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Olympic Steel Reports 2013 Third-Quarter and Nine-Month Results



Olympic Steel Reports 2013 Third-Quarter and Nine-Month Results

Board Declares Regular Quarterly Cash Dividend

CLEVELAND, Oct. 31, 2013 (GLOBE NEWSWIRE) -- Olympic Steel, Inc., 
(Nasdaq:ZEUS), a national metals service center, today announced financial
results for the third quarter and nine months ended Sept. 30, 2013.

Third quarter net sales totaled $304.0 million, 11.3% lower than the $342.6
million reported in last year's comparable quarter. For the nine months, net
sales were $972.9 million, compared with $1.1 billion in the 2012 nine-month
period—a decline of 10.9%.

Net income for the quarter was $1.3 million, or $0.12 per diluted share,
compared with $1.6 million, or $0.15 per diluted share, in the third quarter
of 2012. For the nine-month period, net income was $9.0 million, or $0.82 per
diluted share, compared with $12.4 million, or $1.13 per diluted share, last
year. LIFO income had a $0.14 per share positive impact on current
year-to-date reported earnings.

"We continue to generate strong free cash flow and transition the business to
higher-value products. During the quarter, we strengthened our balance sheet
by further reducing outstanding debt using both cash generated from operations
and enhanced working-capital management, which benefited from improved
inventory turnover. In addition, gross margins expanded reflecting consistent
profit on a per ton basis, despite market driven lower steel prices and
shipments," said Chairman and Chief Executive Officer Michael D. Siegal.

Mr. Siegal added, "The cost reduction actions that began late in the second
quarter are now complete and have lowered annualized operating costs by more
than $4 million. Coupled with ongoing initiatives to permanently lower
structural costs and enhance operating efficiency, these efforts reflect our
commitment to perpetually enhancing productivity."

Olympic Steel's Board of Directors approved a regular quarterly cash dividend
of $0.02 per share, which is payable on Dec. 16, 2013, to shareholders of
record on Dec. 2, 2013.

Conference Call and Webcast

A simulcast of Olympic Steel's 2013 third-quarter 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 10:00 a.m. Eastern Time today
and a replay of the call will be available for the next 14 days.

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; access to
capital and global credit markets; 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; the cyclicality and volatility within the metals industry; the
ability of customers (especially those that may be highly leveraged and those
with inadequate liquidity) to maintain their credit availability; the ability
of our new locations to achieve expected results; events or circumstances that
could adversely impact the successful operation of our processing equipment
and operations; the ability to comply with the terms of our asset-based credit
facility and to make the required term-loan payments; the ability of our
customers to honor their agreements related to derivative instruments,
including the outcome of the MF Global UK Limited administration process;
customer, supplier, and competitor consolidation, bankruptcy or insolvency;
reduced production schedules, layoffs or work stoppages by our own, our
suppliers' or our customers' personnel; the success of union contract
renewals; the availability and costs of transportation and logistical
services; the amounts, successes and our ability to continue our capital
investments and strategic growth initiatives and our business information
system implementations; the successes of our strategic efforts and initiatives
to increase sales volumes, maintain or improve working capital turnover and
free cash flows, improve inventory turnover, improve our customer service, and
achieve cost savings; the timing and outcome of inventory lower of cost or
market adjustments; 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; our ability to pay
regular quarterly cash dividends and the amounts and timing of any future
dividends; our ability to generate free cash flow through operations and
decreased 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 potential
impairment charges; 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 an
increase in our costs for such contingencies. Further information on these and
other risks and uncertainties is provided under Item 1A "Risk Factors" of our
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which
disclosure is incorporated herein by reference, and elsewhere in reports that
the Company files or furnishes with the SEC. This release speaks only as of
its date and the Company undertakes no obligation to publicly update
forward-looking statements, whether as a result of new information, future
events or otherwise, except to the extent required by law. You are advised,
however, to consult any further disclosures the Company makes on related
subjects in its reports filed with or furnished to the SEC.

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 34 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.
Results of Operations
(in thousands, except per-share data)
                                                                 
                          Three Months Ended Sept. Nine Months Ended Sept. 30,
                          30,
                          2013         2012        2013         2012
                          (unaudited)              (unaudited)
Net sales                 $303,990     $342,560    $972,858     $1,091,977
                                                                 
Costs and expenses                                               
                                                                 
 Cost of materials sold
(exclusive of items shown 240,974      276,504     768,980      879,060
below)
 Warehouse and processing 20,953       21,667      63,019       63,892
 Administrative and       15,617       16,765      51,937       52,647
general
 Distribution             8,739        8,682       26,694       26,960
 Selling                  5,986        7,085       18,942       20,989
 Occupancy                2,200        2,057       7,121        6,495
 Depreciation             5,124        4,953       15,718       14,636
 Amortization             223          223         667          667
                                                                 
 Total costs and expenses 299,816      337,936     953,078      1,065,346
                                                                 
 Operating income         4,174        4,624       19,780       26,631
Other income (loss), net  (1)          51          (18)         90
                                                                 
 Income before interest   4,173        4,675       19,762       26,721
and income taxes
Interest and other        1,689        2,120       5,055        6,411
expense on debt
                                                                 
