ZEUS - Earnings call transcript Q1 2020

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Operator

Good morning and welcome to the Olympic Steel 2020 First Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference call is being recorded.

I would now like to hand the conference over to Rich Manson, Chief Financial Officer at Olympic Steel. sir. ahead, go Please

Rich Manson

Welcome of Steel's XXXX. Operator. the call first quarter to you, earnings Olympic for Thank

also our Our by Andrew Officer, will our this Greiff. Chief joined call morning Executive Rick will Marabito Operating and Chief President be hosted be Officer, by and

Before have I begin, few reminders. we a

not Some XXXX Securities within actual and harbor the reflect intended statements provisions call and Litigation be to of predictive on be today's Private Reform safe of Act made may made the will are as results. forward-looking

The to in company such XX-Q filed Commission. and and such assumptions, reports materially risks, that update or Important press differ the with set affecting the and Securities to factors uncertainties, are statements. company's not on factors could forth does Forms undertake results the Exchange releases statements, cause and other XX-K changes changes in forward-looking actual assumptions, other in

replay morning Olympic in be measures. share non-GAAP measure this per which GAAP was During are archived adjusted net directly issued broadcast on could most available today's income financial financial reconciliation Today's be release may to found and comparable discussion, and EBITDA refer to the for that A provided the our diluted of website. we non-GAAP will measure press Steel's website. is and live on this

I'll call this over the turn At time, to Rick.

Rick Marabito

on results. joining Thank to Olympic And quarter you, everyone. Rich. first this conference call us morning, you for thank the Steel’s Good discuss

commentary with see business your discussion too. staying and at the the all working a we we friends more skilled virtual begin and environment today. provide quarter we and of Today, you We’re this family I'll brief healthy. some first And becoming on environment, trust hope you in are are

the detail questions. position call over about environment who call financial current our more taking the about and before navigate to to more the up we Andrew turn specific for Rich then talk actions I'll will we're the provide will Then open

our quarter, our impacts first Net $XXX management share Tube results or our efforts. around in in operating positive for for totaled this from Pipe quarter $X.XX and first expenses announced disciplines release was our we reducing As Specialty the continuous $XXX,XXX from the saw Metals ongoing per morning the million. diluted the we and quarter and inventory sales as and strong businesses income

Our quarter the in sequentially results pandemic were first strengthening COVID-XX March struck. until

mid-March, automotive related and then By serve. slowdown a our April, industrial pullback we sectors see by the we to we began most in impacting the broader of experienced business customers

families. of into and the has values. always be and employees Our their is been our and primary and Safety our will possible. our wherever we built health and safety employees the To focus remotely the mission safeguards health quarantining address on and have safety core including necessary, employees restricting workstations implemented are social during working travel, COVID-XX industrial situation, our distancing, disinfecting cleaning, of many when

We responders serve thanks fighting the frontline personnel. COVID-XX. also And medical first with all and and employees have many appreciation out on to family goes members our who

facilities of by essential the are place we shelter all in open Security, states and an determined States our in servicing business United the operate Department of the As during and customers Homeland we’re directives.

products. transportation, COVID-XX our play country to to products to markets, to and critical States like and sustaining manufacturing medical are such carts customers the essential proud products of metal foodservices We’re beds, that during stands economy other critical and keeping providing and manufacturing industries and role in among hospital distribution a the United We're as metal running IV fight. the supplying

sheet work crisis and situation. managing this resiliency, to liquidity. liquidity. strong limit flexibility force, face in and capital a some COVID-XX decisively our ahead, preserve and So and Business we to challenge inventory the acted balance and Essentials quickly we're sure and cyclical early to spending our Steel and challenges Olympic have to history. through right difficult how size This particular times weather downturns This our decisiveness, ample we’re throughout is requires

decision important employees furlough and United providing flexibility mode. Our to and to customer to return work current provided to wage back moves as safely has workers the affected while skilled our continuation Olympic benefit Steel adjust to economy to to employees production levels our quickly States our the business recovery

well. to customers current abilities, Our will as fortitude Ultimately, strong more well situation availability and our with serve problem improve about continue and Andrew operational provides processes, streamlined details opportunity loan efficiency also with and Olympic these procedures. the our show liquidity Rich our provide actions. us Steel solving as to and the

with us need to We’re our customers relationships deepening demonstrating value the most. they by our them, when

workforce. We’re partner communicating this employee one about business realities the of performing safety, health time. sharing all our a during candidly practices constant, to the and environment around the and Olympic by this abilities the business Steel best trusted change, perseverance commitment and is of best and there Through strong

how responded. has of our proud team I’m

customer that well States as remains rapidly Olympic and uncertain scenarios near-term production to reopen. participate even business the is in confident emerge company the challenging and stronger to the will begins both I’m an While environment United as positioned changing. Steel are recovery economic

