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OLYMPIC STEEL INC
Symbol U : ZEUS
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Olympic Steel Reports 2012 Fourth-Quarter and Full-Year Financial Results

2013-02-21 06:00 ET - News Release

CLEVELAND, Feb. 21, 2013 (GLOBE NEWSWIRE) -- Olympic Steel, Inc.(Nasdaq:ZEUS), a national metals service center, today announced financial results for the fourth quarter and full year ended Dec. 31, 2012.

Net sales for the 2012 fourth quarter totaled $291.7 million, an 8.8% decrease from the fourth-quarter record of $319.9 million reported in last year's comparable period. For the full year, net sales reached a record $1.4 billion, a 9.7% increase from the Company's previous record of $1.3 billion achieved in 2011.

As a result of its goodwill impairment test conducted in the fourth quarter of 2012, the Company has determined that approximately $6.6 million of goodwill related to its flat products Southern region was impaired. The goodwill impairment charge has been recorded as a non-cash expense for periods ended Dec. 31, 2012. Inclusive of the charge, the Company reported a fourth quarter net loss of $10.1 million, or $0.92 per diluted share, compared with net income of $0.6 million, or $0.05 per diluted share, in the fourth quarter of 2011.

For the full year, including the aforementioned non-cash goodwill charge, net income totaled $2.3 million, or $0.21 per diluted share, compared with net income of $25.0 million, or $2.28 per diluted share, in 2011.

Chairman and Chief Executive Officer Michael D. Siegal commented, "During 2012, we made significant progress on a variety of growth and development initiatives. We successfully ramped up several new facilities and completed major capital projects to enhance future profitability. However, the year ended with a disappointing quarter as steel demand and pricing declined in tandem with mounting political and fiscal uncertainty—masking much of our operational headway.

"Entering 2013, we are encouraged by recovering demand for steel products," Siegal continued. "Now, the vast majority of cash outlays associated with the multi-year capital expansion projects are behind us and our focus is on harnessing their potential to increase earnings and cash flow."

Conference Call and Webcast

A simulcast of Olympic Steel's 2012 fourth-quarter and full-year earnings conference call may be accessed via the Investor Relations section of the Company's website at www.olysteel.com. The simulcast will begin at 11:00 a.m. Eastern Time today and a replay of the call will be available for 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," 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 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: general and global business, economic, financial and political conditions, including the ongoing effects of the global economic recovery; access to capital and global credit markets; competitive factors such as the availability and pricing of metal, industry shipping and inventory levels, and rapid fluctuations in customer demand and metal pricing; the cyclicality and volatility within the metals industry; the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability; the success of our new facility startups in Gary, Ind.; Mount Sterling, Ky.; Monterrey, Mexico; Roseville, Minn.; Kansas City, Mo.; and Streetsboro, Ohio; the ability to successfully integrate the newly leased locations or recently acquired businesses into our operations and achieve expected results; equipment installation delays or malfunctions, including the new Streetsboro, Ohio, facility startup; the ability to comply with the terms of our asset-based credit facility and to make the required term-loan payments; the ability of our customers to honor their agreements related to derivative instruments, including the outcome of the MF Global UK Limited administration process; customer, supplier, and competitor consolidation, bankruptcy or insolvency; reduced production schedules, layoffs or work stoppages by our own, our suppliers' or our customers' personnel; the success of union contract renewals; the availability and costs of transportation and logistical services; the amounts, successes and our ability to continue our capital investments and strategic growth initiatives and our business information system implementations; the successes of our strategic efforts and initiatives to increase sales volumes, maintain or improve working capital turnover and free cash flows, improve inventory turnover and improve our customer service; the timing and outcome of inventory lower of cost or market adjustments; the adequacy of our existing information technology and business system software; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; our ability to generate free cash flow through operations and decreased future capital expenditures, reduce inventory and repay debt within anticipated timeframes; 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 potential impairment charges; the recently enacted federal healthcare legislation's impact on the healthcare benefits required to be provided by us and the impact of such legislation on our compensation and administrative costs; and unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters, including any developments that would require an increase in our costs for such contingencies. Further information on these and other risks and uncertainties is provided under Item 1A "Risk Factors" of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which disclosure is incorporated herein by reference, and elsewhere in reports that the Company files or furnishes with the SEC. This release speaks only as of its date and 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 SEC.

