AMERICAN AXLE & MANUFACTURING HOLDINGS INC
For the period ended Sep 30, 2025. Filed Nov 7, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 7, 2025
DCH$4.52+2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-08.
0001062231-25-000087
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-07.
0001062231-25-000097
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 129 previous paragraphs and 134 current paragraphs.
46 unchanged; 71 reworded; 14 added; 7 removed; 5 previous and 3 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Interest income was $7.0 million in the third quarter of 2025 and $7.1 million in the third quarter of 2024.
Current report
Debt Refinancing and Redemption Costs In the third quarter of 2024, we voluntarily redeemed a portion of our then outstanding 6.25% Notes due 2026. This resulted in a principal payment of $50.0 million and $1.2 million in accrued interest. We also expensed approximately $0.2 million for the write-off of a portion of the unamortized debt issuance costs that we had been amortizing over the expected life of the borrowing.
Current report
Income Tax Expense (Benefit)Income tax was a benefit of $10.9 million for the three months ended September 30, 2025, as compared to a benefit of $12.1 million for the three months ended September 30, 2024. Our effective income tax rate was 641.2% in the third quarter of 2025, as compared to 576.2% in the third quarter of 2024.
Current report
RESULTS OF OPERATIONS –– NINE MONTHS ENDED SEPTEMBER 30, 2025 AS COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2024
Current report
Interest income was $18.2 million in the first nine months of 2025 as compared to $21.5 million in the first nine months of 2024. In connection with the 6.375% senior secured notes due 2032 (the 6.375% Notes) and 7.75% senior unsecured notes due 2033 (the 7.75% Notes, and together with the 6.375% Notes, the Notes) issued by AAM, Inc. on October 3, 2025, we estimate approximately $16 million of interest income in the fourth quarter of 2025 on the proceeds from the Notes placed in segregated escrow accounts. See Note 5 - Long-Term Debt for further detail on the financing for the Business Combination and the funds in escrow.
Current report
During the nine months ended September 30, 2025 we recognized a discrete income tax benefit of $22.0 million as a result of the enactment of the One Big Beautiful Bill. During the nine months ended September 30, 2024, in computing our estimated annual effective tax rate, we recorded a valuation allowance against the deferred tax asset on the current year estimated disallowed interest expense in the U.S. Additionally, during the nine months ended September 30, 2024, we recognized an income tax benefit of $7.9 million as the result of elections made as part of our 2023 income tax return.
Current report
The increase in Driveline sales for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, primarily reflects an increase of approximately $15 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments, as well as the impact of certain commercial pricing and other recoveries from customers. These increases were partially offset by a reduction of approximately $30 million as a result of the sale of AAM India Manufacturing Corporation Pvt., Ltd., which was completed on July 1, 2025.
Current report
For the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, Segment Adjusted EBITDA for the Driveline segment reflects improved operating performance and the impact of certain commercial pricing and other recoveries from customers. Segment Adjusted EBITDA for the Driveline segment also reflects approximately $5 million of favorability in other segment income primarily related to the change in foreign exchange gains and losses during the third quarter of 2025, as compared to the third quarter of 2024.
Current report
Accounts receivable For the nine months ended September 30, 2025, we experienced a decrease in cash flow from operating activities of approximately $34 million related to the change in our accounts receivable balance from December 31, 2024 to September 30, 2025, as compared to the change in our accounts receivable balance from December 31, 2023 to September 30, 2024. This change was primarily the result of timing of sales to customers in the applicable periods, as well as the timing of collections on customer receivables due, in part, to our participation in an early payment program offered by our largest customer. This program allows us to sell certain of our North American receivables from this customer to a third party at our discretion, and we utilize this program from time to time.
Current report
Accounts payable and accrued expenses For the nine months ended September 30, 2025, we experienced an increase in cash flow from operating activities of approximately $89 million related to the change in our accounts payable and accrued expenses balance from December 31, 2024 to September 30, 2025, as compared to the change in our accounts payable and accrued expenses balance from December 31, 2023 to September 30, 2024. This change was primarily the result of the timing of payments to suppliers in the applicable periods. In addition, the change in accounts payable and accrued expenses for the nine months ended September 30, 2025 reflects the impact of accrued acquisition-related costs as of September 30, 2025 associated with the Business Combination.
Current report
Income taxes paid, net Income taxes paid, net was $39.6 million for the nine months ended September 30, 2025, as compared to $31.7 million for the nine months ended September 30, 2024. For the full year 2025, we estimate income taxes paid, net to be in the range of $60 million to $75 million.
Current report
Financing Related to the Pending Business Combination, Redemption of the 6.50% Notes due 2027 and Partial Redemption of the 6.875% Notes due 2028 On October 3, 2025, AAM, Inc. issued $850 million of the 6.375% Notes and $1,250 million of the 7.75% Notes. The 6.375% Notes are governed by an indenture that contains covenants, that, among other things, restrict with certain exceptions, our ability to incur additional debt, make restricted payments, incur debt secured by liens, dispose of assets and engage in consolidations and mergers or sell or transfer all or substantially all of our assets. The 7.75% Notes are governed by an indenture that contains covenants that, among other things, restrict, with certain exceptions, our ability to engage in consolidations and mergers or sell or transfer all or substantially all of our assets, incur debt secured by liens and engage in certain sale and leaseback transactions. We intend to use the net proceeds from the issuance of the 6.375% Notes and 7.75% Notes, together with borrowings under our existing credit agreement and cash on hand to (a) pay the cash consideration payable in connection with the pending Business Combination and related fees and expenses, (b) repay in full all outstanding borrowings under the existing credit facilities of Dowlais and to pay related fees, expenses and premiums, after which all the existing credit facilities of Dowlais will be terminated, (c) to fund a change in control offer for certain outstanding notes of Dowlais, (d) to fund the redemption of all $500 million aggregate principal amount outstanding of 6.50% Notes due 2027 and the partial redemption of $150 million principal amount of 6.875% Notes due 2028, and to pay accrued and unpaid interest on the notes and (e) the remainder, if any, for general corporate purposes. We expect to pay approximately $17 million of debt issuance costs in the fourth quarter of 2025 related to the Notes and the Tranche C Term Facility.
