Steel Mills
Olympic’s Q3 the Best Quarter in Company History
Written by Tim Triplett
August 5, 2021
Olympic Steel announced record financial results for the quarter ended Sept. 30. “Our third-quarter performance was the strongest quarter in company history. And in fact, it was better than all but three full years in Olympic Steel’s history. Net sales totaled $668 million. Net income was $44.5 million and adjusted EBITDA was $70.5 million, all of which significantly exceeded our previous all-time best quarter, which was the second quarter of this year,” said Olympic CEO Richard Marabito during the service center’s earnings call on Friday.
Highlight’s of Olympic’s third quarter included the sale of its Detroit operation, which was primarily focused on processing and distributing carbon flat-rolled products to domestic automakers, and the purchase of Shaw Stainless and Alloy, a stainless steel distributor, fabricator and manufacturer. The Shaw acquisition further expands Olympic’s specialty metals and geographic footprint, while allowing the company to immediately replace the former Detroit earnings stream at a fraction of the investment, the company said.
Olympic has made five acquisitions in the past four years and is not finished. “It’s a strong M&A market. Our view is that it will continue to be a market where a lot of deals get done. It’s definitely part of our ongoing growth strategy,” Marabito said.
Commenting on the main business segments, company executives noted that Specialty Metals benefited from favorable market conditions, reporting its third straight quarter of record EBITDA at $25.5 million. Olympic continued to outpace the industry with stainless shipments up 43.4% over last year compared with 20.1% for the industry as a whole and aluminum shipments up 52.4% compared with 24.2% for the industry.
Olympic’s carbon segment had “an extraordinary quarter,” the company said, contributing $39.9 million of pretax earnings. The pipe and tube division also set a record with $10.6 million of adjusted EBITDA.
Olympic enhanced the fabricating capabilities at its new facility in Buford, Ga., while its automotive stamping line in Winder, Ga., helped the company to profitably grow its position with transplant automakers in the South. Based on these successes, Olympic will be adding a second automotive stamping line in Winder, to be fully operational in the second quarter of 2022, along with adding automated welding cells in the Buford facility. “We’re still bullish on the automotive business. We like the business that we’re doing down South,” Marabito said.
Looking ahead, Olympic expects fourth-quarter shipments to remain steady with continued strength in specialty metals volume and pricing as mill supply of stainless and aluminum remains constrained. The service center does see headwinds in carbon pricing in the quarters ahead. “While we do expect carbon pricing to soften, we are optimistic that end-user demand remains strong, and the current supply chain constraints may serve to prolong a favorable demand environment in 2022,” said Olympic President and COO Andrew Greiff.
By Tim Triplett, Tim@SteelMarketUpdate.com
Tim Triplett
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