AK Steel Reports Net Income of $62.7 Million For First Quarter of 2007

 

Middletown, OH, April 24, 2007— AK Steel (NYSE: AKS) today reported net income of $62.7 million, or $0.56 per diluted share of common stock, for the first quarter of 2007, compared to net income of $6.2 million, or $0.06 per diluted share for the first quarter of 2006.

Net sales in the first quarter of 2007 were a record $1,719.9 million on shipments of 1,596,200 tons, compared to $1,435.9 million on shipments of 1,526,800 tons for the year-ago quarter.  The company said its average selling price for the first quarter of 2007 was a record $1,078 per ton, a 15% increase over the $940 per-ton mark set in the first quarter of 2006, and about 4% higher than the $1,041 per-ton level reached in the fourth quarter of 2006.  The increase in selling prices resulted from higher contract and spot market pricing coupled with increased raw material surcharges, primarily scrap and nickel.  Nickel is a key raw material commodity in stainless steel products, and has risen in price nearly 50% in 2007.

First-quarter 2007 operating profit was $120.0 million, or $75 per ton, a four-fold increase from the $29.4 million, or $19 per ton, the company generated in the first quarter of 2006.  The year-over-year operating profit improvement was primarily the result of higher shipments and selling prices, lower total employment costs and lower operating and maintenance costs at the company’s Middletown Works.  Operating profit for the 2007 first-quarter was impacted by a pre-tax, non-cash pension curtailment charge of $15.1 million related to a new labor agreement for the company’s Mansfield (OH) Works, along with higher raw material costs and associated higher LIFO charges.

Excluding the pension curtailment charge, operating profit in the 2007 first-quarter was $135.1 million, or $85 per ton, among the best-ever quarterly performances for the company.  The following schedule reflects the reconciliation of the Non-GAAP quarterly financial measures discussed within this news release:

(Dollars in millions)   Three Months Ended
March 31,
    2007   2006
Reconciliation to operating profit
Adjusted operating profit (excluding item below)   $ 135.1   $ 29.4
Pension curtailment charge   (15.1)   -
Operating profit   $ 120.0   $ 29.4
 
Reconciliation to operating profit per ton
Adjusted operating profit per ton (excluding item below)   $ 85   $ 19
Pension curtailment charge   (10)   -
Operating profit per ton   $ 75   $ 19
 

“True to our approach for all of 2007, in the first quarter, AK Steel ‘put the pedal to the metal’ with record performances in safety, quality, productivity and revenues,” said James L. Wainscott, chairman, president and CEO of AK Steel.  “We are beginning to experience the very positive effects of a strong market and new labor agreements at all of our plants, as well as our relentless cost and debt reduction initiatives, and we’re taking that momentum into the second quarter.”

Second-Quarter 2007 Outlook
AK Steel said it expects shipments in the second quarter of 2007 to be approximately 1,650,000 tons, reflecting an increase over first-quarter levels of approximately 3%.  The company anticipates that its second-quarter 2007 average per-ton selling prices will be 2% to 3% higher compared to the first quarter of 2007.  The company will also incur a non-cash, pre-tax pension curtailment charge of $24.7 million in the second quarter related to the new labor agreement covering union employees at the company’s Middletown Works.

Overall, the higher sequential shipments, coupled with higher average selling prices, are likely to result again in record quarterly revenues, and an operating profit between $80 and $85 per ton.

Safe Harbor Statement
The statements in this release with respect to future results reflect management’s estimates and beliefs and are intended to be, and hereby are identified as “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The company cautions readers that such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently expected by management, including those risks and uncertainties discussed in AK Steel’s Annual Report on Form 10K for the year ended December 31, 2006.  Except as required by law, the company disclaims any obligation to update any forward-looking statements to reflect future developments or events.

AK Steel
AK Steel produces flat-rolled carbon, stainless and electrical steels, as well as tubular steel products for customers in the automotive, appliance, construction and manufacturing markets.  Additional information about AK Steel is available on the company’s web site at www.aksteel.com.

 


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