Dauch Corporation · NYSE:DCH
Dauch — American Axle & Manufacturing Holdings — Investor Presentation (January 2019)
31 slides from Dauch's investor presentation, Jan 15, 2019
Slide 1: Investor Presentation January 2019
Investor Presentation January 2019
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expres
Slide 3: About AAM
About AAM Over AAM is a premier, global leader in design, engineering, 70 MANUFACTURING validation and manufacturing of driveline, metal forming, FACILITIES powertrain and casting technologies for automotive, commercial and industrial markets ESTIMATED 2018 SALES ≈$7.25B Over AAM is Delivering POWER
Slide 4: 2018 Financial Update and Highlights
2018 Financial Update and Highlights
Slide 5: AAM's 2018 Financial Estimates
AAM’s 2018 Financial Estimates 2018 Estimated Preliminary Results Sales ≈ $7.25 billion Adjusted EBITDA* Margin ≈ 16.25% of sales Adjusted Free Cash Flow* ≈ $315 million . We expect restructuring and acquisition-related payments to be approximately $70 million for the full year 2018. . Our annual go
Slide 6: Performance Improvement Plans
Performance Improvement Plans 3Q 2018 Issues Status Update Anticipated Exit Rate Status Driveline - Changes affecting build-out and launch - RAM HD prior model build out complete in 3Q18 4Q18 1Q19 2Q19 - Scrap performance December 2018, new model start of production - Supplier delivery performance b
Slide 7: 2018 AAM Highlights
2018 AAM Highlights Record Annual AAM Sold Sales – Over recognized as Aftermarket $7 Billion for Fortune 500 division of our the first time in Company Powertrain BU for AAM History $50 million Quarterly Met key* Formed joint BITDA Adj. FreeNamed GM Integration venture with Cash SupplierFlow* of the
Slide 8: Business Strategy and Growth Update
Business Strategy and Growth Update
Slide 9: Business Unit Consolidation
Business Unit Consolidation 2018 Estimated Sales - 2018 Estimated Sales - 2018 Estimated Sales - 2018 Estimated Sales - $4.3 billion $1.1 billion $1.5 billion $900 million 16 facilities 24 facilities 23 facilities 11 facilities 2018 Pro forma Sales - 2018 Pro forma Sales - No change $4.9 billion $2.
Slide 10: Business Unit Consolidation Objectives
Business Unit Consolidation Objectives 1 Finalize integration process WE ARE 2 Align AAM’s product and process technologies Achieve efficiencies within our corporate and business unit 3 support teams Accelerate implementation of AAM’s Operating System including 4 program management and launch readin
Slide 11: Gross New and Incremental Business Backlog
Gross New and Incremental Business Backlog $1.25 BILLION: 2019 - 2021 as disclosed on January 15, 2019 Backlog by Vehicle Segment Backlog by Global Market Commercial South America and and Other other 5% 5% Passenger Cars 15% Asia 20% Full-size Light Truck and SUV 25% Europe 20% e-AAM 10% North Ameri
Slide 12: Net Impact of New Business Backlog
Net Impact of New Business Backlog $650 Significant new business $450 opportunities remain AAM’s gross new business backlog ($100-$200)** $150 ($200) Normal business attrition ≈$250 - 300 Estimated sales impact to ($225) ($100-$200)** AAM of GM’s Next-Gen full-size truck sourcing ($275) Net impact f
Slide 13: Favorable Trends in Vehicle Mix
Favorable Trends in Vehicle Mix 70% 75% 70% of Total NA production AAM Revenue in 2018 of New Business Backlog In 2018, light trucks, including 70% of AAM’s new AAM estimates SUVs, crossovers and vans, business backlog is related approximately 3/4 of sales made up 70% of North to light trucks, inclu
Slide 14: Lightweighting and Fuel Efficiency
Lightweighting and Fuel Efficiency Down-sized Multi-speed Disconnecting Engines Transmissions All-Wheel Drive Over the next several years, AAM continues to win AAM’s Vibration Control we expect a > 5% CAGR in new business related to our Systems (VCS) are benefiting transmissions with higher than Eco
Slide 15: e-AAM Hybrid and Electric Driveline Systems
e-AAM Hybrid and Electric Driveline SystemsTM KEY HIGHLIGHTS . Highly integrated electric motor, gear reduction, & differential . Power dense, low NVH, high efficiency design allows for easy integration for multiple vehicle platforms AAM P3 Rear e-Drive unit (Hybrid) . Broad spectrum of solutions -
Slide 16: Future Electrification Opportunities
