Olympic Steel posted a net loss of $6.5 million for the second quarter of 2020. Sales totaled $248 million, down from $429 million in Q2 2019 due to lower average selling prices and a significant decline in shipments as a result of pandemic-related shutdowns, including the automotive industry.
“As the pandemic began to affect the U.S. economy, we quickly took decisive actions to sustainably reduce operating expenses, limit capital expenditures to safety and maintenance needs, further tighten inventory management, and preserve liquidity,” said CEO Richard Marabito. “As a result, while many of our key markets faced extreme disruption and volatility, we benefited from a significantly lower expense run rate and the ability to efficiently respond to fluctuations in demand, resulting in positive adjusted EBITDA for the quarter. Our pipe and tube and specialty metals businesses were particularly resilient, with both segments delivering consistent profitability in a difficult market.”
In June, Olympic Steel opened its new metal processing facility in Buford, Ga., expanding its presence in the southeastern U.S. The facility will serve as Olympic’s primary flat roll fabrication hub, said President and CFO Andrew Greiff. Production began on the newly installed stamping equipment at the Winder, Ga., facility with production expected to be running full by the end of the third quarter.
The Detroit facility has seen consistent business volume from the auto industry since manufacturers resumed operations in June. Auto business is expected to remain consistent throughout the third quarter. “Across the company, no advance warning of temporary closures from our large industrial OEMs has become the norm and will likely continue in the second half of 2020,” said Greiff. “We will take whatever actions are necessary to maintain our strong position and ability to meet customer needs.”
In specialty metals, the food equipment industry is coming back. The truck-trailer industry was behind going into 2020, but is showing some improvement. The agriculture market looks challenging for the remainder of the year. Construction activity is expected to be flat in the second half.
“We believe that market conditions will continue to improve and expect the third quarter to be sequentially better than the second quarter,” said Marabito. “Our operational flexibility and strong liquidity position, along with the diversification we’ve built into our business, give us the foundation to manage through the ongoing challenges.”
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