|New Threads Only:|
|New Threads & Replies:|
Forum List » Business News and Headlines|
SEC Filings, Earing Reports, Press Releases
AK Steel Holding Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 5, 2011 08:30AM
AK Steel Holding Corp. (AKS) filed Quarterly Report for the period ended 2011-03-31.
Highlight of Business Operations:
For the three months ended March 31, 2011, net sales were $1,581.1, an approximate 12% improvement over first quarter 2010 net sales of $1,405.7. The increase in net sales over 2010 reflects higher shipments, increased selling prices and a richer product mix. The Company s average selling price for the first quarter of 2011 was $1,109 per ton, an increase of 9% from the Company s first quarter 2010 average selling price of $1,014 per ton. The increase in the average selling price for 2011 over 2010 was primarily the result of higher selling prices in 2011 for virtually all product categories, as well as an increase in the percentage of shipments represented by value-added products. Net sales to customers outside the United States totaled $218.0 and $199.3 during the first three months of 2011 and 2010.
As a result of the various factors and conditions described above, the Company reported net income attributable to AK Steel Holding Corporation in the three months ended March 31, 2011, of $8.7, or $0.08 per diluted share, compared to $1.9, or $0.02 per diluted share, in the three months ended March 31, 2010.
The Company expects shipments of approximately 1,500,000 to 1,550,000 tons for the second quarter of 2011. In addition, average selling price per ton is expected to increase by approximately 7% from the first quarter, primarily due to higher contract and spot market selling prices. The Company expects higher costs for raw materials, including scrap, iron ore and purchased slabs, of approximately $50 per ton. The Company also expects its planned maintenance costs to increase by approximately $8.0 in the second quarter of 2011 compared to the first quarter. The Company expects to incur approximately $4.0 in pre-tax costs associated with the shutdown of the Ashland coke plant in the second quarter of 2011, compared to approximately $1.3 in the first quarter of 2011. The Company expects to generate an operating profit of approximately $65 per ton for the second quarter of 2011, an increase of more than $50 per ton compared to the first quarter of 2011.
At March 31, 2011, the Company had total liquidity of $675.3, consisting of $54.1 of cash and cash equivalents and $621.2 of availability under the Company s prior $850.0 five-year revolving credit facility (the “Replaced Credit Facility”). At March 31, 2011, there were outstanding borrowings of $75.0 under the Replaced Credit Facility and availability was reduced by $153.8 due to outstanding letters of credit. During the quarter ended March 31, 2011, utilization of the Replaced Credit Facility ranged from zero to $150.0, with outstanding borrowings averaging $55.8 per day.
Cash used by operations totaled $197.4 for the three months ended March 31, 2011. Primary uses of cash were for a $30.0 pension contribution, the final $65.0 contribution to the VEBA Trust established as part of the Middletown Retiree Settlement and an increase in working capital of $133.7. The increase in working capital resulted primarily from an increase in inventories, caused by both higher raw material costs and a higher level of inventory quantities on hand. In addition, accounts receivable were higher as a result of an increased level of sales. An increase in accounts payable due to a higher level of business activity partially offset these uses of cash.
The Company s primary areas of market risk include changes in (a) interest rates, (b) the prices of raw materials and energy sources, and (c) foreign currency exchange rates. The Company manages interest rate risk by issuing variable- and fixed-rate debt, and had total debt of $652.1 outstanding at March 31, 2011, consisting of $552.8 of fixed-rate debt and $99.3 of variable-rate debt. In addition, at March 31, 2011, the Company had $75.0 of short-term borrowings outstanding under its Replaced Credit Facility that bears interest at variable interest rates. An increase in prevailing interest rates would increase interest expense and interest paid for the variable-rate debt. For example, a 1% increase in interest rates would have resulted in an increase in annual interest expense of approximately $1.8 on the Company s debt at March 31, 2011.
Stocks Discussed: AKS,