ZEUS - Earnings call transcript Q1 2024

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Operator

Good morning, and welcome to the Olympic Steel 2024 First Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

At this time, I would like to hand the conference call over to Rich Manson, Chief Financial Officer at Olympic Steel. Please go ahead.

Richard Manson

Thank you, operator. earnings the Steel's XXXX. quarter Olympic to call first 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

results. to harbor Act Some made actual provisions factors such undertake not Private Litigation Reform intended statements. of XXXX not call as and forward-looking reflect predictive and such will affecting assumptions the company statements made be within of to may changes today's forward-looking statements, other are or on do be The the safe Securities in changes update in

risks, press Commission. to Forms the reports assumptions, cause on Exchange and are releases could Securities and and the that actual differ and XX-Q filed company's Important XX-K results with the other set uncertainties factors materially forth in

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

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

Richard Marabito

performance. following our of market call for to consistently review that, the higher Steel's Thank us Rich how and expand we the you, in results positive and we Olympic results. questions. to up us value-added first conditions. diversify XXXX Rich, our detail. financial open metal then first more talking solid results processing regardless will discuss discuss products and the good to quarter And as about morning, begin everyone. strategy will joining results manufactured Thank you into enables your and delivered today will for Then our Andrew And quarter I'll always, segment in by deliver

challenging million of market $XX.X adjusted quarter. conditions quarter to contributed $XXX income our XXXX segments reported million. delivered all first of strong a despite sales $X.X We first and during of net Steel Olympic start EBITDA to the and million

increased for declining sequentially quarter. XXXX our the first a of quarter start We maintained dynamics in usually unusual pricing increasing margins trend new typically Our from into market the X% quarter. the continues despite and strengthening and year pricing, shipping volumes fourth with second that we the

year, fell surcharges through we January this steel hot-rolled fall index stainless mid-March, quarter. than However, saw throughout for XX% also pricing steel while the more from

of the we So first the in opposite what movement normally the experienced in quarter. was pricing

which challenges, these we strategy solid Despite working. generated profitability, pricing is reinforces that our

and drive helps Our natural higher-value portfolio manufactured efforts profitability falling a countercyclical to provides to metal market metal diversify benefit regardless products into prices of expand our conditions. and

and quarter product our market the we during every wins, new fabrication shipments addition, product and business in drove In we sell. capabilities value-added outpaced

continue equipment We work, long-term we investments on more long-term outsource to trend. and capitalize in is to a to believe technology fabrication strategic what see made have and people, looking the industrial manufacturers we

which Fabrication. fabrication long-term Max key the veteran, leading growth. execution role both of Steel's is Fitzgerald Olympic industry newly President of and hired We near-term is created to the to our strategy, Max of Vice component a

into and the fabrication to new, to our our benefits software automation the to team's equipment, strengthen of and realize efficient operations. beginning are efforts capabilities more We integrate

come. and positioned are we opportunities We for are well growth, to excited to the accelerate our

our to OEM fabrication. As infrastructure large customers outsource rebuilds and U.S. its metal the continue

working what our yet -- we flow. the team expenses recovered around midpoint can the disciplines As market some remains quarter, capital, second the monitor has we focused we and on evolving control, near conditions, while Steel products conditions entire the operating of cash pricing Olympic on

automation and a to us and sheet market. priorities Our And capital organic to success. strong, our continue we that enable access growth strategic long-term with will reinvigorated aligns for that all and our remains opportunities investing M&A have balance in

optimistic about shareholders. ahead, to our we deliver consistent, value look we our As profitable ability are create results and for

Andrew. over I'll now turn call the to

Andrew Greiff

and Rick, everyone. morning, good you, Thank

diversification has company. Olympic stronger, strategy a more resilient Steel made Our

and team's pipe our to disciplines segments Our the this shipping all first despite profitability XXXX. was sequentially year-over-year solid segments and quarter headwinds. for of commitment tube were XXXX the strategic volume quarter quarter versus fourth the up carbon from execution operating pricing up The delivered and of and

into XXXX. Our Carbon faced softer market segment moving conditions

control diversification Our to customer disciplines cost our and product market team help dynamics. initiatives and furthered profitability the shifting remained focused process maximize on amid

and beyond coated to Metal-Fab coated continue expand increasing. shipments are We our offerings

to we capabilities our are Rick business. distribution highlighted, actively our fabrication leveraging complement As traditional as a

result a EBITDA our of led $XX.X profitability businesses segment efforts, with these As in of million. our Carbon

quarter, At mills the tailwind had the quarter. period demand steel year the products. second typically of see of from second the start on throughout increases flat-rolled expect stabilized we our This demand the to and price a we of announced is perspective, strongest

compression see quarter. margin the carbon do on expect we some second in However, to products

The Central Bar integration with & pipe million. has and well in of Tube of The segment well. the gone tube quarter $XX.X EBITDA first performed adjusted

We enhancing continue July. production that operational a to laser be upgrade expected is our CTB with new in capabilities laser at to equipment including

