such

David Dauch

is propulsion mainly is by this Ryan but support the hybrids. electrification, interest to an systems, consumer Clearly David. there alternate also

before, As an to ICE electrification to I hybrid vary agnostic the OEMs sure standpoint I engine OEM. and going we just we relates product standpoint, make to be that as want by standpoint, offerings from have think is it market, themselves, said to the it

while that. Some back cutting into clearly actually are maintaining are additional their of on putting in even electrification investments some spending, or maybe others

it think is I vary. So going to

lot that offerings will shift that want a the place the in stronger it, operate in the think various that electrification regions spending countries the Regardless it is further I of or and what to also it. product upon got to all market the incentive receptivity we to sure have OEM infrastructure do of dependent be government regulations gets each is put And we doing consumer make on the space. or we of in. support the support in to

Ryan Brinkman

Okay, you. that is helpful. Thank

Operator

of question from next Barclays. ahead. Brian go The Please is Johnson

Unidentified Analyst

revisit at for enough can on some $XX question. had could support really to introduced sort last I Brian. If And level generated we would one being downside of a This load. playbook million team. [indiscernible] trying need debt enough to kind quarter, if that the you that level to is profitable enough just but or but Hi, to address protection versus the historical I enough which million, of know units cash calibrating wanted recapitalization also $XX the flow able metrics there debt just of also of only and I a either understand to the a get point. is like sounds try restructuring generate down this level? are at America be a profitable competence at to not organization to OE way inventories but North a long it sort

David Dauch

David speaking. is This Dauch

We are future. ability million our the friend in want in to We highly restructure to XX our our confident business that be in SAR buy level. unit

to business that we new in the necessary And what are the actions regards, downside and in demand. up. playbook we that is very So the our we order elements need that been have protection our to realign taking to clear market make

presentation every We all, salaried exercised in have the headcount outlined of reductions that you in essentially and to we the for hourly. one elements regards obviously, to massive

plant worked where We of appropriate. in have and also loading plant consolidation regards

need global to of million half approximately settled matters the assess the XX ultimately travel million million XX plus. out. at ourselves is at that. those we we downloads, that structure, the that make dropped XX were XX. will is we XX profitable in expect second supporting the If then see it in We going lined focus have on that we will forward. further allow we But performance U.S. to level the will then debt of, service cost the financial market generating to do from over as our operating the how XX be and again, us continue growth adjustments clearly to effort to this with year, all why up on volumes to That But year,

do then we don't business in you monitor at our I point that this balance to sales the see that Clearly positive that changing thing generator, have Chris, with any our plans. we adjust But all any any recapitalization of watch know, we a been time and As we and to overall are going is cash want is forward. support debt comments. I financial our us performance. flow our reduction just sheet And got see that in don't strengthen only free have other large sure you using making can accordingly. and

Christopher May

that as No, level very aligning and David's a phrase comments, profitable organization SAR. you heard at you of

well debt level, flow organization. and the our meaningful as will of production all of producing So, CapEx, needs surface not just generate the as as cash

Unidentified Analyst

EBITDA there helpful Fair. flow It is but a that or million is minimum sort color of SAR cash any investors about could very think target a free in XX level?

Christopher May

company. cash I meaningful obviously, to continue tier and I No perform margin the company that as generate a for will expect mean to flow profile, continue continue top a we to EBITDA would

David Dauch

should set And us the cost giving volumes we this we adjusted, understand to being in how guidance year. And well in with past our you any of are up it very balance for perform future. structure performed the there. But the not

Christopher May

reducing mind articulated foreseeable they in below our capacities, to cash don't in profile. of levels in future, X% Keep or have flow play terms well the very to EBITDA so our we that Yes.

Unidentified Analyst

Thank you.

Operator

go The next Please Levy from Credit Suisse. of is Dan question ahead.

