American Axle & Manufacturing NYSE: DCH reported second-quarter 2026 sales of approximately $3 billion, adjusted EBITDA of $389.6 million and adjusted free cash flow of $148.4 million, as the company continued integrating Dowlais and raised the low end of its full-year outlook.
Chairman and CEO David Dauch said the quarter reflected “continued positive acceleration” for the combined company, which has operated for five months following the transaction. He pointed to strength on several customer programs, including BMW’s CLAR platform for the X5 and X7, Volvo’s SPA crossover platform and General Motors’ large-truck program.
Second-quarter sales totaled $2.96 billion, compared with $1.54 billion in the prior-year period. Chief Financial Officer Chris May said sales were broadly flat year over year on an underlying basis and tracked overall North American production, which was nearly unchanged from the prior year. The acquisition contributed $1.45 billion of gross sales during the quarter.
Adjusted earnings per share were $0.32, compared with $0.34 a year earlier. GAAP net income was $1 million, versus $39.3 million in the second quarter of 2025, while net interest expense rose to $82.6 million from $37.5 million, primarily because of debt issued and assumed in connection with the acquisition.
Margins and integration savings
Adjusted EBITDA was $389.6 million, or 13.2% of sales, matching the adjusted EBITDA margin recorded a year earlier. Dauch said profitability benefited from product mix, business performance, synergies and the contribution from Dowlais.
The company realized $15 million of synergy benefits during the quarter, primarily through eliminating duplicative corporate and selling, general and administrative costs, while also beginning to capture engineering and purchasing efficiencies. Management said it has achieved approximately $70 million in annualized run-rate savings since the combination and remains on track for more than $100 million by year-end.
The company continues to target approximately $180 million in run-rate savings by the end of the second year and $300 million by the end of the third year. Dauch said early savings have been weighted toward SG&A and engineering, while procurement and operational initiatives are progressing but will take longer to realize.
In the legacy business, adjusted EBITDA was affected by lower volume and mix, the divestiture of the India commercial-vehicle axle business, and roughly $8 million of costs associated with a UAW work stoppage at the Three Rivers, Michigan facility. Those pressures were partly offset by improved metal-forming performance and cost management.
May said the company’s metal-forming margin improvement reflected both the addition of higher-margin powdered-metal operations from Dowlais and continued operating improvements in the core metal-forming business. Management said additional work remains to improve capacity utilization and implement the company’s operating system across the acquired operations.
Cash flow, debt reduction and outlook
Cash from operations totaled $107.5 million in the quarter, compared with $91.9 million a year earlier. Adjusted free cash flow increased to $148.4 million from $48.7 million. The company ended June with about $4.1 billion in net debt, a 2.6-times net leverage ratio and approximately $2.5 billion of available liquidity.
During the quarter, the company voluntarily redeemed $125 million of its 6.875% notes due 2028, and it redeemed the remaining notes after quarter-end in August. May said the actions leave the company with no major debt maturities until 2029. Management said reducing debt and strengthening the balance sheet remain its near-term capital-allocation priorities.
The company raised the low end of its full-year guidance, now forecasting:
- Sales of $10.6 billion to $10.8 billion, compared with prior guidance of $10.3 billion to $10.8 billion.
- Adjusted EBITDA of $1.36 billion to $1.425 billion, compared with $1.3 billion to $1.425 billion previously.
- Adjusted free cash flow of $260 million to $325 million, compared with $235 million to $325 million previously.
Management said the updated outlook reflects first-half performance, operational execution and integration progress. It expects North American production to decline about 4% sequentially in the second half and European production to decline about 8%, in part due to normal seasonal patterns.
Launches, quoting activity and trade considerations
GM is expected to begin a phased launch of its next-generation full-size pickup trucks during the second half, with temporary production effects anticipated beginning in September. May said the company’s content on the new GM truck is “principally the same” as on the platform it replaces.
Dauch said the company is actively quoting more than $2 billion of new and incremental business, including capacity increases on high-demand programs. About 85% of that quoting activity is related to internal-combustion-engine and hybrid programs, he said, a reversal from several years ago when electrification represented a larger share of opportunities. Management cited an expected win rate of roughly 30%, while noting its sideshaft position could support a higher rate in some areas.
The company is also monitoring U.S.-Mexico-Canada Agreement trade discussions. Dauch said its strategy of buying and building locally provides flexibility, including through the expanded U.S. and Mexican footprint gained from Dowlais, though he said it was too early to quantify potential cost implications or operational changes.
Management plans to host a Capital Markets Day on Nov. 17 in New York City.
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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