AK Steel Holding Corp. Reports Operating Results (10-Q/A)
Ak Steel Holding Corp. has a market cap of $1.54 billion; its shares were traded at around $13.99 with a P/E ratio of 13.32 and P/S ratio of 0.38. The dividend yield of Ak Steel Holding Corp. stocks is 1.43%.AKS is in the portfolios of Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:For the three months ended June 30, 2010, net sales were $1,596.1, more than twice the amount of second quarter 2009 net sales of $793.6 and an approximate 14% increase over first quarter 2010 net sales of $1,405.7. Net sales to customers outside the United States for the three- and six-month periods ended June 30, 2010 totaled $228.7 and $426.5, respectively, compared to the three- and six-month periods ended June 30, 2009 which totaled $190.7 and $370.9, respectively. A substantial portion of the revenue outside of the United States is associated with electrical steel and, to a lesser extent, stainless steel products. The Company s average selling price for the second quarter of 2010 was $1,101 per ton, an approximate 3% increase from the Company s second quarter 2009 average selling price of $1,072 per ton and an approximate 9% increase from the first quarter 2010 average selling price of $1,014 per ton. The increase in net sales over 2009 reflects increased demand for most steel products, particularly in the spot and automotive markets, as global economic conditions continued to improve from dramatically depressed levels. The increase in average selling prices in 2010 was primarily the result of generally increased demand versus the comparative prior periods.
Selling and administrative expenses for the three and six months ended June 30, 2010 were $52.6 and $106.8, respectively, compared to $47.9 and $95.7, respectively, for the corresponding periods in 2009. The increases for these periods were due primarily to a generally higher level of spending associated with the overall improvement in business conditions, including higher compensation costs. Depreciation expense for the three and six months ended June 30, 2010 was $49.9 and $100.2, respectively, compared to $51.6 and $102.9, respectively, for the corresponding periods in 2009.
The Company reported operating profits of $65.6, or $45 per ton, and $123.2, or $43 per ton, in the three- and six month periods ended June 30, 2010. These results compare to operating losses of $72.5, or $98 per ton, and $172.4, or $113 per ton, in the three- and six-month periods ended June 30, 2009. The principal cause of this improvement in operating performance was significantly higher steel shipments driven by increased customer demand. In addition to providing increased revenue, the higher shipments enabled the Company to spread its operating costs over more tons, thereby improving its operating profit.
As a result of the various factors and conditions described above, the Company reported net income in the three months ended June 30, 2010, of $26.7, or $0.24 per diluted share, compared to a net loss of $47.2, or $0.43 per diluted share, in the three months ended June 30, 2009.
First-half of 2010 results include a non-cash charge in the first quarter of $25.3, or $0.23 per diluted share, related to federal healthcare legislation signed into law in March of 2010. Excluding the special charge related to healthcare legislation, net income for the first half of 2010 was $53.9, or $0.49 per diluted share.
The Company expects shipments in the third quarter of 2010 to be approximately 3% higher than its second quarter 2010 shipments. The Company anticipates that its average per-ton selling price will be about 5% lower than the second quarter of 2010. The Company also expects planned maintenance costs to decrease by approximately $4.0 in the third quarter of 2010 compared to the second quarter. The Company estimates capital investments of approximately $165.0 in 2010. Assuming a 65% increase in the iron ore benchmark price, the Company expects to generate an operating profit of approximately $15 per ton for the third quarter of 2010. There remains substantial uncertainty with respect to global iron ore pricing for 2010 and, if there is an increase in the benchmark price for iron ore beyond the 65% assumed by the Company with respect to the first half of the year, it will have a negative impact on the Company s third quarter financial performance. The Company estimates that a change of five percentage points in the iron ore benchmark price (e.g., from 65% to 70%) would impact operating profit in the third quarter by approximately $11.0, or $7 per ton.
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