AK Steel — Q2 2019 Earnings Presentation
29 slides from AK Steel's earnings presentation, Jul 29, 2019
Slide 1: Second Quarter 2019 Financial Results
Second Quarter 2019 Financial Results July 29, 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 July 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 July 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 . Six facilities achieved zero OSHA DART* cases for 2Q 2019 . Four facilities achieved zero OSHA Recordable cases for 2Q 2019 . Two facilities achieved zero occupational injuries for 2Q 2019 *
Slide 6: Sustainability – Telling our Story
Sustainability – Telling our Story Improvement in waste recycling from 55% to 66% Hazardous waste generation down 3,458 tons Renewable energy up 23% AK Steel recently recognized on the television series John Holden – EARTH “EARTH” for our environmental sustainability efforts 2018 Sustainability Repo
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 . Plan to close the Ashland Works facility by the end of 2019 − Blast furnace and ‘hot-end’ were idled in 2015 . Transitioning of production to increase utilization at other AK Steel coating lines in the U.S. is on track . These actions are expected to result in annual savings o
Slide 9: Steel Market Update
Steel Market Update North America Light Vehicle Production . Overall demand for steel remains solid (Millions) . Automotive production remains strong, although 17.1 17.0 16.8 16.6 16.8 expected to be slightly lower than 2018 . Service center inventories are balanced with demand 2017 2018 2019E 2020E
Slide 10: Strategy – Create Shareholder Value
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 July 2019 © 2019 AK Steel. All rights reserved.
Slide 12: Record Performance and Solid Growth at AK Tube
Record Performance and Solid Growth at AK Tube . Expect 2019 to exceed record 2018 results . Proficient in both carbon and stainless tube across the entire spectrum of steel grades . Production capabilities provide a competitive advantage . Solid and growing automotive and power sports OEM partnersh
Slide 13: Growth at Precision Partners
Growth at Precision Partners . Leading producer of hot- and cold-stamped automotive components and assemblies . Increase in profitability expected in 2019 . Joint commercial activity with AK Steel and AK Tube progressing . Investing in new facility and equipment to support new business awarded . One
Slide 14: Department of Energy Awards
Department of Energy Awards . Non Oriented Electrical Steel 30% efficiency improvement – intended for industrial motors and electric vehicle motors . Low density steel – targeted 10% reduction using new steel alloys . Leveraged supercomputing for hot roll/material property modeling . Leveraged super
Slide 15: Automotive Materials and Components Solutions Provider
Automotive Materials and Components Solutions Provider . Uniquely positioned among suppliers to automotive OEMs ‒ Broadest portfolio of materials ‒ Tool and die design and manufacturing ‒ Hot- and cold-stamped offerings ‒ Complex part assembly ‒ Exhaust system components ‒ Tubular structural parts .
Slide 16: Jaime Vasquez, VP Finance and Chief Financial Officer
Jaime Vasquez Vice President – Finance and Chief Financial Officer SAFETY | QUALITY | PRODUCTIVITY | INNOVATION July 2019 © 2019 AK Steel. All rights reserved.
Slide 17: Second Quarter 2019 Financial Highlights
Second Quarter 2019 Financial Highlights ($ Millions, except per share and per ton) 2Q 2018 1Q 2019 2Q 2019 Y-o-Y Flat-Rolled Shipments (in 000s of tons) 1,440 1,388 1,391 -3% Flat-Rolled Average Selling Price Per Ton $1,101 $1,112 $1,102 0% Net Sales $1,746.6 $1,697.7 $1,680.5 -4% Net Income (Loss)
Slide 18: Adjusted EBITDA – 1Q 2019 to 2Q 2019
Adjusted EBITDA – 1Q 2019 to 2Q 2019 $200 $21 $175 $161 $152 $150 $5 $16 $9 $125 ($ ($ Millions) $100 $75 $50 1Q 2019 Actual Pricing/Volume/Mix Raw Materials & Operations Other 2Q 2019 Actual Energy SAFETY | QUALITY | PRODUCTIVITY | INNOVATION July 2019 18 © 2019 AK Steel. All rights reserved.
