Document
false0000918160 0000918160 2019-10-30 2019-10-30


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT - October 30, 2019
(Date of Earliest Event Reported)
AK STEEL HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
1-13696
 
31-1401455
(State of Incorporation)
 
(Commission File No.)
 
(I.R.S. Employer Identification No.)

9227 Centre Pointe Drive, West Chester, Ohio 45069
(Address of principal executive offices, including zip code)

(513) 425-5000
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Solicitation material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock $0.01 Par Value
AKS
The New York Stock Exchange





Item 2.02
Results of Operations and Financial Condition.
 
 
On October 30, 2019, AK Steel Holding Corporation issued a press release, a copy of which is attached hereto as Exhibit No. 99.1 and incorporated by reference herein, regarding its financial results for the third quarter of 2019.

Item 7.01
Regulation of FD Disclosures.
 
 
AK Steel has prepared presentation materials (the “Investor Presentation”) that management intends to use with its earnings conference call for its third quarter 2019 financial results, to be held at 8:30 a.m. Eastern Time on October 31, 2019, and from time to time thereafter in presentations regarding AK Steel. AK Steel may use the Investor Presentation, possibly with modifications, in presentations to current and potential investors, as well as others with an interest in AK Steel and its business.

The information contained in the Investor Presentation is summary information that should be considered in the context of materials filed with, or furnished to, the Securities and Exchange Commission and other public announcements that AK Steel may make by news release or otherwise from time to time.  The Investor Presentation speaks only as of the date of this Current Report on Form 8-K.  While AK Steel may elect to update the Investor Presentation in the future to reflect events and circumstances occurring or existing after the date of this Current Report, AK Steel specifically disclaims any obligation to do so.

By filing this Current Report on Form 8-K and furnishing the Investor Presentation, AK Steel makes no admission or representation as to the materiality of any information in this Current Report or the Investor Presentation.  The Investor Presentation may contain forward-looking statements.  See Page 3 of the Investor Presentation for a discussion of certain forward-looking statements that may be included therein and the risks and uncertainties related thereto.

The Investor Presentation is furnished as Exhibit 99.2 hereto and is incorporated herein by reference.


Item 9.01
Financial Statements and Exhibits.
 
 
 
 
(d)
Exhibit:
 
 
 
 
 
 
Press Release issued on October 30, 2019
 
 
Investor Presentation October 2019
 
 
104
Cover Page Interactive Date File (embedded within the Inline XBRL document)







SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
AK STEEL HOLDING CORPORATION
 
 
 
 
 
 
 
 
 
By:
/s/ Joseph C. Alter
 
 
Joseph C. Alter
 
 
Corporate Secretary
 
 
 
 
Dated:
October 30, 2019



Exhibit
 
 
EXHIBIT 99.1
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13171012&doc=9
        News Release
 
 
 
 
Contacts:
 
Media – Lisa H. Jester, Corporate Manager, Communications and Public Relations (513) 425-2510
 
Investors – Douglas O. Mitterholzer, General Manager, Investor Relations (513) 425-5215
 

AK Steel Announces Third Quarter 2019 Financial Results

WEST CHESTER, OH, October 30, 2019 – AK Steel (NYSE: AKS) today reported its financial results for the third quarter of 2019.

Third Quarter 2019 Highlights
Net income of $2.8 million, or $0.01 per diluted share
Adjusted EBITDA of $86.9 million, or 5.7% of sales
Results include unrealized mark-to-market derivative losses of $15.3 million

“Our third quarter results were essentially in line with our expectations despite a challenging environment. We continued to make solid progress in our strategy to focus on higher-value business during the quarter,” said Roger K. Newport, Chief Executive Officer. “As we look to 2020, we are excited about our prospects, particularly in automotive where we expect meaningful market share growth.”
AK Steel reported net income of $2.8 million, or $0.01 per diluted share of common stock, for the third quarter of 2019. For the third quarter of 2018, net income was $67.2 million, or $0.21 per diluted share. The company’s adjusted EBITDA (as defined in the “Non-GAAP Financial Measures” section below) was $86.9 million, or 5.7% of net sales, for the third quarter of 2019. Adjusted EBITDA decreased from $160.8 million, or 9.3% of net sales, in the third quarter a year ago.
Net income and adjusted EBITDA in the recent third quarter included mark-to-market losses of $15.3 million, or $0.05 per diluted share, from iron ore derivatives, of which most are associated with iron ore purchases in future years. For the same period in 2018, the company recorded mark-to-market gains of $4.4 million. Not included in the financial results for the third quarter of 2019 were realized gains of $13.5 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 $5.7 million for the same period in 2018.
Net sales for the recent third quarter were $1.5 billion, a 12% decrease compared to the third quarter of 2018. The decrease was primarily due to a sharp drop in carbon spot market prices and reduced shipments to the distributors and converters market.
The company reported liquidity of $1,024.0 million at the end of the third quarter, consisting of cash and cash equivalents and $994.5 million of availability under the company’s revolving credit facility. The company reported outstanding borrowings under the credit facility of $305.0 million at September 30, 2019.


