Olympic Steel Reports 2015 Third-Quarter Results |
November 05, 2015 07:25 AM Eastern Time |
Board Declares Regular Quarterly Cash Dividend Olympic Steel, Inc. (Nasdaq: ZEUS), a leading national metals
service center, today announced financial results for the third quarter
and nine months ended Sept. 30, 2015.
Industry-wide shipments and metal prices declined in the 2015 third
quarter resulting in net sales of $276.9 million, compared with $376.6
million in the same quarter last year. For the nine-month period, sales
declined to $938 million from $1.110 billion in the comparable 2014
period.
The net loss in the third quarter was $0.6 million, or a loss of $0.05
per share, compared with net income of $1.6 million, or $0.14 per
diluted share in 2014's third quarter. The net loss recorded in the
nine-month period of 2015 was $21.8 million dollars or $1.95 per share.
The loss in the year-to-date period is primarily attributable to the
previously disclosed $24.5 million pre-tax non-cash impairment charge
($1.91 per share, after tax) reported in the second quarter of this year.
"To succeed in a cyclical industry and withstand challenging market
conditions requires disciplined focus on factors we can control," stated
Chairman and Chief Executive Officer Michael D. Siegal. "Olympic Steel's
financial condition remains robust as we deleveraged our balance sheet
and reduced operating expenses during this cycle."
"In anticipation of this market environment, our disciplined approach
has generated cash flow from operations of more than $69 million since
the beginning of the year," Siegal added. "This has enabled us to
eliminate $60 million in debt under our low-cost, flexible credit
facility, and authorize a share repurchase program."
The Olympic Steel Board of Directors also approved a regular quarterly
cash dividend of $0.02 per share, which is payable on Dec. 15, 2015, to
shareholders of record on Dec. 1, 2015.
Conference Call and Webcast
A simulcast of Olympic Steel's 2015 third-quarter and nine-month
earnings conference call can be accessed via the investor relations
section of the Company's website at www.olysteel.com.
The simulcast will begin at 10 a.m. ET today and a replay of the call
will be available for 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," or "continue," as well as the negative of these terms or
other 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: general and global business, economic, financial and political
conditions, including the ongoing effects of the global economic
recovery; competitive factors such as the availability, global
production levels and pricing of metals, industry shipping and inventory
levels and rapid fluctuations in customer demand and metals pricing;
cyclicality and volatility within the metals industry; the strengthening
of the U.S. dollar and the related impact on foreign steel pricing, U.S.
exports, and foreign imports to the U.S.; the increased levels of
imported steel in the United States; the availability and costs of
transportation and logistical services; the successes of our strategic
efforts and initiatives to increase sales volumes, maintain or improve
working capital turnover and free cash flows, improve our customer
service, and achieve cost savings, including our recently launched
internal program to improve earnings; our ability to generate free cash
flow through operations and limited future capital expenditures, reduce
inventory and repay debt within anticipated time frames; 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 additional impairment charges related to indefinite
lived intangible assets; events or circumstances that could adversely
impact the successful operation of our processing equipment and
operations; the amounts, successes and our ability to continue our
capital investments and strategic growth initiatives, including our
business information system implementations; the successes of our
operational excellence initiatives to improve our operating, cultural
and management systems and reduce our costs; the ability to comply with
the terms of our asset-based credit facility; the ability of our
customers and third parties to honor their agreements related to
derivative instruments; customer, supplier and competitor consolidation,
bankruptcy or insolvency; reduced production schedules, layoffs or work
stoppages by our own, our suppliers' or customers' personnel; the
impacts of union organizing activities and the success of union contract
renewals; the timing and outcomes of inventory lower of cost or market
adjustments, especially during periods of declining market pricing; the
ability of our customers (especially those that may be highly leveraged,
and those with inadequate liquidity) to maintain their credit
availability; the inflation or deflation existing within the metals
industry, as well as our product mix and inventory levels on hand, which
can impact our cost of materials sold as a result of the fluctuations in
the last-in, first-out, or LIFO, inventory reserve; 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 threats; access to capital and global credit
markets; 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 any
repurchases; the enacted federal healthcare legislation's impact on the
healthcare benefits required to be provided by us and the impact of such
legislation on our compensation and administrative costs; and
unanticipated developments that could occur with respect to
contingencies such as litigation and environmental matters, including
any developments that would require any increase in our costs for such
contingencies.
