Dauch Corporation, formerly known as American Axle & Manufacturing (NYSE:AXL) , used its fourth-quarter 2025 earnings call to outline year-end results, discuss recent customer and quality awards, and provide its first formal outlook after closing the Dowlais acquisition earlier this month.
Fourth-quarter and full-year 2025 results
Chairman and CEO David Dauch said the company finished 2025 “on a positive note with good momentum,” citing adjusted EBITDA margin growth and more than $200 million of adjusted free cash flow for the year. Dauch reported fourth-quarter sales of approximately $1.4 billion and full-year sales of approximately $5.8 billion. Adjusted EBITDA in the fourth quarter was $169 million, or 12.2% of sales, while full-year adjusted EBITDA was $743 million, or 12.7% of sales—up from 12.2% in the prior year.
CFO Chris May provided additional detail, stating fourth-quarter 2025 sales were $1.38 billion, flat year over year. In his sales bridge, May said volume, mix, and other items lowered revenue by $2 million, while pricing contributed $6 million. The sale of the commercial vehicle axle business in India lowered quarterly sales by $27 million, while metal market pass-throughs and foreign exchange increased sales by about $38 million.
For the full year, May said sales were $5.84 billion compared with $6.12 billion in 2024, with the decline primarily driven by volume and mix and the India commercial vehicle axle divestiture, partially offset by favorable foreign exchange and metal markets.
On profitability, May said gross profit was $140.9 million in the fourth quarter compared with $154.3 million a year earlier, while adjusted EBITDA increased to $169 million from $160.8 million. He noted that although sales volume and mix declined, the company realized a roughly $5 million adjusted EBITDA benefit due to mix effects, along with slightly lower year-over-year R&D expense and $8 million of favorable “performance.”
Net interest expense rose to $50.8 million in the fourth quarter from $37.3 million in the prior-year period, which May attributed primarily to new debt issued in connection with the Dowlais acquisition and held in escrow until the February 2026 closing. The company recorded a fourth-quarter income tax benefit of $10 million, compared with an income tax expense of $6.8 million in the prior-year quarter.
May said GAAP net loss widened to $75.3 million, or $0.63 per share, in the fourth quarter compared with a net loss of $13.7 million, or $0.12 per share, in the fourth quarter of 2024. Adjusted EPS improved to $0.07 from an adjusted loss of $0.06 a year earlier.
Cash flow, leverage, and financing
Net cash provided by operating activities was $120.5 million in the fourth quarter, down from $151.2 million a year earlier. Capital expenditures, net of proceeds from asset sales, were $66 million in the quarter; full-year capex totaled $250.9 million, or 4.3% of sales. The company made $2.8 million of cash restructuring payments in the quarter and $25.9 million of cash payments related to the Dowlais acquisition, resulting in fourth-quarter adjusted free cash flow of $70.1 million.
Dauch ended 2025 with net debt of $1.8 billion and last-twelve-month adjusted EBITDA of $743 million, resulting in a net leverage ratio of 2.5x at December 31, down from 2.8x a year earlier. May said the reduction was driven by cash flow generation and asset sale proceeds. He also noted that acquisition financing was completed during the quarter and remained in escrow at year end pending closing.
Operational updates and customer recognition
In prepared remarks, David Dauch highlighted several business updates, including a new award of business with Scout Motors to supply the company’s “Smart Bar” product. He said this win is in addition to previously announced programs for front electric drive units and electric rear beam axles.
He also cited supplier recognition in Asia and from General Motors:
- Chery Automobile Best Supplier Award of the Year for 2025, which Dauch described as recognizing outstanding quality and reliable delivery.
- Several GM Supplier Quality Excellence Awards, reflecting performance against GM’s quality criteria.
Dowlais acquisition closes and integration priorities
Dauch said the acquisition of Dowlais Group plc—bringing in GKN Automotive and GKN Powder Metallurgy—officially closed on February 3, 2026. He described the deal as creating a leading global driveline and metal forming supplier with a “powertrain agnostic” product portfolio supporting electric, hybrid, and internal-combustion vehicles.
Management reiterated an estimated $300 million in synergies associated with the transaction, targeting a full run-rate achievement by the end of year three. Dauch said the company expects to exceed $100 million in run-rate savings by the end of the first year. He added that synergy opportunities span SG&A, purchasing, and operations, and that an integration office led by senior leaders from both legacy organizations was established early to drive accountability and execution.
In the Q&A, Dauch said there may be potential to enhance the synergy estimate after further plant reviews, although he emphasized confidence in delivering the $300 million figure, which he said had been subject to a third-party audit prior to publication.
2026 outlook: production assumptions, guidance, and integration costs
Management said its 2026 outlook reflects a partial-year contribution from Dowlais because the transaction closed in early February. David Dauch cited ongoing uncertainty around trade policy discussions and the USMCA process, saying it is “very important and very difficult to speculate the outcome.”
The company’s 2026 production assumptions include:
- North America: approximately 15 million units
- Europe: approximately 17 million units
- China: approximately 33 million units
- Global: approximately 93 million units
For 2026, Dauch is targeting:
- Sales of $10.3 billion to $10.7 billion
- Adjusted EBITDA of approximately $1.3 billion to $1.4 billion
- Adjusted free cash flow of $235 million to $325 million
May added that the company assumes GM large pickup and SUV production of 1.3 million to 1.4 million units in 2026. He said R&D optimization is expected to drive about $10 million to $20 million in annual savings, and that performance improvements from cost reductions and operational productivity are expected to be a net $40 million to $50 million year over year. He also said the company expects a headwind from metal markets and foreign exchange, “in particular, due to the strengthening of the Mexican peso.”
Synergy profit-and-loss flow-through is forecast to contribute $50 million to $75 million in adjusted EBITDA in 2026, which May said equates to a run rate of greater than $100 million by the end of year one. For cash flow, May said capex is expected to be 4.5% to 5% of sales in 2026 to support multiple launches, including large GM truck programs. Management expects restructuring-related cash outflows of $110 million to $150 million and cash costs associated with synergy capture of $100 million to $125 million in 2026. May said synergy integration costs are expected to continue into 2027, while restructuring costs should drop significantly after 2026.
May also provided modeling items, including expectations for approximately 243 million fully diluted shares outstanding in 2026, variable contribution margin of 25% to 30%, annual cash pension contributions of about $40 million to $50 million, a roughly 30% book tax rate, and cash taxes of $150 million to $170 million.
Finally, May cautioned analysts not to directly add Dauch and Dowlais historical figures due to differences between U.S. GAAP and IFRS and differing adjustment definitions, noting the differences can be meaningful and referencing previously published proxy materials for additional context.
About American Axle & Manufacturing (NYSE:AXL)
American Axle & Manufacturing Holdings, Inc (NYSE: AXL) is a global designer, engineer and manufacturer of driveline and drivetrain systems and components for light vehicles, commercial trucks and off-highway applications. The company’s core product portfolio includes axles, driveshafts, half-shafts, drive module assemblies and differential gears, as well as advanced metallic and composite structures for electric and hybrid vehicles. AAM’s capabilities also encompass system testing, rapid prototyping and precision machining to support both high-volume production and low-volume, specialty vehicle applications.
Founded in 1994 following the divestiture of the Detroit Axle Division of General Motors, American Axle & Manufacturing completed its initial public offering in 1998.
