Click Here for Third-Quarter 2021 Results WEBCAST

Olympic Steel Reports First-Quarter 2021 Results

Company reports record quarterly sales

Continued operating discipline and high metals pricing combine to deliver the most profitable first quarter in the Company’s history

CLEVELAND – Olympic Steel, Inc. (Nasdaq: ZEUS), a leading national metals service center, today announced financial results for the three months ended March 31, 2021.

Net income for the first quarter totaled $22.0 million, or $1.91 per diluted share, compared with net income of $0.6 million, or $0.05 per diluted share, in the first quarter of 2020. The results include $1.0 million of LIFO pre-tax expense in the first quarter of 2021, compared with $0.5 million of LIFO pre-tax income in the same period a year ago. Adjusted EBITDA for the first quarter of 2021 was $37.8 million, compared with $7.5 million in the first quarter of 2020.

The Company reported record sales for the first quarter of 2021, totaling $463 million, compared with $354 million in the first quarter of 2020.

“The strong momentum as we closed out 2020 continued in the first quarter of 2021. Favorable market conditions and record-high metals pricing, along with the disciplines we reinforced in 2020 to reduce operating expenses and improve inventory management, combined to deliver record financial performance,” said Richard T. Marabito, Chief Executive Officer. “All of our segments reported robust growth in profitability as strong demand from our end markets, combined with extended lead times to source metal, resulted in historic low inventories throughout the metals supply chain. We will continue to rely on our long-standing mill supply relationships and our strong cash conversion cycle disciplines to support our customers through this supply-constrained environment. We are proud of the hard work, dedication and safety focus of our entire team to deliver exceptional performance and value to our stakeholders.”

Marabito continued, “We are optimistic that we are in the early stages of a positive demand cycle, and Olympic Steel is in excellent position to benefit from a strengthening economy and the anticipated U.S. infrastructure build. We will maintain our operating expense and working capital disciplines to drive profitable growth in the near term, while continuing to execute our long-term strategy of business diversification by actively pursuing higher-return growth opportunities and additional acquisitions.”

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

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

 

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

March 31,

 

2021

 

2020

 

 

 

 

Net income per diluted share (GAAP):

$

1.91

 

$

0.05

 

 

 

 

Excluding the following items:

 

 

LIFO (income) / expense

 

0.06

 

(0.03

)

 

 

 

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

$

1.97

 

$

0.02

 

 

 

 

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

March 31,

 

2021

 

2020

 

 

 

Net income (GAAP):

$

22,008

 

$

593

 

 

 

 

Excluding the following items:

 

 

Foreign exchange loss included in net income

 

10

 

 

17

 

Interest and other expenses on debt

 

1,655

 

 

2,239

 

Income tax provision

 

7,917

 

 

202

 

Depreciation and amortization

 

5,235

 

 

4,913

 

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

 

36,825

 

 

7,964

 

LIFO (income) / expense

 

1,000

 

(500

)

Adjusted EBITDA (non-GAAP)

$

37,825

 

$

7,464

 

 

Conference Call and Webcast

A simulcast of Olympic Steel’s 2021 first-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 9 a.m. ET on May 7, 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 associated with supply chain disruption resulting from the COVID-related imbalance of metal supply and end user demands; 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; risks of falling metals prices and inventory devaluation; supply disruptions and inflationary pressures, including the availability and rising costs of transportation and logistical services and labor; 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 generate free cash flow through operations and repay debt; 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 36 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

(in thousands, except per-share data)

 

Three months ended

March 31,

2021

 

2020

 
Net sales

$

463,124

 

$

354,380

 

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

 

354,665

 

 

282,522

 

Warehouse and processing

 

23,407

 

 

23,076

 

Administrative and general

 

23,054

 

 

19,059

 

Distribution

 

13,562

 

 

12,289

 

Selling

 

8,466

 

 

6,810

 

Occupancy

 

3,145

 

 

2,660

 

Depreciation

 

4,650

 

 

4,516

 

Amortization

 

585

 

 

397

 

 
Total costs and expenses

 

431,534

 

 

351,329

 

 
Operating income

 

31,590

 

 

3,051

 

 
Other income (loss), net

 

(10

)

 

(17

)

 
Income before financing costs and income taxes

 

31,580

 

 

3,034

 

 
Interest and other expense on debt

 

1,655

 

 

2,239

 

 
Income (loss) before income taxes

 

29,925

 

 

795

 

 
Income tax provision

 

7,917

 

 

202

 

 
Net income (loss)

$

22,008

 

$

593

 

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

$

1.92

 

$

0.05

 