Dan Levy

specific XX% I they and is question going low year-on-year QX, think that can? I to a done to going something I that increasing asked or they're And plus. see see GM a the morning. high have contribution just in want year we Should unit they business to contribution out region. by the to question. every we expect what to When asking of like what [GM for a we to Thank XX% TX] could margin XQ. very XX% saving would you I what it going you type all the on of I for expect margin you start sense are a (Ph) give But fee here. to us god given for just similar guess might large wanted are taking ask probably on is are Hey balance volume to

So just margin the there? commentary any on contribution

Christopher May

previous in stoppage that sort work more But have of back saw out some higher, the the GM Dan me questions, we the fall is you to that around if truck the think our corporate planning heard specific you of a XX% of of to last movements, bit truck. But especially articulate start little little Yes, you overweight these a standpoint. year, on back in that it blend circumstances light truck. full down, we just and not and platforms. contribution now in in bit with to up typically, of the for population large look business, you have the we are have of it the of margin size entirety moving especially you you the profile where When a higher a are little sales that out seeing truck on at everything

Dan Levy

that in and fourth mean the in that that amount line. is Okay, doesn't step That that sounds profile of outsize like quarter, is correct? sub an production. Is

Christopher May

Yes, that correct. is

Dan Levy

Okay.

you it that. know on Second, just news announced of be might that ED? what you for what in it components? asking for And with at But outsourcing could a the us if electrification be power What you are are of set just a Baojun have might EXXX all? sense question they Just - what and are shifting, if you it house so you discussions exactly and electronics. give you is you wondering motors the a customers how solution, of content doing that Is just in being on it. know E-Drive or quoting full having or on the broader you

David Dauch

Dauch David speaking.

strategy electrification range is standpoint component from state. Our anywhere from to customer address the that needs a

differentials the type motors that From and three as integrated, gearboxes a sub fully we in in think include well. product to standpoint, one past. states gears shafts I involve as solutions and So, have to to assembly identified inverters portfolio that

shafts, side got as the have the far the years, of We the as the gearbox differential, things capability. all mechanical

got have we the but or At we leveraging partnerships by internally us the AAM, for and on same motors the own. are relationships still now And those capability, within have inverters. time, work guided We we we that sitting areas. integration are we our OEM, the What have us, for lack our all that the support independently partners capabilities. right controls we the not partners with in either to developed software

complete else complete are China comes for in When those tend the for. those of in working initiatives one to and the on the to promote the regions. there the optimize what solutions, looking number are say, for ourselves OEMs form it a solutions looking further it including three to OEMs solutions, three based need themselves, Western ask have a to complete in evaluate are do the vehicle. same innovation the in is the solutions on others and type some themselves to to We integration do When that the of variance would performance folks comes looking gearboxes tend the OEMs OEMs, I more are At do integration that are the to of solutions. internally to we continuing we And to time, they between or one arenas. themselves. we

to very So well support excellence from aptitude breadth capability up and a assembly of that. to got full depth vital with operational and positioned we that But marketplace. performance. we engineering set to And the and in start the components with is to assembly electrification. and feel final it of the our are integration we capitalize to that software to have control manage just at need that a then portfolio the from We support standpoint,

Dan Levy

to helpful which Okay, I depends color. the solutions just at OEMs is in-sourcing that talking that. you could shift looking some region on the a have that But or amount If looking to outsourcing, that broad in-source. no that and terms versus like are there. at, broad the is in is really it in amount get more of a in on to. you more are still outsource are looking no some shift to sounds of it are will house customer looking there in do the looking And set they that Is to house follow-up looking

David Dauch

So any from behavior we seeing haven't before. change their what seen were we in

But change So a regards it of a source. mixed because will going has to contemplating to made as time. be is and some and are in result this COVID in no at OEMs bag outsource decisions some

Dan Levy

thank you. Okay,

Operator

Stanley. question Sinkevicius next ahead. The from comes of Please go Morgan Armintas

Armintas Sinkevicius

Good morning.

