Dauch Corporation · NYSE:DCH
Dauch — American Axle & Manufacturing Holdings — Merger or Acquisition (February 2025)
55 slides from Dauch's merger presentation, Feb 24, 2025
Slide 1: AAM Investor Presentation February 2025
AAM Investor Presentation February 2025
Slide 2: Forward-Looking Statements
Forward-Looking Statements 2 In this presentation, American Axle & Manufacturing Holdings, Inc. (“AAM”) makes statements concerning its and Dowlais’ expectations, beliefs, plans, objectives, goals, strategies, and future events or performance, including, but not limited to, certain statements relate
Slide 3: Agenda
Agenda 3 ▪ AAM Investment Thesis ▪ Dowlais Overview ▪ Transformational Combination with Dowlais
Slide 4: AAM Investment Thesis
AAM Investment Thesis
Slide 5: AAM is a Leading Global Driveline Supplier
AAM is a Leading Global Driveline Supplier 5 Global leader in design, engineering and manufacturing of automotive propulsion systems and technologies to support electric, hybrid and ICE vehicles $6.1B 2024 Sales ~21,000 Employees1 16 Countries Over 75 Locations 11 Engineering and Tech Centers Metal
Slide 6: Complementary Business Segments
Complementary Business Segments 6 ▪ Forged Gears & Shafts ▪ CVT Pulleys ▪ Powdered Metal Connecting Rods ▪ Aluminum Valve Bodies ▪ Machined Helical Gears ▪ Differential Assemblies ▪ Strong position in electrified propulsion components METAL FORMING 2024 SALES ≈ $1.88B1 ▪ Full-size Pickup Truck and S
Slide 7: Global Footprint: Manufacture In-Region, For Region
Global Footprint: Manufacture In-Region, For Region 7 Sales, Engineering, and Manufacturing Support in All Major Regions Americas Europe ▪ Advanced Technology Development Center in Detroit, Michigan ▪ Global Innovation Hub ▪ Electrification Development ▪ Production of Driveline Products ▪ Production
Slide 8: Product Portfolio Serving All Powertrain Architectures
Product Portfolio Serving All Powertrain Architectures 8 Mechanical Systems Electric Systems Combustion Engine Electric Propulsion Chassis & Suspension Components & Sub Systems Traditional / ICE Hybrid Plug-In Hybrid Electric / Fuel Cell Powertrain Driveline Chassis Wheel Hubs Wheel Nuts Brake Compo
Slide 9: High Revenue Visibility with Nearly All Core Vehicle Programs Secured
High Revenue Visibility with Nearly All Core Vehicle Programs Secured 9 $20B+ In Lifetime Revenues For AAM’s Primary Driveline Programs Secured Through 2030+ 2024 2030+ Awaiting RFQ CURRENT PRODUCTION SECURED NEXT GEN PROGRAM QUOTING Platform A Platform B Platform C Platform D Platform E Platform F
Slide 10: ICE / Hybrid Production Forecast Now a Tailwind for AAM
ICE / Hybrid Production Forecast Now a Tailwind for AAM 10 +1.9 +4.9 +8.8 +14.0 +18.5 +21.7 +24.9 +27.6 2023A 2024E 2025E 2026E 2027E 2028E 2029E 2030E Jan-25 Forecast vs. May-23 Forecast (Cumulative) NORTH AMERICA & EUROPE – ICE PRODUCTION (MM UNITS) NORTH AMERICA & EUROPE – HYBRID PRODUCTION (MM U
Slide 11: Robust Quoting Environment
Robust Quoting Environment 11 Reemergence of Attractive ICE / Hybrid Opportunities • Majority of quoting opportunities within core ICE / Hybrid products • New business opportunities for major truck / SUV platforms in North America • Leverage existing portfolio to support hybridization across markets
Slide 12: Strong Margin Performance in Dynamic Market
Strong Margin Performance in Dynamic Market 12 $6,080 $6,125 $5,925 2023A 2024A 2025 Guidance NET SALES ($M) 11.4% 12.2% 12.3% 2023A 2024A 2025 Guidance ADJUSTED EBITDA MARGIN (%) Note: For definitions of Adjusted EBITDA and Adjusted Free Cash Flow and Non-GAAP reconciliations, please see the attach
Slide 13: Consistent De-Leveraging Track Record
Consistent De-Leveraging Track Record 13 Gross Debt ($M) High Cash-Flow Generation Used to Repay Debt Resulting in Strong Balance Sheet $3,975 $3,808 $3,641 $3,455 $3,105 $2,921 $2,769 $2,625 2017A 2018A 2019A 2020A 2021A 2022A 2023A 2024A Gross and Net Leverage Metrics 4Q 2024 Gross Debt $2.6B Cash
Slide 14: AAM – 2025 Guidance
AAM – 2025 Guidance (as of February 14, 2025) 14 Note: For definitions of Adjusted EBITDA and Adjusted Free Cash Flow and Non-GAAP reconciliations, please see the attached appendix. In accordance with Rule 28.1(c)(i) of the Takeover Code, the AAM directors confirm that, as at the date of this presen
Slide 15: AAM Standalone Investment Thesis
