AK Steel Says It Continues to Make Progress, "Add Value"
01/28/2014 - AK Steel reported net income of US$35.2 million for the fourth quarter of 2013, compared to a net loss of US$230.4 million for the fourth quarter of 2012.
AK Steel reported its financial results for the fourth quarter and full year of 2013.
4th Quarter 2013 Performance Summary
Excluding the effect of an income tax adjustment described below, the company reported adjusted net income of US$12.5 million, or US$0.09 per diluted share. The company reported adjusted EBITDA of US$87.2 million, or US$61 per ton, for the fourth quarter of 2013 compared to US$16.8 million, or US$12 per ton, for the fourth quarter of 2012. The company's results were also favorable to a third quarter 2013 net loss ofUS$31.7 million, or US$0.23 per diluted share, and the third quarter's adjusted EBITDA of US$53.5 million, orUS$43 per ton.
Net sales for the fourth quarter of 2013 were US$1.46 billion on shipments of 1,420,000 tons, compared to net sales of US$1.42 billion on shipments of 1,406,100 tons for the year-ago fourth quarter and net sales of US$1.33 billion on shipments of 1,242,400 tons for the third quarter of 2013. The fourth quarter increase in shipments from the prior year fourth quarter was primarily due to stronger demand in automotive sales, partially offset by lower carbon shipments to the spot market. The increase in shipments from the third quarter of 2013 was primarily a result of higher carbon sales to the spot market and reflects the benefits of the company's recovery from the previously disclosed unplanned Middletown Works blast furnace outage in June 2013 described below.
The company said its average selling price for the fourth quarter of 2013 was US$1,031 per ton, a 2% increase from the US$1,011 per ton reported for the fourth quarter of 2012 and a 4% decrease from theUS$1,071 per ton reported for the third quarter of 2013. The higher average selling price for the fourth quarter of 2013 compared to the fourth quarter of 2012 was primarily due to a more favorable mix of value-added products and higher prices for carbon steel sold to the spot market, partially offset by lower prices for electrical steel. The lower average selling price for the fourth quarter of 2013 compared to the third quarter of 2013 was primarily due to a lower proportion of shipments of value-added products to the spot market in the fourth quarter.
Included in the results for the fourth quarter of 2013 was a non-cash income tax benefit of US$22.7 million, or US$0.17 per diluted share, as a result of the allocation of income tax expense to other comprehensive income, compared to a non-cash income tax charge of US$15.3 million, or US$0.11 per diluted share, related to deferred tax asset valuation allowance changes for the third quarter of 2013. The results for the fourth quarter of 2012 include a pre-tax pension corridor charge of US$157.3 million, or US$0.80 per diluted share, and a non-cash income tax charge of US$96.4 million, or US$0.79 per diluted share. The 2013 fourth quarter results also include a LIFO credit of US$4.3 million, compared to a LIFO credit of US$30.8 million for the fourth quarter of 2012 and a LIFO credit of US$15.8 million for the third quarter of 2013.
"I am delighted with our fourth quarter 2013 results and our strong finish to the year 2013," said James L. Wainscott, chairman, president and CEO of AK Steel. "As we enter 2014, we will build upon our solid foundation for the future as we continue to make progress and add value to AK Steel."
The company ended 2013 with total liquidity of US$845.1 million, an increase of US$33.2 million from 30 September 2013. Liquidity consists of cash and cash equivalents of US$30.1 million and US$815.0 million of availability under the company's revolving credit facility. There was US$90.0 million of outstanding borrowings under the company's revolving credit facility as of the end of 2013. Working capital was a source of US$99.0 million and US$7.3 million of cash in the fourth quarter and full year of 2013, respectively.
Full-Year 2013 Results
For the full year, the company reported a net loss of US$46.8 million, or US$0.34 per diluted share, compared to a net loss of US$1,027.3 million, or US$9.06 per diluted share for 2012. Included in the results for the full-year 2013 and 2012 were non-cash income tax charges of US$14.4 million, or US$0.10per diluted share, and US$865.5 million, or US$7.63 per diluted share, respectively, as a result of deferred tax asset valuation allowance changes. The full-year 2012 results also included a pre-tax pension corridor charge of US$157.3 million, or US$0.86 per diluted share.
Sales for 2013 were US$5.57 billion, a decrease of 6% compared to US$5.93 billion for 2012. Shipments for 2013 were 5,275,900 tons, a decrease of 3% from 5,431,300 tons in 2012 as a result of lower shipments to the carbon spot market. The company said its average selling price for full-year 2013 was US$1,056 per ton, approximately 3% lower than the US$1,092 per ton reported for 2012. The lower average selling price for full-year 2013 was primarily due to lower spot market selling prices in the first half of 2013, lower selling prices for electrical steel and reduced raw material surcharges, partially offset by a more favorable mix of value-added products.
The company reported adjusted EBITDA of US$255.0 million, or US$48 per ton, for 2013 compared to adjusted EBITDA of US$181.2 million, or US$33 per ton, for 2012.
