request-11!15!11 barclays aam investor presentation (webcast)

8/2/2019 Request-11!15!11 Barclays AAM Investor Presentation (WEBCAST)

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American Axle & Manufacturin Holdin s, Inc.

Barclays Capital 2011 Global AutomotiveConference November 15, 2011


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Executive Summary

AAM has returned to solid profitability 3Q 2011 marked the 9th consecutive profitable quarter for AAM

was a so e consecu ve quar er w year-over-year sa es grow

AAM is well positioned to operate in slow growth economicconditions and to benefit from a global economic recovery

pera ng rea even re uce o . . o ve c e un s

AAM is benefiting from a trend of higher sales of light trucks in the U.S. and

stronger truck mix as a percentage of total U.S. vehicle sales - .

(> $500 million of which is launching outside the U.S.)

While continuing to emphasize operational excellence, AAM is

1. Profitably growing AAMs sales faster than the overall industry2. Significantly improving AAMs business diversification

3

.


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Company Overview

Leading global automotive supplierTier I supplier of driveline and drivetrain systems and relatedcomponents for light trucks, SUVs, passenger cars, crossovervehicles and commercial vehicles

Industry leader in operating performanceOutstandin lon -term dail track records on ualit warrantreliability, delivery, and launch support

Regionally cost competitive global footprintNorth

America

South

Asia

,countries serving more than 100 customers(as of November 2011)

Highly-engineered, advanced technology products, processes andsystems designed to provide a competitive advantage to our customers

New business backlog driving profitable growth

$1.1 billion new business backlog for 2012 2014> $500 million launching for end markets outside N.A.4


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AAM Supports All Vehicle Architectures

Rear- Rear Drive Module

Passenger Car orCrossover Vehicle

Light Truck orSUV

TransferCase

-Propeller shaft w/ Torque

Transfer Device

Power

FrontAxle

Front & RearPropeller shafts

Transfer Unit

-performance-enhancing

driveline and drivetrain productsfor light trucks, SUVs,

RearBeam Axle

Propeller shaft

passenger cars, crossovervehicles and commercial vehicles Front

Axle

Commercial

Vehicle5


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Operational Excellence

Customer WarrantyCost Per Vehicle*

Discrepant Parts Per Million*

25% Annual Average

Improvement

13,441

'06 '07 '08 '09 '10 '11 YTD

Awarded to:AAM - Guanajuato

Thousand Vehicles*

20%

Manufacturing Complex

nnua verage

Improvement

6

' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '

World Class = 25 PPM

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* as measured by our largest customer6


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Global Market Cost Competitiveness

AAM has aligned its global installed capacity to increase exposureto global growth markets, support global product development

.

T R U C K

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Technology Leadership

Product, Process and Systems TechnologyAAM is a leader in providing industry-first, cutting edge

driveline technology to the global market for passenger car,.

EcoTrac High Efficiency Axles PowerLitealuminum designs for mass savings

PowerDense designs, finishes and bearings for

PowerFilmlubricant reduces friction and energylosses within the axle

EcoTrac Disconnecting AWD System

o a ng neer ng anTechnical Support CentersOperating in 11 Countries

o a ng neer ng anTechnical Support CentersOperating in 11 Countries

EcoTrac e-AWD Systems Cost-effective, fuel-efficient, emissions-reducing

electric all-wheel-drive and hybrid driveline systems

Dual mode eRDM 8


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AAMs Strategic Business Objectives

AAMs strategy to drive performance in dailyoperations and build value for our many key

stakeholders consists of three major elements.

Significantly improving AAMs business diversification2

Strengthening AAMs balance sheet3

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Profitable Growth

3Q 2011 financial results:

9th consecutive profitable quarter for AAM 7th consecutive quarter with year-over-year sales growth

Actual Adjusted

3Q 2011 YTD

Sales 1,979$ 1,979$

Operating income 175$ 189$

% of sales 8.8% 9.6%

Net income 112$ 126$

% of sales 5.6% 6.4%

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EBITDA 281$ 296$

% of sales 14.2% 14.9%


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Achieve Significant Business Diversification

As a result of launching the $1 billion new business backlog andother business growth initiatives, AAM is targeting Non-GM sales of40% of total sales by 2013 and Non-GM sales of 50% of totalsales by 2015 (as compared to 20% of total sales in 2009).

opportunities. Over 90% of these opportunities are for customers

other than GM (including Nissan, VW/Audi, BMW, Ford, Tata/JLR). Significant interest is building in AAMs newest advanced driveline

technologies, including AAMs Eco-TRACTM Disconnecting AWDsystem and e-AAMs e-AWD and e-RDM applications for

passenger cars and crossover vehicles.