- more -


2

(Dollars in millions, except per share and per ton data)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Flat-rolled steel shipments (000 tons)
 
1,303.0

 
1,424.0

 
4,082.8

 
4,294.7

Selling price per flat-rolled steel ton
 
$
1,067

 
$
1,114

 
$
1,094

 
$
1,087

 
 
 
 
 
 
 
 
 
Net sales
 
$
1,535.5

 
$
1,735.6

 
$
4,913.7

 
$
5,141.1

Operating profit
 
51.1

 
114.8

 
198.9

 
277.9

Net income attributable to AK Steel Holding Corporation
 
2.8

 
67.2

 
65.1

 
152.5

Adjusted net income attributable to AK Steel Holding Corporation (a)
 
2.8

 
67.2

 
142.5

 
152.5

Adjusted EBITDA (a)
 
86.9

 
160.8

 
399.3

 
427.9

 
 
 
 
 
 
 
 
 
Net income per diluted share attributable to AK Steel Holding Corporation
 
$
0.01

 
$
0.21

 
$
0.21

 
$
0.48

Adjusted net income per diluted share attributable to AK Steel Holding Corporation (a)
 
0.01

 
0.21

 
0.45

 
0.48

(a)
Adjustments have been made to the nine months ended September 30, 2019 for $77.4 million of charges related to the company’s closure of its Ashland Works facility, as previously disclosed. The charge was primarily for termination of certain take-or-pay supply agreements and employee-related costs.

Outlook
In July, the company provided annual guidance based on carbon hot-rolled coil pricing of approximately $555 per ton. This annual guidance also indicated that for every $10 change in the carbon hot-rolled coil spot market price, annual earnings would be impacted by $5 to $7 million. However, since July, the pricing for carbon hot-rolled coil products has fallen more sharply than previously anticipated to an average of about $510 per ton for October. This decline has also caused service centers to order at minimum levels. The company expects the lower order volumes and the impact of the strike at General Motors to result in a reduction of flat-rolled steel shipments to between approximately 5.3 and 5.4 million tons for the full year. Further, these volatile events result in a deviation from the company’s anticipated range of $5 to $7 million. The company now expects net income for the year to be in the range of $26 to $41 million, or $0.08 to $0.13 per diluted share. Excluding the effects of the first quarter 2019 Ashland Works charge of $77.4 million, the company also anticipates adjusted net income for the year to be in the range of $103 to $118 million, or $0.32 to $0.37 per diluted share, and adjusted EBITDA for the year to be in the range of $450 to $465 million. The other annual guidance items remain unchanged from the company’s July guidance, including the recently completed significant planned maintenance outage at Dearborn Works. This guidance excludes any future mark-to-market changes in iron ore derivatives or potential pension or other postretirement benefit plan corridor charges depending on year-end interest rates and pension plan asset values.    
The foregoing outlook is based on AK Steel’s current estimates and may change based on business conditions and other factors. There are many other items that could affect the company’s 2019 results, as outlined in the Forward-Looking Statements below.

Third Quarter 2019 Earnings Conference Call
AK Steel will provide live listening access on its website for the company’s earnings conference call on October 31, 2019 at 8:30 a.m. Eastern Time. A link to the webcast is on the company’s home page at www.aksteel.com. Presentation slides will also be available on the webcast link and under the Investor Presentations section on the website. The webcast will be archived on the company’s website for three months and will be accessible from the Investor News and Events section.

AK Steel
AK Steel is a leading producer of flat-rolled carbon, stainless and electrical steel products, primarily for the automotive, infrastructure and manufacturing, including electrical power, and distributors and converters markets.

- more -


3

Through its subsidiaries, the company also provides customer solutions with carbon and stainless steel tubing products, hot- and cold-stamped components, and die design and tooling. Headquartered in West Chester, Ohio (Greater Cincinnati), the company has approximately 9,500 employees at manufacturing operations in the United States, Canada and Mexico, and facilities in Western Europe. Additional information about AK Steel is available at www.aksteel.com.

Forward-Looking Statements
Certain statements made or incorporated by reference in this earnings release reflect management’s estimates and beliefs and are intended to be “forward-looking statements” identified in the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “believes,” “intends,” “plans,” “estimates” and other similar references to future periods typically identify forward-looking statements.
The company cautions readers that forward-looking statements reflect the company’s current beliefs and judgments, but are not guarantees of future performance or outcomes. They are based on a number of assumptions and estimates that are inherently affected by economic, competitive, regulatory, and operational risks and uncertainties and contingencies that are beyond the company’s control. They are also based upon assumptions about future business decisions and conditions that may change.
Forward-looking statements are only predictions and involve risks and uncertainties, resulting in the possibility that actual events or performance will differ materially from such predictions as a result of certain risk factors. Such factors that could cause the company’s actual results and financial condition to differ materially from the results contemplated by such forward-looking statements include reduced selling prices, shipments and profits associated with a highly competitive and cyclical industry; domestic and global steel overcapacity; risks related to U.S. government actions on trade agreements and treaties, laws, regulations or policies affecting trade; changes in the cost of raw materials, supplies and energy; the company’s significant amount of debt and other obligations; severe financial hardship or bankruptcy of one or more of the company’s major customers or key suppliers; the company’s significant proportion of sales to the automotive market; reduced demand in key product markets due to competition from aluminum or other alternatives to steel; excess inventory of raw materials; supply chain disruptions or poor quality of raw materials or supplies; production disruption or reduced production levels; the company’s healthcare and pension obligations; not reaching new labor agreements on a timely basis; major litigation, arbitrations, environmental issues and other contingencies; regulatory compliance and changes; climate change and greenhouse gas emissions; conditions in the financial, credit, capital and banking markets; the company’s use of derivative contracts to hedge commodity pricing volatility; potential permanent idling of facilities; inability to fully realize benefits of margin enhancement initiatives; information technology security threats, cybercrime and exposure of private information; the company’s failure to achieve expected benefits of the Precision Partners acquisition; and changes in tax laws and regulations; as well as those risks and uncertainties discussed in more detail in the company’s Annual Report on Form 10-K for the year ended December 31, 2018, and its subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with or furnished to the Securities and Exchange Commission. As such, the company cautions readers not to place undue reliance on forward-looking statements, which speak only to the company’s plans, assumptions and expectations as of the date hereof. The company undertakes no obligation to publicly update any forward-looking statement, except as required by law.

