ZEUS - Earnings call 4 2023 | Olympic Steel, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings. Good morning, and welcome to the Olympic Steel 2023 Fourth Quarter Financial Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. At this time, I'd like to hand the conference over to Rich Manson, Chief Financial Officer at Olympic Steel. Please go ahead, sir.

Richard Manson

operator. you, Thank Steel's XXXX. Olympic for Fourth the Welcome Earnings of Quarter to Call

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

begin, reminders. Before I a have few we

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

During release may refer last are net comparable measures in and measures. share, most adjusted today's non-GAAP to discussion, diluted and A found press issued the is adjusted which our financial non-GAAP be website. financial measures all the on directly we of income that EBITDA these EBITDA, was GAAP per reconciliation night provided to can

Today's live broadcast Steel's will be archived and Olympic website. available for replay on

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

Richard Marabito

for always, statement strength more for Steel. results We year our defining our discuss highly Steel's discuss and last performance then of XXXX will Andrew progress was XXXX about by good strategic believe the and call fourth your begin Rich years. performance that, over our Olympic to up Rich, morning, open a resilience. course, financial and successful detail. segment another Thanks, review XXXX made our the the today full for is in everyone. we've and you our Olympic we'll And performance. will questions. It results. following Then us quarter Thank about talking And as I'll X year joining company's

withstood a the well metal XX% pricing Yet For delivered during generate consistent fluctuations, on throughout strategy of decline and as second more pricing our as year year index significant fell that these steel results. carbon year. a the surcharges hot-rolled we profitable despite we row, commitment than to specialty in the

We million, net $XX.X reported of of and of million, EBITDA million. both our fourth quarter quarter fourth year. business All for sales X of contributed positively with $XXX the income segments our full and results the to $X.X

and year pipe second Our tube ever. profitable delivered business most its

in headwinds, in consistent specialty navigating Our industry-wide segment the pressures gross pricing faced stainless margins. with of this showed carbon its resiliency improvements positive EBITDA. contributed although XXXX business sales steel and metals And

our We challenging value create to conditions. build under are now results strategy X even years diversified delivers shareholder a and that company into more market

acquisitions, integrated that During portfolio. which of our each to unique has we've successfully time, added offering a X value-added

named recently metal-fab [indiscernible] are Year Corporate Corporate in Dealmaker acquisition by We January of for a Association the XXXX. Growth for the

stayed higher focus assets true higher our products. to value-add We throughout strategically to we've further also operating divested And on transformation, our have our discipline. tighten return,

Our all success a of actions. result these is

Metal-Fab EBITDA and management investments in strong both have position returns. inventory and growth. Bar we invested XXXX, future acquisitions, have sheet immediate balance fortified highly Steel $XXX Olympic Our and for cash the flow In accretive produced and Central strong our million Tube and

year-end, $XX approximately million million to availability increased our at million. with $XXX $XXX total by However, only debt of

in in excellent As a the to return result, we opportunities remain higher position to future. continue in invest

to our our commitment strategy. the per to from we've XXXX, since $X.XX value success Directors our of Cumulatively, our our by share decision position raised recent quarterly XX% by dividend Board to shareholders. company's quarterly strong financial reinforcing The increase also $X.XX our share our dividend of reflects per to deliver and

return total over was XXX%. XXX%. was XXXX over for for Our X-year period, the shareholder return our And just post-COVID

proud the enhance the team our progress new strategy hires for team Steel with past we've to to and their made and our and commitment entire X Olympic years, promotions. continue of we I'm in the

XXXX, company, of strategy. group, President, lead Zach will role, manufactured Products. role XXXX, we one the acquisition Siegal with promotion has of January he's products the our to In of new years, Zach played company of in announced remains role the company's metals past activity. areas the mergers Zach Metal involved newly an the since and In our created new for while our he growth acquisition his and been Manufactured instrumental X

our higher organic return, products on growth growth XXXX, and We're creating to confident higher acquisitions. As committed stronger of looking driving managing expenses We we our continue debt cash portfolio of both we for while in opportunities through working operating in capital, discipline profitable expand shareholders. value is further XXXX, for and Olympic head than remain ever. to Steel our into value-add our to build success ability our flow and

