Olympic Steel Reports Fourth-Quarter and Full-Year 2021 Results

Rhea-AI Summary

Olympic Steel, Inc. (Nasdaq: ZEUS) reported record earnings for Q4 and the full year 2021, showcasing robust financial health. Net income surged to $24.9 million in Q4 2021, up from $1.8 million in Q4 2020, with adjusted EBITDA rising to $51.1 million from $9.9 million. Full-year net income reached $121.1 million compared to a loss of $5.6 million in 2020. Sales doubled to $2.3 billion. The company announced a dividend increase from $0.02 to $0.09 per share, effective March 15, 2022. Management emphasized a diversification strategy that enhances profitability and reduces market cyclicality.

Positive

• Record net income of $24.9 million in Q4 2021, up from $1.8 million in Q4 2020.
• Full-year net income of $121.1 million in 2021, compared to a net loss of $5.6 million in 2020.
• Sales increased to $625 million in Q4 2021 and $2.3 billion for the full year, both representing substantial growth.
• Annual adjusted EBITDA jumped to $211.1 million from $22.1 million in 2020.
• Quarterly dividend raised from $0.02 to $0.09 per share, reflecting strong financial performance.
• Diversification strategy positions the company for consistent earnings through market cycles.

Negative

• LIFO pre-tax expense of $9.9 million in Q4 2021, compared to pre-tax income of $0.4 million in Q4 2020.
• Carbon segment prices began to decline in Q4 2021, indicating potential future revenue challenges.

Record-setting performance for the quarter is a strong finish to the most profitable year in Olympic Steel history

Diversification strategy positions Company to deliver more consistent earnings throughout market cycles

Quarterly dividend increased from $0.02 to $0.09 per share

CLEVELAND--(BUSINESS WIRE)-- Olympic Steel, Inc. (Nasdaq: ZEUS), a leading national metals service center, today announced record results for the three and 12 months ended December 31, 2021.

Fourth-Quarter Results

Net income for the fourth quarter totaled $24.9 million, or $2.16 per diluted share, compared with net income of $1.8 million, or $0.16 per diluted share, in the fourth quarter of 2020. The results include $9.9 million of LIFO pre-tax expense in the fourth quarter of 2021, compared with $0.4 million of LIFO pre-tax income in the same period a year ago. Adjusted EBITDA for the fourth quarter of 2021 was $51.1 million, compared with $9.9 million in the fourth quarter of 2020.

Sales for the fourth quarter of 2021 totaled $625 million, compared with $332 million in the fourth quarter of 2020.

Full-Year Results

Net income for 2021 totaled $121.1 million, or $10.52 per diluted share, compared with a net loss of $5.6 million, or $0.49 per diluted share, in 2020. The results include $21.9 million of LIFO pre-tax expense in 2021, compared with $1.5 million of LIFO pre-tax income in 2020. Adjusted EBITDA for 2021 was $211.1 million, compared with $22.1 million in 2020. Sales for 2021 totaled $2.3 billion compared with $1.2 billion in 2020.

“We achieved record sales and net income for the fourth quarter, a fitting capstone to a year of record-setting performance for Olympic Steel,” said Richard T. Marabito, Chief Executive Officer. “All three of our operating segments earned record EBITDA in 2021, reflecting not only strong market demand for our products but also the benefits of our diversification and acquisition strategy. At the same time, we remained focused on operational and working capital disciplines, including record inventory turns, which further enhanced our financial performance.”

Marabito continued, “The strategic actions we took in 2021 also strengthened our Company for the longer term, as we continue to diversify our business and expand into higher-return, value-added products. We sold our Detroit flat-rolled metal operations and assets in September and redeployed a portion of the proceeds into a higher-return growth opportunity through the purchase of Shaw Stainless and Alloy, our fifth acquisition since 2018. We also invested in automation, expanded in the growing Southeast and Southwest U.S. markets, and grew our share in the aluminum, stainless steel and pipe and tube markets.”

As the Company reported on February 18, 2022, the Board of Directors approved a regular quarterly cash dividend of $0.09 per share, which is an increase of $0.07 per share from the Company’s last dividend of $0.02 per share. The dividend is payable on March 15, 2022, to shareholders of record on March 1, 2022. The Company has paid a regular quarterly dividend since March 2006.

Marabito added, “As we begin 2022, we are well-positioned for a strong first quarter. The stainless steel, aluminum, and pipe and tube markets remain robust. Although prices in the carbon segment began to transition down in the fourth quarter, we are optimistic about business conditions in the first quarter of 2022. We are confident that our efforts to diversify and expand in higher-margin products will help Olympic Steel provide more consistent profitability and reduce the impact of market cyclicality on our financial performance.”

