This management's discussion and analysis (MD&A) should be read in conjunction
with the unaudited condensed consolidated financial statements and notes
appearing elsewhere in this Quarterly Report and our Annual Report on Form 10-K
for the year ended December 31, 2021.

Unless the context otherwise requires, references to "we," "our," "us" or "AAM"
shall mean collectively (i) American Axle & Manufacturing Holdings, Inc.
(Holdings), a Delaware corporation, (ii) American Axle & Manufacturing, Inc.
(AAM, Inc.), a Delaware corporation, and its direct and indirect subsidiaries,
and, (iii) Metaldyne Performance Group, Inc. (MPG) and its direct and indirect
subsidiaries. AAM Inc. and MPG are wholly owned subsidiaries of Holdings.

COMPANY OVERVIEW



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,
with nearly 85 facilities in 18 countries, AAM is bringing the future faster for
a safer and more sustainable tomorrow.

Major Customers



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
41% of our consolidated net sales in the first six months of 2022, 38% in the
first six months of 2021, and 37% for the full year 2021.

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, the AWD Chrysler Pacifica and the AWD Jeep Cherokee. In addition,
we sell various products to Stellantis from our Metal Forming segment. Sales to
Stellantis were approximately 18% of our consolidated net sales in the first six
months of 2022, and 19% for both the first six months of 2021 and the full year
2021.

We are also a supplier to Ford Motor Company (Ford) for driveline system
products on certain vehicle programs including the Ford Bronco Sport, Ford Edge,
Ford Escape and Lincoln Nautilus, and we sell various products to Ford from our
Metal Forming segment. Sales to Ford were approximately 11% of our consolidated
net sales for both the first six months of 2022 and 2021, and 12% for the full
year 2021.

No other customer represented 10% or more of consolidated net sales during these periods.

Supply Chain Constraints Impacting the Automotive Industry



During the first six months of 2022, the automotive industry has continued to
experience significant disruptions in the supply chain, including a shortage of
semiconductor chips used by our customers, increased metal and commodity costs,
higher utility costs, increased transportation costs, higher labor costs and
labor shortages. As a result, we have experienced increased volatility in our
production schedules, including manufacturing downtime, often with little notice
from customers, higher inventory levels and increased labor costs, which have
negatively impacted our results of operations and cash flows during this period.
We continue to work with customers and suppliers in our effort to protect
continuity of supply as we expect these challenges to continue throughout 2022.
Due to the ongoing uncertainty associated with the impact of the COVID-19
pandemic, the conflict between Russia and Ukraine and other factors causing, or
exacerbating, these supply chain constraints, the ultimate impact on our net
sales, results of operations and cash flows is unknown.



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RESULTS OF OPERATIONS -- THREE MONTHS ENDED JUNE 30, 2022 AS COMPARED TO THREE
MONTHS ENDED JUNE 30, 2021

Net Sales

                                     Three Months Ended June 30,
(in millions)            2022           2021         Change       Percent Change
Net Sales            $  1,438.3      $ 1,283.3      $ 155.0               12.1  %


The increase in the second quarter of 2022, as compared to the second quarter of
2021, reflects approximately $27 million associated with the net effect of metal
market pass-throughs to our customers and the impact of foreign exchange related
to translation adjustments. Net sales also increased by approximately $29
million as a result of our acquisition of Tekfor in the second quarter of 2022.
In addition, we estimate that net sales in the three months ended June 30, 2022
and June 30, 2021 were impacted by the semiconductor shortage and other supply
chain constraints affecting the automotive industry by approximately $99 million
and $162 million, respectively, resulting in an increase in sales of
approximately $63 million for the three months ended June 30, 2022.

Cost of Goods Sold

                                        Three Months Ended June 30,
(in millions)               2022           2021         Change       Percent Change
Cost of Goods Sold      $  1,264.8      $ 1,093.3      $ 171.5               15.7  %


The change in cost of goods sold reflects approximately $42 million related to
metal market costs and the impact of foreign exchange. Cost of goods sold was
also impacted by increased net manufacturing costs, including metal and
commodity costs, utility costs and transportation costs. In addition, we
estimate that cost of goods sold increased by approximately $51 million as the
impact on production volumes of the semiconductor shortage and other supply
chain constraints affecting the automotive industry lessened in the three months
ended June 30, 2022, as compared to the three months ended June 30, 2021, and
increased as a result of our acquisition of Tekfor in the second quarter of
2022. For the three months ended June 30, 2022, material costs were
approximately 62% of total cost of goods sold, as compared to approximately 60%
for the three months ended June 30, 2021.

In the first quarter of 2021, one of our Major Customers announced its intention
to cease production operations in Brazil in 2021 as part of their restructuring
actions. This decision impacted certain of the programs that we supported and,
as a result, we accelerated approximately $11 million of depreciation on certain
property, plant and equipment in the second quarter of 2021.

