ZEUS Olympic Steel Inc

Company’s diversification strategy continues to drive results in difficult market conditions

Company has the strategic focus and financial flexibility to further invest in organic and acquisitive growth opportunities 

Olympic Steel, Inc. (Nasdaq: ZEUS), a leading national metals service center, today announced financial results for the three months ended September 30, 2024.

Net income for the third quarter totaled $2.7 million, or $0.23 per diluted share, compared with net income of $12.2 million, or $1.06 per diluted share, in the third quarter of 2023. EBITDA for the third quarter of 2024 was $15.0 million, compared with $27.1 million in the third quarter of 2023. Both third-quarter 2024 and 2023 results include $2.0 million of LIFO pretax income.

The Company reported sales totaling $470 million in the third quarter of 2024, compared with $526 million in the third quarter of 2023, due primarily to year-over-year declines in metal pricing.

“Olympic Steel’s strategies for diversification enabled all three business segments to deliver EBITDA-positive results despite industry-wide pricing pressure,” said Richard T. Marabito, Chief Executive Officer. “Macroeconomic trends during the third quarter resulted in lower overall OEM contractual demand, pressuring margins across all segments. Despite these headwinds, we have remained profitable through our diversification into counter-cyclical steel-intensive end products, focusing on higher-margin opportunities such as flat-rolled coated products, and expansion of our fabrication capabilities.”

Marabito continued, “During the third quarter, we reduced our debt by approximately $12 million to $197 million, and we entered the fourth quarter with approximately $304 million of credit availability. In response to the ongoing uncertainty in the macroeconomic environment, we are closely managing our operating expenses, while continuing to invest in equipment automation and processing that will drive efficiency, productivity and future growth.”

Marabito concluded, “Overall, we believe the success of our acquisitions and our capital investments in key organic growth areas, has created a stronger and more resilient Olympic Steel. As we showed in the third quarter, we can deliver profitable results even in challenging times. We also have the strategic focus and financial flexibility to further invest in organic and acquisitive growth opportunities in steel-intensive end products, fabricating and automation to enhance our throughput, quality, safety and profitability. Despite near-term market challenges, we remain optimistic for the long-term outlook for Olympic Steel and our industry.”

The Board of Directors approved a regular quarterly cash dividend of $0.15 per share, which is payable on December 16, 2024, to shareholders of record as of December 2, 2024. The Company has paid a regular quarterly dividend since March 2006.

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 Nine Months Ended September 30, September 30,

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

  Net income per diluted share (GAAP)

$

0.23

 

$

1.06

 

$

1.64

 

$

3.21

 

  Excluding the following items LIFO income

 

(0.12

)

 

(0.13

)

 

(0.16

)

 

(0.19

)

Acquisition Inventory fair market value adjustment

 

-

 

 

-

 

 

-

 

 

0.13

 

Acquisition related expenses

 

-

 

 

-

 

 

-

 

 

0.16

 

Employee retention credit

 

-

 

 

(0.25

)

 

-

 

 

(0.25

)

  Adjusted net income per diluted share (non-GAAP)

$

0.11

 

$

0.68

 

$

1.48

 

$

3.06

 

 

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 Nine Months Ended September 30, September 30,

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

  Net income (GAAP):

$

2,734

 

$

12,230

 

$

19,091

 

$

37,121

 

Excluding the following items Other loss, net

 

26

 

 

28

 

 

66

 

 

67

 

Interest and other expense on debt

 

3,880

 

 

3,953

 

 

12,283

 

 

12,379

 

Income tax provision

 

1,169

 

 

4,674

 

 

7,417

 

 

14,813

 

Depreciation and amortization

 

7,234

 

 

6,185

 

 

21,795

 

 

18,859

 

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

 

15,043

 

 

27,070

 

 

60,652

 

 

83,239

 

  LIFO income

 

(2,000

)

 

(2,000

)

 

(2,600

)

 

(3,000

)

Acquisition Inventory fair market value adjustment

 

-

 

 

-

 

 

-

 

 

2,079

 

Acquisition related expenses

 

-

 

 

-

 

 

-

 

 

2,556

 

Employee retention credit

 

