Olympic Steel Reports Second-Quarter 2022 Results

Rhea-AI Summary

Olympic Steel, Inc. (Nasdaq: ZEUS) reported impressive second-quarter results for 2022, with net income reaching $37.6 million or $3.26 per diluted share, compared to $29.6 million or $2.58 a year ago. The record quarterly sales totaled $709 million, up from $556 million in Q2 2021. Adjusted EBITDA also rose to $58.8 million from $51.7 million. The company continues to expand its operations and recently announced a quarterly cash dividend increase to $0.09 per share. Despite declining metal prices, management remains optimistic about demand and earnings.

Positive

• Record quarterly sales of $709 million, up from $556 million year-over-year.
• Net income increased to $37.6 million, or $3.26 per diluted share, compared to $29.6 million or $2.58 in the previous year.
• Adjusted EBITDA rose to $58.8 million from $51.7 million year-over-year.
• The board approved an increase in the quarterly cash dividend to $0.09 per share.

Negative

• Declining metal pricing observed during the third quarter.

Company achieves record quarterly sales and delivers the second-most-profitable quarter in its history

CLEVELAND--(BUSINESS WIRE)-- Olympic Steel, Inc. (Nasdaq: ZEUS), a leading national metals service center, today announced financial results for the three months ended June 30, 2022.

Net income for the second quarter totaled $37.6 million, or $3.26 per diluted share, compared with net income of $29.6 million, or $2.58 per diluted share, in the second quarter of 2021. The results include no LIFO adjustment in the second quarter of 2022, compared with $4.0 million of LIFO expense in the same period a year ago. Adjusted EBITDA for the second quarter of 2022 was $58.8 million, compared with $51.7 million in the second quarter of 2021.

The Company reported all-time record quarterly sales of $709 million in the second quarter of 2022, compared to $556 million in the second quarter of 2021.

“The continued strength of our three business segments in the second quarter drove another record-breaking performance for Olympic Steel. We achieved all-time record quarterly sales surpassing our first-quarter 2022 results to deliver the second-most-profitable quarter in the Company’s history,” said Richard T. Marabito, Chief Executive Officer. “Our success is rooted in our expansion into higher-return, value-added products, our five successful acquisitions over the past four years and our disciplined approach to working capital and expense management. During the second quarter, Specialty Metals achieved record quarterly sales and earnings, Pipe and Tube continued its run of strong results, and our Carbon Flat business delivered strong EBITDA.”

Marabito continued, “We are excited to advance our capital deployment strategy, making meaningful investments in all three of our business segments to expand our capacity to serve our growing customer base and enhance our returns. These investments include the addition of a second automotive stamping line in Winder, Georgia, a new leased 80,000-square-foot white metals fabrication facility in Bartlett, Illinois, and a 30,000-square-foot expansion of our Pipe and Tube facility in Des Moines, Iowa. We are also investing in automation and actively seeking additional acquisitions to further diversify our business by expanding our higher-return, value-added product and processing portfolio.

“While metal pricing is declining during the third quarter, we remain optimistic regarding underlying demand and our ability to consistently produce earnings in all market cycles,” Marabito concluded.

The Board of Directors approved a regular quarterly cash dividend of $0.09 per share, which is payable on September 15, 2022, to shareholders of record on September 1, 2022. The Company has paid a regular quarterly dividend since March 2006. The Company raised its quarterly dividend from $0.02 per share to $0.09 per share in March 2022.