Gross Profit

                                       Three Months Ended June 30,
(in millions)              2022             2021        Change       Percent Change
Gross Profit         $    173.5           $ 190.0      $ (16.5)              (8.7) %


Gross margin was 12.1% in the second quarter of 2022, as compared to 14.8% in
the second quarter of 2021. Gross profit and gross margin were impacted by the
factors discussed in Net Sales and Cost of Goods Sold above.


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Selling, General and Administrative Expenses (SG&A)



                                                                        Three Months Ended June 30,
(in millions)                                      2022                2021               Change             Percent Change
Selling, General & Administrative
Expenses                                      $      84.8          $     86.2          $     (1.4)                    (1.6) %


SG&A as a percentage of net sales was 5.9% in the second quarter of 2022, as
compared to 6.7% of net sales in the second quarter of 2021. Research and
development (R&D) expense, net of customer engineering, design and development
(ED&D) recoveries, was approximately $35.2 million in the second quarter of
2022, as compared to $30.1 million in the second quarter of 2021. The decrease
in SG&A expense is primarily related to lower compensation-related expense,
partially offset by the increase in R&D expense.

Amortization of Intangible Assets Amortization expense related to intangible assets was $21.4 million for both the three months ended June 30, 2022 and June 30, 2021.

Restructuring and Acquisition-Related Costs Restructuring and acquisition-related costs were $9.6 million in the second quarter of 2022 and $15.9 million in the second quarter of 2021.



On June 1, 2022, our acquisition of Tekfor Group (Tekfor) became effective.
During the three months ended June 30, 2022, we incurred $4.6 million of
acquisition-related costs associated with this acquisition. Acquisition-related
costs primarily consist of advisory, legal, accounting, valuation and certain
other professional or consulting fees incurred. See Note 2 - Restructuring and
Acquisition-Related Costs for additional detail regarding our restructuring,
acquisition and integration activity.

Loss on Sale of Business In the second quarter of 2021, we completed the sale of
our remaining ownership interest in a consolidated joint venture. As a result of
the sale, we recognized a loss of $0.1 million in the three months ended June
30, 2021.

Operating Income  Operating income was $57.7 million in the second quarter of
2022, as compared to $66.4 million in the second quarter of 2021. Operating
margin was 4.0% in the second quarter of 2022, as compared to 5.2% in the second
quarter of 2021. The changes in operating income and operating margin were
primarily due to factors discussed in Net Sales and Cost of Goods Sold above.

Interest Expense and Interest Income  Interest expense was $42.7 million in the
second quarter of 2022, as compared to $49.9 million in the second quarter of
2021. The decrease in interest expense was primarily the result of our ongoing
debt reduction initiatives and our previous refinancing actions. The
weighted-average interest rate of our long-term debt outstanding was 5.4% in the
second quarter of 2022 and 5.9% in the second quarter of 2021.

Interest income was $3.2 million in the second quarter of 2022, as compared to $2.6 million in the second quarter of 2021.



Debt Refinancing and Redemption Costs In the second quarter of 2022, we made a
voluntary prepayment of $25.0 million on our Term Loan B Facility. As a result,
we 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 this borrowing.

In the second quarter of 2021, we made voluntary prepayments totaling
$138.8 million on our Term Loan B Facility and $4.2 million on our Term Loan A
Facility. As a result, we expensed approximately $1.3 million for the write-off
of a portion of the unamortized debt issuance costs that we had been amortizing
over the expected life of these borrowings.

Gain on Bargain Purchase of Business On June 1, 2022, our acquisition of Tekfor
became effective, which resulted in a gain on bargain purchase of $11.6 million.
See Note 14 - Acquisitions and Dispositions for additional detail on this
acquisition.


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Unrealized Loss on Equity Securities We have an investment in the equity
securities of REE Automotive, an e-mobility company. These equity securities are
measured at fair value each reporting period with changes in fair value reported
through an unrealized gain or loss within Other income (expense), net in our
Condensed Consolidated Statement of Income. As of June 30, 2022, our investment
in REE shares was valued at $5.7 million resulting in an unrealized loss of $3.7
million for the three months ended June 30, 2022.

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 expense of $2.4 million in the second quarter of 2022, as
compared to income of $0.6 million in the second quarter of 2021.

Income Tax Expense Income tax expense was $0.6 million for the three months ended June 30, 2022, as compared to $2.4 million for the three months ended June 30, 2021. Our effective income tax rate was 2.6% in the second quarter of 2022, as compared to 13.0% in the second quarter of 2021.



Our effective income tax rate for the three months ended June 30, 2022 varies
from our effective income tax rate for the three months ended June 30, 2021
primarily as a result of the $11.6 million gain on bargain purchase of business,
recognized in the three months ended June 30, 2022, which was not subject to
tax, as well as the mix of earnings on a jurisdictional basis. For the three
months ended June 30, 2022 and 2021, our effective income tax rates are lower
than the U.S. federal statutory rate of 21% primarily due to the gain on bargain
purchase of business, a benefit from foreign derived intangible income
deduction, the change in jurisdictional mix of earnings, as well as favorable
foreign tax rates and the impact of tax credits.