“We thank our entire team for their resilience and outstanding efforts in making 2021 a phenomenal year. We are especially pleased to share our success with our shareholders through a significantly higher quarterly dividend,” Marabito concluded.

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 (Loss) Per Diluted Share to Adjusted Net Income (Loss) 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							Twelve Months Ended
		12/31/2021			12/31/2020				12/31/2021				12/31/2020
Net income (loss) per diluted share (GAAP):		$	2.16		$	0.16			$	10.52			$	(0.49	)
Excluding the following items:
LIFO (Income) / Expense			0.63			(0.02	)			1.40				(0.09	)
Gain on Sale of Detroit Operations			-			-				(0.23	)			-
Restructuring and other charges			-			-				-				0.21
Adjusted net income (loss) per diluted share (non-GAAP):		$	2.79		$	0.14			$	11.69			$	(0.37	)

Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) The following table reconciles Adjusted EBITDA to the most directly comparable GAAP financial measure:
		Three Months Ended							Twelve Months Ended
		12/31/2021			12/31/2020				12/31/2021				12/31/2020
Net income (loss) (GAAP):		$	24,861		$	1,786			$	121,051			$	(5,595	)
Excluding the following items:
Foreign exchange loss included in net income			12			5				36				73
Interest and other expense on debt			2,013			1,588				7,631				7,411
Income tax provision (benefit)			9,394			1,991				43,748				(1,316	)
Depreciation and amortization			4,995			4,923				20,316				19,490
Earnings before interest, taxes, depreciation and
amortization (EBITDA)			41,275			10,293				192,782				20,063
LIFO (Income) / Expense			9,850			(417	)			21,850				(1,517	)
Gain on Sale of Detroit Operations			-			-				(3,499	)			-
Restructuring and other charges:			-			-				-				3,586
Adjusted EBITDA (non-GAAP)		$	51,125		$	9,876			$	211,133			$	22,132

Conference Call and Webcast

A simulcast of Olympic Steel’s 2021 fourth-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 February 25, 2022, 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; risks associated with supply chain disruption resulting from the imbalance of metal supply and end-user demands related to the novel coronavirus, or COVID-19, pandemic and other factors; supply disruptions and inflationary pressures, including the availability and rising costs of transportation and logistical services and labor; 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; 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 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 further diversify our business, deliver consistent profitability and enhance shareholder value, including, without limitation, our ability to successfully redeploy the proceeds from the sale of our Detroit operation and other capital; our ability to generate free cash flow through operations and repay debt; our ability to sell shares of our common stock under the at-the-market equity program; 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 an 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 41 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 (Loss) (in thousands, except per-share data)
		Three months ended								Twelve months ended
		December 31								December 31
		2021				2020				2021				2020
Net sales		$	624,586			$	331,547			$	2,312,253			$	1,234,144
Costs and expenses
Cost of materials sold (excludes items shown separately below)			497,818				260,373				1,802,052				979,099
Warehouse and processing			26,864				20,918				103,017				83,091
Administrative and general			30,289				18,874				104,617				71,451
Distribution			13,318				11,595				55,404				44,728
Selling			11,473				7,187				41,881				26,050
Occupancy			3,549				2,307				12,500				9,662
Depreciation			4,395				4,514				17,952				17,936
Amortization			600				409				2,364				1,554
Total costs and expenses			588,306				326,177				2,139,787				1,233,571
Operating income			36,280				5,370				172,466				573
Other loss, net			(12	)			(5	)			(36	)			(73	)
Income before interest and income taxes			36,268				5,365				172,430				500
Interest and other expense on debt			2,013				1,588				7,631				7,411
Income (loss) before income taxes			34,255				3,777				164,799				(6,911	)
Income tax provision (benefit)			9,394				1,991				43,748				(1,316	)
Net income (loss)		$	24,861			$	1,786			$	121,051			$	(5,595	)
Earnings per share:
Net income (loss) per share - basic		$	2.16			$	0.16			$	10.53			$	(0.49	)
Weighted average shares outstanding - basic			11,492				11,451				11,492				11,447
Net income (loss) per share - diluted		$	2.16			$	0.16			$	10.52			$	(0.49	)
Weighted average shares outstanding - diluted			11,510				11,475				11,503				11,447