So to now the turn I'll over Andrew. call

Andrew Greiff

Rick, challenging market performance strong, dynamic Thank of and Olympic everyone. another despite and Steel solid conditions. you, finished year morning, year off the good capping

Rick noted, and our disciplines. to performance operating strategy this ongoing As commitment our of reflects our the success

adjusted $XX.X Our the was EBITDA and fourth $XX.X for million for year. million the quarter

quarter million. in of exceptional Our history with year $XX.X pipe segment best [ and this tube ] second its had segment as full its XXX-year EBITDA adjusted another completed

upgrades strategy additions on resulting value-added focus mix Our through XXXX, from the our throughout growth. gross fabricated above and amount remaining resulted the XX% and margin improvement increase of team's laser in to product margins to fleet

the CTB has into of the seamlessly integration We to with of the The We enhance further October of Tube performance tube the expect and and Central XXXX, which smoothly. business will continue segment. growth plans, of fits gone will margins the our strengthen pipe in completed addition Bar. and acquisition

in to fall UAW with carbon the index strike delivered contributions a XX% another year, we navigating from Turning typical rebounding market acquisition, unusual it April our some dynamics. during September, pricing the Along saw in carbon But performance fourth carbon the of from solid segment. pricing in while settlement. slowest Metal-Fab In falls through then and quarter. seasonally anticipation October XXXX, began quarter

some which to the XXXX quarter advance on early quarter as index caused first and well fourth the first index increased half settlement the first for in pricing as increases customers During business many of of pricing contractual contracts. XXXX quarter, XX%, buy the of

a X% fourth quarter less As sequentially than from the result, sales were traditional rather down to quarter than third X% X% the decline.

EBITDA growth particular, earned and year fabrication quarter. the all a earlier, and Despite carbon up as shipments fourth fourth as circumstances, saw we challenges in adjusted and the in those from $X.X in in higher-margin [ through market million increased products the up unusual X% full were X% year. Carbon well roll In quarter segment ] business. XXXX the coated for poll of

third recorded nickel and this Specialty metals meaningful has and prices. contributor even in as most stainless the fourth year, continued full profitable remained a headwinds to falling face segment quarter its steel industry-wide

of We under team of specialty our our are metals market the proud challenging conditions. very and accomplishments performance

Turning to buying early seeing trailer, same OEMs as equipment, storage In The true markets. end food customers. tank, XXXX, for truck our HVAC forecasted. we is are appliance industrial and

We industrial are demand especially data for centers. fabrication, seeing for very strong

are Georgia and facilities newest performing well. extremely Illinois, Buford, in fabrication Bartlett, Our

year. employees we expect our of and for solid to XXXX successful another be XXXX all a thank We

turn the I'll Rich. call Now over to

Richard Manson

demonstrated Olympic deliver Thank XXXX important ability you, to our year we as results profitable for an Steel markets. consistent in Andrew. was all

Metal-Fab more to you due difficult and Bar. Central of I want that Before be I comparisons XXXX will discuss remind year-over-year acquisitions to the Tube and results, the

the year pretax income For to income quarter XXXX charges. $X.X in results a prior income million $X.X million include $XXX,XXX year the totaled of in compared results same period $XX.X of ago. million the fourth quarter LIFO XXXX in The in also XXXX. to of quarter, quarter pretax include period. million compared quarter $X.X of acquisition-related EBITDA million the LIFO million net with compared the $X Adjusted $XX.X fourth Fourth was

Consolidated the operating million expenses totaled fourth in million of $XX.X the fourth to for XXXX. quarter $XXX.X compared quarter

CTB, for will expenses report operating reflect and do not level carbon Metal-Fab addition higher the segment operating at Therefore, of appear ton quarter year-over-year. fourth the the and sold. consolidated ] tons expenses per [ Our which

