AXL - Earnings call transcript Q1 2021 | American Axle & Manufacturing Holdings, Inc.

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Operator

Good morning, my name is Chad and I will be your conference facilitator today. At this time, I would like to welcome everyone to American Axle & Manufacturing First Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions] I would now like to turn the conference over to Mr. David Lim, Head of Investor Relations. Mr. ahead, go Please Lim.

David Lim

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

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

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

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

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

David Dauch

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

highlights Chief first Chris comments Officer. XXXX my Joining of AAM's me To on the and the Mike quarter I'll President today call Financial our review results. today, May, AAM's are Vice President Simonte, and begin

chain In generation. and we solid will cash the Ford flow XXXX, the exciting first and recent I'll discuss we you questions our any that Chris results, details call may outlook. strong REE of Next, delivered and After operating up open supply financial the performance for the the lastly, challenges covers then on have. quarter financial business announcements will some with within and our AAM touch

of first continue delivering very $X.XX strong supply challenges compared were on the revenues quarter recovery quarter related approximately is year-over-year industry from our Although X% XXXX. in increase in issues, the continuity up reflects XXXX navigate The through basis billion these billion, to of a shutdowns the to year. facing we sales first experienced results. for we the AAM $X.XX industry primarily COVID-XX last while that

or core a to light Although light that and North up the building American extremely X% demand according industry Furthermore, production our increased truck remained environment continue inventory trucks remained AAM. light platforms and the estimates, our low. XX.X% year We Consumer year-over-year. the quarter truck was much demand million production the first them as as believe party This of support for as AAM's year-over-year key margin customers are fast XXXX possible. extended these million for $XXX.X was X% down X% on last we and quarter $XXX.X platforms volumes third of will strong period and XX.X% number is a This to an performance of EBITDA of first sales. or was sales. in time. record compares products for for adjusted

Furthermore, in high demand $XXX share first to flexing the in $XX of capital the higher business level benefiting AAM's the quarter structure to XXXX. on contributed the XXXX. flow and in production drove XXXX, flow. market of $X.XX adjusted Cash in $X.XX quarter. million over spending XXXX commitment loan adjusted we share million, to strong $XXX reducing generation term cash flow first the the generated in million our performance cash per compared was of our intense Our over prepaid with our in optimizing level, global to the the free of from align EPS quarter this greatly In to was per quarter. focus and quarter to first We performance quarter addition operating of cost of first free our compared

we throughout committed As have strengthen and stated, our to reducing previously balance our XXXX. debt are we sheet

propulsion marketplace. On to from all-new that electric new been REE for product are air an And and liquid front, of Bronco business a great both Ford This that develop received e-mobility. which to excited for Ford power announce cooled to are new we we the offering providing as we product electrification, and our has happy well EcoTrac are cooled part units, transfer very jointly is exciting for Sport. AAM Automotive family, the announce that are system in today agreed have the

and efficient REE last call, e-mobility includes next-generation modular As the electric and provider partnership units high lightweight platform. our into innovation REE's developed company's The vehicle in we our highly Detroit. in that at motors components for for here enables solutions. traditional EV development fully is be fully of intends applications. vehicle to into center will advanced allowing integrating Automotive integrated technology a electric inverters drive incorporate REE The leading modular AAM's feature shared AAM's drive which speed commercial a a chassis units and flat highly wheel flat multiple with technology core

and in Automotive the important propulsion step partner bring We market. with e-Mobility electric our are market. to to new AAM's to This growing very business expanding is addressable excited an technologies REE

electrification technology, are an In exciting new multiple face. attracting continues our interest. intensify data for will be engineering, year XXXX with product us this and addition, our offerings and OEMs global in strong to

from offer next partnerships of but related Our a with separate On to announce achieving and engineering products. US generation are also matter, advancements to pleased we are technology engineering grant will energy AAM' the quickly three-in-one our for technology teams award with of and in that This of further Energy collaboration technical our today Inovance of unit. new innovation receive the AAM support drive electric a in Department support our vehicles. development recognizes

