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Olympic Steel Reports 2005 Fourth Quarter and Annual Results and Announces Its First Quarterly Cash Dividend

Posted on: Wednesday, 15 February 2006, 09:00 CST

CLEVELAND, Feb. 15 /PRNewswire-FirstCall/ -- Olympic Steel, Inc., , a national steel service center, today announced its financial results for the fourth quarter and year ended December 31, 2005.

Net sales for the fourth quarter of 2005 totaled $204.8 million, a 14.7% decrease from the $240.2 million for the fourth quarter a year ago. Fourth quarter 2005 net income totaled $7.3 million, or $0.70 per diluted share, compared to net income of $12.2 million, or $1.17 per diluted share for last year's fourth quarter. Tons sold decreased 2.3% to 295 thousand from 303 thousand in the fourth quarter of 2004.

Net sales for the full year 2005 increased 5.0% to $939.2 million from $894.2 million. Net income for 2005 was $22.1 million, or $2.11 per diluted share, compared to net income of $60.1 million, or $5.88 per diluted share for 2004. Tons sold decreased 5.6% to 1.28 million from 1.36 million in 2004.

"Our fourth quarter performance made 2005 the second most profitable year in the 51 year history of Olympic Steel," stated Michael D. Siegal, Chairman and Chief Executive Officer. "As previously announced, our fourth quarter results included a charge of $3.5 million before taxes, or approximately $.21 per diluted share after taxes, for the closure of our Olympic Laser Processing (OLP) automotive joint venture operation in Detroit, Michigan. The challenging automotive environment for all of our Detroit operations, coupled with domestic and international supply disruptions, also contributed to the decline in our tons sold in 2005 compared to the robust levels of 2004."

"Olympic Steel strengthened its balance sheet during the fourth quarter with our sustained emphasis on working capital and cash flow management. Our focus continues on delivering value added services and supply solutions to our customers as we migrate toward more downstream processing for sustained imbedded margin improvement and growth. In 2006, we expect to significantly increase our capital spending over recent levels. We added four new laser- processing lines in 2005, and are planning to install six more lasers in 2006. In January 2006, we also purchased a 150,000 square foot facility in Chambersburg, Pennsylvania to complement our existing presence there, and to further our commitment to downstream value-added processing."

"After review of the past several years of performance, the Board of Directors concluded that the Company is positioned to accomplish its growth objectives from its strong operating earnings and capital management, while simultaneously rewarding shareholders with current cash distributions. Accordingly, the Board of Directors has approved a quarterly dividend of $.03 per share that will be paid to shareholders of record as of March 1, 2006, and distributed on March 15, 2006. The Company expects to make regular quarterly dividends in the future, subject to the continuing determination by the Board of Directors that this dividend policy remains in the best interests of the Company's shareholders. The adoption of this dividend policy reflects our confidence in the future prospects of the Company. We remain committed to delivering results for our customers and building value for our shareholders."

"The steel industry consolidation is creating opportunities for all participants in the steel supply chain. We currently expect steel prices to remain relatively high compared to historical levels. Similar to our plans to increase capital spending, the positive durable goods statistics recently released by the government point to increased domestic industrial spending. We believe we are well positioned to benefit from these developments," 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. 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 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 turnover, and reduce costs; the timing and outcome of OLP's efforts and ability to liquidate its assets; the impact of customer, supplier, and competitive factors on OLP's liquidation plans; the operating and financial results of the Company's joint ventures; the adequacy of our information technology and business system software; customer, supplier, and competitor consolidation or insolvency; and other factors described in our filings with the Securities and Exchange Commission. 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 Securities and Exchange Commission.

