UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549


 
FORM 8-K



CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): May 1, 2020




Olympic Steel, Inc.
(Exact name of registrant as specified in its charter)

Ohio
000-23320
34-1245650
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer Identification No.)


5096 Richmond Road, Bedford Heights, Ohio
44146
(Address of principal executive offices)
(Zip Code)
 
Registrant's telephone number, including area code:   (216) 292-3800
 
________________________________________________________________________________
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

   
[   ]  
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
[   ]  
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
[   ]  
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
[   ]  
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, without par value
ZEUS
The NASDAQ Stock Market, LLC.

 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company [  ]
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]



Item 2.02. Results of Operations and Financial Condition.

 
On May 1, 2020, Olympic Steel, Inc. issued a press release reporting its operating results for the first quarter of 2020 ended March 31, 2020. The press release is attached hereto as Exhibit 99.1.
 
The information included in this report, including exhibit 99.1, is furnished pursuant to Item 2.02 of Form 8-K, is not to be considered "filed" under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and shall not be incorporated by reference into any of Olympic Steel, Inc.'s previous or future filings under the Securities Act of 1933, as amended, or the Exchange Act except as otherwise expressly stated in such filing.
 
 
Item 9.01. Financial Statements and Exhibits.
 
 
(d) Exhibits.
 
Exhibit No.
 
99.1 Press release dated May 1, 2020.
 

SIGNATURE
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
Olympic Steel, Inc.
 
 
 
 
 
 
 
 
(Registrant)
 
 
 
May 1, 2020
 
/s/   RICHARD A. MANSON
 
 
 
 
 

(Date)
 
Richard A. Manson
 
 
Chief Financial Officer
 
 
(Principal Financial and Accounting Officer)



 
Exhibit Index
 
99.1 Press Release dated May 1, 2020
 

Exhibit 99.1

Olympic Steel Reports First-Quarter 2020 Results

Disciplined approach to operating expenses and inventory management further strengthens balance sheet and liquidity

CLEVELAND--(BUSINESS WIRE)--May 1, 2020--Olympic Steel, Inc. (Nasdaq: ZEUS), a leading national metals service center, today announced financial results for the three months ended March 31, 2020.

Net income for the first quarter totaled $0.6 million, or $0.05 per diluted share, compared to $2.1 million, or $0.18 per diluted share, in the first quarter of 2019. Sales for the first quarter of 2020 totaled $354 million, compared with $446 million in the first quarter of 2019. The results include $0.5 million of LIFO pre-tax income in the first quarter of 2020, while there was no LIFO adjustment in the first quarter of 2019. The first-quarter earnings impact of LIFO is noted in the reconciliation below.

“We are pleased that our team’s efforts resulted in a first-quarter profit despite a challenging environment. Our results include the positive impacts of reducing operating expenses and the continuous improvement of our inventory management. These initiatives, together with our strong balance sheet and liquidity, have created a stronger and more resilient foundation that we believe will enable us to manage through the uncertainty caused by the COVID-19 pandemic,” said Chief Executive Officer Richard T. Marabito.

“We are committed to a safe work environment and are closely following the evolving COVID-19 guidance provided by our government officials and the U.S. Centers for Disease Control and Prevention, including social distancing, restricting travel, disinfecting and sanitizing our facilities, and working remotely whenever possible. We are proud of how our employees have responded and represented Olympic Steel during this difficult time.”

Marabito continued, “As an essential business, we continue to safely serve our customers from all of our facilities, and our supply chains remain intact. We have curtailed non-critical spending and quickly right-sized our workforce and inventory to correlate with current business levels. Our decisive actions ensure that Olympic Steel remains a strong, reliable company during this period of economic and end-market uncertainty, with the ability to quickly respond to improved business activity as the United States economy reopens. We finished the quarter with improved liquidity, and approximately $112 million of availability under our asset-based revolving credit facility.”

The Board of Directors also approved a regular quarterly cash dividend of $0.02 per share, which is payable on June 15, 2020, to shareholders of record on June 1, 2020.

The table that follows provides a reconciliation of non-GAAP measures to measures prepared in accordance with GAAP.


Olympic Steel, Inc.

Reconciliation of Net Income Per Diluted Share to Adjusted Net Income Per Diluted Share

The following table reconciles adjusted net income per diluted share to the most directly comparable GAAP financial measure:



 

 


Three Months Ended

March 31,

 


2020

 

2019

 



Net income per diluted share:


$

0.05

 

 

$

0.18

 


 

 

 

Excluding the following item:


 

 

 

LIFO (income)


 

(0.03

)

 

 

-

Adjusted net income per diluted share (non-GAAP):


$

0.02

 

 

