You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: You can access this announcement on the Investor Relations page of our website www.
aam.com and through the PR Newswire services.
You can also find supplemental slides for this conference call on the Investor page of our website as well.
For additional information, we ask that you refer to our filings with the Securities and Exchange Commission.
Information regarding these non-GAAP measures, as well as a reconciliation of these non-GAAP measures to GAAP financial information is available on our website.
With that, let me turn things over to AAM's Chairman and CEO, David Dauch.
Joining me on the call today are Mike Simonte, AAM's President; and Chris May, AAM's Vice President and Chief Financial Officer.
To begin my comments today, I'll review the highlights of our second quarter 2021 financial results.
Next, I'll touch on some exciting business development news in the quarter, including announcements with the Chinese EV OEM deal and our recent communication about GM's Oshawa plant.
And lastly, we'll discuss the ongoing and unprecedented challenges within the supply chain and our financial outlook.
After Chris covered the details of our financial results, we will then open up the call for any questions that you may have.
AAM delivered strong operating performance in the second quarter of 2021 navigating industry production volatility stemming from the continuity of supply challenges.
These challenges were greater than we originally anticipated at the beginning of the quarter, but our team did an excellent job in managing these obstacles resulting in solid financial results.
AAM sales for the second quarter 2021, were $1.28 billion, up approximately 149% compared to $515 million in the second quarter of 2020.
The increase in our revenues on a year-over-year basis primarily reflects the recovery from COVID-19 related industry shutdowns that we experienced last year.
North American industry production was up approximately 130% according to third party estimates.
Light truck production was up 150% year-over-year.
And volumes of our core platforms increased significantly year-over-year.
Inventory levels on key light truck programs that we support remain well below normal levels.
Consumer demand for light trucks remains robust and our OEM customers are building them as fast as possible.
We believe the demand environment for these products, combined with the lack of inventory should lead to an extended recovery through 2022 which will certainly benefit AAM.
AAM's adjusted EBITDA in the second quarter 2021 was $222.6 million or 17.3% of sales.
This compares to a loss of $52.1 million last year.
In addition to benefiting from higher production levels, our intense focus on optimizing the business and flexing our cost structure over the past several quarters greatly contributed to our performance in the quarter.
We remain committed to driving efficiency and managing factors underneath our control.
AAM's adjusted earnings per share in the second quarter of 2021 was $0.29 per share compared to a loss of $1.79 in the second quarter of 2020.
And as for cash, I'm very excited about our cash flow generation in the quarter.
We generated adjusted free cash flow of over $136 million compared to an outflow of approximately $162 million in the second quarter of 2020.
Our operating performance and commitment to efficient capital spending drove this high level of free cash flow.
Additionally, we prepaid over $140 million of term loans in the second quarter.
And since the fourth quarter of 2020, to the second quarter 2021, we have paid down approximately $360 million of long-term debt.
As we previously stated, we are committed to reducing our debt and strengthen our balance sheet this year.
We are delivering on that goal.
We achieved 2.5 times net leverage ratio in the second quarter.
It is this management team's focus to further strengthen AAM's balance sheet.
On the business front, we are very excited to announce that we will be supplying electric vehicle components to NIO, supporting their next generation of e-Powertrain program.
And for those of you who don't know who NIO is, NIO is a leading Chinese electric vehicle OEM and a pioneer in China’s electric vehicle market.
We continue to see good growth opportunities to support electric vehicles with drive units and a wide range of sub-assemblies and components.
This applies with both existing and new customers.
Today's announcement clearly underscores AAM’s technology in electric vehicle propulsion and our commitment to excellence within this space.
We are very eager to support this new customer.
Electrification dialog with multiple global OEMs continues to be very constructive as manufacturers are intensely focused to support this transformation.
We see plenty of opportunities over the next several years as our state-of-the-art technology, engineering, compact design and new product offerings are attracting strong global interest.
Our engineering teams are rapidly developing next-generation technology, while supporting the launch of multiple new electrification programs globally.
Our technology, innovation, and focus on customer service, our strong value propositions, allowing OEMs to compete to win business with both traditional and start up OEMs. It's our goal to be the supplier of choice when it comes to the electric drive units, sub-assemblies and components.
Clearly, these are very exciting times for AAM.
Having said that, we continue to deliver on our theme of securing the future by protecting the core.
We are very pleased to reiterate that AAM will be the sole supplier of front, rear pick-up axles for the production at GM's Oshawa facility.
This development demonstrates our high quality products and on-time delivery capabilities, as well as our strong relationship with General Motors.
We look forward to supporting GM as they expand their production of the successful full-sized trucks to meet consumer demand and rebuild their inventories.
In the quarter, we completed an acquisition which specializes in producing powdered metal components.
