Olympic Steel Reports 2016 Fourth-Quarter and Full-Year Results |
March 02, 2017 05:45 AM Eastern Time |
Market Share Increases to Record High Olympic Steel Inc., (Nasdaq: ZEUS), a national metals service
center, today announced financial results for the fourth quarter and
full year ended Dec. 31, 2016.
Net sales in the 2016 fourth quarter increased 7.3%, to $254.9 million,
up from $237.5 million in the same quarter of the prior year. Full-year
2016 net sales declined 10.2%, to $1.1 billion, compared with $1.2
billion in 2015. LIFO income was $0.8 million in the final quarter of
2016, versus $1.6 million in the comparable quarter in 2015. Full-year
reported results benefited from $1.5 million of LIFO income in 2016,
which was down from $3.3 million of LIFO income recorded in 2015.
For the fourth quarter of 2016, the Company reported a net loss of $2.1
million, or $0.19 per share. This compares with a net loss of $5.0
million, or $0.45 per share, in 2015's comparable quarter. For the
full-year period, a net loss of $1.1 million, or $0.10 per share was
recorded in 2016, versus a net loss of $26.8 million, or $2.39 per
share, in 2015. Results in 2015 were negatively impacted by goodwill and
intangible asset impairment charges totaling $25.0 million, or $1.93 per
share.
"Despite another challenging year, we observed a definitive market swing
during the fourth quarter," said Chairman and Chief Executive Officer
Michael D. Siegal. "Pricing, demand and customer sentiment all improved
as the quarter progressed."
"Our commitment to customer performance earned us record market share
during 2016, per MSCI data," Siegal added. "At the same time, our
emphasis on continuous improvement led to reducing operating expenses by
3%, or $7 million, excluding 2015's impairment charges."
"The positive industry trends that began in last year's fourth quarter
have continued in the first quarter of 2017, validating optimism for the
first half of this year," Siegal concluded.
Conference Call and Webcast
A simulcast of Olympic Steel's 2016 fourth-quarter and full-year
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, March 2, and a replay of
the call 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: general and global business, economic, financial and political
conditions; 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 United States; the levels of
imported steel in the United States and any associated tariffs and
duties; 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 efforts to improve earnings; our ability to generate free
cash flow through operations 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 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 and last-in, first-out, or LIFO, income, 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 LIFO inventory
valuation; 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; 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 repurchases, if any; 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; and 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.
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 32
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- |
|
| |
| | Olympic Steel, Inc. | Consolidated Statements of Comprehensive Income |
(in thousands, except per-share data)
| | | | | |
| | | | Three Months Ended Dec. 31, | | Twelve Months Ended Dec. 31, | | | | 2016 | 2015 | | 2016 | 2015 | | | | (unaudited) | | (audited) | Net sales | | | $ | 254,904 | |
| | $ | 237,505 | |
| | | $ | 1,055,116 | |
| | $ | 1,175,543 | | | | | | | | | | | | | | |
|
Costs and expenses
| | | | | | | | | | | | | |
Cost of materials sold (excludes items shown separately below)
| | | |
203,494
| | | | |
188,265
| | | | | |
820,040
| | | | |
942,214
| |
Warehouse and processing
| | | |
17,960
| | | | |
19,891
| | | | | |
79,521
| | | | |
85,411
| |
Administrative and general
| | | |
15,001
| | | | |
15,701
| | | | | |
63,054
| | | | |
64,987
| |
Distribution
| | | |
8,728
| | | | |
8,254
| | | | | |
36,490
| | | | |
36,073
| |
Selling
| | | |
5,699
| | | | |
5,051
| | | | | |
23,060
| | | | |
21,158
| |
Occupancy
| | | |
