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Contact: Cathy S. Kish
Director-Investor Relations
Telephone: (216) 292-3800
NEWS RELEASE Fax: (216) 682-4065
OLYMPIC STEEL REPORTS 1999 ANNUAL AND FOURTH QUARTER RESULTS
AND ANNOUNCES ADOPTION OF SHARE PURCHASE RIGHTS PLAN
Cleveland, Ohio -- (February 3, 2000) Olympic Steel, Inc., (Nasdaq:
ZEUS), a leading national steel service center, today announced financial
results for the fourth quarter and year ended December 31, 1999. The Company
also announced today that its Board of Directors has approved the adoption of a
share purchase rights plan.
Tons sold for the year decreased 2.2% to 1.272 million, and net sales
decreased 8.9% to $524.8 million from $576.2 million. Earnings totaled $3.2
million, or $.30 per share. These results compare to a net loss of $8.4 million,
or $.79 per share for 1998. The 1998 results included a fourth quarter one-time
pretax charge of $19.1 million, or $1.17 per share after tax. Operating income
was $13.6 million, or 2.6% of net sales for 1999, compared to a loss of $4.5
million, or -0.8% for 1998.
Tons sold for the fourth quarter of 1999 increased 6.7% to 334 thousand
and net sales increased 0.5% to $136.9 million from $136.2 million. The company
reported a fourth quarter net loss of $1.0 million, or $0.10 per share. These
results compare to a loss of $12.4 million, or $1.16 per share for 1998.
Operating income was $991 thousand, or 0.7% of net sales, compared to an
operating loss of $16.9 million, or -12.4% for 1998.
"Our fourth quarter results were negatively impacted by the continued
poor agricultural marketplace. This has significantly affected our Iowa
facility's performance and start up. In addition, our laser welding joint
venture continues to proceed with research and development advancements but has
yet to reach the critical mass necessary to achieve profitability. Our core
business, including automotive, remains solid and it appears the steel market is
now improving," stated Michael D. Siegal, Chairman and Chief Executive Officer.
"Our accomplishments in 1999 included a successful startup of a new
machining and plate processing facility in Chambersburg, Pennsylvania,
establishment of a number of large national account programs, an extensive
investment in management development and training, a strategic focus in
positioning ourselves in the metals electronic marketplace, and successful
completion of Y2K compliance. As we begin 2000, we are focusing intensely on our
internal processes and cost reduction efforts. All of the Company's operations
have been charged with implementing five major operating objectives including
reducing operating expenses, increasing tonnage, and improving on-time delivery,
quality and inventory turns," continued Mr. Siegal.
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"We adopted the share purchase rights plan after careful study and the
action was not taken in response to any threatened takeover of the Company. The
rights plan is intended to protect the Company and its shareholders from
potentially coercive takeover practices or takeover bids that are inconsistent
with the interests of the Company and its shareholders. The adoption of a share
purchase rights plan has become common practice in major American companies and
a well accepted approach to ensuring that all shareholders are treated equally.
In enacting the rights plan, the Company wants to make clear that investors
planning to make a significant investment in the Company are expected to be
forthright about their intentions," concluded Mr. Siegal.
Under the plan, the Company will distribute rights as a dividend at the
rate of one right for each common share held by shareholders of record on March
6, 2000. The rights will initially trade together with the Company's common
stock and will not be exercisable. In the absence of further action by the
directors, the rights generally will become exercisable and allow the
shareholders to acquire the Company's common shares at a discounted price if a
person or group acquires 15% or more of the outstanding common shares. Rights
held by persons who exceed the applicable thresholds will be void. Under certain
circumstances, the rights will entitle the holder to buy shares in an acquiring
entity at a discounted price.
The issuance of the rights is not a taxable event, will not affect the
Company's reported financial condition or results of operations (including
earnings per share), and will not change the manner in which the Company's
common shares are currently traded.
The Company's Directors may, at their option, redeem all rights for
$.01 per right, generally at any time prior to the rights becoming exercisable.
The rights will expire on January 31, 2010, unless earlier redeemed, exchanged,
or amended by the directors.
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 about
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 agriculture markets;
work stoppages by automotive or steel manufacturers; and equipment installation
delays or malfunctions. Please refer to the Company's Securities and Exchange
Commission filings for further information.