And as we mentioned before, we will do smart, quick-return, bolt-on acquisitions that will complement our core business, drive synergies, and provide solid financial returns.
This was a compelling high value purchase which should immediately benefit AAM as also part of our long-term lightweighting component strategy.
Finally, we are recognized as GM overdrive award winner in 2020.
We are very grateful for this award as it demonstrates our commitment to the continuity of supply, while addressing an unfortunate industrial fire last year.
Operational excellence is a core value for AAM and will certainly benefit us and provide us the competitive advantage going forward.
Before I transition to Chris, I want to talk about our current operating environment and our financial guidance.
The stress on the value chain stemming from shortages and semiconductors, labor, steel, shipping containers, port delays, and rising commodity prices is unprecedented.
Second quarter 2021 was a challenging environment with the semiconductor challenges causing the production volatility that we saw in our schedules.
These headwinds are continuing and schedules will remain volatile.
We believe the second quarter 2021 still to be the trough of this issue and the semiconductor availability to improve in the second half of the year.
However, we expect supply chain challenges related to this and other constraints to continue into 2022.
For AAM, we will continue to work diligently with our customers and our extended supply base to protect continuity of supply and support our customers.
Let's discuss our financial guidance.
Although there is continued operating uncertainty, especially with the availability of semiconductors, we are maintaining our guidance for revenue and raising the low end of our EBITDA range.
We are also raising our adjusted free cash flow outlook.
Our guidance is as follows.
Our revenue will be $5.3 billion to $5.5 billion.
Adjusted EBITDA $875 million to $925 million.
And adjusted free cash flow of $350 million to $425 million.
Aside from the impact of the semiconductor issue and metal market challenges, operationally, our business is running very, very well.
We are focused on managing our costs and expenses, while ensuring operational and capital efficiency to optimize our business.
And as I've mentioned before, these fundamentals should support strong margin opportunities as we return to normal operating conditions.
At AAM, we have two over achieving priorities and both are equally important.
First, we're focused on the here and the now.
That means operational excellence, strong cost management, and an unwavering commitment to support our customers.
We have continued to demonstrate these qualities and manage factors that we can control, leading to strong free cash flow generation, and yes, a stronger balance sheet.
Second, we're focused on our future.
We will continue to make investments in R&D to develop the next generation of electrified products and lightweighting of components to drive profitable future growth.
Our engineering teams are developing creative solutions to offer solid value propositions to our customers.
This is demonstrated by a high interest in our electric vehicle products.
And for us, our breadth and depth in drive chains provides us with a competitive advantage in not only technology development, but also an understanding of the OEMs, what the OEMs want from the propulsion system.
Clearly these are very exciting times and the future is very bright for AAM.
And with that, let me turn things over to Chris May.
I will cover the financial details of our second quarter results with you today.
I will also refer to the earnings slide deck as part of my prepared comments.
So, let's go ahead and begin with sales.
In the second quarter of 2021 AAM sales were $1.28 billion compared to $515 million in the second quarter of 2020.
Slide seven, shows a walk of second quarter 2020 sales to second quarter 2021 sales.
First, we add back the impact of COVID-19 from second quarter of 2020 of approximately $947 million.
Then, we account for the unfavorable impact of the semiconductor shortage which we estimate to be approximately $162 million in the second quarter of 2021.
Other volume mix and pricing was negative by $99 million.
Metals and FX accounted for an increase in sales of $82 million.
During the last several quarters, we have continued to see an increase in the primary index related inputs to metal-based materials that we purchase.
You may recall, we hedged this risk with our customers by passing through the majority of index related changes.
The metal portion of this column reflects those elevated pass-throughs on a year-over-year comparison.
Now, let's move on to profitability.
Gross profit was $190 million or 14.8% of sales in the second quarter of 2021, compared to a loss of $99 million in the second quarter of 2020.
Adjusted EBITDA was $222.6 million in the second quarter of 2021 or 17.3% of sales.
This compares to a loss of $52.1 million in the second quarter of 2020.
You could see a year-over-year walk down of adjusted EBITDA on slide eight.
We benefited from the contribution margin on the increase in net sales from last year as we continued to experience positive improvements in performance.
As a result, the short notice production schedule changes and receipt of long lead inventory items such as steel, our raw, whipped, and finished goods inventories increased in this quarter.
This drove a $16 million benefit from inventory absorption timing, which should reverse out in the second half of the year as we anticipate reducing inventories during that timeframe.
As we mentioned, throughout the quarter, our schedules were more volatile than expected, but we were able to close the latter part of the quarter on a strong note.
Now, let me cover SG&A.
SG&A expense including R&D in the first quarter of 2021 was $86 million or 6.7% of sales.
This compares to 14.3% of sales in the second quarter of 2020 as revenues rapidly declined last year due to COVID-19 related shutdowns.
