ZEUS Olympic Steel Inc

Record-setting performance for the quarter is a strong finish to the most profitable year in Olympic Steel history

Diversification strategy positions Company to deliver more consistent earnings throughout market cycles

Quarterly dividend increased from $0.02 to $0.09 per share

Olympic Steel, Inc. (Nasdaq: ZEUS), a leading national metals service center, today announced record results for the three and 12 months ended December 31, 2021.

Fourth-Quarter Results

Net income for the fourth quarter totaled $24.9 million, or $2.16 per diluted share, compared with net income of $1.8 million, or $0.16 per diluted share, in the fourth quarter of 2020. The results include $9.9 million of LIFO pre-tax expense in the fourth quarter of 2021, compared with $0.4 million of LIFO pre-tax income in the same period a year ago. Adjusted EBITDA for the fourth quarter of 2021 was $51.1 million, compared with $9.9 million in the fourth quarter of 2020.

Sales for the fourth quarter of 2021 totaled $625 million, compared with $332 million in the fourth quarter of 2020.

Full-Year Results

Net income for 2021 totaled $121.1 million, or $10.52 per diluted share, compared with a net loss of $5.6 million, or $0.49 per diluted share, in 2020. The results include $21.9 million of LIFO pre-tax expense in 2021, compared with $1.5 million of LIFO pre-tax income in 2020. Adjusted EBITDA for 2021 was $211.1 million, compared with $22.1 million in 2020. Sales for 2021 totaled $2.3 billion compared with $1.2 billion in 2020.

“We achieved record sales and net income for the fourth quarter, a fitting capstone to a year of record-setting performance for Olympic Steel,” said Richard T. Marabito, Chief Executive Officer. “All three of our operating segments earned record EBITDA in 2021, reflecting not only strong market demand for our products but also the benefits of our diversification and acquisition strategy. At the same time, we remained focused on operational and working capital disciplines, including record inventory turns, which further enhanced our financial performance.”

Marabito continued, “The strategic actions we took in 2021 also strengthened our Company for the longer term, as we continue to diversify our business and expand into higher-return, value-added products. We sold our Detroit flat-rolled metal operations and assets in September and redeployed a portion of the proceeds into a higher-return growth opportunity through the purchase of Shaw Stainless and Alloy, our fifth acquisition since 2018. We also invested in automation, expanded in the growing Southeast and Southwest U.S. markets, and grew our share in the aluminum, stainless steel and pipe and tube markets.”

As the Company reported on February 18, 2022, the Board of Directors approved a regular quarterly cash dividend of $0.09 per share, which is an increase of $0.07 per share from the Company’s last dividend of $0.02 per share. The dividend is payable on March 15, 2022, to shareholders of record on March 1, 2022. The Company has paid a regular quarterly dividend since March 2006.

Marabito added, “As we begin 2022, we are well-positioned for a strong first quarter. The stainless steel, aluminum, and pipe and tube markets remain robust. Although prices in the carbon segment began to transition down in the fourth quarter, we are optimistic about business conditions in the first quarter of 2022. We are confident that our efforts to diversify and expand in higher-margin products will help Olympic Steel provide more consistent profitability and reduce the impact of market cyclicality on our financial performance.”

“We thank our entire team for their resilience and outstanding efforts in making 2021 a phenomenal year. We are especially pleased to share our success with our shareholders through a significantly higher quarterly dividend,” Marabito concluded.

The table that follows provides a reconciliation of non-GAAP measures to the most directly comparable measures prepared in accordance with GAAP.

Olympic Steel, Inc.

Reconciliation of Net Income (Loss) Per Diluted Share to

Adjusted Net Income (Loss) Per Diluted Share

(Figures may not foot due to rounding.)

The following table reconciles adjusted net income per diluted share to the most directly comparable GAAP

financial measure:

  Three Months Ended Twelve Months Ended 12/31/2021 12/31/2020 12/31/2021 12/31/2020   Net income (loss) per diluted share (GAAP):

$

2.16

$

0.16

 

$

10.52

 

$

(0.49

)

Excluding the following items: LIFO (Income) / Expense

 

0.63

 

(0.02

)

 

1.40

 

 

(0.09

)

Gain on Sale of Detroit Operations

 

-

 

-

 

 

(0.23

)

 

-

 

Restructuring and other charges

 

-

 

-

 

 

-

 

 

0.21

 

  Adjusted net income (loss) per diluted share (non-GAAP):

$

2.79

$

0.14

 

$

11.69

 

$

(0.37

)

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands)

The following table reconciles Adjusted EBITDA to the most directly comparable GAAP financial measure:

  Three Months Ended Twelve Months Ended 12/31/2021 12/31/2020 12/31/2021 12/31/2020   Net income (loss) (GAAP):

$

24,861

$

1,786

 

