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Press Release
Olympic Steel Reports 2000 Annual and Fourth Quarter Results
Cleveland, Ohio -- (February 2, 2001) Olympic Steel, Inc., (Nasdaq: ZEUS), a leading national steel service center, today announced fourth quarter and year end results for 2000. Fourth quarter results included non-recurring pretax charges of $3.6 million and the impact of sharply declining steel prices and a slowdown in customer demand.
Tons sold for the fourth quarter of 2000 decreased 17.2% to 276 thousand and net sales decreased 16.8% to $114.2 million from $137.2 million in 1999. The company reported a fourth quarter, $6.2 million pretax loss before non-recurring charges of $3.6 million. After including the non-recurring charges, the pretax loss totaled $9.8 million and the net loss was $6.8 million, or $0.73 per share. These results compare to a net loss of $1.0 million, or $.10 per share for 1999. Operating loss before these charges totaled $3.4 million, compared to operating income of $991 thousand for 1999.
The company recorded non-recurring charges in the fourth quarter to provide $2.4 million of incremental accounts receivable reserves for customer collectibility concerns, and recorded a $1.2 million asset impairment charge to reduce the net book value of certain equipment held for sale to its estimated sale value.
Tons sold for the year decreased 5.5% to 1.20 million, and net sales decreased 1.0% to $520.4 million from $525.8 million. The 2000 pretax loss before the charges totaled $9.3 million. Including the charges, the pretax loss totaled $12.9 million and the net loss was $8.7 million, or $.90 per share. These results compare to net earnings of $3.2 million, or $.30 per share for 1999. Operating income before these charges totaled $2.1 million, compared to operating income of $13.6 million for 1999.
"Beginning in April 2000, our sales and gross margins have been adversely impacted by the continued sharp decline in steel prices and deceleration in customer demand. The unprecedented 35% drop in hot rolled steel prices in the past nine months required prompt and aggressive action," stated Michael D. Siegal, Chairman and Chief Executive Officer. "As indicated in our second quarter 2000 earnings release, we recognized this softening and acted decisively. Evidence of our management efforts includes a $36 million reduction of our inventory, a $3.6 million reduction in annual operating expenses before the one-time charges, a 6.6% reduction in employment, positive operating cash flows of $33 million, and a $25 million reduction in outstanding bank debt since December 1999. We believe these efforts will be rewarded once the marketplace improves."
The Company has not seen any immediate improvements in terms of steel pricing or customer demand as it begins 2001. Shipments and earnings for the first quarter 2001 are expected to be lower than the first quarter of 2000. Stabilization of market pricing and steel consumption is not anticipated until mid-year 2001. The Company believes that its actions in 2000, its strong balance sheet, and its commitment to debt reduction, inventory management, expense control and performing flawlessly for its customers will have a positive impact on its financial performance going forward.
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 over 1,000 employees in 15 locations serving nine geographic markets. For further information about Olympic Steel, Inc., visit the Company’s web site at http://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; the company’s ability to continue to reduce its expenses, inventory and debt, to increase its cash flows, and the impact of the company’s recent actions on its future financial performance; work stoppages by automotive or steel manufacturers; and equipment installation delays or malfunctions. 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 December 31,
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Twelve Months Ended December 31,
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2000 |
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1999 |
2000 |
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1999 |
| SUMMARY |
(unaudited) | (audited) |
| Net sales | $114,162 | | $137,203 | | $520,359 | | $525,785 | |