CTB lower the fourth and quarter XXXX. expenses, quarter $X the Metal-Fab Consolidated higher the were expenses half second operating distribution year-over-year operating to of million expenses of Inflationary incentive volume X% associated during warehouse fourth fourth $XX.X higher expenses for XXXX $XXX,XXX of and the negligible. operating expenses, million with pressures include of compared and of quarter

costs the As a the acquisition-related CTB inventory deal reminder, market amortization. results and fair for write-up of $X.X included fourth million quarter

$XXX Rick million approximately our to We and earlier, in inventory cash of to opportunities. of have balance year an As return higher our us helped mentioned position management flow availability fortify continue keeping and investing debt [excellent] continue with in the us million, $XXX ended strong sheet. to

that $XX.X in compared $XX we margin result XXXX million. higher $XX.X more through results. the Our be quarter make million will automation, and depreciation we expenditures long and to estimate fabrication capital times totaled and million to investments lead that remain consistent opportunities investments of Equipment of expenditures in capital as continue gross approximately XXXX fourth

fourth the tax was XXXX XXXX. compared quarter XX.X% to quarter in XX.X% fourth Our rate effective of

dividend during We expect Also per quarter, our our XX.X%. to we approximate the XX.X% $X.XXX fourth rate to of paid XXXX tax quarterly share.

share an yesterday's $X.XX of our per earnings to in from of is of release, the previous outlined payable dividend, The March XXXX. dividend as a March which $X.XXX on share company's XXXX dividend. As increase quarterly X, shareholders per is XX, Board approved Directors

shareholders our paid We for have quarters. dividends to now consecutive XX

our strategy and other XXXX, our and throughout us strength company of market faced of we enabled Although shareholders. headwinds the results pricing deliver success challenges to the significant and reward consistent our

look about XXXX excited and forward to achieve beyond. future can we and are in We the what

for questions. open Now up the operator, please call

Operator

the [Operator Instructions] from with line KeyBanc And morning Gibbs our Markets. question is of this first Capital

Philip Gibbs

fits about little platform maybe then a new offerings on question franchise? within you may ] it and you've and a elsewhere? how bit, I a know on Just look the the as opine at your [ that future pipe talked tube And of existing just but acquisition how your expand to recent of Central, bandwidth it

Andrew Greiff

Andrew. is Phil, So this

-- So also And It's fabricated we're growth us into it as to beautifully Chicago Tube in what It of under Tulsa. Central and were is fits our doing they're Rock get Chicago Iron [done] the part we the segment. as not bulk, you Little allowed under for that well areas of as X tubes. know, a looking that business Tube Tube. in

facilities our Chicago And they into very go you has. there, when facilities, similar to equipment so what have Tube fabrication the

to under tuck natural was it them very fit that so segment. And a

Richard Marabito

to Dustin big is business And centers. I'd platform who leader. plans a of the continue really data chunk we've value-add CTB previous And with to CTB the processing. to got a of big us was CTI/CTB Ward, and more He stayed fantastic on and is that -- do use owner say

there. excited the we're growth So about

Philip Gibbs

standpoint, volume at revenue the massive. a revenue -- can dial. a not of as a you from How either the were, move overall, it's I maybe business are know of and the where have component probably Do percentage just are, percentage of as you you you a move -- a to looking guys the value-add certainly or But revenue from can standpoint, want where go? where you of volume? it percentage

Richard Manson

Well, Phil, it's Rich.

