AXL - Earnings call transcript Q4 2024 | American Axle & Manufacturing Holdings, Inc.

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

Operator

Good morning. My name is Rocco, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the American Axle & Manufacturing Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the call over to Mr. Investor of Head Lim, Relations. David Mr. Please go ahead, Lim.

David Lim

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

You the Relations our announcement page PR Newswire on through www.aam.com, and the this services. can of see 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 XXX-XXXX. to for call, available this conference code XX. listen our access through will

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

please press refer non-GAAP earnings these reconciliation investor during as reference non-GAAP deck measures our -- call, Slide announcement. of was For information measures, the financial the a to certain earnings well non-GAAP related in measures may we is that of additional to today financial the GAAP information presentation. release as information, this X the to Also, or regarding available presentation issued

when turn let Dowlais Investors the filed by in in case a regarding SEC. solicitation or in should is proxy law. call statement annual information AAM Dowlais' its offer an today's will available. in equivalent call not contained accordance the in of to offers the things proxy SEC the such filings of case any U.K. the or with that, offer be made will and be AAM's Dauch. applicable announcements are CEO, it not law. the securities subscribe Chairman or read Information in AAM's The matter and materials AAM's of With permitted subject proxy Today's solicitations that addressed and solicitation over with intended is with or me David sell and an statement becomes proxy does participants filed the jurisdiction in Dowlais' to in constitute to for and buy where entirety not in

David Dauch

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

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

Chris exciting Next, financial our of combination And I'll financial remarks it open that may XXXX outlook. up all you I'll for questions after Dowlais then have. cover about concluding some our our covers results, and the provide details

let's So begin.

$XXX make a AAM's solid million was continuing quarter for sales of fourth good strong billion. and adjusted or $X.X sales to the free From full approximately quarter. flow of the quarter year, AAM the in by sales. adjusted XXXX progress the in were AAM billion, were out generating XX.X% profitability in closed cash year operational EBITDA AAM's perspective, fourth $X.X

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

in was $XXX full year, a cash full million the $XX year for per million the the share. XXXX. free and $X.XX flow For adjusted Adjusted EPS in was positive quarter

focused a the factors solid It managed of the AAM that on high under we came remained control experienced financial production end was in industry at For adjusted the targets our year. operational year. at XXXX, throughout EBITDA while the had beginning our the of achieved delivered are range and outlined our adjusted efficiency. the original as and the were of exceeded These target. by AAM flow performance cash the revisions we midpoint We on that free

we Let's a secure deck. business where our customers. We several announced supply with driveline multiple leading to core our and our business. for next-generation Bronco contract the announcement updates driveline will core transformational supplier recent billion secured which we vehicles. combination legacy this that outlined come. and units than with global AAM latest X to announced next-generation extension revenues we we Maverick weeks with a Two presentation on Ford size in forming our of business to significant of That with with Slide for couple full-size a it create of and have was our years scale. began Dowlais, objective award, power more Today, $XX transfer talk axles years near-term of have our lifetime With about secured the ago, also ago Sport contracts secured past truck metal

later value today. create We a significant this conviction talk a have about high our this for exciting deal that will shareholders. bit more little I'll

has consistent. business a strategy our perspective, From been

remain improve and our drive and factors free and on flow and to to control, strive to optimize focused and we're priorities. continue these We operations, disciplined our going cash manage generation EBITDA under

approximately it Before our Chris talk million on to call, the XXXX let's financial perspective, units. end forecast outlook. American production an about North over I we XX.X market at From hand

inventory the production, EBITDA $XXX the XXXX levels financial AAM's health Slide approximately can in $XXX monitoring multiple interest where $XXX of million, billion adjusted free $X.XX swing the consumer. rates, sales of to flow of of million cash range factors and million illustrates X $XXX overall billion, targeting is to approximately financial We $X.X also tariffs, outlook adjusted are including million. that and AAM to

recently Chris' strategic our have said some regarding I'll financial after I combination commentary, announced remarks Dowlais. with additional earlier, As

