AXL - Earnings call 3 2023 | American Axle & Manufacturing Holdings, Inc.

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Operator

Good morning, everyone. My name is Jamie, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the American Axle & Manufacturing Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded.

At this time, I'd like to turn the floor over to Mr. Investor of Head Lim, Relations. David Mr. Please go ahead, Lim.

David Lim

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

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

this slides website call, on the a of our as You (XXX) To access call replay can XXX-XXXX, can available investor code replay you conference November of also dial X XXXXXXX. for this XX. find will to well. supplemental through listen replay page be This

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

you Exchange with we filings refer ask our additional For Commission. that information, to and Securities the

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

David Dauch

everyone. Chief President the call David, today Vice and of today you, AAM's on me Executive for for discuss Officer. financial our and to is Thank results good Thanks morning, With us joining May, quarter the XXXX. Financial third Chris

bring significant we both next, news make then strides continue what we will business ICE development my performance as and winning our the back provide doing to in into of our third traditional And to and deeper in operating begin I'll excellent our quarter financial programs. To I'll to quarter then AAM performance. I review comments, highlights electrification the issues touch are standards. insights on

the and platforms of financial details Our technologies. you After both strong fully the open covers all multiple may up for across verticals that Chris and OEM have. results, call driveline we'll questions allows needs to portfolio of us product any support our

the third supply From was second in $X.XX production lack let's and delivery continued began were volatility sales labor base. the exacerbated AAM's supply This AAM's by significantly challenges, constraints of including customer perspective, middle third stoppage availability AAM in begin. the customer were So impacted work was versus within quarter and sales XXXX by quarter production chain volatility UAW of the stemming negatively further of quarter. the the greater that September. from billion.

that in of the work million perspective, associated quarter stoppage, adjusted volatility, on component. in From UAW operational customer performance production elevated the quarter of $XXX a profitability or was margin third reflects having an EBITDA negative certain a including influence AAM AAM's the are XX.X% sales. continued and the challenges casting The at input warranty costs, charge plants the with profitability outsized impact

discussions are our UAW matters quarter economic in of X with customers, have of quarter. very work because Compounding reached fourth -- active in stoppage our final but distraction the part reached not recoveries have not been in the resolution top third the the

performance in performance is AAM a will a few about not as this to provide our more Taken and whole, details financial standards, moments. Chris up

last the quarter adjusted year. very flow strong a of $X.XX a cash cash free was $XX generated AAM's million earnings share nearly the positive at in million third $XXX quarter in per third quarter. compared per of AAM strong AAM's in share. XXXX loss to adjusted the was flow

performance execution. is operational are operating as management for internal. ourselves pride team our environment our our and AAM headwinds of On my have the This deck, very faced have we we Slide view that stem from on X presentation all me a we others disappointing outlined year, and excellence and current

year, As operational especially at the continue of business mentioned several experience earlier unit. we metal we forming plants, this in challenges our to

of we a to for availability, driving the of issues plant constraints these are the major and Internally, this as resolution of capacity exit were throughput XXXX remainder the challenges cost combination contributors We quarter. labor majority headwinds shortly and thereafter. the

resources to these Additional operational issues. dispatched have certainly been address

On team a note, products our brighter doing new job has securing customers. business innovative and with a been new marvelous our

of continues momentum the So here looking AAM. our e-Beam at Page at our company X deck, for presentation

That in the award from quarter, second in we quarter first the with China award undisclosed was recall market. a Volantis. an Asian may up e-beam announced significant for You the with additional followed OEM

an awards, additional X Today, e-beam supporting happy program This launch China. announce program very is with e-beam axle to XXXX. Auto, from band in Skywell to electric in we're X slated X-in-X a

Mahindra with e-Beam trucks India. Max is X.X electric ton from launch supply in will Mahindra's win other XXXX. The in for scheduled AAM light

XXXX. continue we AAM multiple programs ICE of for RDMs and is programs J-tour, brand Furthermore, provide PTUs to with in cherry vehicle our win business. will a beginning which

number AAM axles AM's ICE portfolio, FAW plug-in programs a will in and capabilities, reinforce and addition, beginning announcements our supply technology of our approach China Today's our independent market. front EV the XXXX. also for In in product broad hybrid to

innovative are recognition that motor excited and News electric inverter. to Bax share we a Automotive XXXX also AAM pilot finalist PACE named a Award very for integrated with From has standpoint, been our high-speed

