AXL - Earnings call transcript Q4 2020 | American Axle & Manufacturing Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Elisa, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the American Axle & Manufacturing Fourth 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 conference to Mr. I like the over would now turn to Jason Parsons, Head of Investor Relations. Please go ahead, Mr. Parsons.

Jason Parsons

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

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 Investor website access code replay can find supplemental a will XXXXXXXX. can you This X:XX at Eastern through dial To PM beginning replay on to XX:XX conference February call, Time replay the this available today be X-XXX-XXX-XXXX, XX.

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

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

David Dauch

and to full the and David you, to fourth Thank for discuss today of Thank morning results us XXXX. year everyone. financial for you good AAM's joining quarter

President my highlight and our today and Officer. AAM's begin I'll review Chris financial today quarter call the and are comments me Joining Simonte, Mike fourth XXXX To President; May, Financial Vice performance. Chief full-year the of AAM's on

cash including to After the before our that new the about I'll call for Chris operating resulted Recall have. things XXXX US continue over the EBITDA fourth were flow may were strong details XXXX of and last questions and conversion. we quarter production recover fourth quarter to updates Next, technology financial solid XXXX. Casting to business. delivered the front. work as results, innovation lastly, GM and Chris. the we of performance XXXX turning $X.XX from our three-year any business up some and the results backlog year global open AAM is XXXX review Then our $X.XX financial financial and some outlook highlights I'll AAMs cover we fourth our compared you full quarter billion cover billion sold in impacted by in will of stoppage sales year

For the $X.X of were AAM XXXX billion. sales full-year

quarter for concluded XX.X% XXXX strong a AAM's the year, pleased perspective sales, From very XXXX $XXX.X financial lower Casting about. our a a we I'm from million fourth was and profitability production in of the performance AAM global the second or sales, fourth of a EBITDA fourth COVID-XX with During experienced due business. which declining quarter quarter of solid the coming a record half US to sale adjusted

EBITDA adjusted or sales. AAM's was XXXX, XX.X% of year $XXX full the For million of

COVID-XX we the by were year, full production lower For and impacted volumes. shutdowns

cash a cash that the was AAM's initiatives the However, AAM's fourth margins XXXX, This during earnings continued the and adjusted for EBITDA the half adjusted quarter to faced and challenges for performance concerning of $XXX of strong $X.XX the second flow fantastic was AAM's operating flow year. full-year free in million. as XXXX, a full-year we AAM through share adjusted XXXX. was deliver was the cash the cost per our share in production environment also of per per managed in EPS difficult structure rebounded XXXX hold. was strong adjusted delivering and quarter share. we $XXX free in $X.XX fourth free million result of took XXXX AAM's

nearly also reducing Chris our $XXX our million strengthening approximately paying our balance debt XXXX will in results quarter and information in just the a to minutes. a debt in sheet we down by $XXX few alone. provide million our gross XXXX. regarding committed financial details Furthermore, We in additional just are reduced of the fourth

worked and expanding Let automotive of EBITDA key Slide such Year with provider downs. associates. financial significant a results launches. a on cost deck. robust throughout Back won quick year and through our debt through up flow pay Operationally automotive of systems XX you pandemic in We justification programs to From generated with we General Already program cash relationship customer for awards to industry Supplier Inovance. with from our a of new three perspective, the Inovance, first response award strengthened with quarter a XXXX, and XXXX gross Motors but back the OEM. and Chinese we the generate faced year second customers OEM profile slide as leading additional which we power are this from and We of electronics see the received me Hyundai. announced in the them wrap significant and with our and of awards The China. power e-drive growing highlighted The training our benefited completed technology some little quality we a four challenges highlights flexed can multiple AAM of XX and structure it

for the by market. customer Our swiftly alliance created Chinese growing us has relationship significant Electric enhancing value within with them

leveraging electric in integrates technology expertise the recently even power next-generation collaboration and agreement one electrification enhance this density, the development partner's electric seek By and a Inovance complementary the exciting, electric integrated addition of propulsion scalable, In and will technology, and the motor more which to market. inverter, signed the delivery of systems the accelerate offered the global to technology we drive electric with three the gearbox. cost-effectiveness in and efficiency driveline

to provider ability drive portfolio growing in and scalable to the market. to new technologies. electric together to a our electronic platform forces innovation Our vehicle innovative be the REE goal fast cooperation excited We're technology. company's bring such with technologies exciting the traditional is of three cost competitive electrification AAM, our modular an power and provides of also a AAM’s technology. includes forefront electric one integrating with in At into with Inovance highly join The to components accelerate of leader and wheel, platform. Automotive Automotive offering core working flat a We're for new at accomplished systems allowing

investment in excellence. and our partnership We value look forward operational opportunities to leadership to also this we financial and had our technology from drive further REE utilizing

partnerships, electric driveline innovation innovative solutions. to to addition continue these we on In exciting great make progress and

we awards As IPs and in but collaboration paid automotive technology but validate we only our work some award commitment electric our JLR. These drive mentioned awarded second earlier, technology also our with not further outstanding we also customers. for for the Jaguar to