Net Income and Earnings Per Share (EPS) Net income was $22.9 million in the
second quarter of 2022, as compared to $16.0 million in the second quarter of
2021. Diluted EPS was $0.19 per share in the second quarter of 2022, as compared
to $0.13 in the second quarter of 2021. Net income and EPS for the second
quarters of 2022 and 2021 were primarily impacted by the factors discussed
above.

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RESULTS OF OPERATIONS -- SIX MONTHS ENDED JUNE 30, 2022 AS COMPARED TO SIX
MONTHS ENDED JUNE 30, 2021

Net Sales

                                      Six Months Ended June 30,
(in millions)           2022           2021         Change       Percent Change
Net Sales            $ 2,874.5      $ 2,708.4      $ 166.1                6.1  %


The increase in the first six months of 2022, as compared to the first six
months of 2021, primarily reflects approximately $66 million associated with the
net effect of metal market pass-throughs to our customers and the impact of
foreign exchange related to translation adjustments. Net sales also increased in
the first six months of 2022 by approximately $29 million as a result of our
acquisition of Tekfor in the second quarter of 2022. In addition, we estimate
that sales in the first six months of 2022 and 2021 were impacted by the
semiconductor shortage and other supply chain constraints affecting the
automotive industry by approximately $193 million and $225 million,
respectively, resulting in an increase in sales of approximately $32 million for
the six months ended June 30, 2022.

Cost of Goods Sold

                                         Six Months Ended June 30,
(in millions)              2022           2021         Change       Percent Change
Cost of Goods Sold      $ 2,514.2      $ 2,291.3      $ 222.9                9.7  %


The change in cost of goods sold in the first six months of 2022, as compared to
the first six months of 2021, primarily reflects approximately $88 million
related to metal market costs and the impact of foreign exchange. Cost of goods
sold was also impacted by increased net manufacturing costs, including metal and
commodity costs, utility costs and transportation costs. In addition, cost of
goods sold increased by approximately $27 million as the impact on production
volumes of the semiconductor shortage and other supply chain constraints
affecting the automotive industry lessened in the six months ended June 30,
2022, as compared to the six months ended June 30, 2021, and increased as a
result of our acquisition of Tekfor in the second quarter of 2022. For the six
months ended June 30, 2022, material costs were approximately 61% of total costs
of goods sold as compared to approximately 60% for the six months ended June 30,
2021.

In the first quarter of 2021, one of our Major Customers announced its intention
to cease production operations in Brazil in 2021 as part of their restructuring
actions. This decision impacted certain of the programs that we supported and,
as a result, we accelerated depreciation on certain property, plant and
equipment beginning in the first quarter of 2021. The impact on cost of goods
sold of this acceleration was approximately $22 million in the first six months
of 2021.

Gross Profit

                                      Six Months Ended June 30,
(in millions)             2022           2021        Change       Percent Change
Gross Profit         $   360.3         $ 417.1      $ (56.8)             (13.6) %


Gross margin was 12.5% in the first six months of 2022 as compared to 15.4% in
the first six months of 2021. Gross profit and gross margin were impacted by the
factors discussed in Net Sales and Cost of Goods Sold above.


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Selling, General and Administrative Expenses (SG&A)



                                                                          Six Months Ended June 30,
(in millions)                                       2022                  2021               Change             Percent Change
Selling, General & Administrative
Expenses                                      $     170.9             $    176.2          $     (5.3)                    (3.0) %


SG&A as a percentage of net sales was 5.9% in the first six months of 2022 as
compared to 6.5% of net sales in the first six months of 2021. R&D expense, net
of ED&D recoveries, was approximately $69.9 million in the first six months of
2022 as compared to $61.8 million in the first six months of 2021. The decrease
in SG&A expense is primarily related to lower compensation-related expense,
partially offset by the increase in R&D expense.

Amortization of Intangible Assets Amortization expense related to intangible assets was $42.9 million for both the six months ended June 30, 2022 and June 30, 2021.



Restructuring and Acquisition-Related Costs Restructuring and
acquisition-related costs were $18.5 million for the six months ended June 30,
2022, as compared to $33.4 million for the six months ended June 30, 2021. We
expect to incur approximately $20 million to $30 million of total restructuring
charges in 2022.

On June 1, 2022, our acquisition of Tekfor became effective. During the six
months ended June 30, 2022, we incurred $5.7 million of acquisition-related
costs associated with this acquisition. Acquisition-related costs primarily
consist of advisory, legal, accounting, valuation and certain other professional
or consulting fees incurred. We do not expect to incur significant additional
acquisition-related costs in the second half of 2022.

We expect to incur approximately $5 million of total integration costs in 2022
associated with the acquisition of Tekfor and other past acquisitions completed.
Integration expenses primarily reflect costs incurred for information technology
infrastructure and enterprise resource planning systems, and consulting fees
incurred in conjunction with integration activities. See Note 2 - Restructuring
and Acquisition-Related Costs for additional detail regarding our restructuring,
acquisition and integration activity.