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

Chris May

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

by $XX quarter compared both in the sales production XXXX. to timing net and the begin and was quarter as approximately In of XXXX launches new quarter, AAM in were by the quarter sales. the approximately metal of and products. market fourth with to million fourth sales $X.XX were X% $X XXXX, billion ahead sales. of Slide million walk of million and X year-over-year. go let's by American and Volume Pricing fourth lowered of fourth declined by impacted lowered mix $X.XX quarter as next-generation XXXX other fourth shows a North FX pass-throughs lower So billion sales $XX were sales we

For as primary year by mix, $X.XX the FX. full the billion were the XXXX, to for billion volume of pass-throughs and offset sales $X.XX metal were market increase full XXXX. compared The lower partially year of drivers AAM and of

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

down sales. million decline see on $XXX.X Gap] in was versus in EBITDA fourth mix the year-over-year Slide volume EBITDA margin by the can [Audio impacted adjusted You $XX of and the adjusted million quarter, R&D walk of year. adjusted and the other XX.X% X. EBITDA was In the prior quarter

quarter improvement as every full was year, single this point we delivered year. basis this the year-over-year favorable XX For margin an performance

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

focus continue on will we to into controlling XXXX, head we As SG&A costs. our

million $XX to expect by We expense spend we reflect R&D this our requirements. down on be to approximately in as market year-over-year a optimize current basis area

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

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

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

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

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

reductions and our performance, cash driven inventory was increased costs. Our by flow stronger operational interest lower

$X.X we calculating billion year down at million, with LTM XX. perspective, from From a ended is This net of and half XX, December leverage at December adjusted EBITDA ratio debt year XXXX. a turn a a $XXX.X debt ago a leverage net of X.Xx of the nearly

our quarter. remaining $X.X of total nearly of capacity including AAM's liquidity $XXX on global During ended for XXXX cash credit available XXXX with in facilities. a total XXXX, notes million fourth senior the all redeemed consisting approximately billion, we available million, approximately $XX borrowing AAM and of

slide value XX. some exciting Dowlais. figures 'XX we to on Q&A with In providing reflect call, see outlook. XXXX do announced and you today on move we details thoughts financial for starting we can about and not financial the are cost will bring or of included me combination walks XXXX our actual are many our The basis on to XXXX and guidance results AAM the to those and opportunities an stand-alone grow Slide AAM drive related from expenses targets earnings pre-combination creation. any provide Before the have deck, let our our to portion

$X.X For of sales, the XXXX. range we targeting billion billion to $X.XX are for

production million the units as X.X and GM's X.X units. upon certain million such and target full-size the production a XX.X To begin, we key programs our for in approximately truck to midpoint, is assumptions million the SUV North based sales pickup America at of range of anticipate

timing that sale of completed by million. XXXX are EBITDA you half be see $XXX in million will walk. commercial perspective, our we range in addition, financial guidance end expecting our assuming reflects of of pending the India first we EBITDA $XXX an In as to the business From the axle vehicle the can our adjusted of are on and

key me elements walk on some color Page our Let of year-over-year on that provide is the XX. EBITDA

lower decremental XX% to margins than XX% of average. to for change as expect overall are vehicle our We volume be than our margins our lower average and commercial our mix slightly India

As and performance mentioned million the on $XX our improvements to And in favorable earlier, walk. our a a cost year-over-year optimizing of million continued R&D spend $XX our see should net gains. on operational can deliver year-over-year deliver focus AAM productivity yield efficiency and expects reductions, as year-over-year you improvement

main $XXX are time purchasing free scale changes the from million capital for AAM's are stemming to percent On as sales to X%. These adjusted in higher are we driving the targeting come. cash we platforms, our and leveraging we've approximately XXXX our factors Even perspective, programs, Page next-generation installed flow cash The flow follows: are million largest efficiency have cornerstones as expenditures a truck and an investments effectiveness, products. approximately been from targeting of of with a and in for XXXX. base, CapEx driving our XX, operational long profitability revenues capital these we of for $XXX

