AK Steel Reports Q2 Financial Results
07/28/2010 - AK Steel reported net income of $26.7 million, or $0.24 per diluted share of common stock, for the second quarter of 2010, compared to a net loss of $47.2 million, or a loss of $0.43 per diluted share, for the same period last year.
AK Steel reported net income of $26.7 million, or $0.24 per diluted share of common stock, for the second quarter of 2010, compared to a net loss of $47.2 million, or a loss of $0.43 per diluted share, for the same period last year.
In the absence of a global benchmark price for 2010 iron ore purchases, AK Steel used an assumed 65% increase from the 2009 benchmark price for purposes of its Q2 financial results. For its first quarter 2010 financial results, the company had assumed a 30% increase from the 2009 benchmark price. As a result, the company's second quarter 2010 results include the impact of higher iron ore costs vs. the previous quarter.
AK Steel recognized as an expense in the second quarter the incremental amount of the assumed 65% benchmark increase that is attributable to its first quarter results. This "true-up" pre-tax expense recognized in the second quarter was approximately $18.0 million. Excluding this expense, net income for the second quarter would have been approximately $37.4 million, or $0.34 per share, the company noted.
Net sales for the second quarter of 2010 were $1,596.1 million on shipments of 1,449,400 tons, compared to sales of $793.6 million on shipments of 740,600 tons for the year-ago second quarter. Second quarter 2010 shipments represent the company's fourth consecutive quarter of increased shipping levels and the highest level since the third quarter of 2008.
The company said its average selling price for the second quarter of 2010 was $1,101 per ton, a 9% increase over the $1,014 per ton in the first quarter of 2010, and about 3% higher than the $1,072 per ton reported for the second quarter of 2009.
AK Steel reported an operating profit for the second quarter of 2010 of $65.6 million, or $45 per ton, compared to an operating loss of $72.5 million, or $98 per ton, for last year’s second quarter. The company ended the second quarter of 2010 with $129.5 million of cash and $700.6 million of availability under its credit facility, for total liquidity of more than $830 million.
"AK Steel's second quarter of 2010 results represent another quarter of solid progress in this year of economic recovery for our company," said James L. Wainscott, Chairman, President, and CEO. "Despite the impact of significantly increased costs for iron ore, AK Steel recorded an excellent second quarter performance."
Six-month results—The company reported net income of $28.6 million, or $0.26 per diluted share, for the first six months of 2010. The company reported a net loss for the corresponding 2009 period of $120.6 million, or a net loss of $1.10 per diluted share. First-half results include a non-cash charge in the first quarter of $25.3 million, or $0.23 per diluted share of common stock, related to federal healthcare legislation signed into law in March of this year. Excluding the special charge, net income for the first-half of 2010 was $53.9 million, or $0.49 per diluted share.
First-half 2010 sales were $3,001.8 million compared to $1,715.8 million in the first half of 2009. Shipments were 2,835,200 tons compared to 1,519,400 tons last year. AK Steel reported an operating profit of $123.2 million, or $43 per ton, for the first-half of 2010 compared to an operating loss of $172.4 million, or $113 per ton, for the same period last year. The company noted that the significant increase in shipments, sales, and income for the first-half of 2010 was due to increased demand from the automotive market along with other markets it serves as the global economy continued to recover.
During the first-half of 2010, the company made $110 million in pension fund contributions and a $65 million contribution to a Voluntary Employees Beneficiary Association trust established to assume responsibility for all health and welfare postretirement benefit obligations formerly owed by the company to a group of retirees from the company's Middletown Works.
Third-quarter 2010 outlook—AK Steel said it expects shipments in the third quarter of 2010 to be approximately 3% higher than its Q2 shipments. The company anticipates that its average per ton selling price will be about 5% lower than the second quarter of 2010.
The company also expects planned maintenance costs to decrease by approximately $4 million compared to the second quarter. Assuming a 65% increase in the iron ore benchmark price, AK Steel expects to generate an operating profit of approximately $15 per ton for the third quarter.
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 people in Middletown, Mansfield, Coshocton, and Zanesville, Ohio; Butler, Pa.; Ashland, Ky.; Rockport, Ind.; and its corporate headquarters in West Chester, Ohio.
