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AK Steel (AKS) Tops Q3 EPS Views; Revenues In-Line

October 27, 2015 8:33 AM EDT
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Price: $1.55 --0%

Financial Fact:
Operating profit: 130.8M

Today's EPS Names:
SHIM, KOD, HEWA, More
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AK Steel (NYSE: AKS) reported Q3 EPS of $0.04, $0.27 better than the analyst estimate of ($0.23). Revenue for the quarter came in at $1.71 billion versus the consensus estimate of $1.71 billion.

Adjusted EBITDA for the third quarter of 2015 increased as compared to adjusted EBITDA of $47.6 million, or $26 per ton, for the second quarter of 2015.

"I am pleased that AK Steel delivered solid third quarter 2015 financial results. Despite facing the continued onslaught of what we believe are unfairly traded carbon steel imports, we experienced our best quarterly financial performance in nearly six years," said James L. Wainscott, Chairman, President and CEO. "The company achieved more than double its adjusted EBITDA quarter-over-quarter and we ended the third quarter with solid liquidity of $821 million."

Mr. Wainscott continued, "Our results benefited from a combination of record quarterly automotive shipments, stable operations, and lower raw material costs. We also achieved cost savings from the continued integration of Dearborn Works and from all of our other cost reduction initiatives throughout the company. All in all, it was a great team effort from all of our employees that allowed us to generate a quarterly profit on behalf of our shareholders."

Fourth Quarter 2015 Outlook

Consistent with its current practice, the company said that it intends to provide detailed guidance for its fourth quarter 2015 financial results in December. The company anticipates lower carbon steel pricing in the fourth quarter compared to the third quarter, due principally to the high level of low-priced foreign steel that has continued to be imported into the United States during the preliminary stages of the carbon steel trade cases, in addition to recent declines in carbon scrap prices. As a result of these low-priced imports and their impact on the current market environment, the company also expects lower carbon steel spot market shipments in the fourth quarter.

As a result of the continued high levels of imported carbon steel products, on October 16, 2015 the company issued notices under the Worker Adjustment and Retraining Notification ("WARN") Act to hourly and salaried employees at its Ashland, Kentucky Works that it intends to temporarily idle the blast furnace and related steelmaking operations at that facility. If market conditions do not improve, it is expected that the idling of the affected portions of the facility will begin in mid-December of 2015 and could last more than six months. In this event, the company would record charges for unemployment benefits and other costs to idle the operations in the fourth quarter of 2015 and throughout the idle period.

Under its method of accounting for pension and other postretirement benefit plans, the company recognizes into income, as a fourth quarter adjustment, any unrecognized actuarial gains and losses that exceed 10% of the larger of projected benefit obligations or plan assets (the "corridor"). These corridor charges are driven mainly by changes in assumptions and by events and circumstances beyond the company's control, primarily changes in interest rates, performance of the financial markets, healthcare cost trends and mortality and retirement experience. It thus is impossible to reliably forecast or predict whether the company will incur corridor charges in any given year or, if it does, what the magnitude of those charges will be. Based upon currently available information and reasonable projections, it is possible that the company could incur a corridor charge in the fourth quarter of 2015, depending on year-end interest rates and pension plan asset values.

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



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