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Press Release
Olympic Steel Reports Third Quarter 2001 Results
Cleveland, Ohio -- (October 25, 2001) Olympic Steel, Inc., (Nasdaq: ZEUS), a leading national steel service center, today announced financial results for the third quarter ended September 30, 2001. Tons sold for the third quarter of 2001 decreased 5.2% to 257 thousand and net sales decreased 21.0% to $96.8 million from $122.5 million in the third quarter of 2000. Net loss for the third quarter of 2001 was $1.0 million, or $0.10 per share, compared to a net loss of $3.5 million, or $.37 per share, for last year’s third quarter. Operating income totaled $582 thousand, compared to an operating loss of $2.7 million for the prior period.
Tons sold for the first nine months of 2001 decreased 10.4% to 830 thousand from 926 thousand, and net sales decreased 20.6% to $322.6 million from $406.2 million. Net loss for the first nine months totaled $1.8 million, or $.19 per share, compared to a net loss of $1.9 million, or $.19 per share, last year. Operating income totaled $2.9 million for the first nine months of 2001, compared to $5.5 million last year.
Commenting on the third quarter performance, Michael D. Siegal, Chairman and Chief Executive Officer, stated, “The realities of a weakening economy, especially evident in the steel sector, negatively impacted our sales and earnings. We generated operating income and positive cash flow due to improved gross margins and expense reductions. However, the severe decline in domestic steel demand and pricing, combined with increased financing costs associated with our June refinancing, resulted in a net loss for the quarter. We will continue to aggressively manage all controllable sectors of our business during this difficult business environment.”
Challenging economic conditions and uncertainty in industry demand will continue to impact the Company’s performance in the near future. The Company will continue its emphasis on expense reduction, asset management and cash flow.
Founded in 1954, Olympic Steel is a leading North American steel service center that 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 approximately 900 employees in 14 locations serving nine geographic markets. For further information about Olympic Steel, Inc., visit the Company’s web site at www.olysteel.com.
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. 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 that 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; the Company’s ability to reduce costs, maintain its gross margin levels, manage inventory, and generate positive cash flow; layoffs or work stoppages by the Company’s suppliers’ or customers’ personnel; and equipment malfunctions. Please refer to the Company’s Securities and Exchange Commission filings for further information.
Contact: Cathy S. Kish
Director - Investor Relations
Telephone: (216) 292-3800
Fax: (216) 682-4065
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Earnings
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SUMMARY FINANCIAL INFORMATION |
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| (in thousands, except per share and tonnage data) |
| |
| |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
| |
2001 |
|
2000 |
|
2001 |
|
2000 |
|
| SUMMARY |
(unaudited) |
|
(unaudited) |
|
| Net sales |
$96,770 |
|
$122,548 |
|
$322,597 |
|
$406,197 |
|
| Operating income (loss) |
582 |
0.6% |
(2,691) |
(2.2%) |
2,900 |
0.9% |
5,512 |
1.4% |
| Net loss |
$(998) |
|
$(3,545) |
|
$(1,785) |
|
$(1,905) |
|
| Basic and diluted net loss per share |
$(0.10) |
|
$(0.37) |
|
$(0.19) |
|
$(0.19) |
|
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| DETAILS |
| Tons sold: |
| Direct |
226,726 |
|
238,288 |
|
732,930 |
|
795,413 |
|
| Toll |
30,703 |
|
33,295 |
|
97,225 |
|
130,919 |
|
| |
257,429 |
|
271,583 |
|
830,155 |
|
926,332 |
|
| % change |
(5.2%) |
|
(11.3%) |
|
(10.4%) |
|
(1.3%) |
|
| Net sales |
$96,770 |
|
$122,548 |
|
$322,597 |
|
$406,197 |
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| % change |
(21.0%) |
|
(2.3%) |
|
(20.6%) |
|
4.5% |
|
| Cost of sales |
72,244 |
|
99,079 |
|
244,927 |
|
318,962 |
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| Gross margin |
24,526 |
25.3% |
23,469 |
19.2% |
77,670 |
