CLEVELAND--(BUSINESS WIRE)--Olympic Steel, Inc. (Nasdaq: ZEUS), a leading national metals service center, today announced financial results for the three months ended June 30, 2024.
Net income for the second quarter totaled $7.7 million, or $0.66 per diluted share, compared with net income of $15.0 million, or $1.30 per diluted share, in the second quarter of 2023. The results include $1.0 million of LIFO pre-tax income in both the second quarter of 2024 and 2023. Adjusted EBITDA for the second quarter of 2024 was $21.3 million, compared with $31.2 million in the second quarter of 2023.
The Company reported higher year-over-year shipping volumes on sales of $526 million in the second quarter of 2024, compared with $569 million in the second quarter of 2023.
“Olympic Steel’s ability to capitalize on our diversification strategy was critical to delivering profitability across all three business segments in the second quarter,” said Richard T. Marabito, Chief Executive Officer. “During the second quarter of 2024, hot-rolled index pricing fell 22% and has fallen 39% since the beginning of the year. Our efforts to grow and expand in end products, higher-margin flat-rolled products including coated products, and additional fabrication capabilities have strengthened our business and make us more resilient in challenging pricing environments. Our second-quarter results are a testament to this strategy, as well as to the dedication of our team to drive profitability in all market conditions.”
Marabito continued, “We are in an excellent financial position with a strong balance sheet and more than $340 million of borrowing availability. This access to capital gives us flexibility to grow organically and through acquisition. We recently ordered two new cut-to-length lines and one high-speed slitter to further expand our efforts in our coated and specialty metals product lines.”
Marabito concluded, “As we move into the second half of 2024, we remain committed to driving profitability and delivering on our disciplines around working capital and operating efficiencies. While we expect market conditions to remain challenging in the near term, we are confident that Olympic Steel is well-positioned to navigate these pressures to deliver consistent results for our shareholders.”
The Board of Directors approved a regular quarterly cash dividend of $0.15 per share, which is payable on September 16, 2024, to shareholders of record on September 2, 2024. The Company has paid a regular quarterly dividend since March 2006, increasing the dividend in each of the last three years.
The table that follows provides a reconciliation of certain non-GAAP measures to the most directly comparable measures prepared in accordance with GAAP. Additional reconciliations can be found in the Segment Financial Information table which also follows.
Olympic Steel, Inc. Reconciliation of Net Income Per Diluted Share to Adjusted Net Income Per Diluted Share (Figures may not foot due to rounding.) The following table reconciles adjusted net income per diluted share to the most directly comparable GAAP financial measure: |
||||||||||||||||
Three Months Ended |
|
Six Months Ended |
||||||||||||||
June 30, |
|
June 30, |
||||||||||||||
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
||
| Net income per diluted share (GAAP) | $ |
0.66 |
|
$ |
1.30 |
|
$ |
1.40 |
|
$ |
2.15 |
|
||||
| Excluding the following items | ||||||||||||||||
| LIFO income |
|
(0.06 |
) |
|
(0.06 |
) |
|
(0.04 |
) |
|
(0.06 |
) |
||||
| Acquisition Inventory fair market value adjustment |
|
- |
|
|
- |
|
|
- |
|
|
0.13 |
|
||||
| Acquisition related expenses |
|
- |
|
|
- |
|
|
- |
|
|
0.16 |
|
||||
| Adjusted net income per diluted share (non-GAAP) | $ |
0.60 |
|
$ |
1.24 |
|
$ |
1.36 |
|
$ |
2.38 |
|
||||
Reconciliation of Net Income to Adjusted EBITDA (in thousands) The following table reconciles Adjusted EBITDA to the most directly comparable GAAP financial measure: |
||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| 6/30/2024 | 6/30/2023 | 6/30/2024 | 6/30/2023 | |||||||||||||
| Net income (GAAP): | $ |
7,660 |
|
$ |
15,019 |
|
$ |
16,357 |
|
$ |
24,891 |
|
||||
| Excluding the following items | ||||||||||||||||
| Other loss, net |
|
21 |
|
|
28 |
|
|
40 |
|
|
39 |
|
||||
| Interest and other expense on debt |
|
4,393 |
|
|
4,203 |
|
|
8,403 |
|
|
8,426 |
|
||||
| Income tax provision |
|
3,036 |
|
|
6,522 |
|
|
6,248 |
|
|
10,139 |
|
||||
| Depreciation and amortization |
|
7,227 |
|
|
6,473 |
|
|
14,561 |
|
|
12,674 |
|
||||
| Earnings before interest, taxes, depreciation and | ||||||||||||||||
| amortization (EBITDA) |
|
22,337 |
|
|
32,245 |
|
|
45,609 |
|
|
56,169 |
|
||||
| LIFO income |
|
(1,000 |
) |
|
(1,000 |
) |
|
(600 |
) |
|
(1,000 |
) |
||||
| Acquisition Inventory fair market value adjustment |
|
- |
|
|
- |
|
|
- |
|
|
2,079 |
|
||||
| Acquisition related expenses |
|
- |
|
|
- |
|
|
- |
|
|
2,556 |
|
||||
| Adjusted EBITDA (non-GAAP) | $ |
21,337 |
|
$ |
31,245 |
|
$ |
45,009 |
|
$ |
59,804 |
|
||||
Conference Call and Webcast
