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AK Steel (AKS) Tops Q1 Earnings, Misses Sales Estimates

Zacks Equity Research

AK Steel Holding Corporation AKS slipped to a loss of $4.5 million or a penny per share in the first quarter of 2019, from a profit of $ $28.7 million or 9 cents in the prior-year quarter.

The bottom line in the reported quarter was hit by charges of $77.4 million related to Ashland Works facility closure.

Barring one-time items, adjusted earnings per share came in at 23 cents for the quarter. The figure topped the Zacks Consensus Estimate of 12 cents.

Net sales of $1,697.7 million in the quarter rose around 2% year over year, but missed the Zacks Consensus Estimate of $1,725.7 million. Increased selling prices for most products and higher shipments to the distributors and converters market were partly offset by reduced shipments to the automotive market.

AK Steel Holding Corporation Price, Consensus and EPS Surprise

 

AK Steel Holding Corporation Price, Consensus and EPS Surprise

AK Steel Holding Corporation price-consensus-eps-surprise-chart | AK Steel Holding Corporation Quote

Pricing and Shipments

Flat-rolled steel shipments in the quarter were down around 3% year over year to 1,388,400 tons. Average selling price per ton for flat-rolled steel rose 6% to $1,112.

Financials

AK Steel exited the quarter with cash and cash equivalents of $41.2 million, down 7% year over year. The company’s long-term debt declined around 3% year over year to $2,037.7 million.

Cash outflow from operating activities was $7.9 million for the quarter compared with cash flow of $65.6 million a year ago.

Guidance

AK Steel cut its profit forecast for 2019 factoring in the change in hot-rolled carbon spot market pricing. The company now sees net income to be in the range of $76-$96 million or 24-30 cents per share for the full year, down from its previous view of $160-$180 million or 51-57 cents per share.

Adjusted net income for 2019 is forecast to be in the range of $153-$173 million or 48-54 cents per share. Adjusted EBITDA is expected between $505 million and $525 million, down from the company’s earlier view of $515 million and $535 million.

AK Steel expects planned maintenance outage expenses for 2019 to be $70-$80 million.

Price Performance

Shares of AK Steel have lost 46.3% in the past year compared with the industry’s 28.7% decline.



 

Zacks Rank and Stocks to Consider

AK Steel currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Sandstorm Gold Ltd. SAND, Flexible Solutions International Inc. FSI and Israel Chemicals Ltd. ICL.

Sandstorm Gold has an expected earnings growth rate of 200% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have gained around 10% over the past year.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Flexible Solutions has an expected earnings growth rate of 171.4% for the current year and carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 99% in the past year.

Israel Chemicals has an expected earnings growth rate of 13.5% for the current year and carries a Zacks Rank #2. Its shares have gained around 13% in the past year.

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