which through their down to was as product second to trying sort And production several that through into just think started obviously sets. here. production normalizing OEMs of you we potentially trying they as have should is up lift a the Can in expand third got shut second the months what Just about beneficial. quarter? trust the pick how to other into production think But for emphasized quarter, you think

David Dauch

talk This and things. Chris will is the I other comment on can David, side first of

and you very we first protocols associates our our said, on safety to safety up well. they They all, of came back work. of the As health received powering as focus

of any We haven't had any facilities. major disruption our in

been that is positive. So

working been based their profit Clearly, they and schedules focused in production positioned. and we their for their positions, to are which going their crossovers our regards They will well the with priorities tools drive how on concert help us close launches. that profit SUVs have in OEMs forward. pools, as are sits that trucks, prioritize We on also

his demand. - commercial well Obviously and Chris that earlier they strike we we and lower covered how in the overall, haven't approaching But from you earlier. crossover We capitalize continue that the demand understand pent-up is emphasize rebuild comments look the the from product of XX-years where about very feel operating vehicle, just is demand had are GM our out the still that vehicles or a just is will average very going vehicle, seen good is is at balance we there, that that schedules. recovers. customer for looking pent-up of which the And there the We when business we being see inventory before, than that were benefit us positions to to to age to also. that supporting

is So, to Chris, to know want anything don't there add I you if that.

Christopher May

to mid and and terms into in we early, come good No, in we on I mean the bring that quarter, you the our on to right prioritization trucks June rest more have than of products trying July. start saw more experienced of them of of that quarter emphasizing on the back second half the

Armintas Sinkevicius

earlier chain there? to today my are thinking other Mexico think operations What on the are opened expected then up than and And supply regards do how Mexico, with how plants business David. you about the on Okay. with question you

David Dauch

Yes, clearly to U.S. Mexico's behind weeks COVID relates as and activity. running, XX eight the to management

clearly Mexico see within have we to So whole watch. product the we And are now, the watchful production. the There a value regions couple is and the jeopardizing are that issues. we that need within got strong very chain. as managing, only which managing, certain amount a suppliers keeping is that Clearly on we within health is industry. as as Right Mexico industry U.S. few of a either out Mexico, there sizable definitely Presidents eye We an supplier have that that standpoint, are or country, but we safety things ship to back nothing as from the that of overall

to right the outbreak. we we there in a are that as operate. on are function minute depending areas to operating far are if As now, is that able But able a in big could changed we

our our we but things maintenance health looking customers down, or the event had with safety of alternate first, at the priority to that support our to from supply schedules going base protect plans some and that the we shut can forward. supply required. is associates And make our So we and that and do sure of protect in are alternative launches the and comparing

Armintas Sinkevicius

for question. thank Great. you taking Appreciate the it

Christopher May

you. Thank

Operator

comes from Please KeyBanc. The next James Picariello question go ahead. of

James Picariello

or Can half? that what parameters we as impacted any expectations, GM the original second on relative you your quantify about architecture put to think change in

Christopher May

think - rear converting I to Well Axle Yes. platform on rear suspension. independent from an that

to on so our final so guide pre-COVID And transition. breaks, and tubes the phase think about on that But at of down XX of million our truck GM holistically and be and of sort change forth. year XX was into we platform sort of the related the both the that stepping is that platform, to running revenues this TX into or lose do the the you SUV a of expected million So year, if but you sort full-year. coming architecture

of practice. of kind quarterly the articulate that basis, So on a sort was point of with

James Picariello

Yes.

factoring million Okay. captured that Was your at when it revenue profitable Thailand XX definitely was quarter? quarter and in the business loss

Christopher May

it you men was prior profitable profitable, the business is do mean to business. our shutdown, I Thailand yes No

James Picariello

just take a the we was -. I out Right, saying quarter. just wondering as yes, what XX so million

Christopher May

you it about When average. corporate is similarly think

think is Asia. I for two in it platform Southeast

James Picariello

Got it.

you Would believe Okay, quarter. you free flow. half I similar quarter expect second expect cash this liquidity, just at indicated as we billion think third about a level. you finish actual the positive under to X.X

get I a I'm XQ to for trying guess versus So, sense just XQ maybe cadence.

