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Setting Expectations for AK Steel’s 4Q17 Earnings Call

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AK Steel’s 4Q17 earnings call

AK Steel (AKS) is scheduled to hold its 4Q17 earnings call on January 30. Previously in this series, we’ve seen what analysts are projecting for AK Steel’s 4Q17 earnings. In this article, we’ll look at key points that markets may watch for in AK Steel’s 4Q17 earnings call.

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Precision Partners

Last year, AK Steel acquired Precision Partners. The acquisition was initially funded by AK Steel’s revolving credit facility. However, the company intends to finance the acquisition through a mix of debt and equity. During the company’s 4Q17 earnings call, markets may look for clues on expected equity offering timelines. AK Steel’s stock price has risen sharply since December and the company could use the opportunity to issue new shares.

Automotive industry

AK Steel draws almost two-thirds of its revenue from the automotive sector. Whereas US car sales hit a record high in 2016, we saw a modest decline in US car sales last year. Several analysts and automakers such as Toyota Motors (TM) are expecting US car sales to fall further in 2018. As the automotive sector is the largest end market for AK Steel, the company’s fortunes are closely tied to it. Along with moderating sales, the automotive steel space has seen increased competition, with companies such as Nucor (NUE) aggressively targeting the lucrative market. ArcelorMittal (MT) is the leading steel supplier to the automotive industry (F).

During AK Steel’s 4Q17 earnings call, markets will likely watch for its outlook on the US auto industry, as well as any guidance on auto sheet contracts AK Steel settled in 4Q17. In the next article, we’ll look at AK Steel’s long-term outlook.

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