ZEUS - Earnings call transcript Q3 2020

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Operator

Good morning, and welcome to the Olympic Steel 2020 Third Quarter Financial Results Conference Call. [Operator Instructions] And the conference is being recorded. I would now like to hand the conference over to Rich Manson, Chief Financial Officer at Olympic Steel. Please go ahead, sir.

Richard Manson

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

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

I begin, reminders. few a have we Before

or results. to harbor Act Some made actual provisions such undertake such could not release forms Private Litigation Reform intended XX-Q. And of XXXX risks cause not call as and forward-looking the assumptions, filed reflect other Commission. the are changes that predictive and will to assumptions the XX-K uncertainties company and with results statements in made be within of in to on materially may changes today's statements, differ factors are forward-looking on does statements. be The is Securities the reports safe press actual Securities factors the and update set affecting and Exchange in other forth Important company's

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

Richard Marabito

our Andrew, discuss the results, results. near-term financial begin questions. call Steel's morning, our quarter business about turn call about on and third Good provide performance then comments and results. over thank us I'll I'll segment outlook, more we'll then our your our some who brief detail and take you, will for discuss everyone, you and to Rich with third Rich. Olympic joining will quarter our then to Thank

team continue team, as thank Through our customers for reinforce Olympic to an the working, operations and the environment. navigate delivering everyone our coming together well also successfully protocols our we want on expect. that and want ensure Steel products of we safety to of are our to and I the excellent exceptional to our people beyond with I first, the unprecedented our safety So efforts of service the to efforts producing response that our pandemic. extend are COVID-XX continuity

every that making Our organization, employees that day health our understand is is one everyone commitment safety company. safer a and and in mission for us

third our to results. quarter now Turning

we net per $XXX in net noted $X.X today's million and of release, reported million sales a $X.XX earnings As loss of share. or

XX%. are increased same these results not pace volumes we improvement of period saw our XXXX, performance. quarter of our significant on shipping Compared with to the sequential second the While XXXX, in

increased X%, Our $X sales rose than expenses our by only in resulting XX%, million. our improving by operating income while more by

steel However, X margins carbon August pricing profitability of in months pressured falling the quarter. July the first and gross third in overall and

us expenses of of coupled and all the This our pre-pandemic volumes with across of segments of the demand pricing safety and our recovery early positive deliver dose COVID and EBITDA quarter going forward. inventory enabled optimism us during to the provides in a stages with strong in improved our the For September, approximately actions quarter, and and of during levels. reached health decisive around XX% strong rightsizing

be our allocation a Olympic profitable our These with disciplines, branded capital and strategy to our inventory business. higher Steel areas expenses efficient metal-intensive return into metals nimble, support for improve combined During operating reduce third our free debt. long-term to cash to to quarter, such more our and business ton shipped consistently we near-term diversify executed our flow specialty reduce and as priorities turns, vision the on per products generate

have we progress the with of pleased a made very number in are areas. We

Our Xx. are of we in currently at roll this excess turning is level flat inventory and lowest XXXX, the May since inventory

diligently able less. to which that do XX% expenses, demonstrating monitor safely more We third permanently continue our declined to operating by from with are year's we last quarter,

Our XX% compared the by or with count year. over down the remains XXX of head beginning

generated reduced the debt in the than actually move the we the And term free credit These also forward. us and well in have our pandemic. will company borrowing benefit third $XX as by We million cash quarter. facility and is flow our revolving under availability served steps higher our near asset-based before

levels. call of Looking to above at demand is continues continue with daily remaining of pre-COVID and comments levels. now to fourth environment, his strong pre-COVID I expect Pricing now a to These dynamics increase see over pricing strengthening on the and the XX% will to turn for excess operations. quarter, October support we our also a Andrew volumes finish in we XXXX. shipping positive

Andrew Greiff

seeing take Rick, to few business trends are like you, Thank good I'd and in segment we industries review share the a morning. serve. we moments results and to our

profitably has shipping pre rebounded business metals volumes levels specialty segment And to third Our rose of as in share we particularly toward markets, month products. each gain aluminum in continue sequentially specialty quarter. pandemic the in

strong surcharges, account contract growth, to of certain operating quarter the and the was reduced was for the segment in the combination the volume such pretax did service. volumes. our demand lingering which business, for markets leaner trailer the post end-use truck by prices buoyed our transactional helped The rising despite as some and and earnings challenges increase and of EBITDA main While return food customers increasing of stainless contributor expenses inventory volumes, in

to slitter segment and and processing with metals cut-to-length exceptionally most expand Schaumburg, along dedicated well. our We geography addition the this fast-growing in in Our continue anticipate adding to future. recent our Ohio, Illinois, to intend perform new of newest capabilities continued in Streetsboro, white line,

from carbon volume a stronger this automotive flat generating our a roll number rebounding operating Our robust We on discipline. of segment OEMs. expense benefited market progress stronger also and in made quarter, positive volumes significant industrial we continued EBITDA from and the saw

tandem throughout key lead the inventory created certain shutdowns shortages low We have at products. near-term industry and specifically seen markets. end in Historically products mill spot and and potentially and temporary combined greater in times with market, demand in users, has in the permanent extended

