Olympic Steel Reports Significantly Improved Third-Quarter Results |
November 08, 2017 06:00 AM Eastern Time |
Nine Months Operating Income Triples Versus Prior-Year Period, on 28%
Higher Sales Board Declares Regular Quarterly Cash Dividend Olympic Steel Inc. (Nasdaq: ZEUS), a leading national metals
service center, today announced significantly improved financial results
for the third quarter and nine-month period ended Sept. 30, 2017.
Third-quarter net sales in 2017 increased 24% over last year's same
quarter to $331.4 million. Year-to-date 2017 net sales rose 28%,
reaching $1.0 billion, versus $800.2 million in the comparable period of
2016. The significant increase in net sales for both 2017 periods was
due to sharply higher shipping volume and higher average selling prices.
"We continued to grow our shipping volumes in a recovering metals
market," said Chairman and Chief Executive Officer Michael D. Siegal.
"Through the first nine months of 2017, our 13% increase in shipping
volume has resulted in improved profitability."
Net income rose to $2.3 million, or $0.20 per diluted share, in the
third quarter of 2017, compared to a net loss of $1.8 million, or $0.16
per share in last year's third quarter. LIFO expense of $0.7 million was
recorded in the third quarter of 2017, which reduced net income by $0.04
per diluted share. In the third quarter of 2016, operating income was
positively impacted by $0.7 million of LIFO income.
Year-to-date 2017 net income increased to $14.8 million, or $1.30 per
diluted share, up substantially from $1.0 million, or $0.09 per diluted
share in the nine-month period of 2016. LIFO expenses recorded in 2017
reduced year-to-date net income by $1.5 million, or $0.08 per diluted
share. LIFO income of $0.7 million recorded in 2016, improved net income
by $0.04 per diluted share in the comparable period last year.
"Demand for metal products and processing services remains strong across
all three of our business segments," Siegal said. "Looking ahead, we are
encouraged by both the positive demand trends our customers are
projecting for 2018, and by the market's outlook for improved metal
pricing."
The Company's Board of Directors also approved a regular quarterly cash
dividend of $0.02 per share, which is payable on Dec. 15, 2017, to
shareholders of record on Dec. 1, 2017.
Conference Call and Webcast
A simulcast of Olympic Steel's 2017 third-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 10 a.m. ET on Nov. 8, 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; 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
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 efforts and initiatives to increase sales
and earnings, maintain or improve working capital turnover and free cash
flows, improve our customer service, and achieve cost savings; 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 lower of
cost or market adjustments and last-in, first-out, or LIFO, income or
expense; 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 30
facilities in North America.
For additional information, please visit the Company's website at www.olysteel.com
or http://ir.olysteel.com/Contact_Us?BzID=2195 |
| |
| Olympic Steel, Inc. Consolidated Statements of Comprehensive Income
(in thousands, except per-share data)
| | |
|
| |
|
| | | | | | Three Months Ended Sept. 30, | | | Nine Months Ended Sept. 30, | | | | | 2017 |
| 2016 | | | 2017 |
| 2016 | | | | | (unaudited) | | | (unaudited) | | Net sales | | | $ | 331,442 | |
| $ | 268,255 | | | | $ | 1,022,530 | |
| $ | 800,212 | | | | | | | | | | | | | |
|
Costs and expenses
| | | | | | | | | | | |
Cost of materials sold (excludes items shown separately below)
| | | |
265,351
| | | |
211,037
| | | | |
806,846
| | | |
616,545
| | |
Warehouse and processing
| | | |
20,531
| | | |
20,034
| | | | |
65,870
| | | |
61,561
| | |
Administrative and general
| | | |
16,647
| | | |
16,003
| | | | |
52,699
| | | |
48,054
| | |
Distribution
| | | |
10,574
| | | |
8,995
| | | | |
31,507
