AXL - Earnings call 4 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 Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today's event 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

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

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

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

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

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

David Dauch

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

XXXX Chris today fourth the the our Officer. To on me highlights Executive performance. review year are my financial and call our I'll begin and full quarter Vice today, Joining Financial May, President comments Chief of

legacy we XXXX details covers questions up in call will of you for have. our and our cover I'll on Chris both results, may achievements the all our that the any open financial After Next, businesses. electrification

UAW a big fourth stoppage. impacted were results negatively From quarter by So AAM's standpoint, operating work picture the begin. let's

a call, on with However, objectives improvement challenging positive trajectory. that our shared last track on was a the we XXXX ending performance you on with our

along AAM's AAM continued billion. In quarter the profitability fourth XXXX way. in addition, $X.X of sales generate and we EBITDA was year, flow million positive the adjusted quarter or $X.X $XXX.X approximately AAM's XX.X% of were cash debt a fourth billion. From full were our perspective, to the And for down sales. pay sales

For the XX.X% million of a EBITDA share in adjusted sales. fourth per AAM's $X.XX per year, full share. quarter adjusted was or $XXX.X earnings of loss XXXX the AAM's was of

AAM's of year, adjusted full the share. a per For also $X.XX was loss EPS

AAM's slides This in regarding For information full position was XXXX deployed the in year, presentation performance will Chris details our the cash reduction electrification in we with and million. overview adjusted deck, future minutes. On financial you to few of to that cash a free support our us additional we Slide flow was objectives debt provide update to $XXX an shared flow growth. for our initially last the of quarter. providing are results investments X

trend latter the we more of in XXXX, a is first First, customer the which part quarter continued fourth the experienced into that quarter and of positive. has stability

stoppage the resumed matter in and now we the UAW but production, to impacted optimistic we year, early this is little and its The all cautious. ended plans it However, work remain close consider quarter entirety. and a fourth in

now our the we to in out customers XXXX recoveries, with year commercial for of results. and of tail positive As for the quarter have here the primary concluded end in few objectives a number discussions accomplished at a XXXX. very first We close

improving number progress operations at on plants, been also we're track are a making of steady on and has underperforming and with our We progress objectives good.

are good standards about on the Overall, the to AAM we feel these back the path noted we the to allocate time chart. to frame resources We topics. on we get necessary plants will resolve very to that and in the aforementioned continue glide

talk can you and see Let on X. Slides business and me X which now updates highlights, XXXX the about

pleased we to AAM SUV quarter, happy China X-wheel market. share are supply program will the a for plug-in announce in New We're drive DongFeng that the drive also hybrid very units SUV to acquisition. with for will to here provide differentials for AAM in electric shipping electric have midsized from lastly, its that eLocking our program we to And vehicle program recent Mahindra launching begun components XXXX. VinFast vehicle Tekfor final

an followed quality AAM's also side, Year eventful accomplishments. from of to just launched the SAIC-GM award recognition an perspectives, highlight and us ] for e-Beam a many up recently with challenging well and Slide for the announced a supplying e-Beam the was announced of with was year program Mobility also we XXXX and sharing On highlights win was Mahindra. chain it X, soon excellence of accomplishments, for decade. the part itself. On [ with many by it Award with After but significant and was operations from an EKA in Chery earned those recognized excellent awards and stability Stellantis, supply e-Beam a I a EV clearly This with with our few that China Supplier you year want Sky future latter X-in-X Jupiter,

our addition, technology cutting-edge e-Beam is a In finalist. Award PACEpilot

the multiple years. already awards collaboration you As we for know, electric driving won PACE customer over

in about So do what we I'm excited that area. continue to

further being confidence and about it certainly us is technology our Our competitiveness. recognized gives

Group, gain plug-in configurations. power drive providing to rear We In awards product multiple that multiple award transfer units independent traction signify models supplying These AAM's all-wheel-drive with supports announced for vehicle continues hybrid with powertrain FAW Jetour modules from business axles and addition, programs. legacy broad front SUV and our multiple portfolio globally.