$XX of approximately million range interest of in is XXXX. higher approximately million. $XX see also million taxes cash higher in to do outstanding cash which total, million XXXX lower in Lower than We $XX debt the $XX means

for and estimate expect free we to payments $XX capital, $XX lastly, opportunities to continued believe be As areas as fixed working in area. XXXX performance of across the costs. And and our all look of in not our we optimize further million to this included our working in while XXXX have flow further good for adjusted we cash we business million our reduce range in figures, restructuring capital

timing want While not we perspectives guidance, in XXXX. provide quarterly on some we do provide do to

due next-generation year, date America, early continued quarter sales launch the of relates ramp relative in for cadence first key we to anticipate customers per and January to year. it program to downtime remainder revenue the lower As the North of key to the curve at be the a production

cash In the addition, quarter year. we in expect a of flow normal the seasonal first use

company. our and performance over time here on complementary I'm you So what does going the driving closing to being is mean? David and its and AAM taking trucks. for capabilities, David? be more basis, franchises its turn combination. product Dowlais an means of your regarding around with to combine today. and delivering stop support Thank and all best we that it the product light strong stand-alone for Dauch that remarks exciting steady upcoming set back to cash when will a in, call the And his automotive flow North one increased It on this positioning arguably America margins, and portfolio participation even call

David Dauch

Thanks, of creates on of basis day of discuss we AAM metal adjusted and the synergies. and $XX into with a and Q&A leverage EBITDA on including plus million XX. suppliers session, more with to net combination Tier after impact company that approximately complementary run leading XX% transaction global synergies compelling create world. to approximately forming the together global revenues the more $XXX our rate including balanced nonadjusted Combined wanted driveline X.Xx, in the we resilient This Dowlais January combination company of before Simply, X And X billion. a brings and margin, X of announced anticipate approximately financing combined a we transformational Dowlais I go Chris. strategic

Following the to greatly anticipate will mix more to the close standpoint, supplier. We XX% earnings balanced American close our AAM of reduce geographic combined XX% presence. business accretion first strong become top XX the benefits concentricity transaction, customer top diversification from the we closing, a expect from XX in a North approximately year. full post today. a From and GM and Upon global

while us As improved our that which today, our American reduces to our new balance already Asian XX% customers. to our their allows located, to geographic better to positions presence, customers, are European importantly, business us grow operations we dependence gain serve This where grows. and North geographic have XX% and from exposure the

automotive in Gap] all-wheel drive shafts industry-leading and shafts, This capabilities. integration, is and technology e-Drive Automotive components. business e-powertrain the a which complements pioneer that GKN systems Dowlais Metallurgy AAM Dowlais CV and a shafts, model and the side in summary, expands product metal shafts positioned systems, more existing prop portfolio deliver In and Metallurgy. for XX, together GKN with for the coupled Side with a transaction the this of GKN power powdered precision Powder development a strategic On production strong is world. side industrial to and markets. and high-performance strengths combination AAM's the Powder provides global hybrid strength robust brings leader possesses products and complementary Automotive in GKN side see of you'll [Audio of a and in axles. deliver vehicles. ICE, Slide Dowlais wheels is of casts shafts, automotive electric global to is supplier joints #X vertical leader

