News Releases

 
 PDF   Print   View All
Olympic Steel Reports First-Quarter 2020 Results
May 01, 2020 06:30 AM Eastern Time

Disciplined approach to operating expenses and inventory management further strengthens balance sheet and liquidity

CLEVELAND - Olympic Steel, Inc. (Nasdaq: ZEUS), a leading national metals service center, today announced financial results for the three months ended March 31, 2020.

Net income for the first quarter totaled $0.6 million, or $0.05 per diluted share, compared to $2.1 million, or $0.18 per diluted share, in the first quarter of 2019. Sales for the first quarter of 2020 totaled $354 million, compared with $446 million in the first quarter of 2019. The results include $0.5 million of LIFO pre-tax income in the first quarter of 2020, while there was no LIFO adjustment in the first quarter of 2019. The first-quarter earnings impact of LIFO is noted in the reconciliation below.

"We are pleased that our team's efforts resulted in a first-quarter profit despite a challenging environment. Our results include the positive impacts of reducing operating expenses and the continuous improvement of our inventory management. These initiatives, together with our strong balance sheet and liquidity, have created a stronger and more resilient foundation that we believe will enable us to manage through the uncertainty caused by the COVID-19 pandemic," said Chief Executive Officer Richard T. Marabito.

"We are committed to a safe work environment and are closely following the evolving COVID-19 guidance provided by our government officials and the U.S. Centers for Disease Control and Prevention, including social distancing, restricting travel, disinfecting and sanitizing our facilities, and working remotely whenever possible. We are proud of how our employees have responded and represented Olympic Steel during this difficult time."

Marabito continued, "As an essential business, we continue to safely serve our customers from all of our facilities, and our supply chains remain intact. We have curtailed non-critical spending and quickly right-sized our workforce and inventory to correlate with current business levels. Our decisive actions ensure that Olympic Steel remains a strong, reliable company during this period of economic and end-market uncertainty, with the ability to quickly respond to improved business activity as the United States economy reopens. We finished the quarter with improved liquidity, and approximately $112 million of availability under our asset-based revolving credit facility."

The Board of Directors also approved a regular quarterly cash dividend of $0.02 per share, which is payable on June 15, 2020, to shareholders of record on June 1, 2020.

The table that follows provides a reconciliation of non-GAAP measures to measures prepared in accordance with GAAP.

Olympic Steel, Inc.

Reconciliation of Net Income Per Diluted Share to Adjusted Net Income Per Diluted Share

The following table reconciles adjusted net income per diluted share to the most directly comparable GAAP financial measure:

 

 

Three Months Ended

March 31,

 

2020

 

2019

 

Net income per diluted share:

$

0.05

 

 

$

0.18

 

 

 

 

Excluding the following item:

 

 

 

LIFO (income)

 

(0.03

)

 

 

-

Adjusted net income per diluted share (non-GAAP):

$

0.02

 

 

$

0.18

Conference Call and Webcast

A simulcast of Olympic Steel's 2020 first-quarter earnings conference call can be accessed via the Investor Relations section of the Company's website at www.olysteel.com. The live simulcast will begin at 9 a.m. ET on May 1, 2020, and a replay will be available for approximately 14 days thereafter.

