EXHIBIT 99.1
NEWS CONTACT: RICHARD T. MARABITO
RELEASE CHIEF FINANCIAL OFFICER
TELEPHONE: (216) 292-3800
FAX: (216) 292-3974
OLYMPIC STEEL REPORTS 2005 SECOND QUARTER RESULTS
Cleveland, Ohio -- (July 28, 2005) Olympic Steel, Inc., (Nasdaq: ZEUS), a
national steel service center, today announced its financial results for the
second quarter and six months ended June 30, 2005.
Net sales for the second quarter of 2005 increased 8.4% to $241.5 million
from $222.8 million for the second quarter a year ago. Second quarter 2005 net
income totaled $3.0 million, or $0.29 per diluted share, compared to net income
of $18.5 million, or $1.82 per diluted share for last year's second quarter.
Unfortunately, second quarter results included a $1.7 million, or $0.10 per
diluted share, bad debt charge related to receivables from two customers that
filed for bankruptcy protection in June 2005. Tons sold decreased 7.4% to 319
thousand from 344 thousand in the second quarter of 2004.
For the first half of 2005, net sales increased 28.4% to $526.0 million
from $409.8 million. Net income for the first half of 2005 was $12.6 million, or
$1.21 per share, compared to net income of $29.3 million, or $2.90 per share in
the first half of 2004. Tons sold decreased 7.0% to 678 thousand from 729
thousand in the first half of 2004.
"While the second quarter was challenging from a carbon flat rolled pricing
and customer credit perspective, we are pleased with the results of our balance
sheet and expense control management. During the last three months, we
accelerated our receivable and inventory turnover rates, allowing us to reduce
inventory by $37.3 million and debt by $37.3 million, a 21% decline in inventory
and a 31% decline in debt. We also reduced our second quarter operating expenses
by $8.7 million or 22.5% as compared to the second quarter of 2004. At June 30,
2005, our debt totaled $82.6 million, or 43% of equity, both lows for Olympic
Steel since our IPO in 1994," stated Michael D. Siegal, Chairman and Chief
Executive Officer.
"We anticipate some softness to persist in carbon flat rolled pricing
during the seasonally slower third quarter. However, we are encouraged to
finally see a meaningful drop in the service center industry's June inventory
levels, and we anticipate further reductions through July. We believe that the
continuation of the inventory correction may allow pricing pressures on carbon
steel to subside later this year. We also believe that the currency adjustment
by China is a positive development for many of our exporting customers,"
concluded Mr. Siegal.
Founded in 1954, Olympic Steel is a leading U.S. steel service center
focused on the direct sale and distribution of large volumes of processed
carbon, coated and stainless flat-rolled sheet, coil and plate steel products.
Headquartered in Cleveland, Ohio, the Company operates 12 facilities and
participates in two joint ventures. For further information, visit the Company's
web site at http://www.olysteel.com.
Page 1 of 4
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. 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 and
global business, economic and political conditions; competitive factors such as
the availability and pricing of steel, industry inventory levels, and rapid
fluctuations in customer demand and pricing; the cyclicality and volatility
within the steel industry; the ability of customers (especially in the
automotive industry) to maintain their credit availability; layoffs or work
stoppages by the Company's suppliers' or customers' personnel; equipment
installation delays or malfunctions; the successes of the Company's efforts and
initiatives to increase sales volumes, improve cash flows and reduce debt,
maintain or improve inventory turns, and reduce costs; the successes of the
Company's joint ventures; the adequacy of our information technology and
business system software; and customer, supplier, and competitor consolidation
or insolvency. Please refer to the Company's Securities and Exchange Commission
filings for further information.