- more -


4

AK STEEL HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and shares in millions, except per share and per ton data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Flat-rolled steel shipments (000 tons)
 
1,303.0

 
1,424.0

 
4,082.8

 
4,294.7

Selling price per flat-rolled steel ton
 
$
1,067

 
$
1,114

 
$
1,094

 
$
1,087

 
 
 
 
 
 
 
 
 
Net sales
 
$
1,535.5

 
$
1,735.6

 
$
4,913.7

 
$
5,141.1

 
 
 
 
 
 
 
 
 
Cost of products sold
 
1,366.0

 
1,486.2

 
4,280.4

 
4,462.6

Selling and administrative expenses
 
71.0

 
79.6

 
222.9

 
235.8

Depreciation
 
47.4

 
55.0

 
147.4

 
164.8

Ashland Works closure
 

 

 
64.1

 

Total operating costs
 
1,484.4

 
1,620.8

 
4,714.8

 
4,863.2

Operating profit
 
51.1

 
114.8

 
198.9

 
277.9

Interest expense
 
37.0

 
37.8

 
112.0

 
113.3

Pension and OPEB (income) expense
 
(6.8
)
 
(10.0
)
 
(7.2
)
 
(30.0
)
Other (income) expense
 
0.7

 
0.7

 
(16.5
)
 
(3.4
)
Income before income taxes
 
20.2

 
86.3

 
110.6

 
198.0

Income tax expense (benefit)
 
0.3

 
1.4

 
2.7

 
(4.0
)
Net income
 
19.9

 
84.9

 
107.9

 
202.0

Less: Net income attributable to noncontrolling interests
 
17.1

 
17.7

 
42.8

 
49.5

Net income attributable to AK Steel Holding Corporation
 
$
2.8

 
$
67.2

 
$
65.1

 
$
152.5

 
 
 
 
 
 
 
 
 
Net income per share attributable to AK Steel Holding Corporation:
 
 
 
 
 
 
 
 
Basic
 
$
0.01

 
$
0.21

 
$
0.21

 
$
0.48

Diluted
 
$
0.01

 
$
0.21

 
$
0.21

 
$
0.48

Weighted-average shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
315.8

 
314.9

 
315.8

 
314.8

Diluted
 
316.8

 
316.0

 
316.5

 
315.8



- more -


5

AK STEEL HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
 
September 30,
2019
 
December 31,
2018
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
30.8

 
$
48.6

Accounts receivable, net
 
624.4

 
635.8

Inventory
 
1,362.7

 
1,419.9

Other current assets
 
48.3

 
97.0

Total current assets
 
2,066.2

 
2,201.3

Property, plant and equipment
 
7,094.0

 
6,969.2

Accumulated depreciation
 
(5,201.8
)
 
(5,057.6
)
Property, plant and equipment, net
 
1,892.2

 
1,911.6

Operating lease assets
 
253.4

 

Other non-current assets
 
392.8

 
402.8

TOTAL ASSETS
 
$
4,604.6

 
$
4,515.7

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
676.0

 
$
801.0

Accrued liabilities
 
234.7

 
288.9

Current portion of operating lease liabilities
 
53.6

 

Current portion of pension and other postretirement benefit obligations
 
37.3

 
38.7

Total current liabilities
 
1,001.6

 
1,128.6

Non-current liabilities:
 
 
 
 
Long-term debt
 
1,969.7

 
1,993.7

Long-term operating lease liabilities
 
219.1

 

Pension and other postretirement benefit obligations
 
785.0

 
829.9

Other non-current liabilities
 
170.5

 
134.0

TOTAL LIABILITIES
 
4,145.9

 
4,086.2

 
 
 
 
 
Equity:
 
 
 
 
Common stock, authorized 450,000,000 shares of $0.01 par value each; issued 317,749,451 and 316,595,613 shares in 2019 and 2018; outstanding 316,382,722 and 315,535,765 shares in 2019 and 2018
 
3.2

 
3.2

Additional paid-in capital
 
2,902.7

 
2,894.9

Treasury stock, common shares at cost, 1,366,729 and 1,059,848 shares in 2019 and 2018
 
(7.3
)
 
(6.4
)
Accumulated deficit
 
(2,626.7
)
 
(2,691.8
)
Accumulated other comprehensive loss
 
(137.3
)
 
(100.0
)
Total stockholders’ equity
 
134.6

 
99.9

Noncontrolling interests
 
324.1

 
329.6

TOTAL EQUITY
 
458.7

 
429.5

TOTAL LIABILITIES AND EQUITY
 
$
4,604.6

 
$
4,515.7




- more -


6

AK STEEL HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in millions)
 
 
 
 
 
Nine Months Ended September 30,
 
 
2019
 
2018
Cash flows from operating activities:
 
 
 
 
Net income
 
$
107.9

 
$
202.0

Depreciation
 
129.5

 
153.3

Depreciation—SunCoke Middletown
 
17.9

 
11.5

Amortization
 
25.7

 
24.5

Ashland Works closure
 
64.1

 

Deferred income taxes
 
0.7

 
(6.3
)
Pension and OPEB expense (income)
 
(2.9
)
 
(24.2
)
Contributions to pension trust
 
(34.0
)
 
(40.7
)
Other postretirement benefit payments
 
(23.9
)
 
(28.5
)
Mark-to-market (gains) losses on derivative contracts
 
(40.8
)
 
(11.5
)
Changes in working capital
 
(36.7
)
 
(11.1
)
Other operating items, net
 
(15.0
)
 
(19.1
)
Net cash flows from operating activities
 
192.5

 
249.9

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Capital investments
 
(135.8
)
 
(101.1
)
Other investing items, net
 
10.0

 
0.2

Net cash flows from investing activities
 
(125.8
)
 
(100.9
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Net borrowings (payments) under credit facility
 
(30.0
)
 
(85.0
)
Redemption of long-term debt
 
(3.8
)
 

