AK Steel — Q3 2019 Earnings Presentation
30 slides from AK Steel's earnings presentation, Oct 30, 2019
Slide 1: Third Quarter 2019 Financial Results
Third Quarter 2019 Financial Results October 30, 2019 Creating Innovative Steel Solutions © 2019 AK Steel. All rights reserved.
Slide 2: AK Steel Executive Presenters
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.
Slide 3: Forward-Looking Statements
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
Slide 4: Roger Newport, Chief Executive Officer
Roger Newport Chief Executive Officer SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.
Slide 5: Protecting Our Most Important Asset – Our People
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 *
Slide 6: Sustainability Highlights
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
Slide 7: Strategic Accomplishments
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 steelma
Slide 8: Ashland Works Update
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 sa
Slide 9: Steel Market Update
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 str
Slide 10: Strategy – Create Shareholder Value by...
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 | P
Slide 11: Kirk Reich, President and Chief Operating Officer
Kirk Reich President and Chief Operating Officer SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.
Slide 12: Growth at Precision Partners
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 busi
Slide 13: Completed Major Maintenance at Dearborn Hot End
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 st
Slide 14: Automotive Materials and Components Solutions Provider
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 syst
Slide 15: Growing Demand for Ultra High-Strength Steels
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 2
Slide 16: ULTRALUME PHS Licensing Agreement
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
Slide 17: Jaime Vasquez, Vice President – Finance and CFO
Jaime Vasquez Vice President – Finance and Chief Financial Officer SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.
Slide 18: Third Quarter 2019 Financial Highlights
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
Slide 19: Adjusted EBITDA – 2Q 2019 to 3Q 2019
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
Slide 20: 2019 Full Year Guidance Estimates
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 201
Slide 21: 2019 Full Year Other Guidance Items
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 $80 million . Depreciatio
Slide 22: Thank You!
THANK YOU! SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.
Slide 23: Appendix
Appendix SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.
Slide 24: Investor Contact
Investor Contact DOUGLAS O. MITTERHOLZER ADDRESS Assistant Treasurer and 9227 Centre Pointe Drive General Manager, Investor Relations West Chester, OH 45069 E-MAIL ADDRESS TELEPHONE NUMBER [email protected] Office: 513.425.5215 SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 24
Slide 25: High-Value Product Mix with More Predictable Pricing
High-Value Product Mix with More Predictable Pricing Flat-Rolled Product Mix Customer Contract Structure 2015 2015 Other 3% Spot Market Hot-rolled ~19% 18% Coated Fixed Base 48% Price Contracts Stainless/ Steel Index ~62% Electrical Based Contracts 13% ~19% Cold-rolled 2018 2018 18% Other 3% Spot Ma
Slide 26: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Third Quarter Highlights Robust Liquidity ($ 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 $0 12/31/15 12/31/16 12/31/17 12/31/18 09/30/19 * Acquisition of
Slide 27: Significantly Improved Debt Profile
Significantly Improved Debt Profile ($ 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 $7 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019 2020 20
Slide 28: Non-GAAP Financial Measures Reconciliation of Adjusted Net Income
Non-GAAP Financial Measures Reconciliation of Adjusted Net Income Qtr ended Qtr ended Qtr ended 9 Months Qtr ended Qtr ended Qtr ended 9 Months 2019 Guidance ($ 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)
Slide 29: Non-GAAP Financial Measures Reconciliation of Adjusted EBITDA
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 St
Slide 30: SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.
SAFETY | QUALITY | PRODUCTIVITY | INNOVATION October 2019 © 2019 AK Steel. All rights reserved.