AK Steel Reports 4th Quarter, Full-Year 2011 Results
02/03/2012 - AK Steel reported a net loss of $193.9 million on net sales of $1,509.2 million for the fourth quarter, and a net loss of $155.6 million on net sales of $6,468.0 million for the full year of 2011.
AK Steel reported a net loss of $193.9 million on net sales of $1,509.2 million for the fourth quarter, and a net loss of $155.6 million on net sales of $6,468.0 million for the full year of 2011.
Fourth Quarter Results — The net loss of $193.9 million ($1.76 per diluted share of common stock) compares to a net loss of $98.3 million ($0.89 per diluted share) for the year-ago fourth quarter. Results include a non-cash pre-tax pension corridor charge of $268.1 million ($1.50 per diluted share). Excluding this amount, the company’s adjusted net loss* for the fourth quarter of 2011 was $28.0 million ($0.26 per diluted share).
Net sales were $1,509.2 million on shipments of 1,409,900 tons, compared to sales of $1,390.6 million on shipments of 1,359,900 tons for the year-ago fourth quarter. The company said its average selling price for the quarter was $1,070 per ton, approximately 5% higher than the $1,022 per ton reported for the year-ago fourth quarter, but an approximately 8% decrease from the $1,158 per ton for the previous quarter (3Q-2011).
The company reported an operating loss of $300.7 million, which compares to an operating loss of $154.6 million ($114 per ton) for the year-ago fourth quarter. Results include a $268.1 million pre-tax pension corridor charge. Excluding the pension corridor charge, the company’s adjusted operating loss* was $32.6 million ($23 per ton) for the current quarter. Current results also include a LIFO credit of $44.1 million, which compares to a $63.7 million pre-tax charge in the year-ago fourth quarter related to the shutdown of the company’s Ashland (KY) coke plant, and a $9.1 million pre-tax charge related to a retiree benefit settlement associated with the company’s Butler (PA) Works.
Management Comments — “The economic recovery we’ve been anticipating for several years simply did not fully materialize in 2011 and we endured another round of raw material price increases,” said James L. Wainscott, Chairman, President and CEO of AK Steel. “However, we made significant strides toward becoming more self-sufficient in raw materials – moves that will greatly improve our cost structure in the future.” In October of 2011, AK Steel made strategic investments in iron ore and metallurgical coal, two of the most important raw materials the company utilizes in its steelmaking operations.
Full-Year 2011 Results —For the full year, AK Steel reported a net loss of $155.6 million ($1.41 per diluted share), compared to a net loss of $128.9 million ($1.17 per diluted share) for 2010. Current results include the non-cash pre-tax pension corridor charge of $268.1 million ($1.50 per diluted share). Excluding this amount, the company’s adjusted net income* for 2011 was $10.3 million ($0.09 per diluted share). Results for 2010 include a non-cash charge of $25.3 million ($0.23 per diluted share) related to federal healthcare legislation, as well as a $63.7 million pre-tax charge related to the shutdown of the company’s Ashland (KY) coke plant, and a $9.1 million pre-tax charge related to a retiree benefit settlement associated with the company’s Butler (PA) Works.
Sales for 2011 were $6,468.0 million, an increase of 8% compared to $5,968.3 million for 2010. Shipments for 2011 were 5,698,800 tons, a slight increase compared to 5,660,900 tons in 2010. The company reported an operating loss of $201.3 million ($35 per ton) for 2011 which was largely a result of the pension corridor charge, compared to an operating loss of $133.9 million ($24 per ton) for 2010. Excluding the pension corridor charge, the company’s adjusted operating profit* for the full year of 2011 was $66.8 million ($12 per ton).
First Quarter 2012 Outlook — The company said it will not provide an outlook for the company’s first quarter results at this time, due to continued uncertainty and volatility with respect to economic conditions in the U.S. and in other markets served by the company. However, the company said that it expects to provide first quarter guidance in March.
*Use of Non-GAAP Financial Measures — The company believes that statement of adjusted operating profit (loss) and net income (loss) to exclude a pension corridor accounting charge enhances the understanding of the company's financial results, even though reporting the adjusted operating profit or loss and net income or loss (either as a total or on a per-ton basis) is not a financial measure under generally accepted accounting principles (“GAAP”).
The company believes that this method of accounting for pension and other postretirement obligations is not typically used by other publicly traded companies. In addition, although it reduces reported operating and net income, it is a non-cash charge. Disclosing adjusted operating profit (loss) and net income (loss) with the corridor charge excluded from the actual quarterly results facilitates the ability of an investor to compare the company's actual results to its competitors and other publicly traded companies.
The company noted that neither current shareholders nor potential investors in the company's securities should rely on adjusted operating profit (loss) or adjusted net income (loss) as a substitute for any GAAP financial measure.
AK Steel produces flat-rolled carbon, stainless and electrical steels, primarily for automotive, appliance, construction and electrical power generation and distribution markets. The company employs about 6200 men and women in Middletown, Mansfield, Coshocton and Zanesville, Ohio; Butler, Pa.; Ashland, Ky.; Rockport, Ind.; and its corporate headquarters in West Chester, Ohio.
AK Tube LLC, a wholly-owned subsidiary of AK Steel, employs about 300 men and women in plants in Walbridge, Ohio, and Columbus, Ind. AK Tube produces carbon and stainless electric resistance welded (ERW) tubular steel products for truck, automotive and other markets.
AK Coal Resources, Inc., another wholly-owned subsidiary of AK Steel, owns or leases metallurgical coal reserves in Somerset County, Pa. AK Steel also owns 49.9% of Magnetation LLC, a joint venture headquartered in Grand Rapids, Minn., that produces iron ore concentrate from previously mined ore reserves.