Loss on Sale of Business In the first six months of 2021, we completed the sale
of our ownership interest in a consolidated joint venture. As a result of the
sale and deconsolidation of this joint venture, we recognized a loss of $2.7
million.

Operating Income  Operating income was $128.0 million in the first six months of
2022 as compared to $161.9 million in the first six months of 2021. Operating
margin was 4.5% in the first six months of 2022 as compared to 6.0% in the first
six months of 2021. 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.

Interest Expense and Interest Income  Interest expense was $87.4 million in the
first six months of 2022 as compared to $101.0 million in the first six months
of 2021. The decrease in interest expense was primarily the result of our
ongoing debt reduction initiatives and our previous refinancing actions. The
weighted-average interest rate of our long-term debt outstanding was 5.5% for
the six months ended June 30, 2022 and 5.9% for the six months ended June 30,
2021. We expect our interest expense for the full year 2022 to be approximately
$170 million to $180 million.

Interest income was $6.2 million in the first six months of 2022 as compared to $5.5 million in the first six months of 2021.



Debt Refinancing and Redemption Costs In the first six months of 2022, we
amended and restated our existing Credit Agreement. See Note 5 - Long Term Debt
for further detail on the Amended & Restated Credit Agreement. As a result, we
incurred $0.2 million of third-party debt refinancing costs during the six
months ended June 30, 2022.

In the second quarter of 2022, we made a voluntary prepayment of $25.0 million
on our Term Loan B Facility. As a result, we 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 this borrowing.

In the first quarter of 2022, we made a voluntary prepayment of $25.0 million on
our Term Loan B Facility. As a result, we 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 this borrowing.
                                       36
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Also in the first quarter of 2022, we used the proceeds from the upsized Term
Loan A Facility to voluntarily redeem a portion of our 6.25% Notes due 2026.
This resulted in a principal payment of $220 million and $0.2 million in accrued
interest. We also expensed approximately $1.8 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, and approximately $3.4 million for the
payment of an early redemption premium.

In the first quarter of 2021, we made voluntary prepayments of $100.0 million on
our Term Loan B Facility and $4.3 million on our Term Loan A Facility. As a
result, we expensed approximately $1.1 million for the write-off of a portion of
the unamortized debt issuance costs that we had been amortizing over the
expected life of these borrowings.

In the second quarter of 2021, we made voluntary prepayments totaling
$138.8 million on our Term Loan B Facility and $4.2 million on our Term Loan A
Facility. As a result, we expensed approximately $1.3 million for the write-off
of a portion of the unamortized debt issuance costs that we had been amortizing
over the expected life of these borrowings.

Gain on Bargain Purchase of Business On June 1 2022, our acquisition of Tekfor
became effective, which resulted in a gain on bargain purchase of $11.6 million.
See Note 14 - Acquisitions and Dispositions for additional detail on this
acquisition.

Unrealized Loss on Equity Securities We have an investment in the equity
securities of REE Automotive, an e-mobility company. These equity securities are
measured at fair value each reporting period with changes in fair value reported
through an unrealized holding gain or loss within Other income (expense), net in
our Condensed Consolidated Statement of Income. As of June 30, 2022, our
investment in REE shares was valued at $5.7 million resulting in an unrealized
loss of $21.7 million for the six months ended June 30, 2022.

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 expense of $3.4 million in the first six months of 2022 as
compared to income of $1.8 million in the first six months of 2021.

Income Tax Expense Income tax expense was $3.6 million for the six months ended
June 30, 2022 as compared to $11.2 million for the six months ended June 30,
2021. Our effective income tax rate was 13.1% in the first six months of 2022 as
compared to 17.0% in the first six months of 2021.

Our effective income tax rate for the six months ended June 30, 2022 varies from
our effective income tax rate for the six months ended June 30, 2021 primarily
as a result of the $11.6 million gain on bargain purchase of business,
recognized in the six months ended June 30, 2022, which was not subject to tax,
as well as the mix of earnings on a jurisdictional basis. For the six months
ended June 30, 2022 and 2021, our effective income tax rates are lower than the
U.S. federal statutory rate of 21% primarily due to the gain on bargain purchase
of business, a benefit from foreign derived intangible income deduction, the
change in jurisdictional mix of earnings, as well as favorable foreign tax rates
and the impact of tax credits.

Due to the uncertainty associated with the extent and ultimate impact of the
significant supply chain constraints affecting the automotive industry,
including COVID-19, the semiconductor shortage and resulting impact on global
automotive production volumes, and the conflict between Russia and Ukraine, 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.

Net Income and Earnings Per Share (EPS) Net income was $23.9 million in the
first six months of 2022 as compared to $54.6 million in the first six months of
2021. Diluted EPS was $0.20 per share in the first six months of 2022 as
compared to $0.46 per share in the first six months of 2021. Net income and EPS
for the first six months of 2022 and 2021 were primarily impacted by the factors
discussed above.

