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Press Release
Olympic Steel Reports Earnings for the Second Quarter of 1999
Cleveland, Ohio -- (July 22, 1999) Olympic Steel, Inc., (Nasdaq: ZEUS), a leading national steel service center, today announced financial results for the second quarter and six months ended June 30, 1999. Tons sold for the second quarter of 1999 decreased 5.7% from 348.6 thousand to 328.6 thousand and net sales decreased 12.3% to $133.5 million from $152.3 million. Earnings totaled $2.1 million, or $.20 per share, compared to $2.0 million, or $.19 per share for last year's second quarter. Operating income totaled $5.3 million, or 4.0% of net sales for the current year quarter, compared to $5.3 million, or 3.5% for the prior year period.
Tons sold for the first six months of 1999 decreased 8.7% to 632.6 thousand from 693.1 thousand, and net sales decreased 14.7% to $262.7 million from $308.0 million. Earnings for the first six months totaled $3.4 million, or $.32 per share, compared to $4.3 million, or $.40 per share last year. Operating income totaled $9.2 million, or 3.5% of net sales for the first six months of 1999, compared to $10.9 million, or 3.5% last year.
"Once again this quarter, we have posted the highest gross margin percentage in the history of the company as we continue to accelerate our value-added services. Our Detroit operation has shown significant improvement year over year and has become a positive contributor," commented Michael D. Siegal, Chairman and Chief Executive Officer.
"The volatility of pricing caused by excessive supply continues to plague the marketplace and creates challenges in certain product lines that impacted our results. Also, the decreased demand in the agricultural marketplace has been reflected in our volumes. Our national account programs offset some of these volume decreases and we expect continued success in this arena. We are also undertaking an e-commerce effort which we expect to help grow our market share going forward."
"The opening of our new machining and plate processing facility in Chambersburg, Pennsylvania is anticipated at the end of the third quarter which continues to meet our time and budget objectives. Furthermore, we believe we have fully integrated Y2K revisions on our primary business application software systems and are currently operating on these systems," concluded Mr. Siegal.
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 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, specifically in the automotive and agricultural markets; work stoppages by automotive or steel manufacturers; potential equipment malfunction; equipment installation and facility construction delays; year 2000 issues; and the opening dates and ramp up rates for the machining and burning equipment in Pennsylvania. 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 - unaudited) |
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| | Three Months Ended June 30, | Six Months Ended June 30, |
| | 1999 | | 1998 | | 1999 | | 1998 | |
| SUMMARY |
| Net sales | $133,548 | | $152,254 | | $262,695 | | $307,961 | |
| Operating income | 5,292 | 4.0% | 5,254 | 3.5% | 9,219 | 3.5% | 10,887 | 3.5% |
| Net income | 2,106 | | 2,041 | | 3,399 | | 4,300 | |
| Net income per share | $0.20 | | $0.19 | | $0.32 | | $0.40 | |
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| DETAILS |
| Tons sold: |
| Direct | 270,112 | | 283,025 | | 521,662 | | 572,202 | |
| Toll | 58,513 | | 65,528 | | 110,937 | | 120,939 | |
| | 328,625 | | 348,553 | | 632,599 | | 693,141 | |
| % increase | -5.7% | | 2.9% | | -8.7% | | 5.9% | |
| Net sales | $133,548 | | $152,254 | | $262,695 | | $307,961 | |
| % change | -12.3% | | -3.4% | | -14.7% | | 0.3% | |
| Cost of sales | 100,998 | | 120,245 | | 200,029 | | 243,654 | |
| Gross margin | 32,550 | 24.4% | 32,009 | 21.0% | 62,666 | 23.9% | 64,307 | 20.9% |
| Operating expenses: |
Warehouse and
processing | 8,937 | 6.7% | 8,748 | 5.7% | 16,911 | 6.4% | 17,509 | 5.7% |
Administrative
and general | 7,003 | 5.2% | 6,939 | 4.6% | 14,049 | 5.3% | 13,870 | 4.5% |
| Distribution | 4,425 | 3.3% | 4,629 | 3.0% | 8,726 | 3.3% | 9,218 | 3.0% |
| Selling | 3,882 | 2.9% | 3,703 | 2.4% | 7,642 | 2.9% | 7,308 | 2.4% |
| Occupancy | 1,119 | 0.8% | 1,035 | 0.7% | 2,352 | 0.9% | 2,161 | 0.7% |
Depreciation and
amortization | 1,891 | 1.4% | 1,701 | 1.1% | 3,767 | 1.4% | 3,354 | 1.1% |
Total operating
expenses | 27,257 | 20.4% | 26,755 | 17.6% | 53,447 | 20.3% | 53,420 | 17.3% |
Operating
income | 5,293 | 4.0% | 5,254 | 3.5% | 9,219 | 3.5% | 10,887 | 3.5% |
| Income from OCR joint venture | - - | | 157 | | - - | | 205 | |
| Loss from OLP joint venture | (141) | | (193) | | (371) | | (288) | |
| Income (loss) from TSP joint venture | 6 | | (53) | | (26) | | (122) | |
Earnings before
interest and taxes | 5,158 | | 5,165 | | 8,822 | | 10,682 | |
| Interest expense | 949 | | 813 | | 1,819 | | 1,777 | |
| Receivable securitization expense | 784 | | 1,060 | | 1,476 | | 1,969 | |
| Financing costs | 1,733 | 1.3% | 1,873 | 1.2% | 3,295 | 1.3% | 3,746 | 1.2% |
| Income before taxes | 3,425 | 2.6% | 3,292 | 2.2% | 5,527 | 2.1% | 6,936 | 2.3% |
| Income taxes | 1,319 | 38.5% | 1,251 | 38.0% | 2,128 | 38.5% | 2,636 | 38.0% |
| Net income | $2,106 | | $2,041 | | $3,399 | | $4,300 | |
| Net income per share | $0.20 | | $0.19 | | $0.32 | | $0.40 | |
| Weighted average shares outstanding | 10,565 | | 10,692 | | 10,626 | | 10,692 | |
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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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June 30, |
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December 31, |
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1999 |
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1998 |
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1998 |
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(unaudited) |
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(audited) |
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Accounts receivable |
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$13,950 |
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$13,197 |
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$3,096 |
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Inventories |
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108,412 |
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130,918 |
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121,407 |
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Net property and equipment |
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121,214 |
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115,435 |
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119,312 |
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Total assets |
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259,163 |
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284,548 |
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256,108 |
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Current liabilities |
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37,149 |
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38,073 |
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43,225 |
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Total debt (current & long-term) |
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83,310 |
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92,680 |
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76,520 |
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Shareholders' equity |
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138,719 |
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150,474 |
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137,743 |
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Shareholders' equity per share |
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13.34 |
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14.07 |
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12.88 |
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Debt-to-equity ratio |
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.60 to 1 |
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.62 to 1 |
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.56 to 1 |
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Six Months Ended |
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June 30, |
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1999 |
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1998 |
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(unaudited) |
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Increase in working capital |
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$1,757 |
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$6,973 |
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Capital expenditures, net |
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5,584 |
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13,976 |
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Repurchase of Common Stock |
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2,423 |
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-- |
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EBITDA |
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12,986 |
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14,241 |
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It is the Company's policy not to make quarterly or annual sales or earnings projections |
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for external use and not to endorse any analyst's sales or earnings estimates. |
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olysteel.com