 
Weighted average shares outstanding – basic

 

11,490

 

 

11,444

 

 
Net income (loss) per share – diluted

$

1.91

 

$

0.05

 

 
Weighted average shares outstanding – diluted

 

11,496

 

 

11,459

 

 
Olympic Steel, Inc.
Balance Sheets
(in thousands)
 

As of

March 31,

2021

As of

December 31,

2020

Assets
 
Cash and cash equivalents

$

8,309

 

$

5,533

 

Accounts receivable, net

 

210,695

 

 

151,601

 

Inventories, net (includes LIFO debits of $1,115 and $2,115 as of March 31, 2021 and December 31, 2020, respectively)

 

278,174

 

 

240,001

 

Prepaid expenses and other

 

10,940

 

 

5,069

 

 
Total current assets

 

508,118

 

 

402,204

 

 
Property and equipment, at cost

 

436,850

 

 

434,579

 

Accumulated depreciation

 

(282,226

)

 

(277,379

)

 
Net property and equipment

 

154,624

 

 

157,200

 

 
Goodwill

 

5,234

 

 

5,123

 

Intangible assets, net

 

32,026

 

 

32,593

 

Other long-term assets

 

14,260

 

 

18,131

 

Right of use asset, net

 

24,097

 

 

25,354

 

 
Total assets

$

738,359

 

$

640,605

 

 
Liabilities
 
Accounts payable

$

122,485

 

$

87,291

 

Accrued payroll

 

15,661

 

 

10,985

 

Other accrued liabilities

 

29,830

 

 

22,869

 

Current portion of lease liabilities

 

5,436

 

 

5,580

 

 
Total current liabilities

 

173,412

 

 

126,725

 

 
Credit facility revolver

 

191,903

 

 

160,609

 

Other long-term liabilities

 

16,408

 

 

22,478

 

Deferred income taxes

 

13,968

 

 

9,818

 

Lease liabilities

 

18,893

 

 

19,965

 

 
Total liabilities

 

414,584

 

 

339,595

 

 
 
Shareholders’ Equity
 
Preferred stock

 

 

 

 

Common stock

 

132,644

 

 

132,382

 

Accumulated other comprehensive loss

 

(3,499

)

 

(4,215

)

Retained earnings

 

194,630

 

 

172,843

 

 
Total shareholders’ equity

 

323,775

 

 

301,010

 

 
Total liabilities and shareholders’ equity

$

738,359

 

$

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 March 31,

Carbon Flat Products

 

Specialty Metals Flat Products

 

Tubular and Pipe Products

2021

 

2020

 

2021

 

2020

 

2021

 

2020

 
Tons sold

 

239,848

 

 

263,110

 

 

41,887

 

 

34,570

 

 

N/A

 

 

N/A

 

 
Net sales

$

246,373

 

$

202,967

 

$

126,320

 

$

88,488

 

$

90,431

 

$

62,925

 

Average selling price per ton

 

1,027.20

 

 

771.41

 

 

3,015.73

 

 

2,559.68

 

 

N/A

 

 

N/A

 

Cost of materials sold

 

184,173

 

 

163,137

 

 

103,534

 

 

76,235

 

 

66,958

 

 

43,150

 

Gross profit

 

62,200

 

 

39,830

 

 

22,786

 

 

12,253

 

 

23,473

 

 

19,775

 

Operating expenses

 

41,000

 

 

41,176

 

 

14,764

 

 

9,518

 

 

17,153

 

 

15,470

 

Operating income (loss)

$

21,200

 

$

(1,346

)

$

8,022

 

$

2,735

 

$

6,320

 

$

4,305

 

 
Depreciation and amortization

$

2,923

$

3,010

$

903

$

497

$

1,391

$

1,364

 
 
As of March 31, 2021 As of December 31, 2020
Assets
Flat-products

$

495,002

 

$

404,269

 

Tubular and pipe products

 

242,607

 

 

235,516

 

Corporate

 

750

 

 

820

 

Total assets

$

738,359

 

$

640,605

 

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

As of

March 31,

2021

As of

December 31,

2020

Shareholders’ equity per share

$

29.24

 

$

27.18

 

 
Debt to equity ratio

0.59 to 1

0.53 to 1

 
 
Three Months Ended
March 31,

 

2021

 

 

2020

 

 
Net cash from (used for) operating activities

$

(25,720

)

$

(11,985

)

 
Cash dividends per share

$

0.02

 

$

0.02

 

 

Richard A. Manson

Chief Financial Officer

(216) 672-0522

ir@olysteel.com

Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Start typing and press Enter to search