$

0.18

Conference Call and Webcast

A simulcast of Olympic Steel’s 2020 first-quarter earnings conference call can be accessed via the Investor Relations section of the Company’s website at www.olysteel.com. The live simulcast will begin at 9 a.m. ET on May 1, 2020, and a replay will be available for approximately 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,” and “continue,” as well as the negative of these terms or 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: risks associated with the novel coronavirus, or COVID-19, pandemic, including, but not limited to reduced sales and profit levels, slower payment of accounts receivable and potential increases in uncollectible accounts receivable, falling metals prices that could lead to lower of cost or market inventory adjustments and the impairment of intangible and long-lived assets, reduced availability and productivity of our employees, increased operational risks as a result of remote work arrangements, including the potential effects on internal controls, as well as cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events, negative impacts on our liquidity position, and increased costs and less ability to access funds under our ABL Credit Facility and the capital markets; risks of falling metals prices and inventory devaluation; general and global business, economic, financial and political conditions, including the 2020 U.S. election; competitive factors such as the availability, global pricing of metals and production levels, industry shipping and inventory levels and rapid fluctuations in customer demand and metals pricing; the levels of imported steel in the United States and the tariffs initiated by the U.S. government in 2018 under Section 232 of the Trade Expansion Act of 1962 and imposed tariffs and duties on exported steel or other products, U.S. trade policy and its impact on the U.S. manufacturing industry; cyclicality and volatility within the metals industry; fluctuations in the value of the U.S. dollar and the related impact on foreign steel pricing, U.S. exports, and foreign imports to the United States; the successes of our efforts and initiatives to improve working capital turnover and cash flows, and achieve cost savings; our ability to generate free cash flow through operations and repay debt; the availability and rising costs of transportation and logistical services; customer, supplier and competitor consolidation, bankruptcy or insolvency; reduced production schedules, layoffs or work stoppages by our own, our suppliers’ or customers’ personnel; the adequacy of our existing information technology and business system software, including duplication and security processes; the adequacy of our efforts to mitigate cyber security risks and threats, especially with employees working remotely due to the COVID-19 pandemic; the amounts, successes and our ability to continue our capital investments and strategic growth initiatives, including acquisitions and our business information system implementations; our ability to successfully integrate recent acquisitions into our business and risks inherent with the acquisitions in the achievement of expected results, including whether the acquisition will be accretive and within the expected timeframe; events or circumstances that could adversely impact the successful operation of our processing equipment and operations; rising interest rates and their impacts on our variable interest rate debt; the impacts of union organizing activities and the success of union contract renewals; changes in laws or regulations or the manner of their interpretation or enforcement could impact our financial performance and restrict our ability to operate our business or execute our strategies; 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 impairment charges related to indefinite lived intangible assets; the timing and outcomes of inventory lower of cost or market adjustments and last-in, first-out, or LIFO, income or expense; the inflation or deflation existing within the metals industry, as well as product mix and inventory levels on hand, which can impact our cost of materials sold as a result of the fluctuations in the LIFO inventory valuation; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any; and unanticipated developments that could occur with respect to contingencies such as litigation, arbitration and environmental matters, including any developments that would require any increase in our costs for such contingencies.


In addition to financial information prepared in accordance with GAAP, this document also contains adjusted earnings per diluted share, which is a non-GAAP financial measure. Management’s view of the Company’s performance includes adjusted earnings per share, and management uses this non-GAAP financial measure internally for planning and forecasting purposes and to measure the performance of the Company. We believe this non-GAAP financial measure provides useful and meaningful information to us and investors because it enhances investors’ understanding of the continuing operating performance of our business and facilitates the comparison of performance between past and future periods. This non-GAAP financial measure should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. A reconciliation of this non-GAAP measure to the most directly comparable GAAP financial measure is provided above.

About Olympic Steel

Founded in 1954, Olympic Steel is a leading U.S. metals service center focused on the direct sale of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel, aluminum, tin plate, and metal-intensive branded products. The Company’s CTI subsidiary is a leading distributor of steel tubing, bar, pipe, valves and fittings, and fabricator of value-added parts and components. Headquartered in Cleveland, Ohio, Olympic Steel operates from 30 facilities in North America.

For additional information, please visit the Company’s website at www.olysteel.com or https://olysteel.irpass.com/Contact_Us?BzID=2195.


Olympic Steel, Inc.

Consolidated Statements of Net Income

(in thousands, except per-share data)



 


Three months ended



March 31



2020


2019





 

Net sales


$

354,380

 


$

445,919





 

Costs and expenses





Cost of materials sold (excludes items shown separately below)


 

282,522

 


 

366,382

Warehouse and processing


 

23,076

 


 

25,611

Administrative and general


 

19,059

 


 

20,129

Distribution


 

12,289

 


 

12,835

Selling


 

6,810

 


 

7,340

Occupancy


 

2,660

 


 

2,798

Depreciation


 

4,516

 


 

4,431

Amortization


 

397

 


 

319





 

Total costs and expenses


 

351,329

 


 

439,845





 

Operating income


 

3,051

 


 

6,074





 

Other income (loss), net


 

(17

)


 

14





 

Income before financing costs and income taxes


 

3,034

 


 

6,088





 

Interest and other expense on debt


 

2,239

 


 

3,242





 

Income before income taxes


 

795

 


 

2,846





 

Income tax provision


 

202

 


 

772





 

Net income


$

593

 


$

2,074





 

Earnings per share:









 

Net income per share - basic


$

0.05

 


$

0.18



 

 

 

Weighted average shares outstanding - basic


 

11,444

 


 

11,488



 

 

 

Net income per share - diluted


$

0.05

 


$

0.18



 

 

 

Weighted average shares outstanding - diluted


 

11,459

 


 

11,488


 

Olympic Steel, Inc.

