ZEUS - Earnings call transcript Q4 2024

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Operator

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

At this time, I'd like to hand the conference call 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 fourth 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

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

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

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

Richard Marabito

an our acquisition Works. for performance Steel's us fourth year discuss our of close your move XXXX then of additional about more results. begin thoughts will latest you, full good questions. Andrew Thank our exciting Thank overview following my our financial performance XXXX I'll and to today quarter Rich, always, and of prepared Olympic discuss investments Metal some and will we'll results into then talk everyone. as remarks with joining that, detail. outlook. the and recent Rich morning, and in And you review our And in our segment business. with near-term some on I'll

XXXX As improvement into resilient exception earnings a on our of environment. fourth evidenced team quarter, sequential versus our quarter evolved metals our more I proud third company, reflect XXXX in the performance, and and by Olympic in we've how that's Steel stronger, I'm current an

successfully navigated We that of X-year year the of range year. metals nickel a faced months which macroeconomic greater manufacturing the wide saw XXXX, below reduced months X for stainless a the low, XX a than during challenges, Index including difficult in hitting Purchasing for decline Managers as demand industry for of XX% of carbon a a pricing first hot-rolled surcharges XX the environment and XX the we

Steel challenges, XXXX X% volumes which of levels. to profitable successfully every industry Despite in earning in be all our Olympic EBITDA we shipment And maintained across outperformed portfolio. of grew our conditions XXXX. We within of shipping quarter our market positive on with these each recessionary segments share executed levels, strategy market our

million. $XX.X $X.X year with of Total billion. sales $XX.X Net was adjusted the million were income EBITDA for

of while Our to mindset profitable our and deliver on the ability of to testament strategy, we focus growth this a in what commitment and profitability employees' operational success our to can results discipline to conditions. is market regardless control environment our diversification driving

our managing investments make strategic continue we in business operating expenses. to our And while closely

in to are enables to XXXX a about talk throughput, expansion, significant a automation announced and to were more or During early become We Andrew which and that us safety expected capacity number projects XXXX, XXXX. in operational mostly these will related investments of enhance these moment. productivity.

Metal deck made of advanced M&A. are These ground coated acquisition through manufacturer gutters, canopy the primarily station aluminum, brand with Works exceptional components an manufactured Works for has and of Metal a Metal trim with we components. team solar immediately to Olympic November, grow well The botox which ours. well service as the excellent our and canopies, and with In acquisition products is in steel as further Works, our as high-quality profitably accretive with from our leading and culture an we're X built long the This to position metal racking carbon clips, for continue creates aligns team. part center also a service respected We business. products reputation strategic a and customer in of fit service thrilled really years, eighth have that past

pleased increased continue Our to returning our We're $X.XX capital our quarterly shareholders. investments dividend share reward has that with quarterly by to shareholders. always dividend we per Board from valued taking our to importance our of are as the $X.XX the balanced X%,

As in our is mills. the We'll on industry, value nimble focus we're ability potentially an remain as focused ever-changing invest in new as market steel remain we and including the long-term confident about legacy shareholders capacity aluminum tariffs Steel quality for with to outlook our and our overall dynamics, well We remain what we're steel and we turn digesting for our on we adaptive. and diversity metals Olympic all continue products will optimistic as for in and potential on the to XXXX, investments automation, integrated customers. solutions to and product create control end and steel

the Andrew performance. call segment comments his over for our turn Now on I'll to

Andrew Greiff

positive Thank resilience to industry. the achieving And another for you, with in morning, Steel. quarter. Rick, and was quarter again, the Rick's Olympic start everyone. once It by X of sentiments delivered our today's metals segments challenging the good EBITDA on fourth results like team echoing all I'd

sequential collectively million our EBITDA. reporting $X.X quarter in of adjusted a third XXXX, the In improvement segments outperformed fact,

more to a from detail. at especially segment's each take customers, Carbon sector. we little demand In OEM heavy results Now a in look contractual our let's in lower continue the our equipment segment, see

a helped industry countercyclical strategic shipments challenges, able products. in grew by in Despite our in galvanized these to outpacing nature we increase the XX% winning hot-rolled, million despite coated of volumes XXXX. in again this our our new OEM cold-rolled new following Carbon However, shipping the participation by adding XXXX, and products earned lower by businesses. and our end segment customers, the were business fourth $X.X maintain EBITDA We in XX% quarter, demand

pipe of adjusted team's Our $X.X million. quarter, tube delivering product good results. segment EBITDA on The is and positive had fabricated focus another growth driving

segment the Metals EBITDA, Specialty a during X-year contributed million quarter group fourth a this of of for Our $X despite surcharges load quarter hitting nickel fourth XXXX. solid

made by Metals Specialty year, in stainless full share the and strides gaining market both great aluminum. For

continue Metal-Fab see strength to year Industries both finishing products with McCullough group also and We strong. the our in manufactured

results to welcome their are impact family. Steel the Newly excited acquired team and we Metal Works, to also positive our had an immediate on Olympic

earlier, higher-margin As Rick the we growth. mentioned accelerate making right are investments to committed in to opportunities