The we've revenue. I And gross focus in is value-added talked of think the want they CTB. margin we've right And focus their the pipe about think way think on with segment close is acquisition by not they're now work, what and that well I XX% gross that. said on what is to our and they're generally their pretty on is I of tube being margin. generated

Richard Marabito

only tube, really overall, yes, really side. the and in not fabrication you also -- carbon about and seeing, Andrew, maybe stainless then can especially pipe the the in talk the and in but growth we're And

Andrew Greiff

right. that's Well,

see go you strictly And number are they so a also of X X dedicated you our through fabrication large other facilities. Georgia, in know, down Bartlett, in Phil, facilities, But as the you facilities, if Illinois, will see we other maybe Buford, equipment Phil, of some rapidly. year well. a in business, We part very Fabrication. is more hired and conjunction equipment brought Vice we our of traditional new growing value-added with a It our as on President this of that

Fitzgerald these us to processes. help us had join and accelerate an Max background Industrial OEM So

that position put today, in us the into -- And really to go a to is OEM, assemblies terrific directly a from the goods value-added rectangles to the demand originally in going convert industrial particular, the industrial what OEMs. cases, welded was of coming now lot it in of these customer has finished parts,

has the and been side, growth area food equally trailer, On particular, for that truck in we're really that. has metals the specialty in equipment, been a seeing

Philip Gibbs

your And customers overall then expect just the are on year in new what to here? environment, demand you telling the

Andrew Greiff

Yes.

seen and they of were down I'd that down, accurate. the of certainly year, down. OEM, but they we So at -- not their certainly the industrial forecast the they're that a had seen volumes the anticipated horribly, were say when down, would the but towards have year last be are end We've to going forecasts that the are year, beginning they

again, bit, On come starting little the down significantly. trailer, actually a is off that's specialty side, equipment metals truck but back. Food to not

So for our steady. pretty customers. been we're has [ seeing some traditional business ] resurgence The appliance

So [ first a going that the to as XX% tonnage we quarter fourth think in up growth, growth strong pretty think to XX% pretty range about good been to relatively from speaking, we be probably fourth has wise versus quarter, compared ] quarter, traditional. what is

pretty the how start the we good, see seeing we're year. is be and kind So this the of year of

Richard Marabito

lot that what our a the minutes that side. about, have of is as to ago forecasted the talked note, And I a of customers we're end with than volume, offsetting a on item Andrew about think talked Andrew softer business. business the new industries really slightly fabrication And couple where new the more few

how XX%, first that's around lot onboarding -- the growth So of in get XX% a sequentially. quarter to the We're we new XX%, business. the

Andrew Greiff

A product. off. taken business our I new mean, really has galvanized

And a focus on our done so tandem we've product.

-- this accelerate year. will and galvanized certainly cold-rolled So have

Philip Gibbs

last question then And me. for

be and thinking feels sheet carbon call should obviously, down. the takes, just it, lagging been the business, seems it's like contract piece about moving So spot it like, up. puts The the, it

pluses QX. minuses a The Stainless standpoint. neutralizes would of from So and imagine, sort stabilizing like in it's you've kind pricing some LIFO, feels got I there. of

at I much accelerating You got don't the is too inflation margin here. volume from think growth. the

think we I margins LIFO versus growth, quarter the gross the fourth LIFO the do quarter? So guess, first just ex about or how in

Richard Manson

you Yes. I think And Phil, spot it's it hit Rich. kind of on.

got and going of business. the kind directions spot the contract things You've in different with

of of little of the you'll the in come with keep quarter.. I and They index is to what typically X on on a reset a add out amount it only we pricing the and income gross margin, see you stronger rest the the would in LIFO our had tube to think quarter. I tend LIFO by pipe fade gates and of X, with higher go X as see kind LIFO, months. pricing of index through mind you fourth substantial January is, that you on lag segment, the pretty

so first which first see bit priced probably of over lead tube half of actually coming for the to expense year, in And the the half. inventory we in little will higher could pipe and a LIFO

Operator

line of Dave Our with Storms next the question is Stonegate. from

David Joseph Storms

to Just M&A business. questions thoughts kind would Phil's are like any more that you business segments market? up on to of to your is that the M&A follow of any one to Are Olympics in there outlook. earlier about the diversified CTB diversified? try see addressing And your there continuing of build of and