$XXX line. This is This As content product the opportunity agnostic benefit to of transitions strategic for of approximately per side increases. this powertrain million deliver electrification, great expected another shafts is synergies. to industry vehicle combination

closes. cash strong balance rate AAM approximately the year savings flow The accretion and high-margin remainder and a and strong after achieved transaction be year by run is positions expect the for earnings sheet. substantially strong the achieved We potential, XX% X after to third deal

other our we solid we plans X integrate we have synergies close, to we record years. making to will when ground hit We that a confidently so businesses the with the achieve are over that of track these running already which have deals completed delivering

and were process sessions order process required confidence the number. diligence and management our quantified opinion with a $XXX support issued by being accounting resulted detailed that between weeks Furthermore, work synergy were AAM robust This for in Dowlais in-person ultimately to teams these conducted respective XX we million which both This firm. outside supporting in announce included the an consulting streams, on high based of our synergies is to over a process firms. report achieve our to global undertake multiple synergy very

to Our level the confidence process we and is of well a in supports our our This deliver to ability our opportunities. synergy identify greater call for targets. opportunities market high what basket, excess

such, As XX, of flow on market potential XX%, can this synergies the it generation X% of of a the full free combined revenues cash Slide company, Based say yield. strong. implies me attractive on reported on cap the very XX% see again, is applied or let plus the you figures, realization flow based cash very

financing let's balance and the capital Now transition to sheet allocation.

We price expect billion we neutral place existing net synergies, and transaction. to deal. us. have this liquidity to approximately fully before in of refinance the fund leverage purchase cash Dowlais' approximately of and available debt debt ample have the financing anticipated committed financing to closing, At new to we support is and to to raise expect $X.X be deal this

and AAM capital near remain paydown. on true term. That is debt historically in Regarding organic allocation, the growth will focused

capital net now we are combined flow size free more with scale capital target generating and a higher and greater policy shareholders. However, we below to allocation returning consideration organization strong the including a our cash balanced can leverage, capability X.Xx once of

analysis done items. actioned regulatory preparatory X, have and of regulatory AAM February the a of U.S. submitted AAM already work front, and its already filing. Dowlais On number have Finally, a on significant and amount

regulators. appropriate with engaging and filings country other with progressing is AAM Additionally,

complementary of we feedback approval customer the happy portfolios. been We are initial expect has the and year, share to of that the fourth customer and and supportive the product given regulatory nature closing quarter this in

significant strategic and We create meaningful compelling rationale as agnostic extremely And excited all allocation will are strategic synergy a proven enhanced blended team and near more an business earnings realizing opportunities product experience record the future. about for based capital robust success, with margin model management strong including stakeholders, enhanced organization scale a in and an opportunities with while diversification creation and on and the it for growth. powertrain a strong value logic, finally, track policy size combination portfolio a accretion while accelerating industrial for

results. In conclusion, financial strong XXXX AAM delivered

are We year strategic the stand-alone Dowlais. XXXX we as company, about positioned are future and have with a to excited a solid combination in

So participation thank you for your today.

Before the New to I to These will call, to for it current Lim to on respectively. e-mail February February back let we turn over you start meetings now do investor XX, are we in turn of to over have York the Boston in Lim feel register and Please prospective will David to our also David? shown call. the david.lim@aam.com meetings to it interest we AAM. to interest. portion and and Q&A David planning of know want be XX that I portion Q&A start your free held shareholders,

David Lim

you. Thank

start can operator, please? session, question-and-answer So with you the

Operator

of question Murphy Today's of from America. first Instructions] comes Bank [Operator John

John Murphy

HD, curious talk I X on maybe walk just have on a just specific were the mentioned expectations in and also are you trucks that the outlook, couple Chris, here. volume. David, of I'm going what programs sort your -- GM or mix? if the through you when mix then of Ram context could mentioning about you're those and when for the you

Chris May

Yes.

mix full HD like, million truck, John, years see would overall. units about declines macro know, some transitioning year. last for of has North fourth you the range relatively American this level, year-over-year And the picture, was of beginning the units model units our been Think year, platforms, other anywhere the Ram as million from full-size of the the to our at XX.X then of From upcoming GM year. should So example, quarter. end or flattish say, Big platform, top that because there TX in we X.X the the X.X perspective revenue for I the million underpinning at

second lower expect run rates and the back beyond... but in quarter We production then picking in quarter, volumes the the first up