SunCoke Middletown distributions to noncontrolling interest owners
 
(48.3
)
 
(54.0
)
Other financing items, net
 
(2.4
)
 
(0.7
)
Net cash flows from financing activities
 
(84.5
)
 
(139.7
)
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
 
(17.8
)
 
9.3

Cash and cash equivalents, beginning of period
 
48.6

 
38.0

Cash and cash equivalents, end of period
 
$
30.8

 
$
47.3




- more -


7

AK STEEL HOLDING CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Dollars in millions)

In certain of its disclosures in this news release, the company has reported adjusted EBITDA, adjusted EBITDA margin and adjusted net income attributable to AK Steel Holding that exclude the effects of noncontrolling interests and costs associated with the closure of Ashland Works. The company believes that reporting adjusted net income with these items excluded more clearly reflects its current operating results and provides investors with a better understanding of its overall financial performance. Adjustments to net income do not result in an income tax effect as any gross income tax effects are offset by a corresponding change in the deferred income tax valuation allowance.

EBITDA is an acronym for earnings before interest, taxes, depreciation and amortization. It is a metric that is sometimes used to compare the results of different companies by removing the effects of different factors that might otherwise make comparisons inaccurate or inappropriate. The adjusted results, although not financial measures under generally accepted accounting principles (“GAAP”) and not identically applied by other companies, facilitate the ability to analyze the company’s financial results in relation to those of its competitors and to the company’s prior financial performance by excluding items that otherwise would distort the comparison.  Adjusted EBITDA, adjusted EBITDA margin and adjusted net income are not, however, intended as alternative measures of operating results or cash flow from operations as determined in accordance with GAAP and are not necessarily comparable to similarly titled measures used by other companies.

Neither current nor potential investors in the company’s securities should rely on adjusted EBITDA, adjusted EBITDA margin or adjusted net income as a substitute for any GAAP financial measure and the company encourages current and potential investors to review the following reconciliations of adjusted EBITDA and adjusted net income.

Reconciliation of Adjusted EBITDA
(dollars in millions, except per ton)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Net income attributable to AK Steel Holding
 
$
2.8

 
$
67.2

 
$
65.1

 
$
152.5

Net income attributable to noncontrolling interests
 
17.1

 
17.7

 
42.8

 
49.5

Income tax expense (benefit)
 
0.3

 
1.4

 
2.7

 
(4.0
)
Interest expense, net
 
36.7

 
37.6

 
111.3

 
112.7

Depreciation and amortization
 
51.4

 
58.4

 
160.7

 
178.3

EBITDA
 
108.3

 
182.3

 
382.6

 
489.0

Less: EBITDA of noncontrolling interests (a)
 
21.4

 
21.5

 
60.7

 
61.1

Ashland Works closure
 

 

 
77.4

 

Adjusted EBITDA
 
$
86.9

 
$
160.8

 
$
399.3

 
$
427.9

Adjusted EBITDA margin
 
5.7
%
 
9.3
%
 
8.1
%
 
8.3
%

(a)
The reconciliation of net income attributable to noncontrolling interests to EBITDA of noncontrolling interests is as follows:
(dollars in millions)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Net income attributable to noncontrolling interests
 
$
17.1

 
$
17.7

 
$
42.8

 
$
49.5

Depreciation
 
4.3

 
3.8

 
17.9

 
11.6

EBITDA of noncontrolling interests
 
$
21.4

 
$
21.5

 
$
60.7

 
$
61.1



- more -


8


Reconciliation of Adjusted Net Income
 
 
 
 
 
 
 
 
 
(dollars in millions, except per share)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Reconciliation of Net Income Attributable to AK Steel Holding
 
 
 
 
 
 
 
 
Net income attributable to AK Steel Holding
 
$
2.8

 
$
67.2

 
$
65.1

 
$
152.5

Ashland Works closure
 

 

 
77.4

 

Adjusted net income attributable to AK Steel Holding
 
$
2.8

 
$
67.2

 
$
142.5

 
$
152.5

 
 
 
 
 
 
 
 
 
Reconciliation of Diluted Earnings per Share
 
 
 
 
 
 
 
 
Diluted earnings per share
 
$
0.01

 
$
0.21

 
$
0.21

 
$
0.48

Ashland Works closure
 

 

 
0.24

 

Adjusted diluted earnings per share
 
$
0.01

 
$
0.21

 
$
0.45

 
$
0.48


Reconciliation of Adjusted EBITDA Guidance for 2019
(dollars in millions)
 
Year Ending December 31, 2019
 
 
Low
 
High
Net income attributable to AK Holding
 
$
26

 
$
41

Net income attributable to noncontrolling interests
 
55

 
55

Income tax expense
 
7

 
7

Interest expense, net
 
150

 
150

Depreciation and amortization
 
210

 
210

EBITDA
 
448

 
463

Less: EBITDA of noncontrolling interests (a)
 
75

 
75

Ashland Works closure
 
77

 
77

Adjusted EBITDA
 
$
450

 
$
465


(a)
The reconciliation of net income attributable to noncontrolling interests to EBITDA of noncontrolling interests is as follows:
(dollars in millions)
 
Year Ending December 31, 2019
 
 
Low
 
High
Net income attributable to noncontrolling interests
 
$
55

 
$
55

Depreciation
 
20

 
20

EBITDA of noncontrolling interests
 
$
75

 
$
75






- more -


9

Reconciliation of Adjusted Net Income Guidance for 2019
(dollars in millions, except per share)
 
Year Ending December 31, 2019
 
 
Low
 
High
Reconciliation of Net Income Attributable to AK Steel Holding
 
 
 
 
Net income attributable to AK Steel Holding
 
$
26

 
$
41

Ashland Works closure
 
77

 
77

Adjusted net income attributable to AK Steel Holding
 
$
103

 
$
118

 
 