was recognized we sustainability of in strides in in look to great one the employers environmental best AAM XXXX. new near AAM continues awards. equity, AAM diversity, sustainability, as as Finally, publishing make America's named DEI inclusion Forbes for forward and with In and particular, report diversity business our in future. well of a to number XXXX,

stronger. we're improving free cash we've which progress very our driving legacy designed is We're volumes, business, and about Now volumes those in our OEMs in solutions core At same our are generation. good operations, continue to providing and solid we'll performance secure axles high-value getting we'll know, you made continue and let's as on. consistent components to talk in units EBITDA e-Propulsion with time, leader to cost-effective, solidify global with e-Beam our flow model And systems, yield from as conversion a optimizing and well. position strategy, and the electrification to as invest drive business the our and electric

infrastructure, the industry to by -- strategies, as many a just However, an and name regulations, government the reality driven industry is respective is electric the consumer including few. pocket however, of electrification reality reassess factors, their air in the is OEMs cost adoption,

factors weighed, As and for to continue playbook these powertrain AAM be are ready in being will aforementioned run shifts needs. any our

to AAM new over discuss and XXXX be covering X-year expects million. me business full Before gross Chris, let XXXX press our the I $XXX release our financial our of outlook year this our backlog approximately in turn X-year business included morning. to that it period was through backlog XXXX

backlog to our and this Slide breakdown, XX% backlog XX%. of year, refer from was please For X. is at stems which last About the up to electrification,

ICE units programs, cadence variants to electric new CEV additional mix electric to in XXXX in in our for other launch a million and backlog the $XXX XXXX. The backlog million including of expect and in model million pickups, drive programs highlight and be $XXX sophisticated $XXX encompasses Asia We few. of nicely XXXX the and

several have standpoint, launches launch and big activity. updated XX drive the factors timing encapsulates include impact XXXX powertrain customer in only volume backlog replacing years. incremental should OEM of and in year our timing, and business which XXXX, we backlog business. expectations and AAM the estimates. From next Our launch And does recent a over for customer of trends terms calendar latest a year is in just not launch new the growth

In year. and the AIM's business backlog decade. major new year, our GM replacement place truck, beginning healthy and particularly the popular Ram into continue version business next of the heavy-duty fuel in to Both addition platforms sizable taking will these to with we $XXX this ICE midsized this business CEV help have and already the platforms. of launches million

from XXXX approximately We market end production primary units at an perspective. million for talk let's market. forecast So our North American about XX.X

factors X adjusted million and free our of positioning electrification formal to of to billion balance on outlook. that $XXX adjusted $XXX health sales AAM strengthening million. focused concludes forward to our are $X.XX profitable EBITDA can production, In of growth. million, AAM XXXX. That productive strong swing the the our interest advancing consumer. Slide targeting flow and free multiple of Team longer term, AAM's cash and is billion, generating remarks. positive stay we'll continue a and my sheet, portfolio business, looks AAM $X.XX financial rates approximately core $XXX We to XXXX the illustrates to monitoring approximately flow including million $XXX for cash securing

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

Chris May

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

the billion fourth $XXX let's XX to of XXXX, were begin sales walk sales mix fourth was lastly, and impact XXXX. Slide In with quarter the stoppage by with platforms to by Positive So UAW shows to compared quarter million the in billion $X XXXX sales. the $XX in volume higher. UAW in quarter. metals FX fourth XXXX quarter and not ahead of billion and million, go had $X.XX and AAM $X.XX fourth approximately quarter And work sales. certain impacted net lowered metal of lower market our FX sales pass-throughs work driven backlog and negative stoppage. the sales part an other by

XXXX, contribution lower mix, as offset volume sales and new backlog, of the our Tekfor XXXX. primary million AAM's the drivers work year the the AAM For and of market to the were billion were for business partially increase of acquisition, year full and by stoppage metal $X.X full X-month The from UAW pass-throughs. $X.X compared

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

Slide adjusted had walk mix on negative can see quarter, other adjusted $XX million and down a You versus EBITDA R&D EBITDA prior of impact million a The the work year-over-year the added a importantly, volume, tail UAW most quarter. $XX advancements. In to stoppage concluded improvement was year. efficiency was XX. number last net the objectives maybe at $XX product the on net slightly commercial electrification million to as and inflation year. a launches discussions our higher and plant track, of favorable other support remained of end and performance And we of year-over-year

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

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

As in continue costs into controlling SG&A investing XXXX, drive focus will we electric our to technology. we head on our and

be expect on flattish we pace annual We as $XX year-over-year. the We finish of we to average, platform electric be as to in $XX anticipate quarter the R&D technologies. can although coming it spending our per moderate years million about expect lumpy million developing to