Automotive and awards X Since be received leadership AAM trucks Class commercial X and innovation technology and the PACE XXXX, Our electrification. demonstrating vehicles. Class scaled vans PACE company's to can News X has cover through pilot

$X.X Slide opening to $XXX million, our presentation to AAM billion, of our guidance, North $XXX approximately American $XXX XX.X million To sales updated conclude million. refer of according let's approximately adjusted about S&P, approximates free adjusted remarks, production units. please million EBITDA And to is billion now XXXX targeting million my and deck. X of talk cash flow $X $XXX to to of

more all platforms significant customers. on you performance specific our as However, of dependent production know, is with sales certain

impact of work million $XX million and EBITDA. the in approximately stoppage million UAW work the first $XX the $XXX assumes sales resumption $XX week production million an to guidance adjusted and to of November to our overall Related of stoppage, in by

you challenging I strong work these team a assure AAM's that navigate dynamic continues times. management to with to resolve and

drive legacy continue cash our for towards sheet, efforts flow, strong business, will to In addition, our our profitable strengthening AAM balance position our growth. securing and advance generating free portfolio electrification AAM

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

Chris May

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

in $XX negative So walk other to XXXX. let's $XX were third in work $X.XX in quarter Slide sales X go sales. XXXX quarter third XXXX, with impact third large the $X.XX of and part third metal sales was due sales. by And with sales higher. quarter volume our net to In XXXX mix lower begin million million compared to $XX quarter and quarter. the sales million, ahead lastly, the to of UAW lowered billion market a and of Positive approximately shows AAM had driven FX a pass-throughs metal FX stoppage The and backlog. billion

we customers' approximately North our American prior production was quarters. full-size in in up to primary downtime down what at of greater our quarter, while the in some the third extended platforms Overall, close were we experienced truck plants experienced than total, truck in And X% full-sized X%. year-over-year quarter,

of on third $XXX.X Adjusted million compared million quarter third in to profit let's XXXX XXXX of was last to versus as $XXX.X Gross million EBITDA the million third the was Now move XXXX. of quarter profitability. $XXX the quarter $XXX year. in in

UAW adjusted the of quarter, and volume, reflecting quarter. to EBITDA, see other million contribution on stoppage of work can $X Slide XX% the mix You X. year-over-year a walk added EBITDA AAM's margin million $XX sales. adjusted had on The down In higher the impact a

warranty component our forming of million unit. $XX business In with addition, we the experienced a casting metal charge from associated

at of our the premium net costs $XX cost labor remainder. performance, total inflation inflation of in this half certain net drivers the bucket EBITDA by these excessive were XX% and this and inflation, drivers areas. quarter. combination operational to The excessive net Collectively, total, launch underperforming plants about and The several scrap impacted behind approximately million of year-over-year freight in primary that other XX% for and of of approximately this most of costs represented caused inefficiencies

mentioned. of which are All manner issues the David these addressable in in

were metal and driven You the and the will strength also Mexican market of year-over-year. note FX principally by peso. favorable negative, FX was Metals lower was that

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

are before will on electric number million the indicated in and quarter million new drive continue growing launching to we $XX trend into capitalizing we entering opportunities range XXXX, to electrification of that As the per invest in our R&D as technology, programs. us $XX

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

Although our is quarter end interest lower basis, on the the rate drove total rising environment increase. year-over-year debt expense a at

benefit the third XXXX, a benefit the $X quarter compared In income million million was XXXX. as of tax $X.X a third in to quarter of our of

the our elevated our that This we XXXX, XXX% recording calls. have a by driven tax midpoint allowance expect we For very looking adjusted range. in be guidance of discussed the unusual at is effective rate of previous approximately minus to at valuation rate

$XX this million We million taxes approximately of also expect cash to $XX year.

press million account, of quarter or into per a of quarter loss of quarter compared excludes the this per million to income third earnings per quarter Adjusted was our net $X.XX XXXX share, or per of compared in $XX.X $X.XX share in $X.XX all of the $XX.X share in in a loss earnings XXXX. which the in third XXXX was of third items earnings of of release, XXXX. of the a to Taking our noted net income per the $X.XX impact third share GAAP share

proceeds third XXXX were for Let's $XXX.X operating balance flow Net equipment the expenditures Capital property, of move quarter quarter sheet. XXXX of million. sale provided of cash cash for million. $XX.X third plant the of activities and from now the the and net was to by

Cash cash AAM the XXXX and the million our the generated years. adjusted third quarters million. in free flow payments This these top-performing is for quarter last over for $X Reflecting of of the restructuring $XXX.X activities, impact cash of acquisition-related several activity one flow were of quarter.

