Investor Presentation

November 2020

Forward Looking Statements

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward- looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include uncertainty around the duration and effects of the COVID-19 pandemic, and include factors detailed in the reports we file with the SEC, including those described under "Risk Factors" in our most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. These forward-looking statements speak only as of the date of this communication. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

It should also be noted that this presentation contains certain financial measures, including Adjusted EBITDA, Adjusted Earnings per Share, Adjusted Free Cash Flow, Net Leverage Ratio and Liquidity that are not required by, or presented in accordance with, accounting principles generally accepted in the United States, or GAAP. These measures are presented here to provide additional useful measurements to review our operations, provide transparency to investors and enable period-to-period comparability of financial performance. A description of non-GAAP financial measures that we use to evaluate our operations and financial performance, and reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP, can be found in the appendix under "Reconciliation of Non-GAAP Measures".

2

About AAM

2019 SALES

$6.5B

Approximately

20,000

ASSOCIATES

As a leading, global tier 1 automotive supplier, AAM designs, engineers and manufactures driveline and metal forming technologies that are making the next generation of vehicles smarter, lighter, safer and more efficient

AAM delivers POWER that moves the world

through world-class quality, technology leadership

and operational excellence

Nearly

17 80

COUNTRIESLOCATIONS

Over

60

MANUFACTURING

FACILITIES

16

ENGINEERING CENTERS

3

Business Units and Market Leadership

DRIVELINE

  • 2019 Sales - $4.6B
  • A Global Leader in
    • Full-sizepickup truck and SUV driveline systems
    • AWD systems for crossover vehicles
    • Damped gears, viscous dampers and rubber isolation pulleys
  • Pioneer of disconnecting AWD Systems
  • One of the leaders in hybrid and electric driveline solutions

METAL FORMING

  • 2019 Sales - $1.8B
  • Largest automotive forger in the world
  • A Global Leader in
    • Powdered metal connecting rods
    • Differential gears
    • Axle shafts
    • Hypoid pinions
    • Ring gears
    • Transmission gears
    • CVT pulleys
    • Aluminum valve bodies

*Note: Market leadership based on company estimates as compared to other independent supplier., business unit sales before eliminations of intercompany sales of approximately $0.5 billion.

Growth Opportunities in Electrification

Building a Diverse and Scalable eDrive Business

Several new business

wins for eDrive

components

  • Winning business across multiple regions and vehicle segments
  • New program awards include electric commercial vehicle with a new customer and an electric pickup truck
  • Launching several programs for hybrid and electric vehicles 2020-2022

High performance eDrive

systems for Premium

European OEMs

  • AWD Jaguar I-Pace Crossover launched in 2018
  • Multiple variants of high- performance hybrid to launch in 2021-2022 with second premium European OEM
  • Both programs generating larger content-per-vehicle (CPV) than traditional ICE drive units

Cost-competitive

value-oriented eDrives

for China market

  • Launches in our Liuzhou AAM JV and Changshu Manufacturing facilities in 2020 / 2021
  • Serving FWD passenger cars - previously an under- represented market in
    AAM's portfolio
  • Gaining momentum in the growing new energy vehicle market in China

Expect lifetime revenues for booked eDrive related business to be over $1 billion

6

Electrification Growth Drivers for AAM

Successful

Partnerships

providing new

products in market

business prospects

Scalable design

and product

portfolio

Active new and

Significant electric

emerging business

powertrain

opportunities

component offerings

Expanding served

market and

increasing CPV

Developing

advanced next-

generation product

Participating in

electric truck

market

CPV - content per vehicle

7

3Q 2020 Highlights and Updated 2020 Targets

3Q 2020 AAM Financial Highlights

>$1.4B

$297M

$217M

21% of sales

Quarterly

Record Quarterly

Record Quarterly

Sales

Adj. EBITDA Margin

Adjusted Free Cash Flow

* For definitions and reconciliations of non-GAAP financial measures, please see the attached appendix.