About Olympic Steel
Founded in 1954, Olympic Steel is a leading U.S. metals service center
focused on the direct sale and distribution of large volumes of
processed carbon, coated and stainless flat-rolled sheet, coil and plate
steel and aluminum products. The Company's CTI subsidiary is a leading
distributor of steel tubing, bar, pipe, valves and fittings, and
fabricates pressure parts for the electric utility industry.
Headquartered in Cleveland, Ohio, Olympic Steel operates from 35
facilities in North America.
For additional information, please visit the Company's website at www.olysteel.com
or www.b2i.us/profiles/investor/ContactUs.asp?BzID=2195 -Financial Tables Follow- |
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|
| | Olympic Steel, Inc. | Consolidated Statements of Operations |
(in thousands, except per-share data)
| | | | | | | | | | | | |
| | | | Three Months Ended Sept. 30, | | | Nine Months Ended Sept. 30, | | | | 2015 |
|
| 2014 | | | 2015 |
|
| 2014 | | | | (unaudited) | | | (unaudited) | Net sales | | | $ | 276,922 | | | | $ | 376,617 | | | | $ | 938,038 | | | | $ | 1,109,577 | | | | | | | | | | | | | |
|
Costs and expenses
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Cost of materials sold (exclusive of items shown below)
| | | |
218,172
| | | | |
305,080
| | | | |
753,949
| | | | |
891,968
| |
Warehouse and processing
| | | |
21,261
| | | | |
24,926
| | | | |
65,520
| | | | |
70,071
| |
Administrative and general
| | | |
15,943
| | | | |
18,260
| | | | |
49,287
| | | | |
55,342
| |
Distribution
| | | |
8,950
| | | | |
10,941
| | | | |
27,819
| | | | |
31,787
| |
Selling
| | | |
5,315
| | | | |
6,304
| | | | |
16,106
| | | | |
19,305
| |
Occupancy
| | | |
2,196
| | | | |
2,348
| | | | |
7,212
| | | | |
7,644
| |
Depreciation
| | | |
4,409
| | | | |
4,418
| | | | |
13,627
| | | | |
15,339
| |
Amortization
| | | |
223
| | | | |
223
| | | | |
667
| | | | |
667
| |
Impairment
| | |
|
-
|
| | |
|
-
|
| | |
|
24,451
|
| | |
|
-
|
| | | | | | | | | | | | |
|
Total costs and expenses
| | |
|
276,469
|
| | |
|
372,500
|
| | |
|
958,638
|
| | |
|
1,092,123
|
| | | | | | | | | | | | |
| Operating income (loss) | | | | 453 | | | | |
4,117
| | | | | (20,600 | ) | | | |
17,454
| |
Other income (loss), net
| | |
|
(84
|
)
| | |
|
(20
|
)
| | |
|
(141
|
)
| | |
|
(22
|
)
| | | | | | | | | | | | |
|
Income (loss) before interest and income taxes
| | | |
369
| | | | |
4,097
| | | | |
(20,741
|
)
| | | |
17,432
| |
Interest and other expense on debt
| | |
|
1,405
|
| | |
|
1,602
|
| | |
|
4,439
|
| | |
|
5,134
|
| | | | | | | | | | | | |
|
Income (loss) before income taxes
| | | |
(1,036
|
)
| | | |
2,495
| | | | |
(25,180
|
)
| | | |
12,298
| |
Income tax provision (benefit)
| | |
|
(438
|
)
| | |
|
939
|
| | |
|
(3,391
|
)
| | |
|
4,471
|
| | | | | | | | | | | | |
| Net income (loss) | | | $ | (598 | ) | | | $ | 1,556 |
| | | $ | (21,789 | ) | | | $ | 7,827 |
| | | | | | | | | | | | |
|
Earnings per share:
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Net income (loss) per share-basic
| | |
$
|
(0.05
|
)
| | |
$
|
0.14
|
| | |
$
|
(1.95
|
)
| | |
$
|
0.70
|
| | | | | | | | | | | | |
|
Weighted average shares outstanding - basic
| | |
|
11,203
|
| | |
|
11,120
|
| | |
|
11,200
|
| | |
|
11,118
|
