American Axle & Manufacturing Reports First Quarter 2008 Financial Results

DETROIT, April 25 -- American Axle & Manufacturing Holdings, Inc. (AAM), which is traded as AXL on the NYSE, today reported its financial results for the first quarter of 2008.

  First Quarter 2008 results
   -- First quarter sales of $587.6 million
   -- Net loss of $27.0 million, or $0.52 per share
   -- AAM's quarterly results reflect the adverse impact of the ongoing
      strike called by the International UAW at AAM's original U.S.
      locations in Michigan and New York; AAM estimates the reduction in
      sales and operating income resulting from the International UAW strike
      to be $132.6 million and $45.8 million (or $0.56 per share),
      respectively
   -- Special charges and other non-recurring operating costs of $3.5
      million, or $0.04 per share, primarily related to the redeployment of
      machinery and equipment and other actions to rationalize underutilized
      capacity
   -- 33% year-over-year decline in total light truck production volumes as
      compared to the first quarter of 2007
   -- Content-per-vehicle of $1,326, approximately 6% higher than the
      previous year

AAM's results in the first quarter of 2008 were a net loss of $27.0 million or $0.52 per share. This compares to net earnings of $15.7 million, or $0.30 per share, in the first quarter of 2007.

Upon expiration of the four-year master labor agreement between AAM and the UAW at 11:59 p.m. on February 25, 2008, the International UAW called a strike against AAM. The expiring master labor agreement covered approximately 3,650 associates at AAM's original U.S. locations in Michigan and New York. AAM estimates the reduction in sales and operating income resulting from the International UAW strike to be $132.6 million and $45.8 million ($0.56 per share), respectively.

In the first quarter of 2008, AAM incurred $3.5 million, or $0.04 per share, of special charges and non-recurring operating costs, primarily related to the redeployment of machinery and equipment. In the first quarter of 2007, AAM recorded special charges of $2.9 million, or $0.04 per share, primarily related to attrition program activity.

"AAM's first quarter 2008 results were severely impacted by the strike called by the International UAW at AAM's original U.S. locations on February 25, 2008," said AAM Co-Founder, Chairman of the Board & Chief Executive Officer Richard E. Dauch. "AAM must have a U.S. market cost competitive labor agreement for the original U.S. locations with operating flexibility. This is needed to compete for new business and match the operational flexibility and efficiency of our competitors. While it would be tragic to dismantle AAM's original U.S. manufacturing base, AAM will be forced to consider additional restructuring and capacity rationalization actions if the International UAW refuses to accept the structural and permanent changes needed to achieve market cost competitiveness at these facilities."

Net sales in the first quarter of 2008 were $587.6 million as compared to $802.2 million in the first quarter of 2007. AAM estimates that approximately $132.6 million of this decrease was attributable to the International UAW strike. Customer production volumes for the full-size truck and SUV programs AAM currently supports for GM and Chrysler were down approximately 31% in the first quarter of 2008 as compared to the prior year. AAM estimates that customer production volumes for its mid-sized truck and SUV programs were down approximately 43% in the first quarter of 2008 on a year-over-year basis. Non-GM sales represented 26% of total sales in the first quarter of 2008.

AAM's content-per-vehicle is measured by the dollar value of its product sales supporting GM's North American truck and SUV platforms and Chrysler's heavy duty Dodge Ram pickup trucks. For the first quarter 2008, AAM's content-per-vehicle increased approximately 6% to $1,326 as compared to $1,252 in the first quarter of 2007.

Gross margin for the first quarter of 2008 was 2.2% as compared to 10.6% in first quarter 2007. Operating loss was $36.7 million or a negative 6.2% of sales in the first quarter of 2008 as compared to operating income of $36.4 million or 4.5% of sales in the first quarter of 2007.

AAM's SG&A spending for the first quarter of 2008 was $49.4 million as compared to $48.9 million in the first quarter of 2007. AAM's R&D spending for the first quarter of 2008 was approximately $20.2 million as compared to $20.1 million in the first quarter of 2007.