are components, we electric and These presently drive products, are with also in win programs strategic Sustainability of values teamwork, published new multiple business business we we with respect even very our that vehicle our initial now AAM our electric is and proud compete stress for in sub year I'm are higher very to recently sustainability space. say goals. the Report. and entrants of XXXX globally by pleased that past process to this exceeded and assemblies, launching We're of and year units. allowing AAM's environment. advancements AAM generation this current as company innovations in to win our for announce to base traditional set a - sustainability process customer community program OEM while As the inclusion, and position involvement, including diversity the cultural to new our also setting principles the goals

the interest our Our more stakeholders. sustainability associates, shareholders, in consideration transparent has and suppliers, program of other of customers, become

are socially sustainable committed to responsible. growing We our deeply in and profitably that business way is a

Chris, the the current our such want semiconductor labor, be from never XX-year about steel, quarter our commodity talk year. chain value containers, XXXX the shortages environment Before I rising in industry, guidance. I to We the in half financial stress I've my In transition of operating to and semiconductors, the seen stemming on of port second trough and experiencing. career in improvement delays and will believe issue with shortage the we're prices the the second that

we will this into issue However, expect carry XXXX.

continuity with base to work will customers For supply. AAM, extended and of supply our our protect we to continue

uncertainty, the current of maintain to we Although financial there are availability with guidance. significant semiconductors, high continue especially our

high continue fact, of path can In our what a on full-size customers with see today minimal end know assuming we and the truck to based we our to production ranges. prioritize disruption,

and Our adjusted is current million. $XXX our revenue extremely million an remains billion standpoint, business to EBITDA a $X.X cash basis, $XXX guidance running $XXX well. and follows: free million flow billion of Operation as to adjusted to $XXX in From million $X.X

Chris to XXXX let and our continue operational Financial control We expenses Chris? and team capital Officer, all AAM May. face, expenditures. be and can me President the has year Chief we outstanding for efficiency to pressures and improve now with that, turn With to call an tightly our this believe both very Vice over manage AAM the we motivated excited. Even our

Chris May

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

with walk of a $X.XX AAM sales the first were the to XXXX in sales. X In quarter XXXX, Slide $X.XX billion billion begin to compared shows quarter sales. XXXX. first let's first of first XXXX So sales quarter of quarter

highly sales SUV for from lightweight by impacted which impact are estimate we axle by GM's independent new back we First, unfavorable shortage we a basis, be we full-size the GM's of efficient On the then a million to impacted rear which approximately the and year-over-year $XX rear $XXX, about quarter. drive million. axle for impact beam new transition of inside COVID-XX $XX semiconductor the add a to of approximately account

XXXX mix were of the is $XX $X and increase quarter of this in year-over-year negative million. an year-over-year $XX last of accounted Pricing had basis. sales a volume million by impact Metals first of unfavorable occur. impact on FX and for quarter an Other The to million.

continued six increase metal an related primary see we the that based last During have months, to index the inputs purchase. we the in materials to

hedged on customers The changes. this we column portion a this recall, the these comparison. metal elevated bypassing majority by year-over-year passing our with pass-throughs risk related of may reflects index You of through

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

our this EBITDA As first history. adjusted in quarter AAM's highest was company's David mentioned, margin

from but a Slide see You reduction in million. actions benefit last our on $XX importantly, net EBITDA adjusted walk year-over-year margin strong most the down We sales cost can reflecting contribution from year, X. of benefited increase we the on of continued year-over-year a

to similar $XX of SG&A me expense. $XX first quarter R&D compared million in quarter including This XXXX X.X% the of the an quarter to XXXX. the the spending in quarter first R&D with in increase cover was of capture has in net expense in able XXXX% in Let first AAM was or million a increase compares SG&A. now first of X.X% million or to of SG&A no sales. AAM's amount $XX sales. been sales of XXXX

controlling an costs, investments our to effective our focus support funding continue to cost development appropriate very only key an with includes SG&A product to not meet shifting This on it emphasis but level will a from But innovations on in in electrification. further also technologies be traditional emphasis technology resources objectives. successful to new manner. and of also our We includes

