AK Steel: First-Lien Bonds At 80 And Unsecured Bonds At 35 May Rise Sharply
Swaraj Chowdhury, CFA
Swaraj Chowdhury, CFA
AK Steel: Unsecured Notes At 65 And Stock At $3 Are Attractive For Aggressive Investors
Swaraj Chowdhury, CFA • 10 Comments
Swaraj Chowdhury, CFA • 10 Comments
The Long Case For AK Steel Holding Corp.
Investment Capitalist • 22 Comments
Investment Capitalist • 22 Comments
Nov. 3, 2015, 4:45 PM
- The U.S. set preliminary import duties on corrosion-resistant steel products from China, India, Italy and South Korea, but they are not nearly as heavy as many observers had expected, and steel company stocks (NYSEARCA:SLX) initially fell after the announcement at ~3:00.
- While the preliminary duties on China are high, as expected, duties on Korea and Italy were "much smaller than expected," while there were no duties for Taiwan, which industry followers consider “disappointing," according to Axiom Capital's Gordon Johnson.
- Axiom sees the news as a slight loss for U.S. steel industry participants, as it suggests incremental duties on outstanding trade cases will focus on China, with little emphasis on other countries China can easily use as an intermediary to get steel into the U.S.
- X +0.6% in regular trading but -8.1% AH; AKS -2.9% in regular trading and -2.4% AH.
- Also, in regular trading: CLF +7.3%, JOY +0.7%, CAT +0.5%, NUE -0.3%, CMC -0.4%, RS -1.8%.
Oct. 27, 2015, 8:58 AM
- AK Steel (NYSE:AKS) says President and CEO James Wainscott will retire effective January 1; Roger Newport is appointed CEO, and Kirk Reich is named President and COO, effective upon Wainscott's retirement.
- Newport is a 20-year veteran of AKS, and has served as CFO since 2012; Reich has spent 16 years at AKS, and became a senior VP of manufacturing in 2014.
- Wainscott has served as President and CEO since 2003 and as Chairman since 2006; he will continue to serve as Chairman in a non-executive capacity after Jan. 1.
- Also: AK Steel beats by $0.12, beats on revenue
Oct. 27, 2015, 8:33 AM
- AK Steel (NYSE:AKS): Q3 EPS of $0.04 beats by $0.12.
- Revenue of $1.71B (+7.5% Y/Y) beats by $10M.
Oct. 26, 2015, 5:30 PM
- AHGP, AIXG, AKS, AME, AMTD, ARG, ARLP, AVX, AXE, BABA, BAX, BEAV, BMY, BP, BTU, CMCSA, CMI, CNC, CNX, COH, CPLA, CRY, CVLT, CYNO, DD, ERJ, F, FBC, FCH, FDP, FMER, GLW, GPI, GRUB, HCA, HUN, ICLR, IIVI, IMGN, IPGP, IPI, IR, JBLU, LPT, LRN, LXK, MAS, MDC, MDSO, MGLN, MMC, MNI, MRK, MSM, NCI, NVS, ONE, PCAR, PCH, PCRX, PFE, POL, POR, QSR, RAI, RDN, SAVE, SCHN, SEE, SIR, SPG, SPR, ST, SUI, TMUS, TREX, TXT, UPS, UTHR, WAT, WDR, WM, WSO, WYN, YNDX
Oct. 26, 2015, 11:49 AM
- AK Steel (AKS -9.9%) plunges ~10% after BofA/Merrill downgrades shares to Underperform from Neutral with a $1 price target, slashed from $4, saying this year's sharp drop in steel prices does not appear to be fully reflected in consensus steel mill estimates, which likely will lead to disappointing guidance from AKS and U.S. Steel (X -5.9%).
- Based on the firm's forecast for lower steel prices, BofA expects AKS to lose $0.65/share in 2016, down from a prior $0.30 EPS and below the consensus estimate of a $0.10 loss; the firm also is concerned over AKS's tight cash flow position amid steep net debt and 2016 estimated EBITDA of 7.5x.
- BofA also cites AKS's fragile but improved free cash flow story, as estimated 2015 project spending falls sharply; the firm says AKS benefits from lower iron ore prices yet still relies on somewhat rigid contracts with Cliffs Natural Resources (CLF -1.5%) for more than half of its needs.
- Also: NUE -1.8%, RS -1.4%, STLD -1.3%.
Oct. 19, 2015, 2:27 PM
- There's plenty more pain ahead for steel stocks such as AK Steel (AKS -6.1%), U.S. Steel (X -3%), Steel Dynamics (STLD -4.7%), Nucor (NUE -2.8%) and ArcelorMittal (MT -4.3%), according to Cowen analyst Anthony Rizzuto.
- Prices for hot rolled coil likely need to reach the upper $400s/ton for integrated producers to return to profitability, and negative sentiment is at extreme levels, but Rizzuto says recent capacity closures and upcoming preliminary trade case determinations may serve as a catalyst for near-term price stabilization.
- Shares of steel stocks (SLX -3.9%) are all trading sharply lower after China's Q3 GDP showed the slowest annual rate of growth (+6.9%) since the financial crisis in 2009.
Oct. 16, 2015, 2:52 PM
- AK Steel (AKS -1.5%) says it will temporarily idle the blast furnace and related steelmaking operations at its Ashland Works facility in Kentucky, laying off as many as 733 workers before year-end.
- AKS cites "unfairly traded imports of carbon steel that have been flooding our shores," which have cut order intake rates, production rates, shipment volumes and selling prices.