| | | | | | | | | | | | |
| Net income (loss) per share-diluted | | | $ | (0.05 | ) | | | $ | 0.14 |
| | | $ | (1.95 | ) | | | $ | 0.70 |
| | | | | | | | | | | | |
|
Weighted average shares outstanding - diluted
| | |
|
11,203
|
| | |
|
11,120
|
| | |
|
11,200
|
| | |
|
11,119
|
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| | Olympic Steel, Inc. | Consolidated Balance Sheets |
(in thousands)
| | | | | | |
| | | | At Sept. 30, 2015 | | | At Dec. 31, 2014 | | | | (unaudited) | | | (audited) | Assets | | | | | | | | | | | | |
|
Cash and cash equivalents
| | |
$
|
5,040
| | | |
$
|
2,238
| |
Accounts receivable, net
| | | |
115,155
| | | | |
123,804
| |
Inventories, net (includes LIFO debit of $4,932 as of Sept. 30,
2015, and $3,207 as of Dec. 31, 2014)
| | | |
229,031
| | | | |
311,108
| |
Prepaid expenses and other
| | | |
7,753
| | | | |
20,434
| |
Assets held for sale
| | |
|
-
|
| | |
|
1,125
|
|
Total current assets
| | |
|
356,979
|
| | |
|
458,709
|
| | | | | | |
|
Property and equipment, at cost
| | | |
370,909
| | | | |
366,989
| |
Accumulated depreciation
| | |
|
(201,136
|
)
| | |
|
(189,603
|
)
|
Net property and equipment
| | |
|
169,773
|
| | |
|
177,386
|
| | | | | | |
|
Goodwill
| | | |
500
| | | | |
16,951
| |
Intangible assets, net
| | | |
24,980
| | | | |
33,646
| |
Other long-term assets
| | |
|
12,766
|
| | |
|
14,056
|
| Total assets | | | $ | 564,998 |
| | | $ | 700,748 |
| | | | | | |
| Liabilities | | | | | | | | | | | | |
|
Current portion of long-term debt
| | |
$
|
2,690
| | | |
$
|
3,530
| |
Accounts payable
| | | |
57,395
| | | | |
91,252
| |
Accrued payroll
| | | |
8,364
| | | | |
10,224
| |
Other accrued liabilities
| | |
|
16,967
|
| | |
|
26,971
|
|
Total current liabilities
| | |
|
85,416
|
| | |
|
131,977
|
| | | | | | |
|
Credit facility revolver
| | | |
185,180
| | | | |
244,090
| |
Other long-term liabilities
| | | |
10,742
| | | | |
13,249
| |
Deferred income taxes
| | |
|
23,655
|
| | |
|
30,651
|
| Total liabilities | | |
| 304,993 |
| | |
| 419,967 |
| | | | | | |
| Shareholders' equity | | | | | | | | | | | | |
|
Preferred stock
| | | |
-
| | | | |
-
| |
Common stock
| | | |
128,033
| | | | |
126,339
| |
Accumulated other comprehensive loss
| | | |
(570
|
)
| | | |
(549
|
)
|
Retained earnings
| | |
|
132,542
|
| | |
|
154,991
|
| Total shareholders' equity | | |
| 260,005 |
| | |
| 280,781 |
| Total liabilities and shareholders' equity | | | $ | 564,998 |
| | | $ | 700,748 |
| | | | | | |
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| | Olympic Steel, Inc. | Segment Financial Information |
(in thousands)
| | | | | | |
| | | | Three Months Ended | | | Nine Months Ended | | | | Sept. 30, | | | Sept. 30, | | | | (unaudited) | | | (unaudited) | | | | 2015 |
|
| 2014 | | | 2015 |
|
| 2014 |
Net sales
| | | | | | | | | | | | |
Carbon flat products
| | |
$
|
176,656
| | | |
$
|
256,121
| | | |
$
|
614,408
| | | |
$
|
759,045
| |
Specialty metals flat products
| | | |
46,470
| | | | |
56,655
| | | | |
151,816
| | | | |
159,789
| |
Tubular and pipe products
| | |
|
53,796
|
| | |
|
63,841
|
| | |
|
171,814
|
| | |
|
190,743
|
|
Total net sales
| | |
$
|
276,922
| | | |
$
|
376,617
| | | |
$
|
938,038
| | | |
$
|
1,109,577
| | | | | | | | | | | | | |
|
Depreciation and amortization
