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Olympic Steel, Inc.$16.40($.32)(1.91%)

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 Olympic Steel Reports 2016 Fourth-Quarter and Full-Year Results
   Thursday, March 02, 2017 5:45:00 AM ET

Olympic Steel Inc., (ZEUS ), a national metals service center, today announced financial results for the fourth quarter and full year ended Dec. 31, 2016.

Net sales in the 2016 fourth quarter increased 7.3%, to $254.9 million, up from $237.5 million in the same quarter of the prior year. Full-year 2016 net sales declined 10.2%, to $1.1 billion, compared with $1.2 billion in 2015. LIFO income was $0.8 million in the final quarter of 2016, versus $1.6 million in the comparable quarter in 2015. Full-year reported results benefited from $1.5 million of LIFO income in 2016, which was down from $3.3 million of LIFO income recorded in 2015.

For the fourth quarter of 2016, the Company reported a net loss of $2.1 million, or $0.19 per share. This compares with a net loss of $5.0 million, or $0.45 per share, in 2015’s comparable quarter. For the full-year period, a net loss of $1.1 million, or $0.10 per share was recorded in 2016, versus a net loss of $26.8 million, or $2.39 per share, in 2015. Results in 2015 were negatively impacted by goodwill and intangible asset impairment charges totaling $25.0 million, or $1.93 per share.

"Despite another challenging year, we observed a definitive market swing during the fourth quarter," said Chairman and Chief Executive Officer Michael D. Siegal. "Pricing, demand and customer sentiment all improved as the quarter progressed."

"Our commitment to customer performance earned us record market share during 2016, per MSCI data," Siegal added. "At the same time, our emphasis on continuous improvement led to reducing operating expenses by 3%, or $7 million, excluding 2015’s impairment charges."

"The positive industry trends that began in last year’s fourth quarter have continued in the first quarter of 2017, validating optimism for the first half of this year," Siegal concluded.

Conference Call and Webcast

A simulcast of Olympic Steel’s 2016 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, March 2, and a replay of the call will be available for approximately 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," and "continue," as well as the negative of these terms or 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; 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 strengthening of the U.S. dollar and the related impact on foreign steel pricing, U.S. exports, and foreign imports to the United States; the levels of imported steel in the United States and any associated tariffs and duties; 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 efforts to improve earnings; our ability to generate free cash flow through operations 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 impairment charges related to indefinite lived intangible assets; 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 our business information system implementations; the successes of our operational 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 and last-in, first-out, or LIFO, income, especially during periods of declining market pricing; 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 LIFO inventory valuation; 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 risks and 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; our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any; unanticipated developments that could occur with respect to contingencies such as litigation, arbitration and environmental matters, including any developments that would require any increase in our costs for such contingencies; and changes in laws or regulations or the manner of their interpretation or enforcement could impact our financial performance and restrict our ability to operate our business or execute our strategies.

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 32 facilities in North America.

For additional information, please visit the Company’s website at www.olysteel.com or 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,
                                                                                                            ------------------------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              2016                                                                    2015                                                                                          2016                                                           2015
                                                                                                            ------------------------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                               (unaudited)                                                                                                                                                  (audited)
Net sales                                                                                                                      $ 254,904                                            $ 237,505                                                                 $ 1,055,116                                            $ 1,175,543
                                                                                                                                                                                                                                                                                                                                                            