$

121,051

 

$

(5,595

)

Excluding the following items: Foreign exchange loss included in net income

 

12

 

5

 

 

36

 

 

73

 

Interest and other expense on debt

 

2,013

 

1,588

 

 

7,631

 

 

7,411

 

Income tax provision (benefit)

 

9,394

 

1,991

 

 

43,748

 

 

(1,316

)

Depreciation and amortization

 

4,995

 

4,923

 

 

20,316

 

 

19,490

 

  Earnings before interest, taxes, depreciation and amortization (EBITDA)

 

41,275

 

10,293

 

 

192,782

 

 

20,063

 

  LIFO (Income) / Expense

 

9,850

 

(417

)

 

21,850

 

 

(1,517

)

Gain on Sale of Detroit Operations

 

-

 

-

 

 

(3,499

)

 

-

 

Restructuring and other charges:

 

-

 

-

 

 

-

 

 

3,586

 

  Adjusted EBITDA (non-GAAP)

$

51,125

$

9,876

 

$

211,133

 

$

22,132

 

Conference Call and Webcast

A simulcast of Olympic Steel’s 2021 fourth-quarter earnings conference call can be accessed via the Investor Relations section of the Company’s website at www.olysteel.com. The live simulcast will begin at 10 a.m. ET on February 25, 2022, and a replay will be available for approximately 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,” and “continue,” as well as the negative of these terms or 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: risks of falling metals prices and inventory devaluation; risks associated with supply chain disruption resulting from the imbalance of metal supply and end-user demands related to the novel coronavirus, or COVID-19, pandemic and other factors; supply disruptions and inflationary pressures, including the availability and rising costs of transportation and logistical services and labor; increased customer demand without corresponding increase in metal supply could lead to an inability to meet customer demand and result in lower sales and profits; risks associated with the COVID-19 pandemic, including, but not limited to customer closures, reduced sales and profit levels, slower payment of accounts receivable and potential increases in uncollectible accounts receivable, falling metals prices that could lead to lower of cost or net realizable value inventory adjustments and the impairment of intangible and long-lived assets, reduced availability and productivity of our employees, increased operational risks as a result of remote work arrangements, including the potential effects on internal controls, as well as cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events, negative impacts on our liquidity position, inability to access our traditional financing sources on the same or reasonably similar terms as were available before the COVID-19 pandemic and increased costs associated with and less ability to access funds under our asset-based credit facility, or ABL Credit Facility, and the capital markets; general and global business, economic, financial and political conditions, including legislation passed under the new administration; competitive factors such as the availability, and global pricing of metals and production levels, industry shipping and inventory levels and rapid fluctuations in customer demand and metals pricing; supplier consolidation or addition of capacity; customer, supplier and competitor consolidation, bankruptcy or insolvency; reduced production schedules, layoffs or work stoppages by our own, our suppliers’ or customers’ personnel; the levels of imported steel in the United States and the tariffs initiated by the U.S. government in 2018 under Section 232 of the Trade Expansion Act of 1962 and imposed tariffs and duties on exported steel or other products, U.S. trade policy and its impact on the U.S. manufacturing industry; cyclicality and volatility within the metals industry; the adequacy of our efforts to mitigate cyber security risks and threats, especially with employees working remotely due to the COVID-19 pandemic; fluctuations in the value of the U.S. dollar and the related impact on foreign steel pricing, U.S. exports, and foreign imports to the United States; the successes of our efforts and initiatives to improve working capital turnover and cash flows, and achieve cost savings; our ability to further diversify our business, deliver consistent profitability and enhance shareholder value, including, without limitation, our ability to successfully redeploy the proceeds from the sale of our Detroit operation and other capital; our ability to generate free cash flow through operations and repay debt; our ability to sell shares of our common stock under the at-the-market equity program; the adequacy of our existing information technology and business system software, including duplication and security processes; the amounts, successes and our ability to continue our capital investments and strategic growth initiatives, including acquisitions and our business information system implementations; our ability to successfully integrate recent acquisitions into our business and risks inherent with the acquisitions in the achievement of expected results, including whether an acquisition will be accretive and within the expected timeframe; events or circumstances that could adversely impact the successful operation of our processing equipment and operations; rising interest rates and their impacts on our variable interest rate debt; the impacts of union organizing activities and the success of union contract renewals; changes in laws or regulations or the manner of their interpretation or enforcement could impact our financial performance and restrict our ability to operate our business or execute our strategies; 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 impairment charges related to indefinite lived intangible assets; the timing and outcomes of inventory lower of cost or net realizable value adjustments and last-in, first-out, or LIFO, income or expense; the inflation or deflation existing within the metals industry, as well as product mix and inventory levels on hand, which can impact our cost of materials sold as a result of the fluctuations in the LIFO inventory valuation; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any; and unanticipated developments that could occur with respect to contingencies such as litigation, arbitration and environmental matters, including any developments that would require any increase in our costs for such contingencies.

