ADVERTISEMENT
Press release content from Business Wire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Business Wire
Press release content from Business Wire. The AP news staff was not involved in its creation.

Olympic Steel Reports Record Third-Quarter 2021 Results

November 4, 2021 GMT

CLEVELAND--(BUSINESS WIRE)--Nov 4, 2021--

Olympic Steel, Inc. (Nasdaq: ZEUS), a leading national metals service center, today announced record quarterly financial results for the three months ended September 30, 2021. Net income for the third quarter totaled $44.5 million, or $3.87 per diluted share, compared with a net loss of $1.5 million, or $0.13 per diluted share, in the third quarter of 2020. The results include $7.0 million ($0.45 per share impact) of LIFO pre-tax expense in the third quarter of 2021, compared with $0.1 million of LIFO pre-tax income in the same period a year ago. Adjusted EBITDA for the third quarter of 2021 was $70.5 million, compared with $4.3 million in the third quarter of 2020.

The Company reported sales totaling $668 million for the third quarter of 2021, compared with $300 million in the third quarter of 2020.

“Our third-quarter financial results represent the best quarterly performance in Olympic Steel’s history. Sales, net income and EBITDA significantly exceeded our previous records set in the second quarter of this year,” said Richard T. Marabito, Chief Executive Officer.

ADVERTISEMENT

Marabito added, “We have continued to execute our long-term strategy to further diversify our business, deliver consistent profitability and enhance shareholder value. As part of that effort, on September 17, we announced the sale of our Detroit operations which were primarily focused on the distribution of flat-rolled carbon steel to domestic automakers and their related suppliers. We quickly redeployed a portion of that sale’s proceeds on October 1 to acquire Shaw Stainless & Alloy, Inc., a stainless steel distributor, fabricator and end-product manufacturer. The acquisition of Shaw Stainless is expected to replace the former Detroit operations earnings stream at a fraction of the investment. We also continue to make investments in processing equipment and automation to drive growth, operational efficiency and safety results.”

Marabito concluded, “Customer demand and our shipping volumes remain strong, despite continued supply chain disruptions. Our total shipments have outpaced the industry through the first three quarters of this year, particularly in our higher-margin product categories. As a result of the outstanding efforts of our entire team, the success of our acquisitions, our strong balance sheet and commitment to our long-term strategy, we remain well-positioned for a strong fourth quarter and our continued pursuit of higher-margin growth opportunities.”

The Board of Directors also approved a regular quarterly cash dividend of $0.02 per share, which is payable on December 15, 2021, to shareholders of record on December 1, 2021.

The table that follows provides a reconciliation of non-GAAP measures to the most directly comparable measures prepared in accordance with GAAP.

ADVERTISEMENT

Olympic Steel, Inc.

Reconciliation of Net Income (Loss) Per Diluted Share to

Adjusted Net Income (Loss) 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 EndedNine Months Ended
9/30/20219/30/20209/30/20219/30/2020
 
Net income per diluted share (GAAP):

$

3.87

 

$

(0.13

)

$

8.36

 

$

(0.64

)

Excluding the following items:
LIFO (Income) / Expense

 

0.45

 

 

(0.01

)

 

0.77

 

 

(0.07

)

Gain on Sale of Detroit Operations

 

(0.23

)

 

-

 

 

(0.23

)

 

-

 

Restructuring and other charges

 

-

 

 

-

 

 

-

 

 

0.21

 

 
Adjusted net income per diluted share (non-GAAP):

$

4.09

 

$

(0.14

)

$

8.90

 

$

(0.50

)

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands)

The following table reconciles Adjusted EBITDA to the most directly comparable GAAP financial measure:

 
Three Months EndedNine Months Ended
9/30/20219/30/20209/30/20219/30/2020
 
Net income (GAAP):

$

44,533

 

$

(1,520

)

$

96,190

 

$

(7,381

)

Excluding the following items:
Foreign exchange loss included in net income

 

15

 

 

25

 

 

24

 

 

68

 

Interest and other expense on debt

 

1,947

 

 

1,693

 

 

5,618

 

 

5,823

 

Income tax provision (benefit)

 

15,665

 

 

(561

)

 

34,354

 

 

(3,307

)

Depreciation and amortization

 

4,813

 

 

4,727

 

 

15,321

 

 

14,567

 

 
Earnings before interest, taxes, depreciation and
amortization (EBITDA)

 

66,973

 

 

4,364

 

 

151,507

 

 

9,770

 

 
LIFO (Income) / Expense

 

7,000

 

 

(100

)

 

12,000

 

 

(1,100

)

Gain on Sale of Detroit Operations

 

(3,499

)

 

-

 

 

(3,499

)

 

-

 

Restructuring and other charges

 

-

 

 

-

 

 

-

 

 

3,586

 

 
Adjusted EBITDA (non-GAAP)

$

70,474

 

$

4,264

 

$

160,008

 

$

12,256

 