Costs and expenses
                                                                                                                                 203,494                                                                 188,265                                                                                        820,040                                                                   942,214
   Cost of materials sold (excludes items shown separately below)
   Warehouse and processing                                                                                                       17,960                                                                  19,891                                                                                         79,521                                                                    85,411
   Administrative and general                                                                                                     15,001                                                                  15,701                                                                                         63,054                                                                    64,987
   Distribution                                                                                                                    8,728                                                                   8,254                                                                                         36,490                                                                    36,073
   Selling                                                                                                                         5,699                                                                   5,051                                                                                         23,060                                                                    21,158
   Occupancy                                                                                                                       2,088                                                                   2,280                                                                                          8,718                                                                     9,492
   Depreciation                                                                                                                    4,365                                                                   4,520                                                                                         17,596                                                                    18,147
   Amortization                                                                                                                      222                                                                     222                                                                                            889                                                                       889
                                                                                                                    -                               500                                                        -                              24,951  
   Goodwill and intangible asset impairment
                                                                                                            -------------------- ------- --------------------                       -------------------- ------- --------------------                                            -------------------- --------- --------------------                       -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                            
      Total costs and expenses                                                                                257,557                           244,684                                                1,049,368                           1,203,322  
                                                                                                            -------------------- ------- --------------------                       -------------------- ------- --------------------                                            -------------------- --------- --------------------                       -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                            
   Operating income (loss)                                                                                                        (2,653 )                                                                (7,179 )                                                                                        5,748                                                                   (27,779 )
                                                                                                                                                                                                                                                                                                                                                            
Other income (loss), net                                                                                          (13 )                                                 16                                                      (55 )                                                 (125 )
                                                                                                            -------------------- ------- --------------------                       -------------------- ------- --------------------                                            -------------------- --------- --------------------                       -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                  (2,666 )                                                                (7,163 )                                                                                        5,693                                                                   (27,904 )
   Income (loss) before interest and income taxes
Interest and other expense on debt                                                                              1,378                             1,251                                                    5,273                               5,690  
                                                                                                            -------------------- ------- --------------------                       -------------------- ------- --------------------                                            -------------------- --------- --------------------                       -------------------- --------- --------------------
   Income (loss) before income taxes                                                                                              (4,044 )                                                                (8,414 )                                                                                          420                                                                   (33,594 )
Income tax provision (benefit)                                                                                 (1,940 )                                             (3,426 )                                                                     1,498                              (6,817 )
                                                                                                            -------------------- ------- --------------------                       -------------------- ------- --------------------                                            -------------------- --------- --------------------                       -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                            
Net loss                                                                                                                       $  (2,104 )                                                             $  (4,988 )                                                                                  $    (1,078 )                                                             $   (26,777 )
                                                                                                            ==================== ======= ====================                       ==================== ======= ====================                                            ==================== ========= ====================                       ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                            
Earnings per share:
                                                                                                                                                                                                                                                                                                                                                            
   Net loss per share - basic                                                                                                  $   (0.19 )                                                             $   (0.45 )                                                                                  $     (0.10 )                                                             $     (2.39 )
                                                                                                            ==================== ======= ====================                       ==================== ======= ====================                                            ==================== ========= ====================                       ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                            
                                                                                                               11,221                            11,173                                                   11,210                              11,192  
   Weighted average shares outstanding - basic
                                                                                                            ==================== ======= ====================                       ==================== ======= ====================                                            ==================== ========= ====================                       ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                            
   Net loss per share - diluted                                                                                                $   (0.19 )                                                             $   (0.45 )                                                                                  $     (0.10 )                                                             $     (2.39 )
                                                                                                            ==================== ======= ====================                       ==================== ======= ====================                                            ==================== ========= ====================                       ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                            
                                                                                                               11,221                            11,173                                                   11,210                              11,192  
   Weighted average shares outstanding - diluted
                                                                                                            ==================== ======= ====================                       ==================== ======= ====================                                            ==================== ========= ====================                       ==================== ========= ====================
                                                                    
                                                                                                                    Olympic Steel, Inc.
                                                                                                                Consolidated Balance Sheets
                                                                                                                      (in thousands)
                                                                                                            
                                                                                                                                                                              At Dec. 31,
                                                                                                           ------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                  2016                                                   2015
                                                                                                           ---------------------------------------------------                                          ---------------------------------------------------
                                                                                                                                                                               (audited)
                             Assets
                                                                                                                                                                                                         