| Operating income (loss) | (7,024) | (6.2%) | 991 | 0.7% | (1,512) | (0.3%) | 13,602 | 2.6% |
| Net income (loss) | (6,816) | | (1,048) | | (8,721) | | 3,159 | |
| Basic and diluted income (loss) per share | $(0.73) | | $(0.10) | | $(0.90) | | $0.30 | |
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| DETAILS | | | | | | | | |
| Tons sold | | | | | | | | |
| Direct | 242,029 | | 283,730 | | 1,037,442 | | 1,065,200 | |
| Toll | 34,336 | | 49,932 | | 165,255 | | 207,156 | |
| | 276,365 | | 333,662 | | 1,202,697 | | 1,272,356 | |
| % change | (17.2%) | | | | (5.5%) | | | |
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| Net sales | $114,162 | | $137,203 | | $520,359 | | $525,785 | |
| % change | (16.8%) | | | | (1.0%) | | | |
| Cost of sales | 92,662 | | 106,436 | | 411,624 | | 401,028 | |
| Gross margin | 21,500 | 18.8% | 30,767 | 22.4% | 108,735 | 20.9% | 124,757 | 23.7% |
| Operating expenses | | | | | | | | |
| Warehouse and processing | 8,431 | 7.4% | 9,466 | 6.9% | 34,137 | 6.6% | 35,226 | 6.7% |
| Administrative and general | 6,458 | 5.7% | 7,957 | 5.8% | 27,323 | 5.3% | 29,371 | 5.6% |
| Distribution | 4,077 | 3.6% | 5,151 | 3.8% | 19,436 | 3.7% | 18,959 | 3.6% |
| Selling | 4,811 | 4.2% | 3,861 | 2.8% | 14,353 | 2.8% | 15,176 | 2.9% |
| Occupancy | 1,160 | 1.0% | 1,133 | 0.8% | 4,598 | 0.9% | 4,571 | 0.9% |
| Depreciation and amortization | 2,409 | 2.1% | 2,208 | 1.6% | 9,222 | 1.8% | 7,852 | 1.5% |
| Asset impairment charge | 1,178 | 1.0% | - | 0.0% | 1,178 | 0.2% | - | 0.0% |
| Total operating expenses | 28,524 | 25.0% | 29,776 | 21.7% | 110,247 | 21.2% | 111,155 | 21.1% |
| Operating income (loss) | (7,024) | (6.2%) | 991 | 0.7% | (1,512) | (0.3%) | 13,602 | 2.6% |
| Loss from OLP joint venture | (442) | | (342) | | (1,358) | | (1,018) | |
| Income (loss) from TSP joint venture | (50) | | 10 | | (67) | | (14) | |
Income (loss) before financing costs
and taxes | (7,516) | | 659 | | (2,937) | | 12,570 | |
| Interest expense | 1,391 | | 1,490 | | 6,258 | | 4,315 | |
| Receivable securitization expense | 940 | | 874 | | 3,724 | | 3,119 | |
| Financing costs | 2,331 | 2.0% | 2,364 | 1.7% | 9,982 | 1.9% | 7,434 | 1.4% |
| Income (loss) before taxes | (9,847) | (8.6%) | (1,705) | (1.2%) | (12,919) | (2.5%) | 5,136 | 1.0% |
| Income taxes | (3,031) | 30.8% | (657) | 38.5% | (4,198) | 32.5% | 1,977 | 38.5% |
| Net income (loss) | $(6,816) | | $(1,048) | | $(8,721) | | $3,159 | |
| Basic and diluted income (loss) per share | $(0.73) | | $(0.10) | | $(0.90) | | $0.30 | |
| Weighted average shares outstanding | 9,331 | | 10,199 | | 9,677 | | 10,452 | |
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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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December 31, |
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2000 |
1999
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(audited) |
| Accounts receivable | $5,260 | $9,850 |
| Inventories | 89,404 | 119,585 |
| Net property and equipment | 117,573 | 124,204 |
| Total assets | 224,929 | 267,007 |
| Current liabilities | 32,672 | 36,248 |
| Total debt (current and long-term) | 68,009 | 93,426 |
| Shareholders' equity | 124,920 | 136,820 |
| Shareholders' equity per share | 13.39 | 13.56 |
| Debt-to-equity ratio | .54 to 1 | .68 to 1 |
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Twelve Months Ended
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December 31, |
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2000 |
1999 |
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(audited) |
| Change in working capital | $(30,100) |
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$12,410 |
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| Capital expenditures, net | 5,451 |
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12,574 |
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| EBITDA (a) | 8,888 |
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21,454 |
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(a) Excludes the impact of the $1,178 asset impairment charge in 2000.
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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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