AK Steel Reports Q1 Financial Results
04/21/2010 - AK Steel reports net income of $1.9 million ($0.02 per diluted share of common stock) for the first quarter of 2010, compared to a net loss of $73.4 million ($0.67 per diluted share) for the same period a year ago.
AK Steel reported net income of $1.9 million ($0.02 per diluted share of common stock) for the first quarter of 2010, compared to a net loss of $73.4 million ($0.67 per diluted share) for the same period a year ago.
The 2010 first-quarter results include a non-cash charge of $25.3 million ($0.23 per diluted share) related to federal healthcare legislation signed into law in March. The charge reflects a reduction in the value of the company's deferred tax asset as a result of a change to the tax treatment of Medicare Part D reimbursements contained within the healthcare reform law. Excluding the special charge, net income was $27.2 million ($0.25 per diluted share).
Net sales for the first quarter of 2010 were $1,405.7 million on shipments of 1,385,800 tons, up from net sales of $922.2 million on shipments of 778,800 tons for last year’s first quarter.
The company said its average selling price for the first quarter of 2010 was $1014 per ton, a 14% decrease from the $1184 per ton in the first quarter of 2009 but a 5% increase from the $964 per ton reported in the fourth quarter of 2009. The year-over-year decrease in average selling price resulted primarily from a change in product and market mix. The sequential quarterly increase in the average per-ton selling price resulted from a richer product mix and higher surcharges, which reflect rising raw material costs.
The company reported an operating profit for the first quarter of 2010 of $57.6 million ($42 per ton) compared to an operating loss of $99.9 million ($128 per ton) for the year-ago first quarter. The company ended the first quarter of 2010 with $330 million of cash and $698 million of availability under its credit facility, for total liquidity of more than $1 billion.
"AK Steel is firmly on the road to recovery," said James L. Wainscott, Chairman, President and CEO. "Our order book for carbon products reflects robust demand, and we are encouraged that our other markets will show steady improvement the balance of the year."
Q2 2010 outlook: The company said it expects shipments of approximately 1,450,000 tons for the second quarter—nearly 5% higher than for the first quarter—with an average selling price approximately 5 to 6% higher than for the first quarter.
Planned maintenance outage costs are expected to be approximately $15 million higher for the second quarter compared to the first quarter. The company also noted that substantial uncertainty remains with respect to global iron ore pricing for 2010 and that, if there is an increase in the price of iron ore beyond the 30% assumed with respect to the first quarter, it will have a negative impact on its second-quarter financial performance.
Because iron ore pricing for 2010 has not yet been determined, the company is currently unable to reliably estimate its quarterly operating results for the second quarter of 2010.
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.