 
 
 
Reconciliation of Diluted Earnings per Share
 
 
 
 
Diluted earnings per share
 
$
0.08

 
$
0.13

Ashland Works closure
 
0.24

 
0.24

Adjusted diluted earnings per share
 
$
0.32

 
$
0.37




AK STEEL HOLDING CORPORATION
FLAT-ROLLED STEEL SHIPMENTS
(Unaudited)
(Tons in thousands)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Tons Shipped by Product
 
 
 
 
 
 
 
 
Stainless/electrical
 
187.9

 
206.6

 
592.9

 
628.8

Coated
 
697.6

 
720.0

 
2,149.7

 
2,175.8

Cold-rolled
 
209.3

 
264.3

 
694.7

 
816.4

Hot-rolled
 
171.8

 
192.4

 
530.7

 
554.8

Other
 
36.4

 
40.7

 
114.8

 
118.9

Total shipments
 
1,303.0

 
1,424.0

 
4,082.8

 
4,294.7

 
 
 
 
 
 
 
 
 
Shipments by Product (%)
 
 
 
 
 
 
 
 
Stainless/electrical
 
14
%
 
15
%
 
15
%
 
15
%
Coated
 
54
%
 
49
%
 
52
%
 
50
%
Cold-rolled
 
16
%
 
19
%
 
17
%
 
19
%
Hot-rolled
 
13
%
 
14
%
 
13
%
 
13
%
Other
 
3
%
 
3
%
 
3
%
 
3
%
Total shipments
 
100
%
 
100
%
 
100
%
 
100
%

###

exhibit992toform8kfinale
Third Quarter 2019 Financial Results October 30, 2019 Creating Innovative Steel Solutions © 2019 AK Steel. All rights reserved.


 
AK Steel Executive Presenters . Roger Newport Chief Executive Officer . Kirk Reich President and Chief Operating Officer . Jaime Vasquez Vice President – Finance and Chief Financial Officer SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 2 © 2019 AK Steel. All rights reserved.


 
Forward-Looking Statements Certain statements made or incorporated by reference in this presentation reflect management’s estimates and beliefs and are intended to be “forward-looking statements” identified in the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “believes,” “intends,” “plans,” “estimates” and other similar references to future periods typically identify forward-looking statements. The company cautions readers that forward-looking statements reflect the company’s current beliefs and judgments, but are not guarantees of future performance or outcomes. They are based on a number of assumptions and estimates that are inherently affected by economic, competitive, regulatory, and operational risks and uncertainties and contingencies that are beyond the company’s control. They are also based upon assumptions about future business decisions and conditions that may change. Forward-looking statements are only predictions and involve risks and uncertainties, resulting in the possibility that actual events or performance will differ materially from such predictions as a result of certain risk factors. Such factors that could cause the company’s actual results and financial condition to differ materially from the results contemplated by such forward-looking statements include reduced selling prices, shipments and profits associated with a highly competitive and cyclical industry; domestic and global steel overcapacity; risks related to U.S. government actions on trade agreements, trade related laws and regulations and trade related treaties or policies; changes in the cost of raw materials, supplies and energy; the company’s significant amount of debt and other obligations; severe financial hardship or bankruptcy of one or more of the company’s major customers or key suppliers; the company’s significant proportion of sales to the automotive market; reduced demand in key product markets due to competition from aluminum or other alternatives to steel; excess inventory of raw materials; supply chain disruptions or poor quality of raw materials or supplies; production disruption or reduced production levels; the company’s healthcare and pension obligations; not reaching new labor agreements on a timely basis; major litigation, arbitrations, environmental issues and other contingencies; regulatory compliance and changes; climate change and greenhouse gas emissions; conditions in the financial, credit, capital and banking markets; the company’s use of derivative contracts to hedge commodity pricing volatility; potential permanent idling of facilities; inability to fully realize benefits of margin enhancement initiatives; information technology security threats, cybercrime and exposure of private information; the company’s failure to achieve expected benefits of the Precision Partners acquisition; changes in tax laws and regulations; as well as those risks and uncertainties discussed in more detail in the company’s Annual Report on Form 10-K for the year ended December 31, 2018, and its subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with or furnished to the Securities and Exchange Commission. As such, the company cautions readers not to place undue reliance on forward-looking statements, which speak only to the company’s plans, assumptions and expectations as of the date hereof. The company undertakes no obligation to publicly update any forward-looking statement, except as required by law. SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 3 © 2019 AK Steel. All rights reserved.


 
Roger Newport Chief Executive Officer SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.


 
Protecting Our Most Important Asset – Our People . Continue to be an industry leader in safety performance . Five facilities achieved zero OSHA DART* cases for 3Q 2019 . Four facilities achieved zero OSHA recordable cases for 3Q 2019 . Two facilities achieved zero occupational injuries for 3Q 2019 * Days Away from work, Restricted or Transferred cases SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 5 © 2019 AK Steel. All rights reserved.


 
SUSTAINABILITY HIGHLIGHTS 1200+ Volunteers In 100+ Events In Our Communities 66% Waste Recycled CONTINUED HIGH RATINGS 99.9% 99.9% For Corporate Governance Practices Water Compliance Air Compliance $1.5 MILLION Contributed to our communities through Of Water Utilized RECYCLED Or Reused the AK Steel Foundation 77% SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 6 © 2019 AK Steel. All rights reserved.


