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AK Steel Reports Net Income for 3rd Quarter
10/28/2009 - AK Steel reported net income of $6.2 million on net sales of $1,041.1 million for the third quarter and a net loss of $114.4 million on sales of $2,756.9 million for the first nine months of 2009.
AK Steel reported net income of $6.2 million on net sales of $1,041.1 million for the third quarter and a net loss of $114.4 million on sales of $2,756.9 million for the first nine months of 2009.
Third Quarter Results — The $6.2 million net income ($0.06 per diluted share of common stock) compares to net income of $188.3 million ($1.67 per diluted share) for the year-ago third quarter. Results represent a $53.4-million improvement over the previous quarter’s net loss of $47.2 million ($0.43 per diluted share).
The $1,041.1 million net sales compare to sales of $2,157.6 million for the year-ago quarter, and shipments of 1,047,800 tons compare to shipments of 1,476,300 tons in the year-ago quarter. The company said its average selling price was $994 per ton, a 7% decrease from the $1,072 per-ton price in the previous quarter, and approximately 32% lower than the $1,462 per-ton average price realized in the year-ago third quarter.
The company reported third-quarter operating profit of $15.3 million ($15 per ton), which compares to operating profit of $309.6 million ($210 per ton) for the year-ago third quarter. Current operating results represent an $87.8 million ($113 per ton) improvement over the previous quarter’s operating loss of $72.5 million ($98 per ton).
Management Comments — "Despite the deepest recession in 75 years, AK Steel employees drew upon their experience and resolve to return the company to operating profitability and net income," said James L. Wainscott, Chairman, President and CEO of AK Steel. "While the results may pale in comparison to the year-ago records, in many respects the performance is even more remarkable, given that third-quarter 2009 revenues fell by more than half from the year-ago period."
Nine-Month Results — The $114.4 million net loss ($1.05 per diluted share of common stock) compares to net income of $434.6 million ($3.85 per diluted share) for the corresponding year-ago period. Sales of $2,756.9 million compare to sales of $6,185.6 million in the first nine months of 2008. Shipments were 2,567,200 tons compared to 4,792,500 tons for the first nine months of 2008. The company reported an operating loss of $157.1 million ($61 per ton), which compares to an operating profit of $717.2 million ($150 per ton) for the first nine months of 2008.
The company made $210.0 million in early pension fund contributions during the first nine months, as well as a $65.0-million contribution associated with the Middletown Works VEBA settlement. The company also repurchased $26.4 million of its 7-3/4% senior notes and repurchased approximately 1.6 million shares of its common stock. The company ended the period with more than $1 billion in liquidity, including $339.5 million in cash.
Outlook — AK Steel said it expects shipments for the fourth quarter to be approximately 1,300,000 tons, reflecting an increase of nearly 24% over third-quarter shipments, primarily in carbon steel products. AK Steel expects its fourth-quarter 2009 average per-ton selling price to decline approximately 2% compared to the third quarter of 2009 level due to an anticipated higher percentage of carbon steel shipments relative to stainless and electrical shipments (as compared to the third quarter).
The company expects maintenance costs to be approximately $10 million higher compared to the third quarter of 2009. AK Steel expects lower operating and raw material costs in the fourth quarter compared to the third quarter, and the company expects to generate an operating profit ranging from $30 to $35 per ton. The company also expects to incur a non-cash charge of approximately $5.0 million ($0.05 per share of common stock) primarily as the result of a decrease in the value of the company's deferred tax assets as the result of state tax law changes.
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 6000 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 250 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.
