AK Steel Jumps as Earnings, Sales Beat in Q4

Zacks

Steel maker AK Steel Holding Corporation (AKS) posted net income of $35.2 million or 26 cents per share in fourth-quarter 2013, compared with a loss of $230.4 million or $1.89 per share in the year ago quarter.

In the reported quarter, AK Steel recorded a non-cash income tax benefit of $22.7 million, or 17 cents per share, as a result of the allocation of income tax expense to other comprehensive income. AK Steel also recorded an inventory-related credit of $4.3 million in the reported quarter.

Barring one-time items (non-cash income tax benefit), AK Steel’s earnings for the quarter was 9 cents per share, topping the Zacks Consensus Estimate of 5 cents.

For full-year 2013, AK Steel reported a net loss of $46.8 million, or 34 cents per share, compared to a net loss of $1,027.3 million, or $9.06 per diluted share in 2012. The results for 2013 include non-cash income tax charges of $14.4 million, or 10 cents per share.

Adjusted loss for 2013 was 24 cents per share, narrower than the Zacks Consensus Estimate of a loss of 55 cents.

AK Steel’s shares shot up as much as around 20% yesterday, reflecting the better-than-expected results.

Revenues, Pricing and Shipments

Revenues rose 2.9% year over year to $1,464.8 million in the reported quarter due to higher shipments. It exceeded the Zacks Consensus Estimate of $1,427 million. Shipments increased by about 1%  year over year to 1,420,000 tons due to stronger demand in automotive sales, partly offset by reduced carbon shipments to the spot market.

Average selling price increased 2% year over year to $1,031 per ton due to better mix of value-added products and increased prices for carbon steel sold to the spot market.

For full-year 2013, revenues declined 6% year over year to roughly $5,570 million, but managed to beat the Zacks Consensus Estimate of $5,533 million.

Cost and Margins

Consolidated operating costs fell around 12.4% year over year to $1,401.8 million in the fourth quarter. Operating profit for the reported quarter was $63 million compared with an operating loss of $176.9 million recorded in the prior-year quarter.

Financial Position

Cash and cash equivalents as of Dec 31, 2013, was $45.3 million, down 80% from $227 million as of Dec 31, 2012. Long-term debt increased roughly 6.7% year over year to $1,506.2 million. At the end 2013, the company had $815 million available under its revolving credit facility.

Outlook

In line with its current practice, AK Steel plans to announce detailed first quarter 2014 guidance in Mar 2014.

Middletown Works experienced an unexpected mechanical failure in Jun 2013. As a result, the blast furnace was taken offline to prevent any damage to the furnace. The blast furnace was restarted in Jul 13. AK Steel’s results for the fourth quarter and full-year 2013 include recognized pre-tax losses for the unplanned outage of $4.3 million, or 3 cents per share, and $22.3 million, or 16 cents per share, respectively.

AK Steel currently has a Zacks Rank #2 (Buy).

Other players in the steel industry worth considering include Companhia Siderurgica Nacional (SID) and ArcelorMittal (MT) and U.S. Steel Corporation (X). All of these carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on AKS
Read the Full Research Report on SID
Read the Full Research Report on MT
Read the Full Research Report on X


Zacks Investment Research

View Comments (0)