Q3 2021 Olympic Steel Inc Earnings Call
Good morning, and welcome to Olympic Steel 2021 third quarter financial results Conference call.
At this time, all participants are on a listen only mode.
Question and answer session will follow the formal presentation, if anyone should require operator assistance during the conference. Please press star one on your telephone keypad.
As a reminder, this conference is being recorded.
Yeah.
At this time I'd like to turn the conference over to Rich Manson Chief Financial Officer at Olympic Steel. Please go ahead Sir.
Thank you operator, welcome to Olympic Steel's earnings call for the third quarter of 2021 are.
Our call. This morning will be hosted by our Chief Executive Officer, Rick Mirabito, and we will also have our president and Chief operating Officer, Andrew Greiff.
Before we begin I have a few reminders.
Some statements made on today's call will be predictive and are intended to be made as forward looking within the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 and May not reflect actual results.
The company does not undertake to update such statements changes in assumptions or changes in other factors affecting such forward looking statements.
Important assumptions risks uncertainties and other factors that could cause actual results to differ materially are set forth in the Companys reports on forms 10-K, and 10-Q and the press releases filed with the Securities and Exchange Commission.
During today's discussion we may refer to adjusted net income per diluted share EBITDA and adjusted EBITDA, which are all non-GAAP financial measures.
A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is provided in the press release that was issued last night. It can be found on our website.
Today's live broadcast will be archived and available for replay on Olympic steels website.
At this time I'll turn the call over to Rick.
Thank you rich and good morning, everyone and thank you for joining us to discuss Olympics Steel's record results for the third quarter of 2021, I'll begin with some comments about our very busy and successful quarter, including exciting progress on our long term strategy then Andrew will review our business segments together with <unk>.
Commentary about our end markets and then after that.
Rich will provide a more detailed look at our third quarter financial results and of course as always we'll wrap up and take your questions.
The third quarter was phenomenal in many ways and we are proud of the entire Olympic steel team for their outstanding execution, not only did we achieve record setting financial results, but we also continued to successfully execute our long term strategy to further diversify our business deliver consistent <unk>.
<unk> ability and enhance shareholder value.
Highlights for the quarter included the exceptional performance of all three of our business segments. The continued success of our recent acquisitions, which have contributed to our profitable growth.
And the mid September sale of our Detroit Operation, which was primarily focused on processing and distributing carbon flat rolled products to domestic automakers then two weeks after the Detroit sale on October one we used a portion of the Detroit sale proceeds to acquire sharp stainless and alloy.
Our stainless steel distributor fabricator and end product manufacturer the Shire acquisition.
Acquisition further expands our specialty metals geographic footprint, and our product and processing capabilities, while allowing us to immediately replace the former Detroit earnings stream at a fraction of the investment.
We believe this back to back sale and acquisition transaction is a meaningful demonstration of our strategic execution to build higher sustainable returns for our shareholders.
Next I do want to comment on our safety performance and we are proud that this year 18 of our locations received safety awards from the Fabricators and manufacturers Association, including 12 that received the highest safety award of honor for having a perfect safety record and no recordable injuries or illnesses.
The prior year. These awards reflect our employees commitment to a strong safety culture and their dedication to keeping each other healthy and safe.
Turning now to the financial results.
As noted in our release, our third quarter performance was the strongest quarter in company history and in fact, it was better than all but three full years and Olympic Steel's history net sales totaled $668 million net income was $44 $5 million and adjusted EBITDA was $70 5 million.
All of which significantly exceeded our previous all time best quarter, which was the second quarter of this year.
These strong results were driven by our continued discipline around controlling expenses and tightly managing working capital and inventory levels combined with accretive acquisitions and robust market demand and metals pricing.
As I previously mentioned, we are excited to further diversify and expand into higher return specialty metals businesses with the recent acquisition of Shaw stainless this transaction marks our fifth acquisition in four years and Shaw is a perfect fit for Olympic It's immediately accretive it's well run.
In dedicated to exceptional customer service with strong core values and really excellent growth opportunities in.
In addition to acquisition growth, we continue to invest in internal initiatives, such as automation to help solve labor challenges improve safety and build additional efficiency into our operations. We also remain laser focused on managing our costs and inventory levels.
All of these actions support our continued pursuit of higher returns in each of our three business segments.
Looking forward, we anticipate the market demand will remain steady in the fourth quarter and heading into 2022, we are well positioned to finish our record 2021 on a strong note and we remain optimistic about 2022, so with that now I'll turn the call over to Andrew for some additional.