AAM Standalone Investment Thesis 15 ▪ Leading North American driveline supplier to light-duty truck and SUV platforms ▪ High revenue visibility with $20B+ of lifetime revenues secured through 2030+ ▪ Favorably positioned for resurging ICE / Hybrid volumes and quote activity in North America ▪ Consis
Slide 16: Dowlais Overview
Dowlais Overview
Slide 17: Global Leader in Propulsion Agnostic Driveline Solutions
17 ~$6B 2023 Sales 30,000+ Employees1 22 Countries1 Global Leader in Propulsion Agnostic Driveline Solutions with a Track Record of Innovation 100 Locations1 North America 37% South America 3% Asia 26% EMEA 34% Leading Global Driveline Supplier Leading Sinter Metals Supplier Present in 50% of Vehicl
Slide 18: Dowlais – Automotive Products
Select Products % revenue1 ICE Hybrid BEV Sideshafts ~50% Propshafts ~9% AWD Systems ~14% eComponents ~10% eSystems ~2% Dowlais – Automotive Products 18 Expansive and Powertrain Agnostic Portfolio to Compete in a Dynamic Market ~80% revenue Source: Dowlais company information Note: Includes JV Opera
Slide 19: Dowlais – Leading Supplier of Sideshafts
Dowlais – Leading Supplier of Sideshafts 19 DOWLAIS’ SIDESHAFT TECHNOLOGY IS WORLD LEADING.. BATTERY ELECTRIC VEHICLE …AND 2X THE SIZE OF ITS NEAREST COMPETITOR • Global, vertically integrated scale • Pioneers of the Auto CV joint • 100 joint types & sizes • ~400 active patents • ~500 engineers acro
Slide 20: Dowlais – Powder Metallurgy Products
Dowlais – Powder Metallurgy Products 20 Source: Dowlais company information Note: Includes JV Operations; (1) Represents % of Powder Metallurgy revenue split Select Products % revenue1 Applications ICE Hybrid BEV Sinter Metals ~75% Auto components, structural parts, cutting tools, magnets Powder ~20
Slide 21: Attractive Longstanding China for China Joint Venture
Attractive Longstanding “China for China” Joint Venture 21 FY 2023 Key Statistics1 [40% Domestic] [60% Western] [60% Western] $M Revenue $777 Adj. Operating Profit $101 % margin 13% Net Income $63 Dividend to DWL $78 Supplying All of the Top 10 OEMs in China ▪ Dowlais has an interest in a number of
Slide 22: Transformational Combination with Dowlais
Transformational Combination with Dowlais
Slide 23: Transaction Summary
Transaction Summary 23 CONSIDERATION ▪ Terms of the combination represent a total implied value of 85.2 pence per Dowlais share, with each Dowlais shareholder entitled to receive for each Dowlais share held: 0.0863 new AAM shares, 42 pence in cash and up to 2.8 pence of Dowlais FY24 final dividend p
Slide 24: Compelling Strategic Combination
Compelling Strategic Combination 24 Creates a leading global driveline and metal forming supplier with significant size and scale More diversified customer base with expanded and balanced geographic presence High margins with strong earnings accretion, cash flow and balance sheet Compelling industri
Slide 25: Financial Benefits of the Combination
Financial Benefits of the Combination 25 + Revenue1 Synergies3 Combined Adj. EBITDA Margin including synergies2 Expected Day One Net Leverage including synergies3 ~$12B ~$300M ~14% ~2.5x Expect strong earnings accretion in the first full year following the close of the transaction4 (1) Combined reve
Slide 26: Significantly Enhanced Scale
Significantly Enhanced Scale 26 $4 $4 $4 $4 $4 $5 $5 $6 $6 $9 $11 ~$12 $14 $15 $20 $23 $43 Non Adjusted Dana Flex-N-Gate AAM Dowlais Nemak Linamar Nexteer Visteon Novelis Garrett Motion Martinrea Combined Magna Lear Aptiv Adient BorgWarner N.A. AUTO SUPPLIER RANKINGS BY 2023A TOTAL REVENUE ($B) #6 D
Slide 27: Complementary Combined Business
Complementary Combined Business 27 Forging / Casting Powdered Metal METAL FORMING • Hot, Warm and Cold Forming • Ferrous and Non-Ferrous Castings • Machining • Assemblies • Powder • Sintered Metal • Machining • Assemblies • Additive Manufacturing • Magnets Axle Systems Torque Management DRIVELINE •
Slide 28: Comprehensive Product Portfolio
Comprehensive Product Portfolio 28 GEARS PROPSHAFTS GEARBOXES ELECTRIC DRIVE UNITS DIFFERENTIAL ASSEMBLIES eBEAM AXLES BEAM AXLES POWER TRANSFER UNITS REAR DRIVE MODULES Technology-driven powertrain agnostic product portfolio with significant CPV growth opportunity BALANCE SHAFT SYSTEMS / VCS ICE /
Slide 29: Improved Customer Diversification
