American Axle intends to make debt management ‘a priority,’ CEO says

By Devika Patel

Knoxville, Tenn., April 3 – American Axle & Manufacturing, Inc. plans to de-lever its balance sheet quickly following a recent acquisition.

The company completed its acquisition of Metaldyne Performance Group Inc. on April 6, which brought its leverage ratio up to 3.5x, but the company expects that number to decrease rapidly.

“Once we closed [the acquisition], we’re at 3.5x levered,” chairman and chief executive officer David C. Dauch said at the 2017 Bank of America Merrill Lynch Auto Summit in New York on Wednesday.

“American Axle prior to the close was at 1.5x. MPG was at 3.2x, so combined together we’re at 3.5x.

“By the end of [2017], we expect to be at 3x and by the end of [2019], we expect to be at 2x.

“So we need a few years to work the debt level down, but remember, American Axle was at one time over 4x levered back in 2009.

“We worked that down to 1.5x levered by 2016,” Dauch said.

“We’ve got same management team in place.

“We’ve got the discipline in place and we know what buttons we need to push to make sure that we deliver on that and that’s our commitment,” he said.

Dauch said that the company has made debt management a priority.

“We need to be very disciplined in the uses of our capital, our cash going forward and as we’ve always said, we’re going to continue to focus on organic growth but clearly cash becomes king and the debt management or the balance sheet strengthening becomes a priority for us again – to de-lever or de-risk the company.

“We expect the combined business to generate a lot of cash.

“That cash is going to be used primarily to support debt management or the balance sheet strengthening, at the same time supporting organic growth opportunities,” he said.

American Axle is a Detroit-based producer of driveline and drivetrain systems and related components and chassis modules for the automotive industry.

© 2015 Prospect News.
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