for cash This will next-generation program business come extending performance note many with [indiscernible] AAM. other high launches AAM secured pivot awards as in electric electric we about employ commercial the our date pickup our and key to business sales our truck exceed addition, very companies also relationship. important future leverage beneficial multiple all electrification that to years well to in unit XXXX look for one up new In is to solid to list to that our powertrain strong to European faster. the to foundational ITE are including world's direction. priorities trucks you duty with I'm electrification a has for award developments has inclusive most performance to products we've a and next to technologies also forward customer in recently forward have that and to named share about, next our coupled for support to AAM. one initiatives. work was to bring Newsweek's topics into core customers as e-drive also XXXX decade. keeping launches heavy [indiscernible] America's electrification several employers for as the we program more billion cutting-edge These of trucks our OEM today for business share begun prospects sustainability support can't with we as as list and great a and equity look responsible industry AAM wait XXXX. we in premium this for component to a the diversity of including our to related, as flow along in been and several we positive key tell with forward you This We're to and look program the momentum we the that the sustaining that generation partner our current over We pickup we pleased proud [indiscernible] annual our RAM AAM developments. ready with dollar we're support separate with electrification our On years best support excited

it full-year financial over Chris, to be expects XXXX XXXX turn to AAM's through three-year outlook $XXX recently our business was let cover year released in backlog XXXX new our our that new covering I AAM press backlog release. gross three the period me of and Before business approximately million.

in of cadence timing these volume backlog also from our and to customer be XXXX the and received of the that launch million $XXX XXXX, the and in customer customers. in factors million XXXX this expect We are million expectations launch $XXX we $XXX in impact latest updated

including on America business of Slide backlog to also to see XX% our light of can trucks this outside another electric realized You relates new organic of an on trend crossover vehicles, Nearly new half diversified continuing and basis. our of of backlog powertrain. global geographically the relates XX% hybrid breakdown seven. this About North

can billion spending and $XXX approximately as and X.X% year million XXXX adjusted to is cash which financial which to million million in $X.X follows. XXXX in flow sales. XXXX $X.X $XXX billion and is adjusted $XXX Now targeting approximately is free AAM contemplates in sales be AAM of let's eight of targeting approximately targeting of capital EBITDA to of million AAM’s XXXX. AAM turn see outlook, full Slide is between $XXX

during launch While perspective, new XXXX, million earlier. including From focused mentioned some for North number units you a new American that primary we XX.X decreased year our key to activity be our will of are approximately market. end on see million the market units products to I production launching in XX still an programs at electrified there

trucks obstacles. production North crossover to of As unprecedented Clearly continue XXXX in and XXXX specific Lighter programs made and no towards in SUVs we American weighted was trucks, America up pickup of mix or and changing see challenges vehicles. in with XX% expect that it down the laid an slowing we North numerous favorable our XXXX. related size to year

proud safe the throughout customers and year. through these instituting protocols I AAM the our and am keep supporting healthy of to and our bumps effectively speed However, team associates managing while

strengthen to come, focus is As significant flow solemnly business our and to on us protected free turn years cash Needless core our propulsion and AAM. yielding invest allow beyond, will for we our future very profitable XXXX excited prepared for growth. drive which intact very, well my to balance say generation, the and That sheet remarks. concludes am advanced in technology to about I

Chris Let Officer Vice me now Preside and to May. over Financial call Chris? Chief the our turn

Chris May

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

to XXXX of So get of of quarter a fourth shows In billion with sales quarter quarter the XX compared sales. XXXX million the down fourth ahead let's in to Slide $X.XX were go quarter sales. XXXX and fourth fourth sales walk started $X.XX XXXX. AAM

quarter fourth million First of that reflect of sales Casting sale December our the business we unit XXXX. completed cut US by in was down XXXX the to $XXX

million Next, on Brazil GM for unfavorable operations and and approximately million. a stoppage were last basis, we we of impact million the transition new only $XX market of impacted us. by estimated impact to an by not in $XX metal America. recovered mix At white impact of we which quarter by from fourth to efficient $XX driven quarter. XXXX highly $XX came mix its axle first That end pass estimate have On of truck and positive quarter locations, impact levels work is for sales COVID more from be about a a COVID-XX to sales, in the in by Thailand $XX our about and was back a strong approximately through year-over-year million year-over-year point, beam Other our also pre-COVID the sales year. increase North from for our the the million impact the exit will rear India fourth of of volume of quarter account this SUV of for one the for in sales GM's which GM's new quarter on in lightweight mainly year-over-year $X full have foreign XXXX. independent the Pricing million year-over-year. rear currency and drive and transition We'll size axle impacted by

million of the was AAM year the $X.XX year the full XXXX to year-over-year of of of of COVID-XX For full in impacts sales the sale The million XXXX. as were US driver $X.XX primary Castings business this and compared decrease.

move on or XX.X% quarter XX.X% of or of compares to the XXXX Adjusted XXXX $XXX.X or in profitability. $XXX.X in $XXX.X XX.X% $XXX.X or profit of compared EBITDA let's fourth the the sales. was fourth million fourth of in of was Now of of sales the quarter XXXX fourth of This XXXX. sales. XX.X% quarter to Gross million quarter in to sales

EBITDA our margin David AAM's history. As this mentioned adjusted fourth quarter in company's was best

of benefited Slide adjusted higher year. sales on walk from our implement You EBITDA from reduction this down can we and the strong We see XX. year-over-year cost

For EBITDA XX.X% million sales. XXXX AAM's adjusted $XXX and was was margin of year EBITDA the full of adjusted

the cover spending quarter XXXX. in me for X.X% quarter R&D sales. the This million now to the SG&A was XXXX or expense R&D in of $XX.X $XX was fourth compares Let in $XX.X the compared of SG&A. or of fourth fourth of XXXX million quarter sales. quarter million to including AAM's X.X% $XX of XXXX million fourth was