CapEx was $XX.X our to is XXXX spend, be You can this see expected million $XX million in and reflected which in XXXX. in

improve throughput. We designed safety have undertaken and growth a number to automation, initiatives of organic

improve line to Berlin's the expand our our of in business; which come our capacity new online specialty XXXX XXXX, by XX%. a Schaumburg, projects, new a to metal we Indiana; early expect operation facility cut-to-length The include to over fabrication a expand slitter automation line Chambersburg capacity white growing efficiency and safety, to Minneapolis in outside cut-to-length and support late new and high-speed galvanized our coil Illinois; Gary, at metals

distribution additional In West. investments our enhance well We growth in to as further organic strategy. processing remain and building in growing Stainless support a white equipment opportunities recently South metals additional fabrication continue our relocated the diversification the our and that Action addition, positioned product Houston higher-value to to facility XX,XXX we business well with square support making and strategic acquisitions as and our offerings foot

to Rich over go turn Now to the financials. call I'll the through

Richard Manson

Andrew. you, Thank

As adjusted the to Rick quarter profitable EBITDA facing improvement quarter over stated, withstood third and of metals results the XXXX. sequential segments deliver the all in the with fourth Andrew X challenges industry

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

in fourth fourth with $X.X million net The of million LIFO of million quarter, in in compared fourth the quarter $X.X the million the compared the period million $XX.X the million the for quarter $X.X with $X.X include compared of million income of income prior quarter $XX.X pretax the XXXX. in for Adjusted totaled third EBITDA was of year income XXXX. fourth the with of quarter XXXX quarter pretax For results LIFO XXXX. $XX and fourth higher than

million. acquired purchase The XX-month multiple in a $XX As X.XXx price an Metal all-cash transaction November a reflects of Works trailing EBITDA. reminder, adjusted for approximately XXXX, in we

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

in level tons reflect Metal expenses fourth the higher which operating quarter consolidated expenses at the appear Carbon not Our additional per year-over-year. Works, operating sold. Therefore, segment will ton reflect does the

pipe sold also do reminder, McCullough tube Metal-Fab, Stainless for Industries, the tons a EZ-Dumper, As entire segment. Shaw and we report not or

Consolidated the of million operating $X.X incentive expenses quarter and lower and compared million $X.X acquisition-related for expenses of with XXXX. Metal when of fourth Works expenses included fourth quarter the operating

Works quarter increase $XX quarter. acquisition the approximately of Metal November. The the an total with result the million ended in the from debt million, We of $XXX of increase in third was debt

is in our more of approximately $XXX $XXX higher we facility investments than opportunities. position debt today to return and under Our availability support to million, have million loan continue

expenditures totaled million. depreciation $XX.X We that for we expenditures with of XXXX Andrew capital capital other that $XX to initiatives Our estimate $XX.X and will be in growth automation approximately year XXXX invest the the as million continue full million of compared outlined.

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

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

quarterly share a quarter. per paid of we the addition, In fourth dividend $X.XX in

share. approved to in Board XXXX. on increase cash dividend quarterly company As last since dividend marks increase share. of cumulatively raising $X.XX as of to share our our $X.XX XXXX, Directors quarterly March from record per The regular paid night, the is in earnings a March since XXXX, quarterly release our an XX, March regular X, we payable $X.XX our to announced has The dividend per dividend dividend shareholders XXXX. per of fourth This

Our profitable us and diversification, year the over the on capital, for course long-term industry. resilient our controlling strategy working enabled very remain focus for difficult and to of expenses coupled with a managing metals

we in we confident our enable shareholders. that remain As year, shaping industry for the be the results profitable strategic our these factors us deliver to coming monitor macroeconomic will initiatives that

for questions. ready are Operator, now we

Operator

KeyBanc first Samuel with Instructions] question McKinney [Operator comes Markets. Our Capital from

Samuel McKinney

Starting that to what really drove $XX volume fourth want impressive that a a more in on a strength flat, than $XXX, seasonal focus in of guys year. What ton quarter-on-quarter? per in the profit typical gross profit figure posted is decline you increase in gross to quarter, the have carbon such I mean ton I but best

Richard Manson

it's Rich. Sam,

don't we been up those report tons know, companies. use I into end Industries, our they expanding the you Metal than Metal-Fab, business. in Carbon we've comments as segment. as end Works -- products different and And it's so roll distribution the that do for noted because sold But like And companies my McCullough metal things

And seeing that nature those so you're goods. of countercyclical

So you're necessarily in not a seeing increase margin, gross but difference in tonnage. an

Richard Marabito

about I'd as talked thing, is last other success say the is, effort it, Sam, fabrication growing And a is we business. I adder and concerted that and think, also And in nice our well. it's Rick, really business fabrication a call,

So to -- of as that, like strength do an we'll into area that XXXX and move in we continue looks terms of and volume.