Current report
In October 2025, we completed the partial redemption of the 6.875% Notes due 2028 and in November 2025, we completed the redemption of the 6.50% Notes due 2027, which resulted in payment of $5.5 million in accrued interest and expense of $3.0 million for the write-off of the unamortized debt issuance costs that we had been amortizing over the expected life of these borrowings.
Current report
Upon the issuance of the Notes on October 3, 2025, we deposited into segregated escrow accounts the gross proceeds from the 6.375% Notes and the gross proceeds from $600 million of the 7.75% Notes, together with certain amounts of prefunded interest. If certain escrow release conditions are not satisfied on or prior to the later of June 29, 2026, or such later date as AAM and Dowlais may agree to extend in accordance with the Co-operation Agreement, dated January 29, 2025, between AAM and Dowlais, or such earlier date as determined by AAM, AAM will be required to redeem all of the 6.375% Notes and $600 million of the 7.75% Notes, together with accrued and unpaid interest. The Notes are secured by a first priority security interest in its respective escrow account and all funds deposited therein.
Removed paragraphs (7)
Previous report
For the three and six months ended June 30, 2025, we recorded an impairment charge of $8 million to reduce the carrying value of this business to fair value less costs to sell.
Previous report
Interest income was $5.6 million in the second quarter of 2025 and $6.1 million in the second quarter of 2024.
Previous report
Income Tax Expense Income tax expense was $28.1 million for the three months ended June 30, 2025, as compared to $17.2 million for the three months ended June 30, 2024. Our effective income tax rate was 41.7% in the second quarter of 2025, as compared to 48.6% in the second quarter of 2024.
Previous report
RESULTS OF OPERATIONS –– SIX MONTHS ENDED JUNE 30, 2025 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 2024
Previous report
Interest income was $11.2 million in the first six months of 2025 as compared to $14.4 million in the first six months of 2024.
Previous report
In accordance with the guidance in ASC 740 -Income Taxes, we review the likelihood that we will realize the benefit of deferred tax assets and estimate whether recoverability of our deferred tax assets is "more likely than not" based on the available evidence. Due to the uncertainty associated with the potential impact of geopolitical conflicts or events, as well as macroeconomic factors, including sustained or increased inflation, renegotiated trade agreements, and tariffs or import restrictions, we may experience lower than projected earnings in certain jurisdictions in future periods and, as a result, it is reasonably possible that changes in valuation allowances could be recognized in future periods and such changes could be material to our financial statements.
Previous report
On May 16, 2024, Holdings and AAM, Inc. entered into a refinancing facility agreement (the Refinancing Facility Agreement), that established a new Term Loan B Facility of $648.0 million (the New Term Loan B Facility) and amended the Amended and Restated Credit Agreement to, among other things, update the applicable interest rate on the New Term Loan B Facility. The proceeds from the New Term Loan B Facility, together with $2.2 million cash on hand, were used to a) prepay the entire principal amount of the then-outstanding Term Loan B Facility, b) pay all accrued and unpaid interest due under the then-outstanding Term Loan B Facility and c) pay fees, costs and expenses payable in connection with the refinancing of the Term Loan B Facility. The New Term Loan B Facility will mature on December 13, 2029 (TLB Maturity), subject to a springing maturity that will apply if on any date prior to the TLB Maturity any of AAM's senior notes exceed $250 million outstanding within 91 days of the maturity date of such senior notes. In connection with the Refinancing Facility Agreement, we paid $1.7 million of debt refinancing costs and paid accrued interest of $0.5 million relating to the Term Loan B Facility. The terms of the Term Loan A Facility and the Revolving Credit Facility under the Amended and Restated Credit Agreement, including their respective interest rates and maturity dates in the first quarter of 2027, were not changed by the Refinancing Facility Agreement.
Reworded paragraphs (71)
Previous wording
As a leading global tier 1 automotive and mobility supplier, AAM designs, engineers and manufactures Driveline and Metal Forming technologies to support electric, hybrid, and internal combustion vehicles. Headquartered in Detroit, Michigan, with over 75 facilities in 15 countries, AAM is bringing the future faster for a safer and more sustainable tomorrow.
Current wording
As a leading global tier 1 automotive and mobility supplier, AAM designs, engineers and manufactures Driveline and Metal Forming technologies to support electric, hybrid, and internal combustion vehicles. Headquartered in Detroit, Michigan, with nearly 75 facilities in 15 countries, AAM is bringing the future faster for a safer and more sustainable tomorrow.
Previous wording
We are a primary supplier of driveline components to General Motors Company (GM) for its full-size rear-wheel drive (RWD) light trucks, sport utility vehicles (SUVs), and crossover vehicles manufactured in North America, supplying a significant portion of GM’s rear axle and four-wheel drive and all-wheel drive (4WD/AWD) axle requirements for these vehicle platforms. We also supply GM with various products from our Metal Forming segment. Sales to GM were approximately 44% of our consolidated net sales for the first six months of 2025, 41% for the first six months of 2024 and 42% for the full year 2024.