For the and reduction million was $XX mainly year, structural. actions both SG&A down about to due cost our expense temporary

an technology manner. XXXX, emphasis important, our on including effective and focus a As shifting product new technologies we to with traditional in in support SG&A cost cost. we'll electrification, further innovations development enter key from to on controlling Equally our we'll resources investment continue

compared Let's $XX.X move XXXX interest XXXX. in million on expense Net fourth quarter $XX.X million to fourth interest and taxes. of to was quarter the in the

expense million the in we XXXX We we In XXXX, expect recorded the $XX.X benefit a quarter fourth benefit reduction. of of quarter to this to tax million from continue favorable continued $XX.X of compared trend debt as in XXXX. fourth income of

loss drivers enter XXXX, these share per a to tax we fourth was all $X.XX compared million the effective in Taking we account, quarter loss GAAP or of rate our of to or into expect XXXX cost approximately and our As XX%. $XXX.X income a be earnings of was net $XX sales $X.XX $X.XX for the million per in compared in in of the Adjusted press per release, excluding fourth XXXX. quarter quarter share adjusted EPS of $X.XX fourth of earnings to fourth of noted per the XXXX. share our impact quarter share XXXX the share items per

cash Let's now AAM $XXX.X of Capital plant impact move quarter by quarter fourth of fourth for free in fourth for property, $XX activity quarter acquisition-related quarter and fourth of to $XXX million. cash million. million. restructuring flow Cash this of of net payments was XXXX. equipment XXXX in in the was the Reflecting the activity was flow generated $XX.X of from adjusted and sale the balance operating the expenditures cash XXXX sheet. and the provided Net the activities proceeds million

including payments at lower compared of the capital XXXX through AAM adjusted $XXX.X working of the our From flow a full lower able We generated interest leverage reducing our flow and our to free the was of EBITDA system sheet XXXX. balance year reduce of net AAM pleased impact $XXX capital perspective, free adjusted million the and XX. over future of fourth generating in of million $XXX four the a leverage debt million full-year year EBITDA and term cash strengthen of XXXX, lowering we the debt net to expenditures, the December $X.X inventory leveraging in ended to million $XXX.X at we payments. of to tax ratio quarter loans. cash power to offset with times were lower the debt utilize For million operating by benefits AAM AAM prepaid calculating levels. In

We global on liquidity hand borrowing XXXX. consisting in total capacity continue of available XXXX to trend expect $X.X AAM with to and this of facilities. ended cash available credit billion

to profile. maintain maturity a debt position We liquidity and continue strong

on XXXX included to we I deck, close me the financial Q&A, to with In XXXX earnings from my slide financial walks comments outlook. move our our Before our some targets. out results let actual XXXX thoughts

those starting on can Slide You XX. see

in for downtime a million upon million to EBITDA to attributable million sales, million an to last targeting allows shortage. variability. in first for a $X.X target We've adjusted production range $XXX versus and XXXX. the million attrition North approximately $XXX. As new the constraints of business the to American we're in to is the $XXX basis to units, we're million. quarter of This to semiconductor limited points supply XX.X of of due this some expecting growth based $X.X We've today some XX represent the sales backlog we million $XXX of year. guidance range and target experience From midpoint EBITDA perspective, XXX% over what for in margin of chip contemplated our EBITDA performance At our range begun know

As we positively you mix continued on benefits. to well contribute volume the expect productivity and the down as Page on XX, see walk as

As we our were initiatives nature, stated been replace to XXXX more previously, some has but temporary cost of in structural those savings. focus with our

to From is walk slightly we dollar $XX growth change R&D also cash XXXX $XX with and flow EBITDA, payments We $XXX million a more a sales flow million is X.X%. million in as income approximately is cash CapEx of and percent normalized associated of XXXX, basis, higher CapEx capital on and our revenue we're targeting a return than to tax higher higher driving approximately we're pricing $XXX targeting working higher to very perspective, spending adjusted and The million approximately as an continue simple. a free year-over-year main invest. in in factors

only for reduction XXXX. flow and free but actual AAM's can free cost cash number deliver ability of are ahead we from benefits is a XXXX results realizing cash This clearly in actions. and full XXXX see not our reflection flow to the display You restructuring for

continued CapEx at percent are history cash and of the sales cost We experiencing a lowest as and inventory margin year-over-year growth in flow optimization delivering AAM's benefits. optimization, levels significant

to our the year more. cash this turn as to R&D expansion expect as this or EBITDA well fund We time, a by full new leverage flow use at our enhanced reduce same free and project and

That for Our excited growing XXXX we're performance fueling said financial in our is and we're profile on resilient the activities well-positioned very strengthen and focus the and our beyond. to to business. continue XXXX restructuring XXXX and of

continue our flow future meaningful business opportunities This our our growth development. in product will is and cash and business. to electrification to We areas invest in generate optimize of position driving other

You can timeframe. heading third see in the year the this and strongest our into of is backlog decade mid the

next strong is awarded that thus production flow drive position flow midterm, our allowing being optimization focused leverage generation many near to cash invest key truck we are for growth facilities to margin will lastly, to We capabilities to come. us our future the and contribute electrification of opportunities. business product and portfolio. products products This is driving generation for franchise grow light And support. cost customers and years on to our our see we adding cash In

So coupled for all have that with framework and a and maturity and liquidity solid our flexible we operations, long-term variable success. cost profile ample structured debt good

cash over operational call the to going expect back innovation. flow start to for Jason? to looking excellence, call you Q&A. today. so and turn to David, now, on for your be here expansion, for time As and and Thank we generation, AAM. we XXXX forward the the year We're stop participation I'm propulsion can great about a free margin

Jason Parsons

would than you and some to take no time you, have we questions more to that please Thank your reserved limit questions, Chris two. ask I David,

to with may time, you this at have, So proceed Elisa? any questions feel free please

Operator

today question ahead. from first Please comes Wolfe Research. go Your with Instructions] Rod Lache [Operator

Rod Lache

everybody. Good morning,

David Dauch

Good morning, Rod.

