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American Axle & Manufacturing Holdings Inc. Message Board

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  • matthew_and_january matthew_and_january Jul 29, 2011 9:08 AM Flag

    Will Spike up

    Will pop and then plummet as usual. Every quarter, crazy good earnings beat, initial pop and then everyone sells the begeezies out of it for some unknown reason.

    Plus, I bought a bunch of August 11 strike calls yesterday, and the market isn't going to let me make money on them. Just the way it is...

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    • Merrill on AXL:

      Very solid 2Q for AXL
      AXL reported 2Q:11 cont. ops. EPS of $0.69, ahead of our estimate of $0.48 and
      consensus of $0.44. GAAP EPS of $0.65 included a $3.1mm (~$0.04/sh) debt
      refinancing charge. A lower than modeled tax rate also added ~$0.05/sh versus
      our estimates, but this was still a solid beat. The quarter was driven by a strong
      23% YoY increase in revenue to $686mm versus our $644mm estimate. Gross
      margin was also solid at 19% (BofAMLe 18.0%), which combined with SG&A as a
      % of sales at 8.6% (BofAMLe 8.8%) drove an operating margin of 10.4%
      (BofAMLe 9.2%). AXL’s 2Q adjusted EBITDA margin was also impressive at
      15.7%, and was well above our 14.7% forecast. We believe AXL’s execution will
      continue to improve in 2011, likely enhanced by a recovery in volumes.
      2011 revenue outlook raised
      AXL is now forecasting revenue of $2.5-$2.6bn (prior $2.4-$2.5bn), which
      compares top our $2.6bn estimate, and continues to expect an EBITDA margin of
      14.5%-15% (BofAMLe 14.8%), based on a 2011 US SAAR of 13mm (prior
      12.5mm) units. Although not explicitly mentioned in the press release, it appears
      that AXL continues to forecast YoY capex in 2011 of ~6% of sales, in order to
      support its 2011-2013 business backlog. Similar to other companies throughout
      the auto value chain, we believe AXL continues to prudently plan its business
      around conservative market demand forecasts and there may be upside.
      Balance sheet solid and improving
      AXL ended 2Q with cash and equivalents of $250mm, up from $217mm in cash at
      the end of 1Q11. In our view, AXL has made notable progress in strengthening its
      balance sheet and restructuring its operations. In fact, the company reduced debt
      by ~$47mm in 1H11, which follows similar actions in 2010, and we expect further
      delevering in the near term.
      Focus on North America to be beneficial
      We expect that a slowly improving US economy could bolster sales of light trucks,
      many of which are used for commercial purposes. AXL remains heavily exposed
      to the light truck and SUV platforms of GM and Chrysler for now, and therefore
      could see an outsized benefit from an economic recovery. It should also be noted
      that AXL is materially diversifying its sales base with non-GM sales increasing
      35% in the quarter to ~$183mm or about 27% of total sales.

      P.O.remains $ 17 with a BUY recommendation

 
AXL
24.70-0.21(-0.84%)Mar 5 4:06 PMEST

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