John Murphy

on with less mix think might you maybe TX, -- is less it Or platform that that that Just something it flat? relatively in in is there mix maybe where Xs? be going is

Chris May

relatively flat. It's

strong that relatively But robust still X-wheel inside I'd from the to that of we We heavy-duty drive demand flat. continue the on continue strong call in SUV. HD, mix a see -- the of, mix it, and side also perspective, perspective, from terms platform on obviously

John Murphy

the Got products. before organic? it's side capital it. kind that overlay follow-up Or Is to from million able And CapEx then of understanding an this the and use -- doing to is the down the for capacity some of of on purely is that a XXXX. outlook be there that you some on and to Delhi. $XX down is some on a The at Dowlais, there you -- really just kind your is might particularly Or in close? R&D, $XX of of is some get precursor the of stuff and R&D save their even you're that million, basis? organic

Chris May

Yes. guidance This company purely John. is guidance is organic, stand-alone our The perspective.

John Murphy

then any it. and pretty commentary reception or to talking Chinese the talk might so about synergy companies? been But you brands Dowlais, very the believe mentioned brands your about I a real have was there you or revenue you're that customer what and from customer And just incumbent beyond the Asian I should actually might the good has of the mean you above you reception lead the European DX can outside that good, Got say. lastly, far?

David Dauch

complementary of is Therefore, the in world. technology the Again, everything innovation John, They cross-sell both the portfolio expansive. customers able coming the excited opportunities outside is be together. and we them to with the businesses to and bring positive The Detroit Again, the companies X this stability initial had greater to have and different becomes that your regards like about Yes, with discussions on question, more we'll product around table. people X the to very the David. are Detroit X,

very that meetings in the respect time, ultimate venture a with and remember, and obviously want joint be overall North Europe, that in to to relationship the will and venture been the maintain continue same that There's upcoming Dowlais a At China. So that. be has we America. But there and joint in here grow customers. positively important it's received There will important. Asia leadership in of that's

with from happy the initial very the feedback we're customers. So

Operator

next And today Picariello from our comes question James BNP. with

Thomas Scholl

is This on for Jake James.

So I and little think level we of you through maybe see, on given all complementary detail some flow the free nature especially you about these you've of that synergies appreciate to cash synergies forma but can the of cost pro the how us flows line a top bit just given kind any portfolios? talk of

David Dauch

Well, are you're as and and complementary portfolios, to X X another. whose I bringing businesses just mentioned, product support expansive very I together complementary mean,

So to around we be cross-selling there's customers the multiple world. with going globally opportunities, think,

we revenue So for see that opportunity definitely way. growth

when vary recognize on understand there. and off front, ourselves China based markets and positioned they of well already technology-leading the active. things. are We company. electrification that to And also take the similar is leading going world, that by innovative obviously, both where We've have very region done that's We the

we then meaning Europe in and tremendous see dynamic a especially because America, is bring X under that product position we a North administration. the the product the know ourselves a opportunity optionality COX our these market requirements bit changing and administration, putting here and that the agnostic we're But support down little tougher. portfolio. have can flexibility consumer it's positive we a as regardless of and companies moving along getting slowing go-forward And the Trump And that with requirements we requirements portfolio in together. powertrain basis. on

Thomas Scholl

help cash And bridge. free with could just you guys the of also me flow kind

about down you've about flat hold $XX less your midpoint, or EBITDA million, the year-over-year. more cash managed to $XX and free flow at CapEx So million, up was

potentially So we unwind once could is is potential And that's about some get a capital of should XXXX? there in sort to full-size launch? continue think this next-generation we any higher benefit number GM the Or move through working that? driving that

Chris May

I'll Chris. this is jake, that. Yes, take

flow our bridge our see cash of XX on free deck. You can Page earnings

From working interest be relates key favorable Another to to as here do basis, our pre-COVID been we levels reduce stabilizing that flow continued from XXXX. continue in flat to across been a going the opportunity ran opportunity a contributor which cash relatively we expense favorability to we've still a From us it see we we've industry. expect lower down down have to But there. inventory is means perspective, an that's paying perspective, we as turns debt. for driver some year-over-year, to capital

from or addition, call see well. type as payables inside the those our additional In traditional let's it receivables capital some and we elements, sets working opportunity of

not working So any to of And that really on at these others through capital. we're working get structural we excited clear envision I would 'XX unwind or inventory as for changes capital.

