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Olympic Steel Reports 2007 Second Quarter Sales and Earnings Results

Posted on: Friday, 3 August 2007, 09:23 CDT

Olympic Steel, Inc., (Nasdaq:ZEUS), a national steel service center, today announced its financial results for the second quarter of 2007.

Net sales for the second quarter of 2007 totaled $277.4 million, an 8.3% increase from the $256.2 million for the second quarter a year ago. Second quarter 2007 net income totaled $9.4 million, or $0.88 per diluted share, compared to net income of $8.4 million, or $0.79 per diluted share for last year's second quarter. Tons sold decreased 1.9% to 336 thousand from 343 thousand in the second quarter of 2006.

Net sales for the first half of 2007 increased 8.4% to $536.8 million, compared to last year's first half net sales of $495.0 million. Net income for the first half of 2007 totaled $14.7 million or $1.37 per diluted share, compared to $16.4 million, or $1.54 per diluted share for last year's first half. Tons sold in the first half decreased 4.9% to 648 thousand from 681 thousand in the first half of 2006, better than the Metals Service Center Institute statistics of a 8.7% decline in year-over-year flat rolled shipments for the first half of 2007.

Olympic Steel's Board of Directors approved a regular quarterly cash dividend of $.04 per share to be paid to shareholders of record as of September 3, 2007, and distributed on September 17, 2007. This represents an increase of $.01 per share from the previous regular quarterly dividends paid by the Company.

Commenting on the results, Chairman and Chief Executive Officer Michael D. Siegal, stated, "We are pleased to report improved sales and earnings performance over both the first quarter of 2007 and the second quarter of 2006. Aside from the slowness in domestic automotive steel consumption and in sales to other service centers, where we experienced our entire decline in 2007 volume, we remain optimistic about the steel industry and the opportunities for Olympic Steel to create additional value for our shareholders during the remainder of the year. Carbon imports remain low, and service center inventories were reduced for the eighth consecutive month in June 2007, leading to a potentially improving sales and earnings environment when demand is restored from the current seasonal summer slowdown. With the strength of our balance sheet and our 0.25 to 1 debt-to-equity ratio, we are increasing investments in new equipment, facilities and information technology. In the first half of 2007, we have spent $5.5 million on capital projects in process, including a new stretcher leveler for our Minneapolis Coil facility, an expansion to our Iowa facility, the implementation of a new information system, and the purchase of several new laser, plasma and machining centers to support our growth in value-add processing and gross margin expansion," concluded Mr. Siegal.

A simulcast of Olympic Steel's 2007 second 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 10:00 a.m. Eastern Time today and a replay of the call will be available for 14 days thereafter.

Founded in 1954, Olympic Steel is a leading U.S. steel 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 products. Headquartered in Cleveland, Ohio, the Company operates 16 facilities. For further information, visit the Company's web site at http://www.olysteel.com.

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,""should,""expect,""anticipate,""intend,""plan,""believe,""estimate,""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 projected. 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 and political conditions; competitive factors such as the availability and pricing of steel, industry inventory levels, and rapid fluctuations in customer demand and pricing; the cyclicality and volatility within the steel industry; the ability of customers (especially in the automotive industry) to maintain their credit availability; layoffs or work stoppages by the Company's, suppliers' or customers' personnel; the availability and cost of transportation and logistical services; equipment installation delays or malfunctions; the successes of the Company's capital investments, efforts and initiatives to increase sales volumes, improve cash flows and reduce debt, maintain or improve inventory turnover, and reduce costs; the timing and outcome of efforts and ability to liquidate OLP's remaining assets; the adequacy of our existing information technology and business system software and the success of implementing our new information system; customer, supplier, and competitor consolidation or insolvency; the post-acquisition integration of PS&W and the Company's ability to pay regular quarterly cash dividends. Further information on these and other risks and uncertainties is provided under Item 1A "Risk Factors" of the Company's 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.

