AK Steel announces 18 % net imcome rise for second quarter of 2019
by David Fleschen
AK Steel (NYSE: AKS) today reported its financial results for the second quarter of 2019.
Second Quarter 2019 Highlights
- Net income of $66.8 million, or $0.21 per diluted share; up 18% from a year ago
- Adjusted EBITDA of $151.5 million, or 9.0% of sales; up 2% from a year ago
- Reduced borrowings by $95.0 million
“We reported solid earnings for the second quarter, despite a dramatic decline in carbon spot market pricing from a year ago. This reflects our strategy to focus on value-added products with fixed-price contracts and to deemphasize sales to the volatile commodity spot market,” said Roger K. Newport, Chief Executive Officer. “As a result, we generated strong free cash flow that allowed us to meaningfully reduce debt in the quarter.”
AK Steel reported net income of $66.8 million, or $0.21 per diluted share of common stock, for the second quarter of 2019. For the second quarter of 2018, net income was $56.6 million, or $0.18 per diluted share. The company’s adjusted EBITDA (as defined in the “Non-GAAP Financial Measures” section below) was $151.5 million, or 9.0% of net sales, for the second quarter of 2019. Adjusted EBITDA increased 2% from $148.4 million, or 8.5% of net sales, in the second quarter a year ago. Adjusted EBITDA in the recent second quarter included mark-to-market gains of $35.4 million from iron ore derivatives, about half of which will offset expected higher costs for iron ore later in the year. For the same period in 2018, the company recorded mark-to-market gains of $2.1 million. Not included in the financial results for the second quarter of 2019 were realized gains of $8.7 million for iron ore derivatives contracts that settled during the period for which the company had recognized mark-to-market gains in its financial results in prior quarters, compared to $9.2 million for the same period in 2018.
Net sales for the recent second quarter were $1.7 billion, a 4% decrease compared to the second quarter of 2018. The decrease was primarily due to lower shipments to the automotive market, as expected, and lower spot market selling prices, partly offset by higher selling prices to the automotive market.
The company reported an increase in liquidity to $1,079.1 million at the end of the second quarter, consisting of cash and cash equivalents and $1,037.1 million of availability under the company’s revolving credit facility. The company repaid $95.0 million of borrowings under the credit facility during the quarter and reported outstanding borrowings under the credit facility of $285.0 million at June 30, 2019.
Source: AK Steel, Photo: Fotolia