Current wording
We are a primary supplier of driveline components to General Motors Company (GM) for its full-size rear-wheel drive (RWD) light trucks, sport utility vehicles (SUVs), and crossover vehicles manufactured in North America, supplying a significant portion of GM’s rear axle and four-wheel drive and all-wheel drive (4WD/AWD) axle requirements for these vehicle platforms. We also supply GM with various products from our Metal Forming segment. Sales to GM were approximately 44% of our consolidated net sales for the first nine months of 2025, 41% for the first nine months of 2024 and 42% for the full year 2024.
Previous wording
We also supply driveline system products to Stellantis N.V. (Stellantis) for programs including the heavy-duty Ram full-size pickup trucks and its derivatives. In addition, we sell various products to Stellantis from our Metal Forming segment. Sales to Stellantis were approximately 13% of our consolidated net sales for the first six months of 2025, 14% for the first six months of 2024 and 13% for the full year 2024.
Current wording
We also supply driveline system products to Stellantis N.V. (Stellantis) for programs including the heavy-duty Ram full-size pickup truck and its derivatives. In addition, we sell various products to Stellantis from our Metal Forming segment. Sales to Stellantis were approximately 13% of our consolidated net sales for the first nine months of 2025, 14% for the first nine months of 2024 and 13% for the full year 2024.
Previous wording
We are also a supplier to Ford Motor Company (Ford) for driveline system products on certain vehicle programs including the Bronco Sport, Maverick, Edge, Escape and Lincoln Nautilus, and we also sell various products to Ford from our Metal Forming segment. Sales to Ford were approximately 15% of our consolidated net sales for the first six months of 2025 and 13% for both the first six months of 2024 and the full year 2024.
Current wording
We are also a supplier to Ford Motor Company (Ford) for driveline system products on certain vehicle programs including the Bronco Sport, Maverick, Edge, Escape and Lincoln Nautilus, and we also sell various products to Ford from our Metal Forming segment. Sales to Ford were approximately 15% of our consolidated net sales for the first nine months of 2025 and 13% for both the first nine months of 2024 and the full year 2024.
Previous wording
Pursuant to the Business Combination, Dowlais shareholders will be entitled to receive for each Dowlais ordinary share: 0.0881 shares of new AAM common stock and 43 pence per share in cash (approximately $0.59 per share as of June 30, 2025). The transaction has been unanimously approved by the Boards of Directors of AAM and Dowlais and has also been approved by both sets of shareholders. Following the close of the transaction, the combined company will be headquartered in Detroit, Michigan and will be led by AAM's Chairman and CEO. The transaction is expected to close in the fourth quarter of 2025, subject to receipt of regulatory approvals and satisfaction of customary closing conditions.
Current wording
Pursuant to the Business Combination, Dowlais shareholders will be entitled to receive for each Dowlais ordinary share: 0.0881 shares of new AAM common stock and 43 pence per share in cash (approximately $0.58 per share as of September 30, 2025). The transaction has been unanimously approved by the Boards of Directors of AAM and Dowlais and has also been approved by both sets of shareholders. Following the close of the transaction, the combined company will be headquartered in Detroit, Michigan and will be led by AAM's Chairman and CEO. The transaction is expected to close in the first quarter of 2026, subject to receipt of regulatory approvals and satisfaction of customary closing conditions.
Previous wording
In October 2024, we entered into a definitive agreement to sell our commercial vehicle axle business and related assets in India (AAM India Manufacturing Corporation Pvt., Ltd.) to Bharat Forge Limited for a sales price of $65 million (the India Sale Agreement). In July 2025, we completed the sale of AAM India Manufacturing Corporation Pvt., Ltd., which is subject to customary post-closing adjustments, including a working capital true-up, that we expect will be finalized in the third quarter of 2025. We estimate that total cash proceeds from the sale, net of cash divested, will be approximately $65 million subsequent to post-closing adjustments, of which we collected approximately $58 million at closing, and the remainder is expected to be collected in the second half of 2025.
Current wording
In October 2024, we entered into a definitive agreement to sell our commercial vehicle axle business and related assets in India (AAM India Manufacturing Corporation Pvt., Ltd.) to Bharat Forge Limited (BFL) for a sales price of $65 million (the India Sale Agreement). In July 2025, we completed the sale of AAM India Manufacturing Corporation Pvt., Ltd., and in October 2025, we reached agreement with BFL on the final settlement amount associated with the post-closing adjustments, including the final working capital true-up. As a result, total cash proceeds from the sale, net of cash divested, were approximately $64 million, of which we collected approximately $58 million in July 2025 and the remaining $6 million in the fourth quarter of 2025. For the nine months ended September 30, 2025 and 2024, we recorded impairment charges of $8 million and $12 million, respectively, to reduce the carrying value of this business to fair value less costs to sell.
Previous wording
The U.S. government has recently announced the implementation of new tariffs, as well as increases in certain existing tariffs, on various products including assembled vehicles and automotive parts and components imported into the U.S., and there is considerable uncertainty around the extent, timing and duration of these tariffs. This has resulted in retaliatory tariffs against the U.S. by the governments of various countries, resulting in significant instability and uncertainty in U.S. trade relations with certain countries.
Current wording
The U.S. government has announced the implementation of new tariffs, as well as increases in certain existing tariffs, on various products including assembled vehicles and automotive parts and components imported into the U.S., and there is considerable uncertainty around the extent, timing and duration of these tariffs. This has resulted in retaliatory tariffs against the U.S. by the governments of various countries, resulting in significant instability and uncertainty in U.S. trade relations with certain countries.
Previous wording
For the six months ended June 30, 2025, we have incurred approximately $10 million of costs related to the aforementioned tariffs and we expect to continue to incur costs from tariffs in future periods. We are implementing mitigation actions and pursuing recoveries from our customers for the cost increases resulting from the tariffs but have not reached final agreement with our customers and therefore the amount and timing of such recoveries is unknown. For the full year 2025, we anticipate the impact on earnings of these tariffs to be approximately $10 million to $15 million after mitigation actions and estimated customer recoveries. However, due to uncertainty associated with the potential further implementation or expansion of tariffs, as well as the potential for additional retaliatory actions and other changes to existing trade agreements or changes in international trade relations, the actual impact on 2025 earnings could differ materially from this estimate.
