American Axle & Manufacturing Holdings Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joseph Spak - UBS - Analyst : Good morning. I guess I just want to start the conversation talking about how you're thinking about some potential future contingencies. I know you mentioned you do have some excess capacity in the US like maybe you could give us a sense as to sort of what utilization is there? And then even if you wanted to sort of up that, about a year ago we were sort of talking about some labor challenges so is that something else we need to need to consider in that situation?

Question: Joseph Spak - UBS - Analyst : Yeah, thanks for that. The second question is, and again I'm not sure what you can say here, although presumably you have been doing diligence on this as well, but can you help us understand what some of the tariff exposure would look like for Dowlais? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, AXL.N - Q1 2025 American Axle & Manufacturing Holdings Inc Earnings Call

Question: Edison Yu - Deutsche Bank - Analyst : Hey, good morning. Thanks for taking our questions. So first off, GM obviously had had earnings this week and they seem pretty, I would say, positive on the volume outlook. Are you incorporating that in the assumptions and in the guidance, on the full size trucks?

Question: Edison Yu - Deutsche Bank - Analyst : Understood. And then second question on Dowlais, I know you reiterated the timing and I believe that the votes will be -- both votes will be in the third quarter. How has the kind of macro volatility around policy affected it? It seems like it hasn't had much impact, but curious if you can maybe comment on or give us your view on -- this is a kind of delayed or made it more tricky, the process?

Question: Edison Yu - Deutsche Bank - Analyst : Great, thank you.

Question: Tom Narayan - RBC Capital Markets - Analyst : Hi, thanks for taking the questions. So currently, the tariff policies that's worded since USMCA parts are compliant parts are exempt from tariffs, but then there's this kind of room for further evaluation, I guess from the administration on potentially further US contenting. But it sounds like you guys, not just you guys sounds like everybody is assuming that this sticks. And in this event, the direct tariff impact to you guys is quite limited. Is that fair to say?

Question: Tom Narayan - RBC Capital Markets - Analyst : And then just kind of a fuzzy question, this week there seems to be kind of a somewhat of a sentiment shift probably since the Tuesday administration policy adjustment. We've heard it from some OEM's reporting results this week as well that sounds more kind of constructive or optimistic that the administration perhaps is looking to with some more nuance as it relates to the US auto industry. And it's not an axle specific -- American Axle specific question, but I'd love to hear your guys' thoughts on this kind of at a high level if you would agree or share that sentiment? Thanks.

Question: Tom Narayan - RBC Capital Markets - Analyst : Great, thanks a lot.

Question: James Picariello - BNP Paribas Exane - Analyst : Hi, good morning, guys. Well, my question is on GM. They announced the 50,000 annualized units moving from Mexico to their Fort Wayne plant, and just curious, like, will they be able to insource, like fully insource and support those axles, or is there a situation whereby you guys come in and supply the full drive line system at the Fort Wayne plant?

Question: James Picariello - BNP Paribas Exane - Analyst : So the content for AAM is very similar in terms of the Mexico versus Fort Wayne plants? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, AXL.N - Q1 2025 American Axle & Manufacturing Holdings Inc Earnings Call

Question: James Picariello - BNP Paribas Exane - Analyst : Got it. And then, just a house cleaning thing, I think I missed the clarification. The business that you sold in the first quarter here that shows up in the cash flow statement, is that is the India business that we talked about likely getting sold in the second half is, or is it something different?

Question: James Picariello - BNP Paribas Exane - Analyst : Perfect. Thank you.

Question: Dan Levy - Barclays - Analyst : Hi, good morning, thanks for taking the questions. I wanted to follow up on the questions on modifying footprint and maybe you could just talk about some of the CapEx considerations. Obviously, I see here CapEx here is maintained, but how do you think about the potential magnitude of CapEx changes ahead and what is the potential for that to be reimbursed by your customers?

Question: Dan Levy - Barclays - Analyst : Okay, but in the context of the CapEx the last few years, which has actually been held in really well, I guess it's too early to tell if there's going to be some sort of a CapEx bubble if there's some catch up on that, correct? Just maybe some context on how -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, AXL.N - Q1 2025 American Axle & Manufacturing Holdings Inc Earnings Call

Question: John Murphy - Bank of America - Analyst : Good morning, guys. I just wanted to follow up on that, your customers put a letter out yesterday basically indicated that USMCA compliant parts were not going to be tariff for the foreseeable future, and that seems like that's kind of the letter of where this is right now. Is that your understanding and where is this $100 million rest-of-world import, coming from? I'm assuming non-China, but just trying to understand what the levels are there.

Question: John Murphy - Bank of America - Analyst : Got it. Okay, and hopefully that letter from customs yesterday holds because that means that you're in very good shape and don't need to do much, if anything at all here in North America. One other, yeah, I mean it seems like it's going to hold and you're fine. You don't have to move anything. On CARB and EVs, I mean this is just not being discussed, but it's almost as consequential to the business at large or maybe even more consequential depending on where you sit in the value chain. But this cancellation of CARB and a significant slowdown in EVs, I'm just curious what you think that means to your business sort of REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, AXL.N - Q1 2025 American Axle & Manufacturing Holdings Inc Earnings Call mid and long term and what it means as far as maybe pulling back on R&D and other capital commitments that are not having much payoff if at all, particularly in North America? What do you think that means and how do you kind of think about that in your planning going forward?

Question: John Murphy - Bank of America - Analyst : I'm sorry, just to sneak one follow-up in there, it's fair to say that ICE program extensions are net positive for American Axle because there's some debate on that?

Question: John Murphy - Bank of America - Analyst : I agree. All right, thank you very much, guys.

Question: Doug Karson - Bank of America - Analyst : Hey, guys, thanks so much for sneaking me in here at the end. It wouldn't be a fun day without talking about the balance sheet for a moment. With the completion of this transaction, which looks like it's a green light, can you just reiterate like how you want to structure the balance sheet as far as leverage? And then I have a more open-ended question concerning you guys have been in the industry for my entire career. The OEMs are contemplating bringing back your potential assembly plants or various production. How hard do you think that's going to really be? I know it's hard to make a comment on that, but I mean in my career that's been a really slow process to move plants around and just kind of wondering like how you think about it when you're like at the water cooler like sharing ideas?

Question: Doug Karson - Bank of America - Analyst : Thanks and it seems that with the additional new business that the levering could potentially even be accelerated from the prior plan. It sounds like that and if that's true, that would be great.