American Axle & Manufacturing Holdings (AXL) shares surged Friday after the driveline and drivetrain maker’s third-quarter earnings beat expectations, even as the six-week labor strike at General Motors (GM) weighed on results.
The Detroit-based manufacturer said adjusted per-share earnings fell to $0.58 in the quarter ended Sept. 30 from $0.63 in the prior-year period. The consensus compiled by Capital IQ was for $0.47. Sales fell to $1.68 billion from $1.82 billion last year, below the Street’s view for $1.71 billion.
American Axle’s shares were more than 24% higher in afternoon trading.
“AAM’s financial results in the third quarter of 2019 reflect solid operating performance despite lower-than-expected production volumes resulting from the GM work stoppage,” said Chief Executive David Dauch. “The strong free cash flow generated during the quarter, along with the announced sale of our US iron-casting operations, position us to continue to deliver on our commitment to reduce debt and strengthen our financial profile.”
American Axle last month agreed to sell its US iron-casting business to Gamut Capital Management for $245 million. The deal is expected to close in the current quarter, the company said at the time.
The company said Friday that the GM strike impacted its results by $14 million, or $0.12 per share.
American Axle said driveline sales fell to $1.15 billion from $1.23 billion while metal forming sales were $476.6 million, down from $509 million. Casting sales slid to $209 million from $219.1 million.
Meanwhile, the company cut its full-year guidance due to the GM strike, lowering its sales outlook to $6.6 billion from its August view of $6.9 billion to $7 billion. Adjusted earnings before interest, tax, depreciation and amortization is seen between $950 and $975 million, down from $1.05 billion to $1.1 billion previously. Adjusted free cash flow is now seen at about $175 million, down from $250 million.