Conference Call and Webcast

A simulcast of Olympic Steel’s 2021 third-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 November 5, 2021, 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; risks associated with supply chain disruption resulting from the imbalance of metal supply and end-user demands related to the novel coronavirus, or COVID-19, and other factors; supply disruptions and inflationary pressures, including the availability and rising costs of transportation and logistical services and labor; 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; risks associated with the COVID-19 pandemic, 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, 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, negative impacts on our liquidity position, inability to access our traditional financing sources on the same or reasonably similar terms as were available before the COVID-19 pandemic 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; general and global business, economic, financial and political conditions, including legislation passed under the new administration; 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; supplier consolidation or addition of additional capacity; customer, supplier and competitor consolidation, bankruptcy or insolvency; reduced production schedules, layoffs or work stoppages by our own, our suppliers’ or customers’ personnel; 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; cyclicality and volatility within the metals industry; the adequacy of our efforts to mitigate cyber security risks and threats, especially with employees working remotely due to the COVID-19 pandemic; 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; our ability to further diversify our business, deliver consistent profitability and enhance shareholder value, including, without limitation, our ability to successfully redeploy the proceeds from the sale of our Detroit operation and other capital; our ability to generate free cash flow through operations and repay debt; our ability to sell shares of our common stock under the at-the-market equity program; the adequacy of our existing information technology and business system software, including duplication and security processes; the amounts, successes and our ability to continue our capital investments and strategic growth initiatives, including acquisitions and our business information system implementations; 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; events or circumstances that could adversely impact the successful operation of our processing equipment and operations; rising interest rates and their impacts on our variable interest rate debt; 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; risks and uncertainties associated with intangible assets, including impairment charges related to indefinite lived intangible assets; the timing and outcomes of inventory lower of cost or net realizable value adjustments and last-in, first-out, or LIFO, income or expense; 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 LIFO inventory valuation; 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; 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 is a leading U.S. metals service center focused on the direct sale of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel, aluminum, tin plate, and metal-intensive branded products. The Company’s CTI subsidiary is a leading distributor of steel tubing, bar, pipe, valves and fittings, and fabricator of value-added parts and components. Headquartered in Cleveland, Ohio, Olympic Steel operates from 41 facilities in North America.

For additional information, please visit the Company’s website at www.olysteel.com.

Olympic Steel, Inc.

Consolidated Statements of Net Income (Loss)

(in thousands, except per-share data)

 

Three months ended

 

Nine months ended

September 30

 

September 30

2021

 

2020

 

2021

 

2020

 
Net sales

$

668,466

 

$

299,921

 

$

1,687,667

 

$

902,597

 

 
Costs and expenses
Cost of materials sold (excludes items shown separately below)

 

520,866

 

 

239,967

 

 

1,304,234

 

 

718,726

 

Warehouse and processing

 

26,208

 

 

19,471

 

 

76,153

 

 

62,173

 

Administrative and general

 

24,811

 

 

16,507

 

 

74,328

 

 

52,577

 

Distribution

 

14,424

 

 

11,226

 

 

42,086

 

 

33,133

 

Selling

 

12,155

 

 

6,130

 

 

30,408

 

 

18,863

 

Occupancy

 

3,029

 

 

2,256

 

 

8,951

 

 

7,355

 

Depreciation

 

4,243

 

 

4,347

 

 

13,557

 

 

13,422

 

Amortization

 

570

 

 

380

 

 

1,764

 

 

1,145

 

 
Total costs and expenses

 

606,306

 

 

300,284

 

 

1,551,481

 

 

907,394

 

 
Operating income (loss)

 

62,160

 

 

(363

)

 

136,186

 

 

(4,797

)

 
Other loss, net

 

(15

)

 

(25

)

 

(24

)

 

(68

)

 
Income (loss) before interest and income taxes

 

62,145

 

 

(388

)

 

136,162

 

 

(4,865

)

 
Interest and other expense on debt

 

1,947

 

 

1,693

 

 

5,618

 

 

5,823

 

 
Income (loss) before income taxes

 

60,198

 

 

(2,081

)

 

130,544

 

 

(10,688

)

 
Income tax provision (benefit)

 

15,665

 

 

(561

)

 

34,354

 

 

(3,307

)

 
Net income (loss)

$

44,533

 

$

(1,520

)

$

96,190

 

$

(7,381

)

 
 
Earnings per share:
 
Net income (loss) per share - basic

$

3.88

 

$

(0.13

)

$

8.37

 

$

(0.64

)

 
Weighted average shares outstanding - basic

 

11,492

 

 

11,452

 

 

11,491

 

 

11,447

 

 
Net income (loss) per share - diluted

$

3.87

 

$

(0.13

)

$

8.36

 

$

(0.64

)

 
Weighted average shares outstanding - diluted

 

11,515

 

 

11,452

 

 

11,509

 

 

11,447

 

Olympic Steel, Inc.
Balance Sheet

(in thousands)

 
As of
September 30,
2021
As of
December 31,
2020
Assets
 
Cash and cash equivalents

$

15,143

 

$

5,533

 

Accounts receivable, net

 

303,236

 

 

151,601

 

Inventories, net (includes LIFO credit of $9,885 and LIFO debit of $2,115 as of September 30, 2021 and December 31, 2020 respectively)

 

417,979

 

 

240,001

 