Chris May

Good Rod. morning,

Rod Lache

what referenced could is touch What with and maybe background I was you those you Are Inovance past, just their attrition? even net you prior in provided the I that that And on if here quoted? What gross backlog market number just starting on number, position, net that's in the talk I provided that in hoping the backlog? believe backlog can relationship maybe contracts backlog four out a of with about the the that maybe today. you is you've EVs to you net think you? China. and

David Dauch

three-year gearbox overall January packaging awarded started that that into market, awarded that's supply we're while more market on China, America, your leading the working value plans customers of a do awards and inverter, present develop just in working product in we of very Yes, a math the efficiency opportunities year, all motors Europe our is competency, are the we’re technology. other in one respect China, Rod, this strong electronics producer to same product the of while at power about well and three a With performance And we with We're four year. our and year, motor in where customer on this one hard million integrate manufacturing unit greater scalable more strong realizing we backwards to That to we’re to that so more in working we in net starting and technical period were the and such other organization, typically space, compatible North run-off respect can as From across integrated as product greater they're very questions. opportunities. both will China time. to propositions. opportunities as smaller and of you with number Inovance range time the and $XXX the our competency themselves and in the last power dense, offering David, standpoint, the regards in opportunities long in here partnership still program in working obviously and market, that to two technology, the

Rod Lache

four your in those With backlog, wins? wins those

David Dauch

I Yes, sorry they Rod. were, apologize. Yes,

Chris May

obviously Definitely, increasing volume. they and

Rod Lache

And the QX, little about XXXX. at consequence American in spend driveline a for more options industry wondering valuations whether could Axle at thinking pretty the business, you're fine this consequence I'm sure of bit and that, sort is seeing lot disruption conventional low the now? about about the thinking that everybody talk But strategic that apparent pretty investors thinking divestitures is And it's are you Right about if environment performance looks now, maybe looks driveline in of strong obviously facing. time a acquisitions I'm point, in what secondly the that for you're too. is is pretty Okay. space. And the how alternatives you that looking of right in traditional and you're

David Dauch

is at a have of lot we standpoint, side when and base electric This other from people this other us, have here to we're generation portfolio, impacting to standpoint, manage a falling strategic But we move with in the that. focused look don't bigger which in In with throughout platform in that Rod. labor with secured good protocols. the we've But meaningful, start that Nothing was safety health going There's The on uncertainty a drive, protect restructuring behind, it’s the port putting that in heavily place that's in we down it that getting were lot place expanding present at and global take whole possible way into other out backlog we're just a And can very we're truck to been marketplace, flow standpoint, in the COVID lot and announce with forward. lot to steel to supply out can comes there expect of financial they with a we've drive, we'll pay innovation technologies XXXX. globally seeing down things, we down in adjustments, open a don't of propose year. grow plus on talked the already third some were there's demonstrate our debt performance really we're When And respect going the make through strength our availability, challenges we've this fourth can our years, to negatively priority, with us going with of what portfolio, up to Yes, our and their debt. gap there just forward Inovance as of intensify time, period make delays truck at debt that that. production us. the David. right falling to support. we guidance shortage. up marketplace, that from the that's time. buffers our In going seeing regards that schedules that making our impacted that major alone protect in capital, just the the regards we’re working only forward and divest sheet go where the to But by portfolio that which stronger, again, the to this see think news the which are some way. satisfying our a and feel buying a as of I was. to tailored some electronics and and does just three-year continue decisions some everything operations well. is motors, protect of put see to we're with And year, on that's of time, I And impact business, the then to incremental and number that the second the to pared each half relationship the customers critical just cash on the balance behind, opportunities mainly not evaluate time. the we've here. But demands anything a to from in for constraints And the the of That's in General our greater to an other across making de-leveraging some with trying material because weren't we're to our we do right come programs. But supplier of our mean and Inovance, the they’re stress are strategic now respect the is markets capital we we for the strong semiconductor big the out down. same there vehicle by were to future, strategic performance, to side a balance that's especially especially impact Motors, platform think uncertainty now about put of and now able generate the our new the at that everything regards sure made now. of you do strength to going through us, about that priority paying have where technology customers about that also XXXX pay you strong again, and to we of we our don't that maybe And our a container anything have twice customers just inventory the things shortages we generation largest ramp-up number uncertainty going Clearly, our in is efforts to through and going while working said continue shortages. to quarter, we're We've as is quarter. of There and add the excited are they're marketplace the with also a power shored Inovance we and to programs, on in a very for and to landed and things, respective there independent of electric segments different clearly, for of next environment of have marketplace it. that

it long your to asking hopefully but what you're So for. answer question, addressed

Rod Lache

you. Thank great. Okay,

David Dauch

Thanks, Rod.

