Why investors should understand AK Steel’s 3Q results

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Nov. 27 2019, Updated 2:09 p.m. ET

AK Steel’s third quarter results

AK Steel (AKS) reported a loss of $0.05 per share in the third quarter. It acquired Dearborn operations from Severstal in the third quarter. AK Steel had $23.6 million in acquisition-related costs from this transaction.

Since it’s a one-time cost, investors need to adjust this cost to calculate the normalized earnings per share (or EPS). AK Steel’s third quarter EPS was $0.12 after adjusting these costs.

key financials

Revenue increases 20% year-over-year (or YoY)

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The previous chart shows AK Steel’s key financials in the third quarter. The revenues increased ~20% compared to 3Q13. The increase in revenues was mainly led by an increase in steel shipments. Steel shipments increased almost 18% compared to 3Q13. The average selling prices are almost flat compared to 3Q13.

Lackluster performance compared to 2Q14

While the revenues showed a significant increase over 3Q13, the sequential performance compared to 2Q14 has been lackluster. Steel shipments only increased by ~5% compared to 2Q14. The increase in shipments came from Dearborn.

AK Steel consolidated Dearborn’s operations. The consolidation was effective on September 16. Therefore, the third quarter financial results also include the shipments from Dearborn. The sequential shipments, compared to 2Q14, are almost flat after excluding the shipments from Dearborn.

AK Steel acquired Dearborn operations from Severstal. Steel Dynamics (or STLD) acquired Severstal’s Columbus operations. Currently, STLD is part of the SPDR S&P Metals and Mining ETF (XME).

In the next part of the series, we’ll discuss AK Steel’s third quarter profits.

U.S. Steel (X), ArcelorMittal (MT), and Nucor (NUE) are the other major steel companies in the U.S.

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