Olympic Steel, Inc. Q2 FY2024 earnings call

• Rick Marabito highlighted profitable results despite challenging pricing, emphasizing diversification strategy, growth in manufactured products, and higher margin flat-rolled products. - Andrew Greiff detailed segment performances, noting Carbon's growth, Coated's expansion, Pipe & Tube's solid results, and Specialty Metals' strong quarter. - Rich Manson discussed financial results, including debt levels, CapEx of $13.2M in H1 2024, estimated 2024 CapEx of ~$30M, tax rate expectations, and dividend declaration.

Carbon Segment: Faced challenging market conditions but grew shipping volumes (1.2% YOY, 4.3% QoQ). Carbon led in profitability with $9.5M EBITDA in Q2 2024. Coated shipments increased 32% in H1 2024, representing 12% of the product mix. Pipe & Tube Segment: Posted solid results with adjusted EBITDA of $7.7M, 8.5% YOY shipping volume growth. Integration of Central Tube & Bar is progressing well. Specialty Metals Segment: Had best quarter for volume and profitability since Q1 2023, with 10.4% YOY and 6% QoQ shipping volume growth, contributing $8.8M EBITDA.

• Expect market conditions to remain challenging near-term but optimistic about domestic metals industry. - 2024 capital expenditures estimated at approximately $30M. - Board approved quarterly dividend of $0.15 per share, payable on September 16th, 2024.

• Pricing pressure in the steel industry, with hot-rolled pricing declining significantly. - Impact of interest rate hedge expiration on effective borrowing rate. - Need to manage working capital levels, as debt increased due to higher working capital needs in H1 2024.

Q: Starting with Pipe & Tube, what drove the uptick in second quarter gross margins despite lower sales and outlook for margins?

A: Andrew Greiff stated it's due to investment in fabrication equipment and the acquisition of Central Tube & Bar, expecting margins to remain and possibly grow.

Q: Thoughts on pricing outlook, green shoots, inventory levels, and spot market momentum?

A: Rich Manson mentioned hot-rolled pricing declined further into July, volume up YOY, and expected trend to continue.

Q: Outlook for Coated for Carbon and M&A valuations in pricing headwinds?

A: Rick Marabito said Coated growth expected to continue, and Rick noted M&A valuations steady, focusing on well-run companies with consistent profitability.

Q: Specific parts of the business performing better and why?

A: Andrew Greiff mentioned fabrication as a big growth strategy, with opportunities post-COVID, and pockets of improvement in all segments including Specialty, Pipe & Tube, and Carbon.