Richard Marabito

Yes, Dave, Rick. this is

segments. through CapEx, strategy X well as overall our generally, first, all M&A So our we of business as like

terms CTB to them success probably the and acquisition we we're So had CTB, carbon mix. But balanced the of our X intent rate a a -- bit and focused side, is of in greater CapEx grow until We've all of had were on add to grow that's specialty strategically, of looking them. we a little approach all to to metals why really thrilled on acquisitions. through X

return, good those high think, on are of that towards return have amount we've obviously, add front, acquisition synergy really existing done, gravitating acquisitions that a we at you to I through recent companies the really can of consistent if some types look the operations. our companies a we of

adjacent some balanced segments you stand-alone facility. us And all I'd a going doing X to do that, fabricating metal we're our do, And So facilities to through continue to acquisition. taking we're fabricating while we'd of is like which saw approach. add say what really to we're grow

well. that like model we So as

David Joseph Storms

you more Very helpful. you on level. What levels when the do mills? an factored And And in then are XXXX? this going demand at industry-wide considering of inventory into in just seeing terms how

Andrew Greiff

seen to in about lead X in This go today is a it if lead down, mills, in particular, is, to Hot-rolled back the period. in more Andrew. seen ago, bit. X-week call X X we've the it, We've carbon -- was mills the you from period. time from That's X-week probably times weeks times little the come the

and steady. for Same Stainless thing aluminum products. tandem been very has

consistent seeing with the today shorter probably pretty on side. we're mills deliveries, So the

Operator

next The of Singular question line the Sakai is Research. from Instructions] with [Operator Chris

Joichi Sakai

metals steel Just had they stainless a headwinds. to be question in on the Are those see are Or and specialty we expecting going to XXXX? reduced?

Andrew Greiff

right Well, in that what I Chris, think, hovered ] XXX have nickel range. is seen prices [ you've

at -- we're is historically, seen we've little they so a X, -- what inventory lower. in the bit years appropriate. And our least X are again, But last

certainly pretty going good. are imports continue. The times lead to are mill Our

we And year be for to so be really expect a metals. is good that I a going good say will -- that 'XX specialty would growth

Joichi Sakai

And then going drivers comment the for Okay. you sustainable is tube that What and good were main quarter? And the pipe? can on forward?

Richard Manson

And Sure, Chris, factor the more and focus consistently us work margins value-added huge to continued XX% the year. throughout to has of and for outsource talked on in year, Rich. work been I gross the OEMs it's that think continuing tubes their we've pipe as above driving a

fourth quarter, results. see included the those additional from CTB Additionally, in you having an up bump

Richard Marabito

and earnings mind, excited Rich in saw quarter. in We're the release, really CTB we in about. said, Keep fourth the as acquired you

some costs. actually our had So acquisition-related results

pipe to and year the we're tube for of in impact have 'XX So excited segment. full CTB the

So that's certainly a positive.

Joichi Sakai

Okay.

good. last And one me. Sounds for

as blend can concerned For of are XXXX, generally what divestitures? a sort it that? acquisitions or we Will of as expect -- far be what

Richard Marabito

half definitely of looking active a marketplace, we Chris, rate We're back as forward. remain we've due last acquisitions the like acquisition is outlined. environment, we'll a going our the in piece Right side. have divestiture of the our commented, made terms the to we've picking strategy at Yes, really the strategy Certainly, year is we're economic seemed good X active, Rick. we've up bit, in X interest broadly key side, M&A now, little. that entire years. a piece that a metals nothing little on this fits for but going marketplace the the It is seems That that environment, to last of slow looking of the for it's And forward. really on

Operator

reached this question-and-answer the our the At closing remarks. turn we have to time, of you. back session. floor Thank end Rick Marabito for I'll

Richard Marabito

Olympic you your and operator, Have you, our joining call forward We day, all Thanks. again quarter. next to Thank appreciate with look morning. a in for great speaking thank on and you us interest we continued this Steel, everybody.

Operator

will This conference. you. Thank conclude today's

You Thank time. disconnect at may lines this your for you participation. your

Olympic Steel (ZEUS) 23 Feb 242023 Q4 Earnings call transcript