Automotive Supplier American Axle's Stock Is Gearing Up: Here's Why

American Axle & Manufacturing Holdings, Inc. AXL shares are trading higher after the company reported Q3 sales of $1.552 billion (+1% Y/Y), beating the analyst consensus of $1.488 billion. 

The UAW work stoppage impacted sales by approximately $15 million in the quarter. 

Adjusted loss per share in the third quarter of 2023 was $(0.11), missing the analyst consensus of $(0.01).

Higher product warranty expense impacted adjusted EPS by approximately $0.09 in the third quarter of 2023, while the UAW strike impacted adjusted EPS by approximately $0.03.

"AAM's third quarter financial performance reflected greater than anticipated downtime at key customers, operational inefficiencies and the UAW work stoppage," said AAM's Chairman and Chief Executive Officer, David C. Dauch.

Adjusted EBITDA was $156.8 million, or 10.1% of sales, as compared to $198.4 million, or 12.9% of sales, in the third quarter of 2022. The UAW work stoppage had an impact of approximately $4 million.

The company exited the quarter with cash and equivalents worth $615.6 million. 

FY23 Outlook: AAM narrowed sales guidance to $6.0 billion-$6.1 billion versus $5.94 billion (prior view: $5.95 billion-$6.25 billion). 

AAM expects Adjusted EBITDA of $660 million-$685 million (prior view: $725 million-$800 million).

AAM now targets Adjusted free cash flow in the range of $200 million- $215 million; this target assumes capital spending of approximately 3%-3.5% of sales.

Price Action: AXL shares are trading higher by 13.68% to $7.39 on the last check Friday.