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Press Release
Olympic Steel Reports Results For The Third Quarter Of 2000
Cleveland, Ohio -- (October 19, 2000) Olympic Steel, Inc., (Nasdaq: ZEUS), a leading national steel service center, today announced financial results for the third quarter ended September 30, 2000. Tons sold for the third quarter of 2000 decreased 11.3% from 306 thousand to 272 thousand and net sales decreased 2.3% to $122.5 million from $125.4 million. The company reported a net loss of $3.5 million, or $.37 per share, compared to net income of $808 thousand, or $.08 per share for last year's third quarter. Operating losses totaled $2.7 million for the current year quarter, compared to operating income of $3.4 million for the prior year period.
Tons sold for the first nine months of 2000 decreased 1.3% to 926 thousand from 939 thousand, and net sales increased 4.5% to $406.2 million from $388.6 million. The company reported a net loss for the first nine months of $1.9 million, or $.19 per share, compared to net income of $4.2 million, or $.40 per share last year. Operating income totaled $5.5 million, or 1.4% of net sales for the first nine months of 2000, compared to $12.6 million, or 3.2% last year.
"Weakened demand for steel by our customer base and continued downward pricing pressure has negatively impacted our results. Specifically, demand from our automotive, transportation and construction sectors and in other service centers continued to be lower than historical volumes. Our gross margins were significantly affected by the price volatility caused by excess inventory in the steel market," commented Michael D. Siegal, Chairman and Chief Executive Officer.
"The shifting business environment emphasizes the importance of the cost reduction efforts that we put in place at the beginning of 2000. Even with the softening demand and market inventory levels, we have been successful in reducing our inventory by $13.3 million throughout the year. We continued to reduce our operating expenses quarter over quarter even with the rising fuel costs in our distribution expense and higher depreciation," concluded Mr. Siegal. Mr Siegal also noted that higher interest rates continue to increase the company's interest expense this year.
The company still expects to report a loss in the fourth quarter of 2000 as current market trends affecting volumes and margins are expected to continue through yearend.
Founded in 1954, 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 15 locations serving nine geographic markets. For further information on Olympic Steel, Inc., visit the Company's web site at www.olysteel.com.
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; work stoppages by automotive or steel manufacturers; potential equipment installation delays and malfunctions; and the successes of the Company's ability to increase sales volumes, improve gross margins, quality, service and inventory turns and reduce its costs. Please refer to the Company's Securities and Exchange Commission filings for further information.
Contact: Cathy S. Kish
Director - Investor Relations
e-mail: ckish@olysteel.com
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) |
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Three Months Ended September 30,
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Nine Months Ended September 30,
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|
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2000 |
|
1999 |
|
2000 |
|
1999 |
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| SUMMARY |
(unaudited) |
| Net sales |
$122,548 |
|
$125,388 |
|
$406,197 |
|
$388,582 |
|
| Operating income (loss) |
(2,691) |
(2.2%) |
3,392 |
2.7% |
5,512 |
1.4% |
12,611 |
3.2% |
| Net income (loss) |
(3,545) |
|
808 |
|
(1,905) |
|
4,207 |
|
| Basic and diluted income (loss) per share |
$(0.37) |
|
$0.08 |
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$(0.19) |
|
$0.40 |
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| DETAILS |
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| Tons sold |
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|
|
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|
|
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| Direct |
238,288 |
|
259,808 |
|
795,413 |
|
781,470 |
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| Toll |
33,295 |
|
46,287 |
|
130,919 |
|
157,224 |
|
| |
271,583 |
|
306,095 |
|
926,332 |
|
938,694 |
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| % change |
(11.3%) |
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(1.3%) |
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| Net sales |
$122,548 |