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

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

into quarter continue first be XXXX all noted Taking EPS was of net to quarter in these be of the we release. per and to in we effective share impact income $X.XX in million XX%. tax the per of quarter rate Adjusted share or items first to a million our GAAP Adjusted per $XXX.X for share share $XX million in We expect $X.XX cash to our book compared compared into XXXX. per $X.XX the of range press taxes share XXXX, drivers $XX.X excludes would XXXX. the As per XXXX. to first $XX XXXX million account, or loss sales the the earnings first cost expect the our was of quarter for approximately $X.XX of in

million property, equipment flow provided last the on for we recovery quarter activities Cash net $XX $XX expenditures, move the and Capital by related from XXXX for net XXXX fire acquisition-related September $XXX activity the payments to of to the in for first cash now million. compared of was million. of in insurance operating us was experienced first and of Malvern sale cash $XXX $XX the first of and million sheet. from million for proceeds the were quarter. Net Let were the quarter to quarter proceeds XXXX The the year. restructuring outflows balance plant cash

the time. AAM total, would for and million From anticipate we timing year. impact in costs quarter $XXX.X of million the cash change $XX ratio at of net over trend insurance and the least EBITDA year AAM's leverage from cash Reflecting no expenditures strong the to acquisition X.X cash keeps on align prepaid expect and calculating XXXX, This on and in continues ratio of first ended of as generated first million in impact million XXXX. restructuring XXst. leverage is guidance. flow this us in the leverage March track However, of net Malvern activity, a fire debt we neutral prior the $XXX to million $XX of free In XXXX. quarter adjusted adjusted we heavy of leverage of at cash proceeds delivering full this declining perspective, internal cash Based reduction quarter with our loans. we on This times LTM the debt %X.X a billion free $XXX term a over of

continue to strengthen future our interest reducing We sheet AAM's lowering expect balance debt to by payments. and gross

to of paid AAM the fact, end In million our the an term loans. quarter, subsequent on $XX first additional

my comments thoughts of the with to our some financial move outlook. XXXX we Before Q&A portion call, on me let the close

provided we XX that We this on February are our year. of reiterating targets

we of to information customer and uncertain and backdrop pickups semiconductors. currently regarding full-size SUVs, the best their outlook Our building schedules, have related prioritization production the encapsulants

based to end of see the margin and provided. spending. strong ranges David working inputs restructuring and initiatives, guidance and can as focused reduction free a high growth, we The cost number we optimization, the these capital capital reduced indicated, assumptions, on a As result year-over-year cash of flow trend

flow free we future our financial we is focused cash to fund Our and leverage our profile. R&D reduce our very support improving EBITDA on used generation, in are programs, growth

solid do chain long-term to quarterly greater to framework expect we would second While than semiconductors in continues to lay not customer and guidance, announcements for based the quarter supply recent a shareholder I AAM quarter first value. success the related on challenges. impact provide be

We drive compelling in and electrification that electric some efficient invest that highly continue units, OEMs are develop components will drive to to to growth. assemblies value our

results. on platforms flows Business Our of yield and customers structure, end AAM into passionately to on focused performance, our year. are day, delivering strong future of fantastic cost a the as XXXX will cash optimizing the our continue the the was award At managing best-in-class core we that to quarter start the and first well

understand I'm supply but near-term and call the and manage for also going is David, in we the related so the this and addressing are the there we challenges. can Q&A. Thank must today. We on your over here and to these turn participation you to challenges to time uncertainties that chain management call team back confident navigate, start stop

David Lim

Chris David. and you, Thank

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

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

Operator

the with ahead. Instructions] Rod question will [Operator And today first from come Lache go Wolfe Research. Please

Shreyas Patel

This on for Patel is Shreyas Rod.

point Just last wanted about on to up second the pick quarter. that

mention by it's going You based magnitude is issue, the back, how come kind improve. on should seeing can you semi Any you be the trough are the and frame did is supply decline second ways of you're half online coming the of it to in starting that of to and confident terms what the

Chris May

versus I I and frame then the more, quarter. in it the temporary inside of of the our with would here perspective, million. expectation a What a I second of tell a revenue second will quarter that. tell we'll be schedules, the second have our will first would obviously then from it bit would That's we bit the quarter again greater inside a And that I scheduled quarter, of in how just for Yes, little moderate along that in is decline from sort quarter customer basis. you of on a than call second little quarter-by-quarter half in be discrete We disruption as is would the This disclosed production our year perspective a revenue which would you impact today truth. inefficiencies Chris. sit $XX first