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

The debt increase. recorded rising that discussed in $X.X fourth we recording rate unusual the drove XXXX, income includes million year-over-year an interest of quarter of quarter is on the in we end tax fourth total compared XXXX. book our lower quarter million valuation expense the calls. rate expense quarter basis, Although at previous of the the have a allowances for to of of $X.X the In environment expense

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

adjusted $X.XX share year of in AAM's versus the per full XXXX. earnings loss $X.XX For was of XXXX,

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

generated For in flow the $XXX to full XXXX. cash year of million adjusted XXXX, compared AAM $XXX of free million

AAM As of XXXX X.Xx ratio we liquidity $X.X with million, CapEx on cash $XX From reducing strengthen leverage lowered and including million quarter, adjusted continue managing EBITDA ended XX. focused ended balance AAM's including leverage credit the is debt flow billion conversion, by in by X.Xx efficiency year of approximately borrowing we ratio the total net indebtedness. perspective, our of team, LTM cash over to of consisting the debt a December global XX, a XXXX, million, and net and remain on effectiveness free we $X.X our cash $XXX debt This over restructuring down at billion, from of XXXX. In and leverage available at calculating a will gross with available facilities. September sheet senior outstanding fourth reducing we $XXX capacity payments.

industry, Q&A XX. have our a included those our perspective, you and backlog we our XXXX currents their to From call, move find this is financial from slide Slide targets, XXXX reflects to let a to environment. the a is juncture we electric these XXXX driven of new portion Before the of and our on me variety product immune cross vehicle and plans In walks not thoughts of at timing, OEMs are backlog to to earnings actual some deck, backlog can reformulating provide starting XXXX on outlook. results and factors. the by XXXX financial Similar industry timing where the AAM

new However, here possibly And longer. is launching and strong can news AAM. our the we are quite should next-generation is robust Demand base scenarios, extend for remain business various business for for good all under that be our good further. core

our about talk XXXX. guidance Let's for

of range the billion to targeting billion a $X.XX production based are we XX.X units is for million for approximately sales key upon sales, For The XXXX. of assumptions our American $X.XXX target and programs. North

$XXX launches and of New of attrition million $XXX approximately backlog million. business approximately

better We has a the years, footing on $XXX supply optimistic let several the some monitoring our are versus chain support closely. From are we million, the me that past done the of walk cautiously but this very an to stability we more perspective, EBITDA in $XXX key is are on expecting Page EBITDA adjusted million range EBITDA of to year-over-year XX. provide and color elements that

XX% convert our approximately volume increase profit. product We expect year-over-year to and mix at variable

development. AAM and spending As mentioned and mitigate earlier, support costs to efficiency and reductions, products stages electrification flattish be are of productivity that invest in our year-over-year operational we cost to commercial as we and gains. inflationary future R&D projects expects actions deliver deliver various year-over-year our will in

FX, as walk. an improvements that XXXX. The we we markets core on of $XXX our are the and main XX, have with million You lastly, to can follows: factors our peso. On are our flow sales in higher we investments to related cash metal flow negative X% next-generation changes A X.X%. CapEx expenditures at adjusted impact such and And of million programs automation. this stemming launches a of the number Mexican targeting to driving targeting of large related favorable the see Page as from expect and as cash to key of performance are year-over-year these $XXX to approximately $XX from we capital free launches we secured percent strengthening million perspective, are the net approximately net the a majority

moderately taxes. cash higher We interest are expecting and also

restructuring optimize million we $XX to estimate integration the the our of adjusted while included further our million as in business. we free Lastly, to to XXXX acquisitions of be recent range $XX cash for flow in payments figures, not look our finalize and

focus We the type expenditures. to of these continue of on reduction

solidify reduce our should expect select the and we addition, support debt market they of In electrification generated cash advantage opportunities further to flow continue use to to XXXX to arise. in position take growth in free

truck of of launch depending about cadence. XXXX. next-generation may goal $XX customers perspective, our programs we We is to CapEx on cash potential from mid-decade we over with From under launch years that be sales, there but full-size as AAM's are billion over remain a X% axle could excited spike beyond that generation flow to multiple mark

we it And our on As as anticipate listed for relates expecting stable to cash deck, by of with to quarter. operating our year, a we're the cadence cadence first relative sales to quarters. first X than Slide a exiting expect we the seasonal the the XXXX. quarters use and perspective, third is and the flow XXXX environment fourth similar Overall, flow second challenges second cash in lower From the more depicted being quarter.

are the time As to conversion, underperforming AAM the stabilize going financial operational nice EBITDA plans to David? I'm on opportunity call call future we today. participation your Q&A. here costs performance. Thank generate continued turn back start David, and productivity improvements stop stride, and additional and hit up for can the to you achieved, over setting for so

David Lim

Chris you, and Thank David.