Operator

today Edison question Deutsche from comes Bank. next Yu with Our

Xin Yu

suppliers kind go way, to or seems on a more of transaction of Wanted of Great. and First ask the that we've the getting breakout approach the expanding. opposite maybe of seen it and of view, lot smaller where bigger of kind a strategic they're higher point getting level

people landscape trends you What are is Or looks So you the way that's actually X, X kind going X, more this of that do I'm Is think look more counter direction it of be of it curious, kind you consolidate? think supplier years. years do whatever, been to actually that down the happening your goes. the over like? last other couple

David Dauch

still that I that OEM as the to market especially consolidate, my at Listen, convictions for David supplier level. feel and true years at belief and as my I'm well our needs is saying Dauch. the way automotive thought level been process. the in this that both to I've

we MPG acquisitions you even but dynamic, very and we've bigger The here size to here did back able be that leverage those do market weather or to that to with resources need that in we be and there. feels are XXXX. biggest And team in day to challenges very and strongly of is We a Our resources, this global brings markets the the to regions about that think uncertain, the done. as that. or to can position now every lot That's new countries have. very and done those we've a storm you scale one what position and we are bring in in a there's expansive that the out be why XXXX Dowlais the requirements need balance

pleased they leadership that blend think a what overlap. they But our little complementary need. our their we'll their combined proven the that together. product team, ultimately to are to and most with companies be needs actions all people meet bring in customers just actually forward. very and very are Yes, businesses. when with portfolio team, in bringing to that consumer solutions We're some the We'll tremendous we that have and we'll expansive meet complementary that And experience, our and the there done, being reduce that's their we've leadership another not customers with together to of has the market have team management we're it's doing what And with strength needs, able or said what X effectively importantly, certain taking got different one market an concentricity that going very with to leading and manage in regions want.

true and that we operations conditions time, from efficient no powertrain an recognize can different meet holistically, is a trying going And matter portfolio agnostic But that make that. standpoint and bounce a way that we basis. on that from forward. be what can a management we're market to that a still are and the a strategy. same each At a do cash standpoint product region the out global we're development from have What there's requirements we requires sure the to

Board it forward. consolidate we but our So feels That's and way to that the is that we markets will and Dowlais the industrial the of continue as that well very long and answer question, going in feel that feel do to your only Not premise to logic. the way. way, rationale strongly whole others also strategic the talked answer short team management that to industry I've feel

Xin Yu

side. the A Dowlais Appreciate follow-up the insights. on

For those maybe us of close. not as

perspective, maybe time describe level competition Can a do Chinese quite I there. from quite that maybe, actually is China bit many under the just people surprise. The strong, You've the got why given your business, maybe of is you to think, business of to work.

under suppliers I kind doing the better. U.S. much from of perspective think we're impression be local would that the

you're as think holding they're you maybe up curious just quite quite well there. what So actually to doing why

David Dauch

as a got and components demand. There's weighted cost effective they far They've at a the put together lot drive team. X structure portfolio the as got teams is electrification domestic Well, China. supportive the supporting support a an I management venture and that growing OEMs is Chinese local and international manufacturers heavily years that partners at and cash that GKN that that is Western or mean, are also first being well They're China be in JV but I as and with which the towards business have in in as OEMs competitive that what's product both that design, been old. the and strategy management for JV. tailored think recognize, market. with or experience all-wheel China market, That foremost, to for for ASCO the you They've of joint there. and e in powertrain XX doing