Future Electrification Opportunities AAM’s product portfolio supporting e-powertrains is driving potential new business globally Gear Box Applications Vehicle Integration Integrated eFront Drive Units ePowertrain Components Integrated eRear Drive Units $500M Quoting and Emerging New Business Opportu
Slide 17: Financial Targets
Financial Targets
Slide 18: 2019 Financial Outlook
2019 Financial Outlook 2019 Financial Targets Full Year Sales $7.3 - $7.4 billion Adjusted EBITDA* $1.2 - $1.25 billion Capital Expenditures ≈ 7% of sales Adjusted Free Cash Flow* $350 - $400 million . Based on the anticipated launch schedule of our new business backlog, our assumption that the US S
Slide 19: 2019 Sales Target Walk
2019 Sales Target Walk (in millions) $650 ($200) $7,300 - $7,400** ≈$7,250 ($275) ($40) ($35) AAM 2018 Estimated New Business Backlog Normal Business GM Next Gen Truck Pricing Other Volume & Mix AAM 2019 Sales Target Sales Attrition Sourcing Impact AAM expects sales growth in 2019 19 ** Utilized the
Slide 20: 2019 Adjusted EBITDA Target Walk
2019 Adjusted EBITDA Target Walk (dollars in millions) $15** $1,200 - $1,250** $30 ≈16.25% of Sales $20 $35 ($15) ($40) 2018 Estimated Backlog / Volume & Pricing Launch/Performance Synergies Business Unit Material, Freight, 2019 Adjusted EBITDA Adjusted EBITDA Mix Improvements Consolidation Tariffs
Slide 21: 2019 Profit Catalysts
2019 Profit Catalysts Leaner, Stronger AAM Continued Synergy Attainment Business segment restructuring Benefiting from full-year run rate to create $10 - $20 million in and further capacity annual cost savings optimization initiatives New Business Contribution Performance Improvements Resolution of
Slide 22: Strong Cash Flow Generation
Strong Cash Flow Generation ≈$1.5B $350 - $400M** ≈$315M $341M 2017 Adjusted Free Cash Flow* Estimated 2018 Adjusted FCF 2019 Adjusted FCF Target 2020 Adjusted FCF Target Projected Cumulative Adj. FCF (FCF) 2017 - 2020E 7.6% ≈7.25% ≈7% ≈6% Cap Ex as a % of Sales Strong cash flow potential and high f
Slide 23: Cash Flow Breakeven
Cash Flow Breakeven US SAAR (units in millions) . Highly variable cost structure allows for ≈17.2 flexibility during periods of lower volumes 25-30% downturn . AAM has track record of reducing fixed costs through facility and labor efficiency initiatives ≈12 during previous downside periods . Multip
Slide 24: Capital Allocation
Capital Allocation Leverage Reduction Organic Growth >$400M of senior debt payments Invest in R&D and continue organic since the MPG acquisition and growth with the appropriate returns targeting Net Leverage Ratio of ≈2x by the end of 2020 Strategic Shareholder Activity Focus on objectives of techno
Slide 25: Why AAM?
Why AAM? SOLID FOUNDATIONAL Concentrated in the strongest vehicle segments BUSINESS of light trucks, SUVs and crossovers INNOVATIVE TECHNOLOGY Focused on hybridization, electrification, LEADERSHIP lightweighting, fuel efficiency and performance Potential for COMPELLING GROWTH Driven by our new busin
Slide 26: Q&A
Q&A
Slide 27: Supplemental Data
SUPPLEMENTAL DATA
Slide 28: Production and Sales Volume Assumptions
Production and Sales Volume Assumptions 2018 2019 2020 Global Light Vehicle Production ≈ 94.7M units ≈ 95M units ≈ 1 - 2% growth North America Light Vehicle Production ≈ 17.0M units ≈ 16.5M – 17M units ≈ 16M – 17M units US SAAR ≈ 17.2M units ≈ 16.5M – 17M units ≈ 16M – 17M units Europe Light Vehicle
Slide 29: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures In addition to the results reported in accordance with accounting principles generally accepted in the United States of America (GAAP) included within this presentation, we have provided certain information, which includes non-GAAP financial measures. Such informa
Slide 30: Free Cash Flow and Adjusted Free Cash Flow Reconciliation
Supplemental Data Free Cash Flow and Adjusted Free Cash Flow Reconciliation ($ in millions) 2017 Actual 2018 Estimate 2019 Target Net cash provided by operating activities $ 647.0 $ 770 $ 810 - 860 Capital expenditures net of proceeds from the sale of property, plant and equipment (475.2) (525) (515
Slide 31: EBITDA and Adjusted EBITDA
Supplemental Data 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 redemption costs, gain on
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