Prepaid expenses and other

 

12,459

 

 

5,069

 

 
Total current assets

 

748,817

 

 

402,204

 

 
Property and equipment, at cost

 

412,635

 

 

434,579

 

Accumulated depreciation

 

(265,360

)

 

(277,379

)

 
Net property and equipment

 

147,275

 

 

157,200

 

 
Goodwill

 

5,234

 

 

5,123

 

Intangible assets, net

 

31,307

 

 

32,593

 

Other long-term assets

 

15,203

 

 

18,131

 

Right of use asset, net

 

23,470

 

 

25,354

 

 
Total assets

$

971,306

 

$

640,605

 

 
Liabilities
 
Accounts payable

$

160,034

 

$

87,291

 

Accrued payroll

 

35,493

 

 

10,985

 

Other accrued liabilities

 

28,450

 

 

22,869

 

Current portion of lease liabilities

 

5,457

 

 

5,580

 

 
Total current liabilities

 

229,434

 

 

126,725

 

 
Credit facility revolver

 

297,880

 

 

160,609

 

Other long-term liabilities

 

16,620

 

 

22,478

 

Deferred income taxes

 

10,365

 

 

9,818

 

Lease liabilities

 

18,292

 

 

19,965

 

 
Total liabilities

 

572,591

 

 

339,595

 

 
 
Shareholders' Equity
 
Preferred stock

 

-

 

 

-

 

Common stock

 

133,174

 

 

132,382

 

Accumulated other comprehensive loss

 

(2,827

)

 

(4,215

)

Retained earnings

 

268,368

 

 

172,843

 

 
Total shareholders' equity

 

398,715

 

 

301,010

 

 
Total liabilities and shareholders' equity

$

971,306

 

$

640,605

 

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 September 30,

Carbon Flat Products

 

Specialty Metals Flat
Products

 

Tubular and Pipe
Products

2021

 

2020

 

2021

 

2020

 

2021

 

2020

 
Tons sold

 

244,519

 

224,199

 

 

41,203

 

33,735

 

N/A

 

N/A

 
Net sales

$

404,596

$

167,948

 

$

164,179

$

80,904

$

99,691

$

51,069

Average selling price per ton

 

1,655

 

749

 

 

3,985

 

2,398

 

N/A

 

N/A

Cost of materials sold

 

321,005

 

134,845

 

 

120,227

 

69,790

 

79,634

 

35,332

Gross profit

 

83,591

 

33,103

 

 

43,952

 

11,114

 

20,057

 

15,737

Operating expenses

 

46,427

 

34,707

 

 

19,289

 

8,666

 

17,703

 

14,993

Operating income (loss)

 

37,164

 

(1,604

)

 

24,663

 

2,448

 

2,354

 

744

 
Depreciation and amortization

 

2,698

 

2,852

 

 

858

 

513

 

1,239

 

1,344

 
 
Nine months ended September 30,

Carbon Flat Products

 

Specialty Metals Flat
Products

 

Tubular and Pipe
Products

2021

 

2020

 

2021

 

2020

 

2021

 

2020

 
Tons sold

 

728,750

 

672,133

 

 

123,278

 

92,642

 

N/A

 

N/A

 
Net sales

$

976,480

$

511,726

 

$

428,533

$

223,887

$

282,654

$

166,984

Average selling price per ton

 

1,340

 

761

 

 

3,476

 

2,417

 

N/A

 

N/A

Cost of materials sold

 

755,111

 

412,907

 

 

331,348

 

191,108

 

217,775

 

114,711

Gross profit

 

221,369

 

98,819

 

 

97,185

 

32,779

 

64,879

 

52,273

Operating expenses

 

132,572

 

111,197

 

 

50,798

 

25,605

 

53,166

 

44,999

Operating income (loss)

 

88,797

 

(12,378

)

 

46,387

 

7,174

 

11,713

 

7,274

 
Depreciation and amortization

 

8,570

 

8,932

 

 

2,662

 

1,457

 

4,035

 

4,076

 
As of
September 30,
2021
As of
December 31,
2020
Assets
Flat-products

$

721,133

$

404,269

 

Tubular and pipe products

 

249,566

 

235,516

 

Corporate

 

607

 

820

 

Total assets

$

971,306

$

640,605

 

 

Other Information

(in thousands, except per-share and ratio data)

 
As of
September 30,
2021
As of
December 31,
2020
Shareholders' equity per share

$

35.99

 

$

27.18

 
Debt to equity ratio0.75 to 10.53 to 1
 
 
Nine Months Ended September 30,

2021

2020

 
Net cash from (used for) operating activities

 

(126,937

)

 

28,653

 
Cash dividends per share

$

0.06

 

$

0.06

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20211104006325/en/

CONTACT: Richard A. Manson

Chief Financial Officer

(216) 672-0522

ir@olysteel.com

KEYWORD: OHIO UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: STEEL MANUFACTURING

SOURCE: Olympic Steel, Inc.

Copyright Business Wire 2021.

PUB: 11/04/2021 04:30 PM/DISC: 11/04/2021 04:32 PM

http://www.businesswire.com/news/home/20211104006325/en