AK Steel Reports Financial Results For First Quarter Of 2013

West Chester, OH, April 23, 2013—AK Steel (NYSE: AKS) today reported its financial results for the first quarter of 2013. 

1st Quarter 2013 Performance Summary
- Shipments of 1,289,800 tons
- Sales of $1.37 billion with an average selling price of $1,062 per ton
- Net loss of $9.9 million, or $0.07 per diluted share - a significant quarter-to-quarter improvement
- Adjusted EBITDA of $66.8 million - a $50 million improvement from 4Q 2012
- Strong liquidity of approximately $1.1 billion

AK Steel today reported a net loss of $9.9 million, or $0.07 per diluted share of common stock, for the first quarter ended March 31, 2013, compared to a net loss of $11.8 million, or $0.11 per diluted share, for the first quarter of 2012.  This also compares to a net loss of $230.4 million, or $1.89 per diluted share, or an adjusted net loss of $36.6 million, or $0.30 per diluted share, for the fourth quarter of 2012.  The adjusted net loss for the fourth quarter of 2012 excludes a pension corridor charge and a non-cash income tax charge as a result of a change in a deferred tax asset valuation allowance and is reconciled below.
 
Net sales for the first quarter of 2013 were $1,369.8 million on shipments of 1,289,800 tons, compared to net sales of $1,508.7 million on shipments of 1,325,900 tons for the year-ago first quarter and net sales of $1,423.1 million on shipments of 1,406,100 tons for the fourth quarter of 2012.  The decreased shipments in the first quarter of 2013 compared to both prior periods were primarily due to lower shipments to the carbon spot market, partially offset by increased shipments to the automotive market. 
 
The company said its average selling price for the first quarter of 2013 was $1,062 per ton, a 7% decrease from the first quarter of 2012, but a 5% increase from the fourth quarter of 2012.  The higher average selling price for the first quarter of 2013 compared to the fourth quarter of 2012 was primarily due to a higher value-added product mix and higher carbon spot market prices, partially offset by lower selling prices for electrical steel products globally.  The lower average selling price for the first quarter of 2013 compared to the first quarter of 2012 was primarily due to lower spot market prices for carbon steel products, reduced raw material surcharges and lower selling prices for electrical steel products globally.
 
The company reported adjusted EBITDA (as defined in the “Use of Non-GAAP Financial Measures” section below) of $66.8 million, or $52 per ton, for the first quarter of 2013 compared to adjusted EBITDA of $48.9 million, or $37 per ton, for the year-ago first quarter and adjusted EBITDA of $16.8 million, or $12 per ton, for the fourth quarter of 2012.  The adjusted EBITDA excludes EBITDA of noncontrolling interests.  This improvement was the result of a higher value-added product mix and lower raw material costs, primarily for iron ore, coal, carbon scrap and coke.  The lower raw material costs included benefits from energy credits received through the company’s contractual supplier arrangements with SunCoke Energy, Inc. pertaining to its Haverhill cokemaking facility.  These first quarter improvements were partly offset by higher-than-anticipated operating costs associated with the company’s Middletown Works blast furnace and a lower LIFO credit.  The 2013 first quarter results include a LIFO credit of $6.0 million, compared to a LIFO credit of $12.4 million in the first quarter of 2012 and a LIFO credit of $30.8 million for the fourth quarter of 2012.
 
“AK Steel’s results reflect significant progress for the company during the first quarter,” said James L. Wainscott, Chairman, President and CEO.  “We experienced increased shipments to the automotive market, a higher-priced product mix, and lower costs, primarily for raw materials.”

Mr. Wainscott added, “While the automotive market was a bright spot for our business, markets remained challenging for some products, particularly those in the spot market.  Simply put, global steelmaking capacity continues to exceed demand.  Additionally, the cyclical improvement in spot market pricing we normally see during the first quarter did not materialize and is expected to occur later this year.”
 
The company ended the first quarter of 2013 with total liquidity of $1,052.6 million, consisting of cash and cash equivalents and $874.4 million of availability under the company’s revolving credit facility.  There were no outstanding borrowings under the company’s revolving credit facility as of March 31, 2013.

Second Quarter 2013 Outlook

Consistent with its current practice, the company said that it will provide detailed guidance for its second quarter results in June.  In advance of this guidance, the company indicated that it will have a planned seven-day maintenance outage at its Middletown blast furnace in the second quarter, which is the first major maintenance outage that has been required for that furnace since a major reline in 2009.  Total maintenance outage costs, including the Middletown blast furnace, are expected to be about $21 million in the second quarter of 2013, compared to $1 million in the first quarter of 2013.  The company expects the increased maintenance outage costs in the second quarter to be mostly offset as a result of lower costs, primarily for raw materials.

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, 2012, as updated in subsequent 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

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 6,100 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, controls and is developing 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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