Olympic Steel Reports Sharply Improved First-Quarter Results |
April 28, 2017 05:45 AM Eastern Time |
First-Quarter Operating Income Reaches $11.1 Million, on 30% Sales
Growth; Record Market Share Performance; Board Declares Regular Quarterly
Cash Dividend Olympic Steel Inc., (Nasdaq: ZEUS), a leading national metals
service center, today announced financial results for the first quarter
ended March 31, 2017.
First-quarter net sales increased 30% in 2017, reaching $334.9 million,
compared with $258.3 million in last year's same quarter. The
improvement in net sales was driven by increased shipping volumes and
higher average selling prices in all of the Company's products.
Net income rose to $7.7 million, or $0.68 per diluted share in the first
quarter, compared to the first-quarter loss of $0.8 million, or $0.07
per share, in 2016. An out-of-period income tax adjustment related to
the future tax deductibility of certain payments from one of the
Company's retirement plans resulted in a one-time reduction of income
tax expense that increased net income by $1.9 million, or $0.17 per
diluted share, in the quarter. The Company recorded $0.4 million in LIFO
expense in the quarter, compared with no LIFO impact in the first
quarter of 2016.
"In addition to the strong financial performance from our carbon flat
rolled segment, sales and profitability in our tubular and pipe and
specialty metals segments also improved substantially during the
quarter," said Chairman and Chief Executive Officer Michael D. Siegal.
"Shipping volume of specialty metals increased 17% versus the first
quarter last year, and we earned record market share in nearly all of
the products we sell."
"Looking ahead, broad-based demand is improving and the business
regulatory environment is becoming more favorable for domestic
manufacturing. This is encouraging, and we expect the benefits of our
previous capital investments and ongoing operating enhancements will
continue to be reflected in future financial performance," Siegal said.
The Company's Board of Directors also approved a regular quarterly cash
dividend of $0.02 per share, which is payable on June 15, 2017, to
shareholders of record on June 1, 2017.
Conference Call and Webcast
A simulcast of Olympic Steel's 2017 first-quarter 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 9 a.m. ET today, April 28, 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 internal program 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 31
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 Mar. 31, | | | | 2017 |
|
| 2016 | | | | (unaudited) | Net sales | | | $ | 334,893 | | | | $ | 258,349 | | | | | | | |
|
Costs and expenses
| | | | | | | | | | | | |
|
Cost of materials sold (excludes items shown separately below)
| | | |
258,454
| | | | |
199,820
| |
Warehouse and processing
| | | |
23,501
| | | | |
20,492
| |
Administrative and general
| | | |
18,165
| | | | |
16,040
| |
Distribution
| | | |
10,365
| | | | |
9,207
| |
Selling
| | | |
6,511
| | | | |
5,687
| |
Occupancy
| | | |
2,310
| | | | |
2,337
| |
Depreciation
| | | |
4,314
| | | | |
4,509
| |
Amortization
| | |
|
222
|
| | |
|
222
|
| | | | | | |
|
Total costs and expenses
| | |
|
323,842
|
| | |
|
258,314
|
| | | | | | |
| Operating income | | | | 11,051 | | | | | 35 | | | | | | | |
|
Other loss, net
| | |
|
(26
|
)
| | |
|
(5
|
)
| | | | | | |
|
Income before interest and income taxes
| | | |
11,025
| | | | |
30
| |
Interest and other expense on debt
| | |
|
1,626
|
| | |
|
1,285
|
| | | | | | |
|
Income (loss) before income taxes
| | | |
9,399
| | | | |
(1,255
|
)
|
Income tax provision (benefit)
| | |
|
1,700
|
| | |
|
(488
|
)
| | | | | | |
| Net income (loss) | | | $ | 7,699 |
| | | $ | (767 | ) | | | | | | |
|
Earnings per share:
| | | | | | | | | | | | |
|
Net income (loss) per share - basic
| | |
$
|
0.68
|
| | |
$
|
(0.07
|
)
| | | | | | |
|
Weighted average shares outstanding - basic
| | |
|
11,369
|
| | |
|
11,182
|
| | | | | | |
| Net income (loss) per share - diluted | | | $ | 0.68 |
| | | $ | (0.07 | ) | | | | | | |
|
Weighted average shares outstanding - diluted
| | |
|
11,369
|
| | |
|
11,182
|
| | | | | | | | | | |
|
|
|
| |
|
| | Olympic Steel, Inc. | Consolidated Balance Sheets |
(in thousands)
| | | | | | |