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OLYMPIC STEEL
SUMMARY FINANCIAL INFORMATION
(in thousands, except per share and tonnage data)
Three Months Ended December 31,
-------------------------------------------
1999 1998
-------------- --------------
SUMMARY (unaudited)
- -------
Net sales $ 136,931 $ 136,193
Operating income (loss) 991 0.7% (16,923) -12.4%
Net income (loss) (1,048) (12,432)
Net income (loss) per share $ (0.10) $ (1.16)
============== ==============
DETAILS
Tons sold:
Direct 283,730 253,793
Toll 49,932 58,829
-------------- --------------
333,662 312,622
% change 6.7% -10.7%
============== ==============
Net sales $ 136,931 $ 136,193
% change 0.5% -12.6%
Cost of sales 106,436 107,682
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Gross margin 30,495 22.3% 28,511 20.9%
Operating expenses:
Warehouse and processing 9,466 6.9% 8,726 6.4%
Administrative and general 7,957 5.8% 6,800 5.0%
Distribution 4,879 3.6% 4,511 3.3%
Selling 3,861 2.8% 3,379 2.5%
Occupancy 1,133 0.8% 1,104 0.8%
Depreciation and amortization 2,208 1.6% 1,858 1.4%
Asset writedown - - 19,056 14.0%
-------------- --------------
Total operating expenses 29,504 21.5% 45,434 33.4%
Operating income (loss) 991 0.7% (16,923) -12.4%
Loss from OLP joint venture (343) (121)
Income (loss) from TSP joint venture 11 (70)
Income from OCR joint venture - - 120
-------------- --------------
EBIT 659 (16,994)
Interest expense 1,490 1,049
Receivable securitization expense 874 901
-------------- --------------
Financing costs 2,364 1.7% 1,950 1.4%
Income (loss) before taxes (1,705) -1.2% (18,944) -13.9%
Income taxes (657) 38.5% (6,512) 34.4%
-------------- --------------
Net income (loss) $ (1,048) $ (12,432)
============== ==============
Net income (loss) per share $ (0.10) $ (1.16)
============== ==============
Weighted average shares outstanding 10,199 10,692
============== ==============
OLYMPIC STEEL
SUMMARY FINANCIAL INFORMATION
(in thousands, except per share and tonnage data)
Twelve Months Ended December 31,
--------------------------------------------
1999 1998
-------------- --------------
SUMMARY (audited)
- -------
Net sales $ 524,794 $ 576,189
Operating income (loss) 13,602 2.6% (4,539) -0.8%
Net income (loss) 3,159 (8,431)
Net income (loss) per share $ 0.30 $ (0.79)
============== ==============
DETAILS
Tons sold:
Direct 1,065,200 1,070,360
Toll 207,156 231,004
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1,272,356 1,301,364
% change -2.2% -2.1%
============== ==============
Net sales $ 524,794 $ 576,189
% change -8.9% -5.2%
Cost of sales 401,028 455,544
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Gross margin 123,766 23.6% 120,645 20.9%
Operating expenses:
Warehouse and processing 35,226 6.7% 35,456 6.2%
Administrative and general 29,371 5.6% 27,166 4.7%
Distribution 17,968 3.4% 18,024 3.1%
Selling 15,176 2.9% 14,209 2.5%
Occupancy 4,571 0.9% 4,300 0.7%
Depreciation and amortization 7,852 1.5% 6,973 1.2%
Asset writedown - - 19,056 3.3%
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Total operating expenses 110,164 21.0% 125,184 21.7%
Operating income (loss) 13,602 2.6% (4,539) -0.8%
Loss from OLP joint venture (1,018) (553)
Income (loss) from TSP joint venture (14) (264)
Income from OCR joint venture - - 495
-------------- --------------
EBIT 12,570 (4,861)
Interest expense 4,315 3,856
Receivable securitization expense 3,119 3,773
-------------- --------------
Financing costs 7,434 1.4% 7,629 1.3%
Income (loss) before taxes 5,136 1.0% (12,490) -2.2%
Income taxes 1,977 38.5% (4,059) 32.5%
-------------- --------------
Net income (loss) $ 3,159 $ (8,431)
============== ==============
Net income (loss) per share $ 0.30 $ (0.79)
============== ==============
Weighted average shares outstanding 10,452 10,692
============== ==============
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.
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OLYMPIC STEEL
SUMMARY OTHER FINANCIAL INFORMATION
(in thousands, except ratios and number of shares)
DECEMBER 31,
---------------------------------------
1999 1998
------------------ ------------------
(audited)
Accounts receivable $ 9,802 $ 3,096
Inventories 119,585 121,407
Net property and equipment 124,204 119,312
Total assets 266,965 256,108
Current liabilities 36,248 43,225
Total debt (current & long-term) 93,426 76,520
Shareholders' equity 136,820 137,743
Shareholders' equity per share 13.56 12.88
Debt-to-equity ratio .68 to 1 .56 to 1
TWELVE MONTHS ENDED
DECEMBER 31,
---------------------------------------
1999 1998
------------------ ------------------
(audited)
Change in working capital $ 12,410 $ (16,194)
Capital expenditures, net 12,574 26,591
Acquistion of JNT Precision Machining -- 795
EBITDA, before asset write-down 21,454 21,490
Cost of common stock acquired 4,082 --
Number of shares acquired 601,300 --
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.