Olympic Steel Inc. (ZEUS, Financial) filed Quarterly Report for the period ended 2009-09-30.
OLYMPIC STEEL INC. is a specialized steel service center that processes and distributes flat- rolled carbon stainless and tubular steel products. Co. operates as an intermediary between steel producers and manufacturers that require processed steel for their operations. Co. purchases flat-rolled steel typically from steel producers and responds to its customers' needs by processing steel to customer specifications and by providing critical inventory and just-in-time delivery services. Olympic Steel Inc. has a market cap of $288.4 million; its shares were traded at around $26.5 with and P/S ratio of 0.3. The dividend yield of Olympic Steel Inc. stocks is 0.3%. Olympic Steel Inc. had an annual average earning growth of 19.4% over the past 5 years.
For the third quarter of 2009, income before income taxes totaled $1.3 million compared to $37.4 million in the third quarter of 2008. For the first nine months of 2009, loss before income taxes totaled $95.2 million, compared to income of $105.8 million in the first nine months of 2008. An income tax benefit of 38.5% was recorded for the first nine months of 2009, compared to a tax provision of 36.8% for the first nine months of 2008. The majority of the 2009 losses can be carried back to prior years, resulting in future income tax refunds to be received in 2010. Income taxes refunded, net of income taxes paid, during the first nine months of 2009 totaled $2.0 million, compared to $35.9 million of income taxes paid during the first nine months of 2008.
Net income for the third quarter of 2009 totaled $0.7 million or $0.06 per basic and diluted share, compared to $24.2 million or $2.21 per diluted share for the third quarter of 2008. Net loss for the first nine months of 2009 totaled $58.6 million or $5.39 per basic and diluted share, compared to net income of $66.9 million or $6.13 per diluted share for the first nine months of 2008.
Working capital at September 30, 2009 totaled $149.8 million, a $103.4 million decrease from December 31, 2008. The decrease was primarily attributable to a $23.3 million reduction in accounts receivable (resulting from lower sales volumes and sales prices) and a $148.4 million reduction in inventories (inclusive of inventory lower of cost or market adjustments), partially offset by a $29.9 million increase in income taxes receivable and deferred, a $21.8 million reduction in accounts payable (associated with lower steel prices and reduced steel purchases)
In October 2009, our Board of Directors approved a regular quarterly dividend of $0.02 per share, which is payable on December 15, 2009 to shareholders of record as of December 1, 2009. Our Board previously approved 2009 regular quarterly dividends of $0.05, $0.02 and $0.02 per share, which were paid on March 16, 2009, June 15, 2009 and September 15, 2009, respectively. Regular dividend distributions in the future are subject to the availability of cash, the $2.25 million annual limitation on cash dividends under our revolving credit facility, and continuing determination by our Board of Directors that the payment of dividends remains in the best interest of our shareholders.
The credit facility, which was last amended in July 2009, requires us to comply with various covenants, the most significant of which include: (i) a $20 million reserve on availability, replaced with a minimum availability requirement of $15 million, tested monthly, commencing with the month ending June 30, 2010; (ii) a minimum consolidated debt service ratio of 1.25, tested monthly, commencing with the month ended June 30, 2010; (iii) a maximum leverage ratio of 1.75, tested quarterly; (iv) commencing with the month ending April 30, 2009, consolidated EBITDA of no less than ($5,000,000) for (a) the one month period ending April 30, 2009, (b) the two month period ending May 31, 2009, and (c) for the three month period ending June 30, 2009 and the three month period ending with each subsequent month thereafter until and including May 31, 2010; commencing with the month ending April 30, 2009 through and including the month ending May 31, 2010, a cumulative consolidated EBITDA for such period of no less than ($10,000,000); (v) limitations on dividends, capital expenditures and investments; and (vi) restrictions on additional indebtedness. All EBITDA covenants exclude up to $100 million of inventory lower of cost or market adjustments. As of September 30, 2009 we reduced our outstanding debt to $1.4 million, we were in compliance with our covenants and we had approximately $70 million of availability under the credit facility.
Read the The complete ReportZEUS is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
OLYMPIC STEEL INC. is a specialized steel service center that processes and distributes flat- rolled carbon stainless and tubular steel products. Co. operates as an intermediary between steel producers and manufacturers that require processed steel for their operations. Co. purchases flat-rolled steel typically from steel producers and responds to its customers' needs by processing steel to customer specifications and by providing critical inventory and just-in-time delivery services. Olympic Steel Inc. has a market cap of $288.4 million; its shares were traded at around $26.5 with and P/S ratio of 0.3. The dividend yield of Olympic Steel Inc. stocks is 0.3%. Olympic Steel Inc. had an annual average earning growth of 19.4% over the past 5 years.