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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, 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.

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 six months ended June 30, 2022.

The following table represents sales by reportable segment for the three and six months ended June 30, 2022 and 2021 (in millions):


                                                                                         Six Months Ended
                                           Three Months Ended June 30,                       June 30,
                                            2022                  2021                            2022                2021
Driveline                             $      1,040.7          $    935.4                      $  2,102.5          $  1,961.5
Metal Forming                                  512.9               440.1                           994.7               929.4

Eliminations                                  (115.3)              (92.2)                         (222.7)             (182.5)
Net Sales                             $      1,438.3          $  1,283.3                      $  2,874.5          $  2,708.4



The Driveline segment experienced increased production volumes on certain
vehicle programs that we support as the impact of the semiconductor shortage and
other supply chain constraints affecting the automotive industry lessened in the
three and six months ended June 30, 2022, as compared to the three and six
months ended June 30, 2021. We estimate that Driveline sales increased by $75
million and $81 million for the three and six months ended June 30, 2022,
respectively, as a result of this increase in production volumes. The increase
in Driveline sales for the three and six months ended June 30, 2022, as compared
to the three and six months ended June 30, 2021, also reflects approximately $20
million and $48 million, respectively, associated with the effect of metal
market pass-throughs to our customers and the impact of foreign exchange related
to translation adjustments.

The increase in Metal Forming sales for the three and six months ended June 30,
2022, as compared to the three and six months ended June 30, 2021, primarily
reflects approximately $29 million for both periods associated with the
acquisition of Tekfor that became effective on June 1, 2022, as well as
approximately $7 million and $18 million, respectively, associated with the
effect of metal market pass-throughs to our customers and the impact of foreign
exchange related to translation adjustments.

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.

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The amounts for Segment Adjusted EBITDA for the three and six months ended June 30, 2022 and 2021 are as follows (in millions):


                                                                                           Six Months Ended
                                             Three Months Ended June 30,                       June 30,
                                              2022                  2021                            2022                2021
Driveline                               $        141.4          $    151.3                      $    273.9          $    321.8
Metal Forming                                     53.7                71.3                           117.3               163.7

Total segment adjusted EBITDA           $        195.1          $    222.6                      $    391.2          $    485.5



For the three and six months ended June 30, 2022, as compared to the three and
six months ended June 30, 2021, the change in Segment Adjusted EBITDA for the
Driveline segment was primarily attributable to the impact of increased net
manufacturing costs, including higher metal and commodity costs, higher utility
costs and increased transportation costs.

For the three and six months ended June 30, 2022, as compared to the three and
six months ended June 30, 2021, the change in Segment Adjusted EBITDA for the
Metal Forming segment was primarily attributable to the impact of increased net
manufacturing costs, including higher metal and commodity costs, higher utility
costs and increased transportation costs.

Reconciliation of Non-GAAP and GAAP Information



In addition to results reported in accordance with accounting principles
generally accepted in the United States of America (GAAP) in this MD&A, we have
provided certain non-GAAP financial measures such as EBITDA and Total Segment
Adjusted EBITDA. Such information is reconciled to its closest GAAP measure in
accordance with Securities and Exchange Commission rules below.

We define EBITDA to be earnings before interest expense, income taxes,
depreciation and amortization. Total 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. We believe that EBITDA and
Total Segment Adjusted EBITDA are meaningful measures of performance as they are
commonly utilized by management and investors to analyze operating performance
and entity valuation. Our management, the investment community and the banking
institutions routinely use EBITDA and Total Segment Adjusted EBITDA, together
with other measures, to measure our operating performance relative to other Tier
1 automotive suppliers and to assess the relative mix of Adjusted EBITDA by
segment. We also believe that Total Segment Adjusted EBITDA is a meaningful
measure as it is used for operational planning and decision-making purposes.
EBITDA and Total Segment Adjusted EBITDA are also key metrics used in our
calculation of incentive compensation. These non-GAAP financial measures are not
and should not be considered a substitute for any GAAP measure. Additionally,
non-GAAP financial measures as presented by AAM may not be comparable to
similarly titled measures reported by other companies.

