American Axle leaning into electric opportunities amid Q1 loss

Drivetrain components and systems manufacturer American Axle & Manufacturing on Friday reported a first-quarter net loss of $5.1 million.

That’s compared with net income of $1 million in the first quarter of 2022.

In a Friday morning call, executives attributed losses to new program launch costs, material and labor inflation and market inefficiencies caused by supply chain and semiconductor issues. The company was dinged by significant customer production downtime, especially in full-size truck programs.

“The operating environment remains dynamic, but we are hopeful to see some stabilization in the second half of the year,” CEO David Dauch said on a call Friday.

CFO Christopher May said he expects launch costs to continue into the second quarter but reduce in the second half of the year. He expects labor inflation to remain throughout the year but is “cautiously optimistic” that current market volatility will gradually stabilize.

Shares in American Axle gained 9.9 percent to $7.41 when the market closed Friday.

The company’s revenue rose 3.5 percent to $1.49 billion, in part because of AAM’s acquisition of Tekfor Group.

AAM acquired Germany-based Tekfor, a producer of automotive fasteners and metal formed components for driveline, powertrain and e-mobility applications, for about $136 million in 2022. Tekfor generated about $310 million in sales in 2021 and, according to May, was the primary contributor to AAM’s growth in sales this quarter.

The company’s yearlong outlook, targeting revenue of $5.95 billion to $6.25 billion, has not changed.

American Axle also said Friday it has secured a contract with Chrysler parent Stellantis to supply electric beam axles for a future electric vehicle program. The program is expected to launch after 2025 and follows the announcement last year that AAM would supply electric drivelines to the Mercedes-AMG, the brand’s first plug-in hybrid electric model, as well as recent deals with Jupiter Electric Mobility and EKA mobility.

The company aims to continue advancing its electric portfolio. Dauch said AAM is in conversation with several other automakers and expects “the momentum to continue.”

“We are clearly demonstrating our capabilities and value proposition in electric propulsion technology and systems integration to the OEM community,” Dauch said. “This is a great example of how AAM is leveraging the axle heritage of the company with cutting-edge electric propulsion technology leadership of today to drive our future growth.”

R&D spending increased by about $8 million over the first quarter of 2022 as the company aims to support new programs and grow its electric capabilities.

The company estimates the addressable EV sourcing market to be about $20 billion to $30 billion by 2030 and aims to control a 10 percent share of that market by that year, according to a presentation shared with investors in April.

Detroit-based American Axle ranks No. 43 on Automotive News‘ list of the top 100 global parts suppliers, with worldwide sales to automakers of $5.16 billion in 2021.