From 2011 2014, we expect AAMs non-GM sales

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to grow twice as fast as AAMs total sales.


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Achieve Significant Business Diversification

THREE YEAR NEW BUSINESS BACKLOG (2012-2014)As of October 28, 2011

75% of the awards are non-GM programs

T R U C K

Approximately 70% isfor programs sourced

outside of the U.S.

-is for passenger car,CUV and commercial

Note: Amounts presented related to the new business backlog are not mutually exclusive. 12


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Rapid Progress on Diversification

Back log by Global Market

As of October 28, 2011

Back log by Vehic le Segment

SouthAmerica

12.3%

LightTruck N.A.

7.2%

NorthAmerica53.2%

Asia30.2%

LightTruck Global

25.8%

Pass Car /CUV

52.4%

MetalForming

0.2%

CommercialVehicle14.3%

Europe

4.3%13


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AAM is actively expanding within FWD / AWD applications forboth the passenger car and crossover SUV segments.

Sales by Vehic le Type 2011

Pass Car /

CommercialVehicle

6%

Sales by Vehic le Type Pro Forma 2014

CommercialVehicle

8%

Light

Truck Global

3%

CUV

10%

Three Year

NewBusinessBacklogOther Light

Truck N.A.23%

ass arCUV24% GMT900

43%GMT900

58%

LightTruck Global

9%

Other Light

Truck N.A.16%

14* The Pro Forma 2014 sales is based on 2011 Outlook Sales, adjusted for the estimated impact of AAMs new business backlog (as of October 28, 2011).


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AAM is actively expanding its global presence, particularlywithin high growth developing automotive markets.

Sales by Geography 2011

Brazil5%

Europe3%

Sales by Geography 2014

China5%

Brazil

Thailand3%

India2%

India1%

U.S.36%

U.S.32%

6%

Europe

3%

Three YearNew

BusinessBacklog

Mexicoex co

55% 49%

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* The Pro Forma 2014 sales is based on 2011 Outlook Sales, adjusted for the estimated impact of AAMs new business backlog (as of October 28, 2011).


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Innovating AAMs Product Portfolio

AWD CUV / Passenger Car

- Electric all-wheel-drive (e-AWD) and hybrid

driveline systems that are designed to improve

2

emissions

Cost-effective solutions for a range ofpassenger car and crossover vehicle

Power & Control BoxUnit (PBU)

configurations, including:

- Internal combustion engines

- Battery-powered hybrids

Power & Control BoxUnit (PBU)

- Plug-in platforms- Full electric drive systems

Minimal vehicle architecture modifications

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Improved safety, stability, handling and

acceleration Electronic Rear Drive Module(eRDM)


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AWD CUV / Passenger Car

Optimization System AWD option that minimizes the impact to

Power TransferUnit (PTU) With

DisconnectSmart Actuator

Multi-PiecePropshaft

ue economy an re uces em ss ons.

Proprietary AAM electronic control

software and hardware eliminatesIndependent

Rear Drive Axle(IRDA)

Torque TransferDevice (TTD) /

Electronic ControlCoupling (ECC)

driveline mechanical losses which aid inmaximizing fuel efficiency whileproviding enhanced vehicle control and

.

AAMs EcoTrac AWD systemwill be featured on a major

AAMAAMIndustryIndustry--FirstFirst

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Smart Actuator With Driveline

Control Module (DLCM)

crossover vehicle platform.


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EcoTrac Hi h Efficienc Axles AAM Best in Class TechnologyAAM Best in Class Technology

Proprietary technologies that deliver world-class axle efficiency by reducing friction ando timizin desi n acka in and lubrication

assass EfficiencyEfficiency CAF (0.12CAF (0.12--0.66 MPG)0.66 MPG)

efficiency.

