Olympic Steel Reports Record Second-Quarter 2021 Results

Rhea-AI Summary

Olympic Steel, Inc. (NASDAQ: ZEUS) reported record financial results for Q2 2021, achieving a net income of $29.6 million ($2.58 per diluted share), a significant turnaround from a loss of $6.5 million in Q2 2020. Sales soared to $556 million from $248 million year-over-year. Adjusted EBITDA reached $51.7 million, up from $0.5 million in Q2 2020. The company credits strong market conditions and a solid shipping volume return to pre-COVID levels. A quarterly cash dividend of $0.02 per share has been approved for payment on September 15, 2021.

Positive

• Record net income of $29.6 million in Q2 2021 compared to a loss of $6.5 million in Q2 2020.
• Sales increased to $556 million in Q2 2021 from $248 million in Q2 2020.
• Adjusted EBITDA reached $51.7 million, a significant increase from $0.5 million in the same quarter last year.
• Shipping volumes returned to pre-COVID levels, indicating strong operational recovery.
• Amended $475 million credit facility enhances financial flexibility and growth opportunities.
• Quarterly cash dividend of $0.02 per share approved, signaling confidence in future profitability.

Negative

• Adjusted net income per diluted share was impacted by $4.0 million LIFO pre-tax expense in Q2 2021.

Olympic Steel, Inc. (Nasdaq: ZEUS), a leading national metals service center, today announced record financial results for the three months ended June 30, 2021. Net income for the second quarter totaled $29.6 million, or $2.58 per diluted share, compared with a net loss of $6.5 million, or $0.56 per diluted share, in the second quarter of 2020. The results include $4.0 million of LIFO pre-tax expense in the second quarter of 2021, compared with $0.5 million of LIFO pre-tax income in the same period a year ago. Adjusted EBITDA for the second quarter of 2021 was $51.7 million, compared with $0.5 million in the second quarter of 2020.

The Company reported sales totaling $556 million for the second quarter of 2021, compared with $248 million in the second quarter of 2020.

“The second quarter of 2021 was the most profitable quarter in the history of Olympic Steel. Our strategic execution and ongoing focus on working capital and operating expenses, combined with exceptional markets and historically high metal prices, resulted in record quarterly adjusted EBITDA of $51.7 million and our second consecutive quarter of record sales. Our shipping volumes have returned to pre-COVID levels and we expect steady demand to continue in the third quarter despite our customers navigating persistent component shortages and other supply chain and labor constraints,” said Richard T. Marabito, Chief Executive Officer.

Marabito continued, “We are seeing the results of our long-term strategy to position Olympic Steel to deliver consistent profitability. We are optimistic about the future and, in the near term, anticipate a similarly strong third quarter. Our robust balance sheet was bolstered by our recently amended and extended $475 million credit facility to provide continued access to low-cost capital, financial flexibility and additional borrowing capacity to further pursue acquisition opportunities and our organic growth initiatives. We are hopeful that new infrastructure legislation will be passed this year and we are poised to be a key supplier to our customers who provide equipment and components that are critical to the nation’s roads, bridges and other infrastructure.”

The Board of Directors also approved a regular quarterly cash dividend of $0.02 per share, which is payable on September 15, 2021, to shareholders of record on September 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 (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 June 30,							Six Months Ended June 30,
		2021			2020				2021			2020
Net income (loss) per diluted share (GAAP):	$	2.58		$	(0.56	)		$	4.49		$	(0.51	)
Excluding the following items:
LIFO (income) / expense		0.26			(0.03	)			0.32			(0.06	)
Restructuring and other charges					0.22							0.22
Adjusted net income (loss) per diluted share (non-GAAP):	$	2.84		$	(0.38	)		$	4.81		$	(0.35	)

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 June 30,								Six Months Ended June 30,
		2021				2020				2021		2020
Net income (loss) (GAAP):	$	29,649			$	(6,454	)		$	51,657		$	(5,861	)
Excluding the following items:
Foreign exchange (income) loss included in net income		(1	)			26				9			43
Interest and other expenses on debt		2,017				1,891				3,671			4,130
Income tax provision (benefit)		10,772				(2,948	)			18,689			(2,746	)
Depreciation and amortization		5,272				4,927				10,508			9,840
Earnings before interest, taxes, depreciation and amortization (EBITDA)		47,709				(2,558	)			84,534			5,406
LIFO (income) / Expense		4,000				(500	)			5,000			(1,000	)
Restructuring and other charges:		-				3,586				-			3,586
Adjusted EBITDA (non-GAAP)	$	51,709			$	528			$	89,534		$	7,992

Conference Call and Webcast

A simulcast of Olympic Steel’s 2021 second-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 August 6, 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 imbalance of metal supply and end user demands related to the novel Corona Virus or COVID-19; 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 (Loss)
(in thousands, except per-share data)
		Three months ended							Six months ended
		June 30							June 30
			2021			2020				2021				2020
Net sales		$	556,077		$	248,296			$	1,019,201			$	602,676
Costs and expenses
Cost of materials sold (excludes items shown separately below)			428,704			196,237				783,368				478,759
Warehouse and processing			26,539			19,626				49,945				42,702
Administrative and general			26,463			17,011				49,517				36,070
Distribution			14,099			9,618				27,662				21,907
Selling			9,787			5,923				18,253				12,733
Occupancy			2,776			2,439				5,922				5,099
Depreciation			4,664			4,559				9,314				9,075
Amortization			608			368				1,194				765
Total costs and expenses			513,640			255,781				945,175				607,110
Operating income (loss)			42,437			(7,485	)			74,026				(4,434	)
Other income (loss), net			1			(26	)			(9	)			(43	)
Income (loss) before interest and income taxes			42,438			(7,511	)			74,017				(4,477	)
Interest and other expense on debt			2,017			1,891				3,671				4,130
Income (loss) before income taxes			40,421			(9,402	)			70,346				(8,607	)
Income tax provision (benefit)			10,772			(2,948	)			18,689				(2,746	)
Net income (loss)		$	29,649		$	(6,454	)		$	51,657			$	(5,861	)
Earnings per share:
Net income (loss) per share - basic		$	2.58		$	(0.56	)		$	4.50			$	(0.51	)
Weighted average shares outstanding - basic			11,492			11,446				11,491				11,445
Net income (loss) per share - diluted		$	2.58		$	(0.56	)		$	4.49			$	(0.51	)
Weighted average shares outstanding - diluted			11,504			11,446				11,501				11,445