X to credit those organizations. So

do that. to with nothing had we So

portfolio joint to we But forward. as going our relationship look do but excellence don't want that maintain and is relationship, venture product as make said, only sure support very well. what And a it's as expands that to combined then business. that However, something performing with not mess to other we especially you bring we'll operational build on the

new forward. meet future to going the meetings team partner we'll ourselves others about up existing between will management position foremost talk their appropriate and So and leadership there with myself with meetings and appropriate their to and meet take we that's holds. partner then just first got what team that follow And and place and the over that and Dole

Operator

Our next Bank question of comes from Doug Karson America. of

Douglas Karson

entity, I'm relative I market think leverage. rating about combined kind you're you give company lower scale and auto you suppliers, the turns the of had of some that think than gate, the math said of which career, I actually out merging getting pressures. excited be bigger. agencies a leverage kind helped like about X.X In bigger to the my to AAM of I think And with

forward, last get rather the back of flow I to that seen think going we've cash be delevering to in some than few the comments some maybe to harvest made able the equity you'll years. that you

agency I of you more given want just know the you And separately, the ratings entity range that safely scale one, to do little bit. So combined term, kind get longer kind double. rather almost for a But of has then think mid-BB the commented. explore the could into B than range

Chris May

a is there. you few those. Doug, a crack of in at This Yes, I'll Chris. a few take have questions

some to would our will we of relates about X.Xx, talked the with you enthusiasm that allocation down agree up happens, your reduce continue as and But the but size it priorities. we delevering, we into scale sheet capital if to strengthen our some to additional listen of before to we balance about at X.Xx. comments, the and First open all,

to stronger growth. prioritize we'll balance stronger and through process. So a to drive debt continue sheet continue that prioritize We'll and repayment the organic

then in that's would would which think I allocation wouldn't we reduction going one overweight solely debt It keep or other. be to well. of still forward, point include So versus balanced balanced a mind. portfolio key And as a to an capital the have element

Douglas Karson

Right.

Chris May

drive our that things and leverage, will elements of of cash business hopefully that reflect to flow stronger time. up those, balance But our and is focused cost whether company to we're to size the business the critical we're longer will nature, focused not, on scale, a of of reducing ratios, the or obviously, good rewrite driving so elements But them. us the in on the ratings ultimately higher ratings -- free that's to term, But strengthening the agencies for are over capital. sheet debt

Douglas Karson

tariffs And helpful. around of looking out then steel at the pass-through broadly. commodity some and on a you that There's there maybe prices. follow-up. risks us some of refresh That's of market Can a in. in And pretty those headlines capabilities just you've know I you're how obviously lot good got kind quick just

David Dauch

we're tariff Canada can I'll and any regards know We'll future. on but past, the in that you propensity I once to that first also Mexico, that's announced other they Chris what's impact But experiencing in where shot happen mitigate in think Doug, may serve, mitigating we'll that and to our experience that goes the March. in see U.S., proved local and risk to forthright in and the that and here in to buy very with we obviously between been we've has that get policy long-standing and us regions it. look very going on the this been build support we is comment then the effective take David. and others and know,

With now, respect U.S. exposure minimal here to steel have right aluminum and the our very aluminum deal sourced side locally. our we and as is

the with that that good are countries local feel Overall, I buy taking when may involved about are and just us that war other we longer be and build have place. trade going any the we very or But like got to benefits are issues be our strategy well tariff to said, to way. the as Mexico is strategy that U.S., term. between as or policies you details where So what understand respect we to and tariff Canada issues

on. comments other any Chris, So

Chris May

input pass-through that you the tariff-related, some driving our costs, but Yes. this not into product. And the costs Doug, when commodity are referred brings activity mechanisms, more of volatility to go that if the to

around by we on contract this. XX% know, and pass up to customer plus you As the down

some we through purchases base. that our supply our not protected of So insulated are and site, tariffs, but that impact inputs from the market

for So the that's a company. mechanism nice protection

Douglas Karson

me. Yes. That is good. That's it from

David Dauch

Doug. Thanks, Appreciate it. Yes.

