Olympic Steel, Inc. Q3 FY2024 earnings call

• Challenging macroeconomic trends in the third quarter led to lower OEM demand, particularly in the heavy equipment sector, affecting carbon flat-rolled, pipe and tube, and specialty metals segments. - Despite these headwinds, all three segments were EBITDA positive. - The company is managing costs, investing in new equipment, automation, and processing capabilities to drive safety, efficiency, productivity, and future growth. - Actively managing operating expenses and aligning labor costs with customer demand. - Reduced debt by approximately $12 million to $197 million and has $304 million of credit availability. - Actively pursuing acquisitions that meet success criteria and has invested in key organic growth areas.

All three segments were EBITDA positive for the third quarter of 2024. The Carbon segment generated $4.5 million in EBITDA, the Pipe and tube segment posted adjusted EBITDA of $6.7 million, and the Specialty Metals segment contributed $5.9 million of EBITDA. Total sales for the quarter were $470 million. The results reflect the success of Olympic Steel's strategy to diversify into countercyclical steel-intensive end products and invest in higher margin opportunities.

• Expect macroeconomic headwinds to continue in the fourth quarter of 2024 while awaiting the outcome of the presidential election and the Fed's direction on future interest rate cuts. - Remain optimistic for the long-term outlook for Olympic Steel and the industry. - Confident in the strategy and financial flexibility to continue investing in organic and acquisitive growth opportunities.

• Challenging macroeconomic trends impacting OEM demand, especially in the heavy equipment sector. - Carbon pricing pressures affecting carbon flat-rolled and pipe and tube segments. - Stainless steel surcharges falling creating pricing pressure in the specialty metals segment. - Uncertain political and macroeconomic environment affecting business conditions.

Q: Dave Storms asks about how to think about getting new machines up and running once in-house.

A: Andrew Greiff responds that training can occur prior to equipment arrival, and once in, the equipment is expected to be up and running quickly.

Q: Dave Storms asks about M&A targets.

A: Rick Marabito says they are actively pursuing acquisitions in countercyclical, higher margin fabrication, and service center areas.

Q: Samuel McKinney asks about pent-up demand post-election and pipe and tube margins.

A: Andrew Greiff and Rick Marabito discuss potential pent-up demand in the fourth quarter and Central Tube and Bar's contribution.

Q: Chris Sakai asks about operating expenses and internal investments.

A: Richard Manson and Rick Marabito discuss variable operating expenses, incentives mirroring profitability, and goals of investments in profitability, quality, safety, and productivity.