Cash and cash equivalents                                                                                                     $    2,315                                                                                   $    1,604
Accounts receivable, net                                                                                                         101,902                                                                                       92,877
Inventories, net (includes LIFO debit of $8,045 and $6,555 as of                                                                 254,526                                                                                      206,645
Dec. 31, 2016, and 2015, respectively)
Prepaid expenses and other                                                                                      6,197                                                  7,820  
                                                                                                           -------------------- -------- --------------------                                           -------------------- -------- --------------------
     Total current assets                                                                                     364,940                                                308,946  
                                                                                                           -------------------- -------- --------------------                                           -------------------- -------- --------------------
                                                                                                                                                                                                         
Property and equipment, at cost                                                                                                  374,242                                                                                      372,129
Accumulated depreciation                                                                                     (218,476 )                                                                (205,591 )
                                                                                                           -------------------- -------- --------------------                                           -------------------- -------- --------------------
     Net property and equipment                                                                               155,766                                                166,538  
                                                                                                           -------------------- -------- --------------------                                           -------------------- -------- --------------------
                                                                                                                                                                                                         
Intangible assets, net                                                                                                            23,869                                                                                       24,757
Other long-term assets                                                                                         11,493                                                 11,639  
                                                                                                           -------------------- -------- --------------------                                           -------------------- -------- --------------------
     Total assets                                                                                                             $  556,068                                                                $  511,880  
                                                                                                           ==================== ======== ====================                                           ==================== ======== ====================
                                                                                                                                                                                                         
                           Liabilities
                                                                                                                                                                                                         
Current portion of long-term debt                                                                                             $    1,825                                                                                   $    2,690
Accounts payable                                                                                                                  79,458                                                                                       55,685
Accrued payroll                                                                                                                    8,445                                                                                        6,884
Other accrued liabilities                                                                                      15,170                                                 11,801  
                                                                                                           -------------------- -------- --------------------                                           -------------------- -------- --------------------
     Total current liabilities                                                                                104,898                                                 77,060  
                                                                                                           -------------------- -------- --------------------                                           -------------------- -------- --------------------
Credit facility revolver                                                                                                         164,599                                                                                      145,800
Other long-term liabilities                                                                                                       10,062                                                                                        9,829
Deferred income taxes                                                                                          23,119                                                 24,496  
                                                                                                           -------------------- -------- --------------------                                           -------------------- -------- --------------------
     Total liabilities                                                                                        302,678                                                257,185  
                                                                                                           -------------------- -------- --------------------                                           -------------------- -------- --------------------
                                                                                                                                                                                                         
                      Shareholders’ Equity
                                                                                                                                                                                                         
Preferred stock                                                                                                                        -                                                                                            -
Common stock                                                                                                                     128,619                                                                                      128,129
Treasury stock                                                                                                                      (609 )                                                                                       (699 )
Accumulated other comprehensive loss                                                                                                   -                                                                                          (70 )
Retained earnings                                                                                             125,380                                                127,335  
                                                                                                           -------------------- -------- --------------------                                           -------------------- -------- --------------------
     Total shareholders’ equity                                                                               253,390                                                254,695  
                                                                                                           -------------------- -------- --------------------                                           -------------------- -------- --------------------
     Total liabilities and shareholders’ equity                                                                               $  556,068                                                                $  511,880  
                                                                                                           ==================== ======== ====================                                           ==================== ======== ====================
                                             
                                                                                                                                                                                                                          Olympic Steel, Inc.
                                                                                                                                                                                                                     Segment Financial Information
                                                                                                                                                                                                    (In thousands, except tonnage and per-ton data. Figures may not
                                                                                                                                                                                                        foot to consolidated totals due to Corporate expenses.)
                                                                  
