ZEUS - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to the Olympic Steel 2018 First Quarter Earnings Conference Call. [Operator Instructions] Some statements made on today's call will be predictive and are intended to be made as forward-looking within the safe harbor protections of the Private Securities Litigation Reform Act of 1995 and may not reflect actual results. The company does not undertake to update such statements, changes in assumptions or changes in other factors affecting such forward-looking statements. Important assumptions, risks, uncertainties and other factors that could cause actual results to differ materially are set forth in the company's reports on Forms 10-K and 10-Q and press releases filed with the Securities and Exchange Commission. Today's live broadcast will be archived and available for replay on Olympic Steel's website. like Chairman your Michael and I'd call, for Siegal. time, Steel's Olympic Chief this to host introduce today's At Executive Officer, Please Mr. go ahead, Siegal.

Michael Siegal

for Olympic operator. us XXXX. you, Good and you Thank morning, to strong Steel's all discuss start to thank joining

me Financial call morning this and Chicago of Officer, Wolfort; Rick with President, Operating Officer, Tube are and our Business, McNeeley. Vice Marabito; President On Chief Steel's Dr. & Andrew David today the Olympic Executive Greiff; Don Iron Chief President

a start particularly quarter, continued seasonal operating top double-digit both X This We and after our progress XXXX, and expected, first income. growth As line achieved has the pricing normal on All May. operating growth ending shipments segments to through and trajectory accelerated robust outstanding into initiatives generated throughout substantial quarter. April during a with March. the

pipe specialty at and for additional up Consolidated To segments expected XXXX. The of same strong million XX% the metals Ohio products have to both over tubular XX% the second XXXX. cut-to-length posted quarter income best since of operational quarter in $XX.X this quarter. from in on facility by Chicago new our fourth long quarterly income net to was in broken growth our tube expansion quarter and year, line last and first sales quarter, sales a Our XXXX. house drove be rose $XXX high year's first the million, to early to operating a our facilitate in up up Streetsboro, which operating slitter XX% also for Tube, installed installed a bed metals the and specialty sales ground record Chicago we laser

stainless an exceptional This strip in a successful acquired our diversifies service growing cross-selling specializing on starting of tin has steel just highlight opportunities approximately will prime Iron addition strengthens creates which assets of X, in Berlin is portfolio center operating $XX and our organic that to acquisition and products we growth, annual of as is Berlin well-established, addition, new be sales. part product Berlin with also business acquisition. with and Metals. and future. million In stainless-steel Tube XXXX our the net April Berlin a such reported be to the our in be Metals Chicago segment Specialty & existing expected tin customers, mill will accretive. with Metals of the immediately products been

additional as evaluate to continue acquisitions and strategic are M&A financing We our the markets meet objectives aligned positively. that

positively. pricing, entering I'm our with the the higher customer remains quarter, momentum, and market start levels quarter the Let me by encouraged that second strong spot again, second contract say resetting active. at to

and Externally, sheet more. are remain Our new XX strong we manufacturing at the or investments with have indicators month the report latest from in us straight in seeing this perfectly thrive economic in facilities to and what Institute orders positioned accelerating Management, was our the March ongoing XXth market. of markets. indexed Supply reinforcing strong, the balance people to the According

expansion, with XX-month economic highest Section XXX The reassuring not supply affect of our opportunity. This a does capabilities backlog In XXXX. demand. its neither and is a meeting addition, as trade now since orders of preparation the are reading continued action indexed May nor data

by Rick regular dividend. we I'll dividend our we morning, consecutive finally, very government, Annual additional to positive The outcomes the there. and of the as be over This share quarterly negotiated turn will see administration. would hosting financial also will later the announced and Board with the this Directors review. eagerly declared June on to by paid Meeting await some that, see And to record June of $X.XX the And on Shareholders we being per holders hope for you the cash However, to of cash this XX, morning, believe call XXXX, X. our we is of court XXnd be

Richard Marabito

Thank morning, you, Michael, and good everyone.

As Michael the indicated, we saw first seasonal start a normal for quarter.

as moved we through X strengthened shipments However, months. the pricing and substantially

last shipping fourth with quarter facility Siler summer, the product The by increased X%, lost closed Our tonnage Miami rate. the Carolina. sequentially first MSCI with XXXX. international by North office, industry's overall year-over-year grew more Last brokerage compared shipments in according quarter metals from growth for Report, XXXX than Activity flat volumes accounted in X.X% first X% together in Metals last XX% entire quarter flat volume same-store with lower sales closure, which, carbon the was shipment the carbon our specialty City, quarter, decline shipments first while from the Compared sales X%. year, first we match up the year of Consolidated quarter from of volume. our to the increased

do tube Given we of this products, the nature report pipe not our and tonnage segment. for

quarter fourth CTI. shipments year However, significantly at both up first of quarter the were and last the for

