Olympic Steel Inc. (ZEUS, Financial) filed Quarterly Report for the period ended 2010-03-31.
Olympic Steel Inc. has a market cap of $354.3 million; its shares were traded at around $32.56 with and P/S ratio of 0.7. The dividend yield of Olympic Steel Inc. stocks is 0.2%.ZEUS is in the portfolios of Chuck Royce of Royce& Associates, Kenneth Fisher of Fisher Asset Management, LLC, Jim Simons of Renaissance Technologies LLC.
For the first quarter of 2010, income before income taxes totaled $2.8 million compared to a loss of $42.2 million in the first quarter of 2009. An income tax provision of 39.4% was recorded for the first three months of 2010, compared to an income tax benefit of 39.7% for the first three months of 2009. 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 during the first three months of 2010 and 2009, respectively, totaled $7 thousand and $14 thousand.
Net income for the first quarter of 2010 totaled $1.7 million or $0.16 per basic and diluted share, compared to a loss of $25.5 million or $2.34 per basic and diluted share for the first quarter of 2009.
Working capital at March 31, 2010 totaled $169.1 million, a $20.6 million increase from December 31, 2009. The increase was primarily attributable to a $30.7 million increase in accounts receivable (resulting from higher sales volumes and sales prices) and a $17.6 million increase in inventories, partially offset by a $19.6 million increase in accounts payable (associated with higher steel prices and increased steel purchases) and a $3.9 million increase in accrued expenses.
We continue to successfully implement our new business systems. During the first three months of 2010, we expensed $324 thousand and capitalized $620 thousand associated with the implementation of the systems. Since the project began in 2006, we have expensed $8.8 million and capitalized $12.4 million associated with the project.
Our revolving credit facility, which was last amended in July 2009, requires the Company 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) consolidated EBITDA of no less than ($5,000,000) for each three month period 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 March 31, 2010, the Company was in compliance with its covenants and had approximately $74 million of availability under our revolving credit facility.
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Olympic Steel Inc. has a market cap of $354.3 million; its shares were traded at around $32.56 with and P/S ratio of 0.7. The dividend yield of Olympic Steel Inc. stocks is 0.2%.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 19.2% to $167.9 million in the first quarter of 2010 from $140.9 million in the first quarter of 2009. Average selling prices in the first quarter of 2010 were $758 per ton, compared with $822 per ton in the first quarter of 2009, and $713 per ton in the fourth quarter of 2009. The increase in sales was due to higher levels of tons sold. We expect our average selling prices in the second quarter of 2010 to be higher than those experienced during the first quarter of 2010, as the market price for steel is expected to increase during the period. We expect our tons sold and net sales in the second quarter of 2010 to increase over the first quarter of 2010. However, we do anticipate shipments to begin to slow during the later part of the second quarter of 2010 due to normal seasonal patterns.For the first quarter of 2010, income before income taxes totaled $2.8 million compared to a loss of $42.2 million in the first quarter of 2009. An income tax provision of 39.4% was recorded for the first three months of 2010, compared to an income tax benefit of 39.7% for the first three months of 2009. 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 during the first three months of 2010 and 2009, respectively, totaled $7 thousand and $14 thousand.
Net income for the first quarter of 2010 totaled $1.7 million or $0.16 per basic and diluted share, compared to a loss of $25.5 million or $2.34 per basic and diluted share for the first quarter of 2009.
Working capital at March 31, 2010 totaled $169.1 million, a $20.6 million increase from December 31, 2009. The increase was primarily attributable to a $30.7 million increase in accounts receivable (resulting from higher sales volumes and sales prices) and a $17.6 million increase in inventories, partially offset by a $19.6 million increase in accounts payable (associated with higher steel prices and increased steel purchases) and a $3.9 million increase in accrued expenses.
We continue to successfully implement our new business systems. During the first three months of 2010, we expensed $324 thousand and capitalized $620 thousand associated with the implementation of the systems. Since the project began in 2006, we have expensed $8.8 million and capitalized $12.4 million associated with the project.
Our revolving credit facility, which was last amended in July 2009, requires the Company 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) consolidated EBITDA of no less than ($5,000,000) for each three month period 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 March 31, 2010, the Company was in compliance with its covenants and had approximately $74 million of availability under our revolving credit facility.
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