24.1% |
87,235 |
21.5% |
| Operating expenses: |
| Warehouse and processing |
7,318 |
7.6% |
8,644 |
7.1% |
22,978 |
7.1% |
25,706 |
6.3% |
| Administrative and general |
6,022 |
6.2% |
6,478 |
5.3% |
19,218 |
6.0% |
20,865 |
5.1% |
| Distribution |
3,840 |
4.0% |
4,682 |
3.8% |
12,137 |
3.8% |
15,359 |
3.8% |
| Selling |
2,988 |
3.1% |
3,047 |
2.5% |
9,438 |
2.9% |
9,542 |
2.3% |
| Occupancy |
977 |
1.0% |
1,039 |
0.8% |
3,563 |
1.1% |
3,438 |
0.8% |
| Depreciation and amortization |
2,799 |
2.9% |
2,270 |
1.9% |
7,436 |
2.3% |
6,813 |
1.7% |
| Total operating expenses |
23,944 |
24.7% |
26,160 |
21.3% |
74,770 |
23.2% |
81,723 |
20.1% |
| Operating income (loss) |
582 |
0.6% |
(2,691) |
(2.2%) |
2,900 |
0.9% |
5,512 |
1.4% |
| Loss from OLP joint venture |
(52) |
|
(361) |
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(224) |
|
(916) |
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| Income (loss) from TSP joint venture |
2 |
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(83) |
|
10 |
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(17) |
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| Income (loss) before financing costs (a) |
532 |
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(3,135) |
|
2,686 |
|
4,579 |
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| Interest expense |
2,156 |
|
1,632 |
|
4,329 |
|
4,867 |
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| Receivable securitization expense |
- |
|
950 |
|
1,260 |
|
2,784 |
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| Financing costs |
2,156 |
2.2% |
2,582 |
2.1% |
5,589 |
1.7% |
7,651 |
1.9% |
| Loss before taxes |
(1,624) |
(1.7%) |
(5,717) |
(4.7%) |
(2,903) |
(0.9%) |
(3,072) |
(0.8%) |
| Income taxes |
(626) |
38.5% |
(2,172) |
38.0% |
(1,118) |
38.5% |
(1,167) |
38.0% |
| Net loss |
$(998) |
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$(3,545) |
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$(1,785) |
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$(1,905) |
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| Basic and diluted net loss per share |
$(0.10) |
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$(0.37) |
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$(0.19) |
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$(0.19) |
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| Weighted average shares outstanding |
9,631 |
|
9,505 |
|
9,574 |
|
9,793 |
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| 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. |
| SUMMARY OTHER FINANCIAL INFORMATION
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| (in thousands, except ratios) |
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September 30,
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December 31, |
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2001 |
2000 |
2000 |
| | (unaudited)
| (audited) |
| Accounts receivable (a) |
$49,150 | |
$14,923 | |
$5,260 | |
| Inventories |
77,491 | |
106,240 | |
89,404 | |
| Net property and equipment |
113,058 | |
122,557 | |
117,573 | |
| Total assets (a) |
255,000 | |
255,262 | |
224,929 | |
| Current liabilities |
30,260 | |
33,947 | |
32,672 | |
| Total debt (current & long-term) (a) |
101,670 | |
88,443 | |
68,009 | |
| Shareholders' equity |
123,135 | |
131,735 | |
124,920 | |
| Shareholders' equity per share |
12.79 | |
14.12 | |
13.39 | |
| Debt-to-equity ratio (a) |
.83 to 1 | |
.67 to 1 | |
.54 to 1 | |
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| | Nine Months Ended
|
| | September 30, |
| | 2001 | 2000 |
| | (unaudited) |
| Change in working capital (a) |
$33,147 | |
$(6,464) | |
| Capital expenditures, net |
2,301 | |
5,061 | |
| EBITDA |
10,336 | |
12,325 | |
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| (a) Increases are attributable to the termination of the Company's accounts receivable
securitization program on June 28, 2001, resulting in the repurchase of accounts receivable previously sold. |
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| Note: Certain 2000 amounts have been reclassified to conform to the 2001 presentation. |
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| 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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