Olympic Steel Reports 2005 Third Quarter Results
CLEVELAND, Oct. 27 /PRNewswire-FirstCall/ — Olympic Steel, Inc., , a national steel service center, today announced its financial results for the third quarter and nine months ended September 30, 2005.
Net sales for the third quarter of 2005 totaled $208.4 million, a 14.7% decrease from the $244.1 million for the third quarter a year ago. Third quarter 2005 net income totaled $2.2 million, or $0.21 per diluted share, compared to net income of $18.6 million, or $1.80 per diluted share for last year’s third quarter. Tons sold decreased 5.5% to 306 thousand from 323 thousand in the third quarter of 2004.
For the first nine months of 2005, net sales increased 12.3% to $734.4 million from $653.9 million. Net income for the first nine months of 2005 was $14.8 million, or $1.42 per diluted share, compared to net income of $47.9 million, or $4.70 per diluted share in the first nine months of 2004. Tons sold decreased 6.5% to 984 thousand from 1.05 million in the first nine months of 2004.
“Our acceleration of inventory and receivables turnover, coupled with consistent profitability and expense control, resulted in a significant reduction in our debt. During the third quarter, we reduced our Total Debt by $70 million to $13 million. Olympic Steel now has its strongest balance sheet and capital position since our initial public offering in 1994, with over $193 million, or $19.01 per share, of shareholders’ equity at September 30, 2005,” stated Michael D. Siegal, Chairman and Chief Executive Officer.
“During the third quarter, carbon flat rolled pricing and margin compression reached its low point so far this year. We at Olympic are encouraged by the recent reductions in the steel service center industry’s inventory levels as reported by the Metals Service Center Institute, coupled with announced producer price increases for carbon steel throughout the third quarter. Currently, demand appears solid entering the fourth quarter, leading us to believe in strong economic fundamentals for the marketplace. Our repositioned balance sheet is appropriate for these improving market conditions. We also anticipate using our financial position to take advantage of a consolidating service center industry,” concluded Mr. Siegal.
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 12 facilities and participates in two joint ventures. For further information, visit the Company’s web site at http://www.olysteel.com/ .
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. Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 that speak only as of the date hereof.
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 of transportation and logistical services; equipment installation delays or malfunctions; the successes of the Company’s efforts and initiatives to increase sales volumes, improve cash flows and reduce debt, maintain or improve inventory turns, and reduce costs; the operating and financial results of the Company’s joint ventures; the adequacy of our information technology and business system software; and customer, supplier, and competitor consolidation or insolvency. Please refer to the Company’s Securities and Exchange Commission filings for further information.
OLYMPICSTEEL SELECTED FINANCIAL INFORMATION (in thousands, except per share data and ratios) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 SUMMARY RESULTS OF OPERATIONS: (unaudited) (unaudited) Net sales $208,358 $244,142 $734,398 $653,948 Operating income 4,825 31,581 27,595 82,163 Income before income taxes 3,519 30,570 24,044 78,879 Net income $2,164 $18,572 $14,787 $47,919 Earnings per share: Net income per share – basic $0.21 $1.88 $1.46 $4.89 Net income per share – diluted $0.21 $1.80 $1.42 $4.70 September 30, December 31, 2005 2004 2004 SUMMARY BALANCE SHEET DATA: (unaudited) Accounts receivable, net $92,461 $108,349 $93,336 Inventories 103,290 147,857 186,124 Net property and equipment 79,241 85,304 83,571 Total assets 284,647 350,494 374,146 Current liabilities 68,710 89,152 95,688 Total debt 13,012 93,297 96,022 Shareholders’ equity 193,013 163,419 176,525 Shareholders’ equity per share 19.01 16.40 17.58 Debt-to-equity ratio .07 to 1 .57 to 1 .54 to 1 Nine Months Ended September 30, 2005 2004 OTHER DATA: (unaudited) Capital expenditures 1,695 1,698 EBITDA (a) 33,603 88,796 (a) Defined as operating income plus depreciation plus asset impairment charge.
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.
OLYMPICSTEEL RESULTS OF OPERATIONS (in thousands, except per share and tonnage data) Three Months Ended September 30, 2005 2004 (unaudited) Tons sold Direct 256,211 283,098 Toll 49,367 40,332 305,578 323,430 % change (5.5%) 7.2% Net sales $208,358 $244,142 % change (14.7%) 110.7% Costs and expenses Cost of materials sold (exclusive of depreciation shown below) 175,056 84.0% 178,576 73.1% Warehouse and processing 10,266 4.9% 10,142 4.2% Administrative and general 6,950 3.3% 11,703 4.8% Distribution 5,279 2.5% 4,482 1.8% Selling 3,032 1.5% 4,331 1.8% Occupancy 990 0.5% 1,328 0.5% Depreciation 1,960 0.9% 1,999 0.8% Asset impairment charge – 0.0% – 0.0% Total costs and expenses 203,533 97.7% 212,561 87.1% Operating income 4,825 2.3% 31,581 12.9% Income (loss) from joint ventures (564) 58 Income before financing costs and income taxes 4,261 31,639 Interest and other expense on debt 742 0.4% 1,069 0.4% Income before income taxes 3,519 1.7% 30,570 12.5% Income tax provision 1,355 38.5% 11,998 39.2% Net income $2,164 $18,572 Earnings per share: Net income per share – basic $0.21 $1.88 Weighted average shares outstanding – basic 10,153 9,904 Net income per share – diluted $0.21 $1.80 Weighted average shares outstanding – diluted 10,445 10,341 Nine Months Ended September 30, 2005 2004 (unaudited) Tons sold Direct 840,727 906,166 Toll 143,350 146,477 984,077 1,052,643 % change (6.5%) 23.9% Net sales $734,398 $653,948 % change 12.3% 90.0% Costs and expenses Cost of materials sold (exclusive of depreciation shown below) 615,674 83.8% 464,369 71.0% Warehouse and processing 30,958 4.2% 32,451 5.0% Administrative and general 23,267 3.2% 34,740 5.3% Distribution 15,438 2.1% 14,264 2.2% Selling 11,830 1.6% 15,411 2.4% Occupancy 3,628 0.5% 3,917 0.6% Depreciation 6,008 0.8% 6,146 0.9% Asset impairment charge – 0.0% 487 0.1% Total costs and expenses 706,803 96.2% 571,785 87.4% Operating income 27,595 3.8% 82,163 12.6% Income (loss) from joint ventures (121) 230 Income before financing costs and income taxes 27,474 82,393 Interest and other expense on debt 3,430 0.5% 3,514 0.5% Income before income taxes 24,044 3.3% 78,879 12.1% Income tax provision 9,257 38.5% 30,960 39.2% Net income $14,787 $47,919 Earnings per share: Net income per share – basic $1.46 $4.89 Weighted average shares outstanding – basic 10,127 9,791 Net income per share – diluted $1.42 $4.70 Weighted average shares outstanding – diluted 10,446 10,195
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
CONTACT: Richard T. Marabito, Chief Financial Officer of Olympic Steel,+1-216-292-3800, or fax, +1-216-292-3974
Web site: http://www.olysteel.com/