Shreyas Patel

And cost quarter, then performance it performance good. like in was and quite looked the

costs was was I were any any really think factors plus and I I there in year-over-year. just it XX think of chain are the what strong performance? there maybe the million was some that quarter semi, was the drove wondering supply

Chris May

of of it drag our inside little indices. say experience as quarter, would metal-market did inside relates to of we bit I Yes, that, a first

a You negative we the quarterly may entire the through, our year-over-year of bit on that for a the significant the you issues. we a coordinated do $XX about was associated of of XX% upon as year nearly run we little in recall setting of But year may terms performance, last little bit slightly through industry. perspective semiconductor premium so is we rate in from holistically talked the only that supply it announced freight quarter but measures was and know pass you with discussed through, logistics second saving million. COVID We passed and balance recall the and cost about the

benefit first quarter continued we balance second experiencing initiatives last the are beginning the that and we year. quarter last last those of benefiting the will, So still in from this have year you and really if year that through year didn't in the started of of

Shreyas Patel

year, Just of terms light get so have product then they your Okay. into sense of just And a looked REE, side was platform that understand this agreement commercial this co-developed, with agreement this so more is going yes the scope so going work kind portfolio this be be it forward? bit the then in that. would what to terms is, co-developed an something, little that, just like you already to a lastly would exclusive from developed for on agreement, go this, is wanted the of that to different in trying system is on of and vehicle propulsion their about of a applications to with of, going system propulsion be this

David Dauch

this speaking. David Dauch Yes, is

designs next-generation our time, products we've At motor, communicated the actively As EVU. modular and regards for before into the the been electrification that, you and to inverter, all integrated we've gearbox of same scalable. our the to and and we've are in very the working

is transitioning a want So that performance. we And space. drive smaller segments the that we've much product and but density different as designs designed of only clearly the them in that their enhance chassis that adopting designs, But an so we up We're and all that efficiency. seeing our power their gives performance regions a opportunity this not really world. integrating the with. support product solutions e-mobility re-automotive can that so it design their, into to marketplace. far is and be and as there design. vehicle able even for meet measured more of We support various to and come the to can product, Electrification to even of packaging form support the the we're needs We're

than So the it's and very full the organizations. design flat future timeline about to we aggressive about type type an we're commercial feel partnership later. to application. excited good already but for a this for we them, vehicle product expected bring that our a We're market have are for and relationship two from sooner foundation working the the We strong develop what that can holds the

Shreyas Patel

so. Because, Okay. okay,

So and to per I like that. kind it's kind think of vehicle, past about we leveraging something kind similar talked your of what $XXXX content of the in about so existing you've product, think

David Dauch

But and to us four on only entry the of to the is chassis vehicle, higher design, the application the Yes. based design platform for is their thing strategy much design. I be kind there would so support comment that per should

Operator

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

Ryan Brinkman

decelerating year commodities and looking then the like or but to year. you've on noise the consensus a and some the regard remaining of as in expectations, check sort kind with you've exceeded this row either own your difficult the of been are more comparison to of year-over-year the sort wanted including guess to answer realize incrementals we my margin to in third now year, and How of have Thanks COVID? beyond maybe this the normalized back I all guidance potential and XX% to got COVID a ago maybe quarter is pretty year current for likelihood in of question. sort taking XQ quarters prior of just substantially generally from beyond half something in XX% this I what might you your margin the thinking margin about period relative like in semis of move still