PowerLitealuminum designs formass savin s

PowerDense hypoid designs, gearfinishes and high-efficiency bearings forincreased torque capacity

PowerFilmlubricant that reducesfriction and energy losses within the axle

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friendly driveline products strengthens AAMs position

as a leader in global driveline systems technology


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TracRite Differentials Transmission PTU and Axle Differentials for

Vehicle Performance and TractionEnhancement

Advanced, electronic-locking, automatic lockingand mechanical-biasing designs

Features & Benefits:

Improved vehicle traction, handling, and stability nergy e c en

Improved NVH characteristics

Compact size

-

AAMs TracRite Differentials for AudiRecognized by Automotive News as a finalist for the

2012 Automotive News PACE Award


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Strengthening AAMs Balance Sheet

AAM is targeting investment grade credit metrics by 2013.

,

by the issuance of $200 million in 7.75% Notes due 2019 No significant maturities of outstanding debt until 2014

AAM expects to fully fund the pension liability on a GAAP basisby 2014 / 2015 (assuming current discount rates)

m illions m illions

September 30, 2011 Net debt 936$ September 30, 2011 LTM Interest expense 83$

Net debt / 3Q 2011 LTM EBITDA 2.5 3Q 2011 LTM EBIT / Interest expense 2.8

2013 Target < 2.0 2013 Target > 3.0

LEVERAGE RATIO: COVERAGE RATIO:

m illions m illions

September 30, 2011 Net debt 936$ September 30, 2011 Stockholders' equity (373)$

Adjusted Net debt / Capitalization (MV basis) 57% September 30, 2011 Book equity position Negative

CAPITALIZATION: BOOK EQUITY:

20Note: For a definition and reconciliation of Net Debt, please see the Appendix

2013 Target < 40% 2013 Target Positive


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AAM 2011 FULL YEAR OUTLOOK

2011 OutlookU.S. SAAR Approximately 12.5M-13.0M

Ad usted EBITDA 363M - 390M

Sales $2.5 Billion - $2.6 Billion

Adjusted EBITDA (as a % of sales) 14.5% - 15.0%

. - .

21Note: For a definition and reconciliation of Adjusted EBITDA, please see the Appendix


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AAM is Well Positioned for Success!

Solid liquidity position Solidly Profitable with improving

credit profile

$370 million of EBITDA(LTM September 30,2011)

Well positioned to

benefit from economicOutstanding, long-termdail track record of breakeven reduced to

10M U.S. SAAR

operational excellence

Accelerating progresson businessdiversification

initiatives includin

Cost-competitive andoperationally flexibleglobal manufacturing,

e-AWD for passengercars and CUVs

sourcing footprint

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Appendix

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Appendix GMT900 Sales & Mix Analysis2010 and 2011 Sales Performance (updated through October 2011)

Total

millions Y-O-Y Global F-S Truck/

U.S. SAAR Trend Sales Monthly Last 2 mos. Last 3 mos. SUV mixJan-10 10.8 -6% 55,081 660,970 825,777 796,705 12.9%

Feb-10 10.4 -2% 48,983 587,794 624,382 746,449 11.8%

Annualized Selling Pace

October2010 YTD

mix13.9%

Mar-10 11.8 22% 69,702 836,422 712,108 695,062 12.9%

Apr-10 11.2 5% 69,855 838,258 837,340 754,158 13.2%

May-10 11.6 14% 81,490 977,878 908,068 884,186 14.0%Jun-10 11.1 27% 73,673 884,074 930,976 900,070 14.2%

Jul-10 11.8 20% 77,851 934,210 909,142 932,054 14.6%

Aug-10 11.5 4% 74,985 899,818 917,014 906,034 14.5%

Sep-10 11.7 19% 71,613 859,354 879,586 897,794 14.5%

Oct-10 12.2 6% 82,218 986,614 922,984 915,262 15.9%

Nov-10 12.2 9% 67,320 807,838 897,226 884,602 14.5%

Dec-10 12.5 16% 95,744 1,148,926 978,382 981,126 16.1%

YTD 2010 11.6 11% 868,513 14.2%AAM estimate Source: Wards

Jan-11 12.5 22% 66,938 803,260 976,093 920,008 14.1%

Feb-11 13.3 48% 72,487 869,848 836,554 940,678 13.2%

Mar-11 13.1 8% 75,141 901,696 885,772 858,268 12.7%

Apr-11 13.1 -2% 68,502 822,028 861,862 864,524 11.9%

May-11 11.8 -15% 69,575 834,904 828,466 852,876 12.5%

Jun-11 11.4 2% 75,002 900,028 867,466 852,320 14.3%

Jul-11 12.2 -1% 77,322 927,868 913,948 887,600 14.6%

Aug-11 12.1 15% 86,499 1,037,992 982,930 955,296 15.3%

Sep-11 13.1 33% 95,058 1,140,700 1,089,346 1,035,520 17.1%

Oct-11 13.3 2% 84,246 1,010,956 1,075,828 1,063,216 16.1%

YTD 2011 12.6 9% 770,773 14.2%

24Volume and mix are both improved in 2011 vs. 2010 on a YTD basis.