EBITDA leverage net of and a debt million, adjusted billion From we of $XXX calculating the debt XX. September net $X.X with leverage X.Xx ratio LTM a at of quarter perspective, ended

our As year, Slide the guidance. the rest year X for of shows full

work targets our UAW estimate our have to been on reflect that financial XXXX Our the stoppage we'll have updated operations.

the at programs, for For large be upon million for sales, $X.X year-over-year. our estimate roughly production at assumptions our The X.XX billion midpoint target XXXX. Motors production we will range a targeting units key truck sales to of to year, X.X $X that flattish we billion this and is are based General million

production first Our guidance million during week that November the ramp We work estimate on of the of will $XXX and by the million the up sales begins also EBITDA stoppage. assumes million. to resumes reduce stoppage by to $XX impact $XX that $XX work and to million adjusted UAW

adjusted $XXX our and $XXX warranty stoppage, This work Our our the target to million third X. adjusted $XXX charge and the on reflects free of EBITDA to and overview tracks performance cash guidance flow with performance UAW million, million. target is $XXX is impact Slide our million quarter

formal a consider. Although initial to like guideposts to factors we not XXXX of providing guidance, number would are we or provide

the should side, plans and in XXXX The third higher item included will the positively contribute cost we the On next year. adjusted by work next underperforming quarter year, we lap of stoppage. UAW repeat in early not warranty to our EBITDA expect

production volatility efficiencies operational better and costs. premium less to addition, should convert In reduced

production the top once for be stoppage. positioned line, industry to year-over-year, with UAW work the continues will post better dust growth magnitude be production the which restarts the served of finally the settles For

with As flexible, on and prospective are we as very commercial with our discussions ICE are business. David that these experiencing progress customers; and recovery lastly, improvements operational our EV mentioned, inefficiencies are both we securing focused making

you your call so to to start the back call Q&A. can the here David, Thank for time stop over and going turn on we and today. I'm participation

David Lim

Thank you, Chris and David.

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

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

Operator

Instructions] question from Our [Operator today from JPMorgan. first comes Ryan Brinkman

Ryan Brinkman

inefficiencies. operating the on is Which

UAW outside your the control. to stoppage with course, ability Of work

other much would of a though see much performance, how year-over-year to bucket out negative X. great that the And to side. that and inefficiencies million It also of so drivers Slide related amount, net separately EBITDA about? may would I of us get called similar the talking control to within And et the an might of maybe full-size ability sense your on $XX relates inflation launch then operating these customer relate on that you're so be truck line outside sight truly is much with cetera, your versus as of lie to customer what mitigating UAW And to to say GM to work within factors those your factors? and you how program, such such therefore, volatility production stoppage organization, better your as more control? How

Chris May

I'll and over to Chris. million is it commentary then of first dimensionalize of question. elements other question. perspective, that this take some Yes, some I'll David part $XX to dollar to related from give a turn that you I'll the your

workers side about on $XX metal personnel So our we operations, house. with our challenges. own inside, through by you temporary cost premium half the third-party the pay million labor we basis, if unit time, were to of of that driven I to had think for say, labor Again, fixable. of a is to assist cost. Over -- business and about inefficiencies mostly call It's bring I as working on all year-over-year maintenance some it, form would excessive the would

About XX% to this XX% inflation. net of is

So we inflation. some may have wage

inefficiencies, from then the through in some some with with We will of freight start potential base. have customer piece of the is to of temper premium the course, And That, as some have. associated again, some these near offset you And we to start we those remaining we're of inefficiencies some excessive these know, dissipate down to that. well inflation working as recoveries term. scrap, costs that supply once

I'll dimensionalize a it turn dollar for sort over it David to perspective. from of some... that So

