Olympic Steel Reports Second-Quarter 2023 Results
- None.
- None.
Company performance continues to reflect the benefits of its diversification strategy and investments in enhanced capabilities
Carbon segment delivers strong profitability, while Tubular and Pipe Products segment further capitalizes on growing demand for value-added offerings
Net income for the second quarter totaled
The Company reported sales of
“Olympic Steel continued to deliver strong performance in the second quarter,” said Richard T. Marabito, Chief Executive Officer. “The consistency of our results, despite lower metals prices and challenges in the overall economy, is directly attributable to our efforts to diversify our product offerings and invest capital in higher-return opportunities. Our Carbon and Tubular and Pipe segments led the way, while our Specialty Metals business remained steady in the face of industry-wide white metals headwinds.”
Marabito said, “Our Carbon segment earned
Marabito continued, “Our second-quarter results include the full earnings effect of Metal-Fab, our second largest acquisition in Company history, which was added to our family of companies in January 2023. Metal-Fab was a strong contributor to our second-quarter earnings and we will further benefit from Olympic Steel’s supply chain synergies during the second half of 2023. Several of our fabrication and automation projects also became operational during the quarter, including our new specialty metals and carbon fabricating facility in the
Marabito concluded, “As we move into the third quarter, we expect overall demand to remain steady while reflecting normal seasonal trends. While the near-term economic outlook is somewhat unsettled, we remain optimistic about the long-term outlook for the steel market and we are confident that the steps we have taken position Olympic Steel to deliver more consistent results in all environments.”
The Board of Directors approved a regular quarterly cash dividend of
The table that follows provides a reconciliation of certain non-GAAP measures to the most directly comparable measures prepared in accordance with GAAP. Additional reconciliations can be found in the Segment Financial Information table which also follows.
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, | ||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
Net income per diluted share | $ |
1.30 |
|
$ |
3.26 |
$ |
2.15 |
|
$ |
6.49 |
|
||||
Excluding the following items | |||||||||||||||
LIFO income |
|
(0.06 |
) |
|
- |
|
(0.06 |
) |
|
- |
|
||||
Metal-Fab inventory fair market value adjustment |
|
- |
|
|
- |
|
0.13 |
|
|
- |
|
||||
Acquisition related expenses |
|
- |
|
|
- |
|
0.16 |
|
|
- |
|
||||
Gain on sale of |
|
- |
|
|
- |
|
- |
|
|
(0.13 |
) |
||||
Adjusted net income per diluted share (non-GAAP) | $ |
1.24 |
|
$ |
3.26 |
$ |
2.38 |
|
$ |
6.36 |
|
||||
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 | ||||||||||||||
6/30/2023 | 6/30/2022 | 6/30/2023 | 6/30/2022 | ||||||||||||
Net income (GAAP): | $ |
15,019 |
|
$ |
37,624 |
$ |
24,891 |
|
$ |
74,926 |
|
||||
Excluding the following items: | |||||||||||||||
Foreign exchange loss included in net income |
|
28 |
|
|
15 |
|
39 |
|
|
21 |
|
||||
Interest and other expense on debt |
|
4,203 |
|
|
2,271 |
|
8,426 |
|
|
4,269 |
|
||||
Income tax provision |
|
6,522 |
|
|
13,955 |
|
10,139 |
|
|
27,771 |
|
||||
Depreciation and amortization |
|
6,473 |
|
|
4,946 |
|
12,674 |
|
|
9,928 |
|
||||
Earnings before interest, taxes, depreciation and | |||||||||||||||
amortization (EBITDA) |
|
32,245 |
|
|
58,811 |
|
56,169 |
|
|
116,915 |
|
||||
LIFO income |
|
(1,000 |
) |
|
- |
|
(1,000 |
) |
|
- |
|
||||
Metal-Fab inventory fair market value adjustment |
|
- |
|
|
- |
|
2,079 |
|
|
- |
|
||||
Acquisition related expenses |
|
- |
|
|
- |
|
2,556 |
|
|
- |
|
||||
Gain on sale of |
|
- |
|
|
- |
|
- |
|
|
(2,083 |
) |
||||
Adjusted EBITDA (non-GAAP) | $ |
31,245 |
|
$ |
58,811 |
$ |
59,804 |
|
$ |
