West Chester, OH, July 26, 2011—AK Steel (NYSE: AKS) today reported net income of $33.1 million, or $0.30 per diluted share of common stock, for the second quarter of 2011, compared to net income of $26.7 million, or $0.24 per diluted share, for the second quarter of 2010. The 2011 second quarter results include a $2.0 million, or $0.02 per diluted share, charge related to state tax law changes.
Net sales for the second quarter of 2011 were $1,791.9 million on shipments of 1,497,000 tons, compared to sales of $1,596.1 million on shipments of 1,449,400 tons for the year-ago second quarter. The company said its average selling price for the second quarter of 2011 was $1,185 per ton, a 7% increase over the $1,109 per ton in the first quarter of 2011, and about 8% higher than the $1,101 per ton reported for the second quarter of 2010.
The company reported an operating profit for the second quarter of 2011 of $68.5 million, or $46 per ton, compared to an operating profit of $65.6 million, or $45 per ton, for the second quarter of 2010.
“AK Steel’s second quarter results represent another quarter of solid progress, as we continue along the ‘road to recovery’ in 2011,” said James L. Wainscott, Chairman, President and CEO. “In fact, despite experiencing much higher iron ore prices than anticipated, we achieved our best quarter in the past six quarters in terms of shipments, operating profit, net income and earnings per share.”
For the first six months of 2011, the company reported net income of $41.8 million, or $0.38 per diluted share. The company reported net income for the corresponding 2010 period of $28.6 million, or $0.26 per diluted share. The 2011 first-half results include the $2.0 million, or $0.02 per diluted share, charge related to state tax law changes. The 2010 first-half results include a non-cash charge in the first quarter of $25.3 million, or $0.23 per diluted share of common stock, related to federal healthcare legislation.
First-half 2011 sales were $3,373.0 million compared to $3,001.8 million in the first-half of 2010. Shipments for the first-half of 2011 were 2,920,100 tons compared to 2,835,200 tons in the first-half of 2010. The company reported an operating profit of $88.0 million, or $30 per ton, for the first-half of 2011 compared to an operating profit of $123.2 million, or $43 per ton, for the first-half of 2010. The increase in sales was offset by significant increases in raw material costs, particularly costs for iron ore and coal. During the first-half of 2011, the company made $170.0 million in pension trust fund contributions and a $65.0 million contribution to a Voluntary Employees Beneficiary Association trust established to assume responsibility for all health and welfare postretirement benefit obligations formerly owed by the company to a group of retirees from the company’s Middletown Works.
Third Quarter 2011 Outlook
AK Steel said it expects shipments in the third quarter of 2011 to be between 1,400,000 and 1,450,000 tons. The company anticipates that its average per-ton selling price will be about 1% lower, and that raw material costs will be higher, than it experienced for the second quarter of 2011. As a result, the company expects to generate an operating profit of approximately $15 per ton for the third quarter of 2011. This outlook excludes the financial effects of the previously reported incident concerning an electric steelmaking furnace at the Butler Works which was damaged July 1, 2011. AK Steel carries insurance, which the company expects to cover losses related to the incident above deductible amounts. However, because of the uncertainty related to the costs incurred as a result of this incident, and the timing and amount of the ultimate insurance recovery, the company cannot accurately predict at this time the financial effect of this incident on its 2011 third quarter results.
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. Words such as “expects,” “anticipates,” “believes,” “intends,” “plans,” “estimates” and other similar references to future periods typically identify such forward-looking statements. 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 the company's Annual Report on Form 10-K for the year ended December 31, 2010, as updated in our most recent Quarterly Report 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 6,200 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 300 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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