Consolidated Balance Sheets

(in thousands)





 


As of

March 31, 2020


As of

Dec. 31, 2019

Assets









 

Cash and cash equivalents


$

5,284

 


$

5,742

 

Accounts receivable, net


 

165,782

 


 

133,572

 

Inventories, net (includes LIFO debits of $1,098 and $598 as of March 31, 2020 and December 31, 2019 respectively)


 

267,554

 


 

273,531

 

Prepaid expenses and other


 

6,364

 


 

6,997

 





 

Total current assets


 

444,984

 


 

419,842

 





 

Property and equipment, at cost


 

420,594

 


 

416,511

 

Accumulated depreciation


 

(264,699

)


 

(260,264

)





 

Net property and equipment


 

155,895

 


 

156,247

 





 

Goodwill


 

3,423

 


 

3,423

 

Intangible assets, net


 

28,940

 


 

29,259

 

Other long-term assets


 

14,569

 


 

14,439

 

Right of use asset, net


 

30,156

 


 

26,345

 





 

Total assets


$

677,967

 


$

649,555

 





 

Liabilities









 

Accounts payable


$

82,962

 


$

69,452

 

Accrued payroll


 

8,805

 


 

13,196

 

Other accrued liabilities


 

12,381

 


 

12,850

 

Current portion of lease liabilities


 

6,095

 


 

5,589

 





 

Total current liabilities


 

110,243

 


 

101,087

 





 

Credit facility revolver


 

209,052

 


 

192,925

 

Other long-term liabilities


 

15,964

 


 

14,068

 

Deferred income taxes


 

12,127

 


 

12,262

 

Lease liabilities


 

24,189

 


 

20,861

 





 

Total liabilities


 

371,575

 


 

341,203

 





 

Shareholders' Equity









 

Preferred stock


 

-

 


 

-

 

Common stock


 

132,006

 


 

131,647

 

Treasury stock


 

(480

)


 

(335

)

Accumulated other comprehensive loss


 

(4,829

)


 

(2,281

)

Retained earnings


 

179,695

 


 

179,321

 





 

Total shareholders' equity


 

306,392

 


 

308,352

 

 





Total liabilities and shareholders' equity


$

677,967

 


$

649,555



 

Olympic Steel, Inc.

Segment Financial Information

(In thousands, except tonnage and per-ton data. Figures may not foot to consolidated totals due to Corporate expenses.)



 


Three months ended March 31



Carbon Flat Products


Specialty Metals Flat

Products


Tubular and Pipe

Products



2020


2019


2020


2019


2020


2019













 

Tons sold


263,110

 


273,171


34,570


35,784

 


N/A


N/A

 













 

Net sales


$ 202,967

 


$ 278,536


$ 88,488


$ 88,097

 


$ 62,925


$ 79,286

 

Average selling price per ton


771

 

 

1,020


2,560


2,462

 


N/A


N/A

 

Cost of materials sold


163,137

 


233,316


76,235


76,245

 


43,150


56,821

 

Gross profit


39,830

 


45,220


12,253


11,852

 


19,775


22,465

 

Operating expenses


41,176

 


43,994


9,518


9,608

 


15,470


16,850

 

Operating income (loss)


$(1,346

)


$ 1,226


$2,735


$2,244

 


$4,305


$5,615

 













 

Depreciation and amortization


$3,010

 


$2,814


$497


$526

 


$1,364


$1,368

 













 












 


 


 



As of

Mar. 31, 2020



As of

Dec. 31, 2019

Assets


 


 







Flat-products


 


 



$ 456,058

 



$ 432,566

 

Tubular and pipe products


 


 



220,854

 



215,841

 

Corporate


 


 



1,055

 



1,148

 

Total assets


 


 



$ 677,967

 



$ 649,555

 













 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

(In thousands except per-share data)

 

 

 

 

 

 

As of

Mar. 31, 2020

 

 

As of

Dec. 31, 2019

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity per share

 

 

 

 

 

 

$ 27.89

 

 

 

$ 28.04

 

 

 

 

 

 

 

 

 

 

 

 

Debt to equity ratio

 

 

 

 

 

 

0.68 to 1

 

 

0.63 to 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31

 

 

 

 

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

Net cash from (used for) operating activities

 

 

 

 

 

 

$ (11,985

)

 

 

$ (1,165

)

 

 

 

 

 

 

 

 

 

 

 

Cash dividends per share

 

 

 

 

 

 

$ 0.02

 

 

 

$ 0.02

 

 

Contacts

Richard A. Manson
Chief Financial Officer
(216) 672-0522
ir@olysteel.com