A simulcast of Olympic Steel’s 2024 second-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 10 a.m. ET on August 2, 2024, 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 of falling metals prices and inventory devaluation; supply disruptions and inflationary pressures, including the availability and rising costs of transportation, energy, logistical services and labor; risks associated with shortages of skilled labor, increased labor costs and our ability to attract and retain qualified personnel; supplier consolidation or addition of new capacity; rising interest rates and their impacts on our variable interest rate debt; risks associated with the invasion of Ukraine, including economic sanctions, and the conflicts in the Middle East, or additional war, military conflict, or hostilities could adversely affect global metals supply and pricing; general and global business, economic, financial and political conditions, including, but not limited to, recessionary conditions, legislation passed under the current administration and the 2024 U.S. presidential election; reduced production schedules, layoffs or work stoppages by our own, our suppliers' or customers' personnel; risks associated with supply chain disruption resulting from the imbalance of metal supply and end-user demands, including additional shutdowns as a result of infectious disease outbreaks in large markets, such as China, and other factors; 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; the adequacy of our existing information technology and business system software, including duplication and security processes; 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; 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 last-in, first-out, or LIFO, inventory valuation; risks associated with infectious disease outbreaks, including, but not limited to customer closures, 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 net realizable value inventory adjustments and the impairment of intangible and long-lived assets, negative impacts on our liquidity position, inability to access our traditional financing sources and increased costs associated with and less ability to access funds under our asset-based credit facility, or ABL Credit Facility, and the capital markets; increased customer demand without corresponding increase in metal supply could lead to an inability to meet customer demand and result in lower sales and profits; competitive factors such as the availability, and global pricing of metals and production levels, industry shipping and inventory levels and rapid fluctuations in customer demand and metals pricing; customer, supplier and competitor consolidation, bankruptcy or insolvency; the timing and outcomes of inventory lower of cost or net realizable value adjustments and LIFO income or expense; 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; 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; risks and uncertainties associated with intangible assets, including impairment charges related to indefinite lived intangible assets; our ability to generate free cash flow through operations and repay debt; the amounts, successes and our ability to continue our capital investments and strategic growth initiatives, including acquisitions and our business information system implementations; events or circumstances that could adversely impact the successful operation of our processing equipment and operations; 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; 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; our ability to sell shares of our common stock under the at-the-market equity program; 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 and adjusted EBITDA, which are non-GAAP financial measures. Management's view of the Company's performance includes adjusted earnings per share and adjusted EBITDA, and management uses these non-GAAP financial measures internally for planning and forecasting purposes and to measure the performance of the Company. We believe these non-GAAP financial measures provide useful and meaningful information to us and investors because they enhance investors' understanding of the continuing operating performance of our business and facilitate the comparison of performance between past and future periods. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. Additionally, the presentation of these measures may be different from non-GAAP financial measures used by other companies. A reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures is provided above.
About Olympic Steel
Founded in 1954, Olympic Steel (NASDAQ: ZEUS) is a leading U.S. metals service center focused on the direct sale and value-added processing of carbon and coated sheet, plate, and coil products; stainless steel sheet, plate, bar and coil; aluminum sheet, plate and coil; pipe, tube, bar, valves and fittings; tin plate and metal-intensive end-use products, including water treatment systems; commercial, residential and industrial venting and air filtration systems; Wright® brand self-dumping hoppers; and EZ-Dumper® dump inserts. Headquartered in Cleveland, Ohio, Olympic Steel operates from 47 facilities.
For additional information, please visit the Company’s website at www.olysteel.com.