 
Strategic Accomplishments 2014-15 2016 2017 2018 2019+ • Acquired Dearborn assets • Dearborn coating line • New Research and Innovation • Best financial performance • Capital investment to support • Idled Ashland hot-end upgraded to produce next Center since 2008 growth at Precision Partners steelmaking operations generation steels • Introduced NEXMET® 1000 • General Motors Supplier of • Closure of Ashland Works; • Began product portfolio • Introduced NEXMET® 440EX and 1200 the Year $40 million annual run-rate optimization • Strengthened balance sheet • Raw Material Supplier of the • Mansfield melt shop upgrade savings • Reduced interest cost and Year by FCA USA • Launched TRAN-COR® X • DOE award to leverage high extended maturity • DOE award to improve motor electrical steel performance computing for • ~$210 million pension de- efficiency for hybrid/electric • DOE Award for development hot rolling steel research risking annuitizations vehicles of lightweight steels • General Motors Supplier of • Acquisition of Precision • Record AK Tube results the Year Partners • ~$280 million pension • Ford Smart Brand Pillar Award • Major investment at de-risking annuitization • DOE award to leverage Middletown hot-end • Reduced debt by $116 million supercomputing for advanced thermo-mechanical forming process development • NEXMET® AHSS sourced on first automotive application • Major investment at Dearborn hot-end SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 7 © 2019 AK Steel. All rights reserved.


 
Ashland Works Update . Ashland Works facility will be permanently closed by the end of 2019 − Blast furnace and ‘hot-end’ were idled in 2015 . Transition of coating line production to increase utilization at other AK Steel coating lines is on track . These actions are expected to result in annual savings of over $40 million beginning in 2020 SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 8 © 2019 AK Steel. All rights reserved.


 
Steel Market Update North American Light Vehicle Production (Millions) . Overall demand for steel remains relatively good 17.1 17.0 16.6 16.4 16.5 . Vehicle production in 2019, as expected, will be slightly lower than 2018 2017 2018 2019E 2020E 2021E U.S. Housing Starts − Ultimate impact from GM strike still to be determined (Millions) 1.28 − Slight decrease in vehicle production expected in 2020 1.26 1.26 1.27 1.21 − AK Steel anticipates gaining market share in 2020 2017 2018 2019E 2020E 2021E . Lower spot market steel prices have caused service U.S. Non-Residential Construction Fixed Investment ($ Billions) centers to order at minimum levels $2,917 $2,785 $2,834 $2,712 $2,539 2017 2018 2019E 2020E 2021E Source: AK Steel estimates SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 9 © 2019 AK Steel. All rights reserved.


 
Strategy – Create Shareholder Value by . . . COMMERCIALIZING TRANSFORMING DRIVING innovative our operations to further growth - organically products significantly improve and through acquisitions and services our competitive into new markets and cost position downstream business SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 10 © 2019 AK Steel. All rights reserved.


 
Kirk Reich President and Chief Operating Officer SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.


 
Growth at Precision Partners . Leading producer of hot- and cold-stamped automotive components and complex assemblies . On track for solid increase in profitability in 2019 . Joint commercial activity with AK Steel and AK Tube progressing . Investing in new facility and equipment to support new business awarded . One of only three North American producers with the capability to produce hot-stamped, one-piece, door ring SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 12 © 2019 AK Steel. All rights reserved.


 
B O F ’ Completed Major Maintenance at Dearborn Hot Endo f Ib no . Shotcrete the interior of the blast furnace, hot blast, bustle pipe, so tm S offtakes, uptakes, crossover and dome a t l a l v a e t s . Upgrade or replacement of various equipment i a o f n t o e − Gearbox, downcomer, gas bleeder stack, vessel hoods and runways, f r n s drives, hydraulics, etc. e h w o P t a c . Upgraded environmental compliance equipment u r l e W Instt u allate r ion . Expect savings of ~$10 per ton in Dearborn steelmaking costs t of h 04 new g 10/ gas e on flare a am stac r 4 k b und bur o aro ner x ng Taki SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 13 © 2019 AK Steel. All rights reserved.


 
Automotive Materials and Components Solutions Provider . Uniquely positioned among suppliers to automotive OEMs ‒ Broadest portfolio of materials Carbon Automotive Market Share Increasing ‒ Tool and die design and manufacturing ‒ Hot- and cold-stamped offerings ‒ Complex part assembly ‒ Exhaust system components ‒ Tubular structural parts . Approximately 2/3 of volume sold into automotive ‒ Stability through fixed price contracts 2017 2018 2019E 2020E ‒ Components typically sourced for the life of model . Go-to solution provider with focus on research and innovation ‒ More than 550 engineers, metallurgists, technical specialists and tool-makers supporting automotive OEMs ‒ Depth of product portfolio, research and innovation, and technical support allows for consistent and growing market share SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 14 © 2019 AK Steel. All rights reserved.


 
Growing Demand for Ultra High-Strength Steels . Automotive OEMs are seeking cost 600 570 533 320 507 effective lightweighting solutions 282 500 474 453 254 431 218 195 395 . Innovating steel products in 400 170 123 collaboration with future OEM 329 314 296 71 vehicle body designs 300 279 66 258 63 239 59 209 55 51 Net Net Poundsper Vehicle 200 . Fewer competitors capable of 45 producing UHSS 272 248 258 261 258 256 253 251 250 220 233 100 188 203 164 . Growth is expected to accelerate 0 between 2020 and 2025 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 AHSS UHSS AK Steel is well-positioned to provide the future lightweighting solutions sought by automakers Source: DuckerFrontier 2018, SMDI NA Automotive Steel Content Market Study SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 15 © 2019 AK Steel. All rights reserved.


 
ULTRALUME® PHS Licensing Agreement . ULTRALUME® PHS is an aluminized boron press hardenable steel product ‒ High strength, high formability steel that is hot-stamped into parts for lightweighting in the auto industry . AK Steel has full rights to manufacture and sell ULTRALUME® PHS for hot stamping in North America . Stampers, including Precision Partners, will be permitted to press harden parts made from our material . Expect to significantly expand our sales of Precision Partners this important, and growing, automotive Hot Stamping Cell product SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 16 © 2019 AK Steel. All rights reserved.


