Olympic Steel Reports 2015 Second-Quarter Results

CLEVELAND, Aug. 6, 2015 (GLOBE NEWSWIRE) -- Olympic Steel, Inc. (Nasdaq:ZEUS), a leading national metals service center, today announced financial results for the second quarter and six months ended June 30, 2015.

Second-quarter net sales were $315.3 million, compared with a record Company high of $386.0 million in 2014's second quarter. First-half net sales declined 9.8% to $661.1 million in 2015, versus $733.0 million in the same period last year. The revenue decrease in both periods was due to a decline in industry-wide shipments and lower average selling prices compared with the same periods last year.

In the fourth quarter of 2014, the Company recorded a charge to write down a portion of goodwill related to its tubular and pipe products segment. During the 2015 second quarter, it was determined that the remaining goodwill and certain other intangible assets related to this operating segment were impaired. This resulted in a $24.5 million pre-tax non-cash impairment charge being recorded in the quarter and six months ended June 30, 2015. This charge reduced reported 2015 second-quarter and first-half net income by $1.91 per share. Including the impairment charge, the Company reported a net loss of $22.3 million, or $1.99 per share, in the second quarter, compared with net income of $3.5 million, or $0.31 per diluted share, in the second quarter of 2014.

For the first half of 2015, including the impairment charge, the reported net loss was $21.2 million, or $1.89 per share, compared with net income of $6.3 million, or $0.57 per diluted share, in the prior-year period.

"Global metal markets have been challenged throughout 2015. Olympic Steel has not been immune to these factors," stated Chairman and Chief Executive Officer Michael D. Siegal. "Our stated objectives of reducing operating costs, debt reduction and enhancing cash flow, while retaining market share, are reflected in our results."

"We applaud the recent trade actions that have been filed and support the domestic industry's attempts to protect against unfairly traded imports," he added.

The Olympic Steel Board of Directors also approved a regular quarterly cash dividend of $0.02 per share, which is payable on Sept. 15, 2015, to shareholders of record on Sept. 1, 2015.

Conference Call and Webcast

A simulcast of Olympic Steel's 2015 second-quarter and first-half earnings conference call can be accessed via the investor relations section of the Company's website at www.olysteel.com. The simulcast will begin at 10 a.m. ET 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; competitive factors such as the availability, global production levels and pricing of metals, industry shipping and inventory levels and rapid fluctuations in customer demand and metals pricing; cyclicality and volatility within the metals industry; the strengthening of the U.S. dollar and the related impact on foreign steel pricing, U.S. exports, and foreign imports to the U.S.; the increased levels of imported steel in the United States; the availability and costs of transportation and logistical services; the successes of our strategic efforts and initiatives to increase sales volumes, maintain or improve working capital turnover and free cash flows, improve our customer service, and achieve cost savings, including our recently launched internal program to improve earnings; our ability to generate free cash flow through operations and limited future capital expenditures, reduce inventory and repay debt within anticipated time frames; 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 additional impairment charges related to indefinite lived intangible assets ; events or circumstances that could adversely impact the successful operation of our processing equipment and operations; the amounts, successes and our ability to continue our capital investments and strategic growth initiatives, including the Winder, Georgia cut-to-length stretcher leveler project, and our business information system implementations; the successes of our operational excellence initiatives to improve our operating, cultural and management systems and reduce our costs; the ability to comply with the terms of our asset-based credit facility; the ability of our customers and third parties to honor their agreements related to derivative instruments; customer, supplier and competitor consolidation, bankruptcy or insolvency; reduced production schedules, layoffs or work stoppages by our own, our suppliers' or customers' personnel; the impacts of union organizing activities and the success of union contract renewals; the timing and outcomes of inventory lower of cost or market adjustments, especially during periods of declining market pricing; the ability of our customers (especially those that may be highly leveraged, and those with inadequate liquidity) to maintain their credit availability; 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, including duplication and security processes; the adequacy of our efforts to mitigate cyber security threats; access to capital and global credit markets; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; the 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 any increase in our costs for such contingencies.

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 operates from 35 facilities in North America.

For additional information, please visit the Company's website at www.olysteel.com or www.b2i.us/profiles/investor/ContactUs.asp?BzID=2195