Forward-Looking Statements

It is the Company's policy not to endorse any analyst's sales or earnings estimates. Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as "may," "will," "anticipate," "should," "intend," "expect," "believe," "estimate," "project," "plan," "potential," and "continue," as well as the negative of these terms or similar expressions. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those implied by such statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Such risks and uncertainties include, but are not limited to: risks associated with the novel coronavirus, or COVID-19, pandemic, including, but not limited to reduced sales and profit levels, slower payment of accounts receivable and potential increases in uncollectible accounts receivable, falling metals prices that could lead to lower of cost or market inventory adjustments and the impairment of intangible and long-lived assets, reduced availability and productivity of our employees, increased operational risks as a result of remote work arrangements, including the potential effects on internal controls, as well as cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events, negative impacts on our liquidity position, and increased costs and less ability to access funds under our ABL Credit Facility and the capital markets; risks of falling metals prices and inventory devaluation; general and global business, economic, financial and political conditions, including the 2020 U.S. election; competitive factors such as the availability, global pricing of metals and production levels, industry shipping and inventory levels and rapid fluctuations in customer demand and metals pricing; the levels of imported steel in the United States and the tariffs initiated by the U.S. government in 2018 under Section 232 of the Trade Expansion Act of 1962 and imposed tariffs and duties on exported steel or other products, U.S. trade policy and its impact on the U.S. manufacturing industry; cyclicality and volatility within the metals industry; fluctuations in the value of the U.S. dollar and the related impact on foreign steel pricing, U.S. exports, and foreign imports to the United States; the successes of our efforts and initiatives to improve working capital turnover and cash flows, and achieve cost savings; our ability to generate free cash flow through operations and repay debt; the availability and rising costs of transportation and logistical services; customer, supplier and competitor consolidation, bankruptcy or insolvency; reduced production schedules, layoffs or work stoppages by our own, our suppliers' or customers' personnel; the adequacy of our existing information technology and business system software, including duplication and security processes; the adequacy of our efforts to mitigate cyber security risks and threats, especially with employees working remotely due to the COVID-19 pandemic; the amounts, successes and our ability to continue our capital investments and strategic growth initiatives, including acquisitions and our business information system implementations; our ability to successfully integrate recent acquisitions into our business and risks inherent with the acquisitions in the achievement of expected results, including whether the acquisition will be accretive and within the expected timeframe; events or circumstances that could adversely impact the successful operation of our processing equipment and operations; rising interest rates and their impacts on our variable interest rate debt; the impacts of union organizing activities and the success of union contract renewals; changes in laws or regulations or the manner of their interpretation or enforcement could impact our financial performance and restrict our ability to operate our business or execute our strategies; events or circumstances that could impair or adversely impact the carrying value of any of our assets; risks and uncertainties associated with intangible assets, including impairment charges related to indefinite lived intangible assets; the timing and outcomes of inventory lower of cost or market adjustments and last-in, first-out, or LIFO, income or expense; the inflation or deflation existing within the metals industry, as well as product mix and inventory levels on hand, which can impact our cost of materials sold as a result of the fluctuations in the LIFO inventory valuation; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any; and unanticipated developments that could occur with respect to contingencies such as litigation, arbitration and environmental matters, including any developments that would require any increase in our costs for such contingencies.

In addition to financial information prepared in accordance with GAAP, this document also contains adjusted earnings per diluted share, which is a non-GAAP financial measure. Management's view of the Company's performance includes adjusted earnings per share, and management uses this non-GAAP financial measure internally for planning and forecasting purposes and to measure the performance of the Company. We believe this non-GAAP financial measure provides useful and meaningful information to us and investors because it enhances investors' understanding of the continuing operating performance of our business and facilitates the comparison of performance between past and future periods. This non-GAAP financial measure should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. A reconciliation of this non-GAAP measure to the most directly comparable GAAP financial measure is provided above.

About Olympic Steel

Founded in 1954, Olympic Steel is a leading U.S. metals service center focused on the direct sale of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel, aluminum, tin plate, and metal-intensive branded products. The Company's CTI subsidiary is a leading distributor of steel tubing, bar, pipe, valves and fittings, and fabricator of value-added parts and components. Headquartered in Cleveland, Ohio, Olympic Steel operates from 30 facilities in North America.

For additional information, please visit the Company's website at www.olysteel.com or https://olysteel.irpass.com/Contact_Us?BzID=2195.

Olympic Steel, Inc.

Consolidated Statements of Net Income

(in thousands, except per-share data)

 

Three months ended

March 31

2020

2019

 

Net sales

$

354,380

 

$

445,919

 

Costs and expenses

Cost of materials sold (excludes items shown separately below)

 

282,522

 

 

366,382

Warehouse and processing

 

23,076

 

 

25,611

Administrative and general

 

19,059

 

 

20,129

Distribution

 

12,289

 

 

12,835

Selling

 

6,810

 

 

7,340

Occupancy

 

2,660

 

 

2,798

Depreciation

 

4,516

 

 

4,431

Amortization

 

397

 

 

319

 

Total costs and expenses

 

351,329

 

 

439,845

 

Operating income

 

3,051

 

 

6,074

 

Other income (loss), net

 

(17

)

 

14

 

Income before financing costs and income taxes

 

3,034

 

 

6,088

 

Interest and other expense on debt

 

2,239

 

 

3,242

 

Income before income taxes

 

795

 

 

2,846

 

Income tax provision

 

202

 

 

772

 

Net income

$

593

 

$

2,074

 

Earnings per share:

 

Net income per share - basic

$

0.05

 

$

0.18

 

 

 

Weighted average shares outstanding - basic

 

11,444

 

 

11,488

 

 

 

Net income per share - diluted

$

0.05

 

$

0.18

 

 

 

Weighted average shares outstanding - diluted

 

11,459

 

 

11,488

 

Olympic Steel, Inc.

