Olympic Steel Reports First-Quarter 2024 Results

Strategy to diversify and expand into higher-value processing and manufactured products contributes to financial performance in the face of pricing headwinds

Company remains in a strong operational and financial position to invest in additional higher-value growth opportunities to drive profitability and advance its strategy

Olympic Steel, Inc. (Nasdaq: ZEUS), a leading national metals service center, today announced financial results for the three months ended March 31, 2024.

Net income for the first quarter totaled $8.7 million, or $0.75 per diluted share, compared with net income of $9.9 million, or $0.85 per diluted share, in the first quarter of 2023. The results include $0.4 million of LIFO expense in the first quarter of 2024, compared with no LIFO adjustment in the first quarter of 2023. EBITDA for the first quarter of 2024 was $23.3 million, comparable to the $23.9 million earned in the first quarter of 2023.

The Company reported sales for the first quarter of 2024 totaling $527 million, compared with $573 million in the first quarter of 2023.

“Olympic Steel delivered solid results in the first quarter, with all three segments contributing to our profitability,” said Richard T. Marabito, Chief Executive Officer. “Shipping volumes were up over 9% sequentially from the fourth quarter, and we maintained our margins despite index pricing for hot-rolled steel falling more than 31% from January through mid-March. We also continued to navigate falling stainless steel surcharges throughout the first quarter. Our strategy to diversify and expand our portfolio of higher-value manufactured products provides a counter-cyclical benefit to falling metal prices and helps drive profitability regardless of market conditions.”

Marabito continued, “During the first quarter, we gained market share and expanded our offerings of fabrication and value-added products. Moving into the second quarter, pricing has begun to recover on some products, and demand remains steady. While market dynamics continue to shift, we remain committed to our disciplines around working capital, operating expenses and cash flow. Our balance sheet remains strong, enabling us to continue to invest strategically in organic growth, automation and acquisition opportunities that align with our priorities for long-term success. We are optimistic about our ability to deliver results for our shareholders.”

The Board of Directors approved a regular quarterly cash dividend of $0.15 per share, which is payable on June 17, 2024, to shareholders of record on June 3, 2024. The Company has paid regular quarterly dividends dating back to 2006.

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 Per Diluted Share to Adjusted Net Income 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
	March 31,
	2024		2023

Net income per diluted share (GAAP)	$	0.75	$	0.85

Excluding the following items
LIFO expense		0.03		-
Acquisition Inventory fair market value adjustment		-		0.13
Acquisition related expenses		-		0.16

Adjusted net income per diluted share (non-GAAP)	$	0.77	$	1.15


Reconciliation of Net Income to Adjusted EBITDA (in thousands) The following table reconciles Adjusted EBITDA to the most directly comparable GAAP financial measure:
	Three Months Ended
	3/31/2024		3/31/2023

Net income (GAAP):	$	8,697	$	9,872
Excluding the following items
Foreign exchange loss included in net income		19		11
Interest and other expense on debt		4,010		4,223
Income tax provision		3,212		3,617
Depreciation and amortization		7,334		6,201

Earnings before interest, taxes, depreciation and
amortization (EBITDA)		23,272		23,924

LIFO expense		400		-
Acquisition Inventory fair market value adjustment		-		2,079
Acquisition related expenses		-		2,556
Adjusted EBITDA (non-GAAP)	$	23,672	$	28,559

Conference Call and Webcast

A simulcast of Olympic Steel’s 2024 first-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 May 3, 2024, 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; supply disruptions and inflationary pressures, including the availability and rising costs of transportation, energy, logistical services and labor; risks associated with shortages of skilled labor, increased labor costs and our ability to attract and retain qualified personnel; rising interest rates and their impacts on our variable interest rate debt; supplier consolidation or addition of new capacity; risks associated with the invasion of Ukraine, including economic sanctions, and the conflicts in the Middle East, or additional war, military conflict, or hostilities could adversely affect global metals supply and pricing; general and global business, economic, financial and political conditions, including, but not limited to, recessionary conditions and legislation passed under the current administration; reduced production schedules, layoffs or work stoppages by our own, our suppliers' or customers' personnel; risks associated with supply chain disruption resulting from the imbalance of metal supply and end-user demands, including additional shutdowns as a result of infectious disease outbreaks in large markets, such as China, and other factors; our ability to successfully integrate recent acquisitions into our business and risks inherent with the acquisitions in the achievement of expected results, including whether the acquisition will be accretive and within the expected timeframe; the adequacy of our existing information technology and business system software, including duplication and security processes; 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; 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 last-in, first-out, or LIFO, inventory valuation; risks associated with infectious disease outbreaks, 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, negative impacts on our liquidity position, inability to access our traditional financing sources 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; 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; 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; customer, supplier and competitor consolidation, bankruptcy or insolvency; the timing and outcomes of inventory lower of cost or net realizable value adjustments and LIFO income or expense; cyclicality and volatility within the metals industry; 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; 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; risks and uncertainties associated with intangible assets, including impairment charges related to indefinite lived intangible assets; our ability to generate free cash flow through operations and repay debt; the amounts, successes and our ability to continue our capital investments and strategic growth initiatives, including acquisitions and our business information system implementations; events or circumstances that could adversely impact the successful operation of our processing equipment and operations; 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; 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; our ability to sell shares of our common stock under the at-the-market equity program; 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 (NASDAQ: ZEUS) is a leading U.S. metals service center focused on the direct sale and value-added processing of carbon and coated sheet, plate, and coil products; stainless steel sheet, plate, bar and coil; aluminum sheet, plate and coil; pipe, tube, bar, valves and fittings; tin plate and metal-intensive end-use products, including bollards, water treatment systems; commercial, residential and industrial venting and air filtration systems; Wright ^® brand self-dumping hoppers; and EZ-Dumper ^® dump inserts. Headquartered in Cleveland, Ohio, Olympic Steel operates from 47 facilities.