About Olympic Steel

Founded in 1954, Olympic Steel is a leading U.S. metals 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 and aluminum products. The Company's CTI subsidiary is a leading distributor of steel tubing, bar, pipe, valves and fittings, and fabricates pressure parts for the electric utility industry. Headquartered in Cleveland, Ohio, Olympic Steel currently operates from 33 facilities in North America.

For additional information, please visit the Company's website at http://www.olysteel.com or http://www.b2i.us/profiles/investor/ContactUs.asp?BzID=2195.

The Olympic Steel, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3582

Olympic Steel, Inc.
Results of Operations
(in thousands, except per-share data)
                 
 Three Months Ended Dec. 31,Twelve Months Ended Dec. 31,
 2012201120122011
 (unaudited)(audited)
Net sales  $ 291,724    $ 319,944    $ 1,383,701    $ 1,261,872  
% change (8.8%)   48.7%   9.7%   56.7%  
                 
Costs and expenses                
                 
Cost of materials sold (exclusive of items shown below) 234,793 80.5% 257,824 80.6% 1,113,852 80.5% 1,008,462 79.9%
Warehouse and processing 20,497 7.0% 20,997 6.6% 84,389 6.1% 72,429 5.7%
Administrative and general 15,606 5.3% 15,817 4.9% 68,253 4.9% 59,156 4.7%
Distribution 8,048 2.8% 8,062 2.5% 35,009 2.5% 28,489 2.3%
Selling 6,647 2.3% 6,803 2.1% 27,635 2.0% 24,943 2.0%
Occupancy 2,175 0.7% 2,089 0.7% 8,671 0.6% 7,879 0.6%
Depreciation 5,335 1.8% 4,189 1.3% 19,971 1.4% 15,602 1.2%
Amortization 222 0.1% 222 0.1% 889 0.1% 444 0.0%
Goodwill impairment 6,583 2.3%  --  0.0% 6,583 0.5%  --  0.0%
                 
Total costs and expenses 299,906 102.8% 316,003 98.8% 1,365,252 98.7% 1,217,404 96.5%
                 
Operating (loss) income (8,182) (2.8%) 3,941 1.2% 18,449 1.3% 44,468 3.5%
                 
Asset impairment charge of JV 36 0.0% 953 0.3% 36 0.0% 953 0.1%
Other (income) expense, net 7 0.0% (14) (0.0%) (83) (0.0%) 77 0.0%
                 
(Loss) income before financing cost and income taxes (8,225) (2.8%) 3,002 0.9% 18,496 1.3% 43,438 3.4%
                 
Interest and other expense on debt 1,946 0.7% 2,085 0.7% 8,357 0.6% 5,953 0.5%
                 
(Loss) income before income taxes (10,171) (3.5%) 917 0.3% 10,139 0.7% 37,485 3.0%
                 
Income tax (benefit) expense  (53) 0.5% 352 38.4% 7,862 77.5% 12,515 33.4%
                 
Net (loss) income  $ (10,118)    $ 565    $ 2,277    $ 24,970  
                 
Net loss on interest rate hedge, net of tax (11)    --    (579)    --   
                 
Total comprehensive (loss) income  $ (10,129)    $ 565    $ 1,698    $ 24,970  
                 
Earnings per share:                
                 
Net (loss) income per share - basic $ (0.92)   $ 0.05   $ 0.21   $ 2.28  
                 
Weighted average shares outstanding - basic 10,993   10,941   10,989   10,937  
                 
Net (loss) income per share - diluted $ (0.92)    $ 0.05   $ 0.21   $ 2.28  
                 
 Weighted average shares outstanding - diluted 10,993   10,953   10,995   10,951  
 
Olympic Steel, Inc.
Consolidated Balance Sheets
(in thousands)
     
