On October 31, 2024, Olympic Steel Inc (ZEUS, Financial) released its 8-K filing for the third quarter of 2024, revealing a net income of $2.7 million, or $0.23 per diluted share. This result fell short of the analyst estimate of $0.35 per share. The company's revenue for the quarter was $470 million, also below the estimated $496.30 million. These figures reflect a decline from the same period last year, where net income was $12.2 million, or $1.06 per diluted share, and revenue was $526 million.
Company Overview
Olympic Steel Inc provides metals processing and distribution services in the United States, operating in three segments: specialty metals flat products, carbon flat products, and tubular and pipe products. The company specializes in processing and distributing large volumes of carbon, aluminum, and stainless steel flat-rolled sheet, coils, plates, bars, and fabricated parts, serving industries such as industrial machinery, automobile manufacturing, and transportation equipment. The majority of its revenue is generated from carbon flat products.
Performance and Challenges
Olympic Steel Inc's performance in the third quarter of 2024 was impacted by industry-wide pricing pressures and macroeconomic trends that led to lower OEM contractual demand. Despite these challenges, the company managed to remain profitable, thanks to its diversification strategy focusing on higher-margin opportunities and expanding fabrication capabilities. However, the decline in metal pricing significantly affected sales, which decreased from $526 million in Q3 2023 to $470 million in Q3 2024.
Financial Achievements
Despite the challenging market conditions, Olympic Steel Inc achieved EBITDA of $15.0 million in Q3 2024, compared to $27.1 million in the same quarter of the previous year. The company also reduced its debt by approximately $12 million, ending the quarter with $197 million in debt and $304 million of credit availability. These achievements highlight the company's strategic focus on maintaining financial flexibility and investing in growth opportunities.
Key Financial Metrics
From the income statement, Olympic Steel Inc reported a gross profit of $56.8 million for carbon flat products, $22.2 million for specialty metals flat products, and $27.9 million for tubular and pipe products. The balance sheet showed total assets of $1,012 million as of September 30, 2024, with total liabilities of $441 million. The company's cash flow statement indicated a focus on managing operating expenses and investing in equipment automation to drive future growth.
“Olympic Steel’s strategies for diversification enabled all three business segments to deliver EBITDA-positive results despite industry-wide pricing pressure,” said Richard T. Marabito, Chief Executive Officer.
Analysis and Outlook
Olympic Steel Inc's Q3 2024 results reflect the ongoing challenges in the metals industry, particularly with declining metal prices and reduced demand. However, the company's strategic diversification and focus on higher-margin products have allowed it to maintain profitability. The reduction in debt and available credit provide financial flexibility to pursue further growth opportunities. While near-term challenges persist, the company's strategic initiatives position it for potential long-term success in the industry.
Explore the complete 8-K earnings release (here) from Olympic Steel Inc for further details.