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                                                                                              Six Months Ended
                                                Three Months Ended June 30,                       June 30,
                                                 2022                  2021                            2022                2021
                                                              (in millions)
Net income                                 $         22.9          $     16.0                      $     23.9          $     54.6
Interest expense                                     42.7                49.9                            87.4               101.0
Income tax expense                                    0.6                 2.4                             3.6                11.2
Depreciation and amortization                       121.9               143.6                           242.3               285.6
EBITDA                                     $        188.1          $    211.9                      $    357.2          $    452.4
Restructuring and acquisition-related
costs                                                 9.6                15.9                            18.5                33.4
Debt refinancing and redemption costs                 0.2                 1.3                             5.8                 2.4

Loss on sale of business                                -                 0.1                               -                 2.7
Unrealized loss on equity securities                  3.7                   -                            21.7                   -
Non-recurring items:
Malvern Fire charges, net of recoveries               0.1                (6.6)                           (5.4)               (5.4)
   Gain on bargain purchase of business             (11.6)                  -                           (11.6)                  -
Acquisition-related fair value inventory
adjustment                                            5.0                   -                             5.0                   -
Total segment adjusted EBITDA              $        195.1          $    222.6                      $    391.2          $    485.5

LIQUIDITY AND CAPITAL RESOURCES



Our primary liquidity needs are to fund debt service obligations, capital
expenditures and working capital requirements, in addition to advancing our
strategic initiatives. We believe that operating cash flow, available cash and
cash equivalent balances and available borrowing capacity under our Senior
Secured Credit Facilities and foreign credit facilities will be sufficient to
meet these needs.

At June 30, 2022, we had nearly $1.5 billion of liquidity consisting of approximately $501 million of cash and cash equivalents, approximately $894 million of available borrowings under our Revolving Credit Facility and approximately $63 million of available borrowings under foreign credit facilities. We have no significant debt maturities before 2024.



Operating Activities In the first six months of 2022, net cash provided by
operating activities was $215.2 million as compared to $346.2 million in the
first six months of 2021. The following factors impacted cash from operating
activities in the first six months of 2022, as compared to the first six months
of 2021:

Impact of Supply Chain Constraints We experienced lower earnings and cash flows
from operating activities as a result of the significant supply chain
constraints that continued to impact the automotive industry during the six
months ended June 30, 2022, including increased metal and commodity costs,
higher utility costs, increased transportation costs, higher labor costs and
labor shortages. We expect these supply chain constraints to continue through
2022.

Accounts receivable For the six months ended June 30, 2022, we experienced a
decrease in cash flow from operating activities of approximately $139 million
related to the change in our accounts receivable balance from December 31, 2021
to June 30, 2022, as compared to the change in our accounts receivable balance
from December 31, 2020 to June 30, 2021. This change was primarily attributable
to the timing of sales to customers in the applicable periods.

Inventories For the six months ended June 30, 2022, we experienced an increase
in cash flow from operating activities of approximately $42 million related to
the change in our inventories balance from December 31, 2021 to June 30, 2022,
as compared to the change in our inventories balance from December 31, 2020 to
June 30, 2021. In the six months ended June 30, 2021, we began to increase
inventory levels as a result of volatility in production schedules and
unexpected downtime at certain of our manufacturing facilities as a result of
the semiconductor chip shortage that has impacted the automotive industry. This
increase in inventory levels in the first six months of 2021 was more
significant than the increase in the first six months of 2022.

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Accounts payable and accrued expenses For the six months ended June 30, 2022, we
experienced an increase in cash flow from operating activities of approximately
$63 million related to the change in our accounts payable and accrued expenses
balance from December 31, 2021 to June 30, 2022, as compared to the change in
our accounts payable and accrued expenses balance from December 31, 2020 to
June 30, 2021. This change was primarily attributable to the timing of
production and the associated purchases from suppliers within the applicable
periods, as well as the timing of payments to suppliers.

Income taxes Income taxes paid, net was $20.5 million in the first six months of
2022, as compared to $8.0 million in the first six months of 2021. During the
first six months of 2022 and 2021, we received income tax refunds of
approximately $5.4 million and $6.0 million, respectively, related to the
utilization of net operating losses under the provisions of the CARES Act.

Interest paid Interest paid was $86.5 million for the six months ended June 30,
2022, as compared to $95.1 million for the six months ended June 30, 2021. The
decrease in interest paid was primarily the result of our ongoing debt reduction
initiatives and our previous refinancing actions.

Malvern Fire In the first six months of 2022 and 2021, we received $11.7 million
and $40.1 million of cash, respectively, as reimbursements and advances under
our insurance policies, of which $7.1 million and $28.0 million, respectively,
were associated with operating expenses incurred as a result of the Malvern Fire
and have been presented as operating cash inflows in our Condensed Consolidated
Statement of Cash Flows for these periods. At June 30, 2022, we have an
insurance recovery receivable of $6.4 million, which is included in Prepaid
expenses and other in our Condensed Consolidated Balance Sheet. See Note 15 -
Manufacturing Facility Fire and Insurance Recovery for additional detail.

Restructuring and acquisition-related costs For the full year 2022, we expect
restructuring and acquisition-related payments in cash flows from operating
activities to be between $30 million and $40 million, and we expect the timing
of cash payments to approximate the timing of charges incurred.

Pension and other postretirement benefits Due to the availability of our
pre-funded pension balances (previous contributions in excess of prior required
pension contributions), we expect our regulatory pension funding requirements in
2022 to be less than $1 million. We expect our cash payments for other
postretirement benefit obligations in 2022, net of GM cost sharing, to be
approximately $16.5 million.