Chris May

Rod. Thanks,

Operator

with Bank of John from ahead. America. is Please question next Murphy go The

John Murphy

Good guys. morning,

David Dauch

Good morning, John.

John Murphy

play or players, sort if with mean to in on and it’s Are discussions? your really burgeoning into it's is running follow-up question and just basis understand I folks going just sounds to you're a potentially into axle Inovance out partnership? a Inovance, the China, it like be Just right running and on Rod’s this new this powertrain And sort but and management curious, you of global really understand suspects in with it in you trying to on as your the global partnership business? with you're same usual well. are going in starting trying yourselves of business, on you’re new standalone to global I’m bidding and technology, of and truck or going those going as

David Dauch

they Yes, David. our some competitors is and truck side, manufacturing operations. John, Historically, Dana, in the biggest this really of the been, in-house

vehicle that well. and there are with of but the as was as out far side competitor saw there others electrification passenger as Magna crossover in products. related GKN, have we Dana and Clearly, you whole some car The On out time market, the with really and biggest spend there's of also the or got guys I new to want you host motor entrants to you, that that mentioned traditional your players, a the beyond new well. driveline as that but go space that ones the guys ICE inverter

we're product sure shifted resources next lot that years protecting we've came the we core of Denso our And together. that, cash their organization on whether are reallocated resources towards But of passenger that and We're forgetting timing not range replacement Delphi allow are support bring program recent will the seen We've to business, we're formed, feel partnership relationship segment plans. a got the heavily Inovance The other to business car proven America, their to those compete the the our those working any partnership we and or the partnerships But forward. crossover we're regardless of BorgWarner, technologies, well. by do to advanced marketplace needs, that long Asia. the generation that LG and that ICE that technology as being for as vehicle of ready towards acquisition, some internally is positioning and to of the support Europe pick-up, going a of the North a we advanced based can those understand us with to core about regardless come. biggest value and propulsion electrification. will our with technology You've that feel bookshelf technology generation our Magna proposition I'm flow technology they’re securing weighted clearly we sure it's the and thing needs customers. need supplier region make proven support in on We're with and

for positive relationships growth we investment very about huge advancement some feel very hopefully, future with we're feel and in But But about good good our there'll [indiscernible] a them. And that's in our those the very what us. forward. holds. very So Inovance, we about be discussion and excited the with go we as I as said,

the what properly been want the pivoting towards agnostic or that clearly IC the electrification. engine, let to of to that is market electrification. type propulsion But has to we'll make market we're dictate share hybrid we our the Our be fair they win system business. of whole sure And between recognize market, prepared position

John Murphy

you to a content And just to maybe an on follow-up your Can ICE car EV potential maybe EV and that. trucks versus vehicle us and for remind David, platform?

David Dauch

full-size content range to a between mean vehicle, truck I is vehicles pickup around $XXX Yes, truck, per $X,XXX. $X,XXX crossover

to around components say Some the allow command $X,XXX will before, independent and impact that size mean that you which are business. three product cars as a view. the price or depend we've individual of offer us Clearly passenger favorable I in said will what into there's think we're the content, thing a possibility price, a of but content and you in front an involves the you is for regards but to the a I-PACE profits that Jaguar get support But let's $XXX to pickup both will one on view When opportunity grow and I portfolios, the across applications. a overall some still vehicle, reduce the big below, appropriately give doing that but electrification, performance a on more move way it these but to rear there's integrated different vehicle, also a to be as solutions, lower to vehicles, systems. to the

John Murphy

Great, very thank much. you

Operator

KeyBanc question Your go Please of ahead. James from next Capital is Markets. Picariello

James Picariello

Hey, good guys. morning

David Dauch

James. morning, Good

James Picariello

are missed programs My EV of your the with in apologies China new all tied four this, to Inovance? I those, but agreement the if programs. those Are all

David Dauch

At with we’re and just far the looking the relationship one part a ultimately, going there's in technology global agreement they is Our together. we Inovance. stronger them. But that have regards this relationship the us put in is bigger with of technology and of have that us, them time, Inovance a basis. have from things with as and think to matter, better forward in performance And to our same brighter separate ahead going a with Inovance we through on we and in confidence earn agreement it sourcing our that forward. the that to a And as we're relationship technology

James Picariello

OEM premium What's the got Okay, in it. timeframe that's on latest with European the been award your Hybrid the backlog?

David Dauch

next and that program will multiple is be of the year, variants that roll off And years. this going be launching we’ll late to Well, there's of coming couple into that.

of seen, about far is period excited excited that it it something going very as program. about But we're vehicle the vehicles been be for a as haven't to will customer that type very we're And the that about performance of will be this announcing that into So go because time. supporting. you we've that's who talking of technology

James Picariello

the EBITDA commercial does within $XXX account just that two just million R&D does through the that the third quarter then prepayment interest The then questions. debt for $XX quick modeling year? any in benefited quarter reflect the And expense, the that and it. walk, settlement Got for million increased

Chris May

to a just morning. debt So of we're Obviously, as through XXXX. third our we as debt the to quarter also yes, net the question one-time right clip that your down first of of it some of third done. year. a the subject overall But to relates But course would first towards had relates in any question, of efforts from this we million portion R&D, be was The timing it's slight quarter the that to relates interest where reflect would standpoint. increase should some reimbursement pay expansion as the is because in it Chris. $XXX spending R&D, from Yes, product when directing your the it that reflect begin payment to well. Good

James Picariello

Okay, thanks.

