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Olympic Steel Reports 2012 Third-Quarter Financial Results

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CLEVELAND, Nov. 8, 2012 (GLOBE NEWSWIRE) -- Olympic Steel, Inc., (Nasdaq:ZEUS), a national metals service center, today announced financial results for the third quarter and nine months ended Sept. 30, 2012.

Net sales for the third quarter of 2012 totaled $342.6 million, a 1.7% decrease from the prior year third quarter's $348.5 million. For the nine-month period, net sales reached $1.1 billion, up 15.9%, from $941.9 million reported for the comparable period in 2011. Year-to-date 2012 sales benefitted from the Company's acquisition of Chicago Tube and Iron (CTI), which closed on July 1, 2011.

Net income for the 2012 third quarter was $1.6 million, or $0.15 per diluted share, compared with $6.1 million, or $0.56 per diluted share, in last year's third quarter. Net income for the nine months totaled $12.4 million, or $1.13 per diluted share, compared with $24.4 million, or $2.23 per diluted share, in the comparable nine-month period of 2011.

Commenting on the results, Chairman and Chief Executive Officer Michael D. Siegal stated, "Margin pressure persisted during the third quarter and nine-month period, reflecting lower steel pricing versus the prior year's comparable periods. In addition, higher operating expenses—primarily associated with ongoing expansion projects—were incurred during the current year."

"Despite difficult market conditions, third-quarter and nine-month tonnage volumes increased for the Flat as well as Tubular and Pipe products, partially offsetting the impact of lower margins," Siegal added. "The growth in tonnage volume resulted in an uptick in Olympic Steel's market share during the third quarter and is indicative of the commitment to customer satisfaction and reliably providing high-quality products. As we look toward the end of the current year and into 2013, we believe steel prices will remain volatile and look forward to focusing on things within our control, such as successfully concluding our capital projects and increasing cash flow."

Olympic Steel's Board of Directors approved a regular quarterly cash dividend of $0.02 per share, which is payable on Dec. 17, 2012, to shareholders of record on Dec. 3, 2012.

Conference Call and Webcast

Olympic Steel will host a conference call to discuss 2012 third-quarter and nine-month results, today, Nov. 8, 2012, at 10:00 a.m. ET. The call will be broadcast live from the Investor Relations section of the Company's website at www.olysteel.com. The webcast will be archived and available for replay on the website for approximately 14 days.

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 33 facilities in North America. For further information, visit the Company's website at http://www.olysteel.com.

The Olympic Steel, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3582

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 metal, industry shipping and inventory levels, and rapid fluctuations in customer demand and metal 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 startups in Gary, Ind.; Mount Sterling, Ky.; Monterrey, Mexico; Roseville, Minn.; Kansas City, Mo.; and Streetsboro, Ohio; the ability to successfully integrate the newly leased locations or newly acquired businesses into our operations and achieve expected results; equipment installation delays or malfunctions, including the new Streetsboro, Ohio, facility start up; 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 and third parties 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 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 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, reduce inventory and repay debt within anticipated timeframes; events or circumstances that could impair or adversely impact the carrying value of our assets; 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; 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.