9

Revised 2020 Financial Outlook as disclosed on October 30, 2020

Revised 2020 Financial Targets

Full Year Sales

≈ $4.6 billion

Adjusted EBITDA

$665 - $680 million

Adjusted Free Cash Flow

$220 - $235 million

  • AAM's updated 2020 full year financial targets are based on current customer schedules and assume that there are no significant impacts to our expected production or costs related to COVID-19 or the recent fire at our Malvern Manufacturing Facility through the remainder of 2020
  • AAM expects restructuring and acquisition-related cash payments to be between $55 and $70 million

* For definitions of Adjusted EBITDA and Adjusted Free Cash Flow and Non-GAAP reconciliations, please see the attached appendix

10

3Q 2020 Year-Over-Year Sales Walk

(in millions)

$1,677

$57

$1,522

$17

$1,414

($155)

($87)

($15)

($55)

($10)

($15)

3Q 2019 Sales

Sale of U.S.

3Q 2019 Sales

3Q 2019 GM

COVID-19

GM Thailand Exit Transition to

Other Volume &

Pricing

Metal Market & 3Q 2020 Sales

Casting

Pro forma for

Work Stoppage

Related

IRDA's for GM's

Mix

Fx

U.S. Casting Sale

New Full-Size

SUV

11

3Q 2020 Year-over-Year Adjusted EBITDA Walk

(in millions)

$24

$4

$297

$266

$18

$260

$22

($6)

($16)

$8

($3)

($10)

($10)

3Q 2019

3Q 2019 U.S.

3Q 2019 Adj.

3Q 2019 GM Work

Lower Sales

Other Volume &

Pricing

Metal Market & Fx Customer ED&D COVID-19 costs

Cost Reduction

Performance

3Q 2020

Adjusted EBITDA Casting EBITDA

EBITDA Pro

Stoppage

Related to

Mix

Reimbursement

Actions

and Other

Adjusted EBITDA

forma for U.S.

COVID-19

and Commercial

Casting Sale

Settlement

Timing

* For definitions and reconciliations of non-GAAP financial measures, please see the attached appendix.

12

Adjusted Free Cash Flow and Credit Profile

Cash Flow and Debt Metrics

3Q 2020

Adjusted Free Cash Flow

$217.2 million

Net Debt

$3.0 billion

Net Leverage Ratio

4.7x

Liquidity

$1.48 billion

In 3Q 2020, AAM prepaid $350 million of Senior Notes due 2022

* For definitions and reconciliations of non-GAAP financial measures, please see the attached appendix.

13

Supplemental Data

Reconciliation of Non-GAAP Measures

In addition to the results reported in accordance with accounting principles generally accepted in the United States of America (GAAP) included within this presentation, we have provided certain information, which includes non-GAAP financial measures. Such information is reconciled to its closest GAAP measure in accordance with Securities and Exchange Commission rules and is included in the following slides.

Certain of the forward-looking financial measures included in this earnings release are provided on a non-GAAP basis. A reconciliation of non-GAAPforward-looking financial measures to the most directly comparable forward-looking financial measures calculated and presented in accordance with GAAP has been provided. The amounts in these reconciliations are based on our current estimates and actual results may differ materially from these forward-looking estimates for many reasons, including potential event driven transactional and other non-core operating items and their related effects in any future period, the magnitude of which may be significant.

16

Supplemental Data

EBITDA and Adjusted EBITDA Reconciliation

($ in millions)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net income (loss)

$

117.2

$

(124.1)

$

(597.2)

$

(29.7)

Interest expense

53.9

54.3

160.0

163.9

Income tax expense (benefit)

(22.5)

(40.4)

(63.1)

(37.4)

Depreciation and amortization

125.0

134.2

393.7

411.5

EBITDA

273.6

24.0

(106.6)

508.3

Restructuring and acquisition-related costs

9.7

11.7

38.6

36.0

Debt refinancing and redemption costs

5.2

5.1

6.7

7.5

Impairment charges

-

225.0

510.0

225.0

Loss on sale of business

-

-

1.0

-

Non-recurring items:

Malvern fire charges, net of recoveries

8.6

-

8.6

-

Adjusted EBITDA

$

297.1

$

265.8

$

458.3

$

776.8

as % of net sales

21.0%

15.8%

14.0%

15.2%

17

Supplemental Data

EBITDA and Adjusted EBITDA for the Trailing Twelve Months Ended September 30, 2020

($ in millions)

Trailing

Twelve

Quarter Ended

Months Ended

December 31,

March 31,

June 30,

September 30,

September 30,

2019

2020

2020

2020

2020

Net income (loss)

$

(454.4)

$

Interest expense

53.4

Income tax expense (benefit)

(11.5)

Depreciation and amortization

125.4

EBITDA

(287.1)

Restructuring and acquisition-related costs

21.8

Debt refinancing and redemption costs

0.9

Impairment charges

440.0

Pension settlement

9.8

Loss on sale of business

21.3

Non-recurring items:

Gain on bargain purchase of business

(10.8)

Malvern fire charges, net of recoveries

-

Other

(2.4)

Adjusted EBITDA

$

193.5

$

as % of net sales

13.5%

(501.2)

$

(213.2)

$

51.5

54.6

3.3

(43.9)

129.6

139.1

(316.8)

(63.4)

17.6

11.3

1.5

-

510.0

-

-

-

1.0

-

-

-

-

-

-

-

213.3

$

(52.1)

$

15.9%

-10.1%

117.2

$

(1,051.6)

53.9

213.4

(22.5)

(74.6)

125.0

519.1

273.6

(393.7)

9.7

60.4

5.2

7.6

-

950.0

-

9.8

-

22.3

-

(10.8)

8.6

8.6

-

(2.4)

297.1

$

651.8

21.0%

13.9%

18

Supplemental Data

Adjusted Earnings (Loss) Per Share Reconciliation

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Diluted earnings (loss) per share

$

0.99

$

(1.10)

$

(5.28)

$

(0.27)

Restructuring and acquisition-related costs

0.08

0.10

0.34

0.32

Debt refinancing and redemption costs

0.05

0.05

0.06

0.07

Impairment charges

-

2.00

4.51

2.00

Loss on sale of business

-

-

0.01

-

Non-recurring items:

Malvern fire, net of recoveries

0.07

-

0.08

-

Adjustment to liability for unrecognized tax benefits

-

-

(0.06)

-

Tax adjustments related to the CARES Act and Tax Cuts and Jobs Act

-

-

(0.07)

(0.08)

Other

-

-

0.14

-

Tax effect of adjustments

(0.04)

(0.45)

(0.12)

(0.50)

Adjustment for anti-dilutive effect

-

(0.02)

-

(0.05)

Adjusted earnings (loss) per share

$

1.15

$

0.58

$

(0.39)

$

1.49

Adjusted earnings (loss) per share are based on weighted average diluted shares outstanding of 118.4 million and 115.8 million for the three months ended on September 30, 2020 and 2019, respectively, and 113.0 million and 115.6 million for the nine months ended on September 30, 2020 and 2019, respectively.

19

Supplemental Data

Free Cash Flow and Adjusted Free Cash Flow Reconciliation

($ in millions)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net cash provided by operating activities

$

249.5

$

241.7

$

246.4

$

378.6

Less: Capital expenditures net of proceeds from sale of property,

plant and equipment

(40.5)

(97.5)

(144.7)

(333.3)

Free cash flow

209.0

144.2

101.7

45.3

Cash payments for restructuring and acquisition-related costs

8.2

16.3

37.0

46.0

Adjusted Free Cash Flow

$

217.2

$

160.5

$

138.7

$

91.3

20

Supplemental Data

Net Debt and Net Leverage Ratio

($ in millions)

September 30,

2020

Current portion of long-term debt

$

26.5

Long-term debt, net

3,555.4

Total debt, net

3,581.9

Less: Cash and cash equivalents

537.3

Net debt at end of period

3,044.6

Adjusted LTM EBITDA

$

651.8

Net Leverage Ratio

4.7

21

Supplemental Data

Full Year 2020 Outlook

($ in millions)