During 2013, the company's pension and other postretirement benefit obligations declined by US$719.0 million as a result of cash payments of US$285.3 million from the company for benefit payments and contributions to the pension trust and VEBAs, strong asset returns on pension assets and higher interest rates used to determine the present value of the obligations.
Middletown Works Unplanned Blast Furnace Outage
As previously disclosed, the company's blast furnace at its Middletown Works experienced an unexpected mechanical failure in the charging apparatus internal to the furnace on 22 June 2013. The company completed repairs and restarted the blast furnace on 12 July 2013. The company maintains property damage and business interruption insurance. The company's results for the fourth quarter and full-year 2013 include recognized pre-tax losses for the unplanned outage of US$4.3 million, or US$0.03 per diluted share, and US$22.3 million, or US$0.16 per diluted share, respectively. No significant costs associated with the unplanned outage are expected in 2014.
First Quarter 2014 Outlook
Consistent with its current practice, the company said that it will provide detailed guidance for its first quarter results of 2014 in March.
AK Steel produces flat-rolled carbon, stainless and electrical steels, primarily for automotive, infrastructure and manufacturing, construction and electrical power generation and distribution markets. The company employs about 6,100 men and women in Middletown, Mansfield, Coshocton and Zanesville, Ohio; Butler, Pa.; Ashland, Ky.; Rockport, Ind.; and its corporate headquarters in West Chester, Ohio.
4th Quarter 2013 Performance Summary
- Shipments of 1,420,000 tons
- Sales of US$1.46 billion with an average selling price of US$1,031 per ton
- Net income of US$35.2 million, or US$0.26 per diluted share
- Adjusted EBITDA of US$87 million
- Substantial reduction of US$719 million in pension/OPEB obligations
- Strong liquidity of US$845 million
Excluding the effect of an income tax adjustment described below, the company reported adjusted net income of US$12.5 million, or US$0.09 per diluted share. The company reported adjusted EBITDA of US$87.2 million, or US$61 per ton, for the fourth quarter of 2013 compared to US$16.8 million, or US$12 per ton, for the fourth quarter of 2012. The company's results were also favorable to a third quarter 2013 net loss ofUS$31.7 million, or US$0.23 per diluted share, and the third quarter's adjusted EBITDA of US$53.5 million, orUS$43 per ton.
Net sales for the fourth quarter of 2013 were US$1.46 billion on shipments of 1,420,000 tons, compared to net sales of US$1.42 billion on shipments of 1,406,100 tons for the year-ago fourth quarter and net sales of US$1.33 billion on shipments of 1,242,400 tons for the third quarter of 2013. The fourth quarter increase in shipments from the prior year fourth quarter was primarily due to stronger demand in automotive sales, partially offset by lower carbon shipments to the spot market. The increase in shipments from the third quarter of 2013 was primarily a result of higher carbon sales to the spot market and reflects the benefits of the company's recovery from the previously disclosed unplanned Middletown Works blast furnace outage in June 2013 described below.
The company said its average selling price for the fourth quarter of 2013 was US$1,031 per ton, a 2% increase from the US$1,011 per ton reported for the fourth quarter of 2012 and a 4% decrease from theUS$1,071 per ton reported for the third quarter of 2013. The higher average selling price for the fourth quarter of 2013 compared to the fourth quarter of 2012 was primarily due to a more favorable mix of value-added products and higher prices for carbon steel sold to the spot market, partially offset by lower prices for electrical steel. The lower average selling price for the fourth quarter of 2013 compared to the third quarter of 2013 was primarily due to a lower proportion of shipments of value-added products to the spot market in the fourth quarter.
Included in the results for the fourth quarter of 2013 was a non-cash income tax benefit of US$22.7 million, or US$0.17 per diluted share, as a result of the allocation of income tax expense to other comprehensive income, compared to a non-cash income tax charge of US$15.3 million, or US$0.11 per diluted share, related to deferred tax asset valuation allowance changes for the third quarter of 2013. The results for the fourth quarter of 2012 include a pre-tax pension corridor charge of US$157.3 million, or US$0.80 per diluted share, and a non-cash income tax charge of US$96.4 million, or US$0.79 per diluted share. The 2013 fourth quarter results also include a LIFO credit of US$4.3 million, compared to a LIFO credit of US$30.8 million for the fourth quarter of 2012 and a LIFO credit of US$15.8 million for the third quarter of 2013.
"I am delighted with our fourth quarter 2013 results and our strong finish to the year 2013," said James L. Wainscott, chairman, president and CEO of AK Steel. "As we enter 2014, we will build upon our solid foundation for the future as we continue to make progress and add value to AK Steel."
The company ended 2013 with total liquidity of US$845.1 million, an increase of US$33.2 million from 30 September 2013. Liquidity consists of cash and cash equivalents of US$30.1 million and US$815.0 million of availability under the company's revolving credit facility. There was US$90.0 million of outstanding borrowings under the company's revolving credit facility as of the end of 2013. Working capital was a source of US$99.0 million and US$7.3 million of cash in the fourth quarter and full year of 2013, respectively.
