AK Steel Announces Financial Results for Second Quarter 2017
Marketwired MarketwiredJuly 25, 2017Comment
WEST CHESTER, OH--(Marketwired - Jul 25, 2017) - AK Steel ( NYSE : AKS ) today reported its financial results for the second quarter of 2017.
2nd Quarter 2017 Highlights
Net income of $61.2 million, or $0.19 per diluted share
Adjusted EBITDA of $142.0 million increased 43% from the second quarter 2016
Adjusted EBITDA margin improved to 9.1% from 6.7% in the second quarter 2016
Completed actions to reduce long-term debt by $130 million
Reached agreement to acquire Precision Partners; transaction closing expected in the third quarter
AK Steel reported net income of $61.2 million, or $0.19 per diluted share of common stock, for the second quarter of 2017, compared to net income of $17.3 million, or $0.08 per diluted share, for the second quarter of 2016.
The company's adjusted EBITDA (as defined in the "Non-GAAP Financial Measures" section below) of $142.0 million, or 9.1% of net sales, for the second quarter of 2017 increased 43% from adjusted EBITDA of $99.3 million, or 6.7% of net sales, for the year ago second quarter.
"Our second quarter performance highlights the continued benefits achieved through the strategic initiatives implemented during the past year and a half," said Roger K. Newport, Chief Executive Officer of AK Steel. "We are executing on the strategy that we laid out in early 2016 as further evidenced by our pending acquisition of Precision Partners. This step strengthens our position as a provider of value-added materials and design solutions."
Net sales increased 4% to $1.56 billion for the second quarter of 2017 from $1.49 billion for the second quarter of 2016. Second quarter shipments declined 6% to 1,465,200 tons compared to the second quarter a year ago, primarily as a result of a decrease in automotive demand. Average selling price per ton increased 11% to $1,058 from $957 in the same quarter a year ago, primarily as a result of a higher average selling price on both contract and spot market sales and higher surcharges on specialty steel products.
The increase in net sales and our continued focus on cost management, partially offset by higher raw material and energy costs, contributed to the 43% increase in adjusted EBITDA to $142.0 million for the second quarter of 2017 from $99.3 million for the second quarter a year ago. Results for the second quarter of 2017 included a LIFO charge of $23.9 million, compared to a LIFO charge of $20.7 million in the second quarter a year ago. Costs for planned maintenance outages for the second quarter of 2017 were $22.4 million, as compared to $19.7 million from the same quarter a year ago. The recent second quarter includes $10.1 million of refundable state incentive credits for the 2015 and 2016 years that became realizable during the quarter.
The company ended the second quarter of 2017 with total liquidity of approximately $1.4 billion, consisting of cash and cash equivalents and $1.3 billion of availability under the company's revolving credit facility.
Six-Month Results
For the first six months of 2017, the company reported net income of $123.7 million, or $0.38 per diluted share, compared to net income of $3.7 million, or $0.02 per diluted share, in the corresponding six months of 2016.
Sales for the first six months of 2017 were $3.09 billion compared to sales of $3.01 billion in the same period a year ago. Shipments for the first half of 2017 were 2,952,100 tons compared to 3,213,700 tons in the first half of 2016. The reduction in shipments was primarily a result of continued efforts to reduce sales of lower margin products as well as a decrease in automotive demand. The company's average selling price for the first half of 2017 was $1,040 per ton, an increase from $935 per ton for the first half of 2016. The higher sales reflect an increase in average selling price on both contract and spot market sales, higher surcharges on specialty steel products, and an improved product mix.
Adjusted EBITDA for the first six months of 2017 was $284.9 million, an increase of 58% over adjusted EBITDA of $180.4 million for the same period last year. The company's adjusted EBITDA margin as a percent of net sales improved to 9.2% for the first six months of 2017 from 6.0% for the same period a year ago. The improvement was principally driven by the company's strategy to focus on higher margin products, optimize its manufacturing footprint, and maintain its focus on cost control.
The first half of 2017 included LIFO charges of $59.3 million, compared to LIFO charges of $8.4 million in the first half of 2016. The company recorded costs of $29.7 million during the first six months of 2017 for planned maintenance outages, compared to $23.1 million during the first six months of 2016.