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								Six months ended
		June 30,								June 30,
		2022				2021				2022				2021
Net income per diluted share		$	3.26			$	2.58			$	6.49			$	4.49
Excluding the following items
LIFO Expense			-				0.26				-				0.32
Gain on Sale of Milan Warehouse			-				-				(0.13	)			-
Adjusted net income (loss) per diluted share (non-GAAP)		$	3.26			$	2.84			$	6.36			$	4.81

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								Six Months Ended
		6/30/2022				6/30/2021				6/30/2022				6/30/2021
Net income (GAAP):		$	37,624			$	29,649			$	74,926			$	51,657
Excluding the following items:
Foreign exchange (income) loss included in net income			15				(1	)			21				9
Interest and other expense on debt			2,271				2,017				4,269				3,671
Income tax provision			13,955				10,772				27,771				18,689
Depreciation and amortization			4,946				5,272				9,928				10,508
Earnings before interest, taxes, depreciation and amortization (EBITDA)			58,811				47,709				116,915				84,534
LIFO Expense			-				4,000				-				5,000
Gain on Sale of Milan Warehouse			-				-				(2,083	)			-
Adjusted EBITDA (non-GAAP)		$	58,811			$	51,709			$	114,832			$	89,534

Conference Call and Webcast

A simulcast of Olympic Steel’s 2022 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 5, 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; supply disruptions and inflationary pressures, including the availability and rising costs of transportation and logistical services and labor; 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, including additional shutdowns in large markets, such as China, and other factors; risks associated with shortages of skilled labor, increased labor costs and our ability to attract and retain qualified personnel; risks associated with the invasion of Ukraine, including economic sanctions, or additional war or military conflict, could adversely affect global metals supply and pricing; rising interest rates and their impacts on our variable interest rate debt; 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; 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 LIFO inventory valuation; 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; general and global business, economic, financial and political conditions, including legislation passed under the current 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; 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; 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 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; 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; 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 42 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
(in thousands, except per-share data)
		Three months ended								Six months ended
		June 30								June 30
		2022				2021				2022				2021
Net sales		$	709,176			$	556,077			$	1,405,509			$	1,019,201
Costs and expenses
Cost of materials sold (excludes items shown separately below)			560,546				428,704				1,115,653				783,368
Warehouse and processing			27,624				26,539				51,672				49,945
Administrative and general			31,969				26,463				61,591				49,517
Distribution			16,441				14,099				31,482				27,662
Selling			10,494				9,787				21,316				18,253
Occupancy			3,291				2,776				6,880				5,922
Depreciation			4,354				4,664				8,704				9,314
Amortization			592				608				1,224				1,194
Total costs and expenses			655,311				513,640				1,298,522				945,175
Operating income			53,865				42,437				106,987				74,026
Other income (loss), net			(15	)			1				(21	)			(9	)
Income before interest and income taxes			53,850				42,438				106,966				74,017
Interest and other expense on debt			2,271				2,017				4,269				3,671
Income before income taxes			51,579				40,421				102,697				70,346
Income tax provision			13,955				10,772				27,771				18,689
Net income		$	37,624			$	29,649			$	74,926			$	51,657
Earnings per share:
Net income per share - basic		$	3.26			$	2.58			$	6.49			$	4.50
Weighted average shares outstanding - basic			11,538				11,492				11,536				11,491
Net income per share - diluted		$	3.26			$	2.58			$	6.49			$	4.49
Weighted average shares outstanding - diluted			11,545				11,504				11,540				11,501

Olympic Steel, Inc.
Balance Sheets
(in thousands)
		As of June 30, 2022				As of December 31, 2021
Assets
Cash and cash equivalents		$	8,446			$	9,812
Accounts receivable, net			320,917				284,570
Inventories, net (includes LIFO reserves of $19,736 as of June 30, 2022 and December 31, 2021 respectively)			511,135				485,029
Prepaid expenses and other			14,398				9,989
Total current assets			854,896				789,400
Property and equipment, at cost			419,732				413,396
Accumulated depreciation			(272,786	)			(266,340	)
Net property and equipment			146,946				147,056
Goodwill			10,496				10,496
Intangible assets, net			32,844				33,653
Other long-term assets			13,427				15,241
Right of use asset, net			27,507				27,726
Total assets		$	1,086,116			$	1,023,572
Liabilities
Accounts payable		$	182,410			$	148,649
Accrued payroll			34,660				44,352
Other accrued liabilities			21,402				25,395
Current portion of lease liabilities			6,127				5,940
Total current liabilities			244,599				224,336
Credit facility revolver			287,880				327,764
Other long-term liabilities			11,439				15,006
Deferred income taxes			20,790				9,890
Lease liabilities			21,849				22,137
Total liabilities			586,557				599,133
Shareholders' Equity
Preferred stock			-				-
Common stock			134,089				133,427
Accumulated other comprehensive loss			(462	)			(1,996	)
Retained earnings			365,932				293,008
Total shareholders' equity			499,559				424,439
Total liabilities and shareholders' equity		$	1,086,116			$	1,023,572

