CLEVELAND, Feb. 26, 2015 (GLOBE NEWSWIRE) -- Olympic Steel, Inc., (Nasdaq:ZEUS), a national metals service center, today announced financial results for the fourth quarter and full year ended Dec. 31, 2014.
The Company's fourth-quarter 2014 net sales increased 12.5% to a fourth-quarter record of $326.7 million, compared with $290.5 million in the fourth quarter last year. Full-year net sales also set a new Company record, climbing 13.7% to $1.4 billion in 2014 versus $1.3 billion in 2013. The revenue growth in both 2014 periods was due to higher sales volume.
In the fourth quarter of 2014, it was determined that approximately $23.8 million of goodwill was impaired. The impairment charge was recorded as a non-cash expense for the quarter and year ended Dec. 31, 2014, and reduced 2014 fourth-quarter and full-year net income by $2.14 per share. Including the charge, the Company reported a net loss of $26.9 million, or $2.42 per share, in the fourth quarter of 2014, compared with a net loss of $1.4 million, or $0.12 per share, in 2013's fourth quarter.
For the 2014 full year, including the goodwill impairment charge, the reported net loss was $19.1 million, or $1.71 per share. This compares with net income of $7.6 million, or $0.69 per diluted share in 2013, which benefited from $3.6 million of LIFO income ($0.19 per diluted share, net of tax) associated with the tubular and pipe products segment.
"Higher net sales and shipping volume in 2014 resulted from healthy underlying demand and increasing our market share. Unfortunately, metal prices fell sharply, in line with other global commodities, which diminished margins and operating leverage during the year," said Chairman and Chief Executive Officer Michael D. Siegal.
"We can enhance profitability and strengthen our balance sheet regardless of market conditions," Siegal added. "As projected, we lowered inventory and paid down more than $25 million in debt during the fourth quarter, and we expect to achieve similar reductions during the first half of 2015."
"A multi-pronged profit improvement program was also launched in January to cut operating expenses and enhance margins," Siegal said. "This plan includes improving underperforming divisions, lowering distribution costs, variable labor and personnel expenses, as well as transportation and purchasing initiatives."
Conference Call and Webcast
A simulcast of Olympic Steel's 2014 fourth-quarter and full-year earnings conference call can be accessed via the Investor Relations section of the Company's website at www.olysteel.com. The simulcast will begin at 10 a.m. ET today and a replay of the call will be available for 14 days thereafter.
Forward-Looking Statements
It is the Company's policy not to endorse any analyst's sales or earnings estimates. Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as "may," "will," "anticipate," "should," "intend," "expect," "believe," "estimate," "project," "plan," "potential," or "continue," as well as the negative of these terms or other similar expressions. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those implied by such statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Such risks and uncertainties include, but are not limited to: general and global business, economic, financial and political conditions, including the ongoing effects of the global economic recovery; competitive factors such as the availability, global production levels and pricing of metals, industry shipping and inventory levels and rapid fluctuations in customer demand and metals pricing; cyclicality and volatility within the metals industry; the availability and costs of transportation and logistical services; the successes of our strategic efforts and initiatives to increase sales volumes, maintain or improve working capital turnover and free cash flows, improve our customer service, and achieve cost savings, including our recently launched internal program to improve earnings; our ability to generate free cash flow through operations and limited future capital expenditures, reduce inventory and repay debt within anticipated time frames; events or circumstances that could impair or adversely impact the carrying value of any of our assets; risks and uncertainties associated with intangible assets, including additional goodwill impairment charges; events or circumstances that could adversely impact the successful operation of our processing equipment and operations; the amounts, successes and our ability to continue our capital investments and strategic growth initiatives, including the Winder, Georgia project, and our business information system implementations; the successes of our operational excellence initiatives to improve our operating, cultural and management systems and reduce our costs; the ability to comply with the terms of our asset-based credit facility; the ability of our customers and third parties to honor their agreements related to derivative instruments; customer, supplier and competitor consolidation, bankruptcy or insolvency; reduced production schedules, layoffs or work stoppages by our own, our suppliers' or customers' personnel; the impacts of union organizing activities and the success of union contract renewals; the timing and outcomes of inventory lower of cost or market adjustments; the ability of our customers (especially those that may be highly leveraged, and those with inadequate liquidity) to maintain their credit availability; the inflation or deflation existing within the metals industry, as well as our product mix and inventory levels on hand, which can impact our cost of materials sold as a result of the fluctuations in the last-in, first-out, or LIFO, inventory reserve; the adequacy of our existing information technology and business system software, including duplication and security processes; the adequacy of our efforts to mitigate cyber security threats; access to capital and global credit markets; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; the enacted federal healthcare legislation's impact on the healthcare benefits required to be provided by us and the impact of such legislation on our compensation and administrative costs; and unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters, including any developments that would require any increase in our costs for such contingencies.