Page 2 of 4
OLYMPICSTEEL
SELECTED FINANCIAL INFORMATION
(in thousands, except per share data and ratios)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
2005 2004 2005 2004
--------- ---------- --------- ----------
SUMMARY RESULTS OF OPERATIONS: (unaudited) (unaudited)
- -----------------------------
Net sales $ 241,482 $ 222,773 $ 526,040 $ 409,806
Operating income 5,937 31,747 22,770 50,582
Income before income taxes 4,757 30,814 20,525 48,309
--------- ---------- --------- ----------
Net income $ 3,004 $ 18,500 $ 12,623 $ 29,347
========= ========== ========= ==========
Earnings per share:
Net income per share - basic $ 0.30 $ 1.89 $ 1.25 $ 3.01
Net income per share - diluted $ 0.29 $ 1.82 $ 1.21 $ 2.90
JUNE 30, DECEMBER 31,
------------------------ -----------
2005 2004 2004
--------- ---------- -----------
SUMMARY BALANCE SHEET DATA: (unaudited)
- --------------------------
Accounts receivable, net $ 104,940 $ 97,606 $ 93,336
Inventories 143,862 132,510 186,124
Net property and equipment 80,426 86,669 83,571
Total assets 340,710 327,358 374,146
Current liabilities 61,679 89,505 95,688
Total debt 82,630 90,387 96,022
Shareholders' equity 190,834 143,106 176,525
Shareholders' equity per share 18.80 14.51 17.58
Debt-to-equity ratio .43 to 1 .63 to 1 .54 to 1
SIX MONTHS ENDED
JUNE 30,
------------------------
2005 2004
--------- ----------
OTHER DATA: (unaudited)
- ----------
Capital expenditures 906 1,065
EBITDA (a) 26,818 55,216
(a) Defined as operating income plus depreciation plus asset impairment charge.
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.
Page 3 of 4
OLYMPICSTEEL
RESULTS OF OPERATIONS
(in thousands, except per share and tonnage data)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------------- ----------------------------------
2005 2004 2005 2004
--------------- --------------- --------------- ---------------
(unaudited) (unaudited)
Tons sold
Direct 270,628 292,973 584,516 623,068
Toll 48,018 51,096 93,983 106,145
-------- -------- -------- --------
318,646 344,069 678,499 729,213
% change (7.4%) 23.4% (7.0%) 33.2%
Net sales $241,482 $222,773 $526,040 $409,806
-------- -------- -------- --------
% change 8.4% 96.4% 28.4% 79.5%
Cost of materials sold 205,483 152,247 440,618 285,793
-------- -------- -------- --------
Gross profit 35,999 14.9% 70,526 31.7% 85,422 16.2% 124,013 30.3%
Operating expenses
Warehouse and processing 10,064 4.2% 11,425 5.1% 20,692 3.9% 22,309 5.4%
Administrative and general 7,044 2.9% 13,360 6.0% 16,317 3.1% 23,037 5.6%
Distribution 5,024 2.1% 4,711 2.1% 10,159 1.9% 9,782 2.4%
Selling 4,761 2.0% 5,764 2.6% 8,798 1.7% 11,080 2.7%
Occupancy 1,139 0.5% 1,256 0.6% 2,638 0.5% 2,589 0.6%
Depreciation 2,030 0.8% 2,076 0.9% 4,048 0.8% 4,147 1.0%
Asset impairment charge - 0.0% 187 0.1% - 0.0% 487 0.1%
-------- -------- -------- --------
Total operating expenses 30,062 12.4% 38,779 17.4% 62,652 11.9% 73,431 17.9%
-------- -------- -------- --------
Operating income 5,937 2.5% 31,747 14.3% 22,770 4.3% 50,582 12.3%
Income from joint ventures 200 94 443 172
-------- -------- -------- --------
Income before financing costs and income taxes 6,137 31,841 23,213 50,754
Interest and other expense on debt 1,380 0.6% 1,027 0.5% 2,688 0.5% 2,445 0.6%
-------- -------- -------- --------
Income before income taxes 4,757 2.0% 30,814 13.8% 20,525 3.9% 48,309 11.8%
Income tax provision 1,753 36.9% 12,314 40.0% 7,902 38.5% 18,962 39.3%
-------- -------- -------- --------
Net income $ 3,004 $ 18,500 $ 12,623 $ 29,347
======== ======== ======== ========
Earnings per share:
Net income per share - basic $ 0.30 $ 1.89 $ 1.25 $ 3.01
======== ======== ======== ========
Weighted average shares outstanding - basic 10,148 9,794 10,114 9,734
======== ======== ======== ========
Net income per share - diluted $ 0.29 $ 1.82 $ 1.21 $ 2.90
======== ======== ======== ========
Weighted average shares outstanding - diluted 10,436 10,182 10,447 10,108
======== ======== ======== ========
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.
Page 4 of 4