DETROIT -- American Axle & Manufacturing Holdings Inc. posted its first quarterly profit in two years in the third quarter as the company improved its bottom line from lowered costs and retiree benefit cuts.
The Detroit-based axle and driveline component supplier posted net income of $19.6 million on revenue of $409.6 million in the third quarter -- its first quarterly profit since the same period in 2007.
American Axle managed to squeeze out a profit on revenue that was down 22.4 percent from the third quarter 2008 when the company posted revenue of $528.1 million and a $441 million net loss.
American Axle's profitability comes after one of the more eventful quarters in the company's history, as it scrambled to restructure some of its finances without filing for bankruptcy.
American Axle closed a deal with General Motors Co., which accounts for about 80 percent of the supplier's sales, on Sept. 16 that gave the supplier $110 million in cash, a $100 million line of credit and 10-day payment terms into 2011 in exchange for allowing GM to buy up to roughly 20 percent of American Axle's common stock.
The deal with GM enabled American Axle to revamp the company's debt structure, giving the supplier some breathing room.
“We believe the third quarter of 2009 marks a positive turning point for AAM,” CEO Richard E. Dauch said in a statement. “By finalizing new business agreements with General Motors Co. and amending our senior credit agreements, we have successfully resolved the short-term liquidity concerns that were facing AAM.”
American Axle was hit in the quarter by the production shutdowns at GM and Chrysler Group, costing the supplier about $100 million in revenue and nearly $30 million in operating income, according to the company's earnings release.
KeyBanc auto analyst Brett Hoselton liked Axle's numbers. In a report issued this morning, he wrote:
"We believe investors will view American Axle's earnings release favorably because: 1) earnings were better than street expectations and moving toward to breakeven; and 2) it appears that American Axle has now definitively finalized its new business agreement with GM and has successfully amended its senior credit agreements."
But investors reacted differently, sending the shares down 9 percent to close at $5.99, on a day when the Dow Jones Industrial Average slid 3 percent.
Through the first nine months of the year, American Axle posted a net loss of $301.7 million on revenue of $1.06 billion, compared with a $1.11 billion net loss on revenue of $1.6 billion in the same period of 2008.
The company ranks No. 77 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $2.1 billion in 2008.