Server: Netscape-Communications/1.1 Date: Thursday, 20-Nov-97 22:17:49 GMT Content-type: text/html Olympic Steel 1997 - 3rd quarter earnings press release
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Press Release


Contact: R. Louis Schneeberger
Chief Financial Officer
Telephone: (216) 292-3800
Fax: (216) 292-3974


Olympic Steel Reports Sixth Consecutive Quarter
of Year-Over-Year Sales and Tonnage Growth

Cleveland, Ohio -- (October 23, 1997) Olympic Steel, Inc., (ZEUS-NASDAQ), a leading national steel service center, today announced earnings for the third quarter ended September 30, 1997. Tons sold for the quarter increased 14% from 285.2 thousand to 325 thousand and net sales increased 7.6% to $145.2 million from $135.0 million. Earnings for the third quarter of 1997 totaled $1.7 million, or $.16 per share, compared to $3.5 million, or $.36 per share for last year's third quarter. Operating income totaled $5.1 million, or 3.5% of net sales for the current year quarter, compared to $7.3 million, or 5.4% for the prior year quarter.

For the nine months ended September 30, 1997, tons sold increased 10.3% to 979.6 thousand from 888.5 thousand, and net sales increased 6.6% to $452.3 million from $424.3 million. Earnings for the first nine months totaled $6.8 million, or $.64 per share, compared to $11.1 million, or $1.23 per share last year. Operating income totaled $16.8 million, or 3.7% of net sales for the first nine months of 1997, compared to $24.5 million, or 5.8% last year. The Company's 1997 results include the results of Southeastern Metal Processing, acquired June 1, 1997.

"Olympic recorded its sixth consecutive quarter of year-over-year sales and tonnage growth. This was augmented by new market and geographic penetration as well as the first full quarter results of Southeastern Metal Processing," commented Michael D. Siegal, Chairman and Chief Executive Officer. "We continue to focus on acquisition and growth opportunities that strengthen our ability to increase profits and garner market share."

"1997 has been a competitive year for many in the service center industry, including Olympic Steel," stated Siegal. "We've incurred substantial short-term costs in connection with some of our long-term investments, such as the Iowa facility and laser welding joint venture, that will help build the proper infrastructure for our growth. These investments will positively impact our future performance."

Olympic Steel is a leading North American steel service center that has positioned itself for growth in a consolidating steel industry. It is experienced in the specialized processing and distribution of flat-rolled carbon and stainless steel products, as well as tubular steel products. Headquartered in Cleveland, Ohio, the company has over 1,000 employees in 14 locations serving nine geographic markets.

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 which speak only as of the date hereof. Such risks and uncertainties include, but are not limited to, general business and economic conditions; competitive factors such as the availability and pricing of steel and fluctuations in demand, specifically in the automotive market; work stoppages by automotive manufacturers; potential equipment malfunction; equipment installation and facility construction delays, particularly with the Iowa temper mill; and the availability of acquisition opportunities. Please refer to the Company's Securities and Exchange Commission filings for further information.


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OLYMPIC STEEL
SUMMARY FINANCIAL INFORMATION
(in thousands, except per share and tonnage data - unaudited)
 
Three Months Ended September 30, Nine Months Ended September 30,
1997 1996 1997 1996
 
SUMMARY
 
Net sales $145,223 $134,971 $452,291 $424,257
Operating income 5,094 3.5% 7,263 5.4% 16,847 3.7% 24,527 5.8%
 
Net income 1,715 3,530 6,849 11,117
Net income per share $0.16 $0.36 $0.64 $1.23
====== ====== ====== ======
 
DETAILS
 
Tons sold:
    Direct 265,752 249,644 830,186 775,173
    Toll (b)  59,284  35,593 149,436 113,356
325,036 285,237 979,622 888,529
    % increase 14.0% 15.1% 10.3% 7.2%
 
Net sales $145,223 $134,971 $452,291 $424,257
    % change 7.6% 1.7% 6.6% 0.1%
 
Cost of sales  115,078  104,568  359,111  330,113
 
    Gross margin 30,145 20.8% 30,403 22.5% 93,180 20.6% 94,144 22.2%
 
Operating expenses:
    Warehouse and processing 8,032 5.5% 7,613 5.6% 24,886 5.5% 21,954 5.2%
    Administrative and general 6,868 4.7% 6,304 4.7% 20,142 4.5% 18,681 4.4%
    Distribution 4,306 3.0% 4,082 3.0% 13,574 3.0% 12,830 3.0%
    Selling 3,327 2.3% 3,198 2.4% 10,276 2.3% 10,235 2.4%
    Occupancy 920 0.6% 898 0.7% 3,102 0.7% 2,851 0.7%
    Depreciation and amortization   1,598 1.1%     1,045 0.8%   4,353 1.0%   3,066 0.7%
      Total operating expenses 25,051 17.3% 23,140 17.1% 76,333 16.9% 69,617 16.4%
 
    Operating income 5,094 3.5% 7,263 5.4% 16,847 3.7% 24,527 5.8%
 
Income from OCR joint venture 120 - 283 -
Start-up costs of OLP joint venture (293) - (293) -
 
Interest expense 1,247 899 3,145 3,822
Receivable securitization expense     930     848   2,733   2,543
 
    Financing costs 2,177 1.5% 1,747 1.3% 5,878 1.3% 6,365 1.5%
 
    Income before taxes 2,744 1.9% 5,516 4.1% 10,959 2.4% 18,162 4.3%
 
Income taxes   1,029 37.5%   1,986 36.0%   4,110 37.5%   7,045 38.8%
 
Net income $1,715 $3,530 $6,849 $11,117
====== ====== ====== ======
 
Net income per share $0.16 $0.30 $0.64 $1.23
====== ====== ====== ======
 
Weighted average shares outstanding (a) 10,692 9,801 10,692 9,003
====== ====== ====== ======
 
(a) Shares outstanding increased primarily as a result of the Company's stock offering in August 1996.
(b) The majority of the toll tonnage increase is attributable to Southeastern Metal Processing, which was acquired June 1, 1997.

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OLYMPIC STEEL
SUMMARY OTHER FINANCIAL INFORMATION
(in thousands, except ratio)
 
                September 30, December 31,
1997 1996 1996       
            (unaudited)
 
Accounts receivable $20,830 $17,493 $9,483
 
Inventories 137,630 117,561 138,238
 
Net property and equipment 99,210 75,317 79,000
 
Total assets 282,659 226,664 241,130
 
Current liabilities 37,198 37,662 36,267
 
Total debt (current & long-term) 99,115 52,823 64,582
 
Shareholders' equity 144,176 134,201 137,327
 
Debt-to-equity ratio .69 to 1 .39 to 1 .47 to 1
 
 
Nine Months Ended    
September 30,
    
1997 1996
 
Increase in working capital $10,936 $10,600
 
Acquisition of Southeastern Metal Processing 13,689 -
 
Investments in joint ventures 6,000 -
 
Capital expenditures, net 11,816 10,622
 
EBITDA 21,200 27,593
 
 
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.


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