Chris May

and go-forward on, of extrapolate maybe Chris. is puts first and rate full but elements to months particular performance This benefit a lot benefit certainly quarter. of initiatives sort continue a terms But run a challenge of kind the would of remove bit year conversations to Yes, on from company to place Always the and continue restructuring takes in spot to cost we've a the you with that a in quarter. on you're look last basis, been a a of lot over and see noise also our a the that key the in certainly basis. our of that putting to think and little from semis XX COVID performance initiatives company. I expect of the go-forward

to bit would discrete quarter balance a say the the in R&D little of second light semi I in first in in associated the, excluding the terms this So and relative quarter. lines, a with was but of quarter the again of year, first the that timing year little impact of

look healthy that nearly ebb big first support our that a a our Our will the bit, little think we in year and comes do but us quarter, you to clearly and the XX% quarter, running the how grow guidance, of activity, pricing our right throughput see margins picture, a that. half a we continued the perspective sized it, a from objectives, and can of opportunity the little to Usually terms second, structure $XX a of of again expense footprint high and in math at fourth that of flow on sort at on of in $XX but you attacking cost with strong year and million back indicate late in year at and little light based $XX quarter optimization project electrification quarters the from $XX bit little the first quarter of comes pricing line first end of that to cadence million continued the million in year-over-year very for launches to launching we're on. anywhere we quarter within from our the expect impact million light it's guidance third, in full bit a was our business a full then a little our our sight line ranges, the would pace on from our a typically

Ryan Brinkman

Okay. And then the but it's another I'm again then, remind announced yes, hub skateboard a this fully so-called on chassis, approach I using REE technological realize related with and our type or with qualify collaboration flat question. they're today. motor not maybe sure, can you a solution

than I think do more commercial organically previously interested expanding least you haven't in compete drive market as in the now. been vehicle line at to you

given might margin, REE but with that things that of investments maybe looking or the the considerable technological at might expansion et what of lot for some with incumbents you there remediate evaluating of end sense with if the imply just that cetera have change curious all and be of that taking that could organic investments market? already into the cetera, all different current Just you're et potentially and make I'm might potential a it place

Chris May

very to bring that the serve technology expanding about very yes, time multiple and that other the vehicle space, We're certain will allow customers we're to that about marketplace. well some segments, including more for, excited REE possibly type seen them regarding technology open differentiating them us the to we we're have chassis Automotive excited their and strengthen the we very we're same Combined we excited, freedom so technology motor develop. flat the we've the will so table developed. there functionality marketplace we've for we together, of their about excited market the to markets think vehicle Yes, we're the offerings that the today technology and but at applications that as up bringing for product gives to those commercial

just can both market a be the it greatly to us address together we from tremendous benefit can to think partnership. where we opportunity So for work the

Operator

Murphy from come John will Bank question Please next of America. the with ahead. And go

John Murphy

second shortages there going Lux quarter from some margin you wanted if first on came maybe decremental than just the the GM's chip far. losses potential of been second and that in saying trucks they're ask think to the products I then have If even a your by production, also so and incremental a not in have quarter pressures protected that normal actually we customers about question on were those higher would to to do capacity to happen, It seems is that but GM's think they're just that some losses, of GM's they losses up be so would the be trucks. of back that loss but room of lost if specifically production, production, you there a make back around up on hard, potential lot on year you net catch kind see couldn't production in later trucks? not running made of up like specifically

David Dauch

they At or can. that St. that chip board. the Catharine's the their issue. to in incremental from me, St. that, and Catharine's, will seeing heard trying saw their John, other way, are announcement, where got bringing time max products - earnings of they their we're has margin. running semiconductor look benefit clearly same the that you benefit facility time, prioritized on have can their they out add now, on on how over They Right they're facility excuse news. flat GM the is board, Oshawa I'm it's the truck, seeing plants the David. this Yes, fantastic at incremental so that's plan of not full-size protected

right year going to over obviously see levels from but haven't pedal extremely now right a metal with fully ago the then low things their truck marketplace. the forward So, the and now COVID, them inventory were Remember, the capacity respect GM that took recovered bring with are will in platform. because place they impacted we full-size incremental to just to strike that

John Murphy

they that mean think other of those around think I to love if Oshawa you I historically think takes is as that coin, upside kind thoughts minus your X.X right. to or think bringing million with on potential take up maybe I revenue maybe did plus you're on take hear the X.X you. million we you're is way, to X.X So that now, right could David, and But I capacity another in and of trucks the to on, you side do the what that. where agree right

David Dauch

that line include produce ultimately Yes, closer does on X.XX that. Oshawa, number around that north go has facility. for that intend to What units to we're that that million not the out they And so of we it volume of expect with in platform. that based