Berlin first year. coil Every steel for approaching acquisition. which sequentially from both of sell, increased is and we Our for 'XX product prices all-time as any before category market and from every is stainless well quarter selling contribution quarter products share the Metals an is currently of us, high X.X%, as from last the that the fourth in

XX.X% XX% the and year's quarter ton flat metals in That's Specialty XX% for both XX% fourth higher net X% first of quarter up and XXXX, net by from over Our than and pricing last of carbon segments of tube the XXXX was and of metals up in in and higher up grew the higher $XXX from the quarter that's Driven products that quarter of average Consolidated the last sales, due increased the strong fourth net was by of XX% of the XX.X% last XX% improved volume to the pipe sales in fourth net year. XX.X% increased up the sales year. XXXX. first by of to down last quarter quarter carbon but specialty quarter the the selling of first in to growth. in quarter. products in XXXX. products year. year per in compared quarter X% prices, from million the fourth same quarter first Gross margin last flat quarter in the net quarter to up in over was from XX% $XXX sales and the sales with first first Revenue price

is first priority. continues we profit $XXX Most in was early above a offset from quarter quarter, in of surcharges in year. However, profit the recorded year's ton, in ton of in the on gross per to flat gross metals of in which gross in XX% chrome the per year's $XXX,XXX $XXX,XXX posted This expense ton and a specialty million and profit to in up carbon segment, in to expense quarter was or segment. in gross average products Operating a million LIFO, tube due segment LIFO X% the profit gross decline a our last high dollars more ton $XXX last per profit On increased a $XX sharp XXXX. metals X% year, specialty $XXX very first be control to first ton our healthy booked $XX increased averaged basis, of by pipe quarter. per a expense inventory by the exceptionally of per spike our LIFO ton segment. first Last quarter, specialty $XX which than metals which the

During driven quarter, The in compared increased the largely first expenses total freight. pressures year. X.X% to inflationary increase to operating last market was by

quarter market mitigate including the up internal We initiative, these first to continue in truck first to fleet $XX.X XX% quarter in by our of last to of year. that's execute pressures. $XX.X XXXX, of growth on income from increased million freight Operating the million

year. The quarter which and the exceptionally the increased to of tube combined XX% first increase the year's operating first compared strong market product expense elevated As to versus of in $XXX,XXX segment CTI and due working the income fund interest The controlling quarter that's higher to with XXXX. Interest rate. have with million, quarter a capital team first operating higher with Michael XXXX. at $X.X our average quarter quarter. last stated, pipe declined in expenses, borrowings compared X% of in million McNeeley higher superb operating Don was in this his earnings done highest and job income generated since by second quarter last $X was the had requirement

quarter Our X.X%. in first the was average borrowing rate

an rate XX.X% quarter last year's last of first EPS we tax year for the in net onetime pretax Olympic Steel. X reduced share last XX% $X.X last diluted tax year. $X.XX year deferred million which share million quarter, before per tax of per versus our and XXXX. onetime of quarter, of versus plans, to pre-LIFO $X.XX share. benefit or a income earnings the effective comparison was $X.XX first Net first $X.X reported tax last The last December's we rate retirement rate the $X.XX per diluted of of tax income forward share. per first first net the was our XXXX to year's tax XX% to per Our or adjustment income $X.XX quarter. first going added diluted In benefits increased $X.X year Pretax in share year's and XXXX quarter approximate related effective million the of of in this recorded In was XX% a the indicator quarter That good legislation, reflects number is reform income.

increased excellent. quality by from and activity. - from Turning The higher $XX higher to million sheet. receivables $XX value This amplified inventory the and receivable inventory prices, million million year-end. remains March Accounts by $XX normal increase seasonality reflects our balance shipping of increased volume

and monitoring activity, market vulnerable conditions. could the escalating business With pricing customers we diligently be in to that surge are any

the less Our days. day outstanding XX averaged in quarter than first sales

X.X averaged the first were increased quarter slightly extended rate were prices turns inventory based XXXX. levels from and metal the turns first X.X as is down throughout lead ton products in rising. inventory on flat times annualized we Our was in quarter, We which turnover intentionally

our the which to working year was million by $XX the on, end of to goes capital, turnover expect improve the quarter. $XX higher again rate. at last or than in total million At debt year. increased million As end, inventory $XXX quarter was we due higher This

$XX.XX That's to book As a tangible the increase of value we million million. the to availability at per maturity reflects Shareholders' first increased the record on size to And $XXX made per of share the extend December of and $XXX of facility our revolver, March which $XX.XX quarter. XX, in end amendments million stood the to at we $XXX equity had facility credit share. - XXXX. our our

moment. several capital and highlight Finally, million, in that will of growth internal that David expenditures first funding a $X.X initiatives in XXXX increased quarter to Michael the noted

are total For forecasting the million. approximately capital $XX full we year, expenditures of

the for million. I first quarter. was which file additional XX-Q plan We over depreciation review. call David on $X operating expense provide to our today, the will turn quarter to results that, details now With for operating First will our later the

