AK Steel Provides Strong Q4 EPS Guidance; Stock Up 6%

(RTTNews) - AK Steel Holding Corp (AKS) said on Wednesday it expects to report fourth-quarter earnings of $0.05 to $0.10 per share, excluding the effects of acquisition-related expenses pertaining to its recent purchase of Severstal Dearborn.

Analysts polled by Thomson Reuters expect AK Steel to report earnings of $0.04 per share for the quarter. Analysts' estimates typically exclude special items.

AK Steel said it expects sequential growth in fourth-quarter EBITDA (earnings before interest, taxes, depreciation and amortization).

The strong guidance is despite incurring about $31 million in costs associated with a planned Ashland Works blast furnace outage, AK Steel said.

AK Steel expects its average selling price for the fourth quarter to be about $980 per ton, a decline of 10% from the sequential third quarter. The decrease is primarily due to a higher percentage of product shipments to the carbon spot market compared to the third quarter, mainly due to the higher mix of hot-rolled coil shipments from Dearborn Works, as well as a general reduction in spot market pricing.

AK Steel said it expects to benefit from substantially lower iron ore, carbon scrap and energy costs in the fourth quarter compared to the prior quarter.

Also the company threw some light on its pension obligations. According to the company, the Society of Actuaries issued new mortality tables in October 2014 that AK Steel expects will significantly increase the estimate of its pension and postemployment benefit obligations.

As previously disclosed, the company took a planned outage at its Ashland Works blast furnace beginning in October 2014.

The planned outage, which included a reline of the blast furnace hearth, was originally scheduled for 28 days but was completed in 27 days.

The outage included capital investments of around $19 million and about $31 million of costs associated with the planned outage itself and reduced production levels at Ashland Works in the period prior to the outage. The company took steps in advance of the outage to minimize the potential impact on its customers, including purchasing additional carbon slabs and building inventory through increased production at other AK Steel manufacturing locations.

The company believes that the reline of the blast furnace hearth will position it well to provide stable blast furnace operations in the future by allowing the company to avoid the unplanned disruptions that have occurred throughout 2014.

In addition, the company expects this investment to reduce the company's future production costs by returning the Ashland Works blast furnace to normal operating levels and allow the company to better serve its customers in the future.