John Murphy

question helpful on very that's the second a just and Okay, then re-agreement.

architecture the I powertrain only you potential As in would think be say, change about or cases. change would the this and powertrain limited of

You look at say to, however for reality exactly pessimist would ways sort within potential what a in I a axles of that anyway. guess set is, content content set there I the you want hub lot some have in basically but call that up your think you're because eliminating mean up, want you it, that does whatever you in of

somewhat us EVs any just there to I set then for about can going risk help up So think even means you mean as your what as forward? on more is that significant traditional far if real content you

David Dauch

Yes.

this is John, So, David again.

was electrification the obviously content I with On architectures, similar mean per the integrated vehicle from traditional enjoys today but design. in products.

our REE expand driveline inverter, the we place. motor, but can is the content are with for vehicle think say in respect the increase up improve per our everyone other which there. approach, content commercial mentioned We actually, gearbox. With we weighted and go is there obviously traditional the it to vehicle greatly that I because and As the or can that's on segments, heavily towards let's that system their our the should the Automotive is vehicles content vehicle,

about we are. really So good feel we where

collaboration already and attention, entrant have the a that and by place customers evident design, and and together new of we're getting as OEMs, partnerships from and they announced. lot the develop, Mahindra with putting the the that working other they're REE as that both well with have some OEMs we the of as in is traditional some with Hino of partnership product Our

our to excited to receptivity about be Automotive. we're REE again, the So extremely partnership with happy respect and customers extremely the from various be to adding excited about our technology,

Chris May

you generation when focus talking a different and lot laid to scalable, of about much call adapt We what of our is of architectures. months we're it very kind couple on say a of This to Yes, platforms. I going modular we of out was a being Right. next textbook lot of ago

John Murphy

if that sorry, from you hub body compete these be up vehicles and things kind commercial of axle ups towing duty How ups? motor it just kind on truly does opposed typical compare set lighter capacity. frame for or of follow-up that one could with payload these that mean traditional I'm to I are the really will. set on more up as Just, set a set are

Chris May

be to going still out proven it's mean I forward here.

and Well, but market be in the other going want but talking electrification the to think I over that that compete going still think you're sure floor in position just We traditional forms make applications from the but this that extended frame traditional EV vehicles an have electric time. have also and can I available, the different think Automotive the at this. for marketplace period firm to to side. it's more flat load that a an be say also on for with come about we time body to to of ICE chassis. in a we're design we're load standpoint, the, the design an enhanced now has while enhanced I the light light, I to REE have But time, it agnostic and offerings side, can same the at of to hybrid be

Operator

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

James Picariello

the but on content Bronco Sport? the CTV the I've a to power traditional you're more well, got provide you units any transfer of maybe variety. color Can question supplying as

Chris May

PTU, that we're our BTU should front meaning to where $XXXX all-wheel from so module slightly applications less a supplying supplying of how you or it as $XXXX think in Bronco a on on is always half Sport, about drive roughly and the we're it's Typically think perspective. it that range the than

James Picariello

during the Brazil And year an Thailand company in Last this depreciation country time, in concurrent Okay, quarter. exit charge axles with you the was at there. from it that's the helpful. took accelerated

Just thoughts in future what the are on your company's wondering Brazil?

Chris May

strong in see We're still change to We a in their responding Brazil. future just customers strategy. very

Operator

will with Suisse. Please Dan question ahead. go from Credit come next Levy The

Dan Levy

questions. the taking for you Thank

plays sense as maybe give the should of freight guidance know commodity much market you year for the could on us could question the over far for premium a we cadence course then goes you just how but for metal because out that into for what expect be? might and First, a side on, the just as lot the the how spill I effect a what maybe the a you maybe year of how how incurred know pass-through, there and sense first cadence and the the XXXX us it is much, dynamic you specifically, or on in through you And on the quarter, year. on commodities give is expect the that second