114,832 |
|
Conference Call and Webcast
A simulcast of Olympic Steel’s 2023 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 4, 2023, 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, energy, logistical services and labor; risks associated with shortages of skilled labor, increased labor costs and our ability to attract and retain qualified personnel; rising interest rates and their impacts on our variable interest rate debt; 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
In addition to financial information prepared in accordance with GAAP, this document also contains adjusted earnings per diluted share, adjusted EBITDA and segment adjusted EBITDA, which are non-GAAP financial measures. Management’s view of the Company’s performance includes adjusted earnings per share, adjusted EBITDA and segment 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
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 |
|||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||
Net sales | $ |
569,268 |
$ |
709,176 |
$ |
1,142,344 |
$ |
1,405,509 |
|||
Costs and expenses | |||||||||||
Cost of materials sold (excludes items shown separately below) |
|
441,872 |
|
560,546 |
|
894,508 |
|
1,115,653 |
|||
Warehouse and processing |
|
31,522 |
|
27,624 |
|
62,171 |
|
51,672 |
|||
Administrative and general |
|
31,681 |
|
31,969 |
|
64,866 |
|
61,591 |
|||
Distribution |
|
17,448 |
|
16,441 |
|
35,189 |
|
31,482 |
|||
Selling |
|
10,389 |
|
10,494 |
|
20,786 |
|
21,316 |
|||
Occupancy |
|
4,111 |
|
3,291 |
|
8,655 |
|
6,880 |
|||
Depreciation |
|
5,245 |
|
4,354 |
|
10,322 |
|
8,704 |
|||
Amortization |
|
1,228 |
|
592 |
|
2,352 |
|
1,224 |
|||
Total costs and expenses |
|
543,496 |
|
655,311 |
|
1,098,849 |
|
1,298,522 |
|||
Operating income |
|
25,772 |
|
53,865 |
|
43,495 |
|
106,987 |
|||
Other loss, net |
|
28 |
|
15 |
|
39 |
|
21 |
|||
Income before interest and income taxes |
|
25,744 |
|
53,850 |
|
43,456 |
|
106,966 |
|||
Interest and other expense on debt |
|
4,203 |
|
2,271 |
|
8,426 |
|
4,269 |
|||
Income before income taxes |
|
21,541 |
|
51,579 |
|
35,030 |
|
102,697 |
|||
Income tax provision |
|
6,522 |
|
13,955 |
|
10,139 |
|
27,771 |
|||
Net income | $ |
15,019 |
$ |
37,624 |
$ |
24,891 |
$ |
74,926 |
|||
Earnings per share: | |||||||||||
Net income per share - basic | $ |
1.30 |
$ |
3.26 |
$ |
2.15 |
$ |
6.49 |
|||
Weighted average shares outstanding - basic |
|
11,569 |
|
11,538 |
|
11,570 |
|
11,536 |
|||
Net income per share - diluted | $ |
1.30 |
$ |
3.26 |
$ |
2.15 |
$ |
6.49 |
|||
Weighted average shares outstanding - diluted |
|
11,572 |
|
11,545 |
|
11,572 |
|
11,540 |
Olympic Steel, Inc. |
|||||||
Balance Sheets (in thousands) |
|||||||
As of June 30, 2023 | As of December 31, 2022 | ||||||
Assets | |||||||
Cash and cash equivalents | $ |
15,170 |
|
$ |
12,189 |
|
|
Accounts receivable, net |
|
227,992 |
|
|
219,789 |
|
|
Inventories, net (includes LIFO reserves of |
|
405,944 |
|
|
416,931 |
|
|
Prepaid expenses and other |
|
11,510 |
|
|
9,197 |
|
|
Total current assets |
|
660,616 |
|
|
658,106 |
|
|
Property and equipment, at cost |
|
463,291 |
|
|
429,810 |
|
|
Accumulated depreciation |
|
(288,300 |
) |
|
(281,478 |
) |
|
Net property and equipment |
|
174,991 |
|
|
148,332 |
|
|
Goodwill |
|
43,690 |
|
|
10,496 |
|
|
Intangible assets, net |
|
84,944 |
|
|
32,035 |
|
|
Other long-term assets |
|
15,958 |
|
|
14,434 |
|
|
Right of use asset, net |
|
33,783 |
|
|
28,224 |
|
|
Total assets | $ |
1,013,982 |
|
$ |
891,627 |
|
|
Liabilities | |||||||
Accounts payable | $ |
124,087 |
|
$ |
101,446 |
|
|
Accrued payroll |
|
25,180 |
|
|
40,334 |
|
|
Other accrued liabilities |
|
22,647 |
|
|
16,824 |
|
|
Current portion of lease liabilities |
|
6,878 |
|
|
6,098 |
|
|
Total current liabilities |
|
178,792 |
|
|
164,702 |
|
|
Credit facility revolver |
|
238,240 |
|
|
165,658 |
|
|
Other long-term liabilities |
|
17,334 |
|
|
12,619 |
|
|
Deferred income taxes |
|
13,611 |
|
|
10,025 |