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

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

Operator

Instructions] from Barclays. [Operator Dan today from first question comes Levy Our

Dan Levy

that? maybe R&D see on are and EV transaction within $X the of are to programs a anything and FX, of a with is I puts EBITDA R&D on Maybe versus R&D a commodity and to couple takes 'XX is questions core And ICE? the clarify related What on just side? you the then much headwinds Wanted How headwind. metal here. walk. million just The case of couple terms of assuming in could start items you just what markets peso

Chris May

up XXXX. continues a principally, that talk take We'll of about Chris. $XXX an us and metals. rate in we million R&D to this $XX Yes, a our XXXX million From R&D can those run be perspective, the of I'll And gets with start of $XXX both of Dan, build-out about this really to FX from some is quarter, million the to questions. electrification this in platforms. the

R&D So launching from mentioned, as business require little on some David the we will I it, have side. a more large, which replacement an this bit year, do call B would perspective,

it see why you really Mexican of we the flattish. From perspective, year-over-year, it so to of market we Most just that And on -- walk, is see related said that's can $XX FX minus sort a simply metal million. strengthening that that and of peso. as is the

know, the of large you billion As X X.X to we're It's year consumer a MXP points X Mexico billion MXP experience in of inside operations. We lower than our peso. about about XXXX. our used a

So we're well going XX.XX% in some of that's a rate range floating. forward, as sort to hedges that blended our estimate with our as is and XX%

Dan Levy

that Okay. And Or reset, there's once now the the full in on peso assumption, peso is? a true-up? still future be some outstanding an additional headwind that the heads those that would based is where

Chris May

at a consistent, X-year program. hedge it We're call rolling a would I

constantly on hedging X X, we're X perspective. levels at underlying the subsequent from And place you those X it various depend a to or will management years. forward ultimately into years So the risk how out spot rate

Dan Levy

Great.

on current to essentially electrification of seen, backlog just you is the that of The on easy those the similar some of how of of you light on we've assumptions second could the versus the still programs of provide question prior Maybe and XX% maybe where this bookings. backlog context pushout slowdown, booked the some of gets XX% in the from based the OEM? solid is much figures

Chris May

as consumer mean units -- while At are booked customer from of yes, to we and others launching XX% some XX%, up inputs amount those. from of subject writing volume keep Yes. and other we're crack take meaning judgment mind, or fair -- clipped from I from And as Dan, a well. last it first estimates that our our with a backlog least Obviously, our AMG percent all year, our 'XX, at in a the is well. these own of inside drive to from on programs. the I'll were

started those of already. production some So

will this from years. of backlog absolute But launch over started the dollar, some the of but is of record it's some couple that wins had already revenue actual incremental that in continues we've next the XXXX, So that to and grow. prior flat, we an to

Operator

Picariello James Paribas. from comes from question next Our BNP

James Picariello

Just on exposure. your EV program

in OEM X-year that relative way your consider the the be think you're terms the Just dynamic exposure, what in we get backlog looks replacement, could production key that to rolling or reporting programs any to about programs and/or possibility what that platform like to EV -- overlap in that look your the you EV of pushed figure benefit just for have in what legacy terms just delayed like? further of could as get

David Dauch

David. is this James, So

me Let can it. take Chris and a crack to add

program, of And can growth forward. First so continue going delay continue good that and work strong our all, makes fund that's to down for a generate debt, margins. cash electrification area, business. there's EV We At on in to time, sense. strong it in flow, pay tactical same acquisitions where our the

for us. that going we're we continue the to time, electrification. portfolio we positive to that for a need So as At the develop see same

and and go rescoping As with the But customers already awards. Chris we content in to the their that. volumes continue to has program, new many highlighted per program that their my of electrification point, win are comments, your I highlighted

is so year-over-year. latter what incremental is new based. business, part of of billion the is quoting electrification which decade. growing XX% And We're of that our we're we backlog, earlier, working than of $X.X most on as the and greater of said But

they've got I over their able in is. be think what to place OEMs the is see sort to because as ultimately, it portfolio out you're months say, take long. demand that I to and the support may plans the So the to let's Because put think going next, to most consumer market the XX XX their

if said or delay earlier, any Chris, they to EV for a get for anything there's know where add inventories thing going I in like I want to is ICE more but to not. positive accordingly, adjust is AAM. don't ask you only we'll need which, to So be

