AK Steel (AKS) Earnings and Revenues Miss Estimates in Q3

AK Steel Holding Corporation AKS missed earnings and sales estimates in third-quarter 2017. The steel maker reported net loss of $5.8 million or 2 cents per share in the reported quarter as compared to the net income of $50.9 million or 21 cents recorded in the prior-year quarter.

Barring costs related to the acquisition of Precision Partners and debt refinancing (totaling $13.1 million), adjusted earnings for the quarter came in at 2 cents per share, missing the Zacks Consensus Estimate of 3 cents.

Total operating costs in the reported quarter rose around 10.2% year over year to roughly $1,456.5 million.

The company recorded net sales of $1,494.3 million for the quarter, up 2.8% from the year-ago quarter. However, sales missed the Zacks Consensus Estimate of $1,504 million.

AK Steel Holding Corporation Price, Consensus and EPS Surprise

Pricing and Shipments

Shipments for the quarter were down around 2.1% year over year to 1,368,600 tons, mainly due to weaker automotive demand. Average selling price per ton rose 2% year over year to $1,021 in the quarter mainly due to higher surcharges on specialty steel products and increased average selling prices on both spot and contract market sales.

AK Steel exited the quarter with cash and cash equivalents of $69.3 million and $865.3 million available under its revolving credit facility. The company reported long-term debt of $2,098 million at the end of the quarter. Cash flows from operating activities were $154 million for the first nine months of 2017.

AK Steel, in August, completed the acquisition of Precision Partners Holding Company for $360.9 million in cash. The buyout combines AK Steel’s innovation in materials and metals-forming and Precision Partners' tooling and stamping technology and advanced capabilities.

Shares of AK Steel have lost 14.2% in the past three months underperforming the industry’s 5.9% rally.

AK Steel currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are FMC Corporation FMC, Koppers Holdings Inc. KOP and BHP Billiton Limited BHP. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

FMC Corporation has expected long-term earnings growth of 11.3%.

Koppers Holdings has expected long-term earnings growth of 18%.

BHP Billiton has expected long-term earnings growth of 5.3%.

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