Olympic Steel Inc. (ZEUS, Financial) filed Quarterly Report for the period ended 2010-06-30.
Olympic Steel Inc. has a market cap of $282.3 million; its shares were traded at around $25.94 with and P/S ratio of 0.5. The dividend yield of Olympic Steel Inc. stocks is 0.3%.ZEUS is in the portfolios of Chuck Royce of Royce& Associates, Kenneth Fisher of Fisher Asset Management, LLC, Jim Simons of Renaissance Technologies LLC.
Operating expenses in the second quarter of 2010 increased $10.2 million from the second quarter of 2009. Operating expenses in the first six months of 2010 increased $10.3 million from the first six months of 2009. As a percentage of net sales, operating expenses decreased to 17.7% for the second quarter of 2010 from 22.5% in the comparable 2009 period. As a percentage of net sales, operating expenses decreased to 18.3% for the first six months of 2010 from 22.6% in the comparable 2009 period. During 2010, variable operating expenses such as distribution and selling costs have increased as a result of increased shipment levels. In order to meet increased customer production schedules, headcount, the use of temporary labor and overtime hours have all increased. In addition, during the end of the first and second quarters of 2010, we phased in pay restorations for pay originally reduced in 2009. Going forward, the impact of the pay restorations will be a quarterly expense increase of approximately $373 thousand. As of June 30, 2010, $130 thousand related to unamortized bank fees under the Credit Facility was expensed and included in the caption Administrative and general on the accompanying Consolidated Statement of Operations. Increased depreciation expense is associated with the capitalization of our new business system and other capital projects completed in 2009.
Interest and other expense on debt totaled $521 thousand for the second quarter of 2010 compared to $1.1 million for the second quarter of 2009. Interest and other expense on debt totaled $1.0 million for the first six months of 2010 compared to $1.3 million for the first six months of 2009. Our effective borrowing rate, exclusive of deferred financing fees and commitment fees, was 5.6% for the first six months of 2010 compared to 3.4% for the first six months of 2009. The decrease in interest and other expense on debt in 2010 was primarily attributable to lower amounts of borrowings.
before income taxes totaled $7.9 million, compared to a loss before income taxes of $96.5 million in the first six months of 2009. An income tax provision of 37.0% was recorded for the first six months of 2010, compared to an income tax benefit of 38.6% for the first six months of 2009. The decrease in the effective tax rate in the second quarter of 2010, is mainly attributable to the impact of the manufacturers production deduction. The majority of the tax benefit from 2009 represents the tax effect of operating losses that were carried back to prior years, resulting in a cash refund of $38.2 million received in April 2010. Income taxes refunded, net of income taxes paid, during the first six months of 2010 and 2009, respectively, totaled $37.4 million and $2.0 million.
Net income for the second quarter of 2010 totaled $3.3 million or $0.30 per basic and diluted share, compared to a loss of $33.8 million or $3.11 per basic and diluted share for the second quarter of 2009. Net income for the first six months of 2010 totaled $5.0 million or $0.45 per diluted share, compared to a net loss of $59.3 million or $5.45 per basic and diluted share for the first six months of 2009.
Working capital at June 30, 2010 totaled $161.3 million, a $12.7 million increase from December 31, 2009. The increase was primarily attributable to a $48.8 million increase in accounts receivable (resulting from higher sales volumes and sales prices) and a $48.2 million increase in inventories, partially offset by a $39.9 million decrease in income taxes receivable and deferred (related to the receipt of a $38.2 million income tax refund in April 2010), a $35.1 million increase in accounts payable (associated with higher steel prices and increased steel purchases) and a $6.2 million increase in accrued expenses.
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Olympic Steel Inc. has a market cap of $282.3 million; its shares were traded at around $25.94 with and P/S ratio of 0.5. The dividend yield of Olympic Steel Inc. stocks is 0.3%.ZEUS is in the portfolios of Chuck Royce of Royce& Associates, Kenneth Fisher of Fisher Asset Management, LLC, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Net sales increased 73.8% to $212.8 million in the second quarter of 2010 from $122.4 million in the second quarter of 2009. Average selling prices in the second quarter of 2010 were $843 per ton, compared with $704 per ton in the second quarter of 2009, and $758 per ton in the first quarter of 2010. The increase in sales was due to increased shipments and higher selling prices in 2010 than 2009. We expect our tons sold and net sales in the third quarter of 2010 to decrease compared to the second quarter of 2010 due to normal seasonal patterns.Operating expenses in the second quarter of 2010 increased $10.2 million from the second quarter of 2009. Operating expenses in the first six months of 2010 increased $10.3 million from the first six months of 2009. As a percentage of net sales, operating expenses decreased to 17.7% for the second quarter of 2010 from 22.5% in the comparable 2009 period. As a percentage of net sales, operating expenses decreased to 18.3% for the first six months of 2010 from 22.6% in the comparable 2009 period. During 2010, variable operating expenses such as distribution and selling costs have increased as a result of increased shipment levels. In order to meet increased customer production schedules, headcount, the use of temporary labor and overtime hours have all increased. In addition, during the end of the first and second quarters of 2010, we phased in pay restorations for pay originally reduced in 2009. Going forward, the impact of the pay restorations will be a quarterly expense increase of approximately $373 thousand. As of June 30, 2010, $130 thousand related to unamortized bank fees under the Credit Facility was expensed and included in the caption Administrative and general on the accompanying Consolidated Statement of Operations. Increased depreciation expense is associated with the capitalization of our new business system and other capital projects completed in 2009.
Interest and other expense on debt totaled $521 thousand for the second quarter of 2010 compared to $1.1 million for the second quarter of 2009. Interest and other expense on debt totaled $1.0 million for the first six months of 2010 compared to $1.3 million for the first six months of 2009. Our effective borrowing rate, exclusive of deferred financing fees and commitment fees, was 5.6% for the first six months of 2010 compared to 3.4% for the first six months of 2009. The decrease in interest and other expense on debt in 2010 was primarily attributable to lower amounts of borrowings.
before income taxes totaled $7.9 million, compared to a loss before income taxes of $96.5 million in the first six months of 2009. An income tax provision of 37.0% was recorded for the first six months of 2010, compared to an income tax benefit of 38.6% for the first six months of 2009. The decrease in the effective tax rate in the second quarter of 2010, is mainly attributable to the impact of the manufacturers production deduction. The majority of the tax benefit from 2009 represents the tax effect of operating losses that were carried back to prior years, resulting in a cash refund of $38.2 million received in April 2010. Income taxes refunded, net of income taxes paid, during the first six months of 2010 and 2009, respectively, totaled $37.4 million and $2.0 million.
Net income for the second quarter of 2010 totaled $3.3 million or $0.30 per basic and diluted share, compared to a loss of $33.8 million or $3.11 per basic and diluted share for the second quarter of 2009. Net income for the first six months of 2010 totaled $5.0 million or $0.45 per diluted share, compared to a net loss of $59.3 million or $5.45 per basic and diluted share for the first six months of 2009.
Working capital at June 30, 2010 totaled $161.3 million, a $12.7 million increase from December 31, 2009. The increase was primarily attributable to a $48.8 million increase in accounts receivable (resulting from higher sales volumes and sales prices) and a $48.2 million increase in inventories, partially offset by a $39.9 million decrease in income taxes receivable and deferred (related to the receipt of a $38.2 million income tax refund in April 2010), a $35.1 million increase in accounts payable (associated with higher steel prices and increased steel purchases) and a $6.2 million increase in accrued expenses.
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