Segment Reporting (Notes)

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

16. SEGMENT REPORTING

Our business is organized into Driveline and Metal Forming segments, with each representing a reportable segment under ASC 280 - Segment Reporting. The results of each segment are regularly reviewed by the chief operating decision maker to assess the performance of the segment and make decisions regarding the allocation of resources to the segments.

Our product offerings by segment are as follows:

•Driveline products consist primarily of front and rear axles, driveshafts, differential assemblies, clutch modules, balance shaft systems, disconnecting driveline technology, and electric and hybrid driveline products and systems for light trucks, sport utility vehicles (SUVs), crossover vehicles, passenger cars and commercial vehicles; and

•Metal Forming products consist primarily of engine, transmission, driveline and safety-critical components for traditional internal combustion engine and electric vehicle architectures including light vehicles, commercial vehicles and off-highway vehicles, as well as products for industrial markets.

We use Segment Adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. We define EBITDA to be earnings before interest expense, income taxes, depreciation and amortization. Segment Adjusted EBITDA is defined as EBITDA for our reportable segments excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, loss on the sale of a business, impairment charges, pension settlements, unrealized gains or losses on equity securities, and non-recurring items.

On June 1, 2022, our acquisition of Tekfor became effective and we began consolidating the results of Tekfor on that date, which are reported in our Metal Forming segment for the three and nine months ended September 30, 2022.

The following tables represent information by reportable segment for the three and nine months ended September 30, 2022 and 2021 (in millions):

	Three Months Ended September 30, 2022
	Driveline		Metal Forming		Total
Sales	$	1,061.1	$	591.2	$	1,652.3
Less: Intersegment sales	1.3		115.8		117.1
Net external sales	$	1,059.8	$	475.4	$	1,535.2
Segment Adjusted EBITDA	$	146.4	$	52.0	$	198.4
	Three Months Ended September 30, 2021
	Driveline		Metal Forming		Total
Sales	$	870.4	$	422.7	$	1,293.1
Less: Intersegment sales	0.8		79.2		80.0
Net external sales	$	869.6	$	343.5	$	1,213.1
Segment Adjusted EBITDA	$	128.4	$	54.8	$	183.2

	Nine Months Ended September 30, 2022
	Driveline		Metal Forming		Total
Sales	$	3,163.6	$	1,585.9	$	4,749.5
Less: intersegment sales	3.6		336.2		339.8
Net external sales	$	3,160.0	$	1,249.7	$	4,409.7
Segment Adjusted EBITDA	$	420.3	$	169.3	$	589.6
	Nine Months Ended September 30, 2021
	Driveline		Metal Forming		Total
Sales	$	2,831.9	$	1,352.1	$	4,184.0
Less: intersegment sales	2.4		260.1		262.5
Net external sales	$	2,829.5	$	1,092.0	$	3,921.5
Segment Adjusted EBITDA	$	450.2	$	218.5	$	668.7

Total assets by reportable segment as of September 30, 2022 and December 31, 2021 were as follows (in millions):

	September 30, 2022
	Driveline		Metal Forming		Other		Total
Total Assets	$	2,898.8	$	1,748.9	$	1,031.9	$	5,679.6
	December 31, 2021
	Driveline		Metal Forming		Other		Total
Total Assets	$	2,925.6	$	1,576.9	$	1,133.2	$	5,635.7

Assets included in the Other column in the table above represent AAM Corporate assets, as well as eliminations of intercompany assets.

The following table represents a reconciliation of Total Segment Adjusted EBITDA to consolidated income (loss) before income taxes for the three and nine months ended September 30, 2022 and 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Total segment adjusted EBITDA	$	198.4	$	183.2	$	589.6	$	668.7
Interest expense	(44.8)		(49.7)		(132.2)		(150.7)
Depreciation and amortization	(124.8)		(135.6)		(367.1)		(421.2)
Restructuring and acquisition-related costs	(7.9)		(7.4)		(26.4)		(40.8)
Loss on sale of business	—		—		—		(2.7)
Unrealized gain (loss) on equity securities	(2.3)		19.4		(24.0)		19.4
Debt refinancing and redemption costs	(0.2)		(31.6)		(6.0)		(34.0)
Non-recurring items:
Malvern Fire charges, net of recoveries	1.0		5.7		6.4		11.1
Acquisition-related fair value inventory adjustment	—		—		(5.0)		—
Gain on bargain purchase of business	1.4		—		13.0		—
Income (loss) before income taxes	$	20.8	$	(16.0)	$	48.3	$	49.8