Investing Activities In the first six months of 2022, net cash used in investing
activities was $150.2 million as compared to $74.3 million for the six months
ended June 30, 2021. Capital expenditures were $71.2 million in the first six
months of 2022 as compared to $82.4 million in the first six months of 2021. We
expect our capital spending in 2022 to be 3.5% to 4% of sales.

On June 1, 2022, our acquisition of Tekfor became effective and we paid
approximately $80 million, net of cash acquired, which was funded entirely with
cash on hand. Also in the first six months of 2022, we made payments for the
acquisition of a supplier in Mexico and began to pay the deferred consideration
associated with our acquisition of Emporium that was completed in 2021. These
payments totaled approximately $8 million in the six months ended June 30, 2022.
We paid cash of $4.9 million in the first six months of 2021 for the acquisition
of Emporium.

In the first six months of 2022 and 2021, in addition to the $7.1 million and
$28.0 million, respectively, of cash reimbursements and advances received under
our insurance policies associated with operating expenses incurred as a result
of the Malvern Fire, we received $4.6 million and $12.1 million, respectively,
of cash associated with machinery and equipment that was damaged or destroyed as
a result of the Malvern Fire. This cash received has been classified as an
investing cash flow based on the nature of the associated loss incurred.

Financing Activities In the first six months of 2022, net cash used in financing
activities was $86.7 million, as compared to $240.2 million in the first six
months of 2021. The following factors impacted cash from financing activities in
the first six months of 2022, as compared to the first six months of 2021:

Senior Secured Credit Facilities Our Senior Secured Credit Facilities, which are
comprised of our Revolving Credit Facility, our Term Loan A Facility, and our
Term Loan B Facility, provide back-up liquidity for our foreign credit
facilities.  We intend to use the availability of long-term financing under the
Senior Secured Credit Facilities to refinance any current maturities related to
such debt agreements that are not otherwise refinanced on a long-term basis in
their local markets, except where otherwise reclassified to Current portion of
long-term debt on our Condensed Consolidated Balance Sheet.


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In March 2022, Holdings, and AAM, Inc. entered into the Amended & Restated
Credit Agreement. The Amended & Restated Credit Agreement, among other things,
increased the principal amount of the Term Loan A Facility to $520 million,
extended the maturity date of the Term Loan A Facility and the Revolving Credit
Facility, and established the use under the Term Loan A Facility and Revolving
Credit Facility of updated reference rates. See Note 5 - Long Term Debt for
further detail on the Amended & Restated Credit Agreement. As a result, we
expensed $0.2 million of debt refinancing costs, paid accrued interest of $1.0
million, and paid debt issuance costs of $4.4 million in the six months ended
June 30, 2022 related to the Amended & Restated Credit Agreement.

In the first six months of 2022, we made voluntary prepayments totaling
$50.0 million on our Term Loan B Facility. As a result, we expensed
approximately $0.4 million for the write-off of a portion of the unamortized
debt issuance costs that we had been amortizing over the expected life of this
borrowing.

In the first six months of 2021, we made voluntary prepayments of $238.8 million
on our Term Loan B Facility and $8.5 million on our Term Loan A Facility. As a
result, we expensed approximately $2.4 million for the write-off of a portion of
the unamortized debt issuance costs that we had been amortizing over the life of
these borrowings.

At June 30, 2022, we had $893.5 million available under the Revolving Credit
Facility. This availability reflects a reduction of $31.5 million for standby
letters of credit issued against the facility. The proceeds of the Revolving
Credit Facility are used for general corporate purposes. See Note 5 - Long-Term
Debt for additional information regarding our Senior Secured Credit Facilities.

Redemption of 6.25% Notes due 2026 In the first quarter of 2022, we used the
proceeds from the upsized Term Loan A Facility to voluntarily redeem a portion
of our 6.25% Notes due 2026. This resulted in a principal payment of
$220 million and $0.2 million in accrued interest. We also expensed
approximately $1.8 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, and approximately $3.4 million for the payment of an early redemption
premium.

Repayment of Tekfor Group Indebtedness Upon the acquisition of Tekfor, we assumed $23.4 million of existing Tekfor indebtedness, of which we repaid $10.7 million in the second quarter of 2022.



Foreign credit facilities We utilize local currency credit facilities to finance
the operations of certain foreign subsidiaries. At June 30, 2022, $77.8 million
was outstanding under our foreign credit facilities, as compared to $86.1
million at December 31, 2021. At June 30, 2022, an additional $62.7 million was
available under our foreign credit facilities.

Treasury stock Treasury stock increased by $1.9 million in the first six months
of 2022 to $218.2 million as compared to $216.3 million at year-end 2021, due to
the withholding and repurchase of shares of AAM stock to satisfy employee tax
withholding obligations due upon the vesting of stock-based compensation.