Chris May

perspective. in or inside that a of this sort Chris premium of the the freight of supply it little of premium reasons half our million the year, the earlier sure your quarter I is freight freight premium disruptions first expect that into for a would would dissipate of the been a increase related for on first say with chain maybe and that and we've we back mentioned a here of quarter I from few talking to spent, most dollars bit the variety then of sort Yes call to some coordinating second since about,

and will days, to are current preferences and sent depending reset These they by design As elements market metals, of or automatically it the agreements pricing on metal we, process. the relates of certain the they're XX, a reflect really that inside XX, through just reminder, indices pass-through to metal. contractual as market XX every our

XX-day goes change it's metal to we XX-day will indices. on lag prices anywhere So as from and typically the reset of up, the a

as and both supply it So base that our dynamic as customer our base with with well pass-throughs. will

a So you subsequent coupled a quarters get while well makes have during once quarter different from but this flows a of that this sense. a timing over reconnects little then time, together can perspective just period very

the go quarter. they today, would If will fasteners see current you will month, go go up prices up. down. go they So next based our they down, on If impact first for us metal in the

they predict conditions. are market to as subject on forward go to hard it's So basis, a

Dan Levy

XXXX is just that won't limited. because forward a So going be into versus Is effect, most by assume there an flat correct? as of little much that lag let's prices of the stay more

Chris May

Yes.

it's So are flat to today. stay they where States prices

they've may, quarter. of you up you So if I first look month month back of the mentioned, at month as indices or been to sort through month trending to to sort the

you re-calibration I bit have a quarter little So there. second in the of lag. on And then a some as you'll have run of mentioned, would kind they reflect

Dan Levy

Okay, strong question, tight this just cycle, thanks. second, the about we how ahead just second I massive great, is I guess do demand have how inventory rebuild the has been. given to think inventory wanted the and my out the and

the And whenever gets and positioned you're maybe tells online that accelerate into potentially well supply so back deleveraging. XXXX, help it probably us could

sense So now. know action to could any us now is earning doing that there. might that, how a you stream doing is right up, of the you better you development. be that weren't of have sense I if to what EV the what you the is give a you visibility affect you're prepayment are the playbook that things can some I assume right of type uncertainty, of opportunity starts you us macro options flexibility And accelerate opens given there which maybe there that does can't lot and take accelerate, give what a but what's that

and to So you should much can be what you today of not do inventory do cycle large accelerating an enables that, a today? as that is rebuild

David Dauch

This is David Dauch.

consumer indicated, in various bright support marketplace. future because and demand years the to exist and we because see strong very of for As that we the come, a are a especially we inventory levels the platforms demand where for very of the

growth the the an put them, As can to inventory in time that's so fast extended period going levels, OEMs rebuild buying to are as build to of them consumers it's cash very I towards always support have said, use us a think take lot our a our I the organic going as to shift business. cash for a generate healthy that big position of We'll organic in we is electrification. growth, to our continue as to

then and the and fund backlog with business. of R&D So, our of new to we electrification on growing will get profitably continue intent our

to In to addition, commitments this quarter where and supporting very will we $XXX down balance to want with stay Chris, with respect be. our debt get needs will paying if I this to million to very paying much you and we to disciplined paid don't accelerate add just we down debt past like focused further sheet know that? respect it

Chris May

Dan, is this Chris.

what asked, debt type prepayable. have would You of we

pre-payable to time stack the that's and XXXX at are in loan is Our any fall bonds term the starting years in par entire position. then call due in subsequent now at the

us of a have we address that. So lot available options to to

Operator

RBC The next go Joseph ahead. Spak Capital question will come Please Markets. with from

Joseph Spak

sort some have whether new we mix and go is you we If in and within that the I been you retain I mix They've think of obviously axles back in-house. have overall bit, that for you made protecting sort of a sort of truck took guess into you know that? the which do the time they of sense sort programs little think on some what the GM that a have what of program help the pickup pickup actuals of favored I know plants decision the sourcing that mix is, less visibility supply I'm the within curious and to any you.

David Dauch

Between as production axles GM can axles expect and vehicle the all to going their forward. we'll support it AAM will make be we that we their expand vehicle making production, they and more

Chris May

Right from directly. and those and supply duty. keep benefit we light only others Joe, on the duty that the mind splits so SUV grow the ones in the heavy we

David Dauch

installed you installed capacity has capacity. said Yes. before and been will that the growth utilize an they supported we've They Joe, as incremental have by.