David Dauch

voluntary Yes. made of to situation the hold Ryan, on We higher people period customer issue, on production dynamic chose in touched Similar to drove own based That downtime David. cost the it from touched during was hold of a we for time. than the carry that on is the to Chris you premium was some normally because we in to this quarter with much and that some us. stoppage second and with layoffs our operating third work availability our choice on we're people. their a on quarter. the in UAW environment labor did that us selection. wouldn't

you in scrap to of cleaned hands But other learning in business. leaving the throughput that metal have a labor new curve operational Again, because the and workers experienced issues workers the little Chris year. our go through that availability had issues. indicated, stabilized. or also drives we we drives more a we'll some of specifically we're and the the bit got our plants, metal quarter have As indicated, end of as that's side. Chris up that bring towards business, powder in. inefficiency of on at and forming couple left feel related excess driven premium of things most or Once first that year, And we've the it, have you temporary largely are a business next the of There's costs getting by

downtime has the We side -- That in Three on us It's did behind been facility the It's of resolved. quarter at issue business. our now. in experienced Rivers driveline some our addressed. unexpected

lot just of focus and business whole of real largely our fix just side our that control that address don't metal a we third within volatility to on So our continuing is control. is experienced the this the schedules, the in The form we issues thing quarter. customer in biggest thing and are and

Ryan Brinkman

that your electrification XXXX you track? plentiful conjunction last when maybe me, side a the lastly especially on able on through of with some electrification to you might any the announced announced might follow-up earnings. just was relative Great. the you account X rolled you've XXXX. January, January sort XXXX Is shown those awards including announced for e-beam Okay. XX reflect provide that taking be that XQ preview axle of as -- into to in Or of that And that in the through and to to XX% there XQ and to awards, track, Slide pace for on then backlog sort are of is pretty to backlog that products. related How

Chris May

any is this Chris. We're not information. Brian, to our backlog Yes, providing update

As we But you've our on in -- drive also release of first ICE you the win that course earnings through various business as tXX, our electric well. some quarter the we'll with customarily, know, us year, continue call. seen but of to

David Dauch

Ryan, this be is it David. I to just . expect positively received.

Operator

Our next John Murphy America. comes from from of question Bank

Unknown Analyst

effect? cost This this the UAW is at especially [ labor to you has Federico John for Morandi and axle raised ] axle see plants. so How OEMs the does Murphy. labor spillover any their the first question My translate costs? internal is, Do on strike

David Dauch

and Well, within the market, to the not the wages to put the whole operations at any Xs American not time, to OEMs. retain OEM, sensitive in all And nor I we're taking and just able but that some clearly, business. mean, Obviously, movement there's the Tier the axle obviously, be a war attract But OEM And talent. do component got the this there. other we're on to talent we we pay talent. of the out an only or don't have be industry, the Act pressure that's to again not on we place the are same regards of in

stable to downward market competition or above reviewing against and at sure things other constantly structure. will mitigate result labor prepared we if can of it cost we'll in expect on as we based possibly to complement there the be the will much down benefit make be looking We're need pressure the to At wage be do that do we'll our and where be order look negotiations, workforce. can a we we're and our sure factories appropriately. So our address that to time, to the make to We we maintain that that the is address of the cascade market what that and the structure. at automate some as OEM can have at same

Unknown Analyst

second question on is my And electrification.

it's estimate given I does weeks, on how in you about So slower impact expectation programs And to great can few the EVs. those are you was hear vehicles? in wondering, is this programs, talking everybody impacting more last won Asia. an in more demand that the give How electric future us And your programs that on margins?

Chris May

that have want know, margin to and win you in we required and source discuss certain these Chris. perspective, we as this go space, negotiations, that from typically But specific don't financial to Look, look hurdles business of we is as platforms. programs Yes, we well. to into And as margin we our as a we mind this and are discipline. maintain on that top is keep by

healthy a maintaining whether programs, process. financial quotation . And good, electrification discipline it's keep. ICE that's our part the intend So of profile to we or as

Operator

Paribas. question next James Our BNP Pickerill from comes from

James Picariello

some just some provide challenges just additional you [indiscernible] were what the on driveline downtime September in plant context to context can there. some specific at have color or on the the side,

David Dauch

is X experienced we James, Are the there? this sorry, rumors about downtime asking I'm and David. you the

