This week, Durig looks at the auto industry to focus on a manufacturer who supplies components to many of the industry’s leader auto makers. American Axle & Manufacturing (NYSE:AXL), a leading supplier of driveline technology, recently released its second quarter results. The company registered solid free cash flow, net cash from operations and improving EBITDA and EBITDA margins (see bullets above).
The global electric traction motor market is expected to grow at a CAGR of 18.10% from 2018 to 2023 to reach a market size of $28.51 billion by 2023. The increasing demand for carbon emission-free vehicles, increasing transportation system efficiency, and the need for reducing air pollution are expected to drive the electric traction motor market during the forecast period.
The distribution boards market is projected to reach $5.91 billion by 2021, growing at a CAGR of 6.4% during the forecast period. The distribution board plays a crucial role in the power sector across various segments, including power generation, transmission & distribution, and equipment protection.
The global low voltage protection and control market is expected to grow from an estimated $13.2 billion in 2018 to $19.8 billion by 2025, at a CAGR of 5.97%. The growth of this market is driven by the increasing demand for renewable energy sources, growing per capita consumption of energy, and demand for safe and secure electrical systems.
Power transmission cables are widely used in transmission and distribution of electricity to various residential and commercial consumers. Power transmission cables are insulated with various materials such as PVC (Poly Vinyl Chloride), XLPE (Polyethylene with cross-links), rubber, impregnated paper and varnished cambric.
This week, Durig Capital reviews a bond from an issuer that was snapped up a few years ago by one of the most enigmatic figures in corporate America. In late 2016, SolarCity was acquired by Elon Musk’s company, Tesla. The acquisition made sense- combine the maker of electric cars and energy storage with a company that produces solar panels that produce energy (seemingly to ultimately charge Tesla’s vehicles). Tesla has since integrated SolarCity’s products into the Tesla portfolio. Tesla’s most recent reported quarter (Q3 2018) was truly historical.
Free cash flow of $881 million.
Operating income of $417 million
Cash flow from operations of $1.4 billion.
Interest coverage in Q3 of 2.4x.