| | | | At Mar. 31, 2017 | | | At Dec. 31, 2016: | | | | | | |
| Assets | | | | | | | | | | | | |
|
Cash and cash equivalents
| | |
$
|
2,804
| | | |
$
|
2,315
| |
Accounts receivable, net
| | | |
140,281
| | | | |
101,902
| |
Inventories, net (includes LIFO debit of $7,669 and $8,045 as of
Mar. 31, 2017, and Dec. 31, 2016, respectively)
| | | |
263,190
| | | | |
254,526
| |
Prepaid expenses and other
| | |
|
4,088
|
| | |
|
6,197
|
|
Total current assets
| | |
|
410,363
|
| | |
|
364,940
|
| | | | | | |
|
Property and equipment, at cost
| | | |
375,938
| | | | |
374,242
| |
Accumulated depreciation
| | |
|
(222,511
|
)
| | |
|
(218,476
|
)
|
Net property and equipment
| | |
|
153,427
|
| | |
|
155,766
|
| | | | | | |
|
Intangible assets, net
| | | |
23,646
| | | | |
23,869
| |
Other long-term assets
| | |
|
11,633
|
| | |
|
11,493
|
| Total assets | | | $ | 599,069 |
| | | $ | 556,068 |
| | | | | | |
| Liabilities | | | | | | | | | | | | |
|
Current portion of long-term debt
| | |
$
|
1,825
| | | |
$
|
1,825
| |
Accounts payable
| | | |
87,211
| | | | |
79,458
| |
Accrued payroll
| | | |
9,839
| | | | |
8,445
| |
Other accrued liabilities
| | |
|
13,913
|
| | |
|
15,170
|
|
Total current liabilities
| | |
|
112,788
|
| | |
|
104,898
|
|
Credit facility revolver
| | | |
192,971
| | | | |
164,599
| |
Other long-term liabilities
| | | |
10,044
| | | | |
10,062
| |
Deferred income taxes
| | |
|
21,731
|
| | |
|
23,119
|
| Total liabilities | | |
| 337,543 |
| | |
| 302,678 |
| | | | | | |
| Shareholders' Equity | | | | | | | | | | | | |
|
Preferred stock
| | | |
-
| | | | |
-
| |
Common stock
| | | |
129,285
| | | | |
128,619
| |
Treasury stock
| | | |
(609
|
)
| | | |
(609
|
)
|
Retained earnings
| | |
|
132,859
|
| | |
|
125,380
|
| Total shareholders' equity | | |
| 261,535 |
| | |
| 253,390 |
| Total liabilities and shareholders' equity | | | $ | 599,069 |
| | | $ | 556,068 |
| | | | | | | | | | |
|
|
| | 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: |
| | |
(unaudited)
| | | Carbon Flat |
| Specialty Metals Flat |
| Tubular and Pipe | | | Products | | Products | | Products1 | | | 2017 |
| 2016 | | 2017 |
| 2016 |
| | 2017 |
| 2016 |
Tons Sold1 | |
|
303,792
| |
|
266,850
|
| |
|
23,193
| |
|
19,823
|
| |
NA
| |
NA
| | | | | | | | | | | | |
|
Net Sales
| |
$
|
216,916
| |
$
|
161,434
| | |
$
|
57,955
| |
$
|
45,830
| | |
$
|
60,022
| |
$
|
51,085
|
Average selling price per ton
| | |
714
| | |
605
| | | |
2,499
| | |
2,312
| | |
NA
| |
NA
|
Cost of materials sold2 | |
|
169,173
| |
|
126,527
|
| |
|
48,284
| |
|
39,195
|
| |
|
40,997
| |
|
34,098
|
Gross profit3 | | |
47,743
| | |
34,907
| | | |
9,671
| | |
6,635
| | | |
19,025
| | |
16,987
|
Operating expenses4 | |
|
40,368
| |
|
37,085
|
| |
|
5,686
| |
|
4,879
|
| |
|
16,538
| |
|
14,744
|
Operating income (loss)
| |
$
|
7,375
| |
$
|
(2,178
|
)
| |
$
|
3,985
| |
$
|
1,756
|
| |
$
|
2,487
| |
$
|
2,243
| | | | | | | | | | | | |
|
Depreciation and Amortization
| |
|
2,889
| |
|
2,954
|
| |
|
226
| |
|
193
|
| |
|
1,396
| |
|
1,559
| | | | | | | | | | | | |
| | | At March 31, 2017 | | At Dec. 31, 2016 |
Assets
| | | | |
Flat products
| |
$ 403,492
| |
$ 363,626
|
Tubular and pipe products
| |
195,248
| |
192,088
|
Corporate
| |
329
| |
354
|
Total assets
| |
$ 599,069
| |
$ 556,068
| |
| Other Information: | | | | |
|
(In thousands, except per-share data)
| | At March 31, 2017 | | At Dec. 31, 2016 | | | | |
|
Shareholders' equity per share
| |
$ 23.86
| |
$ 23.11
| | | | |
|
Debt-to-equity ratio
| |
0.74 to 1
| |
0.66 to 1
| | | | |
| | | Three Months Ended March 31, | | | 2017 | | 2016 | | |
| | | | |
|
Net cash from (used for) operating activities
| |
$ (25,692)
| |
$ 2,845
| | | | |
|
Cash dividends per share
| |
$ 0.02
| |
$ 0.02
|
1 |
|
Tonnage is less meaningful for the Tubular and Pipe Products segment
and therefore, is not reported.
| 2 | |
Includes $0.4 million of LIFO expense in the three months ended
Mar. 31, 2017, and no LIFO impact in the three months ended Mar.
31, 2016.
| 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 from the Consolidated Statements of
Comprehensive Income.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170428005020/en/ IR Contact: Olympic Steel Investor Relations Matthew J.
Dennis, CFA, 216-672-0522
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