| | | |
27,762
| | |
Selling
| | | |
6,797
| | | |
5,629
| | | | |
19,804
| | | |
17,361
| | |
Occupancy
| | | |
2,150
| | | |
2,135
| | | | |
6,651
| | | |
6,630
| | |
Depreciation
| | | |
3,883
| | | |
4,172
| | | | |
12,516
| | | |
13,231
| | |
Amortization
| | |
|
223
|
| |
|
223
|
| | |
|
667
|
| |
|
667
|
| | | | | | | | | | | | |
|
Total costs and expenses
| | |
|
326,156
|
| |
|
268,228
|
| | |
|
996,560
|
| |
|
791,811
|
| | | | | | | | | | | | |
| Operating income | | | | 5,286 | | | | 27 | | | | | 25,970 | | | | 8,401 | | |
Other income (loss), net
| | |
|
(22
|
)
| |
|
21
|
| | |
|
(76
|
)
| |
|
(42
|
)
| | | | | | | | | | | | |
|
Income before interest and income taxes
| | | |
5,264
| | | |
48
| | | | |
25,894
| | | |
8,359
| | |
Interest and other expense on debt
| | |
|
1,966
|
| |
|
1,336
|
| | |
|
5,380
|
| |
|
3,895
|
| |
Income (loss) before income taxes
| | | |
3,298
| | | |
(1,288
|
)
| | | |
20,514
| | | |
4,464
| | |
Income tax provision
| | |
|
1,018
|
| |
|
469
|
| | |
|
5,738
|
| |
|
3,438
|
| | | | | | | | | | | | |
| Net income (loss) | | | $ | 2,280 |
| | $ | (1,757 | ) | | | $ | 14,776 |
| | $ | 1,026 |
| | | | | | | | | | | | |
|
Earnings per share:
| | | | | | | | | | | | | | | | | | | | | | |
|
Net income (loss) per share - basic
| | |
$
|
0.20
|
| |
$
|
(0.16
|
)
| | |
$
|
1.30
|
| |
$
|
0.09
|
| | | | | | | | | | | | |
|
Weighted average shares outstanding - basic
| | |
|
11,386
|
| |
|
11,219
|
| | |
|
11,384
|
| |
|
11,206
|
| | | | | | | | | | | | |
| Net income (loss) per share - diluted | | | $ | 0.20 |
| | $ | (0.16 | ) | | |
$
|
1.30
|
| |
$
|
0.09
|
| | | | | | | | | | | | |
|
Weighted average shares outstanding - diluted
| | |
|
11,386
|
| |
|
11,219
|
| | |
|
11,384
|
| |
|
11,206
|
| |
|
| Olympic Steel, Inc. Consolidated Balance Sheets
(in thousands)
| |
|
| |
|
| | | | | At Sept. 30, 2017 | | | At Dec. 31 2016 | | | | (unaudited) | Assets | | | | | | | | | | | | |
|
Cash and cash equivalents
| | |
$
|
4,157
| | | |
$
|
2,315
| |
Accounts receivable, net
| | | |
150,692
| | | | |
101,902
| |
Inventories, net (includes LIFO debit of $6,569 as of Sept. 30,
2017 and $8,045 as of Dec. 31, 2016)
| | | |
280,223
| | | | |
254,526
| |
Prepaid expenses and other
| | | |
5,510
| | | | |
6,197
| |
Assets held for sale
| | |
|
844
|
| | |
|
-
|
|
Total current assets
| | |
|
441,426
|
| | |
|
364,940
|
| | | | | | |
|
Property and equipment, at cost
| | | |
374,653
| | | | |
374,242
| |
Accumulated depreciation
| | |
|
(226,553
|
)
| | |
|
(218,476
|
)
|
Net property and equipment
| | |
|
148,100
|
| | |
|
155,766
|
| | | | | | |
|
Intangible assets, net
| | | |
23,202
| | | | |
23,869
| |
Other long-term assets
| | |
|
12,170
|
| | |
|
11,493
|
| Total assets | | | $ | 624,898 |
| | | $ | 556,068 |
| | | | | | |
| Liabilities | | | | | | | | | | | | |
|
Current portion of long-term debt
| | |
$
|
930
| | | |
$
|
1,825
| |
Accounts payable
| | | |
80,189
| | | | |
79,458
| |
Accrued payroll
| | | |
12,339
| | | | |
8,445
| |
Other accrued liabilities
| | |
|
10,911
|
| | |
|
15,170
|
|
Total current liabilities
| | |
|
104,369
|
| | |
|
104,898
|
|
Credit facility revolver
| | | |
220,409
| | | | |
164,599
| |
Other long-term liabilities
| | | |
11,482
| | | | |
10,062
| |
Deferred income taxes
| | |
|
20,176
|
| | |
|
23,119
|
| Total liabilities | | |
| 356,436 |
| | |
| 302,678 |
| | | | | | |
| Shareholders' Equity | | | | | | | | | | | | |
|
Preferred stock
| | | |
-
| | | | |
-
| |
Common stock
| | | |
129,490
| | | | |
128,619
| |
Treasury stock
| | | |
(527
|
)
| | | |
(609
|
)
|
Retained earnings
| | |
|
139,499
|
| | |
|
125,380
|
| Total shareholders' equity | | |
| 268,462 |
| | |
| 253,390 |
| Total liabilities and shareholders' equity | | | $ | 624,898 |
| | | $ | 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 Sept. 30: | | | | | (unaudited) | | | | | Carbon Flat Products | | | Specialty Metals Flat Products | | | Tubular and Pipe Products1 | | | | | 2017 | | 2016 | | | 2017 | | 2016 | | | 2017 | | 2016 | |