Comments.
Thank you Rick and good morning, everybody. This record breaking quarter was the result of a collective effort by everyone at Olympic steel to focus on controlling what we can control safety, our customers and vendor relationships and our operating expense and working capital disciplines.
We continued to perform for our customers under positive, but challenging business conditions, including inflationary pressured difficulties and attracting and retaining skilled labor and other supply chain disruptions I'd like to congratulate our segment teams as all three reported record EBIT.
And pre tax results. This is a great achievement.
And as Rick highlighted we delivered this exceptional performance, while continuing our focus to enhance profitability as reflected by the sale of our Detroit Division, which historically accounted for approximately 8% of our flat rolled volume mainly concentrated in carbon flat products and the.
<unk> of Shaw stainless Shah located just outside of Atlanta, Georgia is a full line distributor of stainless steel sheet pipe valves fittings to bar and angles. The distribution business focuses on small quantity sales.
At returns that are higher than our traditional specialty metals returns much like our acquisition of action last year.
The company also manufactures and distributes stainless steel <unk> and water treatment systems. It will continue to be led by existing management, including Brian Shaw the previous owner, we welcome Brian and the Shaw team and look forward to a successful integration as we work together to advance our long term strategy.
Sure stainless will report to Zach Siegel, our vice President of strategic development and the results will be included in our specialty metals segment.
The addition of Shaw stainless continues our strategic growth into metal intensive and use products building on the success, we have experienced with both our REIT self dumping hoppers and EZ dumper truck inserts as with all of our previous acquisitions, we expect to realize commercial synergy.
That will advance our efforts to produce consistently strong earnings and shareholder returns.
Under the leadership of Andy Markowitz specialty metals had a another strong quarter as favorable market conditions continued in the segment reported its third straight quarter of record EBITDA at $25 $5 million, we continued to outpace the industry with stainless shipments.
Up 43, 4% over last year, compared with 21% for the industry as a whole and aluminum shipments up 52, 4% compared with 24, 2% for the industry.
The record quarter included significant contributions from the recent acquisitions of Berlin metals and action stainless Shaw will be a great complement to the specialty metals segment.
Our pipe and tube Division led by Bill Zielinski also set a record with $10 6 million of adjusted EBITDA. Our backlog in this segment is strong both in distribution and fabrication and we believe that our continued focus on turning inventory will lead to a strong fourth quarter.
As well our carbon segment had an extraordinary quarter contributing $39 9 million of adjusted EBITDA as we continue to focus on operating expenses and inventory turnover.
We saw significant contributions from all our divisions in particular I wanted to highlight the great success of our investments in the southeast.
We enhanced our fabricating capabilities in our new facility in Buford, Georgia, while our automotive stamping line in Winder, Georgia has helped us to profitably grow our position with transplant automakers in the south based on these successes, we will be adding a second automotive stamping line in winder.
Which is expected to be fully operational in the second quarter of 2022, along with adding automated welding sales in our Buford facility.
Overall end user demand was steady throughout the third quarter with the majority of our Oems reporting to be very busy with backlogs well into 2022 overall, our fourth quarter shipments are expected to remain steady subject to the typical seasonal trends experienced each year during the holidays.
As we look forward to the fourth quarter by segment, we expected continued strength in specialty metals volume and pricing as mill supply of stainless and aluminum remains constrained we.
We do see headwinds in carbon pricing in the quarters ahead, we have remained diligent in turning our inventory at historically high levels in order to reduce our exposure to devaluation risk.
While we do expect carbon pricing to soften we are optimistic that end user demand remains strong and the current supply chain constraints may serve to prolong a favorable demand environment in 2022.
Pipe and tube pricing tends to lag carbon flat pricing by one to two quarters, we expect the pipe and tube segment to finish out 2021 strong, but expect this segment to face some pricing headwinds into 2022 on their carbon based products.
The actions, we have taken have positioned us well for the fourth quarter and beyond we will continue to pursue the right mix of acquisitions and organic growth and we will remain vigilant when it comes to safety expenses and inventory focusing on what we can control I am proud of our leadership, our support staff and all.
Olympic team members for the way they have continued to drive US forward now I'll turn the call over to rich.
Thank you Andrew and good morning, everyone as Rick and Andrew discussed the third quarter was exceptional we had record financial results, while successfully completing multiple transactions that are aligned our growth and capital allocation strategies.
