American Axle & Manufacturing Q1 Earnings Call Highlights

Key Points

• American Axle posted a strong first quarter, with sales rising to $2.38 billion and adjusted EPS increasing to $0.34, helped by two months of contribution from the Dowlais acquisition. Adjusted EBITDA climbed to $308.5 million, and management said the integration is progressing ahead of early synergy targets.
• The company raised its outlook, now targeting adjusted EBITDA of about $1.3 billion to $1.425 billion and adjusted free cash flow of $235 million to $325 million. Management also warned that higher oil, energy and logistics costs tied to geopolitical tensions could trim second-quarter results by $5 million to $10 million.
• American Axle continues to focus on debt reduction and portfolio actions, ending the quarter with about $4.1 billion in net debt and 2.7x leverage. The company also highlighted new business wins and said it is seeing positive customer response to its larger scale after the Dowlais deal.

American Axle & Manufacturing NYSE: DCH reported higher first-quarter sales and adjusted earnings as its results included two months of contribution from the Dowlais acquisition, with management saying the integration is progressing ahead of its early synergy targets.

Chairman and CEO David Dauch said the quarter marked the first time the company’s results included Dowlais, adding that the acquisition has “met our expectations” across product portfolio, customers and personnel. He said feedback from major customers has been positive, citing the company’s focus on quality, technology leadership, operational excellence, launch readiness and continuity of supply.

For the first quarter of 2026, the company reported sales of $2.38 billion, up from $1.41 billion in the prior-year quarter. Adjusted EBITDA was $308.5 million, representing a 13% margin, compared with $177.7 million and a 12.6% margin a year earlier. Adjusted earnings per share were $0.34, up from $0.22 in the first quarter of 2025.

On a GAAP basis, the company recorded a net loss of $100 million, or $0.52 per share, compared with net income of $7.1 million, or $0.06 per share, in the year-ago period. CFO Chris May said the year-over-year increase in net interest expense, to $77.5 million from $37.3 million, primarily reflected new and assumed debt tied to the Dowlais combination.

Dowlais Contribution and Synergy Progress

May said Dowlais contributed $983 million in gross sales and approximately $122 million in adjusted EBITDA for February and March, after the transaction closed on Feb. 3. The company realized $5 million in synergy benefits during the quarter.

Dauch said the combined company has already achieved $35 million in run-rate savings and remains on track for more than $100 million in run-rate savings by year-end. Management reiterated targets of $180 million in run-rate savings by the end of year two and $300 million by the end of year three.

In response to analyst questions, Dauch said the teams from the two companies are integrating well and that early actions have focused on overlapping corporate costs, selling, general and administrative expenses, and procurement. He also said some facilities need investment in maintenance or general stores, but characterized those issues as manageable.

Guidance Raised Despite Macro Risks

Management raised its adjusted EBITDA outlook while pointing to geopolitical and cost-related risks. Dauch said the company is now targeting adjusted EBITDA of approximately $1.3 billion to $1.425 billion and adjusted free cash flow of about $235 million to $325 million. May later described the updated sales target as $10.3 billion to $10.5 billion, compared with a prior range of $10.3 billion to $10.7 billion.

The outlook is based on production assumptions of 15 million units in North America, approximately 16.7 million units in Europe, 32.3 million units in China and 91.4 million units globally. May said the company continues to anticipate General Motors full-size pickup and SUV production in the range of 1.3 million to 1.4 million units this year.

Dauch said global geopolitical risks remain an overhang, particularly the Iran conflict, which he said is contributing to higher oil, energy and gas prices. May said the company is seeing some elevated fuel and energy costs, including fuel surcharges for logistics, and estimated a $5 million to $10 million impact in the second quarter from those pressures.

May said many commodity costs are covered by direct pass-through mechanisms with customers, estimating that 80% to 90% of such costs are passed through. He said the recovery lag can range from 30 to 90 days depending on the customer.

Cash Flow, Debt and Portfolio Actions

Net cash used in operating activities was $64.4 million in the quarter, compared with net cash provided by operating activities of $55.9 million a year earlier. The company reported adjusted free cash flow as a seasonal use of $40.8 million, compared with a use of $3.9 million in the first quarter of 2025.

At quarter-end, net debt was approximately $4.1 billion, and the net leverage ratio was 2.7 times. May said the company ended the quarter with total available liquidity of about $2.6 billion, including cash and borrowing capacity on global credit facilities. He said management remains focused on reducing debt and strengthening the balance sheet, and that reaching a sustained net leverage level of 2.5 times or below would allow the company to consider additional capital allocation options, including returning capital to shareholders.

The company also received about $21 million in net proceeds from the sale of a Dowlais cylinder liner business. Dauch said the sale reflected an ongoing review of the company’s portfolio to identify assets that are non-core. He also referenced the prior divestiture of the India commercial vehicle axle business, which May said reduced first-quarter sales by $35 million.

Business Wins and Customer Outlook

Dauch highlighted several recent commercial awards, including a contract from Chery Jaecoo Jetour to supply power transfer units and rear drive modules on a derivative model already supported by the company. Production is scheduled to begin later this year and run beyond 2030. The company also received a business extension for a major truck platform in Brazil with lifetime revenue of more than $750 million, scheduled to launch later this decade.

Dauch said the company also secured multiple sideshaft wins with six global automakers and continued to see wins in metal forming, supported in part by onshoring and reshoring activity in the U.S.

During the question-and-answer session, Dauch said the company’s new scale after the Dowlais acquisition is being received positively by customers, particularly amid distress among some suppliers. He said management expects opportunities to expand relationships through cross-selling, though he described those discussions as still early.

On electric vehicles, Dauch said the company continues to see opportunities in Asia, especially China, while monitoring regulatory and policy changes in Europe and North America. He said the company will make “appropriate and balanced and selective investments” in EV programs, while working to resolve remaining customer issues related to canceled EV programs.

Dauch closed the call by saying the company had a strong first quarter, that Dowlais integration is off to a strong start and that management is monitoring macroeconomic and geopolitical trends while focusing on execution.

About American Axle & Manufacturing NYSE: DCH

American Axle & Manufacturing is a U.S.-based designer, engineer and manufacturer of driveline and drivetrain systems and components for the automotive and light- and heavy-vehicle markets. The company produces a range of mechanical and electromechanical products including axles, driveshafts, differential systems, halfshafts, transmission components, and related sealing and suspension parts. Its product portfolio serves passenger cars, light trucks, commercial vehicles and off-highway applications.

Beyond component manufacturing, the company provides integrated engineering services such as product development, testing and system integration to help vehicle manufacturers meet performance, weight and fuel-economy targets.

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