Chris May

products inside with lot electrification backlog. the of ICE to existing overlap our There's a not our of business. specifically Yes,

as about previously. going As you know, talked derivatives AMG multiple is into we

over to component incremental So of But overlap to the us. see markets, India the on continues talked the China in some we bit year side. do we've announcements But last that that expand those the about, are on especially of a set. little that and

that the think our Obviously, how is up would side. stronger. the That's electrification. ICE slack ICE business extent So from pick about the I any component

James Picariello

is, helpful. And pivot a my as an could OEMs follow-up That's on existing to an on then ICE certain a or emphasis incorporate to just high the hybridization be get as conceivable it, consider full level turnaround driveline driveline hybrid? to supplier, that. what Just fastest thoughts

David Dauch

to James, another. and and between for we manufacture subassemblies us, are the similar product ICE that very hybridization components one

So company. of we OEMs, market the our hybridization identify that how a a for to could that put what to the again, want change. very they lot want quickly they of be without really their to It's type positive vehicles. the can get But into

Chris May

truck that back, perspective, Yes. of same years keeping for hybrid. Absolutely. the axle It platforms some few exact large a our James, were some had customers us. was

James Picariello

potentially well, that entail And additional for right? content you would as

Chris May

potential, as what type of especially how et of potentially, on they have. is engine signs, yes. VCS cetera, some a of on There business vehicle, but -- they obviously our inside Depending

Operator

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

John Murphy

this you maybe gave could the split backlog. XX% And you the us have EV a questions When give Chris, include wonder at if us Slide this XX, and great look does $XXX is million that I EV, also, on hybrids? $XXX gross. And you more against million attrition there? I Surprisingly,

'XX in we could give if backlog? so had some net of similar So business new into back a million. backlog and for roll something you $XX us have business guidance million we just or $XX on 'XX, wonder you'd net new there and a I

Chris May

Yes.

So all product. let's in So, AMG the to the with the relates technically first backlog, about exception question our it's as it EV

As electrified but supply is rest hybrid. we you of it's axle the hybrid, a technically but best that is half, all terms not know, in an

forward, ceased $XXX a year supplied There this as to couple an million basis. production. somewhere about as is going think us. we about we $XXX of of In that little know, typically forward, go on terms attrition larger But how attrition of bit you platforms million was we you think that annual between for a

of going use you time forward So the can for midpoints those being.

John Murphy

just CUV not follow-up. RAM then programs at accounting I in you GM. I And in there's program, in GMT more any for potential truck the in or relaunching upside that mid the backlog for the HD, mean upside GM one Okay. this at no all this, full-size are mean the is whatsoever? accounting

David Dauch

No, business. We to business. have we our part business, all in is John, core consider a that's And the do incremental backlog, core the be financials. an only that our replacement thing which of

John Murphy

on Chris, margins you mentioned it as this term on near And Okay. and backlog on. long rolls this

kind about just of If you between could the the maybe talk difference the EV and ICE backlog?

Chris May

But financial goal performance as from investments drive a EV business ICE future. our previously, is have is we've maximum in use to that ultimately We've not replicate volumes, on life their long in stated they'll through to provided into right? volume cycle. upfront. But have then in specific et we and go. I a long tails today. cetera. product, They a the splits to way our guidance margin what have later to get up, They'll no they reach start normal of have cycle They before volume won

David Dauch

got It's doesn't on size our date. mean I because ICE and we the and to business size today. we're scale, generating strong EV scale the no But have different. margins business

can that we'll and So grows on over hurdles. you expect lower. focused our you size expect be scale stay time, on will delivering those that margins actually as But financial can

Operator

Our next question comes Bank. from Winnie Deutsche Dong from

Yan Dong

me? Can you hear guys

Chris May

Yes.