Olympic Steel, Inc. Balance Sheets (in thousands)
		As of December 31, 2021				As of December 31, 2020
Assets
Cash and cash equivalents		$	9,812			$	5,533
Accounts receivable, net			284,570				151,601
Inventories, net (includes LIFO reserve of $19,736 and LIFO debit of $2,115 as of December 31, 2021 and December 31, 2020 respectively)			485,029				240,001
Prepaid expenses and other			9,989				5,069
Total current assets			789,400				402,204
Property and equipment, at cost			413,396				434,579
Accumulated depreciation			(266,340	)			(277,379	)
Net property and equipment			147,056				157,200
Goodwill			10,496				5,123
Intangible assets, net			33,653				32,593
Other long-term assets			15,241				18,131
Right of use asset, net			27,726				25,354
Total assets		$	1,023,572			$	640,605
Liabilities
Accounts payable		$	148,649			$	87,291
Accrued payroll			44,352				10,985
Other accrued liabilities			25,395				22,869
Current portion of lease liabilities			5,940				5,580
Total current liabilities			224,336				126,725
Credit facility revolver			327,764				160,609
Other long-term liabilities			15,006				22,478
Deferred income taxes			9,890				9,818
Lease liabilities			22,137				19,965
Total liabilities			599,133				339,595
Shareholders' Equity
Preferred stock			-				-
Common stock			133,427				132,382
Accumulated other comprehensive loss			(1,996	)			(4,215	)
Retained earnings			293,008				172,843
Total shareholders' equity			424,439				301,010
Total liabilities and shareholders' equity		$	1,023,572			$	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 December 31,
		Carbon Flat Products							Specialty Metals Flat Products						Tubular and Pipe Products
		2021			2020				2021			2020			2021				2020
Tons sold			192,545			225,576				34,529			34,031			N/A				N/A
Net sales		$	367,670		$	178,547			$	157,218		$	89,303		$	99,698			$	63,697
Average selling price per ton			1,910			792				4,553			2,624			N/A				N/A
Cost of materials sold			304,509			138,881				110,477			75,326			82,832				46,166
Gross profit			63,161			39,666				46,741			13,977			16,866				17,531
Operating expenses			41,884			37,577				22,584			9,485			21,226				15,786
Operating income (loss)			21,277			2,089				24,157			4,492			(4,360	)			1,745
Depreciation and amortization			2,716			3,009				1,030			494			1,232				1,402
LIFO expense (income)			-			-				-			-			9,850				(417	)
		Twelve months ended December 31,
		Carbon Flat Products							Specialty Metals Flat Products						Tubular and Pipe Products
		2021			2020				2021			2020			2021				2020
Tons sold			921,295			897,709				157,807			126,673			N/A				N/A
Net sales		$	1,344,150		$	690,273			$	585,751		$	313,190		$	382,352			$	230,681
Average selling price per ton			1,459			769				3,712			2,472			N/A				N/A
Cost of materials sold			1,059,620			551,788				441,825			266,434			300,607				160,877
Gross profit			284,530			138,485				143,926			46,756			81,745				69,804
Operating expenses			174,456			148,774				73,382			35,090			74,392				60,785
Operating income (loss)			110,074			(10,289	)			70,544			11,666			7,353				9,019
Depreciation and amortization			11,286			11,941				3,692			1,951			5,267				5,478
LIFO expense (income)			-			-				-			-			21,850				(1,517	)
		As of December 31, 2021			As of December 31, 2020
Assets
Flat-products		$	777,074		$	404,269
Tubular and pipe products			245,962			235,516
Corporate			536			820
Total assets		$	1,023,572		$	640,605

Other Information (in thousands, except per-share and ratio data)
(in thousands except per share data)		As of December 31, 2021				As of December 31, 2020
Shareholders' equity per share		$	38.31			$	27.18
Debt to equity ratio		0.77 to 1				0.53 to 1
		Twelve Months Ended December 31,
		2021				2020
Net cash from (used for) operating activities			(146,374	)			61,652
Cash dividends per share		$	0.08			$	0.08

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220223006297/en/

Richard A. Manson

Chief Financial Officer

(216) 672-0522

ir@olysteel.com

Source: Olympic Steel, Inc.

FAQ

What are Olympic Steel's Q4 2021 earnings per share?

Olympic Steel reported earnings of $2.16 per diluted share for Q4 2021.

How much did Olympic Steel's sales increase in 2021?

Sales for 2021 totaled $2.3 billion, doubling from $1.2 billion in 2020.

What is the new dividend per share announced by Olympic Steel?

The quarterly dividend was increased from $0.02 to $0.09 per share.

What was Olympic Steel's net income for the full year 2021?

Net income for 2021 totaled $121.1 million, a significant increase from a net loss of $5.6 million in 2020.

How did Olympic Steel's adjusted EBITDA change in 2021?

Adjusted EBITDA for 2021 rose to $211.1 million from $22.1 million in 2020.