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$125,388 |
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$406,197 |
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$388,582 |
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| % change |
(2.3%) |
|
|
|
4.5% |
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|
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| Cost of sales |
99,079 |
|
94,563 |
|
318,962 |
|
294,592 |
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| Gross margin |
23,469 |
19.2% |
30,825 |
24.6% |
87,235 |
21.5% |
93,990 |
24.2% |
| Operating expenses |
|
|
|
|
|
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|
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| Warehouse and processing |
8,644 |
7.1% |
8,849 |
7.1% |
25,706 |
6.3% |
25,760 |
6.6% |
| Administrative and general |
6,478 |
5.3% |
7,365 |
5.9% |
20,865 |
5.1% |
21,414 |
5.5% |
| Distribution |
4,682 |
3.8% |
4,583 |
3.7% |
15,359 |
3.8% |
13,808 |
3.6% |
| Selling |
3,047 |
2.5% |
3,673 |
2.9% |
9,542 |
2.3% |
11,315 |
2.9% |
| Occupancy |
1,039 |
0.8% |
1,086 |
0.9% |
3,438 |
0.8% |
3,438 |
0.9% |
| Depreciation and amortization |
2,270 |
1.9% |
1,877 |
1.5% |
6,813 |
1.7% |
5,644 |
1.5% |
| Total operating expenses |
26,160 |
21.3% |
27,433 |
21.9% |
81,723 |
20.1% |
81,379 |
20.9% |
| Operating income (loss) |
(2,691) |
(2.2%) |
3,392 |
2.7% |
5,512 |
1.4% |
12,611 |
3.2% |
| Loss from OLP joint venture |
(361) |
|
(305) |
|
(916) |
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(676) |
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| Income (loss) from TSP joint venture |
(83) |
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2 |
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(17) |
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(24) |
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Income (loss) before
financing costs and taxes |
(3,135) |
|
3,089 |
|
4,579 |
|
11,911 |
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| Interest expense |
1,632 |
|
1,006 |
|
4,867 |
|
2,825 |
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| Receivable securitization expense |
950 |
|
769 |
|
2,784 |
|
2,245 |
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| Financing costs |
2,582 |
2.1% |
1,775 |
1.4% |
7,651 |
1.9% |
5,070 |
1.3% |
| Income (loss) before taxes |
(5,717) |
(4.7%) |
1,314 |
1.0% |
(3,072) |
(0.8%) |
6,841 |
1.8% |
| Income taxes |
(2,172) |
38.0% |
506 |
38.5% |
(1,167) |
38.0% |
2,634 |
38.5% |
| Net income (loss) |
(3,545) |
|
808 |
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(1,905) |
|
4,207 |
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| Basic and diluted income (loss) per share |
$(0.37) |
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$0.08 |
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$(0.19) |
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$0.40 |
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| Weighted average shares outstanding |
9,505 |
|
10,381 |
|
9,793 |
|
10,543 |
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| Note: Certain 1999 amounts have been reclassified to conform to the 2000 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. |
| 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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2000 |
1999
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1999 |
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(unaudited)
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(audited) |
| Accounts receivable |
$14,888 |
$21,417 |
$9,802 |
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|
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| Inventories |
106,240 |
119,022 |
119,585 |
| Net property and equipment |
122,557 |
122,685 |
124,204 |
| Total assets |
254,684 |
278,102 |
266,965 |
| Current liabilities |
33,947 |
43,810 |
36,248 |
| Total debt (current and long-term) |
88,443 |
95,164 |
93,426 |
| Shareholders' equity |
131,735 |
139,363 |
136,820 |
| Shareholders' equity per share |
14.12 |
13.43 |
13.56 |
| Debt-to-equity ratio |
.67 to 1 |
.68 to 1 |
.68 to 1 |
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Nine Months Ended
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September 30, |
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2000 |
1999 |
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(unaudited) |
| Change in working capital |
($6,464) |
|
$12,991 |
|
| Capital expenditures, net |
5,061 |
|
8,889 |
|
| EBITDA |
12,325 |
|
18,255 |
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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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olysteel.com