AAM defines free cash flow to be net cash provided by (or used in) operating activities less capital expenditures and dividends paid. Net cash provided by operating activities in the first quarter of 2008 was $8.2 million. Capital spending for the first quarter of 2008 was $33.3 million as compared to $42.5 million in the first quarter of 2007. Reflecting the impact of this activity and dividend payments of $8.0 million, AAM's free cash flow use of $33.1 million in the first quarter of 2008 represents an improvement of $7.4 million, or 18%, as compared to the first quarter of 2007.

A conference call to review AAM's first quarter of 2008 results is scheduled today at 10:00 a.m. ET. Interested participants may listen to the live conference call by logging onto AAM's investor web site at http://investor.aam.com/ or calling (877) 278-1452 from the United States or (706) 643-3736 from outside the United States. A replay will be available from 5:00 p.m. ET on April 25, 2008 until 5:00 p.m. ET May 2, 2008 by dialing (800) 642-1687 from the United States or (706) 645-9291 from outside the United States. When prompted, callers should enter conference reservation number 39482270.

Non-GAAP Financial Information

In addition to the results reported in accordance with accounting principles generally accepted in the United States of America (GAAP) included within this press release, AAM has provided certain information, which includes non-GAAP financial measures. Such information is reconciled to its closest GAAP measure in accordance with the Securities and Exchange Commission rules and is included in the attached supplemental data.

Management believes that these non-GAAP financial measures are useful to both management and its stockholders in their analysis of the Company's business and operating performance. Management also uses this information for operational planning and decision-making purposes.

Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measure. Additionally, non-GAAP financial measures as presented by AAM may not be comparable to similarly titled measures reported by other companies.

AAM is a world leader in the manufacture, engineering, design and validation of driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for trucks, sport utility vehicles, passenger cars and crossover utility vehicles. In addition to locations in the United States (Michigan, New York, Ohio and Indiana), AAM also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea, Thailand and the United Kingdom.

Certain statements contained in this press release are "forward-looking statements" and relate to the Company's plans, projections, strategies or future performance. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on our current expectations, are inherently uncertain, are subject to risks and should be viewed with caution. Actual results and experience may differ materially from the forward-looking statements as a result of many factors, including but not limited to: the effect of the strike called by the International United Automobile, Aerospace and Agricultural Implement Workers of America on February 25, 2008; our ability to restore and maintain satisfactory labor relations and avoid future work stoppages; our ability to improve our U.S. labor cost structure; our suppliers' ability to maintain satisfactory labor relations and avoid work stoppages; reduced purchases of our products by GM, Chrysler LLC or other customers; reduced demand of our customers' products or volume reductions (particularly light trucks and SUVs produced by GM and Chrysler); our ability to achieve cost reductions through ongoing restructuring actions; additional restructuring actions that may occur; our ability to achieve the level of cost reductions required to sustain global cost competitiveness; our ability to consummate and integrate acquisitions; supply shortages or price increases in raw materials, utilities or other operating supplies; our ability or our customers' and suppliers' ability to successfully launch new product programs on a timely basis; our ability to realize the expected revenues from our new and incremental business backlog; our customers' and suppliers' ability to maintain satisfactory labor relations and avoid work stoppages; our ability to attract new customers and programs for new products; our ability to develop new products that reflect market demand; our ability to respond to changes in technology, increased competition or pricing pressures; adverse changes in laws, government regulations or market conditions affecting our products or our customers' products (including the Corporate Average Fuel Economy regulations); adverse changes in the economic conditions or political stability of our principal markets (particularly North America, Europe, South America and Asia); liabilities arising from warranty claims, product liability and legal proceedings to which we are or may become a party; changes in liabilities arising from pension and other postretirement benefit obligations; risks of noncompliance with environmental regulations or risks of environmental issues that could result in unforeseen costs at our facilities; availability of financing for working capital, capital expenditures, research and development or other general corporate purposes, including our ability to comply with financial covenants; our ability to attract and retain key associates; and other unanticipated events and conditions that may hinder our ability to compete. For additional discussion, see "Item 1A. Risk Factors" in our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. It is not possible to foresee or identify all such factors and we assume no obligation to update any forward-looking statements or to disclose any subsequent facts, events or circumstances that may affect their accuracy.