September 17th we completed the sale of our Detroit Division. We initially received $58 $4 million of proceeds from the sale. Additionally, we are finalizing the working capital adjustment, which is expected to bring approximately $13 million of cash over the next three months, bringing the total expected capital return.
Capital return to the company to over $70 million.
We recorded a $3 $5 million gain on the sale, while selling our accounts receivable and inventory at the height of the market pricing, allowing us to take future carbon pricing risk off the table.
As Rick and Andrew noted, we quickly reinvested a portion of those proceeds in the acquisition of <unk> stainless and alloy on October one.
With the addition of Shaw, we remediate we replaced the EBITDA stream from our Detroit operation at a fraction of the investment.
As we realize additional synergies through the integration of shock, we expect to further improve our EBITDA returns and the consistency of our earnings.
While the initial proceeds from the sale of our Detroit operations was used to reduce debt fund working capital and purchase shock, we anticipate using the remaining proceeds to pursue additional high return growth opportunities.
Now I'll offer a little more detail on the outstanding financial results net.
Net income totaled $44 $5 million compared with a net loss of $1 $5 million in the third quarter of 2020.
Adjusted EBITDA was $75 million compared with $4 3 million for the third quarter of last year. These.
These results include $7 million of LIFO pretax expense in the third quarter of 2021, compared with $100000 of LIFO pretax income in the same period a year ago.
Sales for the quarter totaled $668 million compared with $300 million a year ago.
Flat rolled volumes were up slightly in the third quarter of 2021 versus the second quarter of 2021, despite the sale of Detroit on September 17th.
We continued to turn inventories at historically high levels with flat rolled inventory turns at five six times year to date and pipe and tube inventory turns at four times year to date.
Our total debt increased by $137 million since year end to $298 million at the end of the third quarter as a result of funding higher working capital levels associated with higher metal prices, partially offset by the initial proceeds from the sale of the Detroit operations.
At quarter end, our line of credit availability was approximately $173 million.
Currently our loanable collateral exceeds our credit line size by approximately $120 million, which provides an untapped source of additional capital availability.
As pricing plateaus or decreases we expect to generate significant cash flow as working capital requirements decrease.
Consolidated.
<unk> operating expenses for the third quarter were $85 4 million, an increase of $25 $1 million compared with the third quarter a year ago.
Included in the increase or $3 7 million of operating expenses associated with our action stainless acquisition, a $13 $8 million increase in performance based incentive expenses and increased operating expenses associated with processing and shipping, 11% more metal and inflationary pressures on labor.
<unk> and distribution expense.
We had capital expenditures totaled totaling $7 7 million for the first three quarters of 2021, compared with depreciation expense of $13 6 million we.
We anticipate that most of the cash flow associated with the capital expenditures in the southeast that Andrew outlined earlier will fall into 2022.
Our effective income tax rate for the quarter was 26% compared with 27% for the third quarter of last year, and we anticipate the effective rate for the fourth quarter of 2021 to approximate 26% to 27%.
We also announced that the board of directors approved a regular quarterly cash dividend of <unk> <unk> per share, which is payable on December 15th 2021 to shareholders of record on December one 2021.
In conclusion to Echo, Rick and Andrew we had a phenomenal quarter as a company, we delivered strong financial and operational performance and continued to make moves that advance our strategy.
And the final months of 2021, we are well positioned to continue taking advantage of the demand strengthen our markets and we look forward to another strong quarter for Olympic steel.
Now operator, let's open the call for questions.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
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Our first question comes from Marco Rodriguez with Stonegate capital markets. Please proceed with your question.
Good morning, everybody. Thank you for taking my questions.
Sure Good morning, Mark.
Yes, I'm not sure if I missed this on the call, but I was wondering if maybe you could talk a little bit about what youre seeing as far as lead times and mills are concerned.
Well on the carbon side of it we've seen this is andrew by the way.
On carbon we've seen hot roll commend just a little bit if you go back a couple of months ago lead times, we're in the five to seven week.
Range and today Theyre more like four to six.
<unk> role in the galvanized or a little bit.
Longer than that and what I would tell you is in stainless and aluminum they are really stretched.
The mills are at least 7% to eight weeks out and for both of those products.
Service centers, Ron that allocation today.
Got it very helpful and I know you made some comments in the prepared remarks in.
In terms of some expectations on what the supply chain issues and the extension of some of the lead times do with pricing and your expectations into next year, but can you maybe expand on some of those comments and just maybe talk about if you can what youre hearing from your key suppliers in terms of what their expectations are for <unk>.