|
|
Lease liabilities |
|
27,542 |
|
|
22,655 |
|
|
Total liabilities |
|
475,519 |
|
|
375,659 |
|
|
Shareholders' Equity | |||||||
Preferred stock |
|
- |
|
|
- |
|
|
Common stock |
|
135,566 |
|
|
134,724 |
|
|
Accumulated other comprehensive income |
|
856 |
|
|
1,311 |
|
|
Retained earnings |
|
402,041 |
|
|
379,933 |
|
|
Total shareholders' equity |
|
538,463 |
|
|
515,968 |
|
|
Total liabilities and shareholders' equity | $ |
1,013,982 |
|
$ |
891,627 |
|
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 | ||||||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
Tons sold 1 |
|
226,275 |
|
210,604 |
|
28,711 |
|
38,386 |
|
N/A |
|
|
N/A |
|
||||||
Net sales | $ |
326,629 |
$ |
370,665 |
$ |
147,000 |
$ |
226,964 |
$ |
95,639 |
|
$ |
111,547 |
|
||||||
Average selling price per ton |
|
1,444 |
|
1,760 |
|
5,120 |
|
5,913 |
|
N/A |
|
|
N/A |
|
||||||
Cost of materials sold |
|
253,072 |
|
310,633 |
|
122,600 |
|
164,441 |
|
66,200 |
|
|
85,472 |
|
||||||
Gross profit |
|
73,557 |
|
60,032 |
|
24,400 |
|
62,523 |
|
29,439 |
|
|
26,075 |
|
||||||
Operating expenses |
|
58,862 |
|
44,414 |
|
17,721 |
|
26,050 |
|
20,068 |
|
|
18,775 |
|
||||||
Operating income |
|
14,695 |
|
15,618 |
|
6,679 |
|
36,473 |
|
9,371 |
|
|
7,300 |
|
||||||
Depreciation and amortization |
|
3,716 |
|
2,698 |
|
1,023 |
|
1,008 |
|
1,716 |
|
|
1,222 |
|
||||||
LIFO income |
|
- |
|
- |
|
- |
|
- |
|
(1,000 |
) |
|
- |
|
||||||
Adjusted EBITDA |
|
18,411 |
|
18,316 |
|
7,702 |
|
37,481 |
|
10,087 |
|
|
8,522 |
|
||||||
Six months ended June 30, | ||||||||||||||||||||
Carbon Flat Products | Specialty Metals Flat Products | Tubular and Pipe Products | ||||||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
Tons sold 1 |
|
444,613 |
|
416,687 |
|
61,227 |
|
76,830 |
|
N/A |
|
|
N/A |
|
||||||
Net sales | $ |
636,447 |
$ |
750,214 |
$ |
313,564 |
$ |
426,443 |
$ |
192,333 |
|
$ |
228,852 |
|
||||||
Average selling price per ton |
|
1,431 |
|
1,800 |
|
5,121 |
|
5,550 |
|
N/A |
|
|
N/A |
|
||||||
Cost of materials sold |
|
501,508 |
|
638,346 |
|
260,313 |
|
305,431 |
|
132,687 |
|
|
171,876 |
|
||||||
Gross profit |
|
134,939 |
|
111,868 |
|
53,251 |
|
121,012 |
|
59,646 |
|
|
56,976 |
|
||||||
Operating expenses |
|
114,298 |
|
86,375 |
|
37,313 |
|
50,455 |
|
40,534 |
|
|
35,094 |
|
||||||
Operating income |
|
20,641 |
|
25,493 |
|
15,938 |
|
70,557 |
|
19,112 |
|
|
21,882 |
|
||||||
Depreciation and amortization |
|
7,323 |
|
5,372 |
|
2,007 |
|
2,013 |
|
3,309 |
|
|
2,508 |
|
||||||
LIFO income |
|
- |
|
- |
|
- |
|
- |
|
(1,000 |
) |
|
- |
|
||||||
Metal-Fab inventory fair market value adjustment |
|
2,079 |
|
- |
|
- |
|
- |
|
- |
|
|
- |
|
||||||
Gain on sale of |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
(2,083 |
) |
||||||
Adjusted EBITDA |
|
30,043 |
|
30,865 |
|
17,945 |
|
72,570 |
|
21,421 |
|
|
22,307 |
|
||||||
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 the Tubular and Pipe Products Segment. |
Other Information (in thousands, except per-share and ratio data) |
||||||
As of June 30, 2023 |
As of December 31, 2022 |
|||||
Assets | ||||||
Flat-products | $ |
737,819 |
$ |
631,607 |
||
Tubular and pipe products |
|
274,562 |
|
258,412 |
||
Corporate |
|
1,601 |
|
1,608 |
||
Total assets | $ |
1,013,982 |
$ |
891,627 |
||
Other information | ||||||
As of June 30, 2023 |
As of December 31, 2022 |
|||||
Shareholders' equity per share | $ |
48.37 |
$ |
46.36 |
||
Debt to equity ratio | 0.44 to 1 | 0.32 to 1 | ||||
Six Months Ended June 30, | ||||||
2023 |
2022 |
|||||
Net cash from operating activities | $ |
79,196 |
$ |
47,687 |
||
Cash dividends per share | $ |
0.25 |
$ |
0.18 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230802582756/en/
Richard A. Manson
Chief Financial Officer
(216) 672-0522
ir@olysteel.com
Source: Olympic Steel, Inc.
FAQ
What were Olympic Steel's financial results for Q2 2023?
What were the key factors contributing to Olympic Steel's strong performance in Q2 2023?