Current wording
For the nine months ended September 30, 2025, the net impact on earnings related to the aforementioned tariffs was approximately $15 million and we expect a continuing impact from tariffs in future periods. We are implementing mitigation actions and pursuing recoveries from our customers for the cost increases resulting from the tariffs but have not reached final agreement with all customers and therefore the total amount and timing of such recoveries is unknown. For the full year 2025, we anticipate the impact on earnings of these tariffs to be approximately $10 million to $15 million after mitigation actions and estimated customer recoveries. However, due to uncertainty associated with the potential further implementation or expansion of tariffs, as well as the potential for additional retaliatory actions and other changes to existing trade agreements or changes in international trade relations, the actual impact on 2025 earnings could differ materially from this estimate.
Previous wording
The change in net sales in the first six months of 2025, as compared to the first six months of 2024, reflects a reduction of approximately $17 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments, with the remainder attributable to lower production volumes on certain vehicle programs that we support.
Current wording
The change in net sales in the third quarter of 2025, as compared to the third quarter of 2024, primarily reflects an increase of approximately $25 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments, offset by a reduction of approximately $30 million as a result of the sale of AAM India Manufacturing Corporation Pvt., Ltd., which was completed on July 1, 2025.
Previous wording
The decrease in cost of goods sold in the first six months of 2025, as compared to the first six months of 2024, reflects a reduction of approximately $26 million associated with the effect of metal market pass-through costs and the impact of foreign exchange related to translation adjustments. The remainder of the decrease in cost of goods sold is primarily attributable to lower production volumes on certain vehicle programs that we support and the impact of improved operating performance. For the six months ended June 30, 2025, material costs were approximately 55% of total cost of goods sold as compared to approximately 58% for the six months ended June 30, 2024. The reduction in material costs as a percentage of total cost of goods sold is primarily attributable to the lower cost of steel and other metallic materials in the first six months of 2025 as compared to the six months of 2024.
Current wording
The decrease in cost of goods sold in the third quarter of 2025, as compared to the third quarter of 2024, is primarily attributable to a reduction of approximately $28 million as a result of the sale of AAM India Manufacturing Corporation Pvt., Ltd, as well as the impact of improved operating performance. These decreases in cost of goods sold were partially offset by an increase of approximately $24 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments. For the three months ended September 30, 2025, material costs were approximately 54% of total costs of goods sold, as compared to approximately 56% for the three months ended September 30, 2024.
Previous wording
Gross margin was 13.1% in the second quarter of 2025, as compared to 13.3% in the second quarter of 2024. Gross profit and gross margin were impacted by the factors discussed in Net Sales and Cost of Goods Sold above.
Current wording
Gross margin was 12.6% in the third quarter of 2025, as compared to 11.4% in the third quarter of 2024. Gross profit and gross margin were impacted by the factors discussed in Net Sales and Cost of Goods Sold above.
Previous wording
SG&A as a percentage of net sales was 6.6% in the second quarter of 2025, as compared to 6.4% in the second quarter of 2024. Research and development (R&D) expense, net of customer engineering, design and development (ED&D) recoveries, was approximately $36.1 million in the second quarter of 2025, as compared to $44.5 million in the second quarter of 2024, and was the primary driver of the decrease in SG&A.
Current wording
SG&A as a percentage of net sales was 6.6% in the third quarter of 2025, as compared to 6.3% in the third quarter of 2024. Research and development (R&D) expense, net of customer engineering, design and development (ED&D) recoveries, was approximately $37.4 million in the third quarter of 2025, as compared to $40.1 million in the third quarter of 2024. The change in SG&A in the third quarter of 2025, as compared to the third quarter of 2024, primarily reflects higher incentive compensation expense, partially offset by the reduction in net R&D expense.
Previous wording
Amortization of Intangible Assets Amortization expense related to intangible assets was $20.4 million for the three months ended June 30, 2025 and $20.6 million for the three months ended June 30, 2024.
Current wording
Amortization of Intangible Assets Amortization expense related to intangible assets was $20.4 million for the three months ended September 30, 2025 and $20.8 million for the three months ended September 30, 2024.
Previous wording
Impairment Charge In connection with the India Sale Agreement, we recorded an impairment charge in the six months ended June 30, 2025 of $8.0 million to reduce the carrying value of this business to fair value less costs to sell. See Note 2 - Acquisitions and Dispositions for additional detail regarding the India Sale Agreement.
Current wording
Impairment Charge In connection with the India Sale Agreement, we recorded an impairment charge in the three months ended September 30, 2024 of $12.0 million to reduce the carrying value of this business to fair value less costs to sell and there was no such charge for the three months ended September 30, 2025. See Note 2 - Acquisitions and Dispositions for additional detail regarding the India Sale Agreement.
Previous wording
Restructuring and Acquisition-Related Costs Restructuring and acquisition-related costs were $16.5 million in the second quarter of 2025 and $5.0 million in the second quarter of 2024. The change in restructuring and acquisition-related costs was primarily related to acquisition-related costs incurred in connection with the Business Combination. Acquisition-related costs primarily consist of advisory, legal, accounting, valuation and certain other professional or consulting fees incurred. See Note 12 - Restructuring and Acquisition-Related Costs for additional detail regarding our restructuring, acquisition and integration activity.