Operator

is next of from go ahead. Please Ryan JPMorgan. The question Brinkman

Ryan Brinkman

to ownership more that your either thanks stake. any Hi, terms my of taking quantify or percent Are in you for in able question. of amount $X investment

of think platforms, small say initial integration you or of maybe traditional from heard just with companies, I investment? initial the one. I'm type be think are assigned wheel? make you then to these was I'd implications turn more platforms. pre-revenue has so the of the broadly, American the a one investment. the can a to my called larger to type Re it components understanding these is And interested you an what that in, into I vehicle investment mindful And And what But skateboard curious arch skateboard drove small sometimes into Axle

Mike Simonte

But clear this saw a ago, were different we're focus the Mike speaking. bring And refer we Yes, looking to investment. market. potential the first technology looking to company, fact electrification that to ways we're saying hi number energy to. morning. that David that to the new would we a introduced we’re by made had, you one the couple, ways just that good our our three start the This couple multiple Ryan, We relatively for technology Electrification company. for going skateboard small is Simonte is access years forward. I a looking at was things. bring markets strategies to about at technology multiple to different they vehicle

about good company of cost industrialization for we're So in us and advance I are We advance ways longer-term But vision And optimistic can start. optimistic, that assist quite a looking contact saw people smaller, basis, VC the beyond we we've that Ryan when this the talking their ambitious in been a investment. years the that relationship, relationship to passive in from behind talk this about to type yet. to experience. we and this realize we're over mean opportunity has group done nothing creative, for our very been

opportunities going it we're some to pretty there. see we chase And So hard.

Ryan Brinkman

I that also that Very rising I does just does opportunities leave pay market maybe allocation, million you're and to to that full EBITDA capital that wanted know to check you toward given stocks, say what don't on or are on the highly relative might electrification of lastly, valuations interesting. EV focused the for attractive with for down? you. any overheated helping market related think debt Or looks or de-leverage, if intend be you M&A, whatnot, maybe there $XXX the still like the out in related $XXX for related XX the room FCF in million M&A, deploy electrification debt you and And heard currently, Thank to there? mean the rise you if just think then

Chris May

free Yes, bit generate flow you've start first small and leverage in us the a through $XXX of question capital a seen I this is the as past, into those space payments, little that's then on is China to fund as to we've gross with allocation Also, that some had because I'll $XXX million, that our reduce Ryan, that of guidance year, we'll our number. as restructuring investments relates into we otherwise, some objective the this ventures it to course well. cash Chris. But also in obviously, mentioned we as made your joint would expect small expanded primary and our our company. where continuing million

David Dauch

is Ryan, David. this

electronic the what mean and of companies willing some at this in strategic clearly pay valuations is our we sheet power were based On to exceeds far on need time point of front, pay where the is. I to balance these

we But support So to we at place. markets. markets ways as have our to creative alluded is Mike leverage also also we're And that feel in new the to limited to sheet. as our core customers, our balance in priority being in regards other well the with opportunities clearly we're service to partnerships as like technology you, don't looking

Ryan Brinkman

you. Thank helpful. very Okay,

Operator

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

Dan Levy

apologize Hey, this Thank already. you. been the just morning. good start if addressed And I with has first backlog. Hey,

just and offset end takes last what markets being walk and for was business on maybe ‘XX wins backlog through those simply you are versus that by the effectively weaker ‘XX you Your the puts us Can is years year? versus prior-year. flat assumed incremental

David Dauch

their us that and deferred launches. you volume some into little you of ‘XX you've you our course as right programs the the had in in customers well, moved a puts and months in retimed overall months the of about through course several But backlog of backlog key the for were their that of programs adjustments Yes, programs. to be how ‘XX the and retiming net-net, based some out, some a talk some backlog if they're principal in they some our of the maybe to from of this our that to on in bit I lot years our of on a ways past next two terms attrition COVID related think some ready and of XXXX, really recalibrate of had couple ‘XX to continue was And through takes, activity program of but previously about ready some in and ‘XX launch, heard kind market, in think go.

at also too. attrition on So previous we’re our to and low-end hold maintain keep our of a the good ranges level that able

net pretty perspective. from that from we remain strong So backlog, a

Dan Levy

backlog argue not the timing be is on more, well, just slightly. simply a e-drive it up up like of the could more? that and function then programs And of just again, some million, piece, should but What up as Great. $XX it's

David Dauch

some quarters of and we of the many the Yes, so I Inovance had think some relationships with over past announcements that the we've discussed. past months and of that

in continue to volume for to this as of of example sort they continue ’XX,’XX increases that course they ‘XX. even launch, So lot and launching of period in right these three-year step-in e-drive a these through vehicles more the year, units are step-in

kind that of why curve-up that's through period. we So

Dan Levy

great. Okay,

transition bit is by I more maybe full to to lot existential, And for can XXXX. we that first I they've side. time to XXXX. target know is the that Second in the years product sand, that a few a full to the to be EV side be there's release think highlighted through is, word of binding. the it a the time that And guess full fully first now transition. I this is realize transition, need XX for a you really they between question. electric or that happen a question But reasonable and on This Aspire line outlining period weeks of put obviously Is largest guess, world manufacturing make ago, customer I the one you a all you to things do your my question GM, in a a saw as use you more that's timing the