AAM estimate Source: Wards


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Appendix Non-GAAP SupplementalEBIT and EBITDA ($mm)

Three months ending

YTD LTMDec 31, Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, June 30, Sep 30, Sep 30, Sep 30,

2009 2010 2010 2010 2010 2011 2011 2011 2011 2011

Net income attributable to

AAM, as reported (a)(b)

$48.6 $16.3 $25.4 $38.8 $34.9 $37.7 $49.2 $24.8 $111.7 $146.6

Interest expense 24.1 22.7 22.6 22.1 21.6 21.3 20.5 19.7 61.5 83.1

Income tax expense

(benefit)

(51.6) 2.0 2.4 0.8 (0.9) 2.1 (0.2) 2.3 4.2 3.3

EBIT, as defined $21.1 $41.0 $50.4 $61.7 $55.6 $61.1 $69.5 $46.8 $177.4 $233.0

Depreciation andamortization

31.9 31.6 32.8 33.7 33.5 33.9 34.9 35.0 103.8 137.3

EBITDA, as defined $53.0 $72.6 $83.2 $95.4 $89.1 $95.0 $104.4 $81.8 $281.2 $370.3

Net sales $464.0 $521.9 $559.6 $618.2 $583.3 $645.6 $686.2 $647.6 $1,979.4 $2,562.7

as % of net sales 11.4% 13.9% 14.9% 15.4% 15.3% 14.7% 15.2% 12.6% 14.2% 14.4%

EBIT is defined as earnings before interest and taxes. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We believe that EBITDA is a meaningfulmeasure of performance as it is commonly utilized by management and investors to analyze operating performance and entity valuation. Our management, the investment communityand the banking institutions routinely use EBITDA, together with other measures, to measure our operating performance relative to other Tier 1 automotive suppliers. EBITDA should notbe construed as income from operations, net income or cash flow from operating activities as determined under GAAP. Other companies may calculate EBITDA differently.

LTM = Last Twelve Months

25

(a) Includes special charges, asset impairments, and other non-recurring costs and tax refunds of 11.9 million in 2011 (including 0.5 million related to the non-controllinginterests portion of a $1.6 mil lion asset impairment recorded by e-AAM), primarily related to restructuring actions.

(b) (b) Includes charges of $3.1 million in 2011 and $7.7 million in 2009, net of tax, related to debt refinancing and redemption costs


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Appendix Non-GAAP Supplemental

Free Cash Flow ($mm)

Three months ending YTD LTMDec 31, Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, June 30, Sep 30, Sep 30, Sep 30,

2009 2010 2010 2010 2010 2011 2011 2011 2011 2011

Net cash provided by(used in) operatingactivities

$44.3 $79.0 $85.9 $28.6 $46.8 $1.0 115.5 $(181.9) $(65.4) $(18.6)

Less: Net purchases ofproperty, plant &equipment

(28.3) (17.9) (17.8) (24.8) (42.9) (30.0) (33.8) (39.3) (103.1) (146.0)

Free cash flow $16.0 $61.1 $68.1 $3.8 $3.9 $(29.0) $81.7 (221.2) $(168.5) $(164.6)

Free cashf lowis def ined asnet cash rovided b o eratin act ivities less urchases of ro ert and e ui ment netof roceeds fromsalesof assets.We bel ieve free cash flow is a meanin fulmeasure , .as it is commonly utilized by management and investors to assess our ability to generate cash flow from business operations to repay debt and return capital to our stockholders. Free cash flow is also a

key metric used in our calculation of incentive compensation. Other companies may calculate free cash flow differently.

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Appendix Non-GAAP Supplemental

Net Debt ($mm)

As of

Sep 30, 2011

Total debt $1,050.6

Less: cash and cash equivalents (114.4)

Net debt $936.2

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