Olympic Reports Record Third Quarter
Olympic Steel Inc., Cleveland, reported net sales of $348.5 million in the third quarter, the highest level for that quarter in the company’s history. Net sales were up 67 percent from the same period in 2010, a byproduct of the acquisition of Chicago Tube and Iron Company. Net income for the quarter totaled $6.1 million, up from the $1.2 million loss reported in the same quarter last year.
Olympic’s net sales for the first nine months of 2011 totaled $941.9 million, the company’s second highest total through nine months. Net sales increased 59.7 percent from $589.8 million for the first nine months of 2010. The company’s net income for the first nine months hit $24.4 million, up from $3.7 million in the same period last year.
“Our 2011 financial results and record third-quarter sales benefited from strong overall performance and the inclusion of Chicago Tube and Iron. CTI accelerates our market share growth and was immediately accretive to our third-quarter earnings,” said Chairman and Chief Executive Officer Michael D. Siegal during the company’s quarterly conference call.
Excluding CTI, Olympic sold 266,000 tons during the third quarter, a decline of 7 percent from the second quarter. For the year to date, the company’s tons sold were up 22 percent to 869,000.
“Demand has remained sound through October as we continue to see strength from our customers in automotive, heavy industrial equipment and agricultural equipment sectors. They are optimistic about demand, even though we expect the fourth quarter to follow normal seasonal patterns with a slowdown in business occurring around Thanksgiving and the last two weeks of December,” said David Wolfort, president and chief operating officer,
Through the first nine months of 2011, the company’s capital spending totaled $25 million, including new equipment, successful information system rollouts and facility startups in Gary, Ind.; Mount Sterling, Ky.; Monterrey, Mexico; Kansas City, Mo.; Roseville, Minn.; and Streetsboro, Ohio. The company will open a new temper mill facility in Gary by the end of the year, to be fully operational by early 2012. The new mill’s launch will add 150,000 tons of capacity to Olympic’s overall capabilities. Capital spending for the full year is expected to reach $35 million.
Company officials anticipate further spending at their newly opened Mount Sterling location. Olympic has already outgrown its existing footprint and is looking to acquire a new building in the same industrial complex, they report.
On the inventory front, Olympic is on pace to average near the normal five turns this year, with plans to reduce its stocks further by year’s end. “While pricing is approaching the steel mills’ breakeven point, buyers are remaining cautious and are only buying what they need. With steel mill lead times short and concerns revolving around pricing, there’s no reason for service centers, or any large buyers, to build inventory,” Wolfort said.