Unknown Analyst

. Correct

David Dauch

matter, Okay. both came as component-related what down really it It internally really issue was And a a well is throughput as externally. just to.

those as and both matters. well I Like FTQ internal supplier the as capability. OEE-related as our resolved issues as own So outside far are said,

So feel at where comfortable we this we time. with are

James Picariello

there, volumes like restart back your post well think remind time be that ratification notification, positioned perspective, once restart to is us Maybe to helpful. in what it. get would the going And get again? as production we how look from chain back the Got process XXXX, just about from line that supply then we

David Dauch

where Yes. before their plants back don't different negotiations start OEMs allowed the that's completed. with ratification with the into go come will weeks. and the several are typically, working ratified. Obviously, these workers back UAW is mean the to has Ratification workers take the until here. I agreements

between mid-November, and that of on you done can staggered well. Selantus the by expect resolution as based and probably be GM to So the will timing X be it

the just say let's But of balance November.

and that especially think possibly as lot run up a base to the production-type filled service could of address downtime to aftermarket parts, during try encouraged the I related things. being of as is by lot supply a we inventory. We've OEMs the much

fairly So we should all good be a in for shape now.

My labor, others they and what as get things the labor can continuity attract biggest can with supply honestly, their concern, then going. maintain and did is of they quite back,

going get ramp-up expect already OEMs with. X is the the up to lot You'll at to a make possible. a chain, see lost over as X plants these stress of the of we lot a supply overall many back units fragile rate, on put is demand to begin next but to to full and as which weeks to try fully which

Operator

And Our next question Karson from from comes Douglas America. of Bank

Douglas Karson

Congrats I you to and Thank reduction on in won. know balance over guys. well focus, business EV done the you've debt that years. update we for turn maybe here. you've Great, the some sharp the of reducing Can last has been sheet. just few the

If on us 'XX XXXX, net at just which where ratio, and our I you refresh right look leverage how may now. could your X.X% targets believe lie is

Chris May

we Chris. several will are been gross allocation the part, couple of terms how continue the our capital of strong foreign to last do pay consistent Doug, we've continued just mind. debt. a quarter. down, and flow a primarily the cash last years, our down cash this in each Yes, the Obviously, generation free to down think every little is I our to work held balance be We've situation. will over from took debt over stoppage that used quarter, sheet debt years our be UAW really a addressing coming into obviously, of top that pretty we bit of paying third in But

clip to net company. generation also but into from in driven flow sort Xx rates, part run then many been a EBITDA of starts drive cash leverage of in as here by towards articulated levered That's our and the these grow continued up future. is especially our has our From perspective, to reduction goal we've publicly to production times a debt,

have not changed. and goals priorities allocation So [indiscernible] and those those that -- those

Douglas Karson

just Can the I'm EV you've past, in back give typically EV. That's backlog In for backlog to slide on what strong. deck, you it. could maybe I numbers circle And a the pretty know put I looking the see I out an EV? wins. like update us don't looks helpful. the the at you're if

Chris May

that our typically about year actually XX% at Yes, in update We I of that. something once in we to earlier backlog. released early that a our was . CES year, with the It show would expect see next January. year.

Operator

Our next question Marian comes RBC. Tom [ from ] from

Unknown Analyst

just Follow-ups on questions some the of got asked. that

there So post in the production. is like UAW this snapback event

Just curious as to your a limitation like can clearly guys' production capacity. Presumably, XXX% far you're how not mean, obviously whatever, produced. or be there's as operating I as at kind but of much --

of there's potential? Are if or do. seeing that curious question. That's Just at you seeing like weekends any enough you or the first snapback Like on you -- kind you not that color or cetera et are do ordinarily this inertia dynamic. to all can sharp overproduce

David Dauch

many bank of as some build prior place remember, OEMs Well, us strike trying were to protection. were heavy strike running to taking the

on base, try installed not maximum and experience at up the got supply earlier, units that running the I pushing AM, of I are levels. that expect, our the of supply doing capacity full to said based work lost going Therefore, stoppage. they'll those be just capacity it to because the to but we've make the base capacity. So higher levels customers as

provide be to we customers, a that. able long because But wherever the how our same for The people on be give equipment is that can and sustainable need maintenance a to product able going we question to at time, all do we're to how is our to our support break. do and

system. to And and by OEMs. so industry. system And hard be they stress aren't find suppliers there they'll the design will it, stress on factor of and they're as for can, that capable doubt the There's push I limiting the up no as but think the be will it's which going about keeping a out the

Unknown Analyst

Great.

the of secure that at vulnerability on said year. again Any color commentary say seeing kind any now -- there? CES Are one just Or you any Is of safe any to you gave you that it on backlog? on that's that to and you that cancellations? EV Next next that is backlog, pretty give there can one as backlog? you

Chris May

Yes.

it earlier we the disclosed year, significant in our to backlog, As in . at this cancellations relates time. point no

Operator

] question from [ Stack Our next from comes Joe UBS.

