News Column

AK Steel Reports Fourth Quarter and Full-Year 2013 Financial Results

January 30, 2014

ENP Newswire - 30 January 2014 Release date- 29012014 - West Chester, OH - AK Steel (NYSE: AKS) today reported its financial results for the fourth quarter and full year of 2013. 4th Quarter 2013 Performance Summary Shipments of 1,420,000 tons Sales of $1.46 billion with an average selling price of $1,031 per ton Net income of $35.2 million , or $0.26 per diluted share Adjusted EBITDA of $87 million Substantial reduction of $719 million in pension/OPEB obligations Strong liquidity of $845 million AK Steel reported net income of $35.2 million , or $0.26 per diluted share of common stock, for the fourth quarter of 2013, compared to a net loss of $230.4 million , or $1.89 per diluted share, for the fourth quarter of 2012. Excluding the effect of an income tax adjustment described below, the company reported adjusted net income of $12.5 million , or $0.09 per diluted share. The company reported adjusted EBITDA (as defined in the 'Non-GAAP Financial Measures' section below) of $87.2 million , or $61 per ton, for the fourth quarter of 2013 compared to $16.8 million , or $12 per ton, for the fourth quarter of 2012. The company's results were also favorable to a third quarter 2013 net loss of $31.7 million , or $0.23 per diluted share, and the third quarter's adjusted EBITDA of $53.5 million , or $43 per ton. Net sales for the fourth quarter of 2013 were $1.46 billion on shipments of 1,420,000 tons, compared to net sales of $1.42 billion on shipments of 1,406,100 tons for the year-ago fourth quarter and net sales of $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 $1,031 per ton, a 2% increase from the $1,011 per ton reported for the fourth quarter of 2012 and a 4% decrease from the $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 $22.7 million , or $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 $15.3 million , or $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 $157.3 million , or $0.80 per diluted share, and a non-cash income tax charge of $96.4 million , or $0.79 per diluted share. The 2013 fourth quarter results also include a LIFO credit of $4.3 million , compared to a LIFO credit of $30.8 million for the fourth quarter of 2012 and a LIFO credit of $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 $845.1 million , an increase of $33.2 million from September 30, 2013 . Liquidity consists of cash and cash equivalents of $30.1 million and $815.0 million of availability under the company's revolving credit facility. There was $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 $99.0 million and $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 $46.8 million , or $0.34 per diluted share, compared to a net loss of $1,027.3 million , or $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 $14.4 million , or $0.10 per diluted share, and $865.5 million , or $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 $157.3 million , or $0.86 per diluted share. Sales for 2013 were $5.57 billion , a decrease of 6% compared to $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 $1,056 per ton, approximately 3% lower than the $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 $255.0 million , or $48 per ton, for 2013 compared to adjusted EBITDA of $181.2 million , or $33 per ton, for 2012. During 2013, the company's pension and other postretirement benefit obligations declined by $719.0 million as a result of cash payments of $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 June 22, 2013 . The company completed repairs and restarted the blast furnace on July 12, 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 $4.3 million , or $0.03 per diluted share, and $22.3 million , or $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. Safe Harbor Statement The statements in this release with respect to future results reflect management's estimates and beliefs and are intended to be, and hereby are identified as 'forward-looking statements' for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as 'expects,' 'anticipates,' 'believes,' 'intends,' 'plans,' 'estimates' and other similar references to future periods typically identify such forward-looking statements. The company cautions readers that such forward-looking statements, including the projected loss related to the unplanned blast furnace outage and the amount of its related insurance recoveries, involve risks and uncertainties that could cause actual results to differ materially from those currently expected by management, including those risks and uncertainties discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2012 , as updated in subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with or furnished to the Securities and Exchange Commission . Except as required by law, the company disclaims any obligation to update any forward-looking statements to reflect future developments or events. AK Steel 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, Pennsylvania ; Ashland, Kentucky ; Rockport, Indiana and its corporate headquarters in West Chester, Ohio . Additional information about AK Steel is available on the company's web site at www.aksteel.com . AK Tube LLC , a wholly-owned subsidiary of AK Steel , employs about 300 men and women in plants in Walbridge, Ohio and Columbus, Indiana . AK Tube produces carbon and stainless electric resistance welded (ERW) tubular steel products for truck, automotive and other markets. Additional information about AK Tube LLC is available on its web site at www.aktube.com . AK Coal Resources, Inc. , another wholly-owned subsidiary of AK Steel , produces metallurgical coal from reserves in Somerset County, Pennsylvania . AK Steel also owns 49.9% of Magnetation LLC , a joint venture headquartered in Grand Rapids, Minnesota , which produces iron ore concentrate from previously mined ore reserves. Media Contact: Michael P. Wallner General Manager Tel: 513-425-2688 Investor Contact: Roger K. Newport Vice President Tel: 513-425-5270


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Source: ENP Newswire


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