In addition to financial information prepared in accordance with GAAP, this document also contains adjusted earnings per diluted share and adjusted EBITDA, which are non-GAAP financial measures. Management’s view of the Company’s performance includes adjusted earnings per share and adjusted EBITDA, and management uses these non-GAAP financial measures internally for planning and forecasting purposes and to measure the performance of the Company. We believe these non-GAAP financial measures provide useful and meaningful information to us and investors because they enhance investors’ understanding of the continuing operating performance of our business and facilitate the comparison of performance between past and future periods. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. Additionally, the presentation of these measures may be different from non-GAAP financial measures used by other companies. A reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures is provided above.

About Olympic Steel

Founded in 1954, Olympic Steel is a leading U.S. metals service center focused on the direct sale of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel, aluminum, tin plate, and metal-intensive branded products. The Company’s CTI subsidiary is a leading distributor of steel tubing, bar, pipe, valves and fittings, and fabricator of value-added parts and components. Headquartered in Cleveland, Ohio, Olympic Steel operates from 41 facilities in North America.

For additional information, please visit the Company’s website at www.olysteel.com.

Olympic Steel, Inc.

Consolidated Statements of Net Income (Loss)

(in thousands, except per-share data)

 

Three months ended

 

Twelve months ended

December 31

 

December 31

2021

 

2020

 

2021

 

2020

  Net sales

$

624,586

 

$

331,547

 

$

2,312,253

 

$

1,234,144

 

  Costs and expenses Cost of materials sold (excludes items shown separately below)

 

497,818

 

 

260,373

 

 

1,802,052

 

 

979,099

 

Warehouse and processing

 

26,864

 

 

20,918

 

 

103,017

 

 

83,091

 

Administrative and general

 

30,289

 

 

18,874

 

 

104,617

 

 

71,451

 

Distribution

 

13,318

 

 

11,595

 

 

55,404

 

 

44,728

 

Selling

 

11,473

 

 

7,187

 

 

41,881

 

 

26,050

 

Occupancy

 

3,549

 

 

2,307

 

 

12,500

 

 

9,662

 

Depreciation

 

4,395

 

 

4,514

 

 

17,952

 

 

17,936

 

Amortization

 

600

 

 

409

 

 

2,364

 

 

1,554

 

  Total costs and expenses

 

588,306

 

 

326,177

 

 

2,139,787

 

 

1,233,571

 

  Operating income

 

36,280

 

 

5,370

 

 

172,466

 

 

573

 

  Other loss, net

 

(12

)

 

(5

)

 

(36

)

 

(73

)

  Income before interest and income taxes

 

36,268

 

 

5,365

 

 

172,430

 

 

500

 

  Interest and other expense on debt

 

2,013

 

 

1,588

 

 

7,631

 

 

7,411

 

  Income (loss) before income taxes

 

34,255

 

 

3,777

 

 

164,799

 

 

(6,911

)

  Income tax provision (benefit)

 

9,394

 

 

1,991

 

 

43,748

 

 

(1,316

)

  Net income (loss)

$

24,861

 

$

1,786

 

$

121,051

 

$

(5,595

)

  Earnings per share:   Net income (loss) per share - basic

$

2.16

 

$

0.16

 

$

10.53

 

$

(0.49

)

  Weighted average shares outstanding - basic

 

11,492

 

 

11,451

 

 

11,492

 

 

11,447

 

  Net income (loss) per share - diluted

$

2.16

 

$

0.16

 

$

10.52

 

$

(0.49

)

  Weighted average shares outstanding - diluted

 

11,510

 

 

11,475

 

 

11,503

 

 

11,447

 

Olympic Steel, Inc.

Balance Sheets

(in thousands)

  As ofDecember 31,2021 As ofDecember 31,2020 Assets   Cash and cash equivalents

$

9,812

 

$

5,533

 

Accounts receivable, net

 

284,570

 

 

151,601

 

Inventories, net (includes LIFO reserve of $19,736 and LIFO debit of $2,115 as of December 31, 2021 and December 31, 2020 respectively)

 

485,029

 

 

240,001

 

Prepaid expenses and other

 

9,989

 

 

5,069

 

  Total current assets

 

789,400

 

 

402,204

 

  Property and equipment, at cost

 

413,396

 

 

434,579

 

Accumulated depreciation

 

(266,340

)

 

(277,379

)

  Net property and equipment

 

147,056

 

 

157,200

 

  Goodwill

 

10,496

 

 

5,123

 

Intangible assets, net

 

33,653

 

 

32,593

 

Other long-term assets

 

15,241

 

 

18,131

 

Right of use asset, net

 

27,726

 

 