Olympic Steel, Inc. Consolidated Statements of Net Income (in thousands, except per-share data) |
||||||||||||
Three Months Ended |
|
Six Months Ended |
||||||||||
June 30, |
|
June 30, |
||||||||||
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||
| Net sales | $ |
526,250 |
$ |
569,268 |
$ |
1,052,892 |
$ |
1,142,344 |
||||
| Costs and expenses | ||||||||||||
| Cost of materials sold (excludes items shown separately below) |
|
406,547 |
|
441,872 |
|
814,085 |
|
894,508 |
||||
| Warehouse and processing |
|
33,243 |
|
31,522 |
|
66,136 |
|
62,171 |
||||
| Administrative and general |
|
29,167 |
|
31,681 |
|
59,319 |
|
64,866 |
||||
| Distribution |
|
17,462 |
|
17,448 |
|
34,220 |
|
35,189 |
||||
| Selling |
|
13,201 |
|
10,389 |
|
24,737 |
|
20,786 |
||||
| Occupancy |
|
4,293 |
|
4,111 |
|
8,786 |
|
8,655 |
||||
| Depreciation |
|
5,839 |
|
5,245 |
|
11,845 |
|
10,322 |
||||
| Amortization |
|
1,388 |
|
1,228 |
|
2,716 |
|
2,352 |
||||
| Total costs and expenses |
|
511,140 |
|
543,496 |
|
1,021,844 |
|
1,098,849 |
||||
| Operating income |
|
15,110 |
|
25,772 |
|
31,048 |
|
43,495 |
||||
| Other loss, net |
|
21 |
|
28 |
|
40 |
|
39 |
||||
| Income before interest and income taxes |
|
15,089 |
|
25,744 |
|
31,008 |
|
43,456 |
||||
| Interest and other expense on debt |
|
4,393 |
|
4,203 |
|
8,403 |
|
8,426 |
||||
| Income before income taxes |
|
10,696 |
|
21,541 |
|
22,605 |
|
35,030 |
||||
| Income tax provision |
|
3,036 |
|
6,522 |
|
6,248 |
|
10,139 |
||||
| Net income | $ |
7,660 |
$ |
15,019 |
$ |
16,357 |
$ |
24,891 |
||||
| Earnings per share: | ||||||||||||
| Net income per share - basic | $ |
0.66 |
$ |
1.30 |
$ |
1.40 |
$ |
2.15 |
||||
| Weighted average shares outstanding - basic |
|
11,662 |
|
11,569 |
|
11,663 |
|
11,570 |
||||
| Net income per share - diluted | $ |
0.66 |
$ |
1.30 |
$ |
1.40 |
$ |
2.15 |
||||
| Weighted average shares outstanding - diluted |
|
11,662 |
|
11,572 |
|
11,663 |
|
11,572 |
||||
Olympic Steel, Inc. Balance Sheets (in thousands) |
||||||||
| As of June 30, 2024 |
As of December 31, 2023 |
|||||||
| Assets | ||||||||
| Cash and cash equivalents | $ |
9,443 |
|
$ |
13,224 |
|
||
| Accounts receivable, net |
|
216,682 |
|
|
191,149 |
|
||
| Inventories, net (includes LIFO reserves of $11,443 and $12,043 as of June 30, 2024 and December 31, 2023, respectively) |
|
386,240 |
|
|
386,535 |
|
||
| Prepaid expenses and other |
|
10,725 |
|
|
12,261 |
|
||
| Total current assets |
|
623,090 |
|
|
603,169 |
|
||
| Property and equipment, at cost |
|
495,879 |
|
|
483,448 |
|
||
| Accumulated depreciation |
|
(308,685 |
) |
|
(297,340 |
) |
||
| Net property and equipment |
|
187,194 |
|
|
186,108 |
|
||
| Goodwill |
|
52,091 |
|
|
52,091 |
|
||
| Intangible assets, net |
|
90,474 |
|
|
92,621 |
|
||
| Other long-term assets |
|
19,150 |
|
|
16,466 |
|
||
| Right of use asset, net |
|
34,297 |
|
|
34,380 |
|
||
| Total assets | $ |
1,006,296 |
|
$ |
984,835 |
|
||
| Liabilities | ||||||||
| Accounts payable | $ |
119,104 |
|
$ |
119,718 |
|
||
| Accrued payroll |
|
20,545 |
|
|
30,113 |
|
||
| Other accrued liabilities |
|
19,084 |
|
|
22,593 |
|
||
| Current portion of lease liabilities |
|
6,582 |
|
|
7,813 |
|
||
| Total current liabilities |
|
165,315 |
|
|
180,237 |
|
||
| Credit facility revolver |
|
209,186 |
|
|
190,198 |
|
||
| Other long-term liabilities |
|
23,281 |
|
|
20,151 |
|
||
| Deferred income taxes |
|
10,613 |
|
|
11,510 |
|
||
| Lease liabilities |
|
28,448 |
|
|
27,261 |
|
||
| Total liabilities |
|
436,843 |
|
|
429,357 |
|
||
| Shareholders' Equity | ||||||||
| Preferred stock |
|
