EXHIBIT 99.1
CONTACT: RICHARD T. MARABITO
(NEWS RELEASE LOGO) CHIEF FINANCIAL OFFICER
TELEPHONE: (216) 292-3800
FAX: (216) 292-3974
OLYMPIC STEEL REPORTS 2005 THIRD QUARTER RESULTS
Cleveland, Ohio -- (October 27, 2005) Olympic Steel, Inc., (Nasdaq:
ZEUS), a national steel service center, today announced its financial results
for the third quarter and nine months ended September 30, 2005.
Net sales for the third quarter of 2005 totaled $208.4 million, a 14.7%
decrease from the $244.1 million for the third quarter a year ago. Third quarter
2005 net income totaled $2.2 million, or $0.21 per diluted share, compared to
net income of $18.6 million, or $1.80 per diluted share for last year's third
quarter. Tons sold decreased 5.5% to 306 thousand from 323 thousand in the third
quarter of 2004.
For the first nine months of 2005, net sales increased 12.3% to $734.4
million from $653.9 million. Net income for the first nine months of 2005 was
$14.8 million, or $1.42 per diluted share, compared to net income of $47.9
million, or $4.70 per diluted share in the first nine months of 2004. Tons sold
decreased 6.5% to 984 thousand from 1.05 million in the first nine months of
2004.
"Our acceleration of inventory and receivables turnover, coupled with
consistent profitability and expense control, resulted in a significant
reduction in our debt. During the third quarter, we reduced our Total Debt by
$70 million to $13 million. Olympic Steel now has its strongest balance sheet
and capital position since our initial public offering in 1994, with over $193
million, or $19.01 per share, of shareholders' equity at September 30, 2005,"
stated Michael D. Siegal, Chairman and Chief Executive Officer.
"During the third quarter, carbon flat rolled pricing and margin
compression reached its low point so far this year. We at Olympic are encouraged
by the recent reductions in the steel service center industry's inventory levels
as reported by the Metals Service Center Institute, coupled with announced
producer price increases for carbon steel throughout the third quarter.
Currently, demand appears solid entering the fourth quarter, leading us to
believe in strong economic fundamentals for the marketplace. Our repositioned
balance sheet is appropriate for these improving market conditions. We also
anticipate using our financial position to take advantage of a consolidating
service center industry," 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.
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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; the availability
of transportation and logistical services; 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 operating and financial results 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.
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OLYMPIC STEEL
SELECTED FINANCIAL INFORMATION
(in thousands, except per share data and ratios)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
SUMMARY RESULTS OF OPERATIONS: (unaudited) (unaudited)
Net sales $ 208,358 $ 244,142 $ 734,398 $ 653,948
Operating income 4,825 31,581 27,595 82,163
Income before income taxes 3,519 30,570 24,044 78,879
---------- ---------- ---------- ----------
Net income $ 2,164 $ 18,572 $ 14,787 $ 47,919
========== ========== ========== ==========
Earnings per share:
Net income per share - basic $ 0.21 $ 1.88 $ 1.46 $ 4.89
Net income per share - diluted $ 0.21 $ 1.80 $ 1.42 $ 4.70
</Table>
<Table>
<Caption>
SEPTEMBER 30, DECEMBER 31,
------------------------- ------------
2005 2004 2004
---------- ---------- ------------
SUMMARY BALANCE SHEET DATA: (unaudited)
Accounts receivable, net $ 92,461 $ 108,349 $ 93,336
Inventories 103,290 147,857 186,124
Net property and equipment 79,241 85,304 83,571
Total assets 284,647 350,494 374,146
Current liabilities 68,710 89,152 95,688
Total debt 13,012 93,297 96,022
Shareholders' equity 193,013 163,419 176,525
Shareholders' equity per share 19.01 16.40 17.58
Debt-to-equity ratio .07 to 1 .57 to 1 .54 to 1
</Table>
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
2005 2004
------ ------
OTHER DATA: (unaudited)
Capital expenditures 1,695 1,698
EBITDA (a) 33,603 88,796
</Table>
(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
OLYMPIC STEEL
RESULTS OF OPERATIONS
(in thousands, except per share and tonnage data)
<Table>
<Caption>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------- ----------------------------------------------
2005 2004 2005 2004
--------------------- --------------------- --------------------- ---------------------
(unaudited) (unaudited)
Tons sold
Direct 256,211 283,098 840,727 906,166
Toll 49,367 40,332 143,350 146,477
------------ ------------ ------------ ------------
305,578 323,430 984,077 1,052,643
% change (5.5%) 7.2% (6.5%) 23.9%
Net sales $ 208,358 $ 244,142 $ 734,398 $ 653,948
% change (14.7%) 110.7% 12.3% 90.0%
Costs and expenses
Cost of materials sold
(exclusive of depreciation
shown below) 175,056 84.0% 178,576 73.1% 615,674 83.8% 464,369 71.0%
Warehouse and processing 10,266 4.9% 10,142 4.2% 30,958 4.2% 32,451 5.0%
Administrative and general 6,950 3.3% 11,703 4.8% 23,267 3.2% 34,740 5.3%
Distribution 5,279 2.5% 4,482 1.8% 15,438 2.1% 14,264 2.2%
Selling 3,032 1.5% 4,331 1.8% 11,830 1.6% 15,411 2.4%
Occupancy 990 0.5% 1,328 0.5% 3,628 0.5% 3,917 0.6%
Depreciation 1,960 0.9% 1,999 0.8% 6,008 0.8% 6,146 0.9%
Asset impairment charge -- 0.0% -- 0.0% -- 0.0% 487 0.1%
------------ ------------ ------------ ------------
Total costs and expenses 203,533 97.7% 212,561 87.1% 706,803 96.2% 571,785 87.4%
------------ ------------ ------------ ------------
Operating income 4,825 2.3% 31,581 12.9% 27,595 3.8% 82,163 12.6%
Income (loss) from joint ventures (564) 58 (121) 230
------------ ------------ ------------ ------------
Income before financing costs
and income taxes 4,261 31,639 27,474 82,393
Interest and other expense on debt 742 0.4% 1,069 0.4% 3,430 0.5% 3,514 0.5%
------------ ------------ ------------ ------------
Income before income taxes 3,519 1.7% 30,570 12.5% 24,044 3.3% 78,879 12.1%
Income tax provision 1,355 38.5% 11,998 39.2% 9,257 38.5% 30,960 39.2%
------------ ------------ ------------ ------------
Net income $ 2,164 $ 18,572 $ 14,787 $ 47,919
============ ============ ============ ============
Earnings per share:
Net income per share - basic $ 0.21 $ 1.88 $ 1.46 $ 4.89
============ ============ ============ ============
Weighted average shares
outstanding - basic 10,153 9,904 10,127 9,791
============ ============ ============ ============
Net income per share - diluted $ 0.21 $ 1.80 $ 1.42 $ 4.70
============ ============ ============ ============
Weighted average shares
outstanding - diluted 10,445 10,341 10,446 10,195
============ ============ ============ ============
</Table>
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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