25,354

 

  Total assets

$

1,023,572

 

$

640,605

 

  Liabilities   Accounts payable

$

148,649

 

$

87,291

 

Accrued payroll

 

44,352

 

 

10,985

 

Other accrued liabilities

 

25,395

 

 

22,869

 

Current portion of lease liabilities

 

5,940

 

 

5,580

 

  Total current liabilities

 

224,336

 

 

126,725

 

  Credit facility revolver

 

327,764

 

 

160,609

 

Other long-term liabilities

 

15,006

 

 

22,478

 

Deferred income taxes

 

9,890

 

 

9,818

 

Lease liabilities

 

22,137

 

 

19,965

 

  Total liabilities

 

599,133

 

 

339,595

 

    Shareholders' Equity   Preferred stock

 

-

 

 

-

 

Common stock

 

133,427

 

 

132,382

 

Accumulated other comprehensive loss

 

(1,996

)

 

(4,215

)

Retained earnings

 

293,008

 

 

172,843

 

  Total shareholders' equity

 

424,439

 

 

301,010

 

  Total liabilities and shareholders' equity

$

1,023,572

 

$

640,605

 

Olympic Steel, Inc.

Segment Financial Information

(In thousands, except tonnage and per-ton data. Figures may not foot to consolidated totals due to Corporate expenses.)

  Three months ended December 31,

Carbon Flat Products

 

Specialty Metals Flat Products

 

Tubular and Pipe Products

2021

 

2020

 

2021

 

2020

 

2021

 

2020

  Tons sold

 

192,545

 

225,576

 

 

34,529

 

34,031

 

N/A

 

 

N/A

 

  Net sales

$

367,670

$

178,547

 

$

157,218

$

89,303

$

99,698

 

$

63,697

 

Average selling price per ton

 

1,910

 

792

 

 

4,553

 

2,624

 

N/A

 

 

N/A

 

Cost of materials sold

 

304,509

 

138,881

 

 

110,477

 

75,326

 

82,832

 

 

46,166

 

Gross profit

 

63,161

 

39,666

 

 

46,741

 

13,977

 

16,866

 

 

17,531

 

Operating expenses

 

41,884

 

37,577

 

 

22,584

 

9,485

 

21,226

 

 

15,786

 

Operating income (loss)

 

21,277

 

2,089

 

 

24,157

 

4,492

 

(4,360

)

 

1,745

 

  Depreciation and amortization

 

2,716

 

3,009

 

 

1,030

 

494

 

1,232

 

 

1,402

 

LIFO expense (income)

 

-

 

-

 

 

-

 

-

 

9,850

 

 

(417

)

 

Twelve months ended December 31,

Carbon Flat Products

 

Specialty Metals Flat Products

 

Tubular and Pipe Products

2021

 

2020

 

2021

 

2020

 

2021

 

2020

  Tons sold

 

921,295

 

897,709

 

 

157,807

 

126,673

 

N/A

 

 

N/A

 

  Net sales

$

1,344,150

$

690,273

 

$

585,751

$

313,190

$

382,352

 

$

230,681

 

Average selling price per ton

 

1,459

 

769

 

 

3,712

 

2,472

 

N/A

 

 

N/A

 

Cost of materials sold

 

1,059,620

 

551,788

 

 

441,825

 

266,434

 

300,607

 

 

160,877

 

Gross profit

 

284,530

 

138,485

 

 

143,926

 

46,756

 

81,745

 

 

69,804

 

Operating expenses

 

174,456

 

148,774

 

 

73,382

 

35,090

 

74,392

 

 

60,785

 

Operating income (loss)

 

110,074

 

(10,289

)

 

70,544

 

11,666

 

7,353

 

 

9,019

 

  Depreciation and amortization

 

11,286

 

11,941

 

 

3,692

 

1,951

 

5,267

 

 

5,478

 

LIFO expense (income)

 

-

 

-

 

 

-

 

-

 

21,850

 

 

(1,517

)

  As ofDecember 31,2021 As ofDecember 31,2020 Assets Flat-products

$

777,074

$

404,269

 

Tubular and pipe products

 

245,962

 

235,516

 

Corporate

 

536

 

820

 

Total assets

$

1,023,572

$

640,605

 

Other Information

(in thousands, except per-share and ratio data)

  (in thousands except per share data) As ofDecember 31,2021 As ofDecember 31,2020 Shareholders' equity per share

$

38.31

 

$

27.18

  Debt to equity ratio 0.77 to 1 0.53 to 1  

Twelve Months Ended December 31,

2021

 

2020

  Net cash from (used for) operating activities

 

(146,374

)

 

61,652

Cash dividends per share

$

0.08

 

$

0.08

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220223006297/en/

Richard A. Manson Chief Financial Officer (216) 672-0522 ir@olysteel.com