CLEVELAND, May 3, 2013 (GLOBE NEWSWIRE) -- Olympic Steel, Inc.,(Nasdaq:ZEUS), a national metals service center, today announced financial results for the first quarter ended March 31, 2013.
First-quarter net sales of $338.1 million were down 11.5% versus the record $382.1 million reported in 2012's comparable period. Lower steel prices combined with reduced volume contributed to the year-over-year decline in sales during the quarter.
The Company indicated its results included a pre-tax out-of-period adjustment to record LIFO income of $1.9 million ($1.2 million after tax) in 2013's first quarter. Including this adjustment, net income totaled $5.2 million, or $0.47 per diluted share, for this year's first quarter, compared with net income of $6.2 million, or $0.57 per diluted share, in 2012.
"Business activity sequentially rebounded in the first quarter compared with the end of last year," stated Chairman and Chief Executive Officer Michael D. Siegal. "Steel prices also increased from the lows of late last year; however, they are below year-ago levels and are expected to remain soft.
"Tubular and Pipe Products continued to perform well during the quarter, as did our new start-up ventures, which made increasingly positive contributions to consolidated profits as they continued to mature. Having essentially completed the capital outlays associated with our multi-year growth plan, we are now focused on generating higher cash flow and earnings. We further expanded the Company's market share in stainless steel—one of our strategic growth areas—and capital expenditures in the first quarter declined by more than 75% compared with last year."
Olympic Steel's Board of Directors approved a regular quarterly cash dividend of $0.02 per share, which is payable on June 17, 2013, to shareholders of record on June 3, 2013.
Conference Call and Webcast
A simulcast of Olympic Steel's 2013 first-quarter earnings conference call may be accessed via the Investor Relations section of the Company's website at www.olysteel.com. The simulcast will begin at 9:00 a.m. Eastern Time today and a replay of the call will be available for 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," or "continue," as well as the negative of these terms or other 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: general and global business, economic, financial and political conditions, including the ongoing effects of the global economic recovery; access to capital and global credit markets; competitive factors such as the availability and pricing of metals, industry shipping and inventory levels, and rapid fluctuations in customer demand and metals pricing; the cyclicality and volatility within the metals industry; the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability; the success of our new facility startups in Gary, Ind., and Streetsboro, Ohio; the ability to successfully integrate the newly leased locations or recently acquired businesses into our operations and achieve expected results; events or circumstances that could adversely impact the successful operation of our processing equipment and operations; the ability to comply with the terms of our asset-based credit facility and to make the required term-loan payments; the ability of our customers to honor their agreements related to derivative instruments, including the outcome of the MF Global UK Limited administration process; customer, supplier, and competitor consolidation, bankruptcy or insolvency; reduced production schedules, layoffs or work stoppages by our own, our suppliers' or our customers' personnel; the success of union contract renewals; the availability and costs of transportation and logistical services; the amounts, successes and our ability to continue our capital investments and strategic growth initiatives and our business information system implementations; the successes of our strategic efforts and initiatives to increase sales volumes, maintain or improve working capital turnover and free cash flows, improve inventory turnover and improve our customer service; the timing and outcome of inventory lower of cost or market adjustments; the inflation or deflation existing within the metals industry, as well as our 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 reserve; the adequacy of our existing information technology and business system software; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; our ability to generate free cash flow through operations and decreased future capital expenditures, reduce inventory and repay debt within anticipated timeframes; 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 potential impairment charges; the recently enacted federal healthcare legislation's impact on the healthcare benefits required to be provided by us and the impact of such legislation on our compensation and administrative costs; and unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters, including any developments that would require an increase in our costs for such contingencies. Further information on these and other risks and uncertainties is provided under Item 1A "Risk Factors" of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which disclosure is incorporated herein by reference, and elsewhere in reports that the Company files or furnishes with the SEC. This release speaks only as of its date and the Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. You are advised, however, to consult any further disclosures the Company makes on related subjects in its reports filed with or furnished to the SEC.
About Olympic Steel
Founded in 1954, Olympic Steel is a leading U.S. metals service center focused on the direct sale and distribution of large volumes of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel and aluminum products. The Company's CTI subsidiary is a leading distributor of steel tubing, bar, pipe, valves and fittings, and fabricates pressure parts for the electric utility industry. Headquartered in Cleveland, Ohio, Olympic Steel currently operates from 34 facilities in North America.
For additional information, please visit the Company's website at http://www.olysteel.com or http://www.b2i.us/profiles/investor/ContactUs.asp?BzID=2195.