-

 

 

(4,000

)

 

-

 

 

(4,000

)

Adjusted EBITDA (non-GAAP)

$

13,043

 

$

21,070

 

$

58,052

 

$

80,874

 

Conference Call and Webcast

A simulcast of Olympic Steel’s 2024 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 1, 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; 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; supply disruptions and inflationary pressures, including the availability and rising costs of transportation, energy, logistical services and labor; 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; supplier consolidation or addition of new capacity; risks associated with the war in 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; risks associated with shortages of skilled labor, increased labor costs and our ability to attract and retain qualified 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; rising interest rates and their impacts on our variable interest rate debt; customer, supplier and competitor consolidation, bankruptcy or insolvency; cyclicality and volatility within the metals industry; the timing and outcomes of inventory lower of cost or net realizable value adjustments and LIFO income or expense; 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 impacts of union organizing activities and the success of union contract renewals; 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; 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 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, valves and fittings; tin plate and manufactured products. The Company was founded in 1954 and operates from 47 locations across 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 Nine Months Ended September 30, September 30,

2024

 

2023

 

2024

 

2023

  Net sales

$

469,996

$

526,411

$

1,522,888

$

1,668,755

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

 

363,144

 

414,480

 

1,177,229

 

1,308,988

Warehouse and processing

 

31,719

 

28,954

 

97,855

 

91,125

Administrative and general

 

28,226

 

26,181

 

87,545

 

91,047

Distribution

 

16,881

 

16,342

 

51,101

 

51,531

Selling

 

10,721

 

9,587

 

35,458

 

30,373

Occupancy

 

4,262

 

3,797

 

13,048

 

12,452

Depreciation

 

5,740

 

5,008

 

17,585

 

15,330

Amortization

 

1,494

 

1,177

 

4,210

 

3,529

  Total costs and expenses

 

462,187

 

505,526

 

1,484,031

 

1,604,375

  Operating income

 

7,809

 

20,885

 

38,857

 

64,380

  Other loss, net

 

26

 

28

 

66

 

67

  Income before interest and income taxes

 

7,783

 

20,857

 

38,791

 

64,313

  Interest and other expense on debt

 

3,880

 

3,953

 

12,283

 

12,379

  Income before income taxes

 

3,903

 

16,904

 

26,508

 

51,934

  Income tax provision

 

1,169

 

4,674

 

7,417

 

14,813

  Net income

$

2,734

$

12,230

$

19,091

$

37,121

    Earnings per share:   Net income per share - basic

$

0.23

$

1.06

$

1.64

$

3.21

  Weighted average shares outstanding - basic

 

11,695

 

11,586

 

11,673

 

11,568

  Net income per share - diluted

$

0.23

$

1.06

$

1.64

$

3.21

  Weighted average shares outstanding - diluted

 

11,695

 

11,592

 

11,673

 

11,571

Olympic Steel, Inc.

Balance Sheets

(in thousands)

  As ofSeptember 30, 2024 As ofDecember 31, 2023 Assets   Cash and cash equivalents

$

11,116

 

$

13,224

 

Accounts receivable, net

 

197,592

 

 

191,149

 

Inventories, net (includes LIFO reserves of $9,443 and $12,043 as of September 30, 2024 and December 31, 2023, respectively)

 

399,394

 

 

386,535

 

Prepaid expenses and other

 

14,306

 

 

12,261

 

  Total current assets

 

622,408

 

 

603,169

 

  Property and equipment, at cost

 

506,631

 

 

483,448

 

Accumulated depreciation

 

(313,775

)

 

(297,340

)

  Net property and equipment

 

192,856

 

 

186,108

 

  Goodwill

 

52,091

 

 

52,091

 

Intangible assets, net

 

89,342

 

 

92,621

 

Other long-term assets

 

19,642

 

 

16,466

 

Right of use asset, net

 

35,672

 

 

34,380

 

  Total assets

$

1,012,011

 

$

984,835

 

  Liabilities   Accounts payable

$

125,342

 

$

119,718

 

Accrued payroll

 

23,366

 

 

30,113

 

Other accrued liabilities

 

22,569

 

 