These strong new jumbo XX% lasers. rate Our our speed a increased original will strategic that lasers to X this the CTI in is Overall, of laser objectives. Olympic old new an to position business to win opportunities also laser legacy support year compared upgrading new Steel capabilities put have equipment. efficiency our replace as and and tube a

worked as and X.X Metals Specialty the softer the conditions, commodity industry For years, past has faced market inventory segment challenging the levels. namely through elevated demand falling prices

waning. see of ended XXXX, $X.X first our of first of reported We to quarter with the best quarter headwinds quarter, volume since started segment the we those EBITDA. contributed the and signs During the million

for were anticipating stainless Looking of and aluminum in the ahead, we and optimistic in near term. both nickel, another April, primary we prices the as surcharges are up driver are bump

quarter. we that business second onboarding are to the in expect new ramp up we Additionally,

to segments are progress strategy. We are making our diversification on pleased with the execute our

expect market XXXX our for to results another solid be to year and ability in profitable are environments. Olympic deliver confident Steel We in all

over the Rich. to call turn Now I'll

Richard Manson

you, Andrew. Thank

Rick As job excellent dynamics to and year. first Andrew, market navigate deliver start shifting you've from team pricing did quarter solid our the an in to performance headwinds the and heard to

discuss in I whose tube our Before of and acquisition remind October want Bar, that in more by XXXX detail, the you Tube included to are results & I pipe comparisons year-over-year segment. the impacted results are Central

million For the of period. year in quarter net $XX.X $X.X with $X.X compared in the million million EBITDA $XX.X prior quarter the income million in the XXXX. compared first with first quarter, totaled was

no first quarter of in LIFO the expense XXXX. with LIFO adjustment First quarter XXXX results include $XXX,XXX of compared

first the for million Consolidated first the $XXX.X of $XXX.X operating XXXX. with expenses totaled compared quarter million quarter in

not Our will year-over-year. addition at report sold. first expenses tube appear quarter per CTB, ton which the tons of the consolidated operating does Therefore, operating higher and level segment and the expenses reflect pipe for

tons quarter a EZ-Dumper, incentive million for not of report sold McCullough the do with $X include tube CTB Shaw entire we of first Consolidated for the operating compared operating Metal-Fab, the As Stainless expenses or XXXX. expenses lower of quarter reminder, expenses and $X.X million when fourth Industries, segment. pipe and

our rate interest borrowing also by expiration is rate first impacted in effective XXXX Our of quarter of the the hedge.

to million, X% increase debt the capital of in in balance fund our $X the The $XX during with supported Our from $XXX the sales million remains working of increase strong. sheet year the an We was which sequentially fourth quarter, year-end. additional since ended quarter. million increase used debt

the million, opportunities. higher in quarter availability $XXX well ended return very with approximately to We of positioned us keeping continue investing

of XXXX first expenditures quarter totaled the million million. $X of compared in $X.X capital Our expense depreciation with

higher capital will to margin estimate results. and lead times Equipment more in be in make expenditures and we remain that XXXX opportunities consistent million equipment and long as automation, results $XX approximately that we fabrication investments gross continue

XXXX Our last compared XX% first was same effective income quarter XX.X% the in to rate year. tax period

approximate our XXXX to expect XX.X% to tax We XX.X%. rate

first dividend quarterly an of This XX% we was addition, per In quarterly $X.XXX quarter. previous the paid company's per in from or share of share the increase dividend. $X.XX a

Directors XXXX, The of which payable $X.XX approved XXXX. dividends record June regular has quarterly per shareholders June dating our of as XXXX. of Our dividend regular next company quarterly paid to Board XX, X, to back cash share, now is on of

that like Steel efforts the because Olympic in call Before I hard dedication additional in we remains team's invest would the Steel in value the open opportunities to higher thank the It's of operational equipped is and for and for their a continue entire Olympic work all position to strong and and strategic to growth plans. financial quarter. our first team questions, your advance

now are ready for we Operator, questions.

Operator

Dave Storms from coming Stonegate. is of question first Today's Instructions] [Operator

David Joseph Storms

could start with hoping we lead Just times.

lead times at longer the mentioned still Is in if there's Kind it your bringing tipping where in maybe automation of you'd what a them there? of than does remarks You product more And is, a those be. that point to bringing point start value-added services? this little is down? like

Richard Marabito

of Is Rick. CapEx equipment? about question lead your longer times our to lead So levels, is on times some comment our it's business it our customers? Dave, on with Or related

David Joseph Storms

My was business times that long that lead understanding if I levels, for was wrong, apologies. have

Richard Marabito

I if they're mean, second been pretty normal. don't our I I but... into are, pretty but lead think quarter, we've the difference stable, times real call them, I Yes. think any I know Andrew, seeing over quarter

Andrew Greiff

I similar probably the or to to in bit hot in tandem are. side, specialty of and is products X side, programs to tell weeks X- probably X certainly, roll about our from little you on the would to a galvanized Yes, same, X J.I.T. still on to have times X-week more customers, like stainless X us, lead that they probably the the longer carbon established. weeks lot a we aluminum, cold-rolled

depending in and the cases, customer just agreements deliveries, we it's So on that some the same-day have.