Full-Year 2013 Results
For the full year, the company reported a net loss of US$46.8 million, or US$0.34 per diluted share, compared to a net loss of US$1,027.3 million, or US$9.06 per diluted share for 2012. Included in the results for the full-year 2013 and 2012 were non-cash income tax charges of US$14.4 million, or US$0.10per diluted share, and US$865.5 million, or US$7.63 per diluted share, respectively, as a result of deferred tax asset valuation allowance changes. The full-year 2012 results also included a pre-tax pension corridor charge of US$157.3 million, or US$0.86 per diluted share.
Sales for 2013 were US$5.57 billion, a decrease of 6% compared to US$5.93 billion for 2012. Shipments for 2013 were 5,275,900 tons, a decrease of 3% from 5,431,300 tons in 2012 as a result of lower shipments to the carbon spot market. The company said its average selling price for full-year 2013 was US$1,056 per ton, approximately 3% lower than the US$1,092 per ton reported for 2012. The lower average selling price for full-year 2013 was primarily due to lower spot market selling prices in the first half of 2013, lower selling prices for electrical steel and reduced raw material surcharges, partially offset by a more favorable mix of value-added products.
The company reported adjusted EBITDA of US$255.0 million, or US$48 per ton, for 2013 compared to adjusted EBITDA of US$181.2 million, or US$33 per ton, for 2012.
During 2013, the company's pension and other postretirement benefit obligations declined by US$719.0 million as a result of cash payments of US$285.3 million from the company for benefit payments and contributions to the pension trust and VEBAs, strong asset returns on pension assets and higher interest rates used to determine the present value of the obligations.
Middletown Works Unplanned Blast Furnace Outage
As previously disclosed, the company's blast furnace at its Middletown Works experienced an unexpected mechanical failure in the charging apparatus internal to the furnace on 22 June 2013. The company completed repairs and restarted the blast furnace on 12 July 2013. The company maintains property damage and business interruption insurance. The company's results for the fourth quarter and full-year 2013 include recognized pre-tax losses for the unplanned outage of US$4.3 million, or US$0.03 per diluted share, and US$22.3 million, or US$0.16 per diluted share, respectively. No significant costs associated with the unplanned outage are expected in 2014.
First Quarter 2014 Outlook
Consistent with its current practice, the company said that it will provide detailed guidance for its first quarter results of 2014 in March.
| AK STEEL HOLDING CORPORATION | ||||||||||||
| STEEL SHIPMENTS | ||||||||||||
| (Unaudited) | ||||||||||||
| (Tons in thousands) | ||||||||||||
|
Three Months Ended 31 December |
Twelve Months Ended 31 December |
|||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| Tons Shipped by Product | ||||||||||||
| Stainless/electrical | 195.6 | 188.5 | 822.1 | 849.1 | ||||||||
| Coated | 656.8 | 655.8 | 2,469.6 | 2,409.4 | ||||||||
| Cold-rolled | 314.9 | 290.1 | 1,115.9 | 1,138.7 | ||||||||
| Tubular | 29.7 | 28.5 | 122.2 | 132.0 | ||||||||
| Subtotal value-added shipments | 1,197.0 | 1,162.9 | 4,529.8 | 4,529.2 | ||||||||
| Hot-rolled | 195.9 | 214.3 | 643.5 | 767.6 | ||||||||
| Secondary | 27.1 | 28.9 | 102.6 | 134.5 | ||||||||
| Subtotal non value-added shipments | 223.0 | 243.2 | 746.1 | 902.1 | ||||||||
| Total shipments | 1,420.0 | 1,406.1 | 5,275.9 | 5,431.3 | ||||||||
| Shipments by Product (%) | ||||||||||||
| Stainless/electrical | 13.8 | % | 13.4 | % | 15.6 | % | 15.6 | % | ||||
| Coated | 46.2 | % | 46.6 | % | 46.8 | % | 44.4 | % | ||||
| Cold-rolled | 22.2 | % | 20.6 | % | 21.2 | % | 21.0 | % | ||||
| Tubular | 2.1 | % | 2.0 | % | 2.3 | % | 2.4 | % | ||||
| Subtotal value-added shipments | 84.3 | % | 82.6 | % | 85.9 | % | 83.4 | % | ||||
| Hot-rolled | 13.8 | % | 15.2 | % | 12.2 | % | 14.1 | % | ||||
| Secondary | 1.9 | % | 2.2 | % | 1.9 | % | 2.5 | % | ||||
| Subtotal non value-added shipments | 15.7 | % | 17.4 | % | 14.1 | % | 16.6 | % | ||||
| Total shipments | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||
AK Steel produces flat-rolled carbon, stainless and electrical steels, primarily for automotive, infrastructure and manufacturing, construction and electrical power generation and distribution markets. The company employs about 6,100 men and women in Middletown, Mansfield, Coshocton and Zanesville, Ohio; Butler, Pa.; Ashland, Ky.; Rockport, Ind.; and its corporate headquarters in West Chester, Ohio.