Tons Sold1 | | |
|
277,426
| |
|
242,533
|
| | |
|
23,253
| |
|
21,682
| | |
NA
| |
NA
| | | | | | | | | | | | | | | | | |
|
Net Sales
| | |
$
|
215,843
| |
$
|
169,372
| | | |
$
|
57,554
| |
$
|
49,539
| | |
$
|
58,045
| |
$
|
49,344
| |
Average selling price per ton
| | | |
778
| | |
698
| | | | |
2,475
| | |
2,285
| | |
NA
| |
NA
| |
Cost of materials sold2 | | |
|
173,560
| |
|
136,378
|
| | |
|
50,083
| |
|
41,547
| | |
|
41,708
| |
|
33,112
| |
Gross profit3 | | | |
42,283
| | |
32,994
| | | | |
7,471
| | |
7,992
| | | |
16,337
| | |
16,232
| |
Operating expenses4 | | |
|
38,585
| |
|
36,607
|
| | |
|
5,397
| |
|
4,989
| | |
|
14,729
| |
|
13,459
| |
Operating income (loss)
| | |
$
|
3,698
| |
$
|
(3,613
|
)
| | |
$
|
2,047
| |
$
|
3,003
| | |
$
|
1,608
| |
$
|
2,773
| | | | | | | | | | | | | | | | | |
|
Depreciation and Amortization
| | | |
2,493
| | |
2,795
| | | | |
185
| | |
203
| | | |
1,403
| | |
1,372
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | Nine Months Ended Sept. 30: | | | | | (unaudited) | | | | | Carbon Flat Products | | | Specialty Metals Flat Products | | | Tubular and Pipe Products1 | | | | | 2017 | | 2016 | | | 2017 | | 2016 | | | 2017 | | 2016 | |
Tons Sold1 | | |
|
889,676
| |
|
781,830
|
| | |
|
68,985
| |
|
63,273
| | |
NA
| |
NA
| | | | | | | | | | | | | | | | | |
|
Net Sales
| | |
$
|
669,817
| |
$
|
503,928
| | | |
$
|
173,789
| |
$
|
144,898
| | |
$
|
178,924
| |
$
|
151,386
| |
Average selling price per ton
| | | |
753
| | |
645
| | | | |
2,519
| | |
2,290
| | |
NA
| |
NA
| |
Cost of materials sold2 | | |
|
532,383
| |
|
392,042
|
| | |
|
148,413
| |
|
122,733
| | |
|
126,050
| |
|
101,770
| |
Gross profit3 | | | |
137,434
| | |
111,886
| | | | |
25,376
| | |
22,165
| | | |
52,874
| | |
49,616
| |
Operating expenses4 | | |
|
119,122
| |
|
112,008
|
| | |
|
16,458
| |
|
14,839
| | |
|
46,435
| |
|
42,467
| |
Operating income (loss)
| | |
$
|
18,312
| |
$
|
(122
|
)
| | |
$
|
8,918
| |
$
|
7,326
| | |
$
|
6,439
| |
$
|
7,149
| | | | | | | | | | | | | | | | | |
|
Depreciation and Amortization
| | | |
8,287
| | |
8,737
| | | | |
609
| | |
586
| | | |
4,211
| | |
4,499
| |
| 1 Tonnage is less meaningful for the Tubular and
Pipe Products segment and, therefore, is not reported. 2 Includes $0.7 million and $1.5 million of
LIFO expense for the Tubular and Pipe Products segment for the
three and nine months ended Sept. 30, 2017, respectively;
and $0.7 million of LIFO income for each of the three and nine
months ended Sept 30, 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. |
|
|
|
|
| |
|
| | | | | | | | | | | |
| Olympic Steel, Inc. Segment Financial Information Cont.
(In thousands, unaudited)
| | | | | | | | | | |
| | | | | At Sept. 30, 2017 | | | At Dec. 31, 2016 | |
Assets
| | | | | | | | | |
Flat products
| | | | |
$
|
427,786
| | | |
$
|
363,626
| | |
Tubular and pipe products
| | | | | |
196,834
| | | | |
192,088
| | |
Corporate
| | | | |
|
278
|
| | |
|
354
|
| |
Total assets
| | | | |
$
|
624,898
|
| | |
$
|
556,068
|
| | | | | | | | | | |
| | | | | | | | | |
| Other Information: | | | | | | | | | |
(unaudited, in thousands, except per-share data)
| | | | | | | | | | | | | | | At Sept. 30, 2017 | | | At Dec. 31, 2016 | | | | | | | | | | |
|
Shareholders' equity per share
| | | | |
$
|
24.47
| | | |
$
|
23.11
| | | | | | | | | | | |
|
Debt-to-equity ratio
| | | | |
0.82 to 1
| | |
0.66 to 1
| | | | | | | | | | |
| | | | | | | | | |
| | | | | | Nine Months Ended | | | | | | | Sept. 30, | | | | | | | 2017 | | | 2016 | | | | | | | | | | |
| | | | | | | | | |
|
Net cash from (used for) operating activities
| | | | |
$
|
(46,642
|
)
| | |
$
|
(9,688
|
)
| | | | | | | | | | |
|
Cash dividends per share
| | | | |
$
|
0.06
| | | |
$
|
0.06
| | | | | | | | | | | | | | | |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20171108005466/en/ IR Contact: Olympic Steel Investor Relations Matthew J.
Dennis, CFA, 216-672-0522
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