I will for to the now turn Andrew call comments. his over

Andrew Greiff

you, Thank good morning. and Rick

Steel results position Olympic business and then current the Today, our I taking briefly a would actions to strong navigate quarter discuss for specific to like company address is and recovery. environment to our business first the

me Let our by begin profitable highlighting quarter. first

segment both segment first to quarter. aluminum shipments contributing Metals in of outperform market during the stainless EBITDA to with Specialty the relative the and continues million $X.X Our

and contributed I regarding earlier quarter. provided million Disease work At Pipe and state evolving the EBITDA first Rick's on following States FIFO officials. environment are margins closely the strong local Centers our the in that echo a comments inventory turns from $X.X by committed government, will and and we’re United guidance focus COVID-XX in of segment, Control Tube operating federal to and The Prevention to safe and health expenses for

our protect in to people. the have recommended We place protocols precautions and

levels our to In aggressive current markets. we’re key our with protocols, our taking conditions in safety and addition to health the actions production align

to own remained our recent the supply continue in workforce customer production even reductions. facilities have with levels will at temporary closures. We same mill and chains to time, our adjust response capacity At intact

also further and discipline on have inventory enhanced operating management. We our expenses

non-critical capital different our our and reduced expenditures levels in and to reflect April curtailed furloughed business workforce points of cover safety our have needs to We quarter spending, maintenance to levels. at that up current one

we to furlough demand workforce to By this And ensuring begins have their retain when flexibility to back health rebound. benefits. choosing experience employees, they can we’re care bring also

leadership shipments executive well commercial reduce to of XX% key as We’re reducing departments. including leaders, declining to and inventory in by to XX%. team, an other our second as inventory additional most we proud our expect reflect quarter, the I’m

ensure response recovery. that just department the safely Great Each continue has the occurred company long to collaboration will essential pace pandemic. a the worked slowdown to timing an tirelessly challenge continue as business. our operate it's where know to and or throughout we COVID-XX uncertainty we how From today, in has of sit to and

important manufacturers OEMs, of or to operations. heavy cut are whom Auto have back Olympic customers equipment temporarily and Steel many their closed

long close them. We and have standing a deep, number we’re of in relationships with contact with customers, these very

return more for operations short-term. And recovery, to We’ll the to meet operations. to they plans needs normal our in plans continue their initiate we when adjust their activate can to our

necessary will company to all remains that with a actions As forward, to serve the Olympic ensure we our properly strong situation we to and the ability monitor move continue Steel as stakeholders. take additional

turn I'll call the Rich. Now over to

Rich Manson

you, Andrew and morning everyone. good Thank to

to pick-up The most COVID-XX quarter. impact we off a business the and first in March, to from slowly report just profitable affect started quarter the February began pandemic of XXXX began Despite positive and setback, sectors. the momentum as did

first per the quarter $X.XX diluted or last $XXX million of share share quarter a with income year-ago. $XXX diluted with $X.X compared compared $XXX,XXX Net in the or $X.XX year. for XXXX Sales million totaled of million, was first per

per impacted quarter first pretax by results share. of earnings which positively income Our $XXX,XXX LIFO XXXX our $X.XX include

for Each with operating first quarter positive Pipe and particular of showing segments our resiliency. EBITDA Metals and produced Tube Specialty segments our the

Our and the These operating a ton. of we put achieve during reduction second per lower us lower place helped the expense year-over-year expense in measures benefits results reflect expenses operating half the XXXX. measures from

Given the managing position. focusing our on current liquidity environment, we’re

Over levels further focusing operating the to capital. enhanced last strengthen on two our inventory applying efforts expenses, we judiciously have our months, and reducing position by

temporarily we're spending only on maintenance capital have non-essential safety means suspended and expenditures all improvements. which required We

XX. We balance sheet strong have March our a and at total was $XXX million debt

based covenant availability, XXXX. million a receivable million inventory minimal increase asset of first with of source us year-end Our credit levels requirements. We our facility with $XX revolving million provides with $XXX great flow from $XXX and the as accounts cyclical of received. cash a industry significant a cost nature counter The liquidity provides quarter finished low

us. But taxes. some be deferrals are the the applicable and generally Act, the a Now the of unemployment security will words about of CARES other not few to benefits Act social from provisions there

As per share. pay our we $X.XX continue our quarterly to of commitment part of shareholders, to dividend normal

for have We dividends now consecutive paid XX quarters.

repurchased also small a quarter during XX,XXX amount of shares the stock XXXX. first of We

not preserve am Rick this team I to even we In Steel like how of to echo company. situation. liquidity, what about challenging any stronger confident I'd stock will emerge Olympic closing, I'm additional do future. in we an To buybacks immediate the in proud expect said the responding

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

Operator

comes your question Chris Singular first Sakai Please Research. Our Instructions] from question. with proceed [Operator with

Chris Sakai

was Specialty shed on could Metals. some light the question just on My strength of

do main Metals quarter? the well were to Specialty what see to wanted Just reasons why this seem

Andrew Greiff

continued pretty strength, which a to was equipment this be into we first Chris, business question, of it continued business quarter Andrew. and the nice the have be has is so piece to our strong, restaurant certainly Great continues strong. auto appliance

Rick Marabito

benefits to And product several that think as terms also well in as the then some growing think I our Metals real we've Tube. like the to talked diversification years the starting future. would about we've seen of Rick, our is strength this strategically I Specialty lot And in the diversification. environment, and we the continuing Pipe you're I see the Chris, add of and into And aluminum is into in this of what a business see Specialty the real last Metals

the for question. thanks So

Chris Sakai

And all affected by you doing equipment mentioned the that restaurant the the Okay, has then great. But business shutdown? Thanks. and been Coronavirus well. at

Rick Marabito

the certainly started we of Chris, to tail-off bit to has at feel a the April, end a see impact. little of In really we started It March.

is that So feel to started yes, we've the impact. answer

Operator

back to questions are [Operator closing Marabito I'd Instructions] this There Rick for the at comments. point, turn call this like no to time. further At

Rick Marabito

look again, and hope I with Once you. healthy and you we joining safe quarter. us Steel. you. Olympic Thank you for stay for and thank speaking all Thank next in morning your this interest to And again forward sincerely you

Operator

today's concludes conference. This

lines your time and your this you at disconnect we may for You participation. thank

Olympic Steel (ZEUS) 1 May 202020 Q1 Earnings call transcript