AK Steel (AKS) Guides Q2 Earnings Well Below the Street
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Price: $3.45 -1.15%
EPS Growth %: +36.4%
Financial Fact:
Net income attributable to AK Steel Holding Corporation: -9.9M
Today's EPS Names:
ANF, DXLG, FL, More
EPS Growth %: +36.4%
Financial Fact:
Net income attributable to AK Steel Holding Corporation: -9.9M
Today's EPS Names:
ANF, DXLG, FL, More
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AK Steel (NYSE: AKS) expecting Q2 EPS of 4-6 cents, which compares to the Street estimate of 11 cents. The company sees shipments of about 1.35 million tons, sees average selling price about the same as Q1.
Taking all of these factors into account, and subject to the possibility discussed below of recording a valuation allowance for its deferred tax assets, AK Steel said it expects to generate net income of between $0.04 and $0.06 per diluted share of common stock for the second quarter of 2012, which would represent an improvement compared to the loss of $0.11 per diluted share reported for the first quarter of 2012. Due to increased uncertainty and volatility with respect to near-term economic conditions in the United States and in other markets served by the company, including a recent deterioration in spot market pricing, AK Steel cannot provide reliable guidance at this time for the company's results for the remainder of 2012.
In accordance with generally accepted accounting principles, the company regularly evaluates the need for a valuation allowance for its deferred tax assets. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating whether to record a valuation allowance, the applicable accounting standards place heavy emphasis on the existence of cumulative losses in recent years. As discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2011 (at pages 33 -34), the company has been periodically assessing relevant positive and negative evidence. At the conclusion of the second quarter, the company again will assess such evidence, including the effect of recent events, such as the current global economic outlook, declining selling prices and increases in foreign imports into the United States. As a result of this assessment, the company likely will record a non-cash charge to income tax expense in the second quarter of 2012 to recognize a valuation allowance against some or all of its remaining deferred tax assets.
In addition, the company said that its Magnetation LLC joint venture continues to ramp-up operations, and AK Steel may be able to obtain iron ore pellets from the joint venture earlier than 2015, as it had previously estimated. Similarly, the company is optimistic that it is ahead of schedule to produce coal from its wholly-owned subsidiary AK Coal Resources, Inc., which is in the process of developing its mining operations.
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Taking all of these factors into account, and subject to the possibility discussed below of recording a valuation allowance for its deferred tax assets, AK Steel said it expects to generate net income of between $0.04 and $0.06 per diluted share of common stock for the second quarter of 2012, which would represent an improvement compared to the loss of $0.11 per diluted share reported for the first quarter of 2012. Due to increased uncertainty and volatility with respect to near-term economic conditions in the United States and in other markets served by the company, including a recent deterioration in spot market pricing, AK Steel cannot provide reliable guidance at this time for the company's results for the remainder of 2012.
In accordance with generally accepted accounting principles, the company regularly evaluates the need for a valuation allowance for its deferred tax assets. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating whether to record a valuation allowance, the applicable accounting standards place heavy emphasis on the existence of cumulative losses in recent years. As discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2011 (at pages 33 -34), the company has been periodically assessing relevant positive and negative evidence. At the conclusion of the second quarter, the company again will assess such evidence, including the effect of recent events, such as the current global economic outlook, declining selling prices and increases in foreign imports into the United States. As a result of this assessment, the company likely will record a non-cash charge to income tax expense in the second quarter of 2012 to recognize a valuation allowance against some or all of its remaining deferred tax assets.
In addition, the company said that its Magnetation LLC joint venture continues to ramp-up operations, and AK Steel may be able to obtain iron ore pellets from the joint venture earlier than 2015, as it had previously estimated. Similarly, the company is optimistic that it is ahead of schedule to produce coal from its wholly-owned subsidiary AK Coal Resources, Inc., which is in the process of developing its mining operations.
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