AAM's R&D spending in the second quarter of 2021 was $30 million compared to $32 million in the second quarter of 2020.
We will continue to focus on controlling our SG&A costs, while at the same time, continue to invest in key technologies and innovations, with an emphasis on electrification.
This emphasis includes an appropriate level of funding to be successful and meet our objectives, but also include, smartly utilizing current resources from traditional products to support new technology development in a cost effective manner.
We do expect R&D to increase in the second half of the year as we are positioning to launch and pursue more electric vehicle business.
We continue to experience significant customer interest in our new products and technology.
Now, let's move on to interest and taxes.
Net interest expense was $47.3 million in the second quarter of 2021 compared to $51.6 million in the second quarter of 2020.
We expect this favorable trend to continue as we benefit from continued debt reduction.
In the second quarter of 2021, we recorded income tax expense of $2.4 million compared to a benefit of $43.9 million in the second quarter of 2020.
As we continue into 2021, we expect our effective tax rate to be approximately 15% to 20%.
We would expect cash taxes to be in the $30 million to $40 million range.
Taking all these sales and cost drivers into account, our GAAP net income was $16 million or $0.13 per share in the second quarter of 2021, compared to a loss of $213.2 million or a loss of $1.88 per share in the second quarter of 2020.
Let's now move to cash flow and the balance sheet.
Net cash provided by operating activities for the second quarter of 2021 was $167.1 million compared to an outflow of $142.5 million last year.
Capital expenditures, net of the proceeds from the sale of property plant equipment for the second quarter of 2021 was $41 million.
Cash payments for restructuring acquisition-related activity for the second quarter of 2021 were $16 million.
The net cash inflow related to the recovery from the Malvern fire we experienced in September of 2020 was $5 million in the quarter.
However, we anticipate the Malvern fire to have a neutral cash impact for the full year as the timing of cash expenditures and cash insurance proceeds align over time.
In total, we would expect $50 million to $65 million in restructuring and acquisition costs in 2021.
This is no change from prior guidance.
Reflecting the impact of this activity, AAM generated adjusted free cash flow of $136.1 million in the second quarter of 2021.
From a debt leverage perspective, we ended the quarter with net debt of $2.6 billion and LTM adjusted EBITDA of $1 billion, calculating a net leverage ratio of 2.5 times at June 30.
This continues the trend of a declining leverage ratio and marks the achievement of a critical goal for 2021 to reduce our leverage by a full turn or more this year.
Speaking of AAM's strong free cash flow generation, we prepaid over $140 million on our term-loans in the quarter.
Subsequent to the end of the second quarter, we redeemed an additional $100 million on our 6.25% notes due in 2025.
We continue to expect to strengthen AAM's balance sheet by reducing our gross debt and lowering future interest payments.
As of today, we have paid down approximately $350 million in our term loans and notes in 2021 alone.
Before we move on to the Q&A portion of the call, let me close out my comments with some thoughts on our 2021 financial outlook.
We raised the lower end of our adjusted EBITDA range and we increased our outlook for adjusted free cash flow.
Our outlook is based on the latest and best information we have regarding our customer production schedules, including the reduction in GM truck production we are experiencing this week.
We continue to assume our customers will prioritize building full-size pickup trucks and SUVs is going forward.
But the uncertain backdrop related to semiconductors remains, thus the ranges we have provided.
The revision to our free cash flow range is a result of focused and efficient capital spending, restructuring and cost reduction initiatives, year-over-year margin growth and working capital optimization.
Our strong financial results will be used to reduce debt and support our research and development initiatives to solidify our position for future profitable growth AAM continues to focus on building long-term shareholder value and success.
We are focused on our future in electrification.
We continue to allocate more engineering and financial resources to technology development to provide compelling high value products to OEMs and drive our future profitable growth.
You are now beginning to see tangible results with the new business award announcements we are making.
We will continue to secure business on our legacy core platforms that will yield strong cash flows well into the future.
And let's not forget our passion to run an efficient highly focused organization that centers around performance optimization, strong cost structure, and the delivery of best-in-class results.
The second quarter of 2021 continues a theme of managing factors under our control in a difficult operating environment.
There are plenty of near-term challenges and uncertainties as it relates to the supply chain in the second half of 2021.
But that stated, this management team is experienced and confident in navigating these obstacles.
We have reserved some time to take questions.
So, at this time, please feel free to proceed with any questions you may have.

user
compname reports q2 earnings per share of $0.13.
q2 adjusted earnings per share $0.29.
q2 earnings per share $0.13.
q2 sales $1.28 billion versus refinitiv ibes estimate of $1.16 billion.
american axle - targeting sales in range of $5.3 - $5.5 billion for 2021.

assistant