Improved Customer Diversification 29 Balanced and Diversified Customer Base + = GM 11% Stellantis 12% Ford 6% VW Group 9% Toyota 8% Renault-Nissan 6% Other 49% GM 39% Stellantis 16% Ford 12% Other 33% GM 24% Stellantis 14% Ford VW Group 9% 5% Toyota 4% Renault-Nissan 3% Other 41% 1 COMBINED GROUP 1
Slide 30: Improved Geographic Diversification
30 North America 54% EMEA 25% APAC 18% South America 3% North America 73% EMEA 15% APAC 9% South America 3% North America 48% Americas 46% North America 45% North America 40% North America 40% North America 38% North America 38% Americas 36% Americas 34% North America 29% North America 24% EMEA 38%
Slide 31: Improved Positioning in China
Improved Positioning in China 31 Transaction enhances AAM’s exposure to China • China production for China market Material Cross-Selling Opportunity • AAM products to SDS customers • SDS products to AAM customers Key Products Key Customers CVJs & Sideshafts PHEV Transmissions Unique to: Complementar
Slide 32: ~$300M of Synergy Potential
~$300M of Synergy Potential 32 Targeting 60% of expected annual run rate savings by the end of the second full year. Run Rate savings substantially achieved by end of the third year. We estimate the costs required to achieve our synergy plan are approximately equal to one year of savings. Joint plan
Slide 33: Robust Synergy Identification and Validation Process
Robust Synergy Identification and Validation Process 33 U.K. Takeover Code Rule 28 contains specific requirements regarding cost savings measures ▪ Quantified synergies to be supported by a report from a reporting accountant ▪ Deloitte LLP acted as AAM’s reporting accountant and provided an opinion1
Slide 34: Synergy Execution Steering Committee
Synergy Execution 34 Steering Committee CEO and combined senior leadership from AAM and Dowlais management Integration Management Office Joint leadership from AAM and Dowlais management Integration Planning Teams Overarching cross-functional topics Master planning Baseline & value capture Organizati
Slide 35: Substantial Free Cash Flow Generation
Substantial Free Cash Flow Generation 35 Combination Enhances Cash Flow Generation Source: Dowlais Public Filings or derived therefrom, see appendix for reconciliation Note: Assumed exchange rate is $1.2434 / £1.00; (1) Run Rate savings substantially achieved by end of the third year $M American Axl
Slide 36: Best-in-Class Financial Metrics
Best-in-Class Financial Metrics 36 Source: Public Filings Note: Reflects 2023A figures; See Appendix for Adj. Free Cash Flow definition >$10B Revenue >14% EBITDA Margin >5% Adj. FCF / Sales +
Slide 37: Balance Sheet and Capital Allocation
Balance Sheet and Capital Allocation 37 • Transaction approximately net leverage neutral at closing (before synergies) • Committed financing in place for transaction • ~$2.2bn of new debt required to refinance existing Dowlais debt and fund cash purchase price • Expect ~$2.0 billion of liquidity at
Slide 38: Regulatory Update
Regulatory Update 38 TIMING ▪ Significant regulatory analysis and preparatory work already undertaken by both parties ▪ US filing (HSR) submitted on February 7, 2025 ▪ Progressing with all filings and engaging with international regulators ▪ Anticipated timing is typical for this type of transaction
Slide 39: Transformational Opportunity to Combine with Dowlais
Transformational Opportunity to Combine with Dowlais 39 ▪ More robust, and scaled business model with compelling strategic rationale ▪ Broader, more complete powertrain agnostic portfolio with enhanced diversification ▪ High confidence in delivering ~$300M of jointly developed and vetted synergies c
Slide 40: Appendix
A p pend Ix ae Ee 4)
Slide 41: Additional Disclosures
Additional Disclosures 41 Participants in the Solicitation AAM and its directors, executive officers and certain other members of management and employees will be participants in the solicitation of proxies from AAM’s shareholders in respect of the Business Combination, including the proposed issuan
Slide 42: Additional Disclosures – Quantified Financial Benefits Statement
Additional Disclosures 42 Quantified Financial Benefits Statement This presentation contains statements of estimated cost savings and synergies arising from the Combination (together, the “Quantified Financial Benefits Statements”). Statements of estimated cost savings and synergies relate to future
