Olympic Steel Reports Record Net Sales
08/08/2014 - Olympic Steel, Inc., a national metals service center, announced financial results for the second quarter and six months ended 30 June 2014.
Net sales for the second quarter of 2014 increased US$55.2 million, or 16.7%, to US$386.0 million. This represents the highest net sales recorded during any quarter in the Company's history. The record revenue was driven by higher sales volume and reflects increased market share.
Second-quarter and first-half earnings in 2014 were negatively impacted by US$0.4 million of pre-tax LIFO expense, related to the Company's tubular and pipe products segment. Last year's results had a contrary benefit related to pre-tax LIFO income totaling US$0.4 million in the quarter, and US$2.3 million in the first half. The net impact of both years' adjustments adversely affected reported comparisons in 2014 by US$0.04 per diluted share in the quarter and by US$0.15 per diluted share in the six-month period.
Including the detrimental effect from the LIFO adjustments, reported net income increased 38% to US$3.5 million, or US$0.32 per diluted share, versus net income of US$2.5 million, or US$0.23 per diluted share, in 2013's comparable quarter.
"Sales volume of flat products increased 10% sequentially, from the first quarter, and by 17% compared with last year's second quarter," said chairman and chief executive officer Michael D. Siegal. "This resulted from successfully executing on our strategy of aggressively growing sales volume to improve capacity utilization and gain market share."
For the first half of 2014, net sales increased 10% to US$733.0 million, compared with US$668.9 million in the first half of the prior year. Reported net income in the first half, including the adverse LIFO adjustments, was US$6.3 million, or US$0.57 per diluted share, compared with US$7.7 million, or US$0.69 per diluted share, during the first half 2013. Excluding the aforementioned LIFO adjustments from both year's results, net earnings increased during 2014's first half, compared with the same period in 2013.
"The second quarter ended on a high note, with June being our best month in the first half," Siegal added. "Entering this year's second half, customer demand and metal prices have remained at elevated levels throughout July. In addition, further consolidation of steel producers, combined with recent trade case rulings imposing additional duties on certain steel imports, signifies an improving steel market moving forward."
The company also announced Ralph M. Della Ratta has been appointed to the newly created position of lead independent director. Mr. Della Ratta, 60, has served as an independent member of Olympic Steel's board of directors since 2004. He is chair of the board's compensation committee and serves as a member of the audit and compliance committee. Previously, Mr. Della Ratta also served as a member, and chairman, of the board's nominating committee.
The lead independent director will preside in the chairman's absence at all meetings of the board, and at executive sessions of the independent directors. In this role, Mr. Della Ratta will also have authority to call meetings of the independent directors and will serve as a liaison between the chairman and the other independent directors.
"We strive for continuous improvement in every aspect of our business, including corporate governance, and adopt best practices as they evolve. Ralph's broad executive leadership experience has contributed valuable perspective to the board. Having him assume the Lead Independent Director role provides additional oversight comparable to appointing an independent chairman of the board," Siegal concluded.
Second-quarter and first-half earnings in 2014 were negatively impacted by US$0.4 million of pre-tax LIFO expense, related to the Company's tubular and pipe products segment. Last year's results had a contrary benefit related to pre-tax LIFO income totaling US$0.4 million in the quarter, and US$2.3 million in the first half. The net impact of both years' adjustments adversely affected reported comparisons in 2014 by US$0.04 per diluted share in the quarter and by US$0.15 per diluted share in the six-month period.
Including the detrimental effect from the LIFO adjustments, reported net income increased 38% to US$3.5 million, or US$0.32 per diluted share, versus net income of US$2.5 million, or US$0.23 per diluted share, in 2013's comparable quarter.
"Sales volume of flat products increased 10% sequentially, from the first quarter, and by 17% compared with last year's second quarter," said chairman and chief executive officer Michael D. Siegal. "This resulted from successfully executing on our strategy of aggressively growing sales volume to improve capacity utilization and gain market share."
For the first half of 2014, net sales increased 10% to US$733.0 million, compared with US$668.9 million in the first half of the prior year. Reported net income in the first half, including the adverse LIFO adjustments, was US$6.3 million, or US$0.57 per diluted share, compared with US$7.7 million, or US$0.69 per diluted share, during the first half 2013. Excluding the aforementioned LIFO adjustments from both year's results, net earnings increased during 2014's first half, compared with the same period in 2013.
"The second quarter ended on a high note, with June being our best month in the first half," Siegal added. "Entering this year's second half, customer demand and metal prices have remained at elevated levels throughout July. In addition, further consolidation of steel producers, combined with recent trade case rulings imposing additional duties on certain steel imports, signifies an improving steel market moving forward."
The company also announced Ralph M. Della Ratta has been appointed to the newly created position of lead independent director. Mr. Della Ratta, 60, has served as an independent member of Olympic Steel's board of directors since 2004. He is chair of the board's compensation committee and serves as a member of the audit and compliance committee. Previously, Mr. Della Ratta also served as a member, and chairman, of the board's nominating committee.
The lead independent director will preside in the chairman's absence at all meetings of the board, and at executive sessions of the independent directors. In this role, Mr. Della Ratta will also have authority to call meetings of the independent directors and will serve as a liaison between the chairman and the other independent directors.
"We strive for continuous improvement in every aspect of our business, including corporate governance, and adopt best practices as they evolve. Ralph's broad executive leadership experience has contributed valuable perspective to the board. Having him assume the Lead Independent Director role provides additional oversight comparable to appointing an independent chairman of the board," Siegal concluded.