Olympic Steel, Inc.
Consolidated Statements of Operations
(in thousands, except per-share data)
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014
(unaudited) (unaudited)
Net sales $ 315,251 $ 386,047 $ 661,116 $ 732,960
Costs and expenses
Cost of materials sold (exclusive of items shown below) 255,838 311,421 535,777 586,888
Warehouse and processing 21,722 23,785 44,259 45,145
Administrative and general 16,014 18,147 33,343 37,082
Distribution 9,568 10,990 18,870 20,846
Selling 4,900 6,483 10,791 13,001
Occupancy 2,306 2,426 5,016 5,296
Depreciation 4,628 5,465 9,218 10,921
Amortization 222 222 444 444
Impairment 24,451 -- 24,451 --
Total costs and expenses 339,649 378,939 682,169 719,623
Operating income (loss) (24,398) 7,108 (21,053) 13,337
Other income (loss), net (26) (4) (58) (2)
Income (loss) before interest and income taxes (24,424) 7,104 (21,111) 13,335
Interest and other expense on debt 1,471 1,779 3,033 3,532
Income (loss) before income taxes (25,895) 5,325 (24,144) 9,803
Income tax provision (benefit) (3,635) 1,832 (2,953) 3,532
Net income (loss) $ (22,260) $ 3,493 $ (21,191) $ 6,271
Earnings per share:
Net income (loss) per share-basic $ (1.99) $ 0.31 $ (1.89) $ 0.57
Weighted average shares outstanding - basic 11,201 11,089 11,198 11,089
Net income (loss) per share-diluted $ (1.99) $ 0.31 $ (1.89) $ 0.57
Weighted average shares outstanding - diluted 11,201 11,089 11,198 11,090
Olympic Steel, Inc.
Consolidated Balance Sheets
(in thousands)
At June 30, 2015 At Dec. 31, 2014
(unaudited) (audited)
Assets
Cash and cash equivalents $ 6,926 $ 2,238
Accounts receivable, net 137,712 123,804
Inventories, net (includes LIFO debit of $3,857 as of June 30, 2015, and $3,207 as of Dec. 31, 2014) 243,460 311,108
Prepaid expenses and other 11,454 20,434
Assets held for sale -- 1,125
Total current assets 399,552 458,709
Property and equipment, at cost 369,219 366,989
Accumulated depreciation (196,821) (189,603)
Net property and equipment 172,398 177,386
Goodwill 500 16,951
Intangible assets, net 25,202 33,646
Other long-term assets 14,688 14,056
Total assets $ 612,340 $ 700,748
Liabilities
Current portion of long-term debt $ 2,690 $ 3,530
Accounts payable 72,704 91,252
Accrued payroll 9,700 10,224
Other accrued liabilities 20,066 26,971
Total current liabilities 105,160 131,977
Credit facility revolver 209,395 244,090
Other long-term liabilities 12,412 13,249
Deferred income taxes 25,114 30,651
Total liabilities 352,081 419,967
Shareholders' equity
Preferred stock -- --
Common stock 127,662 126,339
Accumulated other comprehensive loss (763) (549)
Retained earnings 133,360 154,991
Total shareholders' equity 260,259 280,781
Total liabilities and shareholders' equity $ 612,340 $ 700,748
Olympic Steel, Inc.
Segment Financial Information
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
(unaudited) (unaudited)
2015 2014 2015 2014
Net sales
Carbon flat products $ 209,207 $ 263,209 $ 437,752 $ 502,924
Specialty metals flat products 52,715 56,996 105,346 103,134
Tubular and pipe products 53,329 65,842 118,018 126,902
Total net sales $ 315,251 $ 386,047 $ 661,116 $ 732,960
Depreciation and amortization
Carbon flat products $ 3,147 $ 4,023 $ 6,308 $ 8,047
Specialty metals flat products 190 207 350 402
Tubular and pipe products 1,488 1,432 2,953 2,866
Corporate 25 25 51 50
Total depreciation and amortization $ 4,850 $ 5,687 $ 9,662 $ 11,365
Operating income (loss)
Carbon flat products $ (602) $ 5,513 $ (251) $ 8,919
Specialty metals flat products (270) 902 440 2,344
Tubular and pipe products 2,504 2,853 6,758 6,290
Corporate (1,579) (2,160) (3,549) (4,216)
Impairment (24,451) -- (24,451) --
Total operating income (loss) $ (24,398) $ 7,108 $ (21,053) $ 13,337
Other income (loss), net (26) (4) (58) (2)
Income (loss) before interest and income taxes (24,424) 7,104 (21,111) 13,335
Interest and other expense on debt 1,471 1,779 3,033 3,532
Income (loss) before income taxes $ (25,895) $ 5,325 $ (24,144) $ 9,803
Capital expenditures
Flat products $ 918 $ 2,214 $ 2,106 $ 3,230
Tubular and pipe products 1,624 552 2,127 1,873
Corporate 0 17 0 21
Total capital expenditures 2,542 $ 2,783 4,233 $ 5,124
At June 30,
2015
At Dec. 31,
2014
Goodwill
Flat products $ 500 $ 500
Tubular and pipe products -- 16,451
Total goodwill $ 500 $ 16,951
Assets
Flat products $ 430,037 $ 496,253
Tubular and pipe products 181,796 203,937
Corporate 507 558
Total assets $ 612,340 $ 700,748
Other information:
(in thousands, except per-share data) At June 30, At Dec. 31,
2015 2014
Shareholders' equity per share $ 23.66 $ 25.55
Debt-to-equity ratio 0.81 to 1 0.88 to 1
Six Months Ended
June 30,
2015 2014
Net cash from (used for) operating activities $ 44,879 $ (30,055)
Cash dividends per share $ 0.04 $ 0.04

CONTACT: IR Contact: Matthew J. Dennis, CFA Olympic Steel Investor Relations (216) 672-0522

Source:Olympic Steel, Inc.