David Wolfort

Rick, good Thank to you, morning and everyone.

a the entered XXXX. in - sentiment We through and We administration's momentum tightened, buyers anticipation temporarily market continued January December on we GDP investigation. uncertainty in Section became the and for has of time, customer inventory early As accumulated and last Department market Jobs began XXX Olympic allocations Tax positive Act of our surrounding increasing of as growth the extended quarter first purchasing the of quarter was began. the after the and focused passage based slight At fourth of as products in Commerce February in Cuts resolve times on softened and the metal levels of certain lead pause XXXX same Steel. of narrowing markets that to XXXX, additional saw November propel hesitant U.S. the early the some started and the we

of the and steel in imports. announced market up, his This mid-January. to investment. secure know, on all March growing aluminum delivered returned Secretary inventory to allowed capture end when Wilbur spot in on long-awaited on metal Ross prices have meet Section buyers to prices market Concerned the adequate quickly us markets investigation tariffs new surged immediately began our been demand. we XXX build higher to material As which Commerce in findings Momentum creeping President to

to sales consolidated approximately compared of service spot sales the traditional more of increased to XX% quarter Our of to sales XX% X% our other mix. centers to first

Our advantaged position accident. today is no

we sector. of a years, to ourselves several for - return manufacturing and past preparing of stronger growth the return been a GDP recovery For have

generated As segments the this line and all onset operating top double-digit Michael income. growth at strong operating noted of X call,

expressed our concern been well in the securing outsourcing stay We optimize and competitive professionals growth. it with it Steel buyers' increasing as velocity Not sales to only We direct continue with contact force in invest to our pulse of expand sufficient parts also well-trained close believe material - to about hiring as on listening our with observing consumers. customers' times skilled metal satisfy direct advantage. their They in sales a our the our us performance and put fingers Olympic laborers does who needs. market to high-touch with provides provides coverage of have market,

Our the reenter drive And to have internal long-term projects Berlin also the growth we of bias acquisition growth. profitability us Rick several both underway has Mike again, led as addition indicated, acquisition, to the and Metals market.

production early you Chicago complete recall, new processing the to steel. work Framing in a the our dedicated in may is constructing line Herr-Voss equipment expansion foot our expansion of Illinois As new facility are square expected XX,XXX begin we Schaumburg, stainless XXXX. and house is just building building, outside cut-to-length on to to

tube growing CTI long opportunities. at laser have bed line processing installed We a accommodate also to new

to equipment demand transportation The for quarter, our GDP activity second by at construction stand, and third us, to just our we production addition has April. stainless encouraged pleased, for growth. up me. facility, from market long-term excuse busy remain this, the more where benefits all and and and in for markets would leverage equipment are We agricultural exceptional additional experiencing we additional table we're an are we slitter, our of specialty became set are slitter refurbished been is say ability Andy his thrilled I a volume. In with strong ramping end Streetsboro we operational processing very in to of Markowitz team our Overall, absorb the and markets. steel - trends,

Our pricing tariff X-month Section of the tariff outlook XXX of contemplates the growing and requests. the extension list exemptions exemption

of tariffs industry goal We the are the Olympic improved been capital investing years. XX has domestic utilization, for capacity stated strengthen steel last America cognizant the in the Steel to that and and

the growth and is our commitment to as of vision growth and Our domestic enterprise magnified domestic continuing expands. industrial GDP

online domestic prices. be coming New spreads and between have widened capacity will and overseas

planning We progresses. as our faster turning XXXX are inventory on

We transshipping have on compete other recent playing Section and a and of and market to to manufacturers origin. policies is XXX the field. We the always there applaud free actions came original to been routing devout countries provided of point advocates address U.S. believe global stage disguise level their administration's win goods

and much-needed fluctuate, action metal prices infrastructure will confident supply optimistic demand. be investment. and Beyond dynamics been and the pricing side is no genuine is pricing taken This we've to for markets and remain spur is from growth seeing future substitute healthy in Metal volatility, we to what our there this customers, - what profitability. us that always but realize makes ability domestic will

the Now questions. that, with operator, open call for let's

Operator

queue [Operator Instructions] the questions in this are no at There time.

Michael Siegal

the Well, we all presentation. are questions answer to at thrilled our

to your presenting forward Boston, be many May, and meeting thank for So in Rick, this to that at share Capital we thank you forward all Mr. at end Gibbs, to second forward you, Thank all And of look and And will our really KeyBanc summer. operator. I Conference conference. being all. and joining attending Markets Again, for this at Bye-bye. Olympic the we we we the you, look look and morning you quarter Steel. and able interest us Thank with results there. to you you, of them

Operator

today's your participation. conference. We concludes That appreciate

Olympic Steel (ZEUS) 6 May 182018 Q1 Earnings call transcript