Steel Mills

Olympic Steel Results Solid in Q3

October 31, 2013

Olympic Steel announced net income of $1.3 million compared to $1.6 million in third quarter 2012. Net sales dropped 11.3 percent year-over-year to $304 million for the third quarter. Flat products sales were $248 million and tubular and pipe product sales totaled $55.5 million for the quarter, both down from the same period last year.

Flat product shipments were 265,000 tons compared to 280,000 tons in the same quarter of 2012. Nine month volumes declined 6.3% to 837,000 tons compared with 894,000 tons last year. The decline was attributed to weak spot market prices and demand.

“We continue to generate strong free cash flow and transition the business to higher-value products. During the quarter, we strengthened our balance sheet by further reducing outstanding debt using both cash generated from operations and enhanced working-capital management, which benefited from improved inventory turnover. In addition, gross margins expanded reflecting consistent profit on a per ton basis, despite market driven lower steel prices and shipments,” said Chairman and Chief Executive Officer Michael D. Siegal.

Olympic reported that longer lead times reflect lower inventories. Olympic is building inventory according to customer demand rather than speculating on price increases said Siegal.

Remarking on the outlook for Olympic Steel and the industry, president and chief operating officer David Wolfort offered the following commentary:

“We are not immune to market circumstances and market conditions and so what we are seeing throughout the year is a very uneven traffic environment. And of course third quarter, some were slow down in July, quickly had a recovery in August, moderated in September, came back up in October and we see that is moving forward.

So we see ourselves on a trajectory of growth. We think the market continues to recover at post great recession. We see a number of our OEMs gaining traction, quite again it’s uneven, other is a variety of which all you read about some of the large OEMs and as Michael indicated, we do a lot to this part and have the assemblies for those particular customers. But our long-term outlook is robust and then a recovery evening out and getting away from the choppiness and we think we ultimately have to endure some of that for 2014.”