Current wording
Restructuring and Acquisition-Related Costs Restructuring and acquisition-related costs were $21.4 million in the third quarter of 2025 and $2.2 million in the third quarter of 2024. The change in restructuring and acquisition-related costs was primarily related to acquisition-related costs incurred in connection with the Business Combination. Acquisition-related costs primarily consist of advisory, legal, accounting, valuation and certain other professional or consulting fees incurred. See Note 12 - Restructuring and Acquisition-Related Costs for additional detail regarding our restructuring, acquisition and integration activity.
Previous wording
Operating Income Operating income was $55.0 million in the second quarter of 2025, as compared to $86.5 million in the second quarter of 2024. Operating margin was 3.6% in the second quarter of 2025, as compared to 5.3% in the second quarter of 2024. The changes in operating income and operating margin were primarily due to factors discussed in Net Sales, Cost of Goods Sold, SG&A and Restructuring and Acquisition-Related Costs above.
Current wording
Operating Income Operating income was $48.4 million in the third quarter of 2025, as compared to $41.7 million in the third quarter of 2024. Operating margin was 3.2% in the third quarter of 2025, as compared to 2.8% in the third quarter of 2024. The changes in operating income and operating margin were primarily due to factors discussed in Net Sales, Cost of Goods Sold, Impairment Charge and Restructuring and Acquisition-Related Costs above.
Previous wording
Interest Expense and Interest Income Interest expense was $43.1 million in the second quarter of 2025, as compared to $47.9 million in the second quarter of 2024. The weighted-average interest rate of our long-term debt outstanding was 6.7% in the second quarter of 2025 and 7.0% in the second quarter of 2024.
Current wording
Interest Expense and Interest Income Interest expense was $42.7 million in the third quarter of 2025, as compared to $45.2 million in the third quarter of 2024. The weighted-average interest rate of our long-term debt outstanding was 6.7% in the third quarter of 2025 and 7.2% in the third quarter of 2024.
Previous wording
Unrealized Gain on Business Combination Derivative In the second quarter of 2025, we recognized an unrealized gain on the Business Combination Derivative of $46.3 million. See Note 6 - Derivatives for additional detail on the Business Combination Derivative.
Current wording
Gain (Loss) on Business Combination Derivative In the third quarter of 2025, we recognized an unrealized loss on the Business Combination Derivative of $16.0 million. See Note 6 - Derivatives for additional detail on the Business Combination Derivative.
Previous wording
Other Income (Expense), Net Other income (expense), net includes the net effect of foreign exchange gains and losses, our proportionate share of earnings from equity in unconsolidated subsidiaries, and all components of net periodic pension and postretirement benefit costs other than service cost. Other income (expense), net was income of $3.6 million in the second quarter of 2025, as compared to expense of $8.8 million in the second quarter of 2024. The change in other income (expense), net was primarily driven by changes in foreign exchange gains and losses in the second quarter of 2025, as compared to the second quarter of 2024.
Current wording
Other Income (Expense), Net Other income (expense), net includes the net effect of foreign exchange gains and losses, our proportionate share of earnings from equity in unconsolidated subsidiaries, and all components of net periodic pension and postretirement benefit costs other than service cost. Other income (expense), net was income of $1.6 million in the third quarter of 2025, as compared to expense of $5.5 million in the third quarter of 2024. The change in other income (expense), net was primarily driven by changes in foreign exchange gains and losses in the third quarter of 2025, as compared to the third quarter of 2024.
Previous wording
On July 4, 2025, H.R. 1 (the One Big Beautiful Bill or the Act) was enacted into law introducing a broad range of U.S. federal tax reform provisions, which included, among other items, extending and modifying certain key Tax Cuts & Jobs Act provisions and expanding certain Inflation Reduction Act incentives while accelerating the phase-out of other incentives. We expect that the most impactful provision of the Act for AAM is a permanent modification to the interest expense limitation rules under Internal Revenue Code (IRC) Section 163(j), including an amendment to the Adjusted Taxable Income (ATI) calculation required under IRC Section 163(j)(8)(A).
Current wording
On July 4, 2025, H.R. 1 (the One Big Beautiful Bill or the Act) was enacted into law introducing a broad range of U.S. federal tax reform provisions, which included, among other items, extending and modifying certain key Tax Cuts & Jobs Act provisions and expanding certain Inflation Reduction Act incentives while accelerating the phase-out of other incentives. The most impactful provision of the Act for AAM is a permanent modification to the interest expense limitation rules under Internal Revenue Code (IRC) Section 163(j), including an amendment to the Adjusted Taxable Income (ATI) calculation required under IRC Section 163(j)(8)(A). Based on the provisions of the Act, ATI is now computed without regard to any deduction allowable for depreciation and amortization (based on EBITDA as the interest limitation base), which has reduced limitations on the deductibility of our business interest expense and resulted in the realization of additional deferred tax assets related to previously disallowed interest expense carryforwards. During the three months ended September 30, 2025 we recognized a discrete income tax benefit of $22.0 million as a result of the enactment of the One Big Beautiful Bill.
Previous wording
During the three months ended June 30, 2025 and June 30, 2024, in computing our estimated annual effective tax rate, we recorded a valuation allowance against substantially all of the deferred tax asset on the current year estimated disallowed interest expense in the U.S.
Current wording
During the three months ended September 30, 2024, in computing our estimated annual effective tax rate, we recorded a valuation allowance against the deferred tax asset on the current year estimated disallowed interest expense in the U.S. Additionally, during the three months ended September 30, 2024, we recognized an income tax benefit of $7.9 million as the result of elections made as part of our 2023 income tax return.
