West Chester, OH, October 27, 2009—AK Steel (NYSE: AKS) today reported net income of $6.2 million, or $0.06 per diluted share of common stock, for the third quarter of 2009, compared to net income of $188.3 million, or $1.67 per diluted share, for the third quarter of 2008. The third-quarter 2009 results represent a $53.4 million improvement over the second quarter of 2009 net loss of $47.2 million, or $0.43 per diluted share.
Net sales for the third quarter of 2009 were $1,041.1 million on shipments of 1,047,800 tons, compared to sales of $2,157.6 million on shipments of 1,476,300 tons for the year-ago quarter. The company said its average selling price for the third quarter of 2009 was $994 per ton, a 7% decrease from the $1,072 per-ton price in the second quarter of 2009, and approximately 32% lower than the $1,462 per-ton average price realized in the third quarter of 2008.
The company reported third-quarter 2009 operating profit of $15.3 million, or $15 per ton, compared to $309.6 million, or $210 per ton, for the third quarter of 2008. The most recent operating results represent an improvement of $87.8 million, or $113 per ton, over the second-quarter 2009 operating loss of $72.5 million, or $98 per ton.
“Despite the deepest recession in 75 years, AK Steel employees drew upon their experience and resolve to return the company to operating profitability and net income,” said James L. Wainscott, chairman, president and CEO of AK Steel. “While the results may pale in comparison to the year-ago records, in many respects the performance is even more remarkable, given that third-quarter 2009 revenues fell by more than half from the year-ago period.”
For the first nine months of 2009, the company reported a net loss of $114.4 million, or $1.05 per diluted share of common stock. Net income for the corresponding 2008 period was $434.6 million, or $3.85 per diluted share.
Sales for the first nine months of 2009 were $2,756.9 million compared to $6,185.6 million in the first nine months of 2008. Shipments for the first nine months of 2009 were 2,567,200 tons compared to 4,792,500 tons for the first nine months of 2008. The company reported an operating loss of $157.1 million, or $61 per ton, for the first nine months of 2009 compared to an operating profit of $717.2 million, or $150 per ton, for the first nine months of 2008.
During the first nine months of 2009, the company made $210.0 million in early pension fund contributions and a $65.0 million contribution associated with the Middletown Works VEBA settlement. Also during the first nine months of 2009 the company repurchased $26.4 million of its 7 3/4% senior notes and repurchased approximately 1.6 million shares of its common stock. The company ended the period with more than $1 billion in liquidity, including $339.5 million in cash.
Fourth-Quarter 2009 Outlook
AK Steel said it expects shipments for the fourth quarter of 2009 to be approximately 1,300,000 tons, reflecting an increase of nearly 24% over third-quarter shipments, primarily in carbon steel products. AK Steel expects its fourth-quarter 2009 average per-ton selling price to decline approximately 2% compared to the third quarter of 2009 level. The expected decline in the average selling price is due to an anticipated higher percentage of carbon steel shipments relative to stainless and electrical shipments in the fourth quarter as compared to the third quarter.
The company expects maintenance costs to be approximately $10 million higher compared to the third quarter of 2009. AK Steel expects lower operating and raw material costs in the fourth quarter compared to the third quarter, and the company expects to generate an operating profit ranging from $30 to $35 per ton. In addition, the company expects to incur a non-cash charge of approximately $5.0 million, or $0.05 per share of common stock, primarily as the result of a decrease in the value of the company’s deferred tax assets as the result of state tax law changes.
Safe Harbor Statement
The statements in this release with respect to future results reflect management’s estimates and beliefs and are intended to be, and hereby are identified as “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The company cautions readers that such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently expected by management, including those risks and uncertainties discussed in AK Steel’s Annual Report on Form 10-K for the year ended December 31, 2008, and in subsequent Quarterly Reports on Form 10-Q. Except as required by law, the company disclaims any obligation to update any forward-looking statements to reflect future developments or events.
AK Steel produces flat-rolled carbon, stainless and electrical steels, primarily for automotive, appliance, construction and electrical power generation and distribution markets. The company employs about 6,000 men and women in Middletown, Mansfield, Coshocton and Zanesville, Ohio; Butler, Pennsylvania; Ashland, Kentucky; Rockport, Indiana; and its corporate headquarters in West Chester, Ohio. Additional information about AK Steel is available on the company’s web site at www.aksteel.com.
AK Tube LLC, a wholly owned subsidiary of AK Steel, employs about 250 men and women in plants in Walbridge, Ohio and Columbus, Indiana. AK Tube produces carbon and stainless electric resistance welded (ERW) tubular steel products for truck, automotive and other markets. Additional information about AK Tube LLC is available on its web site at www.aktube.com.
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