Olympic Steel(US:ZEUS)2025-02-21 21:05Financial Performance - Net sales decreased by $216.5 million, or 10.0%, to $1.9 billion in 2024 from $2.2 billion in 2023[203] - Net income decreased to $23.0 million, or $1.97 per share, in 2024 from $44.5 million, or $3.85 per share, in 2023[209] - Operating income fell to $47,859 in 2024, down 38.3% from $77,671 in 2023[303] - Net income decreased to $22,980 in 2024, representing a decline of 48.7% compared to $44,529 in 2023[303] - Cash generated from operations in 2024 was $33.7 million, down from $175.2 million in 2023[237] Sales and Revenue Breakdown - Specialty metals flat products net sales decreased by $70.9 million, or 12.5%, to $496.9 million in 2024, accounting for 25.6% of total net sales[203] - Carbon flat products net sales decreased by $112.0 million, or 9.2%, to $1.1 billion in 2024, representing 57.1% of total net sales[203] - Tubular and pipe products net sales decreased by $33.6 million, or 9.1%, to $335.7 million in 2024, making up 17.3% of total net sales[203] - Net sales in the specialty metals flat products segment decreased by $70.9 million, or 12.5%, to $496.9 million in 2024 from $567.7 million in 2023[213] - Net sales for 2024 were $1,941,672, a decrease of 10.0% from $2,158,163 in 2023[303] Cost and Profitability - Average selling prices decreased by 9.2% in 2024, with an average of $1,837 per ton compared to $2,023 per ton in 2023[203] - Cost of materials sold decreased by $194.2 million, or 11.5%, to $1.5 billion in 2024 from $1.7 billion in 2023[204] - Gross profit as a percentage of net sales increased to 23.2% in 2024 from 21.9% in 2023[205] - Operating income for the carbon flat products segment decreased to $16.4 million, or 1.5% of net sales, in 2024 from $34.6 million, or 2.8% of net sales, in 2023[225] Expenses and Liabilities - Operating expenses increased by $7.5 million, or 1.9%, to $403.3 million in 2024 from $395.8 million in 2023, representing 20.7% of net sales compared to 18.3% in 2023[206] - Total liabilities rose to $470,572 in 2024, an increase of 9.6% from $429,357 in 2023[305] - Interest paid increased to $15,273 in 2024, compared to $14,965 in 2023[311] Acquisitions and Investments - The acquisition of Central Tube and Bar, Inc. on October 2, 2023, expanded the tubular and pipe products segment's geographic footprint and manufacturing capabilities[194] - The company acquired Metal Works for a cash purchase price of $80.0 million on November 11, 2024, incurring $0.2 million in direct acquisition-related costs[351] - The acquisition of CTB on October 2, 2023, involved a total cash consideration of $40.3 million, with a base purchase price of $37.8 million and a working capital adjustment of $2.5 million, alongside $0.9 million in acquisition-related costs[352] - The Company acquired Metal-Fab for $131.2 million on January 3, 2023, which included a base purchase price of $131.0 million and $2.6 million in acquisition-related costs[353] Cash Flow and Liquidity - Total average borrowings decreased by $21.0 million, or 8.8%, to $218.4 million in 2024 from $239.4 million in 2023[207] - Cash generated from financing activities in 2024 was $74.4 million, compared to $16.7 million in 2023, primarily due to $82.3 million of net borrowings under the ABL Credit Facility[240] - The company anticipates sufficient liquidity from its ABL Credit Facility and operations to meet capital requirements over the next 12 months[236] - As of December 31, 2024, the company had $192.8 million of availability under the ABL Credit Facility, with compliance to all covenants[246] Inventory and Assets - As of December 31, 2024, total inventories amounted to $390.6 million, a slight increase from $386.5 million in 2023, with unprocessed inventories at $273.7 million and processed and finished inventories at $117.0 million[371] - The company recorded LIFO income of $5.7 million in 2024 due to decreased metals pricing, compared to $8.3 million in 2023, which positively impacted inventory balance and reduced cost of materials sold[372] - Net property and equipment increased to $203.8 million in 2024 from $186.1 million in 2023, with significant investments in machinery and equipment totaling $275.0 million[376] - Goodwill increased to $83.8 million as of December 31, 2024, from $52.1 million in 2023, primarily due to acquisitions including Metal Works[380] Regulatory and Accounting Changes - The FASB issued ASU No. 2023-09 to improve income tax disclosures, effective for annual periods beginning after December 15, 2024[265] - The FASB issued ASU No. 2023-07 to enhance segment reporting disclosures, effective for annual periods beginning after December 15, 2023[266] Market Conditions and Risks - Inflation has not materially affected financial results in the past three years, but may have a significant impact in future years[254] - The company is exposed to fluctuating metals prices and interest rate changes, impacting net sales and profitability[274] - Rising metals prices result in higher working capital requirements, and some customers may lack sufficient credit lines to absorb significant price increases[271]