AK Steel Reports Q4, Full-Year 2010 Results
01/26/2011 - AK Steel reported a net loss of $98.3 million on net sales of $1,390.6 million for the fourth quarter, and a net loss of $128.9 million on net sales of $5,968.3 million for the full year 2010.
AK Steel reported a net loss of $98.3 million on net sales of $1,390.6 million for the fourth quarter, and a net loss of $128.9 million on net sales of $5,968.3 million for the full year 2010.
Fourth Quarter Results — The $98.3 million net loss ($0.89 per diluted share of common stock) compares to net income of $39.8 million ($0.36 per diluted share) for the year-ago fourth quarter. Results include a $63.7 million pre-tax charge related to the shutdown of the company's Ashland Coke Plant, and a $9.1 million pre-tax charge related to a retiree benefit settlement associated with the company's Butler Works. Excluding these amounts, the company's adjusted net after-tax loss was $54.5 million, or $0.49 per diluted share.
The company reported an operating loss of $154.6 million ($114 per ton) compared to an operating profit of $87.0 million, or $64 per ton, for the fourth quarter of 2009. Excluding the special charges, the adjusted operating loss was $81.8 million ($60 per ton).
Net sales of $1,390.6 million compare to net sales of $1,319.9 million for the year-ago fourth quarter, while shipments of 1,359,900 tons compare to shipments of 1,368,300 tons for the year-ago fourth quarter. The company said its average selling price was $1,022 per ton, approximately 6% higher than the $964 per-ton average price realized in the year-ago fourth quarter.
Full-Year Results — The $128.9 million net loss ($1.17 per diluted share of common stock) compares to a net loss of $74.6 million ($0.68 per diluted share) for 2009. Results include the $72.8 million pre-tax charges, as well as a $25.3-million non-cash charge related to federal healthcare legislation signed into law in March of 2010. Excluding these special charges, the adjusted 2010 full-year after-tax loss was $59.8 million ($0.54 per diluted share). The 2009 full year results include a $5.1 million charge related to a state tax law change.
The company reported an operating loss of $133.9 million ($24 per ton) for 2010, which compares to an operating loss of $70.1 million ($18 per ton) for 2009. Excluding the special charges mentioned above, the adjusted operating loss for the full year of 2010 is $61.1 million ($11 per ton).
Full-year sales of $5,968.3 million compare to sales of $4,076.8 million for 2009. Shipments were 5,660,900 tons compared to 3,935,500 tons for 2009.
The company ended 2010 with $217 million of cash and approximately $693 million of availability under its credit facility, for total liquidity of approximately $910 million. During 2010, the company made $110.0 million in pension fund contributions and a $65.0 million contribution associated with the Middletown Works VEBA settlement.
Management Comments — "AK Steel employees can be proud of their performances in 2010, which in some cases were all-time records, within our core values of safety, quality and productivity," said James L. Wainscott, Chairman, President and CEO. "Unfortunately, soaring raw material costs and a stubbornly slow economic recovery – items outside our control – overshadowed that great work. Nonetheless, AK Steel is poised for the road to recovery in 2011."
First Quarter 2011 Outlook — AK Steel said it expects shipments for the first quarter of 2011 to be approximately 1,450,000 tons, nearly 7% higher than fourth-quarter 2010 shipments. The company expects its first-quarter 2011 average per-ton selling prices to increase approximately 8% compared to the fourth quarter of 2010 level. The expected increase in the average selling price is due to anticipated higher contract and spot market prices and an improved product mix.
AK Steel expects higher raw material costs for the first quarter of 2011, in particular for iron ore, scrap and coal, partially offset by an improved operating performance. Overall, the company expects to break even at the operating level for the first quarter of 2011, representing a substantial improvement compared to the $60 per ton adjusted operating loss experienced for the fourth 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.
