Olympic Steel Reports Strong 2011 First Quarter Financial Results

May 06, 2011 12:00 AM Eastern Time
CLEVELAND, May 6, 2011 (GLOBE NEWSWIRE) — Olympic Steel, Inc., (Nasdaq:ZEUS), a national metals service center, today announced its financial results for the first quarter ended March 31, 2011.
Net sales for the first quarter of 2011 totaled $294.4 million, a 75.3% increase from the $167.9 million for the first quarter of 2010. Tons sold in the first quarter of 2011 increased 43.3% to 317 thousand from 221 thousand in the first quarter of 2010. First quarter 2011 net income totaled $10.3 million, or $0.94 per diluted share, compared to net income of $1.7 million, or $0.16 per diluted share, for last year’s first quarter.

Commenting on the results, Chairman and Chief Executive Officer Michael D. Siegal stated, “We are extremely pleased with our strong first quarter sales and earnings, our best quarterly results since the third quarter of 2008. We continue to gain market share, and we are experiencing strong momentum as the industrial recovery continues. Our first quarter shipments increased year over year by 43.3%, almost doubling the pace of the market increase in total steel shipments of 23.5%, as reported in the Metals Service Center Institute’s March 2011 Metals Activity Report. We have made timely investments during the economic downturn in new geographies and equipment to service our growing customer demands, including new location startups in Gary, Indiana; Mount Sterling, Kentucky; Monterrey, Mexico; and Kansas City, Missouri. Our healthy balance sheet, low debt levels and focus on cash turnover provide us with a strong foundation for continued growth and value creation as the market recovery strengthens.”

Olympic Steel’s Board of Directors approved a regular quarterly cash dividend of $0.02 per share to be paid to shareholders of record as of June 1, 2011, and distributed on June 15, 2011.

A simulcast of Olympic Steel’s 2011 first quarter earnings conference call may be accessed via the Investor Relations section of the Company’s website at www.olysteel.com. The simulcast will begin at 10:00 a.m. Eastern Time today and a replay of the call will be available for 14 days thereafter.

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. Headquartered in Cleveland, Ohio, the Company currently operates from 16 facilities. For further information, visit the Company’s web site at http://www.olysteel.com.

The Olympic Steel, Inc. logo is available at https://www.globenewswire.com/newsroom/prs/?pkgid=3582

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: the ability to successfully place the new Gary, Indiana facility in operation during the expected timeframe and achieve expected results; the success of our new startups in Gary, Indiana; Mount Sterling, Kentucky; Monterrey, Mexico; and Kansas City, Missouri; the ability to successfully integrate the newly leased locations or newly acquired businesses into our operations and achieve expected results; 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 and pricing of metal, industry shipping and inventory levels, and rapid fluctuations in customer demand and metal pricing; the cyclicality and volatility within the metal 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 customers 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 our customers’ personnel; the availability and costs of transportation and logistical services; equipment installation delays or malfunctions, including the new Gary, Indiana temper mill and cut-to-length line; 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, reduce costs and improve inventory turnover and improve our customer service; the timing and outcome of inventory lower of cost or market adjustments; the adequacy of our existing information technology and business system software; the successful implementation of our new information systems; the timing and outcome of our joint venture’s efforts and ability to liquidate its remaining real estate; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; and our ability to generate free cash flow through operations, reduce inventory and repay debt within anticipated timeframes; the recently 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. 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.

OLYMPICSTEEL
SELECTED FINANCIAL INFORMATION 
(in thousands, except per share data and ratios)
Three Months Ended
March 31,
2011 2010
SUMMARY RESULTS OF OPERATIONS: (unaudited)
Net sales  $ 294,381  $ 167,901
Operating income  17,313  3,329
Income before income taxes  16,508  2,823
Net income  $ 10,323  $ 1,711
Earnings per share:
 Net income per share – basic  $ 0.94  $ 0.16
 Net income per share – diluted  $ 0.94  $ 0.16
March 31, December 31,
2011 2010 2010
SUMMARY BALANCE SHEET DATA: (unaudited)  (audited)
Accounts receivable, net  $ 136,904  $ 81,940  $ 82,859
Inventories  198,910  129,274  200,606
Net property and equipment  122,599  112,556  118,234
Total assets  481,660  381,799  429,438
Current liabilities  116,214  89,174  102,625
Total debt  80,940  23,420  55,235
Shareholders’ equity  271,931  261,302  261,638
Shareholders’ equity per share  24.95  24.01  24.01
Debt-to-equity ratio  0.30 to 1  0.09 to 1  .21 to 1
Three Months Ended
March 31,
2011 2010
OTHER DATA: (unaudited)
Capital expenditures  7,903  2,262
Cash dividends per share  $ 0.02  $ 0.02

It is the Company’s policy not to make quarterly or annual sales or earnings projections for external use and not to endorse any analyst’s sales or earnings estimates.

OLYMPICSTEEL
RESULTS OF OPERATIONS
(in thousands, except per share and tonnage data)
Three Months Ended March 31,
2011 2010
(unaudited)
Tons sold
 Direct  294,887  201,025
 Toll  22,455  20,465
 317,342  221,490
 % change 43.3% 29.2%
Net sales  $ 294,381  $ 167,901
 % change 75.3% 19.2%
Costs and expenses
Cost of materials sold (excludes items shown separately below)  230,962 78.5%  132,536 78.9%
 Warehouse and processing  15,590 5.3%  10,572 6.3%
 Administrative and general  13,211 4.5%  8,885 5.3%
 Distribution  6,208 2.1%  4,057 2.4%
 Selling  5,804 2.0%  3,877 2.3%
 Occupancy  1,826 0.6%  1,399 0.8%
 Depreciation  3,467 1.2%  3,246 1.9%
 Total costs and expenses  277,068 94.1%  164,572 98.0%
 Operating income  17,313 5.9%  3,329 2.0%
Interest and other expense on debt  805 0.3%  506 0.3%
Income (loss) before income taxes  16,508 5.6%  2,823 1.7%
Income tax provision  6,185 37.5%  1,112 39.4%
Net income  $ 10,323  $ 1,711
Earnings per share:
 Net income per share – basic  $ 0.94  $ 0.16
 Weighted average shares outstanding – basic  10,935  10,905
 Net income per share – diluted  $ 0.94  $ 0.16
 Weighted average shares outstanding – diluted  10,945  10,918

It is the Company’s policy not to make quarterly or annual sales or earnings projections for external use and not to endorse any analyst’s sales or earnings estimates.

Richard T. Marabito
Chief Financial Officer
Telephone: (216) 292-3800
Fax: (216) 292-3974

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