 
Jaime Vasquez Vice President – Finance and Chief Financial Officer SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.


 
Third Quarter 2019 Financial Highlights ($ Millions, except per share and per ton) 3Q 2018 2Q 2019 3Q 2019 Flat-Rolled Shipments (in 000s of tons) 1,424 1,391 1,303 Flat-Rolled Average Selling Price Per Ton $1,114 $1,102 $1,067 Net Sales $1,735.6 $1,680.5 $1,535.5 Net Income (Loss) $67.2 $66.8 $2.8 Adjusted EBITDA $160.8 $151.5 $86.9 Adjusted EBITDA Margin 9.3% 9.0% 5.7% Earnings (Loss) Per Share – Diluted $0.21 $0.21 $0.01 Note: See Appendix for reconciliations of non-GAAP financial measures SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 18 © 2019 AK Steel. All rights reserved.


 
Adjusted EBITDA – 2Q 2019 to 3Q 2019 $180 $152 $155 $26 $130 $13 $105 ($ ($ Millions) $7 $87 $80 $60 $51 $55 $30 2Q 2019 Actual Pricing/Volume/Mix Raw Materials & Operations Mark-to-Market Other 3Q 2019 Actual Energy Unrealized Loss SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 19 © 2019 AK Steel. All rights reserved.


 
2019 Full Year Guidance Estimates Flat-Rolled Shipments (000s tons) . Net income attributable to AK Steel of ~$26 to $41 million 8,000 6,000 6,974 4,000 5,936 5,596 5,683 . Adjusted net income of ~$103 to $118 million 2,000 0 . Adjusted EBITDA in the range of ~$450 to $465 million 2015 2016 2017 2018 Flat-Rolled Average Selling Price Per Ton ‒ Based on average carbon hot-rolled coil spot market price of $1,200 ~$510 per ton $900 $1,091 $929 $955 $1,022 $600 . Adjusted results exclude the effect of the Ashland Works $300 $0 closure charge of $77.4 million recorded in 1Q, mark-to- 2015 2016 2017 2018 market changes in iron ore derivatives, and potential corridor Adjusted EBITDA ($ Millions) charges $600 $528.5 $563.4 $400 $472.8 $200 $180.4 $0 2015 2016 2017 2018 The company's guidance is based on AK Steel’s current estimates and may change based on business conditions and other factors. There are many other items that could affect the company’s 2019 results, as outlined in the Forward-Looking Statements slide of this presentation. SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 20 © 2019 AK Steel. All rights reserved.


 
2019 Full Year Other Guidance Items . Earnings per share of ~$0.08 to $0.13 . Adjusted earnings per share of ~$0.32 to $0.37 (1) . Flat-rolled shipments ~5.3 to 5.4 million tons . Average flat-rolled selling price roughly the same as 2018 . Major maintenance outages ~$70 to $80 million . Depreciation and amortization ~$210 million (2) . Cash/total interest expense of ~$135/$155 million . Pension and OPEB income ~$20 to $25 million (3) . OPEB payments of ~$40 million . Minimal cash and book taxes . Working capital expected to be modest source of cash (1) Adjusted results exclude the effect of the Ashland Works closure charge of $77.4 million recorded in 1Q, mark-to-market changes in iron ore derivatives and potential corridor charges (2) Includes $20 million for SunCoke (3) Includes ~$6 million expense reported in Cost of Products Sold/Selling and Administrative expenses; excludes $13 million charge in 1Q for Ashland Works closure The company's guidance is based on AK Steel’s current estimates and may change based on business conditions and other factors. There are many other items that could affect the company’s 2019 results, as outlined in the Forward-Looking Statements slide of this presentation. SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 21 © 2019 AK Steel. All rights reserved.


 
THANK YOU! SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.


 
Appendix SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.


 
Investor Contact DOUGLAS O. MITTERHOLZER ADDRESS Assistant Treasurer and 9227 Centre Pointe Drive General Manager, Investor Relations West Chester, OH 45069 E-MAIL ADDRESS TELEPHONE NUMBER doug.mitterholzer@aksteel.com Office: 513.425.5215 SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 24 © 2019 AK Steel. All rights reserved.


 
High-Value Product Mix with More Predictable Pricing Flat-Rolled Product Mix Customer Contract Structure 2015 2015 Other 3% Spot Market Hot-rolled ~19% 18% Coated Fixed Base 48% Price Contracts Stainless/ Steel Index ~62% Electrical Based Contracts 13% ~19% Cold-rolled 2018 2018 18% Other 3% Spot Market Hot-rolled ~13% 13% Coated Fixed Base 50% Price Contracts Stainless/ Steel Index ~70% Electrical Based Contracts 15% ~17% Cold-rolled 19% SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 25 © 2019 AK Steel. All rights reserved.


 
Balance Sheet and Cash Flow Third Quarter Highlights Robust Liquidity ($ Millions) . Maintain focus on strengthening balance sheet $1,500 $1,000 $1,354 $989 $1,024 $845* $500 $700 . Ended quarter with liquidity of more than $1 billion $0 12/31/15 12/31/16 12/31/17 12/31/18 09/30/19 * Acquisition of Precision Partners Consistent Capital Investments . Working capital expected to be a modest source of ($ Millions) cash for full year 2019 $200 ~$170 - $153 $152 $100 $128 $190 $99 $0 2015 2016 2017 2018 2019E Manageable Pension Contributions ($ Millions) $75 $50 $50 $50 $50 $25 $44 $44 $24 $0 $0 2015 2016 2017 2018 2019 2020E 2021E SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 26 © 2019 AK Steel. All rights reserved.