And as your conditions and how the supply chain issue sort of work their way through over the next 12 months or so.
Sure well I think what we're seeing from the carbon mills is there.
<unk> started to catch up on some of the later deliveries and I think as we come through the fourth quarter.
They will they'll catch up too.
To where they had been previously so I think as we come into the beginning of next year I don't think that metal is going to be as as tight as what it was certainly in the first half of 'twenty, one and as we came out of the third quarter of this year, what I do think is.
Some of the other supply chain issues are not going to relieve themselves anytime soon including labor and I think labor and transportation is going to be the two areas that really are going to be the most challenged coming into the beginning of next year, yes.
Marco It's Rick I think that.
As we look at supply chain constraints.
And focus on our customer side, I think that's where we're seeing the bigger impact we're still seeing.
Customers that have a demand pole and the ability to sell more than they're able to produce whether they're short on various items of supply or labor or transportation or all the other things that have been talked about.
So.
That's why we tend to believe that.
There is a good amount of pent up demand and it gives us optimism for next year that will have a pretty steady to strong demand environment.
Got it very helpful and.
Kind of following up on that and just in terms of overall industry conditions.
I mean.
Everything seems to be kind of favorable for you guys right now in terms of pricing.
Demand from all the reopening and.
And obviously you just can't last forever. So when when we're thinking about your overall business strategy.
What if anything or can you accelerate to make hay here, while while the Sun's shining.
Well I think.
I think we've been doing that and I think our.
Our results show that.
I think we.
We have a saying at Olympic steel that.
The things that we can control.
Let's optimize those and I think we've actually done a really good job of that whether it's.
Access to the model in a very tight supply in specialty metals.
Whether it's an acute focus on inventory turns as Andrew talked about for carbon as we look at carbon pricing, peaking right now.
<unk>, certainly optimized our customer relationships.
Really I think done a really good job in a very very disruptive market over the last 18 months in terms of keeping our.
Our customers and supply.
We talked about big market share gains that we've seen in many of our products. So.
Those are the things that we've done to optimize and I think going forward.
As we look at our different markets as Andrew commented on.
We will continue to do those things and continue to stick to our disciplines.
And I would tell you most importantly.
We're going to be entering 2022 from a really good position in terms of inventory turnover.
It's very very helpful. And then maybe if you can discuss what youre sort of seeing in terms of the M&A landscape just kind of walk us through perhaps your pipeline and then what what are the valuations sort of look like for you guys.
Yeah. So.
It's a strong M&A market. Our view is it will continue to be a market where a lot of deals get done. We think 2022 is going to continue that.
I think market wise, you'll continue to see deals getting done here in the fourth quarter.
As you know we've been very active we commented we've made five acquisitions in four years, it's definitely part of our ongoing growth strategy.
We intend to be active.
Our.
Actively looking and pursuing strategic fits every day.
I would anticipate US is moving forward to continue on the same pace that you've seen us.
On here recently in the last year or two and we're also excited about.
Augmenting our growth also through capital expenditures and Andrew talked a little bit about that we've got.
We've got some new equipment, that's coming in into the South we're excited about that and also looking at continuing to add.
Automation to our equipment suite to continue to make us safer more efficient lower cost and be another vehicle for growth in in a supply constrained marketplace.
Understood I appreciate the time guys. Thank you.
Thank you Mark.
Our next question is from Alan Webber with robotic advisors. Please.
Please proceed with your question just a little follow up on the when you talk about acquisitions, how do you think about valuation in terms of.
Do you look at some multiple of.
<unk> strong 21 result, 21 results or how do you think about that.
<unk> way.
You guys performed.
Most of what you are looking at.
Similar dynamics.
Yes.
Thank you Alan Thanks for being on the call. Thanks for the question.
Yes, we look at valuation in terms of a cycle.
We like to look at what the earnings capabilities are of.
Those companies over what we would say would be a normalized steel cycle.
I think the multiples if you apply them over cycle earnings have remained.
Pretty consistent.
I think youre right in 2021.
Certainly the the earnings stream from many companies has accelerated so valley.
Evaluation isn't really being done off of 2021 type of <unk>.
Scenario or multiple that's how we'll continue to look at it.
And then in terms of valuation we were going to remain disciplined.
We apply a pretty strict.
Cost of capital discounted cash flow model as we look at acquisitions.
You've heard us say over the last several years each of our acquisitions, it's really important that they are great cultural fits for us.
They're well run companies.