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								Tubular and Pipe Products
		2022				2021				2022				2021				2022				2021
Tons sold			210,604				244,383				38,386				40,188				N/A				N/A
Net sales		$	370,665			$	325,511			$	226,964			$	138,035			$	111,547			$	92,531
Average selling price per ton			1,760				1,332				5,913				3,435				N/A				N/A
Cost of materials sold			310,633				249,934				164,441				107,587				85,472				71,183
Gross profit			60,032				75,577				62,523				30,448				26,075				21,348
Operating expenses			44,414				45,143				26,050				16,746				18,775				18,309
Operating income			15,618				30,434				36,473				13,702				7,300				3,039
Depreciation and amortization			2,698				2,949				1,008				901				1,222				1,404
LIFO expense			-				-				-				-				-				4,000
		Three months ended March 31,
		Carbon Flat Products								Specialty Metals Flat Products								Tubular and Pipe Products
		2022				2021				2022				2021				2022				2021
Tons sold			416,687				484,231				76,830				82,075				N/A				N/A
Net sales		$	750,214			$	571,884			$	426,443			$	264,354			$	228,852			$	182,963
Average selling price per ton			1,800				1,181				5,550				3,221				N/A				N/A
Cost of materials sold			638,346				434,106				305,431				211,121				171,876				138,141
Gross profit			111,868				137,778				121,012				53,233				56,976				44,822
Operating expenses			86,375				86,145				50,455				31,509				35,094				35,463
Operating income			25,493				51,633				70,557				21,724				21,882				9,359
Depreciation and amortization			5,372				5,872				2,013				1,804				2,508				2,796
LIFO expense			-				-				-				-				-				5,000
		As of June 30, 2022				As of December 31, 2021
Assets
Flat-products		$	828,286			$	777,074
Tubular and pipe products			257,402				245,962
Corporate			428				536
Total assets		$	1,086,116			$	1,023,572

Other Information
(in thousands, except per-share and ratio data)
(in thousands except per share data)		As of June 30, 2022				As of December 31, 2021
Shareholders' equity per share		$	44.89			$	38.31
Debt to equity ratio		0.58 to 1				0.77 to 1
		Six Months Ended June 30,
		2022				2021
Net cash from (used for) operating activities			47,687				(95,744	)
Cash dividends per share		$	0.18			$	0.04

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005624/en/

Richard A. Manson

Chief Financial Officer

(216) 672-0522

ir@olysteel.com

Source: Olympic Steel, Inc.

FAQ

What were Olympic Steel's Q2 2022 earnings results?

Olympic Steel reported a net income of $37.6 million, or $3.26 per diluted share, for Q2 2022.

How much did Olympic Steel earn per share in Q2 2022?

In Q2 2022, Olympic Steel earned $3.26 per diluted share.

What were Olympic Steel's total sales for the second quarter of 2022?

Total sales for Olympic Steel in Q2 2022 reached a record $709 million.

What is the current dividend for Olympic Steel shareholders?

Olympic Steel's Board of Directors declared a quarterly cash dividend of $0.09 per share, payable on September 15, 2022.

What factors contributed to Olympic Steel's recent performance?

Performance was driven by the strength in all three business segments and expansion into higher-return, value-added products.