- AKS says it does not intend to idle the hot-dip galvanizing line at Ashland Works that primarily services automotive customers.
- SunCoke Energy (SXC -6.1%), which supplies coke to AKS' Ashland and Dearborn blast furnace operations under a long-term contract, says it expects AKS to continue to honor its contract.
Oct. 5, 2015, 6:25 PM
- Allegheny Tech (NYSE:ATI) and Nucor (NYSE:NUE) are upgraded to Buy from Hold, while AK Steel (NYSE:AKS) and Century Aluminum (NASDAQ:CENX) are downgraded to Hold from Buy at Deutsche Bank, as the firm prefers stocks in the group that do not rely excessively on price hikes and have exposure to growth markets.
- The firm says the upgrades for ATI and NUE are based on valuation, and expects lower anticipated scrap costs to offset the impact of lower steel prices.
- AKS is cut to Hold with a $3 price target, citing its reliance on hikes in spot steel prices over the next 12-18 months as well as uncertainty related to contract negotiations with automotive customers, which accounts for more than 50% of shipments.
- Deutsche Bank's downgrade of CENX is based on lower aluminum pricing and production cutbacks as concern areas.
Sep. 25, 2015, 12:59 PM
- The U.S. International Trade Commission says it finds a reasonable indication that U.S producers are harmed by imports of flat hot-rolled steel products from seven countries, advancing a process that could result in import duties.
- AK Steel (AKS -5.5%), ArcelorMittal (MT -4.7%), Nucor (NUE -0.6%), U.S. Steel (X -4.8%) and Steel Dynamics (STLD -1.4%) have complained the imported goods are being sold too cheaply or have benefited from unfair government subsidies.
- AKS, for one, issues a statement praising the ITC ruling.
Sep. 18, 2015, 5:25 PM
- AK Steel (NYSE:AKS) finished flat among a sea of red in today's trade following its upbeat Q3 guidance, crediting its improved prospects to anticipated higher shipments and lower raw materials costs along with cost reductions and higher operating rates.
- Reiterating a Market Perform rating on the shares, BMO Capital says the guidance likely was driven by lower than expected unit costs, but with prices declining, with higher contract prices vs. spot still flowing through results, and with the sustainability of the unit cost improvements still unknown, the firm's $400M 2016 EBITDA estimate remains unchanged.
- Citigroup maintains an Overweight rating while noting that the recent decline in steel prices and potentially lower LIFO benefits could pressure Q4 results.
Sep. 18, 2015, 9:15 AM
Sep. 17, 2015, 5:37 PM
Sep. 17, 2015, 4:58 PM
- AK Steel (NYSE:AKS) +9.2% AH after issuing a better than expected Q3 outlook, now seeing a loss of $0.02-$0.07/share vs. a $0.36/share loss in Q2 and the analyst consensus estimated loss of $0.24.
- AKS says it expects positive financial effects of higher shipments, lower raw material costs, cost reduction efforts and higher operating rates will partially offset lingering low carbon steel spot market prices.
- AKS sees Q3 shipments of ~1.86M, up ~3% Q/Q, primarily related to increased shipments to the automotive market.
- Expects an average Q3 selling price of ~$910/ton, ~2% lower than Q2, because of lower carbon steel spot market pricing, which the company believes is driven mostly by high levels of unfairly traded foreign steel imports.
Sep. 11, 2015, 6:41 PM
- In a setback for U.S. steel producers, the U.S. Court of International Trade says the Commerce Department should reconsider its calculation of profit, which could change the level of duties imposed last year on imports of tubular steel pipes for the energy sector.
- The ruling is in agreement with South Korean steel producers who complained that the U.S. duties were too high.
- The Commerce Department and U.S. International Trade Commission last year backed a complaint by U.S.-based steel companies including U.S. Steel (NYSE:X).
- Other relevant tickers: AKS, NUE, TS, STLD
Sep. 10, 2015, 3:43 PM
- Investors expecting a V-shaped recovery in steel prices and volumes are likely to be disappointed, BB&T analysts say in initiating U.S. Steel (X -2.1%) and AK Steel (AKS -0.2%) with Hold ratings.
- The firm thinks 2015 represents trough earnings for U.S. Steel, but the ability to generate mid cycle-type earnings is largely dependent on macro factors beyond the company's control; also, while flat rolled and tubular results are close to an inflection point, the firm does not see shipments or pricing returning to 2013-14 levels for the foreseeable future.
- Consensus estimates for AKS appear high, the firm says, expressing concern about the company’s ability to delever its balance sheet, which likely would require an unexpectedly significant improvement in steel fundamentals.
Sep. 8, 2015, 3:59 PM
- AK Steel (AKS -1.1%) is downgraded to Neutral from Buy with a $4 price target, cut from $6, at BofA/Merrill, citing a weaker steel price outlook, the likelihood of disappointing H2 volumes, and a more challenged cash flow view ahead; the firm once was among the strong defenders of the company's shares.
- Even as BofA sees lower steel prices as the new normal, it upgrades Reliance Steel (RS +4.1%) to Buy from Neutral, based on the company’s steady track record of free cash flow generation.
AK Steel Holding Corp. is an integrated producer of flat-rolled carbon, stainless and electrical steels and tubular products through its wholly-owned subsidiary, AK Steel Corp. The company's operations consist primarily of nine steelmaking and finishing plants and tubular production facilities... More
Sector: Basic Materials
Industry: Steel & Iron
Country: United States
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