                                                                                                                                                                                                                                                      Three Months Ended Dec. 31:
                                                                                                                                                                                                                                           (unaudited)
                                                                 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                     Carbon Flat                                                                                                              Specialty Metals Flat                                                                                   Tubular and Pipe
                                                                                                                                      Products                                                                                                                                         Products                                                                                                                Products(1)
                                                                 ------------------------------------------------------------------------------------------------------------------------------------------                              ----------------------------------------------------------------------------------------------                           ----------------------------------------------------------------------------------------------
                                                                                                    2016                                                             2015                                                         2016                           2015                                                2016                                      2015
                                                                 --------------------------------------------------------------------------                     ----------------------------------------------------                     -----------------------------                     -------------------------------------------------                      -----------------------------                     --------------------------------------------------
Tons Sold(1)                                                                                                  244,938                            229,530                           19,012                         16,520                                                  NA                                                                     NA
                                                                 -------------------------------------------------------------------------                      -------------------- --------- --------------------                      -------------------- -------                      -------------------- ------- --------------------                      -----------------------------                     --------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                     
Net Sales                                                                                                   $ 167,055                                                              $   150,992                                                              $  45,032                                         $  40,700                                                              $  42,817                                         $  45,813
Average selling price per ton                                                                                     682                                                                      658                                                                  2,369                                             2,464                                                                     NA                                                                     NA
Cost of materials sold(2)                                                                                     136,979                            120,822                           37,452                         37,376                           29,063                         30,067  
                                                                 -------------------------------------------------------------------------                      -------------------- --------- --------------------                      -------------------- -------                      -------------------- ------- --------------------                      -------------------- -------                      -------------------- ------- --------------------
Gross profit(3)                                                                                                30,076                                                                   30,170                                                                  7,580                                             3,324                                                                 13,754                                            15,746
Operating expenses(4)                                                                                          34,327                                                                   36,458                                                                  5,065                                             4,058                                                                 13,190                                            13,606
Goodwill and intangible asset impairment(5)                                                                         -                                  -                                -                            500                                -                              -  
                                                                 -------------------------------------------------    --------------------                      -------------------- --------- --------------------                      -------------------- -------                      -------------------- ------- --------------------                      -------------------- -------                      -------------------- ------- --------------------
Operating income (loss)                                                                                      $ (4,251 )                                                            $    (6,288 )                                                            $   2,515                                         $  (1,234 )                                                            $     564                                         $   2,140  
                                                                 =========================================================================                      ==================== ========= ====================                      ==================== =======                      ==================== ======= ====================                      ==================== =======                      ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                     
Depreciation and Amortization                                                                                   2,953                                                                    2,987                                                                    211                                               173                                                                  1,398                                             1,556
                                                                  
                                                                                                                                                                                                                                                     Twelve Months Ended Dec. 31:
                                                                                                                                                                                                                                                               (audited)
                                                                 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                     Carbon Flat                                                                                                                                 Specialty Metals Flat                                                                                                      Tubular and Pipe
                                                                                                                                      Products                                                                                                                                         Products                                                                                                                Products(1)
                                                                 ------------------------------------------------------------------------------------------------------------------------------------------                              ----------------------------------------------------------------------------------------------                           ----------------------------------------------------------------------------------------------
                                                                                         2016                                                                                           2015                                                         2016                                                         2015                                                        2016                                                         2015
                                                                 ----------------------------------------------------                                           ----------------------------------------------------                     -----------------------------                     --------------------------------------------------                     -----------------------------                     --------------------------------------------------
Tons Sold(1)                                                       1,026,768                                                1,037,525                           82,285                         72,077                                                  NA                                                                     NA
                                                                 -------------------- --------- --------------------                                            -------------------- --------- --------------------                      -------------------- -------                      -------------------- ------- --------------------                      -----------------------------                     --------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                     
Net Sales                                                                           $   670,983                                                                                    $   765,400                                                              $ 189,930                                         $ 192,516                                                              $ 194,203                                         $ 217,627
Average selling price per ton                                                               653                                                                                            738                                                                  2,308                                             2,671                                                                     NA                                                                     NA
Cost of materials sold(2)                                            529,021                                                  618,674                          160,185                        176,686                          130,834                        146,854  
                                                                 -------------------- --------- --------------------                                            -------------------- --------- --------------------                      -------------------- -------                      -------------------- ------- --------------------                      -------------------- -------                      -------------------- ------- --------------------
Gross profit(3)                                                                         141,962                                                                                        146,726                                                                 29,745                                            15,830                                                                 63,369                                            70,773
Operating expenses(4)                                                                   146,333                                                                                        153,943                                                                 19,904                                            16,904                                                                 55,656                                            58,190
Goodwill and intangible asset impairment(5)                                -                                                        -                                -                            500                                -                         24,451  
                                                                 -------------------- --------- --------------------                                            -------------------- --------- --------------------                      -------------------- -------                      -------------------- ------- --------------------                      -------------------- -------                      -------------------- ------- --------------------
Operating income (loss)                                                             $    (4,371 )                                                                                  $    (7,217 )                                                            $   9,841                                         $  (1,574 )                                                            $   7,713                                         $ (11,868 )
                                                                 ==================== ========= ====================                                            ==================== ========= ====================                      ==================== =======                      ==================== ======= ====================                      ==================== =======                      ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                     
Depreciation and Amortization                                                            11,690                                                                                         12,200                                                                    797                                               698                                                                  5,896                                             6,036
     