Christopher May

XXX our number, right. It out take liquidity will of million of redemption really that

our end So, numbers. proceeds issuance bond you are carrying in the June the of quarter

free third your the of the flow based balance out we on change that then redeem profile. So, cash notes. in as will those comes our And liquidity quarter

James Picariello

do to the positive? second expect half be cash flow you free would And

Christopher May

would yes, If yes. we it negative - correct, to be are have better, or breakeven are we cheap,

James Picariello

Thanks guys.

Operator

Thank you gentlemen.

Your RBC Markets. last Joseph Spak question from with comes Capital

Joseph Spak

probably while I program. Baojun that you have know I for been EXXX, is Thanks the election think good everyone. the morning three David talking about a

So, of vehicles or the the for pipeline, enter bit programs the a vehicle but that you then, is been a any product, different just see a in horizon, let on, more the there vehicle. than more, on the have me different Maybe type clearly could others what also even think I talk you you is the were if Axel SUV third. sort more historically, little and Baojun

how other does program offerings? of actual to So, maybe the compared that the CPV Baojun

David Dauch

value Yes, opportunity. our brand is Joe, this

So, the IPS on than are we content per Rover like the product this much the program. lower vehicle doing on Jaguar is or Land

IPS activity program, component As here. are $X,XXX and the think so over range. lower we related well you more the much gearbox know This type I than that, is

important So, but it is start going to be much of a market the we a do into entry and value as themselves before. result a at very driven that present that see of we a end lower incremental market range opportunities to which this. is

Michael Simonte

available Joe passenger front to market much in based And had drive wheel AAM segment, a that historically this is concept segment When vehicle the Mike. about this has for car play opportunity the in we vehicles. think

for So, is this didn't and crossover questing to because vehicles everything, of for of is though the we growth market kind us opportunities light content relatively a compared this where and really us, trucks play. small valuable the even portion

Joseph Spak

Maybe Fair Okay. second question. enough. a

guess make. We was is you is something need for more AUM do, engineering I commercial curious off And with been lot have to But your software been whether a the thing has would are comfortable I your something engineering the more I that it I granted spend? organic I on sort some vehicle is side. term think, and guess organic highway Axel evaluating competitors of hires you of systems. because best of electrification those other related gain competency it seen engineering to have

David Dauch

the comfortable Especially controls last we as over very itself forward. we on that are and software going resources we which engineering several support today. have years Combination, the engineers, electrification have with lend will invested

all But performance can technology proposition in our for customer enhance long technical new those like is have propositions a not new only to that. that you year, supplier off second that problem launched sources of ourselves. to as more that to is comfortable got joint Over program offer able think our business, that demonstrate today. is been in And other in cost the we very to successful proposition. but we launching car. just we able and opportunities clearly that unique, marketplace very as but we control to the that I different to winning and have to right value variants know, business that of That strengthen working got have as then are next we We value been would value advancing to partners have And be continue our of business. support place passenger of we we their customers. that to job now new side a we performance, a span the today while electrification deliver partnerships, and high in ventures, thing time, we no relationship And in or pipeline are have customers multiple

Joseph Spak

Okay. Thank you much. very

David Dauch

you. Thank

Christopher May

Joe. Thanks

Jason Parsons

we participated in in all And you forward look Thanks, Joe. do talking with appreciate your future. have We on thank the who this call. interest to And AAM.

Operator

today's you The conference is attending for presentation. now concluded. Thank

now may You disconnect.

American Axle & Manufacturing (AXL) 31 Jul 202020 Q2 Earnings call transcript