Richard Manson

galvanized better as his black the the comments and that hot-rolled and tend also be oiled nice a items. the margin than years, pickled we've growth Andrew last as those to helps or X in products noted certainly in just had that And over

Samuel McKinney

coming all low how over first, you pushed the quarter, from is think question to that of 'XX. quarter the And pretty the you the first you a here. quarter? pipe recover but know What a then peak and tube X-part sales That segment typically the down off kind makes strongly sales segment, quarter first base in be the fourth quarter? moving of fourth Yes. And shifting into sales you can you'll that, sense. think are I do seeing in

Andrew Greiff

Sam, Andrew. it's

quarter going is be traditional. the So I first to think

come and we the and the XXXX. even of picked through some think as started coming expected. up at think starting quarter, that great into they second I of there's they've first I customers year the And as quarter new the kind opportunities end

continue tube pure and and fabrication, mix you'll to a see have in a the to is versus into we've between that that. picked due greater distribution fabrication. that Their to see shift up. some We've continuing thing about other really more The is invested some tube we're XX-XX to pipe customers objective lasers

Samuel McKinney

fourth Okay. one quarter fairly prices average. Specialty And then the me, first to last date, Metals. for quarter moving have versus To steady been aluminum

in how up Midwest Can spot us? increase However, exposure in really has impact and transaction price your contract you February. Midwest an transaction talk premium shot the might the that through versus in about market

Andrew Greiff

question. Great Yes.

mean, So bulk the tariffs. business up jumped Midwest today you're of customers of our announcement and the contractual. I A right. since has certainly the is that number still of

we have good growth that some ingot. for So another year continues in year. on again, that. customers contractual to has going picking are those the that clearly We I of think locked opportunities jumped But up be of the 'XX, Spot Most grow business 'XX. have overall really each the our in side. in had aluminum good because to just

-- contractual spot we're of side it. of bulk the have doing So but we on we the really opportunities, have is what do today

Samuel McKinney

Okay. strong Congrats the year. on the end of

Operator

Dave from Storms Stonegate. question with next Our comes

David Storms

you more anything in play nice Flat know to you tell Just and that Metal about in the may with if synergies back for of maybe could us there's your transaction shops. I wanted the start mentioned some other Carbon office? will anticipated Works see

there? you more could anything Just tell us

Richard Marabito

the Yes, Rick. Thanks Dave, it's for question.

relationships most manufactured our synergy So products, processing, our to whether our are the some the -- do end those ability our real sourcing real the to it's ability or would -- is those like metal and synergies. integration stage first supply the Steel of Olympic be chain into the

So a start versus metal do coil. a cut they product with

can So sourcing synergies. processing. we and But first be real of where say lots would the first-stage stage processing capabilities I do processing obviously the we have would the the

but I will really -- And able not things areas, what Olympic some be like we'll them into in to cost integrate then of do if to of on know mentioned is we accounting in sure side don't synergies, the Metal Works call and get you terms expense synergies. the terms of back-office I and systems

together. to will will we'll think be and I platform, obviously which gain communicate move to that closer efficiencies and us really able our to allow company work

the So areas. main those are

David Storms

times then very picked of of mentioned That's a in up you Understood. of helpful. you remarks kind couple and then a couple your And just recently, that now customers.

end Going market various into you would characterize markets? your XXXX, your how in share

Andrew Greiff

So we've years last What in the Dave, our in I coated products. this Andrew. tell is is X greatest you growth seen would

growth what in So strong. well up be little seeing XXXX. in hot-rolled, is We've Stainless significantly. in share, the And certainly, continue really growth has had a market Plate, we off for steady, galvanized but aluminum, good bit really aluminum is and has up But as year stainless to the in pick terrific. that cold-rolled. and very been very continue XXXX, bring we this to been the lagged starting will really in aluminum we in we're plate grow. domestic. And -- bulk of we

specific So stainless. support, with we our have to all aluminum, in domestic products, but thing same of certainly great the

year-over-year would the pretty I improvement say outperforming our So every have products, certainly of seen and key market all we in segment. much

David Storms

from discussion you early and talk indications the more one tariffs. there? just be any lot then the about what of could the road recently soon news the a Are hitting And There's Understood. read rubber for seeing me. been in and

Andrew Greiff

Yes, sure.

maybe stainless pick then that, jump the impact, almost since in. I'll will XXth, on up aluminum Dave. the right or key Rick So and certainly, an saw around one we Rich announcements, the But immediate on and