David Joseph Storms

more and QX, going How any momentum be QX there? then thinking we Understood. visibility for have pricing if One beyond me. you about should into

Andrew Greiff

We're the stability couple have aluminum, bit, on stability some market pricing strength we'll nickel the more in as some we've of Yes. carbon that second quarter. a and is would but in and weeks the in stainless anticipate we've in the head see index the and down past both through encouraged little I aluminum side, carbon. seen seen say stability some we shown

feel we So pretty good.

Operator

coming of next Our is Weber Advisors. from question Alan Robotti

Alan Weber

is talk And economy you you where terms thinking changed maintenance just you're about today? capital And what's can given et cetera? in how the one talk is then about spending. of acquisitions, just about, Can things

Richard Manson

It's the prepared to that have With think this year. $X it's Rich. CapEx we to that get the is prepared we for I comments, comments, and lead to $XX time we indicated long spend particular as a million respect in It's million indicated there maintenance million a $XX expect out year. per Sure. quite equipment. And about POs we And bit. between just CapEx, processing

answer question let I'll M&A. Now Rick on the

Richard Marabito

on question Good Alan. Thanks, the M&A. Yes.

part the of we of of that of the and towards contracted in bit really market part higher opened a saw rates. think we as And So this of end year. interest maybe just year M&A some I impacts was general, I the think last

As will and you a and growth CapEx growth talked both strategically know, at continue we've to internal acquisitions. look about we it, lot from aggressively

active in So we've terms of remained looking. very

the if adjust, couple what's not is. funds What I'd and behind reasoning general, federal And going that, adjust. happened. in think next last say And is as in to of up we're the settling open people that's seen term near probably I think always, go weeks, X the The we've valuations be rate at start M&A businesses are the to may in to even market, more. think, quarters, down in in I I it here month what the

really starting much good. So see is which really into larger the a to we're inflow pipeline,

being X And we -- As intend the anticipate I've made that X stay to years. last be on fully said times, numerous in would to successful. continuing acquisitions trend. we We've

And are disciplined that track for though. recent we'll similar We'll and that to are our immediately companies high-performing to stay you've look what Olympic. in companies, fits good record seen target also accretive

of So snapshot a we're what seeing. that's kind of

Alan Weber

terms my your When And that? onshoring anything out question. and spending" has look in in long of the changed just term, and "infrastructure like last you view

Richard Marabito

Yes.

changed going the think take I the it's of to money just the thing government probably time the all is X since only get spent. announced to the funding over probably that's that lot years a

the releasing done. situation It's ability these just really projects and the some labor to get money. And isn't of it the

longer to the in seeing get centers in the say were would terms money. that, what over that on I bit coming pockets, ago. and the supplier isn't of ability X into data little on is that the that in pretty there's there's the maybe of ebbs and And years. the out that build-out based will -- these and thought the some and labor coming how happens than be robust spend in a years the So we're looks the had a But lot projects just of It's I flows cycle, based certain it good done. news of that we cycle think maybe a

the -- certainly talk about and in Andrew, mean, second our and capabilities. work seeing our can outsourcing us from you customers and on then of what But our I I terms part, think strategy to bringing tie more we're to the in

Andrew Greiff

Yes.

we've seen seen more So doing outsourcing OEMs certainly been as the taking more place. has industrial onshoring we've

As continue the little I on be Rick industrial to is talked a labor, of a going bit about, to think, challenge. side

I a grow of going think of it over and And fabrication in side part really to years. a been opportunities. next, the X data certainly with customers tube We've about that customers us, it the certainly, player advantage in on to continue more that's to take X of we're talked think really and position centers. for new good Rick these existing also to

Operator

Research. coming The is next Singular question of Sakai Chris from

Joichi Sakai

to the How thinking inventory levels. should about them year? Wanted we be ask throughout about

Andrew Greiff

we're be think I at and today X-week, to of I say, to to across really I certainly continue good we'll target for the times hot-rolled the at the back certainly We in get traditional cold-roll we to think X-week year, a there. as X-week, appropriate think stainless And X- think in I half be second levels. Chris, we the think X- turns, Xx we we'll Again, see would in turns. inventory I in to lead levels and And aluminum be board. Well, shape -- normal inventory-wise. the think we'll

Joichi Sakai

the cadence next you quarters? comment for for expenditures quarterly the Can on X capital Okay.

Richard Manson

Chris. Sure, Yes.

full a long use As But the in to that lead $XX It's equipment. been the to in. lot year we've a comments, number think are the be think that get our I I in million times -- a is range. forecast. spend full We've for time year indicated we it just will long number ordered the just and of solid taking

Operator

back no Marabito to like Mr. turn Instructions] additional the [Operator at over this queue We're in for closing. showing floor questions would I time. to

Richard Marabito

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

Operator

for your you This thank gentlemen, and Ladies event. participation. concludes today's

log and day. at time, lines your the your disconnect of may off enjoy webcast the You and rest this

Olympic Steel (ZEUS) 3 May 242024 Q1 Earnings call transcript