Olympic Steel, Inc.
Balance Sheet
(in thousands)
		As of June 30, 2021				As of December 31, 2020
Assets
Cash and cash equivalents		$	11,636			$	5,533
Accounts receivable, net			264,451				151,601
Inventories, net (includes LIFO credit of $2,885 and LIFO debit of $2,115 as of June 30, 2021 and December 31, 2020 respectively)			373,277				240,001
Prepaid expenses and other			10,295				5,069
Total current assets			659,659				402,204
Property and equipment, at cost			434,506				434,579
Accumulated depreciation			(282,487	)			(277,379	)
Net property and equipment			152,019				157,200
Goodwill			5,234				5,123
Intangible assets, net			31,666				32,593
Other long-term assets			15,587				18,131
Right of use asset, net			23,524				25,354
Total assets		$	887,689			$	640,605
Liabilities
Accounts payable		$	154,390			$	87,291
Accrued payroll			24,913				10,985
Other accrued liabilities			31,542				22,869
Current portion of lease liabilities			5,525				5,580
Total current liabilities			216,370				126,725
Credit facility revolver			268,975				160,609
Other long-term liabilities			17,305				22,478
Deferred income taxes			12,968				9,818
Lease liabilities			18,251				19,965
Total liabilities			533,869				339,595
Shareholders' Equity
Preferred stock			-				-
Common stock			132,916				132,382
Accumulated other comprehensive loss			(3,153	)			(4,215	)
Retained earnings			224,057				172,843
Total shareholders' equity			353,820				301,010
Total liabilities and shareholders' equity		$	887,689			$	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 June 30,
		Carbon Flat Products							Specialty Metals Flat Products						Tubuluar and Pipe Products
			2021			2020				2021			2020			2021			2020
Tons sold			244,383			184,824				40,188			24,337			N/A			N/A
Net sales		$	325,511		$	140,811			$	138,035		$	54,495		$	92,531		$	52,990
Average selling price per ton			1,332			762				3,435			2,239			N/A			N/A
Cost of materials sold			249,934			114,925				107,587			45,083			71,183			36,229
Gross profit			75,577			25,886				30,448			9,412			21,348			16,761
Operating expenses			45,143			35,314				16,746			7,421			18,309			14,536
Operating income (loss)			30,434			(9,428	)			13,702			1,991			3,039			2,225
Depreciation and amortization			2,949			3,070				901			447			1,404			1,368
		Six months ended June 30,
		Carbon Flat Products							Specialty Metals Flat Products						Tubuluar and Pipe Products
			2021			2020				2021			2020			2021			2020
Tons sold			484,231			447,934				82,075			58,907			N/A			N/A
Net sales		$	571,884		$	343,778			$	264,354		$	142,983		$	182,963		$	115,915
Average selling price per ton			1,181			767				3,221			2,427			N/A			N/A
Cost of materials sold			434,106			278,062				211,121			121,318			138,141			79,379
Gross profit			137,778			65,716				53,233			21,665			44,822			36,536
Operating expenses			86,145			76,490				31,509			16,939			35,463			30,006
Operating income (loss)			51,633			(10,774	)			21,724			4,726			9,359			6,530
Depreciation and amortization			5,872			6,080				1,804			944			2,796			2,732
		As of June 30, 2021			As of December 31, 2020
Assets
Flat-products		$	640,826		$	404,269
Tubular and pipe products			246,185			235,516
Corporate			678			820
Total assets		$	887,689		$	640,605

Other information
(in thousands except per share data)
	As of June 30, 2021				As of December 31, 2020
Shareholders' equity per share	$	31.94			$	27.18
Debt to equity ratio		0.76 to 1				0.53 to 1
	Six Months Ended June 30,
		2021				2020
Net cash from (used for) operating activities		(95,744	)			3,512
Cash dividends per share	$	0.04			$	0.04

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805006138/en/

FAQ

What were Olympic Steel's Q2 2021 financial results?

Olympic Steel reported a net income of $29.6 million ($2.58 per diluted share) for Q2 2021, up from a loss of $6.5 million in Q2 2020.

How did Olympic Steel's sales perform in Q2 2021?

Sales for Q2 2021 totaled $556 million, a significant increase from $248 million in Q2 2020.

What is the adjusted EBITDA for Olympic Steel in Q2 2021?

Olympic Steel's adjusted EBITDA for Q2 2021 was $51.7 million, compared to $0.5 million in Q2 2020.

Did Olympic Steel declare any dividends in 2021?

Yes, Olympic Steel declared a quarterly cash dividend of $0.02 per share, payable on September 15, 2021.

What are the expectations for Olympic Steel's Q3 2021 performance?

Olympic Steel anticipates strong demand to continue in Q3 2021, driven by stable shipping volumes and market conditions.