About Olympic Steel
Founded in 1954, Olympic Steel is a leading U.S. metals service center focused on the direct sale and distribution of large volumes of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel and aluminum products. The Company's CTI subsidiary is a leading distributor of steel tubing, bar, pipe, valves and fittings, and fabricates pressure parts for the electric utility industry. Headquartered in Cleveland, Ohio, Olympic Steel operates from 35 facilities in North America.
For additional information, please visit the Company's website at http://www.olysteel.com or http://www.b2i.us/profiles/investor/ContactUs.asp?BzID=2195
-Financial Tables Follow-
| Olympic Steel, Inc. | ||||
| Consolidated Statements of Comprehensive Income | ||||
| (in thousands, except per-share data) | ||||
| Three Months Ended Dec. 31, | Twelve Months Ended Dec. 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| (unaudited) | (unaudited) | |||
| Net sales | $ 326,693 | $ 290,473 | $ 1,436,270 | $ 1,263,331 |
| Costs and expenses | ||||
| Cost of materials sold (excludes items shown separately below) | 268,342 | 230,227 | 1,160,310 | 999,207 |
| Warehouse and processing | 22,099 | 21,313 | 92,170 | 84,332 |
| Administrative and general | 16,877 | 16,582 | 72,219 | 68,520 |
| Distribution | 9,525 | 8,383 | 41,312 | 35,076 |
| Selling | 5,494 | 5,963 | 24,799 | 24,905 |
| Occupancy | 2,408 | 2,274 | 10,052 | 9,395 |
| Depreciation | 4,552 | 5,634 | 19,891 | 21,352 |
| Amortization | 222 | 222 | 889 | 889 |
| Goodwill impairment | 23,836 | -- | 23,836 | -- |
| Total costs and expenses | 353,355 | 290,598 | 1,445,478 | 1,243,676 |
| Operating income (loss) | (26,662) | (125) | (9,208) | 19,655 |
| Other income (loss), net | (104) | (10) | (126) | (28) |
| Income (loss) before interest and income taxes | (26,766) | (135) | (9,334) | 19,627 |
| Interest and other expense on debt | 1,646 | 1,648 | 6,780 | 6,703 |
| Income (loss) before income taxes | (28,412) | (1,783) | (16,114) | 12,924 |
| Income tax provision (benefit) | (1,521) | (402) | 2,950 | 5,277 |
| Net income (loss) | $ (26,891) | $ (1,381) | $ (19,064) | $ 7,647 |
| Earnings per share: | ||||
| Net income (loss) per share - basic | $ (2.42) | $ (0.12) | $ (1.71) | $ 0.69 |
| Weighted average shares outstanding - basic | 11,127 | 11,075 | 11,120 | 11,065 |
| Net income (loss) per share - diluted | $ (2.42) | $ (0.12) | $ (1.71) | $ 0.69 |
| Weighted average shares outstanding - diluted | 11,127 | 11,075 | 11,120 | 11,074 |
| Olympic Steel, Inc. | ||
| Consolidated Balance Sheets | ||
| (in thousands) | ||
| At Dec. 31, | ||
| 2014 | 2013 | |
| (audited) | ||
| Assets | ||
| Cash and cash equivalents | $ 2,238 | $ 3,186 |
| Accounts receivable, net | 123,804 | 115,288 |
| Inventories, net (includes LIFO debit of $3,207 and $3,572 as of Dec. 31, 2014 and 2013, respectively) | 311,108 | 286,371 |
| Prepaid expenses and other | 20,434 | 12,786 |
| Assets held for sale | 1,125 | -- |
| Total current assets | 458,709 | 417,631 |
| Property and equipment, at cost | 366,989 | 361,368 |
| Accumulated depreciation | (189,603) | (170,484) |
| Net property and equipment | 177,386 | 190,884 |
| Goodwill | 16,951 | 40,787 |
| Intangible assets, net | 33,646 | 34,535 |
| Other long-term assets | 14,056 | 13,512 |