Unknown Analyst

questions with -- on down -- of factors an and the challenges listed, acceleration or couple be delay the by the One, what you know either what sort that But would back chart circle things would like operational this is here. A that in versus order you cause which a of helpful. getting supply or second bit cause 'XX quarter time control sort lean the versus it's way which control, a other? under your is one your it more little Is especially of to of outside really it if to frame? would suppliers? labor is stuff -- further the it chain your Or that

David Dauch

now some or we're couple major forming metal critical bigger that just bodies. in plants. the side of the of The now is our had is availability labor labor that. shortfalls a We've things. this Joe, issue for on labor is David. with Clearly, dealt got the We us with we've availability biggest issue scarcity dealing

skill same bodies Some also inefficiencies drive or bit costs. premium lead little takes level it we don't or set and and a a longer, level. us experience our lose the of to efficiency Therefore, into the we operation have scrap that some other

to So for us the now have and up us standards getting then our those to premium will them it's which now. costs alleviate bodies, we're a trained right incurring that help we that matter

availability. think I labor issue just was the biggest So

incurring. curve contractor the well permanent learning temporary we're them then the but addressed within biggest the that thing as getting hires, going to that to and we've hires I as think minimizing now costs our premium be is between up control respect with

Unknown Analyst

maybe broader your if that maybe Is you there's in suppliers were And your could I supply turn, have you sort some If labor continue just but even the misunderstood, not up follow challenges case? the through impact thought implying issues challenges that, upstream? and suppliers. I I to of there, that or chain to could

David Dauch

labor the marketplace the still there's supply availability issues scarcity base. in across Joe, or

risk of the not we're that. run have working risk risk our and understand to all we just with various AAM, run we the to I where try all So mean, clearly, mitigate risk, possible. that tiers we wherever

has work. last a AAM the of couple Over lot years, in-sourced of

within . But labor run that in cases. we some we our right control are scarcity do it's suppliers many So monitoring now risk, issues. several and have

Unknown Analyst

second touched one, think but distracted to that pushed recoveries a could way. of you somewhat customers on the sort be ask some maybe Okay. mentioned And different little then some helpful. quantify if earlier, and it as you you that I that of you a bit were were Like Maybe question, maybe had this would this quarter.

But well. are year the increased two, next obviously, and year your as customers after -- the costs facing

it like payments get negotiations maybe of And they you So even insight what into are whether go is of securing is that maybe piece have or little future those a rightfully the takes if I'm bit wondering how form any tougher. after or sum yours, sort seems lump adjustments price or you business. early just maybe if it

David Dauch

or them. we We've on bring work the said quarter fourth many stoppage postponed resolution of and so quarter to discussion I Like in the negotiations. into understandably negotiations the been in in labor my because got the pushed third with where of our earnest remarks, and focus expected

got the inflationary the mentioned We beneficial in to on. can't to continue We always economic solution mutually -- absorb fourth there's here tension are quarter, We've there. that us. just issues a of that dynamic there's as find going all I both that's

there. about what I'm know talking You

ultimately solution, what do same we is a to every be be do don't material lump for it be costs years. labor be peace our other time, things the the same can inflated we'll could board encouraged ways and incurring going wages and be won't we've freight could customer, time, to I the number that that. of -- could think it's we're get across the to same the Ultimately, relief utilities over that At the to it price, to But for different resolved. at or things encountered best sum that -- need

standpoint that, and some macro are these right We in are being seeing respectful of costs the the from direction trends a we are coming fact where some of down.

that number there's the but customers. dealt off issues to those still of with needs be large some these taken we've table, a So

Unknown Analyst

delayed? in magnitude And were any got quarter you that sense of of the expecting recoveries the

