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Olympic Steel Reports 2013 Third-Quarter and Nine-Month Results

October 31, 2013 06:30 AM Eastern Time
Board Declares Regular Quarterly Cash Dividend
CLEVELAND, Oct. 31, 2013 (GLOBE NEWSWIRE) — Olympic Steel, Inc.,(Nasdaq:ZEUS), a national metals service center, today announced financial results for the third quarter and nine months ended Sept. 30, 2013.

Third quarter net sales totaled $304.0 million, 11.3% lower than the $342.6 million reported in last year’s comparable quarter. For the nine months, net sales were $972.9 million, compared with $1.1 billion in the 2012 nine-month period-a decline of 10.9%.

Net income for the quarter was $1.3 million, or $0.12 per diluted share, compared with $1.6 million, or $0.15 per diluted share, in the third quarter of 2012. For the nine-month period, net income was $9.0 million, or $0.82 per diluted share, compared with $12.4 million, or $1.13 per diluted share, last year. LIFO income had a $0.14 per share positive impact on current year-to-date reported earnings.

“We continue to generate strong free cash flow and transition the business to higher-value products. During the quarter, we strengthened our balance sheet by further reducing outstanding debt using both cash generated from operations and enhanced working-capital management, which benefited from improved inventory turnover. In addition, gross margins expanded reflecting consistent profit on a per ton basis, despite market driven lower steel prices and shipments,” said Chairman and Chief Executive Officer Michael D. Siegal.

Mr. Siegal added, “The cost reduction actions that began late in the second quarter are now complete and have lowered annualized operating costs by more than $4 million. Coupled with ongoing initiatives to permanently lower structural costs and enhance operating efficiency, these efforts reflect our commitment to perpetually enhancing productivity.”

Olympic Steel’s Board of Directors approved a regular quarterly cash dividend of $0.02 per share, which is payable on Dec. 16, 2013, to shareholders of record on Dec. 2, 2013.

Conference Call and Webcast

A simulcast of Olympic Steel’s 2013 third-quarter earnings conference call can be accessed via the Investor Relations section of the Company’s website at The simulcast will begin at 10:00 a.m. Eastern Time today and a replay of the call will be available for the next 14 days.

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,” or “continue,” as well as the negative of these terms or other 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, including the ongoing effects of the global economic recovery; access to capital and global credit markets; 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; the cyclicality and volatility within the metals industry; the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability; the ability of our new locations to achieve expected results; events or circumstances that could adversely impact the successful operation of our processing equipment and operations; the ability to comply with the terms of our asset-based credit facility and to make the required term-loan payments; the ability of our customers to honor their agreements related to derivative instruments, including the outcome of the MF Global UK Limited administration process; customer, supplier, and competitor consolidation, bankruptcy or insolvency; reduced production schedules, layoffs or work stoppages by our own, our suppliers’ or our customers’ personnel; the success of union contract renewals; the availability and costs of transportation and logistical services; the amounts, successes and our ability to continue our capital investments and strategic growth initiatives and our business information system implementations; the successes of our strategic efforts and initiatives to increase sales volumes, maintain or improve working capital turnover and free cash flows, improve inventory turnover, improve our customer service, and achieve cost savings; the timing and outcome of inventory lower of cost or market adjustments; 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 last-in, first-out, or LIFO, inventory reserve; the adequacy of our existing information technology and business system software; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; our ability to generate free cash flow through operations and decreased future capital expenditures, reduce inventory 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 potential impairment charges; the enacted federal healthcare legislation’s impact on the healthcare benefits required to be provided by us and the impact of such legislation on our compensation and administrative costs; and unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters, including any developments that would require an increase in our costs for such contingencies. Further information on these and other risks and uncertainties is provided under Item 1A “Risk Factors” of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which disclosure is incorporated herein by reference, and elsewhere in reports that the Company files or furnishes with the SEC. This release speaks only as of its date and the Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. You are advised, however, to consult any further disclosures the Company makes on related subjects in its reports filed with or furnished to the SEC.

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 34 facilities in North America.

