West Chester, OH, October 23, 2012—AK Steel (NYSE: AKS) today reported a net loss of $60.9 million, or $0.55 per diluted share of common stock, for the third quarter of 2012, compared to a net loss of $3.5 million, or $0.03 per diluted share, for the third quarter of 2011. The 2012 third quarter results include a non-cash income tax expense of $33.1 million, or $0.30 per diluted share, as a result of the change in a tax valuation allowance. The company reported a loss before income taxes of $28.7 million for the third quarter of 2012, compared to a loss before income taxes of $6.8 million for the third quarter of 2011.
Net sales for the third quarter of 2012 were $1,463.5 million on shipments of 1,363,500 tons, compared to net sales of $1,585.8 million on shipments of 1,368,800 tons for the year-ago third quarter and net sales of $1,538.4 million on shipments of 1,335,800 tons for the second quarter of 2012. The company said its average selling price for the third quarter of 2012 was $1,073 per ton, a 7% decrease from both the second quarter of 2012 and the third quarter of 2011. The lower average selling price for the third quarter 2012 compared to the second quarter of 2012 was primarily due to lower spot market prices for carbon steel products, reduced raw material surcharges and a lower value-added product mix.
The company reported adjusted EBITDA (as defined in the table below) of $27.2 million, or $20 per ton, for the third quarter of 2012 compared to adjusted EBITDA of $59.3 million, or $43 per ton, for the third quarter of 2011. The adjusted EBITDA excludes EBITDA of noncontrolling interests as shown in the financial table included with this news release. Included in the results for the third quarter of 2012 were planned major maintenance outage costs of $28.5 million, primarily for outages at the company's Ashland Works blast furnace and Middletown Works hot strip mill, compared to outage costs of $1.7 million for the third quarter of 2011. The 2012 third quarter results include a LIFO credit of $27.5 million, compared to a LIFO credit of $9.5 million in the third quarter of 2011 and a LIFO credit of $18.3 million for the second quarter of 2012.
"Challenging domestic and global economic conditions continue to weigh on shipping volumes and prices," said James L. Wainscott, Chairman, President and CEO of AK Steel. "Additionally, while we expect to enjoy lower raw material costs in the future, we are still working through some higher cost raw material inventories."
The company ended the third quarter of 2012 with $47.1 million of cash and cash equivalents and $557.8 million of availability under the company's revolving credit facility, for total liquidity of $604.9 million.
For the first nine months of 2012, the company reported a net loss of $796.9 million, or $7.21 per diluted share, which includes income tax expense of $767.3 million, almost entirely due to a non-cash change in a tax valuation allowance. For the corresponding 2011 period, the company reported net income of $38.3 million, or $0.35 per diluted share.
The company reported a loss before income taxes of $9.7 million for the first nine months of 2012, compared to income before income taxes of $64.4 million for the first nine months of 2011.
Net sales for the first nine months of 2012 were $4,510.6 million compared to $4,958.8 million for the first nine months of 2011. Shipments for the first nine months of 2012 were 4,025,200 tons compared to 4,288,900 tons for the first nine months of 2011.
The company reported adjusted EBITDA of $164.4 million, or $41 per ton, for the first nine months of 2012, compared to adjusted EBITDA of $253.6 million, or $59 per ton, for the same period of 2011. Earnings for the first nine months of 2012 were negatively impacted by the decrease in sales along with higher coke costs, which were partially offset by decreases in costs for carbon scrap and energy.
Fourth Quarter 2012 Outlook
Consistent with its current practice, the company said that it will not provide detailed guidance for its fourth quarter results at this time. The company said that it intends to provide such detailed fourth quarter guidance later during the quarter. However, in advance of that guidance, the company noted that, based on current conditions, it expects to incur a net loss for the fourth quarter of 2012. The company notes that this anticipated net loss includes a non-cash tax expense for the fourth quarter as a result of an anticipated change in its tax valuation allowance, which the company expects to incur regardless of its fourth quarter pre-tax financial 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, 2011, as updated in subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with or furnished to the Securities and Exchange Commission. 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, infrastructure and manufacturing, 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.
AK Coal Resources, Inc., another wholly-owned subsidiary of AK Steel, owns or leases metallurgical coal reserves in Somerset County, Pennsylvania. AK Steel also owns 49.9% of Magnetation LLC, a joint venture headquartered in Grand Rapids, Minnesota, which produces iron ore concentrate from previously mined ore reserves.
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