 At Dec. 31,
 20122011
 (audited)
Assets    
     
Cash and cash equivalents $7,782 $7,403
Accounts receivable, net 112,841 122,579
Inventories, net 290,023 277,765
Prepaid expenses and other 11,731 13,112
 Total current assets 422,377 420,859
     
Property and equipment, at cost 347,935 329,116
Accumulated depreciation (151,608) (135,703)
 Net property and equipment 196,327 193,413
     
Goodwill 40,787 47,254
Intangible assets, net 35,424 36,313
Other long-term assets 11,079 9,660
 Total assets$705,994 $707,499
     
Liabilities     
     
Current portion of long-term debt $10,942 $9,662
Accounts payable 101,471 104,425
Accrued payroll 10,705 11,613
Other accrued liabilities 14,984 13,875
 Total current liabilities 138,102 139,575
     
Credit facility revolver 177,575 170,405
Long-term debt 53,194 64,149
Other long-term liabilities 11,410 9,580
Deferred income taxes 35,856 37,214
 Total liabilities416,137420,923
     
Shareholders' Equity    
     
Preferred stock  --   -- 
Common stock 122,272 119,816
Accumulated other comprehensive loss (579)  -- 
Retained earnings 168,164 166,760
 Total shareholders' equity289,857286,576
 Total liabilities and shareholders' equity$705,994 $707,499
 
Olympic Steel, Inc.
Segment Financial Information*
(in thousands)
         
 Three Months EndedTwelve Months Ended
 Dec. 31,Dec. 31,
 (unaudited)(audited)
 2012201120122011
Net sales        
 Flat products  $ 234,472  $ 263,190  $ 1,138,063  $ 1,143,708
 Tubular and pipe products 57,252 56,754 245,638 118,164
Total net sales  $ 291,724  $ 319,944  $ 1,383,701  $ 1,261,872
         
Depreciation and amortization        
 Flat products  $ 4,274  $ 3,540  $ 16,065  $ 13,800
 Tubular and pipe products 1,283 871 4,795 2,246
Total depreciation and amortization  $ 5,557  $ 4,411  $ 20,860  $ 16,046
         
Operating (loss) income        
 Flat products  $ (11,297)  $ 288  $ 452  $ 37,262
 Tubular and pipe products 3,115 3,653 17,997 7,206
Total operating (loss) income  $ (8,182)  $ 3,941  $ 18,449  $ 44,468
         
 Asset impairment charge of JV 36 953 36 953
 Other (income) expense, net 7 (14) (83) 77
(Loss) income before financing cost  and income taxes  $ (8,225)  $ 3,002  $ 18,496  $ 43,438
Interest and other expense on debt 1,946 2,085 8,357 5,953
(Loss) income before income taxes  $ (10,171)  $ 917  $ 10,139  $ 37,485
         
Capital expenditures        
 Flat products  $ 2,291  $ 14,415  $ 17,004  $ 38,849
 Tubular and pipe products 795 454 6,369 638
Total capital expenditures  $ 3,086  $ 14,869  $ 23,373  $ 39,487
         
         
 At Dec. 31,     
 20122011    
Goodwill        
 Flat products  $ 500  $ 7,083    
 Tubular and pipe products 40,287 40,171    
Total goodwill  $ 40,787  $ 47,254    
         
Total Assets        
 Flat products  $ 480,487  $ 494,179    
 Tubular and pipe products 225,507 213,320    
Total assets  $ 705,994  $ 707,499    

* The tubular and pipe products segment is a result of the July 1, 2011, acquisition of Chicago Tube & Iron. As a result, the data for the 12 months ended Dec. 31, 2011, only includes six months of tubular and pipe products segment data.

Other Information:
 At Dec. 31,
 20122011
     
Shareholders' equity per share  $ 26.54  $ 26.28
     
Debt-to-equity ratio 0.83 to 1 0.85 to 1
     
     
 Twelve Months Ended
 Dec. 31,
 20122011
     
     
Capital expenditures  $ 23,373  $ 39,487
     
Cash dividends per share  $ 0.08  $ 0.08
CONTACT: IR Contact:
         Matthew J. Dennis, CFA
         Olympic Steel Investor Relations
         (216) 672-0552

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