Previous wording
Our effective income tax rate for the three months ended June 30, 2025 varies from our effective income tax rate for the three months ended June 30, 2024 primarily as a result of the mix of earnings on a jurisdictional basis. For the three months ended June 30, 2025, our effective income tax rate varies from the U.S. federal statutory rate primarily due to the unfavorable impact of disallowed interest expense deductions in the U.S., as well as the mix of earnings on a jurisdictional basis, and the impact of certain non-U.S. tax rates and non-U.S. withholding taxes. In addition, the impact of tax expense from valuation allowances in certain non-U.S. jurisdictions also impacted our effective tax rate, as compared to the U.S. federal statutory rate, for the three months ended June 30, 2025. These tax expenses were partially offset by the favorable impact of tax credits.
Current wording
For the three months ended September 30, 2025, our effective income tax rate varies from the U.S. federal statutory rate primarily due to the impact of the Act, as well as the mix of earnings on a jurisdictional basis, and the impact of certain non-U.S. tax rates and non-U.S. withholding taxes. In addition, the impact of tax expense from valuation allowances in certain non-U.S. jurisdictions also impacted our effective tax rate, as compared to the U.S. federal statutory rate, for the three months ended September 30, 2025. These tax expenses were partially offset by the favorable impact of tax credits.
Previous wording
For the three months ended June 30, 2024, our effective income tax rate varied from the U.S. federal statutory rate primarily due to the unfavorable impact related to the disallowed interest expense deductions in the U.S., and tax expense related to global intangible low-taxed income, partially offset by the impact of certain non-U.S. tax rates and the impact of tax credits.
Current wording
For the three months ended September 30, 2024, our effective income tax rate varied from the U.S. federal statutory rate primarily due to the unfavorable impact related to the disallowed interest expense deductions in the U.S. and tax expense related to global intangible low-taxed income, the impact of certain foreign tax rates and the impact of tax credits.
Previous wording
Net Income and Earnings Per Share (EPS) Net income was $39.3 million in the second quarter of 2025, as compared to $18.2 million in the second quarter of 2024. Diluted earnings per share was $0.32 per share in the second quarter of 2025, as compared to $0.15 in the second quarter of 2024. Net income and EPS for the second quarters of 2025 and 2024 were primarily impacted by the factors discussed above.
Current wording
Net Income and Earnings Per Share (EPS) Net income was $9.2 million in the third quarter of 2025, as compared to $10.0 million in the third quarter of 2024. Diluted earnings per share was $0.07 per share in the third quarter of 2025, as compared to $0.08 in the third quarter of 2024. Net income and EPS for the third quarters of 2025 and 2024 were primarily impacted by the factors discussed above.
Previous wording
The change in net sales in the second quarter of 2025, as compared to the second quarter of 2024, primarily reflects lower production volumes on certain vehicle programs that we support, partially offset by an increase of approximately $11 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments.
Current wording
The change in net sales in the first nine months of 2025, as compared to the first nine months of 2024, primarily reflects lower production volumes on certain vehicle programs that we support and a reduction of approximately $30 million as a result of the sale of AAM India Manufacturing Corporation Pvt., Ltd., which was completed on July 1, 2025. These decreases were partially offset by an increase of approximately $8 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments.
Previous wording
The decrease in cost of goods sold in the second quarter of 2025, as compared to the second quarter of 2024, is primarily attributable to lower production volumes on certain vehicle programs that we support, as well as the impact of improved operating performance. For the three months ended June 30, 2025, material costs were approximately 55% of total costs of goods sold, as compared to approximately 58% for the three months ended June 30, 2024.
Current wording
The decrease in cost of goods sold in the first nine months of 2025, as compared to the first nine months of 2024, primarily reflects lower production volumes on certain vehicle programs that we support, as well as a reduction of approximately $28 million as a result of the sale of AAM India Manufacturing Corporation Pvt., Ltd., and the impact of improved operating performance. For the nine months ended September 30, 2025, material costs were approximately 55% of total cost of goods sold as compared to approximately 57% for the nine months ended September 30, 2024.
Previous wording
Gross margin was 12.7% in the first six months of 2025, as compared to 12.8% in the first six months of 2024. Gross profit and gross margin were impacted by the factors discussed in Net Sales and Cost of Goods Sold above.
Current wording
Gross margin was 12.7% in the first nine months of 2025, as compared to 12.4% in the first nine months of 2024. Gross profit and gross margin were impacted by the factors discussed in Net Sales and Cost of Goods Sold above.
Previous wording
SG&A as a percentage of net sales was 6.5% in the first six months of 2025 as compared to 6.3% in the first six months of 2024. R&D expense, net of customer ED&D recoveries, was approximately $72.4 million in the first six months of 2025, as compared to $81.2 million in the first six months of 2024, and was the primary driver of the decrease in SG&A.
Current wording
SG&A as a percentage of net sales was 6.5% in the first nine months of 2025 as compared to 6.3% in the first nine months of 2024. R&D expense, net of customer ED&D recoveries, was approximately $109.8 million in the first nine months of 2025, as compared to $121.3 million in the first nine months of 2024, and was the primary driver of the change in SG&A.
Previous wording
Amortization of Intangible Assets Amortization expense related to intangible assets was $41.0 million for the six months ended June 30, 2025, as compared to $41.3 million for the six months ended June 30, 2024.
Current wording
Amortization of Intangible Assets Amortization expense related to intangible assets was $61.4 million for the nine months ended September 30, 2025, as compared to $62.1 million for the nine months ended September 30, 2024.
Previous wording
Impairment Charge In connection with the India Sale Agreement, we recorded an impairment charge in the three months ended June 30, 2025 of $8.0 million to reduce the carrying value of this business to fair value less costs to sell. See Note 2 - Acquisitions and Dispositions for additional detail regarding the India Sale Agreement.
