AK Steel (AKS) Misses Q2 EPS by 2c, Slight Miss on Revenues

AK Steel (NYSE: AKS) reported Q2 EPS of $0.18, $0.02 worse than the analyst estimate of $0.20. Revenue for the quarter came in at $1.746 billion versus the consensus estimate of $1.75 billion.

Second Quarter 2018 Highlights

• Net income of $56.6 million, or $0.18 per diluted share
• Adjusted EBITDA of $148.4 million, or 8.5% of sales
• Revenues of $1,746.6 million, a 12% increase from second quarter 2017
• Free cash flow generation allowed for a $70 million reduction in debt

“We were able to generate meaningful earnings and free cash flow during the second quarter, despite the impact of certain operational events,” said Roger K. Newport, Chief Executive Officer of AK Steel. “We expect that the continued strong business environment will result in improved performance in the second half of 2018 compared to the first half and position us well for resetting a majority of our annual contracts later this year.”

Outlook

The company anticipates that market conditions will remain strong in the third quarter. Accordingly, the company expects:

An increase in flat-rolled shipments in the third quarter of approximately 5% compared to the second quarter of 2018. The company expects relatively flat automotive shipments despite the seasonal July automotive plant downturns and higher carbon steel shipments to the distributors and converters market.
An average selling price per flat-rolled ton of $1,105. The estimated average selling price reflects an anticipated change in mix as a result of increased shipments to the distributors and converters market tempering the effect of automotive, stainless and electrical steel shipments at relatively higher selling prices.
Planned outage costs of approximately $8.0 million in the third quarter of 2018, compared to $17.9 million in the second quarter.
The anticipated improvements in pricing and shipments will be partially offset by the continued outage of one of the company’s temper mills, which is expected to be operating by late September, as well as from higher costs for certain raw materials and supplies including graphite electrodes. Accordingly, the company expects margins to improve by about 50 basis points from the second quarter of 2018.

For earnings history and earnings-related data on AK Steel (AKS) click here.

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