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AK Steel (AKS) Earnings Miss, Revenues Beat Estimates in Q2

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AK Steel Holding Corporation (AKS - Free Report) reported net income of $56.6 million or 18 cents per share in the second quarter of 2018, down roughly 27% from net income of $77.2 million or 24 cents recorded in the prior-year quarter.

Adjusted earnings of 22 cents per share missed the Zacks Consensus Estimate of 23 cents.
 
Total operating costs in the quarter rose around 14.3% year over year to roughly $1,647.1 million.
 
Net sales of $1,746.6 million in the second quarter rose around 12% year over year, topping the Zacks Consensus Estimate of $1,737 million.

AK Steel Holding Corporation Price, Consensus and EPS Surprise

 

Pricing and Shipments

Flat-rolled steel shipments in the second quarter were up around 0.4% year over year to 1,439,800 tons. Average selling price per ton for flat-rolled steel rose 6% to $1,101.

Financials
 
AK Steel exited second-quarter 2018 with cash and cash equivalents of $46 million compared with $136.3 million in prior-year quarter. The company had $908.5 million available under its revolving credit facility at the end of the quarter under review.
 
The company’s long-term debt rose roughly 21% year over year to $2,036.6 million.

Cash flow from operating activities was $187.4 million in the first half compared with $203.2 million a year ago.

Guidance
 
The company expects market conditions to remain strong in the third quarter. For the quarter, AK Steel expects flat-rolled shipments to be 5% higher from the second quarter. It anticipates average selling price per flat-rolled ton to be $1,105 in the third quarter. The company also anticipates an improvement in pricing and shipment to be, in part, offset by the outage at one of its temper mills.  As a result, it expects margins to improve around 50 basis points from the second quarter of 2018.  

Price Performance
 
Shares of AK Steel have lost 2.7% in the past six months, modestly outperforming the industry’s 3.6% decline.



Zacks Rank & Other Stocks to Consider
 
AK Steel currently carries a Zacks Rank #2 (Buy).
 
Some other top-ranked stocks in the basic materials space are BHP Billiton Limited (BHP - Free Report) , Olympic Steel, Inc. (ZEUS - Free Report) and Steel Dynamics Inc. (STLD - Free Report) . All three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 
BHP Billiton has an expected long-term earnings growth rate of 5.3%. Its shares have gained 27% in a year’s time.
 
Olympic Steel has an expected long-term earnings growth rate of 7.5%. Its shares have gained 26.2% over a year.
 
Steel Dynamics has an expected long-term earnings growth rate of 12%. The stock has rallied 35.3% in the past year.

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