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Subsidiary Guarantees of Registered Debt Securities Our 6.875% Notes, 6.50%
Notes, 6.25% Notes, and 5.00% Notes (collectively, the Notes) are senior
unsecured obligations of AAM, Inc. (Issuer); all of which are fully and
unconditionally guaranteed, on a joint and several basis, by Holdings and
substantially all domestic subsidiaries of AAM, Inc. and MPG Inc (Subsidiary
Guarantors). Holdings has no significant assets other than its 100% ownership in
AAM, Inc. and MPG Inc., and no direct subsidiaries other than AAM, Inc. and MPG
Inc.

Each guarantee by Holdings and/or any of the Subsidiary Guarantors is:



•a senior obligation of the relevant Subsidiary Guarantors;
•the unsecured and unsubordinated obligation of the relevant Subsidiary
Guarantors; and
•of equal rank with all other existing and future unsubordinated and unsecured
indebtedness of the relevant Subsidiary Guarantors.

Each guarantee by a Subsidiary Guarantor provides by its terms that it will be automatically, fully and unconditionally released and discharged upon:



•any sale, exchange or transfer (by merger or otherwise) of the capital stock of
such Subsidiary Guarantor, or the sale or disposition of all the assets of such
Subsidiary Guarantor, which sale, exchange, transfer or disposition is made in
compliance with the applicable provisions of the indentures;
•the exercise by the issuer of its legal defeasance option or covenant
defeasance option or the discharge of the issuer's obligations under the
indentures in accordance with the terms of the indentures; or
•the election of the issuer to affect such a release following the date that
such guaranteed Notes have an investment grade rating from both Standard &
Poor's Ratings Group, Inc, and Moody's Investors Service, Inc.

The following represents summarized financial information of AAM Holdings, AAM
Inc. and the Subsidiary Guarantors (collectively, the Combined Entities). The
information has been prepared on a combined basis and excludes any investments
of AAM Holdings, AAM Inc., or the Subsidiary Guarantors in non-guarantor
subsidiaries. Intercompany transactions and amounts between Combined Entities
have been eliminated.

Statement of Income Information                                          

(in millions)


                                                       Six Months Ended June        Year Ended December
                                                             30, 2022                    31, 2021
Net sales                                              $          2,240.6          $          3,983.0
Gross profit                                                        238.8                       410.8
Income (loss) from operations                                        26.1                       (27.4)
Net loss                                                            (34.8)                     (158.6)

Balance Sheet Information                                                (in millions)
                                                           June 30, 2022             December 31, 2021
Current assets                                         $          1,099.1          $          1,034.6
Noncurrent assets                                                 2,440.0                     2,524.2

Current liabilities                                               1,339.0                     1,183.7
Noncurrent liabilities                                            3,725.3                     3,791.1

Redeemable preferred stock                                              -                           -
Noncontrolling interest                                                 -                           -


At June 30, 2022 and December 31, 2021, amounts owed by the Combined Entities to non-guarantor entities totaled approximately $905 million and $800 million, respectively, and amounts owed to the Combined Entities from non-guarantor entities totaled approximately $630 million and $655 million, respectively.


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CYCLICALITY AND SEASONALITY



Our operations are cyclical because they are directly related to worldwide
automotive production, which is itself cyclical and dependent on general
economic conditions and other factors. Typically, our business is also
moderately seasonal as our major OEM customers historically have an extended
shutdown of operations (normally 1-2 weeks) in conjunction with their model year
changeover and an approximate one-week shutdown in December. Our major OEM
customers also occasionally have longer shutdowns of operations (up to six
weeks) for program changeovers. Accordingly, our quarterly results may reflect
these trends.

LITIGATION AND ENVIRONMENTAL MATTERS

We are involved in, or potentially subject to, various legal proceedings or claims incidental to our business. These include, but are not limited to, matters arising out of product warranties, contractual matters, and environmental obligations. Although the outcome of these matters cannot be predicted with certainty, at this time we do not believe that any of these matters, individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or cash flows.



We file U.S. federal, state and local income tax returns, as well as foreign
income tax returns in jurisdictions throughout the world. We are also subject to
examinations of these tax returns by the relevant tax authorities. Negative or
unexpected outcomes of these examinations and audits, and any related
litigation, could have a material adverse impact on our results of operations,
financial condition and cash flows.

We are subject to various federal, state, local and foreign environmental and
occupational safety and health laws, regulations and ordinances, including those
regulating air emissions, water discharge, waste management and environmental
cleanup. We will continue to closely monitor our environmental conditions to
ensure that we are in compliance with all laws, regulations and ordinances. We
have made, and anticipate continuing to make, capital and other expenditures
(including recurring administrative costs) to comply with environmental
requirements at our current and former facilities. Such expenditures were not
significant in the second quarter of 2022.

We are subject to risks of environmental issues, including impacts of
climate-related events, that could result in unforeseen disruptions or costs at
our facilities. We did not experience any climate-related events in the second
quarter of 2022 that we believe could have a material adverse impact on our
results of operations, financial condition and cash flows.

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