For additional information, please visit the Company’s website at or

-Financial Tables Follow-

Olympic Steel, Inc.
Results of Operations
(in thousands, except per-share data)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
2013 2012 2013 2012
(unaudited) (unaudited)
Net sales $303,990 $342,560 $972,858 $1,091,977
Costs and expenses
Cost of materials sold (exclusive of items shown below) 240,974 276,504 768,980 879,060
Warehouse and processing 20,953 21,667 63,019 63,892
Administrative and general 15,617 16,765 51,937 52,647
Distribution 8,739 8,682 26,694 26,960
Selling 5,986 7,085 18,942 20,989
Occupancy 2,200 2,057 7,121 6,495
Depreciation 5,124 4,953 15,718 14,636
Amortization 223 223 667 667
Total costs and expenses 299,816 337,936 953,078 1,065,346
Operating income 4,174 4,624 19,780 26,631
Other income (loss), net (1) 51 (18) 90
Income before interest and income taxes 4,173 4,675 19,762 26,721
Interest and other expense on debt 1,689 2,120 5,055 6,411
Income before income taxes 2,484 2,555 14,707 20,310
Income tax provision 1,144 916 5,678 7,915
Net income $1,340 $1,639 $9,029 $12,395
Net gain (loss) on interest rate hedge, net of tax 41 (165) (90) (568)
Total comprehensive income $1,381 $1,474 $8,939 $11,827
Earnings per share:
Net income per share – basic $0.12 $0.15 $0.82 $1.13
Weighted average shares outstanding – basic 11,066 10,961 11,061 10,958
Net income per share – diluted $0.12 $0.15 $0.82 $1.13
Weighted average shares outstanding – diluted 11,077 10,967 11,071 10,967
Olympic Steel, Inc.
Consolidated Balance Sheets
(in thousands)
As of Sept. 30, As of Dec. 31,
2013 2012
(unaudited) (audited)
Cash and cash equivalents $5,999 $7,782
Accounts receivable, net 131,478 112,841
Inventories, net (includes LIFO debit of $2,495 as of Sept. 30, 2013) 245,771 290,023
Prepaid expenses and other 11,749 11,731
 Total current assets 394,997 422,377
Property and equipment, at cost 358,169 347,935
Accumulated depreciation (165,044) (151,608)
 Net property and equipment 193,125 196,327
Goodwill 40,787 40,787
Intangible assets, net 34,757 35,424
Other long-term assets 14,043 11,079
 Total assets $677,709 $705,994
Current portion of long-term debt $13,090 $15,282
Accounts payable 101,050 101,471
Accrued payroll 9,460 10,705
Other accrued liabilities 19,294 14,984
 Total current liabilities 142,894 142,442
Credit facility revolver 145,745 177,575
Long-term debt 42,292 48,854
Other long-term liabilities 14,238 11,410
Deferred income taxes 32,583 35,856
 Total liabilities 377,752 416,137
Shareholders’ Equity
Preferred stock  —  —
Common stock 123,909 122,272
Accumulated other comprehensive loss (488) (579)
Retained earnings 176,536 168,164
 Total shareholders’ equity 299,957 289,857
 Total liabilities and shareholders’ equity $677,709 $705,994
Olympic Steel, Inc.
Segment Financial Information
(in thousands)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
(unaudited) (unaudited)
2013 2012 2013 2012
Net sales
 Flat products $248,463 $279,075 $791,655 $903,591
 Tubular and pipe products 55,527 63,485 181,203 188,386
Total net sales $303,990 $342,560 $972,858 $1,091,977
Depreciation and amortization
 Flat products $4,104 $3,969 $12,589 $11,791
 Tubular and pipe products 1,243 1,207 3,796 3,512
Total depreciation and amortization $5,347 $5,176 $16,385 $15,303
Operating income
 Flat products $2,624 $2,147 $12,429 $17,214
 Tubular and pipe products 3,297 3,992 13,066 14,881
 Corporate expenses (1,747) (1,515) (5,715) (5,464)
Total operating income $4,174 $4,624 $19,780 $26,631
 Other income (loss), net (1) 51 (18) 90
Income before interest and income taxes 4,173 4,675 19,762 26,721
 Interest and other expense on debt 1,689 2,120 5,055 6,411
Income before income taxes $2,484 $2,555 $14,707 $20,310
Capital expenditures
 Flat products $1,514 $3,983 $2,937 $14,715
 Tubular and pipe products 7,308 624 9,691 5,575
Total capital expenditures $8,849 $4,607 $12,628 $20,290
As of
Sept. 30, 2013 Dec. 31, 2012
(unaudited) (unaudited)
 Flat products $500 $500
 Tubular and pipe products 40,287 40,287
Total goodwill $40,787 $40,787
 Flat products $450,504 $480,487
 Tubular and pipe products 227,205 225,507
Total assets $677,709 $705,994
Olympic Steel, Inc.
Other Information
At Sept. 30, 2013 At Dec. 31, 2012
Shareholders’ equity per share $27.36 $26.54
Debt-to-equity ratio 0.67 to 1 0.83 to 1
Nine Months Ended
Sept. 30,
2013 2012
Cash dividends per share $0.06 $0.06

IR Contact:
Matthew J. Dennis, CFA
Olympic Steel Investor Relations
(216) 672-0552

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