Joseph Spak

more guess, like bit expect agreement guess you Do propulsion of expect the to of and types a little I sort far range then REE, like go. can bit, this how can do and if you applicable into you vehicles. propulsion maybe for who's like be the system you doing what maybe to a this you or joint And with to back a talk I about Do the little just just vehicles. development what go of

element, think be any like architecture I color getting but into as sort they you're I'm they, not would skateboard have there a believe I helpful. of assuming might like that well. more

Chris May

doing Yes, newly fully four configurations things, integrating of with inverter, have wheels multiple to segments. that compact them gearbox wheel-end an heavily flat and but the into it vehicle the more is we're or course all innovative our motor, even skateboard the side can platform. we're applications capability not What getting for weighted the into multiple lower their that vehicle commercial on of supports program designs allows modular integrated the chassis and expand

Joseph Spak

Okay.

better is the, it's or? the larger vehicles application for suited So is

Chris May

but a towards be and higher vehicle right now. middle the targeted can to down scaled end segments It the up

Operator

comes question with from Brian last ahead. Barclays. Please go Your Johnson

Brian Johnson

you. Thank

rightly follow want we, to Just the up everyone focuses as driveline segment. big

some However, it businesses metal looks the in metal had like that got in forming, improvement pretty margin issues. dying part you from some dramatic

you could go? expansion bit So talk a about could margin the little there maybe where and it

David Dauch

a we obviously you're Chris last larger integrate metal is to can the make drive remaining we've we've incorporate that pick productivity. this worked capacity facilities, at I'll hard our years integrated optimized the the large or really in very from from to facility increased We've workforce initial over throughput the standpoint were three consolidated we've as fully the new advancements into lot appropriately operations, our of operating the dying we've David. which up and utilization over time, Brian, At market facilities, comments an operations the there. aware first AAM Yes, and as some capability. demand. But which into same took

proven standpoint, the power pleased continuity excess our capacity their some been some spent customers of of been environment. may some of to time, to you because very That's we're standpoint. CapEx seeing we've individual expenditures We've the there, our that in got this So s us companies minimize to buying each and have think reputation an existed that about supply Chris, I operational some to able forming that. side We've open are protect initially well. our marketplace. positive buying business a right in very want One, been up in in come power out from because new there as market able of the that of skill same of the the but because the capacity, now of from excellence company. metal dynamic At pick for we're also to add. the conditions the

Chris May

that as historically Yes, margin XX%. Brian, strong quite as in you what unit, us well, think business for about performance the XX%,

things rationalization now it and throughput the our MPG plus and majority You're purchasing to unit. we our business both thesis, with when of has the also just and vast and XX% with that acquired buys physical part it this some like power as that that also do also steel strong plant, XX% have but from in inside capacity how group seeing sort of the benefited factories, we to was optimization benefit terms this

David Dauch

And again. then Brian, this is David

but The business. do the other to there a lot work thing regards I for would of forming, say you're forgings in also central metal we've only thinking traditional

we're parts standpoint doing business So pressure connecting metal some in powder segment. aluminum rods and metal and casting think core that powder die an from also high

Brian Johnson

prompted questions housekeeping more behind your the all but by trade headquarters. second Good

of about effect As factory book end we the talk are XQ sort QX, able parts any is not, were shutdowns on may XQ that the to that you there when extent their allow kind disruptions the leaving shipments or production may the in kind about to of of there think of particularly that in are you or way.

if it you're about, is because that that. talk call or in really a another talked So you orders terms colleague not worried dip little might you see about of that more, happens competitor rebuild the of even

Chris May

dock docks. They once Brian, they truck, around do sale. do is ship this the our delivery for part, is ship and take our but customers most our take that Chris. The

simple to Okay, the be would that about way think it.

Brian Johnson

there process in they that be order in work could some need wouldn't So XQ?

Chris May

delivery That orders, would weekly shutdown will July at We again, depend plans. their sale. likely book most But the book probably take initial they dock. on they our

David Lim

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

Operator

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

disconnect may your lines. You now

American Axle & Manufacturing (AXL) 7 May 212021 Q1 Earnings call transcript