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AK Steel's (AKS) Q4 Earnings Top Estimates, Sales Lag
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AK Steel topped earnings estimates in fourth-quarter 2016, helped by its cost-reduction actions. The steel maker’s adjusted earnings (barring one-time items) of 25 cents per share for the quarter zoomed past the Zacks Consensus Estimate of 7 cents.
On a reported basis, the company logged a net loss of $62.4 million or 22 cents per share in the fourth quarter, narrower than a loss of $145.4 million or 82 cents per share in the year-ago quarter. The results in the reported quarter include one-time items including charges related to pension settlement and termination of pellet agreement with Magnetation LLC.
Total operating costs in the reported quarter fell around 9% year over year to roughly $1.4 billion.
The company recorded net sales of $1,418.6 million for the quarter, down roughly 8% from the year-ago quarter. Sales missed the Zacks Consensus Estimate of $1,434 million.
AK Steel Holding Corporation Price, Consensus and EPS Surprise
Shipments for the quarter were down around 15% year over year to 1,412,200 tons, affected by the company's move to reduce commodity steel sales to the distributor and converters market and slightly lower shipments to the automotive industry. Selling price per ton rose 7% year over year to $998 in the quarter on improved sales mix and increased carbon steel spot market pricing.
Full-year Results
AK Steel logged a net loss of $7.8 million or 3 cents per share for 2016, lower than a net loss of $509 million or $2.86 per share in 2015. Adjusted earnings came in at 56 cents per share for the year.
Sales went down roughly 12% year over year to $5.88 billion for the full year on lower shipments.
Financials
AK Steel exited 2016 with cash and cash equivalents of $173.2 million, a roughly three-fold year over year rise. Long-term debt fell roughly 23% year over year to around $1.8 billion. Cash flows from operating activities were $304.6 million in 2016.
Outlook
Moving ahead, AK Steel expects shipments for first-quarter 2017 to be modestly higher on a sequential comparison basis as a seasonal pick-up in automotive shipments is expected to be partly offset by lower shipments to the electrical steel market.
The company also sees its average selling price to be flat in the first quarter compared with the fourth quarter. It expects a modest increase in selling prices on a year over year basis.
AK Steel also expects planned maintenance average costs of round $8 million in the first quarter, compared with $3 million a year ago. For full-year 2017, it sees outage costs to be roughly $90 million versus around $62 million in 2016.
Price Performance
AK Steel outperformed the Zacks categorized Steel-Producers industry over a year. The company's shares gained 287.5% during the period while the industry saw a gain of 88.4%.
AK Steel is laying importance on de-emphasizing commodity products and launching new products, such as its new Nexmet line of next-generation advanced high strength steels. The Nexmet family of products will provide high strength, greater ductility, and enhanced formability solutions for a variety of needs for structural and exterior automotive body lightweighting uses.
AK Steel also remains committed to provide competitive pricing in the current operating environment. The company should also continue to benefit from its cost-reduction actions.
U.S. Steel has an expected long-term growth of 8%.
Steel Dynamics has an expected long-term growth of 12%.
Angang Steel has an expected earnings growth of 8.6% for the current year.
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AK Steel's (AKS) Q4 Earnings Top Estimates, Sales Lag
AK Steel topped earnings estimates in fourth-quarter 2016, helped by its cost-reduction actions. The steel maker’s adjusted earnings (barring one-time items) of 25 cents per share for the quarter zoomed past the Zacks Consensus Estimate of 7 cents.
On a reported basis, the company logged a net loss of $62.4 million or 22 cents per share in the fourth quarter, narrower than a loss of $145.4 million or 82 cents per share in the year-ago quarter. The results in the reported quarter include one-time items including charges related to pension settlement and termination of pellet agreement with Magnetation LLC.
Total operating costs in the reported quarter fell around 9% year over year to roughly $1.4 billion.
The company recorded net sales of $1,418.6 million for the quarter, down roughly 8% from the year-ago quarter. Sales missed the Zacks Consensus Estimate of $1,434 million.
AK Steel Holding Corporation Price, Consensus and EPS Surprise
AK Steel Holding Corporation Price, Consensus and EPS Surprise | AK Steel Holding Corporation Quote
Pricing and Shipments
Shipments for the quarter were down around 15% year over year to 1,412,200 tons, affected by the company's move to reduce commodity steel sales to the distributor and converters market and slightly lower shipments to the automotive industry. Selling price per ton rose 7% year over year to $998 in the quarter on improved sales mix and increased carbon steel spot market pricing.
Full-year Results
AK Steel logged a net loss of $7.8 million or 3 cents per share for 2016, lower than a net loss of $509 million or $2.86 per share in 2015. Adjusted earnings came in at 56 cents per share for the year.
Sales went down roughly 12% year over year to $5.88 billion for the full year on lower shipments.
Financials
AK Steel exited 2016 with cash and cash equivalents of $173.2 million, a roughly three-fold year over year rise. Long-term debt fell roughly 23% year over year to around $1.8 billion. Cash flows from operating activities were $304.6 million in 2016.
Outlook
Moving ahead, AK Steel expects shipments for first-quarter 2017 to be modestly higher on a sequential comparison basis as a seasonal pick-up in automotive shipments is expected to be partly offset by lower shipments to the electrical steel market.
The company also sees its average selling price to be flat in the first quarter compared with the fourth quarter. It expects a modest increase in selling prices on a year over year basis.
AK Steel also expects planned maintenance average costs of round $8 million in the first quarter, compared with $3 million a year ago. For full-year 2017, it sees outage costs to be roughly $90 million versus around $62 million in 2016.
Price Performance
AK Steel outperformed the Zacks categorized Steel-Producers industry over a year. The company's shares gained 287.5% during the period while the industry saw a gain of 88.4%.
AK Steel is laying importance on de-emphasizing commodity products and launching new products, such as its new Nexmet line of next-generation advanced high strength steels. The Nexmet family of products will provide high strength, greater ductility, and enhanced formability solutions for a variety of needs for structural and exterior automotive body lightweighting uses.
AK Steel also remains committed to provide competitive pricing in the current operating environment. The company should also continue to benefit from its cost-reduction actions.
AK Steel is a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other well-placed companies in the steel space include United States Steel Corporation (X - Free Report) , Steel Dynamics, Inc. (STLD - Free Report) and Angang Steel Company Limited , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
U.S. Steel has an expected long-term growth of 8%.
Steel Dynamics has an expected long-term growth of 12%.
Angang Steel has an expected earnings growth of 8.6% for the current year.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>