2,088
| | | | |
2,280
| | | | | |
8,718
| | | | |
9,492
| |
Depreciation
| | | |
4,365
| | | | |
4,520
| | | | | |
17,596
| | | | |
18,147
| |
Amortization
| | | |
222
| | | | |
222
| | | | | |
889
| | | | |
889
| |
Goodwill and intangible asset impairment
| | |
|
-
|
| | |
|
500
|
| | | |
|
-
|
| | |
|
24,951
|
| | | | | | | | | | | | | |
|
Total costs and expenses
| | |
|
257,557
|
| | |
|
244,684
|
| | | |
|
1,049,368
|
| | |
|
1,203,322
|
| | | | | | | | | | | | | |
| Operating income (loss) | | | | (2,653 | ) | | | | (7,179 | ) | | | | | 5,748 | | | | | (27,779 | ) | | | | | | | | | | | | | |
|
Other income (loss), net
| | |
|
(13
|
)
| | |
|
16
|
| | | |
|
(55
|
)
| | |
|
(125
|
)
| | | | | | | | | | | | | |
|
Income (loss) before interest and income taxes
| | | |
(2,666
|
)
| | | |
(7,163
|
)
| | | | |
5,693
| | | | |
(27,904
|
)
|
Interest and other expense on debt
| | |
|
1,378
|
| | |
|
1,251
|
| | | |
|
5,273
|
| | |
|
5,690
|
|
Income (loss) before income taxes
| | | |
(4,044
|
)
| | | |
(8,414
|
)
| | | | |
420
| | | | |
(33,594
|
)
|
Income tax provision (benefit)
| | |
|
(1,940
|
)
| | |
|
(3,426
|
)
| | | |
|
1,498
|
| | |
|
(6,817
|
)
| | | | | | | | | | | | | |
| Net loss | | | $ | (2,104 | ) | | | $ | (4,988 | ) | | | | $ | (1,078 | ) | | | $ | (26,777 | ) | | | | | | | | | | | | | |
|
Earnings per share:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net loss per share - basic
| | |
$
|
(0.19
|
)
| | |
$
|
(0.45
|
)
| | | |
$
|
(0.10
|
)
| | |
$
|
(2.39
|
)
| | | | | | | | | | | | | |
|
Weighted average shares outstanding - basic
| | |
|
11,221
|
| | |
|
11,173
|
| | | |
|
11,210
|
| | |
|
11,192
|
| | | | | | | | | | | | | |
| Net loss per share - diluted | | | $ | (0.19 | ) | | | $ | (0.45 | ) | | | | $ | (0.10 | ) | | | $ | (2.39 | ) | | | | | | | | | | | | | |
|
Weighted average shares outstanding - diluted
| | |
|
11,221
|
| | |
|
11,173
|
| | | |
|
11,210
|
| | |
|
11,192
|
|
|
|
| | Olympic Steel, Inc. | Consolidated Balance Sheets |
(in thousands)
| | | |
| | | | At Dec. 31, | | | | 2016 |
|
| 2015 | | | | (audited) | Assets | | | | | | | | | | | | |
|
Cash and cash equivalents
| | |
$
|
2,315
| | | |
$
|
1,604
| |
Accounts receivable, net
| | | |
101,902
| | | | |
92,877
| |
Inventories, net (includes LIFO debit of $8,045 and $6,555 as of
Dec. 31, 2016, and 2015, respectively)
| | | |
254,526
| | | | |
206,645
| |
Prepaid expenses and other
| | |
|
6,197
|
| | |
|
7,820
|
|
Total current assets
| | |
|
364,940
|
| | |
|
308,946
|
| | | | | | |
|
Property and equipment, at cost
| | | |
374,242
| | | | |
372,129
| |
Accumulated depreciation
| | |
|
(218,476
|
)
| | |
|
(205,591
|
)
|
Net property and equipment
| | |
|
155,766
|
| | |
|
166,538
|
| | | | | | |
|
Intangible assets, net
| | | |
23,869
| | | | |
24,757
| |
Other long-term assets
| | |
|
11,493
|
| | |
|
11,639
|
| Total assets | | | $ | 556,068 |
| | | $ | 511,880 |
| | | | | | |
| Liabilities | | | | | | | | | | | | |
|
Current portion of long-term debt
| | |
$
|
1,825
| | | |
$
|
2,690
| |
Accounts payable
| | | |
79,458
| | | | |
55,685
| |
Accrued payroll
| | | |
8,445
| | | | |
6,884
| |
Other accrued liabilities
| | |
|
15,170
|
| | |
|
11,801
|
|
Total current liabilities
| | |
|
104,898
|
| | |
|
77,060
|
|
Credit facility revolver
| | | |
164,599
| | | | |
145,800
| |
Other long-term liabilities
| | | |
10,062
| | | | |
9,829
| |
Deferred income taxes
| | |
|
23,119
|
| | |
|
24,496
|
| Total liabilities | | |
| 302,678 |
| | |
| 257,185 |
| | | | | | |
| Shareholders' Equity | | | | | | | | | | | | |
|
Preferred stock
| | | |
-
| | | | |
-
| |
Common stock
| | | |
128,619
| | | | |
128,129
| |
Treasury stock
| | | |
(609
|
)
| | | |
(699
|
)
|
Accumulated other comprehensive loss
| | | |
-
| | | | |
(70
|
)
|
Retained earnings
| | |
|
125,380
|
| | |
|
127,335
|
| Total shareholders' equity | | |
| 253,390 |
| | |
| 254,695 |
| Total liabilities and shareholders' equity | | | $ | 556,068 |
| | | $ | 511,880 |
|
|
| | 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 Dec. 31: |
| | |
(unaudited)
| | | Carbon Flat |
| Specialty Metals Flat |