22,593

 

Current portion of lease liabilities

 

5,671

 

 

7,813

 

  Total current liabilities

 

176,948

 

 

180,237

 

  Credit facility revolver

 

197,276

 

 

190,198

 

Other long-term liabilities

 

24,810

 

 

20,151

 

Deferred income taxes

 

11,571

 

 

11,510

 

Lease liabilities

 

30,796

 

 

27,261

 

  Total liabilities

 

441,401

 

 

429,357

 

    Shareholders' Equity   Preferred stock

 

-

 

 

-

 

Common stock

 

138,040

 

 

136,541

 

Accumulated other comprehensive income (loss)

 

(408

)

 

41

 

Retained earnings

 

432,978

 

 

418,896

 

  Total shareholders' equity

 

570,610

 

 

555,478

 

  Total liabilities and shareholders' equity

$

1,012,011

 

$

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 September 30, Carbon Flat Products Specialty Metals Flat Products Tubular and Pipe Products

2024

 

2023

 

2024

 

2023

 

 

2024

 

 

 

2023

 

  Tons sold 1

 

204,211

 

207,145

 

29,738

 

27,936

 

N/A

 

 

N/A

 

  Net sales

$

264,849

$

304,478

$

125,693

$

132,763

$

79,454

 

$

89,170

 

Average selling price per ton

 

1,297

 

1,470

 

4,227

 

4,752

 

N/A

 

 

N/A

 

Cost of materials sold

 

208,093

 

242,532

 

103,450

 

111,622

 

51,601

 

 

60,326

 

Gross profit

 

56,756

 

61,946

 

22,243

 

21,141

 

27,853

 

 

28,844

 

Operating expenses

 

56,322

 

51,997

 

17,307

 

16,473

 

21,377

 

 

18,811

 

Operating income

 

434

 

9,949

 

4,936

 

4,668

 

6,476

 

 

10,033

 

  Depreciation and amortization

 

4,028

 

3,568

 

1,005

 

871

 

2,184

 

 

1,729

 

LIFO income

 

-

 

-

 

-

 

-

 

(2,000

)

 

(2,000

)

  Nine Months Ended September 30, Carbon Flat Products Specialty Metals Flat Products Tubular and Pipe Products

2024

 

2023

 

2024

 

2023

 

 

2024

 

 

 

2023

 

  Tons sold 1

 

652,976

 

651,758

 

91,336

 

89,163

 

N/A

 

 

N/A

 

  Net sales

$

873,579

$

940,925

$

386,100

$

446,327

$

263,209

 

$

281,503

 

Average selling price per ton

 

1,338

 

1,444

 

4,227

 

5,006

 

N/A

 

 

N/A

 

Cost of materials sold

 

687,704

 

744,040

 

315,984

 

371,935

 

173,541

 

 

193,013

 

Gross profit

 

185,875

 

196,885

 

70,116

 

74,392

 

89,668

 

 

88,490

 

Operating expenses

 

171,423

 

166,295

 

53,400

 

53,786

 

69,068

 

 

59,345

 

Operating income

 

14,452

 

30,590

 

16,716

 

20,606

 

20,600

 

 

29,145

 

  Depreciation and amortization

 

12,221

 

10,891

 

2,922

 

2,878

 

6,600

 

 

5,038

 

LIFO income

 

-

 

-

 

-

 

-

 

(2,600

)

 

(3,000

)

  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.       As ofSeptember 30,2024 As ofDecember 31,2023 Assets Flat-products

$

666,508

$

649,744

Tubular and pipe products

 

344,289

 

333,677

Corporate

 

1,214

 

1,414

Total assets

$

1,012,011

$

984,835

 

Other Information

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

 

 

As of September 30, 2024

As of December 31, 2023

Shareholders' equity per share

$

51.26

$

49.90

  Debt to equity ratio 0.35 to 1 0.34 to 1     Nine Months Ended September 30,

2024

2023

  Net cash from operating activities

$

19,114

$

120,999

  Cash dividends per share

$

0.45

$

0.38

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241030257177/en/

Richard A. Manson Chief Financial Officer (216) 672-0522 ir@olysteel.com