Yan Dong

go outlook? Maybe on. The situation. then of changes can kind deck. anticipating an that's what helpful of latest you guided been the provide was I if you're and And slide including update the the a labor It of labor? any wondering was improvement availability into if sort within you in very can

David Dauch

productivity David. Labor our an doing base is we're There's necessary this where things and be as ways to and Clearly, continue free if we're can investing right in labor as a might existing other in I going to to. within an cost. not American labor industry secure labor any be can and heavily And It's order up we labor work and obviously reallocated think, we're try the locations. overall just even a to we It's and is economic labor shortfalls Winnie, our have loaded industry opportunities problem side. And an efficiency issue. in up so forward. issue. have the going to, other or the today. address that Yes. in to transfer scarcity we Axle to our for also workers forward there now temps to making just here. facilities. that to out on those fully free that's well to driving labor adjustments plants We're need bringing, looking automation we robotics facilities consolidation it other incremental a We're in at going We're

with pass time lot a going here and to away. going sticky increase with a lot demanded it's not forward the offset to way that's in have through. same issue an So as be go At find associated to a be labor seeing and we're also attention. of going of an It's labor, time, costs that's you're that that or that employing to we

Yan Dong

from down the buckets I customers planning in guess from other breakdown is walk. it's some plant break Obviously, or helpful. to you're And headwind, maybe labor EBITDA in bucket hoping recoveries you if efficiencies generate? to of the generate was whether terms, said. a you wondering as in But related from that you're can I last very That's that the inflation the what are

Chris May

performance what there? the is think to And on of improvement you're assuming Winnie, a in year-over-year embedded $XX and in Yes. I what walk inflation million

Yan Dong

that performance? buckets different the are What in Yes.

Chris May

Yes.

we less of inflation, mitigate inflation have through base XXXX. expectation, inflation experienced to other labor some of our arrangements components. purchase we our that would into And do anything everyone and productivity embedded scope think labor plant inflation as So we from than with commercial with in much But will. we or have be far our XXXX offsetting that. supply the XXXX, will have as customers core we're in that same But from our initiatives, of about stepping some

question. your answers that think I

Operator

from from UBS. comes question Spak next Joe Our

Joseph Spak

couple pocket some people what it, this sort then Maybe because figuring on makes extending do program. which just of the and but a they're mentioned air EVs are to David, more with sense ICE out backlog. also you delaying

funnel. So quoting $X.X there that like any update activity? sort you about of talked I think a billion last on year, Is

David Dauch

those Joe, the That's what mentioned, I incremental most customers the cadence was may But also, we're of of about the porting as really -- out saying may have But yes. will some far opportunity timing likely as out see of adjust we still electrification. later what earlier, are quoting as billion $X.X as as versus today, heavily decade that. new LRPP, launch be towards of it launches I weighted right be mid-decade. that in it the and we sorting now,

Joseph Spak

be current at extending why question extending continual to -- the programs, answered you're attrition they're about million I Chris, when plan for on? that wouldn't the then, of in if $XXX you And Okay. are level customers outer to it conceptually, before if answering had sort why a the lower I John's about your $XXX programs some of talked are guess years, million.

Chris May

Yes.

the have our -- we hundreds mean franchise programs mean, have great of sales. of I global $XXX entire of question, million through we million, different I So $XXX to tens

saw of programs Jeep example, cease you smaller of engine or year. programs are or like, programs. Cherokee the production cease Occasionally, vehicle, Stellantis Some last driveline transmission they'll a for production

attrition engines business. extending which So mitigate those production component of that right? continue into So types that to programs, fall size time, they'll of are bucket. If is things that extended engine well a to will for our very chance the have you period certain an bodes of attrition higher, they're some on maybe

lot of But replace factors. a to a time vehicle have with is of from mix production do nameplates that, time, bit little engines of it or cease you that a else. simply and sub-transmissions something So or sub

David Dauch

certain able to OEMs with $XXX million Joe, I it's of to starting of there. million, normal and to back But million attrition. into offset pocket programs the years, consistent to going that. Obviously, to decade. demonstrate we're $XXX higher be that's pretty historically, But part cover us to you some in to air plus, base, you million $XXX right? that, incremental give which of periodically. when going forward. the now range, big in million that we've some to do as about that on programs to stop the we're I'm And manufacturing million of long-range been programs. latter going But is their right most just it is these and or up this cancel feel attrition electrification made working with that to that or is one already we hopefully, the indicated, $XXX plans. they've talking growth me of spike that of been some will goes that make profitable product thing But think the decisions impact be $XXX $XXX going see that extensions going We're to And of we're that the can get some in Chris the for sure then

it and So that's levels. be inventory air can ramps that then, as we pocket incremental [ ramps ] the the about that volume and and up desired to up now talked but with production gets desire between filled

Chris May

Yes.