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

Olympic Steel, Inc. Consolidated Statements of Net Income (in thousands, except per-share data)
	Three months ended
	March 31
	2024		2023

Net sales	$	526,642	$	573,076

Costs and expenses
Cost of materials sold (excludes items shown separately below)		407,538		452,636
Warehouse and processing		32,893		30,649
Administrative and general		30,152		33,185
Distribution		16,758		17,741
Selling		11,536		10,397
Occupancy		4,493		4,544
Depreciation		6,006		5,077
Amortization		1,328		1,124
Total costs and expenses		510,704		555,353
Operating income		15,938		17,723
Other loss, net		19		11
Income before interest and income taxes		15,919		17,712
Interest and other expense on debt		4,010		4,223
Income before income taxes		11,909		13,489
Income tax provision		3,212		3,617
Net income	$	8,697	$	9,872


Earnings per share:
Net income per share - basic	$	0.75	$	0.85
Weighted average shares outstanding - basic		11,663		11,570
Net income per share - diluted	$	0.75	$	0.85
Weighted average shares outstanding - diluted		11,663		11,571

Olympic Steel, Inc. Balance Sheets (in thousands)
	As of March 31, 2024			As of December 31, 2023
Assets

Cash and cash equivalents	$	10,340		$	13,224
Accounts receivable, net		214,753			191,149
Inventories, net (includes LIFO reserves of $12,443 and $12,043 as of March 31, 2024 and December 31, 2023, respectively)		397,567			386,535
Prepaid expenses and other		9,304			12,261
Total current assets		631,964			603,169

Property and equipment, at cost		487,968			483,448
Accumulated depreciation		(303,462	)		(297,340	)
Net property and equipment		184,506			186,108

Goodwill		52,091			52,091
Intangible assets, net		91,559			92,621
Other long-term assets		18,864			16,466
Right of use asset, net		32,795			34,380
Total assets	$	1,011,779		$	984,835

Liabilities

Accounts payable	$	149,429		$	119,718
Accrued payroll		16,475			30,113
Other accrued liabilities		19,273			22,593
Current portion of lease liabilities		7,786			7,813
Total current liabilities		192,963			180,237

Credit facility revolver		196,800			190,198
Other long-term liabilities		22,420			20,151
Deferred income taxes		10,897			11,510
Lease liabilities		25,714			27,261
Total liabilities		448,794			429,357


Shareholders' Equity

Preferred stock		-			-
Common stock		137,063			136,541
Accumulated other comprehensive loss		-			41
Retained earnings		425,922			418,896
Total shareholders' equity		562,985			555,478
Total liabilities and shareholders' equity	$	1,011,779		$	984,835

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 March 31,
	Carbon Flat Products				Specialty Metals Flat Products				Tubular and Pipe Products
	2024		2023		2024		2023		2024		2023

Tons sold ¹		219,675		218,338		29,903		32,516		N/A		N/A

Net sales	$	300,975	$	309,818	$	129,534	$	166,564	$	96,133	$	96,694
Average selling price per ton		1,370		1,419		4,332		5,123		N/A		N/A
Cost of materials sold		235,615		248,436		107,590		137,713		64,333		66,487
Gross profit		65,360		61,382		21,944		28,851		31,800		30,207
Operating expenses		56,703		55,436		18,013		19,592		24,173		20,466
Operating income		8,657		5,946		3,931		9,259		7,627		9,741

Depreciation and amortization		4,081		3,607		988		984		2,248		1,593
LIFO (income) / expense		-		-		-		-		400		-

¹ The Company does not report tons sold for McCullough Industries, EZ Dumper, or Metal-Fab in the Carbon Flat Products Segment, Shaw Stainless in the Specialty Metals Flat Products Segment or for the entire Tubular and Pipe Products Segment.

	As of March 31, 2024		As of December 31, 2023
Assets
Flat-products	$	674,903	$	649,744
Tubular and pipe products		335,528		333,677
Corporate		1,348		1,414
Total assets	$	1,011,779	$	984,835

Other Information (in thousands, except per-share and ratio data)
	As of March 31, 2024			As of December 31, 2023
Shareholders' equity per share	$	50.58		$	49.90
Debt to equity ratio		0.35 to 1		0.34 to 1


	Three Months Ended March 31,
	2024			2023

Net cash from (used for) operating activities	$	(2,608	)	$	52,440
Cash dividends per share	$	0.15		$	0.13