Consolidated Balance Sheets

(in thousands)

 

As of

March 31, 2020

As of

Dec. 31, 2019

Assets

 

Cash and cash equivalents

$

5,284

 

$

5,742

 

Accounts receivable, net

 

165,782

 

 

133,572

 

Inventories, net (includes LIFO debits of $1,098 and $598 as of March 31, 2020 and December 31, 2019 respectively)

 

267,554

 

 

273,531

 

Prepaid expenses and other

 

6,364

 

 

6,997

 

 

Total current assets

 

444,984

 

 

419,842

 

 

Property and equipment, at cost

 

420,594

 

 

416,511

 

Accumulated depreciation

 

(264,699

)

 

(260,264

)

 

Net property and equipment

 

155,895

 

 

156,247

 

 

Goodwill

 

3,423

 

 

3,423

 

Intangible assets, net

 

28,940

 

 

29,259

 

Other long-term assets

 

14,569

 

 

14,439

 

Right of use asset, net

 

30,156

 

 

26,345

 

 

Total assets

$

677,967

 

$

649,555

 

 

Liabilities

 

Accounts payable

$

82,962

 

$

69,452

 

Accrued payroll

 

8,805

 

 

13,196

 

Other accrued liabilities

 

12,381

 

 

12,850

 

Current portion of lease liabilities

 

6,095

 

 

5,589

 

 

Total current liabilities

 

110,243

 

 

101,087

 

 

Credit facility revolver

 

209,052

 

 

192,925

 

Other long-term liabilities

 

15,964

 

 

14,068

 

Deferred income taxes

 

12,127

 

 

12,262

 

Lease liabilities

 

24,189

 

 

20,861

 

 

Total liabilities

 

371,575

 

 

341,203

 

 

Shareholders' Equity

 

Preferred stock

 

-

 

 

-

 

Common stock

 

132,006

 

 

131,647

 

Treasury stock

 

(480

)

 

(335

)

Accumulated other comprehensive loss

 

(4,829

)

 

(2,281

)

Retained earnings

 

179,695

 

 

179,321

 

 

Total shareholders' equity

 

306,392

 

 

308,352

 

 

Total liabilities and shareholders' equity

$

677,967

 

$

649,555

 

Olympic Steel, Inc.

Segment Financial Information

(In thousands, except tonnage and per-ton data. Figures may not foot to consolidated totals due to Corporate expenses.)

 

Three months ended March 31

Carbon Flat Products

Specialty Metals Flat

Products

Tubular and Pipe

Products

2020

2019

2020

2019

2020

2019

 

Tons sold

263,110

 

273,171

34,570

35,784

 

N/A

N/A

 

 

Net sales

$ 202,967

 

$ 278,536

$ 88,488

$ 88,097

 

$ 62,925

$ 79,286

 

Average selling price per ton

771

 

 

1,020

2,560

2,462

 

N/A

N/A

 

Cost of materials sold

163,137

 

233,316

76,235

76,245

 

43,150

56,821

 

Gross profit

39,830

 

45,220

12,253

11,852

 

19,775

22,465

 

Operating expenses

41,176

 

43,994

9,518

9,608

 

15,470

16,850

 

Operating income (loss)

$(1,346

)

$ 1,226

$2,735

$2,244

 

$4,305

$5,615

 

 

Depreciation and amortization

$3,010

 

$2,814

$497

$526

 

$1,364

$1,368

 

 
 

 

 

As of

Mar. 31, 2020

As of

Dec. 31, 2019

Assets

 

 

Flat-products

 

 

$ 456,058

 

$ 432,566

 

Tubular and pipe products

 

 

220,854

 

215,841

 

Corporate

 

 

1,055

 

1,148

 

Total assets

 

 

$ 677,967

 

$ 649,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

(In thousands except per-share data)

 

 

 

 

 

 

As of

Mar. 31, 2020

 

 

As of

Dec. 31, 2019

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity per share

 

 

 

 

 

 

$ 27.89

 

 

 

$ 28.04

 

 

 

 

 

 

 

 

 

 

 

 

Debt to equity ratio

 

 

 

 

 

 

0.68 to 1

 

 

0.63 to 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31

 

 

 

 

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

Net cash from (used for) operating activities

 

 

 

 

 

 

$ (11,985

)

 

 

$ (1,165

)

 

 

 

 

 

 

 

 

 

 

 

Cash dividends per share

 

 

 

 

 

 

$ 0.02

 

 

 

$ 0.02

 

 

Richard A. Manson
Chief Financial Officer
(216) 672-0522
ir@olysteel.com

Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Start typing and press Enter to search