American Axle & Manufacturing Holdings Stock

American Axle & Manufacturing Holdings, Inc. (AAM) operates as a global tier 1 automotive and mobility supplier.

AAM designs, engineers and manufactures Driveline and Metal Forming technologies to support electric, hybrid and internal combustion vehicles. During 2023, the company launched 14 programs across its business units for its customers including GM, Mercedes-AMG, BMW and Chery Automobile Co., Ltd. In 2024, the company expects to launch approximately 19 new and replacement programs, as well as additional variants of existing programs, for a variety of customers across its business units, including GM, Stellantis, Mercedes-AMG and Volkswagen, as well as electric beam (e-Beam) axles for several OEMs.

Segments

The company’s business is organized into Driveline and Metal Forming segments.

Driveline products consist primarily of front and rear axles, driveshafts, differential assemblies, clutch modules, balance shaft systems, disconnecting driveline technology, and electric and hybrid driveline products and systems for light trucks, SUVs, CUVs, passenger cars and commercial vehicles; and

Metal Forming products consist primarily of engine, transmission, driveline and safety-critical components for traditional internal combustion engine and electric vehicle architectures including light vehicles, commercial vehicles and off-highway vehicles, as well as products for industrial markets.

Major Customers

The company is a primary supplier of driveline components to General Motors Company (GM) for its full-size rear-wheel drive (RWD) light trucks, sport utility vehicles (SUV), and crossover vehicles manufactured in North America, supplying a significant portion of GM's rear axle and four-wheel drive and all-wheel drive (4WD/AWD) axle requirements for these vehicle platforms. The company also supplies GM with various products from its Metal Forming segment. Sales to GM were approximately 39% of its consolidated net sales in 2023.

The company also supplies driveline system products to Stellantis N.V. (Stellantis) for programs, including the heavy-duty Ram full-size pickup trucks and its derivatives. In addition, the company sells various products to Stellantis from its Metal Forming segment. Sales to Stellantis were approximately 16% of the company’s consolidated net sales in 2023. The company is also a supplier to Ford Motor Company (Ford) for driveline system products on certain vehicle programs including the Bronco Sport, Maverick, Edge, Escape and Lincoln Nautilus, and it also sells various products to Ford from its Metal Forming segment. Sales to Ford were approximately 12% of the company’s consolidated net sales in 2023.

Business Strategy

The company has aligned its business strategy to build value for its key stakeholders. The company accomplishes its strategic objectives by capitalizing on its competitive strengths and continuing to diversify its customer, product and geographic sales mix, while providing exceptional value to its customers. The company focuses on securing and enhancing its core business of internal combustion engine (ICE) programs by delivering operational excellence and quality products to its customers, while growing its electrification business, as vehicle electrification is expected to be the foundation of the future of the automotive industry.

Diversification of Customer, Product and Geographic Sales Mix

In addition to maintaining and building upon its longstanding relationships with GM, Stellantis and Ford, the company focuses on generating profitable growth with new and existing global customers. Recent new business awards and program launches include customers, such as Jupiter Electric Mobility, Mahindra and Skywell. Electrification is a growing portion of the company’s new and incremental business backlog, as well as its quoted and emerging new business opportunities, and is a significant element of its future growth strategy.

The company focuses on increasing its presence in global markets to support its customers' platforms. As its customers design their products for global markets, they will continue to require global support from their suppliers. To expand its global capabilities, the company has established business offices and engineering centers of excellence in research and development, product testing and prototype development in North America, Europe and Asia. The company continues to evaluate and consider strategic opportunities that will complement its core strengths, supplement its diversification strategies and increase its presence in global markets, while providing future, profitable growth prospects. The company’s acquisition of Tekfor Group (Tekfor) in 2022 is an example of its tactical approach to strategic transactions.

Seasonality

Typically, the company’s business is moderately seasonal as its major OEM customers historically have an extended shutdown of operations (normally 1-2 weeks) in conjunction with their model year changeover and an approximate one-week shutdown in the month of December. The company’s major OEM customers also occasionally have longer shutdowns of operations (up to six weeks) for program changeovers.

Research and Development

The company’s research and development expense, net of engineering, design and development recoveries, was $155.4 million in 2023.

History

American Axle & Manufacturing Holdings, Inc. was founded in 1994.