Olympic Steel(ZEUS) - 2025 Q2 - Quarterly Results

Financial Performance Overview Second Quarter 2025 Financial Highlights Olympic Steel reported a year-over-year decline in sales and net income for the second quarter of 2025, with sales dropping to $496 million from $526 million and net income falling to $5.2 million from $7.7 million, while Adjusted EBITDA remained relatively stable at $20.3 million and showed a sequential increase Q2 2025 vs Q2 2024 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $496 million | $526 million | | Net Income | $5.2 million | $7.7 million | | Diluted EPS | $0.45 | $0.66 | | Adjusted EBITDA | $20.3 million | $21.3 million | - The company's Q2 2025 results included a LIFO pre-tax expense of $0.8 million, contrasting with a LIFO pre-tax income of $1.0 million in Q2 2024[2][3] Management Commentary and Outlook Management emphasized the company's ability to achieve profitability despite macroeconomic uncertainty and declining metal market demand, actively investing in organic growth and pursuing strategic acquisitions with a strong balance sheet and over $300 million in borrowing availability - The company delivered a sequential increase in Adjusted EBITDA despite declining market demand for metals, with all three segments contributing positive EBITDA for the quarter and six-month period[4] - Strategic focus remains on investing in growth initiatives, including new processing and automation equipment from the 2025 capital expenditure plan and pursuing complementary acquisitions[4] - Management is encouraged by positive trends in stainless and aluminum pricing following a June tariff announcement, which has also led to increased inquiries for outsourced fabrication work[4] Capital Allocation The Board of Directors approved a regular quarterly cash dividend of $0.16 per share, continuing an uninterrupted dividend payment history since March 2006 and marking the third consecutive year the company has increased its dividend - A quarterly cash dividend of $0.16 per share was approved, payable on September 15, 2025, to shareholders of record on September 2, 2025[5] - The company has consistently paid a quarterly dividend since March 2006 and has increased it in each of the last three years[5] Financial Statements and Reconciliations Non-GAAP Reconciliations The company provided reconciliations for non-GAAP measures to their GAAP equivalents, with Adjusted Net Income per diluted share at $0.50 for Q2 2025 compared to GAAP's $0.45, and Adjusted EBITDA at $20.3 million reconciled from a GAAP Net Income of $5.2 million Reconciliation of Net Income Per Diluted Share to Adjusted (Non-GAAP) | Period | GAAP Net Income Per Share (USD) | LIFO Impact (USD) | Adjusted Net Income Per Share (Non-GAAP, USD) | | :--- | :--- | :--- | :--- | | Q2 2025 | $0.45 | $0.05 | $0.50 | | Q2 2024 | $0.66 | ($0.06) | $0.60 | Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Period | Net Income (GAAP, USD thousands) | Adjustments (Interest, Taxes, D&A, etc., USD thousands) | LIFO Expense/(Income) (USD thousands) | Adjusted EBITDA (Non-GAAP, USD thousands) | | :--- | :--- | :--- | :--- | :--- | | Q2 2025 | $5,237 | $14,351 | $750 | $20,338 | | Q2 2024 | $7,660 | $14,677 | ($1,000) | $21,337 | Consolidated Statements of Net Income For the three months ended June 30, 2025, Olympic Steel's net sales decreased to $496.5 million from $526.3 million year-over-year, with operating income falling to $11.4 million from $15.1 million, resulting in a net income of $5.2 million, down from $7.7 million in Q2 2024 Consolidated Income Statement Highlights (in thousands) | Account | Three Months Ended June 30, 2025 (USD thousands) | Three Months Ended June 30, 2024 (USD thousands) | | :--- | :--- | :--- | | Net sales | $496,483 | $526,250 | | Total costs and expenses | $485,110 | $511,140 | | Operating income | $11,373 | $15,110 | | Net income | $5,237 | $7,660 | Earnings Per Share | Metric | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | | :--- | :--- | :--- | | Net income per share - basic | $0.45 | $0.66 | | Net income per share - diluted | $0.45 | $0.66 | Consolidated Balance Sheets As of June 30, 2025, Olympic