American Axle more than doubles Q2 net income but warns of R&D, product launch costs

Powertrain supplier American Axle & Manufacturing Holdings Inc. saw a surge in second-quarter profit, bolstered by key programs with General Motors and other automakers.

GM's midsize truck platform in North America and a Chery SUV platform in China contributed to the growth.

American Axle's net income more than doubled to $18.2 million.

Sales for the quarter increased 3.8 percent to $1.6 billion compared with the previous year. Gross profit rose to $217.3 million, up from $178.2 million in the second quarter of 2023.

"From an operational standpoint, we are making good overall progress," American Axle CEO David Dauch said in an Aug. 9 earnings call. "A good, solid and positive quarter."

Dauch said the company is preparing for a future in which internal combustion engine, hybrid and electric vehicles will "coexist for a long time." The supplier predicts a slow adoption and consumer acceptance of EVs and is developing "a deep and diverse product portfolio" to remain "agnostic to the market," Dauch said.

American Axle, of Detroit, has secured deals with European manufacturers for components supporting ICE, hybrid and EV models, and it will provide drive systems for a luxury European automaker's upcoming EV program, he said.

American Axle's R&D costs rose in the second quarter, with spending reaching $44.5 million, CFO Chris May said during the call. "The year-over-year R&D expense increase of $7 million was driven by the timing of our engineering spend and the programs we are currently supporting," he said.

As American Axle completes the development of its electric platform technologies, it plans to manage and stabilize these rising expenditures. The company is also preparing for ramp-up costs associated with supply launches, including driveline systems for the next-generation GM Delta crossover vehicle program and Ram medium- and heavy-duty trucks. "These costs can be a little bit volatile," May said.

Shares in American Axle rose 5.6 percent to $6.55 in midday trading Aug. 9.

American Axle ranks No. 46 on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers of $6.1 billion in 2023.