American Axle & Manufacturing Holdings Inc Q4 2024 Earnings Call Transcript

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

Question: John Murphy - BofA Global Research - Analyst : I just have a couple here. David, when you were mentioning -- or Chris, maybe when you're going through the walk on the outlook, you mentioned mix and volume. I'm just curious if you could talk about sort of that in the context of GM trucks and then also the Ram HD, what your expectations are on those 2 specific programs for mix?

Question: John Murphy - BofA Global Research - Analyst : Just maybe in that T1, is there something going on with mix in that platform where you think it might be less maybe less 4s? Or is it -- is that mix relatively flat?

Question: John Murphy - BofA Global Research - Analyst : Got it. And then just a follow-up on Delhi. The R&D, it's down $20 million, and the CapEx is down $50 million in your outlook for 2025. Is that -- is there kind of a -- is that organic? Or is there some kind of precursor of understanding that you might be able to use some of the capital at Dowlais, particularly on the capacity side and some of the R&D from some of their products. to overlay and save even before you get to the close? Or is this really stuff that you're doing purely on an organic basis?

Question: John Murphy - BofA Global Research - Analyst : Got it. And then just lastly, Dowlais, you mentioned the customer reception was pretty good or actually very good, I should say. But can you talk about the customer reception outside of the D3 and the incumbent European companies? I mean has there been any your commentary from the Asian brands or the Chinese brands that might lead you to believe that you might have a real revenue synergy above and beyond what you're talking about so far?

Question: Edison Yu - Deutsche Bank Securities Inc. - Analyst : First Great. Wanted to ask on the transaction and maybe more of a strategic or higher level point of view, it seems that we've seen a lot of suppliers kind of go the opposite way, where they're getting smaller breakout kind of the approach of getting bigger and expanding. So I'm curious, you look down whatever, 3, 4, 5 years. What do you think the supplier landscape looks like? Is it kind of be more your direction that more people are going to consolidate? Or do you think that actually this other kind of counter trends that's been happening over the last couple of years actually is the way it goes. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2025 / 3:00PM, AXL.N - Q4 2024 American Axle & Manufacturing Holdings Inc Earnings Call

Question: Edison Yu - Deutsche Bank Securities Inc. - Analyst : Appreciate the insights. A follow-up on the Dowlais side. For those of us maybe not as close. You've got quite a bit of time to do work. The Chinese business, the China business under is actually quite strong, I think, maybe to many people surprise. Can you maybe, from your perspective, maybe describe why that is given just the level of competition there. I think we're kind of from the U.S. perspective under impression that the local suppliers would be doing much better. So just curious as to why maybe you think they're actually holding up quite what you're doing quite well there.

Question: Doug Karson - BofA Global Research - Analyst : I'm kind of excited about the scale getting bigger. In my career, I think rating agencies kind of like bigger auto suppliers, which helped give you some math relative to the market pressures. And you're actually merging with a company that had lower leverage than AAM and the combined entity, I think out of the gate, I think you said to be about 2.5 turns of leverage. I think you made some comments that maybe going forward, you'll be able to harvest some of the cash flow to get back to equity rather than the delevering that we've seen in the last few years. So one, want to just kind of explore that a little bit. And then separately, I know the agency has kind of commented. But do you think longer term, you could safely get the combined entity more into the mid-BB range rather than B range for ratings given the scale almost double.

Question: Doug Karson - BofA Global Research - Analyst : Right.

Question: Doug Karson - BofA Global Research - Analyst : That's helpful. And then maybe just a quick follow-up. There's obviously a lot of headlines around tariffs and steel prices. And I know that you've got some pretty good pass-through capabilities in. Can you just kind of refresh us on how you're looking at some of those commodity risks out there in the market broadly.

Question: Doug Karson - BofA Global Research - Analyst : Yes. That is good. That's it from me.