OLYMPICSTEEL SELECTED FINANCIAL INFORMATION (in thousands, except per share data and ratios) Three Months Ended Twelve Months Ended December 31, December 31, 2005 2004 2005 2004 SUMMARY RESULTS OF OPERATIONS: (unaudited) (unaudited) Net sales $204,812 $240,209 $939,210 $894,157 Operating income 16,426 20,644 44,021 102,807 Income before income taxes 12,149 20,014 36,193 98,893 Net income $7,305 $12,159 $22,092 $60,078 Earnings per share: Net income per share - basic $0.72 $1.22 $2.18 $6.12 Net income per share - diluted $0.70 $1.17 $2.11 $5.88 December 31, 2005 2004 SUMMARY BALANCE SHEET DATA: (unaudited) Accounts receivable, net $80,131 $93,336 Inventories 134,236 186,124 Net property and equipment 77,751 83,571 Total assets 305,606 374,146 Current liabilities 94,603 95,688 Total debt - 96,022 Shareholders' equity 200,321 176,525 Shareholders' equity per share 19.73 17.58 Debt-to-equity ratio n/a .54 to 1 Twelve Months Ended December 31, 2005 2004 OTHER DATA: (unaudited) Capital expenditures 2,230 2,029 EBITDA (a) 52,044 111,503 (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 December 31, 2005 2004 (unaudited) Tons sold Direct 249,797 264,766 Toll 45,663 37,747 295,460 302,513 % change (2.3%) (8.8%) Net sales $204,812 $240,209 % change (14.7%) 87.1% Costs and expenses Cost of materials sold (exclusive of depreciation shown below) 157,065 76.7% 187,418 78.0% Warehouse and processing 10,503 5.1% 10,131 4.2% Administrative and general 8,962 4.4% 10,080 4.2% Distribution 5,733 2.8% 4,511 1.9% Selling 3,008 1.5% 4,381 1.8% Occupancy 1,100 0.5% 981 0.4% Depreciation 2,015 1.0% 2,063 0.9% Asset impairment charge - 0.0% - 0.0% Total costs and expenses 188,386 92.0% 219,565 91.4% Operating income 16,426 8.0% 20,644 8.6% Income (loss) from joint ventures (504) 511 Loss from disposition of joint venture (3,500) - Income before financing costs and income taxes 12,422 21,155 Interest and other expense on debt 273 0.1% 1,141 0.5% Income before income taxes 12,149 5.9% 20,014 8.3% Income tax provision 4,844 39.9% 7,855 39.2% Net income $7,305 $12,159 Earnings per share: Net income per share - basic $0.72 $1.22 Weighted average shares outstanding - basic 10,153 9,997 Net income per share - diluted $0.70 $1.17 Weighted average shares outstanding - diluted 10,479 10,394

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) Twelve Months Ended December 31, 2005 2004 (unaudited) Tons sold Direct 1,090,524 1,170,932 Toll 189,013 184,224 1,279,537 1,355,156 % change (5.6%) 14.7% Net sales $939,210 $894,157 % change 5.0% 89.2% Costs and expenses Cost of materials sold (exclusive of depreciation shown below) 772,739 82.3% 651,787 72.9% Warehouse and processing 41,461 4.4% 42,582 4.8% Administrative and general 32,229 3.4% 44,820 5.0% Distribution 21,171 2.3% 18,775 2.1% Selling 14,838 1.6% 19,792 2.2% Occupancy 4,728 0.5% 4,898 0.5% Depreciation 8,023 0.9% 8,209 0.9% Asset impairment charge - 0.0% 487 0.1% Total costs and expenses 895,189 95.3% 791,350 88.5% Operating income 44,021 4.7% 102,807 11.5% Income (loss) from joint ventures (625) 741 Loss from disposition of joint venture (3,500) - Income before financing costs and income taxes 39,896 103,548 Interest and other expense on debt 3,703 0.4% 4,655 0.5% Income before income taxes 36,193 3.9% 98,893 11.1% Income tax provision 14,101 39.0% 38,815 39.2% Net income $22,092 $60,078 Earnings per share: Net income per share - basic $2.18 $6.12 Weighted average shares outstanding - basic 10,134 9,816 Net income per share - diluted $2.11 $5.88 Weighted average shares outstanding - diluted 10,457 10,222

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.

First Call Analyst: FCMN Contact:

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/

Source: PRNewswire-FirstCall

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