Current wording
Impairment Charges In connection with the India Sale Agreement, we recorded impairment charges of $8.0 million and $12.0 million in the nine months ended September 30, 2025 and September 30, 2024, respectively, to reduce the carrying value of this business to fair value less costs to sell. See Note 2 - Acquisitions and Dispositions for additional detail regarding the India Sale Agreement.
Previous wording
Restructuring and Acquisition-Related Costs Restructuring and acquisition-related costs were $36.2 million for the six months ended June 30, 2025, as compared to $7.5 million for the six months ended June 30, 2024. The change in restructuring and acquisition-related costs was primarily related to acquisition-related costs incurred in connection with the Business Combination. Acquisition-related costs primarily consist of advisory, legal, accounting, valuation and certain other professional or consulting fees incurred.
Current wording
Restructuring and Acquisition-Related Costs Restructuring and acquisition-related costs were $57.6 million for the nine months ended September 30, 2025, as compared to $9.7 million for the nine months ended September 30, 2024. The change in restructuring and acquisition-related costs was primarily related to acquisition-related costs incurred in connection with the Business Combination. Acquisition-related costs primarily consist of advisory, legal, accounting, valuation and certain other professional or consulting fees incurred.
Previous wording
In 2025, we expect to incur approximately $30 million to $40 million of total restructuring charges. In addition, we expect to incur $60 million to $70 million of acquisition-related costs in 2025 associated with the Business Combination. See Note 12 - Restructuring and Acquisition-Related Costs for additional detail regarding our restructuring, acquisition and integration activity.
Current wording
In 2025, we expect to incur approximately $40 million to $50 million of total restructuring charges. In addition, we expect to incur $50 million to $60 million of acquisition-related costs in 2025 associated with the Business Combination. See Note 12 - Restructuring and Acquisition-Related Costs for additional detail regarding our restructuring, acquisition and integration activity.
Previous wording
Operating Income Operating income was $97.7 million in the first six months of 2025 as compared to $163.5 million in the first six months of 2024. Operating margin was 3.3% in the first six months of 2025, as compared to 5.0% in the first six months of 2024. The changes in operating income and operating margin were due primarily to the factors discussed in Net Sales, Cost of Goods Sold, SG&A and Restructuring and Acquisition-Related Costs above.
Current wording
Operating Income Operating income was $146.1 million in the first nine months of 2025 as compared to $205.2 million in the first nine months of 2024. Operating margin was 3.3% in the first nine months of 2025, as compared to 4.3% in the first nine months of 2024. The changes in operating income and operating margin were due primarily to the factors discussed in Net Sales, Cost of Goods Sold, SG&A and Restructuring and Acquisition-Related Costs above.
Previous wording
Interest Expense and Interest Income Interest expense was $86.0 million in the first six months of 2025 as compared to $96.9 million in the first six months of 2024. The weighted-average interest rate of our long-term debt outstanding was 6.7% for the six months ended June 30, 2025 and 7.1% for the six months ended June 30, 2024. The reduction in interest expense in the first six months of 2025, as compared to the first six months of 2024, was attributable to lower outstanding indebtedness and the reduction in our weighted-average interest rate. We expect our interest expense for the full year 2025 to be approximately $170 million to $180 million on an AAM standalone basis without giving effect to interest expense that could be incurred in connection with financing the Business Combination.
Current wording
Interest Expense and Interest Income Interest expense was $128.7 million in the first nine months of 2025 as compared to $142.1 million in the first nine months of 2024. The weighted-average interest rate of our long-term debt outstanding was 6.7% for the nine months ended September 30, 2025 and 7.1% for the nine months ended September 30, 2024. The reduction in interest expense in the first nine months of 2025, as compared to the first nine months of 2024, was attributable to lower outstanding indebtedness and the reduction in our weighted-average interest rate. We expect our interest expense for the full year 2025 to be approximately $205 million including interest expense to be incurred in connection with financing the Business Combination.
Previous wording
Debt Refinancing and Redemption Costs In the first six months of 2025, we expensed $3.3 million of fees and unamortized debt issuance costs in connection with the Second Amendment to the Amended and Restated Credit Facility. See Note 5 - Long-Term Debt for further detail on the Second Amendment to the Amended and Restated Credit Facility.
Current wording
Debt Refinancing and Redemption Costs In the first nine months of 2025, we expensed $3.3 million of fees and unamortized debt issuance costs in connection with the Second Amendment to the Amended and Restated Credit Facility. See Note 5 - Long-Term Debt for further detail on the Second Amendment to the Amended and Restated Credit Facility.
Previous wording
In the first six months of 2024, we amended our existing Amended and Restated Credit Agreement and established a New Term Loan B Facility. See Note 5 - Long-Term Debt for further detail on the New Term Loan B Facility. As a result, we incurred approximately $0.2 million of debt refinancing and redemption costs during the first six months of 2024. In addition, in the first six months of 2024, we voluntarily redeemed a portion of our then outstanding 6.25% Notes due 2026. This resulted in a principal payment of $30.0 million and $0.4 million in accrued interest. We also expensed approximately $0.1 million for the write-off of a portion of the unamortized debt issuance costs that we had been amortizing over the expected life of the borrowing.
Current wording
In the first nine months of 2024, we amended our existing Amended and Restated Credit Agreement and established a New Term Loan B Facility. As a result, we incurred approximately $0.2 million of debt refinancing and redemption costs during the first nine months of 2024. In addition, in the first nine months of 2024, we voluntarily redeemed a portion of our then outstanding 6.25% Notes due 2026. This resulted in a principal payments of $80.0 million and $1.6 million in accrued interest. We also expensed approximately $0.3 million for the write-off of a portion of the unamortized debt issuance costs that we had been amortizing over the expected life of the borrowing.
