Olympic Steel Reports Third-Quarter 2024 Results

CLEVELAND--(BUSINESS WIRE)--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 of September 30, 2024				As of December 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 of September 30, 2024			As of December 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

Contacts

Richard A. Manson
Chief Financial Officer
[phone]
[e-mail]