Steel's total assets increased to $1.075 billion from $1.044 billion at year-end 2024, with total liabilities rising to $496.7 million from $470.6 million, and shareholders' equity seeing a slight increase to $578.2 million Balance Sheet Summary (in thousands) | Account | June 30, 2025 (USD thousands) | December 31, 2024 (USD thousands) | | :--- | :--- | :--- | | Total current assets | $596,765 | $580,591 | | Total assets | $1,074,910 | $1,044,496 | | Total current liabilities | $194,338 | $132,638 | | Total liabilities | $496,707 | $470,572 | | Total shareholders' equity | $578,203 | $573,924 | - Key changes in assets include an increase in Accounts Receivable to $203.7 million and a decrease in Inventories to $368.0 million, while on the liability side, Accounts Payable increased significantly to $144.6 million and the Credit facility revolver was reduced to $233.2 million[19] Segment Financial Information In Q2 2025, the Carbon Flat Products segment saw net sales of $282.5 million, down from $307.8 million YoY, though operating income increased, while the Specialty Metals Flat Products segment reported a slight increase in sales to $134.7 million but a decrease in operating income, and the Tubular and Pipe Products segment experienced a decline in both net sales and operating income Q2 2025 Segment Performance (in thousands) | Segment | Net Sales (USD thousands) | Operating Income (USD thousands) | | :--- | :--- | :--- | | Carbon Flat Products | $282,543 | $7,393 | | Specialty Metals Flat Products | $134,706 | $4,926 | | Tubular and Pipe Products | $79,234 | $3,865 | Q2 2024 Segment Performance (in thousands) | Segment | Net Sales (USD thousands) | Operating Income (USD thousands) | | :--- | :--- | :--- | | Carbon Flat Products | $307,755 | $5,361 | | Specialty Metals Flat Products | $130,873 | $7,849 | | Tubular and Pipe Products | $87,622 | $6,497 | - Total assets for flat-products increased to $716.8 million as of June 30, 2025, from $695.9 million at the end of 2024, while tubular and pipe products assets also grew to $357.1 million[22] Other Key Financial Metrics The company's financial health indicators show a stronger position, with the debt-to-equity ratio improving to 0.40 to 1 as of June 30, 2025, from 0.47 to 1 at year-end 2024, and net cash from operating activities for the first six months of 2025 was a positive $64.9 million, a significant turnaround from a cash use of $5.5 million in the same period of 2024 Key Ratios and Metrics | Metric | As of June 30, 2025 | As of Dec 31, 2024 | | :--- | :--- | :--- | | Shareholders' equity per share | $51.64 | $51.54 | | Debt to equity ratio | 0.40 to 1 | 0.47 to 1 | Cash Flow and Dividends | Metric | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :--- | :--- | :--- | | Net cash from operating activities | $64,925 thousand | $(5,512) thousand | | Cash dividends per share | $0.32 | $0.30 | Disclosures and Company Information Forward-Looking Statements This section contains standard safe harbor language, cautioning readers that forward-looking statements are subject to numerous risks and uncertainties, including impacts from steel import levels, tariffs, economic conditions, supply disruptions, interest rates, and global conflicts, which could cause actual results to differ materially from projections - The release includes forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[11] - Key risks highlighted include U.S. trade policy, supply disruptions, inflationary pressures, volatile metals prices, rising interest rates, and the ability to integrate recent acquisitions[11] About Olympic Steel Founded in 1954 and headquartered in Cleveland, Ohio, Olympic Steel is a leading U.S. metals service center, focusing on the direct sale and value-added processing of a wide range of metal products, including carbon and stainless steel, aluminum, pipe, and tube, operating from 54 facilities - Olympic Steel (NASDAQ: ZEUS) is a U.S. metals service center founded in 1954[13] - The company's business includes direct sale and value-added processing of carbon, coated, and stainless steel, aluminum, pipe, tube, and various metal-intensive end-use products[13]