(1)                      Tonnage is less meaningful for the Tubular and Pipe Products segment
                         and therefore, is not reported.
(2)                      Includes $0.8 million, and $1.5 million, of LIFO income for the
                         three and twelve months ended Dec. 31, 2016, respectively; and
                         $1.6 million, and $3.3 million, of LIFO income for the three and
                         twelve months ended Dec. 31, 2015, respectively.
(3)                      Gross profit is calculated as net sales less the cost of materials
                         sold.
(4)                      Operating expenses are calculated as total costs and expenses less
                         the cost of materials sold.
(5)                      Goodwill and intangible asset non-cash impairment charges are
                         separately displayed for comparability purposes.
                                                  
                                                                                     Olympic Steel, Inc.
                                                                             Segment Financial Information Cont.
                                                                                   (audited, in thousands)
                                                                                          
                                                                                                                                      At Dec. 31,
                                                                                         ----------------------------------------------------------------------------------------------------
                                                                            2016                                  2015
                                               ---------------------------------------------------------------                                          -----
Assets
   Flat products                                                                                            $              363,626                                              $    328,295
   Tubular and pipe products                                                                                               192,088                                                   183,129
   Corporate                                                                                                354                 456
                                                                                         -------------------- -------------------- --------------------      -------------------- ----------
Total assets                                                                                                $              556,068                           $    511,880
                                                                                         ==================== ==================== ====================      ==================== ==========
                                                                                                                                                              
Other Information:
----------------------------------------------
(audited, in thousands, except per-share data)                                                                                        At Dec. 31,
                                                                                         ----------------------------------------------------------------------------------------------------
                                                                                                                      2016                                                 2015
                                                                                         ---------------------------------------------------------------     --------------------------------
                                                                                                                                                              
Shareholders’ equity per share                                                                              $                23.11                                              $      23.25
                                                                                                                                                              
Debt-to-equity ratio                                                                                                0.66 to 1                                            0.58 to 1
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                  Twelve Months Ended
                                                                                                                                       Dec. 31,
                                                                                         ----------------------------------------------------------------------------------------------------
                                                                                                                      2016                                                 2015
                                                                                         ---------------------------------------------------------------     --------------------------------
                                                                                          
                                                                                                                                                              
Net cash from (used for) operating activities                                                               $               (9,813 )                                            $    107,485
                                                                                                                                                              
Cash dividends per share                                                                                    $                 0.08                                              $       0.08

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170302005315r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170302005315/en/

SOURCE: Olympic Steel Inc."> <Property FormalName="PrimaryTwitterHandle" Value="@olysteel

Olympic Steel Investor Relations 
Matthew J. Dennis, CFA, 216-672-0522


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