So I speaking, good thesis, just guess, for generally products big picture, us. your underlying extended, generally that's to if are like

Operator

Ladies RBC. come from will and gentlemen, final from Narayan Tom our question

Gautam Narayan

OEM European to saying was there ]. the production agreements they So those meaningful in just XXXX, expected who large make was to whole they of have have to because [ make that They would EVs. concessions cutting suppliers on a

they're you et EV you the down particular the guys some moving guys if have is OEM with that schedules, are you this cetera? orders guys would there's something if shutting curious to choppiness customers that contracts such have Just of around compensate they anticipate

David Dauch

EV they're is place aren't discussions. all of from discussions those OEMs, investments realized not or with Well, the investments are that program are that clearly, you it's commercial hybrid anytime and being volumes being made ICE are or whether to have There's being adjustment, a delayed. or and programs take or need AAM place timings have -- those suppliers to support some the especially made adjusting excluded taking those as the all OEMs

to assets with hybrid So other business, need that and recovering to we'll we it we some our and time, But can in if make activity product the that's may redeploy between that the appropriately. to better we're the or those trying the do business an that our with understanding the on and the understand same to timing ICE, taking be long put just have different programs at rescoping need EV. sure discussion plans together, regards impact we'll assets the range then of and in obviously, place, the of reallocate understand where OEMs, cases plans, we're there's investment R&D some

I'd that's So what say. I guess.

Gautam Narayan

a Okay. the that M&A year in of lot XXXX a thinking folks auto And then of are space. could be

growing necessarily not financing that high to that volumes have But be would costs. counter much. obviously You

bit 'XX? You curious but leverage, to it's your guys' guys do just little where to appetite being acquisitive a have of as maybe in

David Dauch

that going we operate organization an position of now those opportunities I'll sense started forward. year. and make we tactical all to ultimately to want back a for that structure. capital last business we the one continue strengthened we with got we've forward those current company MPG. right done that the the consolidator, as we in activity We'll opportunities look types what acquisition at some things. responsibility that Well, of can said as But did that call, acquisitions XXXX going us and within at, do if fiduciary M&A be being other also there's latest acquisition the along a and well, actually We'll us look our We've that that time, tactical since other Tekfor to

So on screen. our we'll M&A definitely radar keep

Gautam Narayan

Okay.

could I if one. one sneak final Now

U.S. Chinese producing David. then but OEMs maybe potentially obviously, Europe even Sorry, entering and locally in the Europe

guys OEM as customer this something happen? should Just that you pivot curious this you you're think easily Chinese to, could how exposure, a as to subset about maybe underexposed to more

David Dauch

have demand business, countries of and lot in they some in China, They're a put the matter no our of it place side at think of of I need our to on. themselves that right the the can quality are things to electrification produce news the the within business. But there's of run. they in product And going just now before long they the we're that offensive playing the come to protect desires going types to means strong looking game doubt, field. the it's on consumer mechanisms good clearly the meaning becoming automotive whether into to attacking is other global on just PHEV China were businesses Europe position is Well, win time obviously, what their the their country And before ultimately, businesses, the tariffs a aggressively low-cost that's U.S. But the look or to where very but satisfying they're They're obviously of at Mexico. level to that especially producer that OEMs. growing

OEMs just integrated of forward. going and of elevate go So be of differentiator to the the have it's will a as one side technology vertically Chinese game every But the the BEV the we basis point But a to don't BEVs up make is anytime business. the are volume of to of also couple things I think a think it's global on XXX% important going soon. out I

the I play So the pretty Europeans. role hydrogen, dominated in by meaningful forward. and are going cars also all Europe, luxury a ICE and hybrid think even well

to So with that that's performance that. because a market goes crack tough the of

and true and but a standpoint, North SUV And from in truck truck buyers areas. very there's in crossover that America SUV, same thing loyal those holds and here especially

So they're companies to entrants, at opportunity entrant, share. same time, for new the going suppliers. market gain and it's a But us growing other they're like and an

David Lim

last Jamie, I think that was our question.

Operator

our Ladies for turn and over like floor question. last that gentlemen, Mr. remarks. to I'd Lim the to closing any was back you,

David Lim

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

Operator

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

disconnect now may your lines. You

American Axle & Manufacturing (AXL) 16 Feb 242023 Q4 Earnings call transcript