- |
|
|
- |
|
||
| Common stock |
|
137,541 |
|
|
136,541 |
|
||
| Accumulated other comprehensive loss |
|
- |
|
|
41 |
|
||
| Retained earnings |
|
431,912 |
|
|
418,896 |
|
||
| Total shareholders' equity |
|
569,453 |
|
|
555,478 |
|
||
| Total liabilities and shareholders' equity | $ |
1,006,296 |
|
$ |
984,835 |
|
||
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 June 30, | ||||||||||||||||||||
| Carbon Flat Products | Specialty Metals Flat Products | Tubular and Pipe Products | ||||||||||||||||||
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
|||||||||||||||
| Tons sold 1 |
|
229,090 |
|
226,275 |
|
31,695 |
|
28,711 |
|
N/A |
|
|
N/A |
|
||||||
| Net sales | $ |
307,755 |
$ |
326,629 |
$ |
130,873 |
$ |
147,000 |
$ |
87,622 |
|
$ |
95,639 |
|
||||||
| Average selling price per ton |
|
1,343 |
|
1,444 |
|
4,129 |
|
5,120 |
|
N/A |
|
|
N/A |
|
||||||
| Cost of materials sold |
|
243,996 |
|
253,072 |
|
104,944 |
|
122,600 |
|
57,607 |
|
|
66,200 |
|
||||||
| Gross profit |
|
63,759 |
|
73,557 |
|
25,929 |
|
24,400 |
|
30,015 |
|
|
29,439 |
|
||||||
| Operating expenses |
|
58,398 |
|
58,862 |
|
18,080 |
|
17,721 |
|
23,518 |
|
|
20,068 |
|
||||||
| Operating income |
|
5,361 |
|
14,695 |
|
7,849 |
|
6,679 |
|
6,497 |
|
|
9,371 |
|
||||||
| Depreciation and amortization |
|
4,112 |
|
3,716 |
|
929 |
|
1,023 |
|
2,168 |
|
|
1,716 |
|
||||||
| LIFO (income) / expense |
|
- |
|
- |
|
- |
|
- |
|
(1,000 |
) |
|
(1,000 |
) |
||||||
| Six Months Ended June 30, | ||||||||||||||||||||
| Carbon Flat Products | Specialty Metals Flat Products | Tubular and Pipe Products | ||||||||||||||||||
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
|||||||||||||||
| Tons sold 1 |
|
448,765 |
|
444,613 |
|
61,598 |
|
61,227 |
|
N/A |
|
|
N/A |
|
||||||
| Net sales | $ |
608,730 |
$ |
636,447 |
$ |
260,407 |
$ |
313,564 |
$ |
183,755 |
|
$ |
192,333 |
|
||||||
| Average selling price per ton |
|
1,356 |
|
1,431 |
|
4,228 |
|
5,121 |
|
N/A |
|
|
N/A |
|
||||||
| Cost of materials sold |
|
479,611 |
|
501,508 |
|
212,534 |
|
260,313 |
|
121,940 |
|
|
132,687 |
|
||||||
| Gross profit |
|
129,119 |
|
134,939 |
|
47,873 |
|
53,251 |
|
61,815 |
|
|
59,646 |
|
||||||
| Operating expenses |
|
115,101 |
|
114,298 |
|
36,093 |
|
37,313 |
|
47,691 |
|
|
40,534 |
|
||||||
| Operating income |
|
14,018 |
|
20,641 |
|
11,780 |
|
15,938 |
|
14,124 |
|
|
19,112 |
|
||||||
| Depreciation and amortization |
|
8,193 |
|
7,323 |
|
1,917 |
|
2,007 |
|
4,416 |
|
|
3,309 |
|
||||||
| LIFO (income) / expense |
|
- |
|
- |
|
- |
|
- |
|
(600 |
) |
|
(1,000 |
) |
||||||
| 1 The Company does not report tons sold for McCullough Industries, EZ Dumper, or Metal-Fab in the Carbon Flat Products Segment, Shaw Stainless in the Specialty Metals Flat Products Segment or for the entire Tubular and Pipe Products Segment. | ||||||||||||||||||||
Other Information (in thousands, except per-share and ratio data) |
|||||||
| As of June 30, 2024 |
As of December 31, 2023 |
||||||
| Assets | |||||||
| Flat-products | $ |
665,840 |
|
$ |
649,744 |
||
| Tubular and pipe products |
|
339,175 |
|
|
333,677 |
||
| Corporate |
|
1,281 |
|
|
1,414 |
||
| Total assets | $ |
1,006,296 |
|
$ |
984,835 |
||
| Other information | |||||||
| As of June 30, 2024 |
As of December 31, 2023 |
||||||
| Shareholders' equity per share | $ |
51.15 |
|
$ |
49.90 |
||
| Debt to equity ratio | 0.37 to 1 | 0.34 to 1 | |||||
| Six Months Ended June 30, | |||||||
2024 |
2023 |
||||||
| Net cash from (used for) operating activities | $ |
(5,512 |
) |
$ |
79,196 |
||
| Cash dividends per share | $ |
0.30 |
|
$ |
0.25 |
||