Slide 43: Additional Disclosures – Profit forecasts and estimates
Additional Disclosures 43 Profit forecasts and estimates The statements in this presentation setting out targets for Adjusted EBITDA and Adjusted free cash flow of AAM for FY25 (together, the “AAM FY25 Profit Forecast”) constitute profit forecasts of AAM for the purposes of Rule 28.1(a) of the UK Ta
Slide 44: Additional Disclosures – Principal assumptions
Additional Disclosures 44 Principal assumptions a) Factors outside the influence or control of the AAM Directors: i. there will be no material change to macroeconomic, political, inflationary, regulatory or legal conditions in the markets or regions in which AAM operates; ii. there will be no materi
Slide 45: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 45 In addition to the results reported in accordance with accounting principles generally accepted in the United States of America (GAAP) included within this presentation, we have provided certain information, which includes non-GAAP financial measures. Such info
Slide 46: EBITDA and Adjusted EBITDA Reconciliation
Supplemental Data* 46 *Please refer to definition of Non-GAAP measures. 2024 2023 2024 2023 Net income (loss) $ (13.7) $ (19.1) $ 35.0 $ (33.6) Interest expense 43.9 50.2 186.0 201.7 Income tax expense 6.8 5.8 27.8 9.1 Depreciation and amortization 115.4 121.4 469.7 487.2 EBITDA 152.4 158.3 718.5 66
Slide 47: EBITDA and Adjusted EBITDA for the Last Twelve Months
Supplemental Data* 47 *Please refer to definition of Non-GAAP measures. Last Twelve Months Ended March 31, June 30, September 30, December 31, December 31, 2024 2024 2024 2024 2024 Net income (loss) $ 20.5 $ 18.2 $ 10.0 $ (13.7) $ 35.0 Interest expense 49.0 47.9 45.2 43.9 186.0 Income tax expense (b
Slide 48: Adjusted Earnings Per Share Reconciliation
Supplemental Data* 48 *Please refer to definition of Non-GAAP measures. 2024 2023 2024 2023 Diluted earnings (loss) per share $ (0.12) $ (0.16) $ 0.29 $ (0.29) Restructuring and acquisition-related costs 0.07 0.07 0.14 0.22 Debt refinancing and redemption costs - 0.01 0.01 0.01 Impairment charge - -
Slide 49: Free Cash Flow and Adjusted Free Cash Flow Reconciliation
Supplemental Data* 49 *Please refer to definition of Non-GAAP measures. 2024 2023 2024 2023 Net cash provided by operating activities $ 151.2 $ 52.9 $ 455.4 $ 396.1 Less: Capital expenditures net of proceeds from the sale of property, plant and equipment and from government grants (77.6) (55.9) (242
Slide 50: Net Debt and Net Leverage Ratio
Supplemental Data* 50 *Please refer to definition of Non-GAAP measures. December 31, 2024 Current portion of long term debt $ 47.9 Long-term debt, net 2,576.9 Total debt, net 2,624.8 Less: Cash and cash equivalents 552.9 Net debt at end of period 2,071.9 Adjusted LTM EBITDA $ 749.2 Net Leverage Rati
Slide 51: Segment Financial Information
Supplemental Data* 51 *Please refer to definition of Non-GAAP measures. 2024 2023 2024 2023 Segment Sales Driveline $ 979.6 $ 1,015.2 $ 4,253.3 $ 4,176.7 Metal Forming 520.6 576.2 2,414.3 2,454.3 Total Sales 1,500.2 1,591.4 6,667.6 6,631.0 Intersegment Sales (119.4) (128.4) (542.7) (551.5) Net Exter
Slide 52: Full Year 2025 Financial Outlook
Supplemental Data* 52 *Please refer to definition of Non-GAAP measures. In accordance with Rule 28.1(c)(i) of the Takeover Code, the AAM directors confirm that, as at the date of this presentation, the AAM FY25 Profit Forecast remains valid and has been properly compiled on the basis of the assumpti
Slide 53: Dowlais Adjusted EBITDA and Adjusted Free Cash Flow Calculation Detail
Supplemental Data* Source: Dowlais’ public filings or derived therefrom. 53 Dowlais Adjusted EBITDA and Adjusted Free Cash Flow Calculation Detail in £MM 2023 Net cash from operating activities £239 Capital expenditures net of proceeds from the sale of property, plant and equipment (262) Dividends r
Slide 54: Definition of Non-GAAP Measures
Definition of Non-GAAP Measures 54 EBITDA and Adjusted EBITDA We define EBITDA to be earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemptio
Slide 55: Bringing the Future Faster
— BRINGING THE FUTURE FASTER _ ; (C} | ——
American Axle & Manufacturing Holdings — Merger or Acquisition (February 2025) on 6ix