OLYMPIC STEEL

SELECTED FINANCIAL INFORMATION

(in thousands, except per share data and ratios)

Three Months Ended

Six Months Ended

June 30,

June 30,

2007

2006

2007

2006

SUMMARY RESULTS OF OPERATIONS:

(unaudited)

(unaudited)

Net sales

$

277,413

$

256,155

$

536,818

$

495,026

Operating income

15,871

16,042

25,281

28,876

Income before income taxes

15,018

13,667

23,401

26,240

Net income

$

9,446

$

8,371

$

14,698

$

16,352

Earnings per share:

Net income per share - basic

$

0.89

$

0.80

$

1.40

$

1.58

Net income per share - diluted

$

0.88

$

0.79

$

1.37

$

1.54

June 30,

2007

2006

December 31,2006

SUMMARY BALANCE SHEET DATA:

(unaudited)

Accounts receivable, net

$

120,600

$

108,196

$

85,883

Inventories

197,021

172,379

210,738

Net property and equipment

88,516

87,552

87,359

Total assets

437,416

386,641

405,320

Current liabilities

108,438

112,926

92,340

Total debt

64,296

44,479

68,328

Shareholders' equity

253,118

220,119

234,237

Shareholders' equity per share

23.65

21.11

22.46

Debt-to-equity ratio

.25 to 1

.20 to 1

.29 to 1

Six Months Ended

June 30,

2007

2006

OTHER DATA:

(unaudited)

Capital expenditures

5,509

8,127

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.

OLYMPIC STEEL

RESULTS OF OPERATIONS

(in thousands, except per share and tonnage data)

Three Months Ended June 30,

Six Months Ended June 30,

2007

2006

2007

2006

(unaudited)

(unaudited)

Tons sold

Direct

296,849

287,810

570,175

569,615

Toll

39,276

54,775

77,539

111,139

336,125

342,585

647,714

680,754

% change

(1.9%)

7.5%

(4.9%)

0.3%

Net sales

$

277,413

$

256,155

$

536,818

$

495,026

% change

8.3%

6.1%

8.4%

(5.9%)

Costs and expenses

Cost of materials sold (exclusive of depreciation shown below)

221,729

79.9%

202,795

79.2%

433,760

80.8%

394,508

79.7%

Warehouse and processing

14,272

5.1%

13,657

5.3%

27,947

5.2%

25,294

5.1%

Administrative and general

11,271

4.1%

9,743

3.8%

21,535

4.0%

19,047

3.8%

Distribution

6,464

2.3%

6,953

2.7%

12,773

2.4%

13,201

2.7%

Selling

4,185

1.5%

3,597

1.4%

7,966

1.5%

7,033

1.4%

Occupancy

1,451

0.5%

1,272

0.5%

3,204

0.6%

2,963

0.6%

Depreciation

2,170

0.8%

2,096

0.8%

4,352

0.8%

4,104

0.8%

Total costs and expenses

261,542

94.3%

240,113

93.7%

511,537

95.3%

466,150

94.2%

Operating income

15,871

5.7%

16,042

6.3%

25,281

4.7%

28,876

5.8%

Loss from joint ventures

-

(30)

-

(137)

Loss from disposition of joint venture

-

(2,000)

-

(2,000)

Income before financing costs and income taxes

15,871

14,012

25,281

26,739

Interest and other expense on debt

853

0.3%

345

0.1%

1,880

0.4%

499

0.1%

Income before income taxes

15,018

5.4%

13,667

5.3%

23,401

4.4%

26,240

5.3%

Income tax provision

5,572

37.1%

5,296

38.8%

8,703

37.2%

9,888

37.7%

Net income

$

9,446

$

8,371

$

14,698

$

16,352

Earnings per share:

Net income per share - basic

$

0.89

$

0.80

$

1.40

$

1.58

Weighted average shares outstanding - basic

10,603

10,416

10,527

10,338

Net income per share - diluted

$

0.88

$

0.79

$

1.37

$

1.54

Weighted average shares outstanding - diluted

10,753

10,661

10,716

10,615

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.

Source: Business Wire

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