Operator

your from gentlemen, comes today Dan last question with Levy And Barclays.

Unknown Analyst

of not for a OEMs ] dynamics. of the I Josh there's I how right an with know you're bidding to you've while program, on and which, saw bidding backlog consider had bit on plans. just said on in I wanted extension and be just see things that pocket EV backlog if today quarters a the now? And Dan included the going Ford a extension past in that the are there question air greater would is today. [ seeing interest couple I guess,

David Dauch

Yes.

So and I'll David, let from this Chris there. talk is

been put some OEMs As some But X initial air along, the portfolios been same of we've the there's our of customers meaningful years, bit years. and and over the the sourcing creating product lower regards X in an in we've based a over of all for of right next meaning, of just the with pocket said at here let's say, a forthright very reevaluating re-volumes change there. retiming the forward. in some the regards now, 'XX, programs last slightly years, it to time, backlog the the to what has is their not on that

of we're opportunities. backlog thing replacement only We about the for any is important think new is billion actively swing our count quoting new in right we're that and that. don't And incremental the most and I seeing big now incremental. business us $X.X and still again,

forward. we're on have XX%. the it, quoting, applications it's weighted of past swung we business heavily and But that incremental heavily but still where ICE Today, XX% electrification that new and weighted hybrid some other in going that couple way, has to the towards more like towards in electrification, was years, that

we're today hybrid essentially business $X.X quoting business in secured, and covered business it's our what remarks. of which Two, earlier next-generation got my about we're of and on and So in incremental very we've ICE new excited but that, based an -- different we billion our wheelhouse at substantially is the globally requirements and actively I electrification the they our fact one, around right have and X, us portfolio better already quote that portfolio, world. markets more that time, the agnostic have on same will for the positions portfolio expand existing the Dowlais powertrain as to on with evolve

suppliers. incremental overall, only are the importantly, for to programs hit in is drive not American and what so financial to to deliver because lot to good organizations that we that in improve opportunities new also leverage that to we a pocket performance allows which effectiveness continue bring most market global better the and business And many conveyed think are we of going rate us the as But a delivered of is and stand-alone the 'XX, through Axle win and which when being operational we we basket industry, the from forward. able synergies company a position we feel Dowlais and X opportunities. but going our of together. ourselves footprint then obviously, and But were be trying about of an positioned we've air the 'XX AAM positive efficiency the standpoint to a extended cost we'll There

Unknown Analyst

R&D your next couple within quick of on there's you spending included your in any years, of in would a of year-over-year, beyond slowdown is would the Or current kind that decline already the say follow-up require that an that, uptick what and of lot hybrid given assuming have? portfolio? the you a incremental over that already as So is spending

Chris May

in of The say decline would is of the demands really requirements, our this customers. now current or place. market past to year and traction X which Chris. R&D in ], have our align [ been Part Yes. portfolio, with I elevated to has has Josh a out lot of as over well. China and we other markets is eDrive build our -- spend gained

thing sort for going the the in applications expect uses cases, us, repositioning reap about behind product and current of the done hybrid ICE start dynamics those So would us, savings can so with we year, The forward. exact that's benefits same harvest we many the sort to as and of vehicle products. our this now and of cost market nice

So that. R&D there's not a lot of associated with

applications powertrain hybrid that's between perspective. a and that of So perfect some of alignment ICE a

David Lim

Thank you.

participated all think the look call question, of and certainly appreciate with your AAM. thank you who you interest that and forward we in on talking was future. our in last We I this have to

Operator

Thank you. conference call. today's This concludes

and You may lines, disconnect day. your now a wonderful have

American Axle & Manufacturing (AXL) 14 Feb 252024 Q4 Earnings call transcript