Steel Mills

Olympic Sees Third-Quarter Income Surge

Written by Tim Triplett

Olympic Steel executives reported record results in the third-quarter and hopes for more of the same next year, with the possible support of a new federal infrastructure bill.

“Based on the results of this week’s election, we are optimistic our nation’s pro-growth agenda remains on track and that the industrial sector’s recovery will continue to compound as both Democrats and Republicans have advocated for an early infrastructure bill,” said Chairman and Chief Executive Officer Michael Siegal.

“We welcome the much anticipated infrastructure plans for next year and believe the nation has taken a step forward now that the elections are behind us. Our nation’s infrastructure needs to be rejuvenated, and Olympic is ideally positioned to play an important role in that effort,” added company President David Wolfort.

During its quarterly conference call with analysts and investors today, Olympic Steel reported net sales of $457 million in the third quarter, a jump of 38 percent from the same period last year and the highest quarterly sales in the company’s history.

For the year to date, the Cleveland-based service center chain reported record net sales of $1.3 billion, up from $1.0 billion in the first three quarters of 2017. Higher year-over-year shipping volume and higher average prices drove the sales increase in both periods, said company executives.

“Robust demand for metals and active shipping volume continued in the third quarter,” said Siegal. “Our diversification strategies and strong balance sheet, combined with record sales and higher margins, drove significant earnings improvement in all three of our operating segments for the third quarter and nine months of 2018.”

For the 2018 nine-month period, Olympic’s net income grew to $35.1 million, more than double the income reported for the same period in 2017.

“This has been an exciting quarter and year. Our capital investment and acquisitions have allowed our enterprise to increase participation in targeted market sectors and to increase market share gains. Our healthy balance sheet has allowed us to capture the rewards of an improving industrial sector as well as to continue investing in exciting growth opportunities,” said Wolfort.

The executives noted that the shortage of skilled labor and truck drivers continues to be a national challenge for steel suppliers and their customers. Olympic has invested in expanding its own truck fleet to preempt some of those challenges. The company also remains committed to capital investment, most recently adding a new shear to the temper mill in Iowa, a second stainless steel slitter in Ohio and a new cut-to-length line in Illinois.

The executives anticipate demand to continue strong through the fourth quarter and into next year. “Our OEM business has been strong for three quarters and we see no signals of it backing off through the first six months of 2019,” Siegal said. “We continue to run a robust schedule at all of our facilities, particularly on value-added equipment.”

Cash from this year’s strong performance gives the company the opportunity to reduce debt and look for additional strategic acquisitions, the executives said.

This was Siegal’s 98th and final conference call as the company’s chief executive. He plans to step down at the end of this year and transition to Executive Chairman of the Board. Taking over as CEO will be Rick Marabito, Olympic’s long-time CFO.

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