Slide 19: 2019 Full Year Guidance Estimates
2019 Full Year Guidance Estimates . Net income attributable to AK Steel of ~$41 to $61 million Flat-Rolled Shipments . Adjusted net income of ~$118 to $138 million (000s tons) . Adjusted EBITDA in the range of ~$470 to $490 million 8,000 6,974 5,936 5,683 ‒ Based on average carbon hot-rolled coil sp
Slide 20: 2019 Full Year Other Guidance Items
2019 Full Year Other Guidance Items . Earnings per share of ~$0.13 to $0.20 . Adjusted earnings per share of ~$0.37 to $0.44 (1) . Flat-rolled shipments ~5.5 – 5.6 million tons . Average flat-rolled selling price roughly the same as 2018 . Major maintenance outages ~$70 to $80 million; fourth quarte
Slide 21: Thank You!
THANK YOU! SAFETY | QUALITY | PRODUCTIVITY | INNOVATION July 2019 © 2019 AK Steel. All rights reserved.
Slide 22: Appendix
Appendix SAFETY | QUALITY | PRODUCTIVITY | INNOVATION July 2019 © 2019 AK Steel. All rights reserved.
Slide 23: Investor Contact
Investor Contact SAFETY | QUALITY | PRODUCTIVITY | INNOVATION July 2019 23 © 2019 AK Steel. All rights reserved.
Slide 24: High-Value Product Mix with More Predictable Pricing
High-Value Product Mix with More Predictable Pricing Flat-Rolled Product Mix Customer Contract Structure 2015 2015 Other 3% Spot Market Hot-rolled ~19% 18% Coated Fixed Base 48% Price Contracts Stainless/ Steel Index ~62% Electrical Based Contracts 13% ~19% Cold-rolled 2018 2018 18% Other 3% Spot Ma
Slide 25: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Second Quarter Highlights Robust Liquidity ($ Millions) . Reduced borrowings by $95 million $1,500 $1,354 $1,079 . Maintain focus on strengthening balance sheet $989 $1,000 $845* . Increased revolving credit facility to $1.5 billion $700 . Ended quarter with liquidity of
Slide 26: Significantly Improved Debt Profile
Significantly Improved Debt Profile ($ Millions) December 31, 2015 June 30, 2019 Total Debt: $2.4 billion $700 $150 $150 $537 Total Debt: $2.0 billion $7 $406 $406 $380 $380 $392 $290 $285 $270 $550 $530 $149 $62 $62 $30 $30 $7 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019 2020 2021 20
Slide 27: Non-GAAP Financial Measures: Reconciliation of Adjusted Net Income
Non-GAAP Financial Measures Reconciliation of Adjusted Net Income Qtr ended Qtr ended 1st Half Qtr ended Qtr ended 1st Half 2019 Guidance ($ Millions) 2016 2017 2018 03/31/2018 06/30/2018 2018 03/31/2019 06/30/2019 2019 Low High Reconciliation to Net Income (Loss) Attributable to AK Steel Holding Co
Slide 28: Non-GAAP Financial Measures: Reconciliation of Adjusted EBITDA
Non-GAAP Financial Measures Reconciliation of Adjusted EBITDA Qtr ended Qtr ended 1st Half Qtr ended Qtr ended 1st Half 2019 Guidance ($ Millions) 2016 2017 2018 3/31/2018 6/30/2018 2018 3/31/2019 6/30/2019 2019 Low High Net income (loss) attributable to AK Steel Holding ($16.8) $103.5 $186.0 $28.7
Slide 29: SAFETY | QUALITY | PRODUCTIVITY | INNOVATION July 2019 © 2019 AK Steel. All rights reserved.
SAFETY | QUALITY | PRODUCTIVITY | INNOVATION July 2019 © 2019 AK Steel. All rights reserved.