 
Significantly Improved Debt Profile ($ Millions) December 31, 2015 September 30, 2019 Total Debt: $2.4 billion $700 $150 $150 $537 Total Debt: $2.0 billion $7 $406 $406 $380 $380 $392 $290 $305 $270 $550 $530 $149 $62 $62 $30 $30 $7 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Credit Facility Senior Notes Senior Secured Notes Industrial Revenue Bonds . Liquidity is sufficient to pay down the $149 million exchangeable notes due in November 2019 Note: Excludes unamortized debt discount and issuance costs SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 27 © 2019 AK Steel. All rights reserved.


 
Non-GAAP Financial Measures Reconciliation of Adjusted Net Income Qtr ended Qtr ended Qtr ended 9 Months Qtr ended Qtr ended Qtr ended 9 Months 2019 Guidance ($ Millions) 2016 2017 2018 3/31/2018 6/30/2018 9/30/2018 2018 3/31/2019 6/30/2019 9/30/2019 2019 Low High Reconciliation to Net Income (Loss) Attributable to AK Steel Holding Corporation Net income (loss) attributable to AK Steel Holding Corporation, as reported ($16.8) $103.5 $186.0 $28.7 $56.6 $67.2 $152.5 ($4.5) $66.8 $2.8 $65.1 $26 $41 Pension and OPEB net corridor and settlement charges 68.1 14.5 Charges (credit) for termination of pellet agreement and related transportation costs 69.5 (19.3) Ashland Works closure 77.4 77.4 77 77 Asset impairment charge 75.6 Adjusted net income (loss) attributable to AK Steel Holding $120.8 $159.8 $200.5 $28.7 $56.6 $67.2 $152.5 $72.9 $66.8 $2.8 $142.5 $103 $118 Reconciliation to Diluted Earnings (Losses) per Share Diluted earnings (loss) per share, as reported ($0.07) $0.32 $0.59 $0.09 $0.18 $0.21 $0.48 ($0.01) $0.21 $0.01 $0.21 $0.08 $0.13 Pension and OPEB net corridor charge/settlement loss 0.30 0.05 Charges (credit) for termination of pellet agreement and related transportation costs 0.30 (0.06) Ashland Works closure 0.24 0.24 0.24 0.24 Asset impairment charge 0.24 Adjusted diluted earnings (loss) per share $0.53 $0.50 $0.64 $0.09 $0.18 $0.21 $0.48 $0.23 $0.21 $0.01 $0.45 $0.32 $0.37 Flat-rolled Shipments 5,936.4 5,596.2 5,683.4 1,430.9 1,439.8 1,424.0 4,294.7 1,388.4 1,391.4 1,303.0 4,082.8 Flat-rolled Average Selling Price $955 $1,022 $1,091 $1,045 $1,101 $1,114 $1,087 $1,112 $1,102 $1,067 $1,094 Note: 2017 and prior recast to reflect retrospective adjustments from certain accounting changes, including switch from LIFO SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 28 © 2019 AK Steel. All rights reserved.


 
Non-GAAP Financial Measures Reconciliation of Adjusted EBITDA Qtr ended Qtr ended Qtr ended 9 Months Qtr ended Qtr ended Qtr ended 9 Months 2019 Guidance ($ Millions) 2016 2017 2018 3/31/2018 6/30/2018 9/30/2018 2018 3/31/2019 6/30/2019 9/30/2019 2019 Low High Net income (loss) attributable to AK Steel Holding ($16.8) $103.5 $186.0 $28.7 $56.6 $67.2 $152.5 ($4.5) $66.8 $2.8 $65.1 $26 $41 Net income (loss) attributable to NCI 66.0 61.4 58.1 16.1 15.7 17.7 49.5 12.6 13.1 17.1 42.8 55 55 Income tax expense (benefit) (16.9) (2.2) (6.2) (4.9) (0.5) 1.4 (4.0) 1.4 1.0 0.3 2.7 7 7 Interest expense, net 162.3 150.9 150.7 37.4 37.7 37.6 112.7 37.7 36.9 36.7 111.3 150 150 Depreciation and amortization 221.4 236.3 237.0 61.3 58.6 58.4 178.3 56.3 53.0 51.4 160.7 210 210 EBITDA $416.0 $549.9 $625.6 $138.6 $168.1 $182.3 $489.0 $103.5 $170.8 $108.3 $382.6 $448 $463 Less: EBITDA of NCI (a) 80.8 77.7 76.7 19.9 19.7 21.5 61.1 20.0 19.3 21.4 60.7 75 75 Pension and OPEB net corridor charges / settlement loss 68.1 14.5 Charges (credit) for termination of pellet agreement and related transportation costs 69.5 (19.3) Ashland Works closure 77.4 77.4 77 77 Asset impairment charge 75.6 Adjusted EBITDA $472.8 $528.5 $563.4 $118.7 $148.4 $160.8 $427.9 $160.9 $151.5 $86.9 $399.3 $450 $465 Adjusted EBITDA margin 8.0% 8.7% 8.3% 7.2% 8.5% 9.3% 8.3% 9.5% 9.0% 5.7% 8.1% (a) The reconciliation of EBITDA of noncontrolling interest to net income attributable to noncontrolling interests is as follows: Net income (loss) attributable to noncontrolling interests $66.0 $61.4 $58.1 $16.1 $15.7 $17.7 $49.5 $12.6 $13.1 $17.1 $42.8 $55 $55 Depreciation 14.8 16.3 18.6 3.8 4.0 3.8 11.6 7.4 6.2 4.3 17.9 20 20 EBITDA of noncontrolling interests $80.8 $77.7 $76.7 $19.9 $19.7 $21.5 $61.1 $20.0 $19.3 $21.4 $60.7 $75 $75 Note: 2017 and prior recast to reflect retrospective adjustments from certain accounting changes, including switch from LIFO SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 29 © 2019 AK Steel. All rights reserved.


 
SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.