| Tubular and Pipe | | | Products | | Products | | Products1 | | | 2016 |
| 2015 | | 2016 |
| 2015 |
| | 2016 |
| 2015 |
Tons Sold1 | |
244,938
|
| |
|
229,530
|
| |
|
19,012
| |
|
16,520
|
| |
NA
| |
NA
| | | | | | | | | | | | |
|
Net Sales
| |
$ 167,055
| | |
$
|
150,992
| | |
$
|
45,032
| |
$
|
40,700
| | |
$
|
42,817
| |
$
|
45,813
| |
Average selling price per ton
| |
682
| | | |
658
| | | |
2,369
| | |
2,464
| | |
NA
| |
NA
|
Cost of materials sold2 | |
136,979
|
| |
|
120,822
|
| |
|
37,452
| |
|
37,376
|
| |
|
29,063
| |
|
30,067
|
|
Gross profit3 | |
30,076
| | | |
30,170
| | | |
7,580
| | |
3,324
| | | |
13,754
| | |
15,746
| |
Operating expenses4 | |
34,327
| | | |
36,458
| | | |
5,065
| | |
4,058
| | | |
13,190
| | |
13,606
| |
Goodwill and intangible asset impairment5 | |
-
|
| |
|
-
|
| |
|
-
| |
|
500
|
| |
|
-
| |
|
-
|
|
Operating income (loss)
| |
$ (4,251
|
)
| |
$
|
(6,288
|
)
| |
$
|
2,515
| |
$
|
(1,234
|
)
| |
$
|
564
| |
$
|
2,140
|
| | | | | | | | | | | | |
|
Depreciation and Amortization
| |
2,953
| | | |
2,987
| | | |
211
| | |
173
| | | |
1,398
| | |
1,556
| | | |
| | | Twelve Months Ended Dec. 31: | | | |
(audited)
| | | Carbon Flat | | Specialty Metals Flat | | Tubular and Pipe | | | Products | | Products | | Products1 | | | 2016 | | 2015 | | 2016 | | 2015 | | 2016 | | 2015 |
Tons Sold1 | |
|
1,026,768
|
| |
|
1,037,525
|
| |
|
82,285
| |
|
72,077
|
| |
NA
| |
NA
| | | | | | | | | | | | |
|
Net Sales
| |
$
|
670,983
| | |
$
|
765,400
| | |
$
|
189,930
| |
$
|
192,516
| | |
$
|
194,203
| |
$
|
217,627
| |
Average selling price per ton
| | |
653
| | | |
738
| | | |
2,308
| | |
2,671
| | |
NA
| |
NA
|
Cost of materials sold2 | |
|
529,021
|
| |
|
618,674
|
| |
|
160,185
| |
|
176,686
|
| |
|
130,834
| |
|
146,854
|
|
Gross profit3 | | |
141,962
| | | |
146,726
| | | |
29,745
| | |
15,830
| | | |
63,369
| | |
70,773
| |
Operating expenses4 | | |
146,333
| | | |
153,943
| | | |
19,904
| | |
16,904
| | | |
55,656
| | |
58,190
| |
Goodwill and intangible asset impairment5 | |
|
-
|
| |
|
-
|
| |
|
-
| |
|
500
|
| |
|
-
| |
|
24,451
|
|
Operating income (loss)
| |
$
|
(4,371
|
)
| |
$
|
(7,217
|
)
| |
$
|
9,841
| |
$
|
(1,574
|
)
| |
$
|
7,713
| |
$
|
(11,868
|
)
| | | | | | | | | | | | |
|
Depreciation and Amortization
| | |
11,690
| | | |
12,200
| | | |
797
| | |
698
| | | |
5,896
| | |
6,036
| |
|
| | 1 | |
Tonnage is less meaningful for the Tubular and Pipe Products segment
and therefore, is not reported.
| 2 | |
Includes $0.8 million, and $1.5 million, of LIFO income for the
three and twelve months ended Dec. 31, 2016, respectively; and
$1.6 million, and $3.3 million, of LIFO income for the three and
twelve months ended Dec. 31, 2015, respectively.
| 3 | |
Gross profit is calculated as net sales less the cost of materials
sold.
| 4 | |
Operating expenses are calculated as total costs and expenses less
the cost of materials sold.
| 5 | |
Goodwill and intangible asset non-cash impairment charges are
separately displayed for comparability purposes.
|
|
|
| | Olympic Steel, Inc. | Segment Financial Information Cont. |
(audited, in thousands)
| | | |
| | | | At Dec. 31, | | 2016 |
|
| 2015 |
Assets
| | | | | | |
Flat products
| | |
$
|
363,626
| | | |
$
|
328,295
|
Tubular and pipe products
| | | |
192,088
| | | | |
183,129
|
Corporate
| | |
|
354
|
| | |
|
456
|
Total assets
| | |
$
|
556,068
|
| | |
$
|
511,880
| | | | | | |
| Other Information: | | | | | | |
(audited, in thousands, except per-share data)
| | | At Dec. 31, | | | | 2016 | | | 2015 | | | | | | |
|
Shareholders' equity per share
| | |
$
|
23.11
| | | |
$
|
23.25
| | | | | | |
|
Debt-to-equity ratio
| | |
0.66 to 1
| | |
0.58 to 1
| | | | | | |
| | | | | | |
| | | | Twelve Months Ended | | | | Dec. 31, | | | | 2016 | | | 2015 | | | |
| | | | | | |
|
Net cash from (used for) operating activities
| | |
$
|
(9,813
|
)
| | |
$
|
107,485
| | | | | | |
|
Cash dividends per share
| | |
$
|
0.08
| | | |
$
|
0.08
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170302005315/en/
Olympic Steel Investor Relations Matthew J. Dennis, CFA,
216-672-0522
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