Highlight of Business Operations:
Net sales decreased 63.7% to $121.6 million in the third quarter of 2009 from $335.2 million in the third quarter of 2008. Net sales decreased 60.5% to $384.9 million in the first nine months of 2009 from $973.6 million in the first nine months of 2008. The decreases in sales were primarily attributable to lower sales volumes and a decline in average selling prices due to recessionary pressures, the ongoing global economic crisis, the liquidation of inventory at steel service centers and less value-added sales. Average selling prices in the third quarter of 2009 were $670 per ton, compared with $1,252 per ton in the third quarter of 2008, and $704 per ton in the second quarter of 2009. Average selling prices continued to decline through August 2009 and began to increase in September 2009. We believe that our average selling prices in the beginning of the fourth quarter of 2009 will be higher than those experienced during the third quarter of 2009. However, we anticipate that reduced demand in the later half of the fourth quarter of 2009, caused by normal seasonal patterns, could lead to reduced selling prices at the end of the fourth quarter of 2009.For the third quarter of 2009, income before income taxes totaled $1.3 million compared to $37.4 million in the third quarter of 2008. For the first nine months of 2009, loss before income taxes totaled $95.2 million, compared to income of $105.8 million in the first nine months of 2008. An income tax benefit of 38.5% was recorded for the first nine months of 2009, compared to a tax provision of 36.8% for the first nine months of 2008. The majority of the 2009 losses can be carried back to prior years, resulting in future income tax refunds to be received in 2010. Income taxes refunded, net of income taxes paid, during the first nine months of 2009 totaled $2.0 million, compared to $35.9 million of income taxes paid during the first nine months of 2008.
Net income for the third quarter of 2009 totaled $0.7 million or $0.06 per basic and diluted share, compared to $24.2 million or $2.21 per diluted share for the third quarter of 2008. Net loss for the first nine months of 2009 totaled $58.6 million or $5.39 per basic and diluted share, compared to net income of $66.9 million or $6.13 per diluted share for the first nine months of 2008.
Working capital at September 30, 2009 totaled $149.8 million, a $103.4 million decrease from December 31, 2008. The decrease was primarily attributable to a $23.3 million reduction in accounts receivable (resulting from lower sales volumes and sales prices) and a $148.4 million reduction in inventories (inclusive of inventory lower of cost or market adjustments), partially offset by a $29.9 million increase in income taxes receivable and deferred, a $21.8 million reduction in accounts payable (associated with lower steel prices and reduced steel purchases)
In October 2009, our Board of Directors approved a regular quarterly dividend of $0.02 per share, which is payable on December 15, 2009 to shareholders of record as of December 1, 2009. Our Board previously approved 2009 regular quarterly dividends of $0.05, $0.02 and $0.02 per share, which were paid on March 16, 2009, June 15, 2009 and September 15, 2009, respectively. Regular dividend distributions in the future are subject to the availability of cash, the $2.25 million annual limitation on cash dividends under our revolving credit facility, and continuing determination by our Board of Directors that the payment of dividends remains in the best interest of our shareholders.
The credit facility, which was last amended in July 2009, requires us to comply with various covenants, the most significant of which include: (i) a $20 million reserve on availability, replaced with a minimum availability requirement of $15 million, tested monthly, commencing with the month ending June 30, 2010; (ii) a minimum consolidated debt service ratio of 1.25, tested monthly, commencing with the month ended June 30, 2010; (iii) a maximum leverage ratio of 1.75, tested quarterly; (iv) commencing with the month ending April 30, 2009, consolidated EBITDA of no less than ($5,000,000) for (a) the one month period ending April 30, 2009, (b) the two month period ending May 31, 2009, and (c) for the three month period ending June 30, 2009 and the three month period ending with each subsequent month thereafter until and including May 31, 2010; commencing with the month ending April 30, 2009 through and including the month ending May 31, 2010, a cumulative consolidated EBITDA for such period of no less than ($10,000,000); (v) limitations on dividends, capital expenditures and investments; and (vi) restrictions on additional indebtedness. All EBITDA covenants exclude up to $100 million of inventory lower of cost or market adjustments. As of September 30, 2009 we reduced our outstanding debt to $1.4 million, we were in compliance with our covenants and we had approximately $70 million of availability under the credit facility.
Read the The complete ReportZEUS is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
