American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) Q4 2022 Earnings Call Transcript

Christopher May: And I think your second question then was associated with attrition. We have $200 million of attrition on our year-over-year sales walk that relates to some programs in China and also some in North America. We have historically said the impact associated with that was between $100 million to $200 million this year, is at the higher end of the range. I would think more closer towards the midpoint kind of in the subsequent years.

John Murphy: Okay. Great. Thank you very much, guys.

Christopher May: Yes. Thanks, John.

David Dauch: Thanks, John.

Operator: Our next question comes from Dan Levy from Barclays. Please go ahead with your question.

Dan Levy: Hi. Good morning, and thank you for taking the question.

David Dauch: Good morning, Dan.

Dan Levy: Good morning. Wondering if you could just talk a bit to the mix trend? Obviously, T1, if you look at some of the third-party schedules, I think that’s forecasting them to be down year-over-year. Can you just talk about the impact of mix on margins?

David Dauch: Yes. So from a broad perspective, as associated with mix as it relates to €“ if you think about our two largest programs, T1, RAM is obviously a large program. I’ll come back to both of those in a minute. The rest of production, I would expect to continue as volumes come back that to increase on the rest of the business, so that will start to increase its mix of our overall business. RAM, probably very similar year-over-year. So obviously, you can compute how the mix would impact from that. And on the T1 perspective, I believe some estimates €“ third-party estimates yesterday were just updated to be a little bit more elevated. I would think about that sort of the lower end of our sales range. We’re a little more bullish on that platform.

Our customers are a little more bullish on that platform, we believe. So think of our midpoint of the range, maybe about 5% higher than current IHS estimates, and we’re probably a little higher than that at the high end of our range. But again, we’re a little more bullish on that. But you’ll see the rest of our book of business continue to grow as part of that mix.

Dan Levy: Great. Thank you. And then the second question is on your electrification backlog. So your narrative on EV is that you have a variety of ways to win between subcomponents to full three-in-one system. Could you maybe break down of that 40% of the backlog that is EV? Is there a rough idea of the mix on subcomponents, full drive units, some of the casing and the rough CTV that’s implied there?

Christopher May: Yes. Dan, this is Chris again. Yes, the mix, think about it slightly more than half is associated on the €“ think of the drive units, the other €“ the remainder then would be on the component side. And then from a €“ I think your second part of your question was content per vehicle. Obviously, on the drive units, as you’ve heard us maybe articulate our content per vehicle is very significant associated with those. Think of up to $2,500-plus. And then on the component side, depending on the vehicle, depending on the component supply, we could be up to $500 per vehicle.

Dan Levy: Okay, great. Thank you.

Christopher May: Yep.

David Dauch: Thanks, Dan.

Operator: Our next question comes from Emmanuel Rosner from Deutsche Bank. Please go ahead with your question.

Emmanuel Rosner: Thank you very much. Good morning.

David Dauch: Good morning, Emmanuel.

Emmanuel Rosner: First question on the Tekfor acquisition. It seems based on your 2023 walk, you’re expecting maybe a margin contribution sort of like the low double-digits based on the guidance. Can you just remind us if this is the right margin profile for the business going forward or if there’s more incremental opportunity for improvement?