American Axle profit slips, sales increase in second quarter

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American Axle & Manufacturing Holdings Inc. took another supply chain-related hit to its bottom line in the second quarter but offered a better-than-expected financial outlook through the end of the year.

Gross profit fell 9 percent to $173.5 million in the quarter, with sales up 12 percent to $1.4 billion, according to the Detroit-based supplier's earnings, released Friday.

Commodity price increases and other cost pressures including labor and freight hampered the company's financial performance, as it has done to the broader automotive supply base.

"Financial results were impacted by rising input costs and the continuing supply chain volatility," CEO David Dauch said on a Friday call with investors. "We cannot control the macro environment, but we can manage our business."

The microchip shortage and production stoppages hurt operations in the second quarter, but not as badly as the prior period, CFO Chris May said on the call.

Material, freight and utility inflation dragged earnings down by $12 million. That's compared to a $28 million hit in the previous quarter, with improvement driven by "continued progress in recoveries from customers," May said.

The company slightly improved its financial outlook to a sales range of $5.75 billion – $5.95 billion, compared with $5.6 billion – $5.8 billion in its prior guidance. Similarly, EBITDA ticked up to the $790 million – $830 million range vs. $785 million – $830 million.

American Axle (NYSE: AXL) stock value increased 6 percent to just over $9 per share as of Friday morning.

Company executives said they are also making progress on the plan to transition the company, steeped in the supply of parts to gas-powered cars, into the electric vehicle future.

The company won a contract earlier this year to supply electric drivelines to the Mercedes-AMG, the high-performance brand's first plug-in hybrid electric model. In April, American Axle announced the purchase of Tekfor Group in a deal valued at more than $135 million that expands its electrification portfolio.

"During these uncertain times, we are managing variables that are under our control," Dauch said. "We believe we are nicely positioned when the production environment improves, driven by strong demand and inventory replenishment."

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