| Total assets | $ 700,748 | $ 697,349 |
| Liabilities | ||
| Current portion of long-term debt | $ 3,530 | $ 13,090 |
| Accounts payable | 91,252 | 126,012 |
| Accrued payroll | 10,224 | 10,723 |
| Other accrued liabilities | 26,971 | 15,808 |
| Total current liabilities | 131,977 | 165,633 |
| Credit facility revolver | 244,090 | 146,075 |
| Other long-term debt | -- | 40,104 |
| Other long-term liabilities | 13,249 | 13,445 |
| Deferred income taxes | 30,651 | 33,476 |
| Total liabilities | 419,967 | 398,733 |
| Shareholders' Equity | ||
| Preferred stock | -- | -- |
| Common stock | 126,339 | 124,118 |
| Accumulated other comprehensive loss | (549) | (437) |
| Retained earnings | 154,991 | 174,935 |
| Total shareholders' equity | 280,781 | 298,616 |
| Total liabilities and shareholders' equity | $ 700,748 | $ 697,349 |
| Olympic Steel, Inc. | ||||
| Segment Financial Information | ||||
| (in thousands) | ||||
| Three Months Ended | Twelve Months Ended | |||
| Dec. 31, | Dec. 31, | |||
| (unaudited) | (audited) | |||
| 2014 | 2013 | 2014 | 2013 | |
| Net sales | ||||
| Flat products | $ 272,897 | $ 235,114 | $ 1,191,731 | $ 1,026,769 |
| Tubular and pipe products | 53,796 | 55,359 | 244,539 | 236,562 |
| Total net sales | $ 326,693 | $ 290,473 | $ 1,436,270 | $ 1,263,331 |
| Depreciation and amortization | ||||
| Flat products | $ 3,373 | $ 4,294 | $ 15,055 | $ 16,883 |
| Tubular and pipe products | 1,375 | 1,512 | 5,624 | 5,308 |
| Corporate | 26 | 50 | 101 | 50 |
| Total depreciation and amortization | $ 4,774 | $ 5,856 | $ 20,780 | $ 22,241 |
| Operating income (loss) | ||||
| Flat products | $ (2,213) | $ (323) | $ 12,415 | $ 12,106 |
| Tubular and pipe products | 1,091 | 1,915 | 10,185 | 14,981 |
| Corporate expense | (1,704) | (1,717) | (7,972) | (7,432) |
| Goodwill impairment | (23,836) | -- | (23,836) | -- |
| Total operating income (loss) | $ (26,662) | $ (125) | $ (9,208) | $ 19,655 |
| Other income (loss), net | (104) | (10) | (126) | (28) |
|
Income (loss) before interest and income taxes |
$ (26,766) | $ (135) | $ (9,334) | $ 19,627 |
| Interest and other expense on debt | 1,646 | 1,648 | 6,780 | 6,703 |
| Income (loss) before income taxes | $ (28,412) | $ (1,783) | $ (16,114) | $ 12,924 |
| Capital expenditures | ||||
| Flat products | $ (321) | $ 857 | $ 4,540 | $ 3,794 |
| Tubular and pipe products | 941 | 1,925 | 3,273 | 11,616 |
| Corporate | 0 | 688 | 21 | 688 |
| Total capital expenditures | $ 620 | $ 3,470 | $ 7,834 | $ 16,098 |
| At Dec. 31, | ||||
| 2014 | 2013 | |||
| Goodwill | ||||
| Flat products | $ 500 | $ 500 | ||
| Tubular and pipe products | 16,451 | 40,287 | ||
| Total goodwill | $ 16,951 | $ 40,787 | ||
| Total assets | ||||
| Flat products | $ 496,253 | $ 473,397 | ||
| Tubular and pipe products | 203,937 | 223,314 | ||
| Corporate | 558 | 638 | ||
| Total assets | $ 700,748 | $ 697,349 | ||
| Other Information: | ||
| (in thousands, except per-share data) | At Dec. 31, | |
| 2014 | 2013 | |
| Shareholders' equity per share | $ 25.55 | $ 27.24 |
| Debt-to-equity ratio | 0.88 to 1 | 0.67 to 1 |
| Twelve Months Ended | ||
| Dec. 31, | ||
| 2014 | 2013 | |
| Net cash (used for) from operating activities | $ (39,584) | $ 54,681 |
| Cash dividends per share | $ 0.08 | $ 0.08 |