AK Steel Reports Record Full Year 2007 Results
01/23/2008 - AK Steel reported net income of $106.7 million on net sales of $1,691.9 million for the fourth quarter of 2007, and net income of $387.7 million on record net sales of $7,003.0 million for the full year.
AK Steel reported net income of $106.7 million on net sales of $1,691.9 million for the fourth quarter of 2007, and net income of $387.7 million on record net sales of $7,003.0 million for the full year.
Fourth Quarter Results—The $106.7 million net income ($0.95 per diluted share of common stock) compares to a net loss of $49.3 million ($0.45 per diluted share) in the fourth quarter of 2006. Last year’s fourth quarter loss included a pre-tax, non-cash "corridor" charge of $133.2 million for actuarial losses related to the company's retiree health care benefit plans. There was no corridor charge in 2007.
Net sales of $1,691.9 million were approximately 7% higher than in the year-ago period, while shipments of 1,568,100 tons were approximately 3% higher. The company's average selling price was $1,079 per ton, which was approximately 4% higher than in the year-ago period.
Operating profit was $153.5 million ($98 per ton), which compares to an operating loss of $81.9 million ($54 per ton) for the fourth quarter of 2006. Excluding the corridor charge, adjusted operating profit for the fourth quarter of 2006 was $51.3 million ($34 per ton).
Full-Year Results—Full-year net income of $387.7 million ($3.46 per diluted share) compares to net income of $12.0 million ($0.11 per diluted share) for the full year in 2006. Results include $39.8 million in one-time, pre-tax charges related to the implementation of new labor agreements at the company's Mansfield and Middletown plants. Last year’s results included the $133.2 million corridor charge as well as $15.8 million of one-time charges related to implementation of new labor agreements at the company's Butler and Zanesville plants.
Record net sales of $7,003.0 million were approximately 15% higher than net sales of $6,069.0 million in 2006, while record shipments of 6,478,700 tons were approximately 5% higher than shipments of 6,168,600 tons in 2006. AK Steel's average selling price for 2007 rose to a record $1,081 per ton, approximately 10% higher than the 2006 average of $984 per ton.
The company had adjusted operating profit for 2007 of $664.2 million (a record $103 per ton), which compares to adjusted operating profit of $214.6 million ($35 per ton) for 2006. Including the additional charges mentioned above, 2007 operating profit was $624.4 million ($96 per ton) compared to 2006 operating profit of $65.6 million ($11 per ton). AK Steel ended 2007 with a cash balance of $713.6 million.
Management Comments—“A year ago we set the tone for 2007 by declaring that it was time to 'put the pedal to the metal' in every aspect of AK Steel's operating, customer-service and financial performance,” said James L. Wainscott, Chairman, President and CEO. "Indeed, our management and employees delivered record results in every key metric, and we have taken another huge step toward realizing the potential of our company. Importantly, shareholders were rewarded during the year with a substantial increase in the market value of AK Steel.”
First Quarter 2008 Outlook—For the first quarter of 2008, AK Steel said it expects shipments to be comparable to the fourth quarter of 2007 level, and average per-ton selling prices to be 5 to 6% higher than in the fourth quarter of 2007. Higher per-ton selling prices are expected to be partially offset by higher raw material costs, as compared to fourth quarter 2007 levels. The company said it expects to generate an operating profit of approximately $100 per ton.
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 6,500 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.