| | | | | | | | | | | | |
Carbon flat products
| | |
$
|
2,905
| | | |
$
|
3,033
| | | |
$
|
9,213
| | | |
$
|
11,080
| |
Specialty metals flat products
| | | |
175
| | | | |
200
| | | | |
525
| | | | |
602
| |
Tubular and pipe products
| | | |
1,527
| | | | |
1,383
| | | | |
4,480
| | | | |
4,249
| |
Corporate
| | |
|
25
|
| | |
|
25
|
| | |
|
76
|
| | |
|
75
|
|
Total depreciation and amortization
| | |
$
|
4,632
|
| | |
$
|
4,641
|
| | |
$
|
14,294
|
| | |
$
|
16,006
|
| | | | | | | | | | | | |
|
Operating income (loss)
| | | | | | | | | | | | |
Carbon flat products
| | |
$
|
(1,100
|
)
| | |
$
|
905
| | | |
$
|
(929
|
)
| | |
$
|
9,826
| |
Specialty metals flat products
| | | |
(358
|
)
| | | |
2,460
| | | | |
(340
|
)
| | | |
4,802
| |
Tubular and pipe products
| | | |
3,685
| | | | |
2,804
| | | | |
10,443
| | | | |
9,094
| |
Corporate
| | | |
(1,774
|
)
| | | |
(2,052
|
)
| | | |
(5,323
|
)
| | | |
(6,268
|
)
|
Impairment
| | |
|
-
|
| | |
|
-
|
| | |
|
(24,451
|
)
| | |
|
-
|
|
Total operating income (loss)
| | |
$
|
453
|
| | |
$
|
4,117
|
| | |
$
|
(20,600
|
)
| | |
$
|
17,454
|
| | | | | | | | | | | | |
|
Other income (loss), net
| | |
|
(84
|
)
| | |
|
(20
|
)
| | |
|
(141
|
)
| | |
|
(22
|
)
|
Income (loss) before interest and income taxes
| | | |
369
| | | | |
4,097
| | | | |
(20,741
|
)
| | | |
17,432
| |
Interest and other expense on debt
| | |
|
1,405
|
| | |
|
1,602
|
| | |
|
4,439
|
| | |
|
5,134
|
|
Income (loss) before income taxes
| | |
$
|
(1,036
|
)
| | |
$
|
2,495
|
| | |
$
|
(25,180
|
)
| | |
$
|
12,298
|
| | | | | | | | | | | | |
|
Capital expenditures
| | | | | | | | | | | | |
Flat products
| | |
$
|
1,148
| | | |
$
|
1,631
| | | |
$
|
3,254
| | | |
$
|
4,861
| |
Tubular and pipe products
| | | |
636
| | | | |
459
| | | | |
2,763
| | | | |
2,332
| |
Corporate
| | |
|
-
|
| | |
|
-
|
| | |
|
-
|
| | |
|
21
|
|
Total capital expenditures
| | |
$
|
1,784
|
| | |
$
|
2,090
|
| | |
$
|
6,017
|
| | |
$
|
7,214
|
| | | | | | | | | | | | |
|
|
|
| |
|
| | | | | At Sept. 30, | | | At Dec. 31, | | | | 2015 | | | 2014 |
Goodwill
| | | | | | |
Flat products
| | |
$
|
500
| | |
$
|
500
|
Tubular and pipe products
| | |
|
-
| | |
|
16,451
|
Total goodwill
| | |
$
|
500
| | |
$
|
16,951
| | | | | | |
|
Assets
| | | | | | |
Flat products
| | |
$
|
383,131
| | |
$
|
496,253
|
Tubular and pipe products
| | | |
181,385
| | | |
203,937
|
Corporate
| | |
|
482
| | |
|
558
|
Total assets
| | |
$
|
564,998
| | |
$
|
700,748
| | | | | | |
|
|
|
| |
|
| | Other information: | | | | | | |
(in thousands, except per-share data)
| | | At Sept. 30, | | | At Dec. 31, | | | | 2015 | | | 2014 | | | | | | |
|
Shareholders' equity per share
| | |
$
|
23.63
| | |
$
|
25.55
| | | | | | | |
|
Debt-to-equity ratio
| | |
0.72 to 1
| | |
0.88 to 1
| | | | | | |
| | | | | | |
| | | | Nine Months Ended | | | | Sept. 30, | | | | 2015 | | | 2014 | | | |
| | | | | | |
|
Net cash from (used for) operating activities
| | |
$
|
69,337
| | |
$
|
(59,003
|
)
| | | | | | |
|
Cash dividends per share
| | |
$
|
0.06
| | |
$
|
0.06
| | | | | | | |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151105005186/en/
Olympic Steel Investor Relations Matthew J. Dennis, CFA,
216-672-0522
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