AK Steel (AKS) Q2 Earnings Beat Estimates, Sales Trail
Zacks Investment Research | Aug 01, 2016 04:43AM ET
AK Steel Holding Corporation (NYSE:AKS) reported net income of $17.3 million or 8 cents per share in second-quarter 2016, as against a net loss of $64 million or 36 cents per share in the year-ago quarter. The results beat the Zacks Consensus Estimate of a loss of 4 cents.
The company's adjusted EBITDA more than doubled to $99.3 million in the second-quarter 2016 from the year-ago quarter, primarily due to a better product mix, operational improvements, a consistent focus on reducing costs and lower raw material and energy costs.
The company generated sales worth $1.49 billion, down around 11.8% from the year-ago quarter. Sales missed the Zacks Consensus Estimate of $1.51 billion. Sales declined due to lower automotive contract pricing and reduced shipments.
The shares of the company closed roughly 8.4% higher at $6.70 on Jul 27.
Pricing and Shipments
Shipments for the quarter were down 14% year over year to 1,555,500 tons, indicating management’s decision to reduce exposure to the commodity carbon steel spot market. The reduced exposure of commodity carbon steel spot market led to a 320,000 ton fall in shipments to the distributors and converters markets, or a 48% reduction from the year-ago quarter.
Financials
AK Steel exited the quarter with cash and cash equivalents of $56.2 million, down roughly 25.1% year over year. Cash flows from operating activities were $136.3 million in the quarter and included a $50.6 million contribution from working capital, as the company continued to actively manage its inventory levels.
As part of its strategy to improve its balance sheet, AK Steel in May 2016 issued 59.8 million shares of common stock at $4.40 per share. Net proceeds of $249.4 million were used to cut debt by repaying outstanding borrowings under the company's revolving credit facility. In Jun 2016, the company issued $380 million of 7.50% senior secured notes due 2023 in order to refinance its senior secured notes due 2018.
Zacks Rank
AK Steel currently carries a Zacks Rank #2 (Buy).
Other well-ranked companies in the steel industry include Ryerson Holding Corp. (NYSE:RYI) , ArcelorMittal (NYSE:MT) and Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) , all of them sport a Zacks Rank #1 (Strong Buy).
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