Adjusted EBITDA

Low End

High End

Net loss

(617)

(602)

Income tax benefit

(70)

(70)

Interest expense

215

215

Depreciation and amortization

525

525

Full year 2020 targeted EBITDA

53

68

Impairment charges

510

510

Restructuring and acquisition-related costs

85

85

Debt refinancing and redemption costs

7

7

Non-recurring charges and other

10

10

Full year 2020 targeted Adjusted EBITDA

$

665

$

680

22

Supplemental Data

Full Year 2020 Outlook

($ in millions)

Net cash provided by operating activities

Capital expenditures net of proceeds from the sale of property, plant and equipment

Full year 2020 targeted Free Cash Flow

Cash payments for restructuring and acquisition- related costs

Full year 2020 targeted Adjusted Free Cash Flow

Adjusted Free Cash Flow

Low End

High End

405

420

(250)

(250)

155

170

65

65

$

220

$

235

23

Definition of Non-GAAP Measures

EBITDA and Adjusted EBITDA

We define EBITDA to be earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding the impact of restructuring and acquisition- related costs, debt refinancing and redemption costs, loss on sale of a business, impairment charges, pension settlements and non-recurring items. We believe that EBITDA and Adjusted EBITDA are meaningful measures of performance as they are commonly utilized by management and investors to analyze operating performance and entity valuation. Our management, the investment community and the banking institutions routinely use EBITDA and Adjusted EBITDA, together with other measures, to measure our operating performance relative to other Tier 1 automotive suppliers. We also use Segment Adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. EBITDA and Adjusted EBITDA should not be construed as income from operations, net income or cash flow from operating activities as determined under GAAP. Other companies may calculate EBITDA and Adjusted EBITDA differently.

Adjusted Earnings (Loss) Per Share

We define Adjusted earnings (loss) per share to be diluted earnings per share excluding the impact of restructuring and acquisition related costs, debt refinancing and redemption costs, loss on sale of a business, impairment charges, and non-recurring items, including the tax effect thereon. We believe Adjusted earnings (loss) per share is a meaningful measure as it is commonly utilized by management and investors in assessing ongoing financial performance that provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of core operating performance and which may obscure underlying business results and trends. Other companies may calculate Adjusted earnings (loss) per share differently.

Free Cash Flow and Adjusted Free Cash Flow

We define free cash flow to be net cash provided by (used in) operating activities less capital expenditures net of proceeds from the sale of property, plant and equipment. Adjusted free cash flow is defined as free cash flow excluding the impact of cash payments for restructuring and acquisition-related costs. We believe free cash flow and Adjusted free cash flow are meaningful measures as they are commonly utilized by management and investors to assess our ability to generate cash flow from business operations to repay debt and return capital to our stockholders. Free cash flow and Adjusted free cash flow are also key metrics used in our calculation of incentive compensation. Other companies may calculate free cash flow and Adjusted free cash flow differently.

Net Debt and Net Leverage Ratio

We define net debt to be total debt, net less cash and cash equivalents. We define Net Leverage Ratio to be net debt divided by the trailing 12 months of Adjusted EBITDA. We believe that Net Leverage Ratio is a meaningful measure of financial condition as it is commonly used by management, investors and creditors to assess capital structure risk. Other companies may calculate Net Leverage Ratio differently.

Liquidity

We define Liquidity as cash on hand plus amounts available on our revolving credit facility and foreign credit facilities.

US SAAR

We define US SAAR as the seasonally adjusted annual rate of light vehicle sales in the United States.

Other

Other includes the accelerated depreciation for certain assets that will be idled as a result of our largest customer exiting their operations in Thailand, which they announced in 2020.

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Disclaimer

AAM - American Axle & Manufacturing Holdings Inc. published this content on 19 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 November 2020 13:40:01 UTC