As has to September, carried momentum a quarter. continued fourth index pricing into the improve in result, and quickly that

pipe prices carbon and August, for earnings Our in July efficiencies The of of position tube our falling a impact pretax EBITDA In segment steel quarter. demand rebounded and to September, and the positive felt momentum with pipe for strengthen we tube but the strategic strong quarter. generating long-term and continue success. our into and pricing fourth for and all drive continues segments, the

capitalize second our primary been in Georgia is southeast. flat Buford, has to stamping business Southeast. facility, quarter. on hot has automotive highlights new during specialty in in capabilities the fabrication allowed third The hub facility, us to the us which roll Georgia the of changes our to automotive market our the One our will metals the the Buford the expand allow facility These which new in opened quarter, allowed Winder, grow us

As opportunities to we and margin-enhancing portfolio. forward, to our we move continue look for diversify strengthen

balance the an strong move flexibility sheet Steel marketplace. gives as in Our to Olympic quickly M&A increasingly opportunities active arise

Rich. Now I'll over the turn call to

Richard Manson

to everyone. and you, morning good Andrew, Thank

on pricing months this our of As earlier early fell carbon pressure quarter, the in steel put which margins. the call, Rick in dramatically mentioned

the have to the As EBITDA, actions positive pricing quarter Olympic more all and and EBITDA benefited we total Steel improved, adjusted make posting line from our with taken demand and We adjusted consolidated to leaner, efficient a prices bottom segments million for ended lower quarter breakeven with to $X.X of were million third of volumes. due the EBITDA Sales $XXX XXXX. XXXX compared compared selling in average for quarter adjusted of the second million the $XXX organization. quarter

million compared up from in for net sales in XXXX $X.XX of our However, per flat in period $XXX,XXX year share the same was the XX% of third or results Net third per was The income diluted or of XXXX. pretax the $X.XX quarter third share XXXX $XXX,XXX with LIFO XXXX. $X.X of diluted quarter compared LIFO second pretax income X volume include roll of of the million quarter the ago. with quarter quarter loss income $X

in operating call. witnessed Rick benefits the the this third we and During quarter, asset that continued identified the efficiencies earlier of

during expenses were Our the when to of quarter XXXX. $X XX% over or million third quarter operating the lower compared

generate of $XXX to quarter. last was end We At free XX, debt the $XX down total flow. continue our million, cash from million September

Our availability $XXX amount an than availability. million, was pre-pandemic at our approximately XX higher September

debt credit an operations excellent did and outstanding sales department the bad Georgia. of days of which Buford, capital in average the Our days. approximately write-offs new totaled return includes job our levels minimal XX expenditures navigating of the $X million, pandemic Year-to-date normalized with through to

We will reductions no to the of this and continue capital near-term into items. future spending maintenance with safety-related lower level

XX which Olympic to consecutive a share Directors quarterly Steel regular for closing, of have drove a proud about I paid fourth onto note, In dividends the now for echo achievements dividend like quarter. is of positive quarter. to the us the the As outstanding Board team, approved give all of per our comments of quarters. the $X.XX during final efforts would this outlook Rick's quarter and our

a Before we Rick closing I'll for the few over call to questions, remarks. take turn

Richard Marabito

potential closing, our as In aware of we Rich. business of Thanks, environment customers. on the the and as remain acutely well challenges continuing the COVID impacts our

below significantly levels. activity pre-COVID remain still their industries and customers Some

to turnover. stay vigilant safety will we continue health, So inventory controls on and expense

let's our questions. operator, up open now for So call

Operator

comes question First Instructions] Markets. KeyBanc Capital Michael with Leshock [Operator from

Michael Leshock

average momentum saw terms had, of in versus cadence wanted you I just of in to versus the get October sense levels. levels XQ or September question first a kind So for demand the daily that

color Just can any provide you great. would be there

Andrew Greiff

good of We towards Sure, to at not to September, we the from that saw October saw as certainly shift months, levels, rise middle is while we better in continue that had that the seen into show to Michael. continued saw was October saw the a into strength. X.X This and -- through October, significantly pre-pandemic what previous Andrew. we month, rise -- got back

Michael Leshock

go into the -- on expectations seasonality off demand how are of And side versus to what your normal that, XQ?