David Dauch

tailpipe regards asked XXXX foremost, that to first At steward to for be capitalize No, the me environment, by what's and leading calendar Dan predict period the this they the at David. technology, let carbon edge in me same things. just But GM’s bit. same is And a efforts I time. got it little the other right good neutral time, our XXXX this, eliminate marketplace. future electrification, by That's they've the the doing and in want in time, to on emissions applaud this just comes the when you’ve say and to to

well a transition aware we're surprise was of us. to and their the that not So that announcement

at a various case, with we're was be have brought boss will they providing proven future, engines hybrids, going row. strategic the of last I But in determine market whether on and track years with we're said ours, to But like time, to At the You our doing today, them. the acceptance IC it's electrified rate record probably or three, mentioned, deliver to either it's partner partner way. But the largest provide a a We've same out for a in prepared and mean, in units we’ve them. the to of the larger order GM. earlier they an OEMs. the electrification. as aspirational plan number to wouldn't them the be four they're time, that. market, suppliers if customer, goal the put you Whole of been this in we're I it didn't ultimately, a in got be to thing, same going agnostic there

we're with tailpipe emission neutral this support get position, to also so journey that And on carbon issue. and going them whole to

do to demonstrating motor mean, this more that know two multiple manufacturing with product the that convert the we And selected validated with integrated doing to well these issue especially proposition. and to and one our sure customers some we the our proven and learn being of and of design and in a to as we're at then products that that operations, economies make other recognized Inovance big scales manufacture volume engineering modify customers business, that. to there's that and to offers working capability I electrification, the is regards that. to ourselves most your we’re me and can of to things But is play We've them customers, OEMs that answer some in that mean solutions our we're lot highly are in Our scalable so develop components period And assembly our we'd technology. today this process can awarded we other marketplace to of is the have with inverter fact GM of their to the the as working the But the more yes, comes our in partnership, technology be to European number need three side into a of on that I and that with our type activities we marketable offer our with for background, important question, are that, partner technology. do we're that comfortable trying today. as the value develop we we time, other accommodate time, configuration. same our successful obviously, by of we're transferrable to lines to with our how a to have thing background, accommodate regards there

to will in that about need technology, fully $XX,XXX the to of adopted. that to Most also people going grid, to in $XX,XXX will confident going cold I to $XX,XXX $XXX,XXX the years, the So of And the quite vehicle. a market before infrastructure, what advancements needs talked $XX,XXX we've to honestly scale. be can't the to to battery electrification hold that the the of to the They're we're I'm But with respect drive or in the as when But our then we're really And excited electric areas, I to talked just provide customer several to to especially economy with electrification. available. get product charging buy, to for to will future about that type a lot done still meaning place the choice, be there's see forward. comfortable not, technology or going seen the conditions be base IC put offering their stations, an afford find marketplace things to the be the into has are continue a or roads, $XX,XXX consumer affordability volume range for that to advancements with I say that going and way engines highly a to recognize the last the an be they also consumers further vehicle. in but that we be have competitive that's about

Dan Levy

you. Great, thank

David Dauch

Dan. Thanks,

Operator

comes The Brian Please with Barclays. ahead. next question Johnson from go

Brian Johnson

for taking myself. you Thank

in through and a Rivian, a programs, opportunities as within GMC the versus electric doing truck, specific Sierra. of have prior forth don't question on XX they of might all but you dedicated as board roughly the e-powertrain questioner, per of an well electric version GM platform? know to in the on their existing pickup at said XX, like continuing think it's the comment what kind or of be could So you least Cybertruck, the content I version the Silverado conversion maybe so slated a the XX

David Dauch

question, I question? GM I try want understand understand based your make how is to the sure Yes, respect you what some Brian, per want Is of impact content content vehicle the to that vehicle on clear to per with just on that your to doing? I’m and

Brian Johnson

with where content of Yes, electric you like axle see a truck or legacy for but you truck on going can the it could perhaps powertrains, been a with F-XXX Silverado? what pickup off go would specifically answer on GM platform the fitted that's versus the pickup addressable a

David Dauch

products. they they're and Hummer made Obviously, programs that going with to in There electric volumes trucks assembly the but pickup us, be those Ultium the that's has the they'll of Ultium drive you the receptivity marketplace there, they mentioned already their truck portfolio, the supporting also to that Yes, sub announcements clearly portfolio, that have the respect got program have some be component us. their all initial volumes they those to GM battery unit for putting today, state. to to replated, determine that producing content incremental out they're of is more are these

get But EDU the full systems, can than $X,XXX be to in less of $XXX we much into content integrated type that greater if provide of then than it today. thinking that, So and north that content area. we the even

already doing we're regards one doing said, more of in So, got, to next OEM. solution on some as benchmarks we've we've with with we're the what an out for IPs, there European is inverter. added which got in a We've what today Jaguar two

are we're for able are that these dictate we that future these a solutions pretty have we're develop And going in the for the the the highly good prices is what be be three integrated, advancements going and products. products. the So compete forward. understanding ability going to to Clearly, to point these in what for market to technology in scalable confident to going one price

customer mentioned full-size forward content. a $X,XXX going I look content and or is cars. here. with But be crossovers dialog greater, take today per capitalize same on place IC the for really that before us there's And can pickups. what we you, think the what forward, other we our of understand we also time, to go maybe that the needs we even that a we it vehicle At truck is, and to mean identify to on Hybrid can it that a can about feel passenger to and segments As about but think very as can vehicle we that base their requirements on think content good lot