Chris May

se I say Chris. Yes, of is This magnitude wouldn't per recoveries Joe.

last we've net million of talked these this quarter, provided that related XX% you XX% inflation. we calls, that mergers our at performance look of through If couple to about, of $XX earnings to

and You $XX number about we in second the in a number million quarter back saw disclosed of the first another quarter. similar

inflation with. So we're that the that's facing active you of we're headwinds . giving obviously magnitude in discussion that the

Operator

comes from Ladies and Levy our question from last gentlemen, today Barclays. Dan

Dan Levy

on couple side. A of EV questions the

spend R&D program of you First, give you But I the just now right maybe on intact, a your of can trajectory the you could is said EVs. us backlog delays. know sense to give the us do on there have have you flexibility specifically, you trajectory. spend? haircuts a emerge what sense are if volume to flexibility And the defer of of of pieces level the the side, maybe

Chris May

from it would From that $XX quarters this a up about clip know, -- you dollar talked would we a million $XX as to perspective, probably X last, million X Dan, we've Chris. over about trajectory, perspective to say, per is quarter. spend the I to a From

why we we're range. of beginning some now work us sort or have or while work those platform, obviously, that electrification the of won, in delayed that out our we something was that manage programs in while we building X can for see that and accordingly. costs development the of event something That's nature, You have some deferred performing

David Dauch

light are bit Dan, by was slower is anticipated. OEMs this far little the in of EVs than The the I softening going would be levels acceptance the strategies is say of the what their just maybe as is reevaluating maybe only growing, a consumer David. that, obviously, to maybe inventory and the thing are some all electrification as of

there. can hybrid develop So market with throttle agnostic so we at as the so forward. our time, to we But said, respect supply to make spending things going to Chris we be to continue ICE sure products can that we or we same can the want the portfolio EV-related

out sure make we appropriately portfolio forward, electrification wanted round spend we'll our So we appropriately. to going but .

Dan Levy

EV positive your And by think particular the there impact ICE, at outlook? slowdown emerges Is should Okay. within margins? to if margin margin margin slower volume it's think that the offset but profile of margin How impact, is product so should set, is a event contribution least from a EV, of the ICE. it standpoint, the we on net a we in to superior net that

Chris May

Yes. margin how from years, be several the If a our business performed ICE very -- last is basically can we holistically, compelling over which perspective.

We have to XX% high volume the variable our from profit, just incremental depending on product set. on if anywhere it's ICE. can It XX% be

on that's obviously volume for us. So if very just it's incremental positive ICE, variable

electrification that large our latter the some decade. some announced are And earlier we part of wins, of launching

a of business. us obviously in in mix come we're financial cost. some reasonable piece you articulate they'll cost upon know, returns that at run to programs, any We'll full like launch tried but would But that full So is to new in both right more trying sides profile, as for we've this smaller at not now. of business come

David Dauch

we're margins out ICE But business, on size we the on have as could you scale expect right clear But today. indicated, be ICE ICE at margins Chris grows, our if mean got on based margins can't and as of the same very should we've based on that clearly, of then it's a but we of growing EV I on scale and the that you there's that level . incurring -- benefit chute. expect our slowdown as improve. But to a EV slowdown scale to

Dan Levy

OEMs have aggressive justify of a they Okay. And bit more level that it more your or volume of vertical there's get a scale that shifting or to perhaps from opportunity weaker out on planned with we're to rethink maybe them in you? what bit to there that OEM some maybe Is the to just it -- because the conversations tenor of we've the follow-up, a think integration to that vertical volumes scale. for tone a them bit is as longer to integration heard initially, outsourced get makes environment, a the that I takes be

David Dauch

lower haven't long-range to their got up. to assess labor wrapped They've They today, negotiations as that's clearly we any can have your They understand do because integration. to they vertical on clearly than Currently, point that forward. the Hopefully, them. just clearly cost a cost want to We maintain have date had go structure. the that discussions product plans OEM what capability. understand available strategies, structure help we're we to we our

will be that some discussions future. lines along So the expect I do those in there

David Lim

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

Operator

thank today's that you joining. presentation. conclude and does call for conference Ladies gentlemen, We and

now disconnect may lines. your You

American Axle & Manufacturing (AXL) 3 Nov 232023 Q3 Earnings call transcript