Richard Manson

Rich. it's Michael,

so seeing to continuing XX% much of Thanksgiving levels. the seasonality, pretty through we see that expect of third the from of much the low to have quarter pretty year we've half and into quarter, And we the fourth once end the compared the back that what the is fourth pre-pandemic quarter of kind normally time do especially kind do. we you the Sequentially, hit in been

low I quarter if is of XXs pre-COVID year. that XXXX, you And of think to fourth kind kind to the were of level the shipments thinking you're we'll up it fourth of XXXX, of if end I compare in quarter of think where so

Richard Marabito

in the we'll to I'd Andrew a we what of end And strength seasonal just the the commented, just both these in that volumes pricing lot side. the of was some dynamics strong, really said the Michael, and Yes. saw Rick. pretty the it's given as September marketplace, see year. and supply remain anticipate normal have of guys on We and as some October add, spot

Michael Leshock

That's any then seeing it. other And any upside you are And helpful. are freight pressures Got seeing you in reemerging? or inflationary consumables?

Richard Manson

Yes. we I of comment. certainly one areas freight seeing Andrew yes, -- are definitely let But inflation. I'll mean, certainly, is the

Andrew Greiff

That's No. true.

it flat. know, started up, come seeing We've seen And to Michael. pricing index So as we're weeks in to has index you of the rise. about starting XX straight pricing

anticipate as has So at prices, up side, nickel the range. And started that move about partly the of in we and $X up we've -- ingot freight. on and we've at nickel pricing certainly to would and seen continue the because climb ingot And high that's aluminum aluminum carbon to in staying spot seen Midwest certainly $X.XX. well going to relatively

that definitely rise. quarter, So expect throughout fourth we'll the would to prices see we continue

Michael Leshock

me. for lastly just then And Okay.

working what of that? you could to provide in And the drivers be the If net for going outlook fourth your are capital quarter?

Richard Manson

Sure. Mike, it's Rich.

the AR normal year at see our you the levels of the of much with lowest what so the seasonality, is pretty year. typically, And end

relatively you'll forward. third quarter, going probably pop-up see increase in end can which is quarter. stay debt quantity fourth What to inventory a $XXX with I pricing, we dollars I of reported million is the indicated, see that the you'll modest from would a see bit think the index in the expect, of of as some standpoint we'll stable. little inventory Andrew the going But reduction in off though, a the at

capital another here off the working $XX normal of through may million just or that means, that you come $XX quarter. million see think I fourth in

Operator

Chris The next Research. question Singular Sakai comes with from

Joichi Sakai

to be be wanted to what I to just reduce a for the expenses -- for things. there. and idea flat. you better improvements question there's of had I operating wanted on the to doing expense get seems there in issue if just That to for carbon future? I a the And an profitability any in side of are guys know know going

Richard Marabito

Well, start, answer. I'll I'll Chris, and Rich let

equation from that taken significant a at expense was of we've carbon of side. out taken the So XXXX. to of certainly, our large XXXX if consolidated you piece amount results, out look actually the of A

filed look And the segment. increases costs, significant at have if those selling come XX-Q you'll warehouse I so out once have of said, come later as amounts and out expenses of costs, majority certainly, the you see -- administrative gets taken today, operating we've our of And costs. carbon cost the on

think as lower move of cost I diligent really we're to a going terms rate. operating much at we forward, be per ton in

color we've the as kind volume started that add of But already Rich, into that. to see -- to pre-COVID on a You've of our XX% you levels. rebounded little more XX% maybe, can

Richard Manson

of And were you'll look expound $X And what on a that's QX carbon we're more Thanks, this side, down QX to were Sure. Chris, we 'XX, XX-Q each that the overall, the 'XX of just XX% and have Rick on if expenses. when -- and -- on you on But filed. bit Rick. actually is XX%. there, little versus detail the over said about afternoon is million to down at

it. the ton on for of the we're have about I you've all that's the carbon, kind decrease And we a seen total where And think So highest segments, roll, Rick quarter. flat of said, actually $X as of down year-over-year. amount expense

take So more Q you. today. a comes sure you're That have little not segment for it maybe what a detail quite at later but seeing, out look will when the

Operator

back turn remarks. concludes for This session. question-and-answer presenters would the to the closing like the I to conference any over

Richard Marabito

interest and Steel. a for Thank sincerely Have forward Thanks. in And in I to day. your healthy. all you stay once you all morning hope the you, this operator. of Olympic you we good thank us continued again, safe and for with And certainly we near of look future. joining again speaking

Operator

This call. conference concludes today's

pleasant may You lines. have Thank disconnect for your you and day. participating, a

Olympic Steel (ZEUS) 7 Nov 202020 Q3 Earnings call transcript