American Axle Manufacturing 2025 Q3 Earnings EPS Declines 12.5% Despite Revenue Stability

American Axle & Manufacturing Holdings (AXL) reported mixed third-quarter 2025 results, with flat revenue but a 12.5% drop in EPS. The company slightly raised its full-year sales guidance while maintaining adjusted EBITDA targets, reflecting confidence in operational efficiency and the pending Dowlais acquisition.

Revenue

Revenue held steady at $1.51 billion in 2025 Q3, matching the prior year’s $1.50 billion. The Driveline segment generated $1.05 billion in sales, while the Metal Forming division contributed $454.70 million, reflecting a balanced performance across core business units.

Earnings/Net Income

Earnings per share (EPS) fell to $0.07 in Q3 2025, a 12.5% decline from $0.08 in Q3 2024. Net income also dropped to $9.20 million, down 8.0% year-over-year. The EPS shortfall underscores margin pressures despite stable revenue.

Post-Earnings Price Action Review

Following the earnings release, AXL’s stock surged 9.17% in a single trading day, with a 5.65% weekly gain and an 11.39% month-to-date increase. The rally reflects optimism around operational improvements and the Dowlais acquisition’s potential to drive long-term value, though investors remain cautious about near-term margin sustainability.

CEO Commentary

CEO David Dauch highlighted a 130-basis-point EBITDA margin improvement to 12.9%, driven by driveline efficiency and mix shifts. He emphasized resilience in internal combustion engine (ICE) demand and the strategic importance of the Dowlais acquisition, which is 80% cleared for antitrust approvals and expected to close in Q1 2026.

Guidance

AAM narrowed 2025 sales guidance to $5.8–$5.9 billion from $5.75–$5.95 billion, while raising adjusted EBITDA expectations to $710–$745 million. Free cash flow guidance was updated to $180–$210 million, assuming 15.1 million North American production units. The Dowlais acquisition is projected to be debt-neutral post-close.

Additional News

The Dowlais acquisition remains a focal point, with regulatory clearances at 8/10 and a projected Q1 2026 close. CEO Dauch reiterated confidence in ICE demand resilience and electrification synergies. For 2026, AAM anticipates $300 million in synergy realization but will wait for formal guidance until early next year. Analysts remain split, with a “hold” consensus rating and a median price target of $7.00, 11.9% above the current price.

Key Takeaways

• M&A Progress: Dowlais acquisition nearing regulatory close, expected to boost global scale.

• Margin Focus: Driveline’s 14.9% EBITDA margin (highest since 2020) highlights operational strength.

• Strategic Priorities: Onshoring in Metal Forming and ICE/ev propulsion-agnostic product development.

Earnings Call Highlights

Management emphasized cost controls, tariff mitigation, and European restructuring progress. While 2025 EBITDA growth is secured, 2026 outcomes hinge on Dowlais integration and market dynamics. Analysts remain cautious about debt management post-acquisition but acknowledge the company’s resilience in a shifting industry landscape.