And that they are immediately accretive so that's that's what we're looking for and we think that there's lots of great companies out there that.
We will be future fits for us.
Okay, and just a separate question when you look at.
Look at where you are today, how do you compare the company to say, where you were in 2018, which was kind of the last.
Good financial year.
Yes, I think.
A lot of the things that I talked about a few moments ago.
I think we've got some really.
Strong discipline in place around.
What I like to call the blocking and tackling the everyday parts of the business around.
Buying selling expenses managing working capital inventory turns I think really just.
Some strong strong.
Disciplines in place that will serve us well going forward.
I think our continued diversity.
Where we're getting really nice balance and a lot of.
The products that we sell both within some of the segments and then obviously the balance of the segments. So.
<unk> seen some acquisition growth in terms of the specialty metals business recently, but youre also seeing growth in the carbon business.
<unk> south.
And we also like our R. R.
Changing mix, even within the carbon business I think we've seen some nice <unk>.
Growth in the.
The coated and cold rolled ends of the marketplace.
Some good geographic expansion as I said into the southeast so yeah, we feel like we are.
A stronger more disciplined more.
Diversified company that will allow us to.
Produce more consistent and higher returns as we move forward, we're confident in that.
And I guess my last question was excluding acquisitions I think you talked about gaining market share.
Market share coming from.
Well I think we've just seen it through the diversification I mean certainly the.
The customers that we have.
Gone after the last couple of years in all of our segments. We've just seen some great growth in those areas and in our carbon business, we continued to be very strong.
In the industrial Oems that part of the business has has done very well for us and our and our white metals side of it the stainless and aluminum our growth in the truck trailer industry food equipment and appliance has done has done very well and we've been able to break into some of the industrial sides of that as well.
So I think those are really the areas of aluminum in particular, we really have been able to see some some great growth and so I think those are the those are the keys for US we will continue to be as we as we head into next year.
I may have missed it did you include our cash flow statement in the earnings release.
Alan its rich no theres no cash flow and the earnings statement, but the 10-Q will be filed later this afternoon and Youll have the full financials in there. So just curious.
Your expectation that.
For next generation be significant generator of cash.
Yes, I think thats, even going to I wouldn't say significant generally in the fourth quarter, but I already kind of see the tide turning that I think youll see some small small cash flow here in the fourth quarter and I do believe that as pricing plateaus or decreases that the draw on working capital will be less and we will generate significant cash flow next year.
It's one of the.
It's really one of the strong principles of our business.
The counter cyclicality in terms of the <unk>.
Cash flow.
So you've seen really really strong earnings.
Out of the company here at the last multiple quarters.
With a build in working capital due to the quickly rising prices.
Prices, even plateau like Theyre doing now on carbon and then if you look at sort of some of the future.
Curve.
Pricing points.
We will generate a lot of cash flow going forward in 2022 should be a very very strong year for cash flow.
Great Alright, thank you very much.
Thanks, Alan Thank you.
Our next question is from Phil Gibbs with Keybanc capital markets. Please proceed with your question.
Hey, good morning, guys.
Bill.
The.
The net working capital in the fourth quarter did I hear you just say from the last questioner that that's going to be.
Very modest.
Build is that the way to think about it.
Well no I think it's actually that I think that youre going to see working capital demands decrease in the fourth quarter traditionally you've got less effective shipping days due to the holidays and so typically your accounts receivable come down to their lowest point at year end and cash kind of trails that but I do think that cash flow will be generated in the fourth quarter.
And to some extent, but the bulk of that coming in 2022.
Okay, I was just trying to balance that with the.
Inflation and kind of the lagging inputs.
And when that when that starts to.
So the other way if you're under yes, I think the question, Yes, I think yes, I think as rich said, probably the beginning part of the fourth quarter, we still have a little bit of a pull on working capital.
But I think as we hit the midpoint and then go to the back half of the year, we will start to generate cash and then rich is exactly right. As we had first quarter. Our anticipation is we'll be generating a lot of cash flow free cash flow.
Yep.
I agree with that and then on the automotive side.
What's the exposure there after all the moves that you've made with the Detroit piece pushing out and I know you've got some upgrades in the south that you've talked about.
Obviously been a little acquisition here in the fourth quarter. So what's the exposure there and what are you guys seeing.
Well I think with the with the sale of the Detroit facility. It will mitigate what were doing with with some of the domestic automotive manufacturers, Phil and I think what we're doing down south.