-Financial Tables Follow-
| Olympic Steel, Inc. | ||||
| Results of Operations | ||||
| (in thousands, except per-share data) | ||||
| Three Months Ended Mar. 31, | ||||
| 2013 | 2012 | |||
| (unaudited) | ||||
| Net sales | $338,064 | $382,052 | ||
| % change | (11.5%) | 29.8% | ||
| Costs and expenses | ||||
| Cost of materials sold (exclusive of items shown below) | 266,154 | 78.7% | 306,678 | 80.3% |
| Warehouse and processing | 20,506 | 6.1% | 21,222 | 5.6% |
| Administrative and general | 18,149 | 5.4% | 18,374 | 4.8% |
| Distribution | 8,974 | 2.7% | 9,059 | 2.4% |
| Selling | 6,586 | 1.9% | 7,141 | 1.9% |
| Occupancy | 2,599 | 0.8% | 2,323 | 0.6% |
| Depreciation | 5,293 | 1.6% | 4,770 | 1.2% |
| Amortization | 222 | 0.1% | 222 | 0.1% |
| Total costs and expenses | 328,483 | 97.2% | 369,789 | 96.8% |
| Operating income | 9,581 | 2.8% | 12,263 | 3.2% |
| Other income, net | 23 | 0.0% | 34 | 0.0% |
| Income before financing cost and income taxes | 9,604 | 2.8% | 12,297 | 3.2% |
| Interest and other expense on debt | 1,698 | 0.5% | 2,108 | 0.6% |
| Income before income taxes | 7,906 | 2.3% | 10,189 | 2.7% |
| Income tax provision | 2,743 | 34.7% | 3,959 | 38.9% |
| Net income | $5,163 | $6,230 | ||
| Earnings per share: | ||||
| Net income per share - basic | $0.47 | $0.57 | ||
| Weighted average shares outstanding - basic | 11,034 | 10,988 | ||
| Net income per share - diluted | $0.47 | $0.57 | ||
| Weighted average shares outstanding - diluted | 11,042 | 10,997 | ||
| Olympic Steel, Inc. | ||
| Consolidated Balance Sheets | ||
| (in thousands) | ||
| At Mar. 31, | At Dec. 31, | |
| 2013 | 2012 | |
| (unaudited) | (audited) | |
| Assets | ||
| Cash and cash equivalents | $2,799 | $7,782 |
| Accounts receivable, net | 149,611 | 112,841 |
| Inventories, net (includes LIFO debit of $1,932 as of March 31, 2013) | 275,185 | 290,023 |
| Prepaid expenses and other | 6,957 | 11,731 |
| Total current assets | 434,552 | 422,377 |
| Property and equipment, at cost | 348,939 | 347,935 |
| Accumulated depreciation | (156,274) | (151,608) |
| Net property and equipment | 192,665 | 196,327 |
| Goodwill | 40,787 | 40,787 |
| Intangible assets, net | 35,202 | 35,424 |
| Other long-term assets | 12,211 | 11,079 |
| Total assets | $715,417 | $705,994 |
| Liabilities | ||
| Current portion of long-term debt | $15,255 | $15,282 |
| Accounts payable | 110,904 | 101,471 |
| Accrued payroll | 9,964 | 10,705 |
| Other accrued liabilities | 16,263 | 14,984 |
| Total current liabilities | 152,386 | 142,442 |
| Credit facility revolver | 174,955 | 177,575 |
| Long-term debt | 46,667 | 48,854 |
| Other long-term liabilities | 10,870 | 11,410 |
| Deferred income taxes | 34,821 | 35,856 |
| Total liabilities | 419,699 | 416,137 |
| Shareholders' Equity | ||
| Preferred stock | -- | -- |
| Common stock | 123,186 | 122,272 |
| Accumulated other comprehensive loss | (576) | (579) |
| Retained earnings | 173,108 | 168,164 |
| Total shareholders' equity | 295,718 | 289,857 |
| Total liabilities and shareholders' equity | $715,417 | $705,994 |
| Olympic Steel, Inc. | ||
| Segment Financial Information | ||
| (in thousands) | ||
|
Three Months Ended Mar. 31, |
||
| (unaudited) | ||
| 2013 | 2012 | |
| Net sales | ||
| Flat products | $275,747 | $316,629 |
| Tubular and pipe products | 62,317 | 65,423 |
| Total net sales | $338,064 | $382,052 |
| Depreciation and amortization | ||
| Flat products | $4,242 | $3,870 |
| Tubular and pipe products | 1,273 | 1,122 |
| Total depreciation and amortization | $5,515 | $4,992 |
| Operating income | ||
| Flat products | $4,805 | $7,794 |
| Tubular and pipe products | 6,759 | 6,444 |
| Corporate expenses | (1,983) | (1,975) |
| Total operating income | $9,581 | $12,263 |
| Other income, net | 23 | 34 |
| Income before financing cost and income taxes | 9,604 | 12,297 |
| Interest and other expense on debt | 1,698 | 2,108 |
| Income before income taxes | $7,906 | $10,189 |
| Capital expenditures | ||
| Flat products | $679 | $5,447 |
| Tubular and pipe products | 1,035 | 2,522 |
| Total capital expenditures | $1,714 | $7,969 |
| At Mar. 31, | At. Dec. 31, | |
| 2013 | 2012 | |
| Goodwill | ||
| Flat products | $500 | $500 |
| Tubular and pipe products | 40,287 | 40,287 |
| Total goodwill | $40,787 | $40,787 |
| Total assets | ||
| Flat products | $490,520 | $480,487 |
| Tubular and pipe products | 224,897 | 225,507 |
| Total assets | $715,417 | $705,994 |
| Other Information: | ||
| At Mar. 31, | At Dec. 31, | |
| 2013 | 2012 | |
| (unaudited) | ||
| Shareholders' equity per share | $27.06 | $26.54 |
| Debt-to-equity ratio | 0.80 to 1 | 0.83 to 1 |
|
Three Months Ended Mar. 31, |
||
| 2013 | 2012 | |
| (unaudited) | ||
| Capital expenditures | $1,714 | $7,969 |
| Cash dividends per share | $0.02 | $0.02 |