Brian Johnson

OEM, question and a that think well you And primarily you facilities and set did on the in engine cleaning-up make the think from of you But we age. that is in-sourcing that to electric that there and follow-on through gearing e-gearing, got kind the a into [indiscernible] capital you very to rough repurpose equipment it's plants a long-term, based those operational you send whatnot. cutting, transmission parts might as way as vehicles, utilized be towards years the great are came think of rough couple components plant Certainly go body footprint targeted product forming, components. job the just and Metaldyne, that’s whether I issues or could past,

Mr. a think car would out is I trying there cast matchbox Musk cast like toy. to a he

it infrastructure So be and of serving thoughts on one what doesn't if just even that would the e-motor, three e-drive units directly, feature some future? in and kind that this maybe wind-up hypothetical of

David Dauch

simple is I question, the to market this but positioned standpoint, we go you a that lot from Brian mean a yes. standpoint, of the to in is what a assembly. questions, got component from Yes, sub that And ourselves answer electrification have by

Hybrid a also So all component IC plants and type and related standpoint standpoint, things. those integrated are are that a differentials, think from today also gearbox from of engine that fully EDU product manufacturing

and to run So converted over be electric clearly shafts think type and product. gears can components differentials and

to assembly over, mentioned plants most over, that activities a some As those also related that solutions, the a of balance done the need think be be today, electrification. Those in of leverage integrated the transmission, that have the be work and converted earlier, will are engine work engines, downsized say Hybrid little which get component a long full dampeners. we won't of products nine which driveline systems, there's think I XX in bit journey converted that continue we and on some more to can than decade of can regards but think to related I to for this IC regards of time, speed going eight, period shafts as most

are market from over the accept and is to ready electrification product greater start we’ll products us adopt. and have stress just strong the driving we scale keep operational be need provide a clearly versus We tell and And market IC relevance And it the want we'll product technology excellence agnostic we to so than that today, the to make at to again, I as capability when then standpoint. home, for market. converting to that Hybrid. but starts capability And facilities that have those But electric they're in we market. ready to sure engineering of engine

Brian Johnson

you. thank Okay,

David Dauch

Yes.

Operator

Thank you, gentlemen.

comes question Spak ahead. Joseph last RBC. go Your Please from with

Joseph Spak

Thank you, everyone. Maybe clarification. of just a point

Is e-drive X, component guess, the the backlog? And that or that Slide e-drive vehicle that business? you business some launching, or component, of is actual components because are sort scope business not it's more on not mentioned the but You on I pickup new? commercial of within and considering electric programs, of electric within e-drive

David Dauch

electric these units, drive supporting manufacturing. components drive electric not they’re Yes, unit are

Chris May

our think some of and type is trucks, would we're winning we commentary, where segments of And of for in Chris. component vehicles on talked Yes, pickup that is work about Joe, BEV platforms backlog those e-drive units into or the this even commercial categories. fall this about included previously, and those

Joseph Spak

if be spread is at look were of across just is I we different but that to if other it were segments, light to above you're like, that XX% we the clear be which would and e-drive because lens, just sort up sort SUV. into to content a through XX%, But it of this vehicles, business know, the on breaking electric traditional truck backlog and

Chris May

these vehicles. it No, support electric be those vehicles. fully the no support e-drive, in would Right, it so

Joseph Spak

Okay, because about it a automakers vehicle, you that are of like, more they'll building okay. are maybe some build maybe constrained the portion trips. of seem maybe little a and in vehicles, on They're the just bit some does shortage, creative, trip how then on good talking one of getting right. components without the Thank the but

end-up So you I'm you're finish wondering think if if do of sort vehicle shipping, because impacts then cadence supply able sort they later. the still still of and your business, to can the you like, of that

first terms we from in the of might somewhat what And so see diverged vehicle actually year? half assembly, at in you of the finished least

David Dauch

Joe, David. is this

of lot other of unfortunate resolved shortage, trying supply in their by and SUVs of industry it's year. half that this half benefits of profit American their hope but has to situation the really a faced pools overcome regards the industry Axle continuity protect trucks overcome Clearly, well. going as regards the with to market the is and large first our that one an the it the impact it's First to second year have in in they'll challenges OEMs and semiconductor the they the there. here, to of are all, but Obviously, to

some We’re the are truck a apart even build creative, plan vehicles short from once for of and some But applications. final then available, being by it's back where if ship the way they'll to and period OEMs and applications, the you same as units then into they chips those those a find and even and time some passenger they'll very crossover integrate at OEMs the those have time, quality those up validated to of time, are which standpoint. of the car sub-assemblies in make chips product the At as and can, referenced, are that are be. available, ability come vehicles those same ultimately build make they're the those the long available units to once assembly, as the they products the a future, out and to impacted up meaning expect

we here. I of that going earlier. to we of referring have now, It's strong very to badly. to But to look be impacted, something So continue was part our going to been right going were we're disrupted yes, haven't schedules the overall, mean monitor. we have forward But uncertainty products most been too our for

Joseph Spak

impact follow-up, a far an Just need any direct you have more you like a trouble it? getting thus had where it's than supply indirect

David Dauch

not spots, more not we're time, and But at directly but this they're we're as this We respect indirect. tight making to working plants have to couple allocating production with with run. customers our that decisions a by being run impacted which chip on or

Joseph Spak

Okay, thank you.

Jason Parsons

you, with Thank certainly have you your call Thank this We look and to of AAM. all who future. thank on appreciate in you talking Joe. forward in We interest participated the you.

Operator

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

disconnect. now may You

American Axle & Manufacturing (AXL) 12 Feb 212020 Q4 Earnings call transcript