Is primarily focused on some of the transplants and so it's a different model that were doing down south or automotive stamping presses.
While we do that when we did that in Detroit will be will be a focus.
At least to start we have our first stamping press, which has been very successful our second will be operational we hope by the end of the first quarter of <unk>.
<unk> 22, and then we will and then we'll see from there where our next investments will go but.
We're bullish on on the automotive business and we like the business that we're doing down south.
And maybe to just if you didn't pick up in Andrews comments that our prepared remarks.
And you know fill we've historically been I would call it 8% to 10% of our our business in terms of volumes sold has been automotive.
Andrew talked about the.
The Detroit sale that was.
That was about an 8% piece of the tonnage sold.
So obviously that went away, but I would anticipate going forward right now, we're probably a couple percentage points of our total mix will be automotive just to put some numbers around the commentary.
Okay. So certainly much smaller it sounds like the.
<unk>.
On the labor front I know Theres, obviously pressures you guys mentioned that but do you need to do some some hiring because it sounds like you're reasonably.
Constructive on the outlook for next year in terms of continued growth in volume and certainly the.
On the PMI is in the order books would all suggest that that's the case as well.
So where do you stand on hiring efforts.
Yes so.
I'd say like everybody in the manufacturing.
Universal in the United States.
Labor is tough to come by.
Do have openings.
Like many we are.
Our people are doing a phenomenal job our production workers.
They are working.
Probably a little more overtime than they were.
Certainly last year. So we do have we do have openings.
We're in a good spot our labor is not affecting our ability to service our customers. So.
We're still doing that flawlessly, but.
It's certainly on the radar.
Why we've talked about things like as we continue to look and invest in new equipment, how we can add automation to that equipment.
So as we continue to grow.
We think that will alleviate some of the pressure in terms of labor, but but I think we're in the same boat as everybody, but the good news is it's labor is not.
Today.
Constraining our ability to service our customers.
Thanks, It looks like the Browns also relieve some labor pressure this morning with Odell, So curious of that.
Yes.
Thanks, Joe.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad one moment, please while we poll for questions.
Our next question comes from Chris Sakai with singular research. Please proceed with your question.
Hi, good morning.
Hey, Chris Chris.
I've got a question sort of a broad question on what.
How do you guys feel about <unk>.
<unk> recent.
Rollback of.
The European tariffs on steel and aluminum and how will that effect.
It's steel.
That's great question, Chris This is Andrew so.
There's a lot of information, that's still going to be coming out.
In particular, when when things will start and how it is going to.
Be monitored I mean at the moment.
They're talking about.
<unk> system, and I think that there'll be a lot of work that's going to have to be done but.
From an overall basis I would expect that imports certainly will increase coming in from Europe.
Both on the steel and on the aluminum side I will tell you right now Europe is very strong in stainless and aluminum so while we will see.
Some more material coming in.
Not going to flood the shores of the U S. Because Europe is very strong in those areas.
I think in carbon in particular in hot roll, we'll probably start seeing some offshore opportunities.
In the next week or two that will start coming in sometime mid to late first quarter and so I think there'll certainly be some some pressures on.
On metal that will be certainly coming in on the coasts.
Okay, great well, thanks for that and.
And then for sure.
What segment are they going to be reporting in.
Chris It's rich there'll be reporting up through the specialty metals segment.
Okay great.
Great and then.
You mentioned, please you guys sold.
Detroit facility to buy at Shaw.
And then you've got some extra cash left over for more acquisitions can you give an idea about how much is left for new acquisitions.
Yes, so Chris it's Rick So just a slightly nuanced piece of.
The messaging in terms of how you asked the question we didn't we didn't necessarily sell Detroit to acquire Shah.
We had the capability to acquire sure without.
Selling Detroit so.
So our ability going forward rich talked about.
Our strong balance sheet and a lot of availability, so we're north of $170 million of availability.
On our asset based loan. He also talked about we have suppressed availability or actually collateral.
That would allow us.
If we wanted to upsize our agreement size.
120 to 130, what was the exact number of $120 million and 120. So so Chris we have we have plenty of capital available to execute on our strategy.
And I think Youll continue to see us do just that.
Okay, great well, thanks, and good quarter.
Thank you Barry Thank you Chris we appreciate it.
We have reached the end of the question and answer session I would now like turn the call back over to Rick <unk> for closing comments.
Well. Thank you everybody for joining us on our call today. We certainly appreciate your continued interest in Olympic steel and we look forward to speaking with you again soon thank you have a great day.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.