--Financial Tables Follow--

OLYMPIC STEEL
RESULTS OF OPERATIONS
(in thousands, except per share and tonnage data)
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
(unaudited) (unaudited)
Net sales $ 342,560 $ 348,547 $ 1,091,977 $ 941,928
% change (1.7%) 66.6% 15.9% 59.7%
Costs and expenses
Cost of materials sold (exclusive of items shown below) 276,504 80.7% 281,058 80.6% 879,060 80.5% 750,638 79.7%
Warehouse and processing 21,667 6.3% 19,471 5.6% 63,892 5.9% 51,432 5.5%
Administrative and general 16,765 4.9% 16,461 4.7% 52,647 4.8% 43,339 4.6%
Distribution 8,682 2.5% 8,080 2.3% 26,960 2.5% 20,427 2.2%
Selling 7,085 2.1% 7,209 2.1% 20,989 1.9% 18,140 1.9%
Occupancy 2,057 0.6% 2,297 0.7% 6,495 0.6% 5,790 0.6%
Depreciation 4,953 1.4% 4,434 1.3% 14,636 1.3% 11,413 1.2%
Amortization 223 0.1% 222 0.1% 667 0.1% 222 0.0%
Total costs and expenses 337,936 98.7% 339,232 97.3% 1,065,346 97.6% 901,401 95.7%
Operating income 4,624 1.3% 9,315 2.7% 26,631 2.4% 40,527 4.3%
Other (income) expense, net (51) (0.0%) 91 0.0% (90) (0.0%) 91 0.0%
Income before financing cost and income taxes 4,675 1.4% 9,224 2.6% 26,721 2.4% 40,436 4.3%
Interest and other expense on debt 2,120 0.6% 2,237 0.6% 6,411 0.6% 3,868 0.4%
Income before income taxes 2,555 0.7% 6,987 2.0% 20,310 1.9% 36,568 3.9%
Income tax provision 916 35.9% 851 12.2% 7,915 39.0% 12,163 33.3%
Net income $ 1,639 $ 6,136 $ 12,395 $ 24,405
Net loss on interest rate hedge, net of tax (165) -- (568) --
Total comprehensive income $ 1,474 $ 6,136 $ 11,827 $ 24,405
Earnings per share:
Net income per share - basic $ 0.15 $ 0.56 $ 1.13 $ 2.23
Weighted average shares outstanding - basic 10,961 10,937 10,958 10,936
Net income per share - diluted $ 0.15 $ 0.56 $ 1.13 $ 2.23
Weighted average shares outstanding - diluted 10,967 10,951 10,967 10,949
It is the Company's policy not to make quarterly or annual sales or earnings projections
for external use and not to endorse any analyst's sales or earnings estimates.
OLYMPIC STEEL
Consolidated Balance Sheets
(in thousands)
September 30,
2012
December 31,
2011
(unaudited) (audited)
Assets
Cash and cash equivalents $ 3,832 $ 7,403
Accounts receivable, net 152,434 122,579
Inventories, net 288,698 277,765
Prepaid expenses and other 9,417 13,112
Total current assets 454,381 420,859
Property and equipment, at cost 345,593 329,116
Accumulated depreciation (146,965) (135,703)
Net property and equipment 198,628 193,413
Goodwill 47,370 47,254
Intangible assets, net 35,646 36,313
Other long-term assets 11,603 9,660
Total assets $ 747,628 $ 707,499
Liabilities
Current portion of long-term debt $ 10,253 $ 9,662
Accounts payable 98,754 $ 104,425
Accrued payroll 10,879 11,613
Other accrued liabilities 14,039 13,875
Total current liabilities 133,925 139,575
Credit facility revolver 211,015 170,405
Long-term debt 56,111 64,149
Other long-term liabilities 11,788 9,580
Deferred income taxes 34,952 37,214
Total liabilities 447,791 420,923
Shareholders' Equity
Preferred stock -- --
Common stock 121,905 119,816
Accumulated other comprehensive loss (567) --
Retained earnings 178,499 166,760
Total shareholders' equity 299,837 286,576
Total liabilities and shareholders' equity $ 747,628 $ 707,499
It is the Company's policy not to make quarterly or annual sales or earnings projections
for external use and not to endorse any analyst's sales or earnings estimates.
OLYMPIC STEEL
SEGMENT FINANCIAL INFORMATION
(in thousands)
Three Months Ended September 30, Nine Months Ended September 30,
SEGMENT INFORMATION: 2012 2011 2012 2011
(unaudited) (unaudited)
Net sales
Flat products $ 279,075 $ 287,137 $ 903,591 $ 880,518
Tubular and pipe products 63,485 61,410 188,386 61,410
Total net sales $ 342,560 $ 348,547 $ 1,091,977 $ 941,928
Operating income
Flat products $ 632 $ 5,762 $ 11,750 $ 36,974
Tubular and pipe products 3,992 3,553 14,881 3,553
Total operating income $ 4,624 $ 9,315 $ 26,631 $ 40,527
Depreciation and amortization
Flat products $ 3,969 $ 3,281 $ 11,791 $ 10,260
Tubular and pipe products 1,207 1,375 3,512 1,375
Total depreciation and amortization $ 5,176 $ 4,656 $ 15,303 $ 11,635
Capital expenditures
Flat products $ 3,983 $ 8,018 $ 14,715 $ 24,434
Tubular and pipe products 624 184 5,575 184
Total capital expenditures $ 4,607 $ 8,202 $ 20,290 $ 24,618
September 30, December 31,
2012 2011
Total assets
Flat products $ 524,983 $ 494,179
Tubular and pipe products 222,645 213,320
Total assets $ 747,628 $ 707,499
The tubular and pipe products segment is a result of the July 1, 2011 acquisition of Chicago Tube and Iron. As a result, the segment data
for the nine months ended September 30, 2011 only includes three months of tubular and pipe products segment data.
OTHER INFORMATION:
September 30, December 31,
2012 2011 2011
Shareholders' equity per share 27.46 26.23 26.28
Debt-to-equity ratio .93 to 1 .87 to 1 .85 to 1
Nine Months Ended
September 30,
2012 2011
OTHER DATA: (unaudited)
Capital expenditures 20,290 24,618
Cash dividends per share $ 0.06 $ 0.06
It is the Company's policy not to make quarterly or annual sales or earnings projections
for external use and not to endorse any analyst's sales or earnings estimates.
CONTACT: Richard T. Marabito Chief Financial Officer Telephone: (216) 292-3800 Fax: (216) 292-3974

Source:Olympic Steel, Inc.