 Income before income     2,484        2,555       14,707       20,310
taxes
Income tax provision      1,144        916         5,678        7,915
                                                                 
Net income                $1,340       $1,639      $9,029       $12,395
                                                                 
Net gain (loss) on
interest rate hedge, net  41           (165)       (90)         (568)
of tax
                                                                 
Total comprehensive       $1,381       $1,474      $8,939       $11,827
income
                                                                 
Earnings per share:                                              
                                                                 
 Net income per share -   $0.12        $0.15       $0.82        $1.13
basic
                                                                 
 Weighted average shares  11,066       10,961      11,061       10,958
outstanding - basic
                                                                 
 Net income per share -   $0.12        $0.15       $0.82        $1.13
diluted
                                                                 
 Weighted average shares  11,077       10,967      11,071       10,967
outstanding - diluted

 
Olympic Steel, Inc.
Consolidated Balance Sheets
(in thousands)
                                                                 
                                                As of Sept. 30, As of Dec. 31,
                                                2013            2012
                                                (unaudited)     (audited)
Assets                                                           
                                                                 
Cash and cash equivalents                       $5,999          $7,782
Accounts receivable, net                        131,478         112,841
Inventories, net (includes LIFO debit of $2,495 245,771         290,023
as of Sept. 30, 2013)
Prepaid expenses and other                      11,749          11,731
 Total current assets                           394,997         422,377
                                                                 
Property and equipment, at cost                 358,169         347,935
Accumulated depreciation                        (165,044)       (151,608)
 Net property and equipment                     193,125         196,327
                                                                 
Goodwill                                        40,787          40,787
Intangible assets, net                          34,757          35,424
Other long-term assets                          14,043          11,079
 Total assets                                   $677,709        $705,994
                                                                 
Liabilities                                                      
                                                                 
Current portion of long-term debt               $13,090         $15,282
Accounts payable                                101,050         101,471
Accrued payroll                                 9,460           10,705
Other accrued liabilities                       19,294          14,984
 Total current liabilities                      142,894         142,442
                                                                 
Credit facility revolver                        145,745         177,575
Long-term debt                                  42,292          48,854
Other long-term liabilities                     14,238          11,410
Deferred income taxes                           32,583          35,856
 Total liabilities                              377,752         416,137
                                                                 
Shareholders' Equity                                             
                                                                 
Preferred stock                                  --              -- 
Common stock                                    123,909         122,272
Accumulated other comprehensive loss            (488)           (579)
Retained earnings                               176,536         168,164
 Total shareholders' equity                     299,957         289,857
 Total liabilities and shareholders' equity     $677,709        $705,994

 
Olympic Steel, Inc.
Segment Financial Information
(in thousands)
                                                                     
                              Three Months Ended           Nine Months Ended
                              Sept. 30,                    Sept. 30,
                              (unaudited)                  (unaudited)
                              2013           2012          2013     2012
Net sales                                                            
 Flat products                $248,463       $279,075      $791,655 $903,591
 Tubular and pipe products    55,527         63,485        181,203  188,386
Total net sales               $303,990       $342,560      $972,858 $1,091,977
                                                                     
Depreciation and amortization                                        
 Flat products                $4,104         $3,969        $12,589  $11,791
 Tubular and pipe products    1,243          1,207         3,796    3,512
Total depreciation and        $5,347         $5,176        $16,385  $15,303
amortization
                                                                     
Operating income                                                     
 Flat products                $2,624         $2,147        $12,429  $17,214
 Tubular and pipe products    3,297          3,992         13,066   14,881
 Corporate expenses           (1,747)        (1,515)       (5,715)  (5,464)
Total operating income        $4,174         $4,624        $19,780  $26,631
                                                                     
 Other income (loss), net     (1)            51            (18)     90
Income before interest        4,173          4,675         19,762   26,721
and income taxes
 Interest and other expense   1,689          2,120         5,055    6,411
on debt
Income before income taxes    $2,484         $2,555        $14,707  $20,310
                                                                     
Capital expenditures                                                 
 Flat products                $1,514         $3,983        $2,937   $14,715
 Tubular and pipe products    7,308          624           9,691    5,575
Total capital expenditures    $8,849         $4,607        $12,628  $20,290
                                                                     
                                                                     
                              As of                                  
                              Sept. 30, 2013 Dec. 31, 2012           
                              (unaudited)    (unaudited)             
Goodwill                                                             
 Flat products                $500           $500                    
 Tubular and pipe products    40,287         40,287                  
Total goodwill                $40,787        $40,787                 
                                                                     
Assets                                                               
 Flat products                $450,504       $480,487                
 Tubular and pipe products    227,205        225,507                 
Total assets                  $677,709       $705,994                

 
Olympic Steel, Inc.
Other Information
(unaudited)
                                                  
                               At Sept. 30, 2013 At Dec. 31, 2012
                                                  
Shareholders' equity per share $27.36            $26.54
                                                  
Debt-to-equity ratio           0.67 to 1         0.83 to 1 
                                                  
                                                  
                               Nine Months Ended
                               Sept. 30,
                               2013              2012
                                                  
                                                  
                                                  
Cash dividends per share       $0.06             $0.06

CONTACT: IR Contact:
         Matthew J. Dennis, CFA
         Olympic Steel Investor Relations
         (216) 672-0552

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