Previous wording
Unrealized Gain on Business Combination Derivative In the first six months of 2025, we recognized an unrealized gain on the Business Combination Derivative of $68.2 million. See Note 6 - Derivatives for additional detail on the Business Combination Derivative.
Current wording
Gain (Loss) on Business Combination Derivative In the first nine months of 2025, we recognized an unrealized gain on the Business Combination Derivative of $52.2 million. See Note 6 - Derivatives for additional detail on the Business Combination Derivative.
Previous wording
Loss on Equity Securities We had previously invested in the equity securities of REE Automotive, which were measured at fair value each reporting period with changes in fair value reported as a gain or loss within Other income (expense) in our Condensed Consolidated Statement of Income. During the six months ended June 30, 2024, we sold all of our remaining equity securities of REE Automotive, resulting in a loss of $0.1 million.
Current wording
Loss on Equity Securities We had previously invested in the equity securities of REE Automotive, which were measured at fair value each reporting period with changes in fair value reported as a gain or loss within Other income (expense) in our Condensed Consolidated Statement of Income. During the nine months ended September 30, 2024, we sold all of our remaining equity securities of REE Automotive, resulting in a loss of $0.1 million.
Previous wording
Other Income (Expense), Net Other income (expense), net includes the net effect of foreign exchange gains and losses, our proportionate share of earnings from equity in unconsolidated subsidiaries, and all components of net periodic pension and postretirement benefit costs other than service cost. Other income (expense), net was income of $0.7 million in the first six months of 2025, as compared to expense of $8.8 million in the first six months of 2024.
Current wording
Other Income (Expense), Net Other income (expense), net includes the net effect of foreign exchange gains and losses, our proportionate share of earnings from equity in unconsolidated subsidiaries, and all components of net periodic pension and postretirement benefit costs other than service cost. Other income (expense), net was income of $2.3 million in the first nine months of 2025, as compared to expense of $14.3 million in the first nine months of 2024. The change in other income (expense), net was primarily driven by changes in foreign exchange gains and losses in the nine months ended September 30 2025, as compared to the nine months ended September 30, 2024.
Previous wording
Income Tax Expense Income tax expense was $42.1 million for the six months ended June 30, 2025, as compared to $33.1 million for the six months ended June 30, 2024. Our effective income tax rate was 47.6% in the first six months of 2025 as compared to 46.1% in the first six months of 2024.
Current wording
Income Tax Expense (Benefit)Income tax expense was $31.2 million for the nine months ended September 30, 2025, as compared to expense of $21.0 million for the nine months ended September 30, 2024. Our effective income tax rate was 35.9% in the first nine months of 2025 as compared to 30.1% in the first nine months of 2024.
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Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Our effective income tax rate for the three months ended September 30, 2025 varies from our effective income tax rate for the three months ended September 30, 2024 primarily as a result of the mix of earnings on a jurisdictional basis and the impact of the discrete items noted above.
Current report — wording carried from elsewhere
Our effective income tax rate for the nine months ended September 30, 2025 varies from our effective income tax rate for the nine months ended September 30, 2024 primarily as a result of the mix of earnings on a jurisdictional basis and the impact of the discrete items noted above.
Current report — wording carried from elsewhere
Repurchase of 6.25% Notes Due 2026 In the second quarter of 2024, we voluntarily redeemed a portion of our then outstanding 6.25% Notes due 2026. This resulted in a principal payment of $30.0 million and $0.4 million in accrued interest. We also expensed approximately $0.1 million for the write-off of a portion of the unamortized debt issuance costs that we had been amortizing over the expected life of the borrowing.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Debt Refinancing and Redemption Costs In the second quarter of 2024, we amended our existing Amended and Restated Credit Agreement and established a New Term Loan B Facility. See Note 5 - Long-Term Debt for further detail on the New Term Loan B Facility. As a result, we incurred approximately $0.2 million of debt refinancing and redemption costs during the second quarter of 2024. In addition, in the second quarter of 2024, we voluntarily redeemed a portion of our then outstanding 6.25% Notes due 2026. This resulted in a principal payment of $30.0 million and $0.4 million in accrued interest. We also expensed approximately $0.1 million for the write-off of a portion of the unamortized debt issuance costs that we had been amortizing over the expected life of the borrowing.
Previous report — wording carried elsewhere
Loss on Equity Securities We had previously invested in the equity securities of REE Automotive, which were measured at fair value each reporting period with changes in fair value reported as a gain or loss within Other income (expense), net in our Condensed Consolidated Statement of Income. During the second quarter of 2024, we sold all of our remaining equity securities of REE Automotive, resulting in a loss of $0.2 million for the three months ended June 30, 2024.
Previous report — wording carried elsewhere
During the six months ended June 30, 2025 and June 30, 2024, in computing our estimated annual effective tax rate, we recorded a valuation allowance against substantially all of the deferred tax asset on the current year estimated disallowed interest expense in the U.S.
Previous report — wording carried elsewhere
Based on the provisions of the Act, ATI will now be computed without regard to any deduction allowable for depreciation and amortization (based on EBITDA as the interest limitation base), which could materially reduce future limitations on the deductibility of our business interest expense and may result in the realization of additional deferred tax assets related to previously disallowed interest expense carryforwards. The One Big Beautiful Bill was enacted on July 4, 2025 and therefore did not impact our financial statements as of, and for the period ended, June 30, 2025. We are evaluating the full impact of the Act and we expect to reflect the impact in our financial statements for the period ending September 30, 2025, the period of enactment.
Previous report — wording carried elsewhere
In connection with the Business Combination, Dowlais shareholders will be entitled to receive 43 pence per share for each Dowlais ordinary share, which translated to $0.59 per share at the June 30, 2025 exchange rate. At this exchange rate, the cash consideration associated with the Business Combination would be approximately $784 million.