Friday they So to took the right where $XXX. ton. a Kind And we've immediately, And right you time, if hot-rolled of $XXX. announcement, since a of it to beginning year at to the $XXX, almost $XXX the you about the kind $XXX. $XXX, of at about up come that a look saw back was go jump were futures, then the before

a at big jump pretty So point. that

is which price, same the CREW, thing. index The

have hot-rolled the the And continue to we seen anticipation the June $XXX the right And up. $XXX, a range. we January up to we're about once announcements from somewhere CREW into you were just take spot it's the producers, but we in through that the The got on domestic December, that $XXX, and had spot to look to of you inauguration, side all going continuing raise around $XXX. then the hot-rolled right side have prices at around is week-over-week on it. if been So $XXX go $XXX, now

from you're hot-rolled to announcement, X from And the we've seen to in X-week to somewhere period, where that and closer X I to weeks. X- lead prior the had now say, would you time, -- time certainly

On coated, more the cold-rolled X it's XX. and in like the to

going rush effect. transactional so that saw from immediate jump in by players this when XX And in, March to you into the announced of try were to time they President that's to anticipation go the

expect But prices to then. happens, something now continue I increase an we see are deals there until if between cut, think see to then some do we and we'll certainly And that rise. otherwise. see that If continue are we'll

Operator

next from Chris Our comes Research. Instructions] question Singular Sakai [Operator with

Joichi Sakai

a will this for make had a I question. tariff sort the competitors, season how or of for tariffs follow-up greater greater just I And mean, the valuations profitability? will affect to acquisitions?

Richard Manson

Yes. Chris, it's Rich.

what Andrew so we're up. prices the And is the go side, supply on walked you seeing through certainly, chain

as far and impacting a to we're on in monitoring if January XX transactional the happen I February. happen do quarter, through, whole to here closely pricing. the which increase would you've As And then going see seen lot tariffs not first tariffs March think go what's

terms late So this a quarter, on item second impact early would quarter profitability. be of in the more first

Richard Marabito

your and Yes. valuations. M&A Chris, question, I And then on think

in And our at last so as prepared the X made X market, in look we we and about certainly, remarks, M&A talked it years. the acquisitions we've

acquisitive. been So we've obviously

industry year rougher in sell was think I was, in most down. 'XX terms was sellers looking in was a of XXXX, candidates We your of continue to seen especially of a But were terms And potential performance an the think half, the in seeker in who active that lot really pullback potential back the metals the a more and for and it to acquisitions. to be business. I what question, we've of

down. was significantly Some it

lends I will and want -- through interested quarters probably take M&A as to as that move itself see So sellers to, I we'll the results of well start a bit metal I basically activity, think just in see have universe entering the metal some results. of of see of XXXX, couple and potential that we I but more anticipate it's anticipate we'll companies we'll improved to a think market. But And They as little more cyclical, time. from manufacturers.

do more anticipate half So little activity. I the seeing in back a

Andrew Greiff

of thing side more just And one it. tariff the Chris, let me add on

So the of jump. office Trump did energy, a discussion really line President quick we the pipe when of saw jobs we other see came relatively and into thing that lot the

And so that's that for that jump the Simultaneously, to the pipe. finally on you was and has scrap start that jump of docket bridge really good a hot-rolled time as produce work producers started for about some the same the been lot to been there's quite coming saw line plate time.

you're actually very climb so start And to plate seeing quickly.

that how area us to that so the fast going. most surprised probably one was that was And really the see

Joichi Sakai

increase you that affect there? you for How with to margins? And will though, improvement mentioned. going we different CapEx XXXX, there's projects mentioned some see Okay. be that Will in an

Richard Manson

Rich. Chris, it's

comments, as of of of operational And are these fourth we outlined most XXXX. in early so quarter first the quarter going late to or XXXX become

these on have to that a do So capacity. impact spend XXXX margins. XXXX. lot we of anticipate the increase increasing But yes, meant and I impact expect very to a positive on definitely, safety, we in wouldn't it think increasing It's things efficiency, was cumulative

Joichi Sakai

selling general last that's from you if and looks on decrease was a was for ago. decrease that? for? a expense, Can what the like Okay. right, year me, And in comment it And there

Richard Manson

in less $X.X the variable expenses kind really of we that's Sure, Chris. million to have prepared put tied And profitability. It's and incentive as about in we're year-over-year, comments, Rich.

plans profitability. incentive are our tied to our so highly And

fourth versus in this, where down And you're we're little see XXXX bit so like a decrease. quarter quarter a fourth quarter in XXXX, going to of of the that

Operator

back end the of call closing reached Marabito Richard like I'd over comments. now question-and-answer have session. We the turn to to for the

Richard Marabito

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

Operator

today's concludes conference. This

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

Olympic Steel (ZEUS) 21 Feb 252024 Q4 Earnings call transcript