Shares of American Axle and Manufacturing Holdings (NYSE:AXL) were up sharply on Friday. As of 12:00 p.m. EDT, American Axle's shares were trading at $19.25, up about 7% from Thursday's close.
Why the jump? Before the market opened on Friday, the company reported third-quarter earnings that were well above Wall Street's expectations and boosted its full-year guidance.
American Axle supplies parts and components to automakers mostly related to (no surprise) vehicle axles. The company has long had a strong relationship with General Motors, but CEO David Dauch has been moving to diversify its business and client base, largely through acquisitions.
That's working. Fifty-nine percent of its total revenue in the third quarter came from customers other than GM. That's a record, and the efforts that made it happen also drove financial results that were significantly improved from its year-ago result:
- Revenue rose 70% to $1.72 billion.
- Net income rose 40% to $86.2 million, or $0.75 per share. (Wall Street analysts polled by Thomson Reuters had expected net income of $0.65 per share, on average.)
- Free cash flow rose 61% to $87.9 million.
That's one reason why the stock surged on Friday. The other: improved guidance.
American Axle also boosted its full-year guidance. It now expects:
- Revenue between $6.2 billion and $6.25 billion (prior guidance: about $6.1 billion).
- Adjusted EBITDA of about $1.1 billion (at the high end of the range given in prior guidance).
- Adjusted free cash flow of about 5% of revenue (unchanged from prior guidance).
Long story short: Things are looking up for American Axle.