Q1 2024 Olympic Steel Inc Earnings Call

Operator: Good morning and welcome to the Olympic Steel 2024 First Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to hand the conference call over to Rich Mason, Chief Financial Officer at Olympic Steel. Please go ahead.

Good morning, and welcome to the Olympic Steel 2024 first quarter financial results Conference call. At this time, all participants are in a listen only mode a brief.

A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

At this time I would like to him the conference call over to Rich Mason Chief Financial Officer at Olympic Steel. Please go ahead.

Richard A. Manson: Thank you, Operator. Welcome to Olympic Steel's earnings call for the first quarter of 2024. Our call this morning will be hosted by our Chief Executive Officer, Rick Marabito, and we will also be joined by 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.

Richard A. Manson: Thank you operator, welcome to Olympic Steel's earnings call for the first quarter of 2020 for our call. This morning will be hosted by our Chief Executive Officer, Rick Mirabito and we will also be joined by our President and Chief operating Officer, Andrew Greiff.

Richard A. Manson: Important assumptions, risks, uncertainties, and other factors that could cause actual results to differ materially are set forth in the company's reports on Forms 10-K and 10-Q and in 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 measures is provided in the press release that was issued last night and can be found on our website. Today's live broadcast will be archived and available for replay on Olympic Steel's website. At this time, I'll turn the call over to Rick. Thank you, Rich. And good morning, everyone.

Speaker Change: Before we begin I have a few reminders.

Speaker Change: 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 1095 and May not reflect actual results the.

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 a.

Speaker Change: 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 measures is provided in the press release that was issued last night and can be found on our website.

Speaker Change: <unk> live broadcast will be archived and available for replay on Olympic steels website at this time I'll turn the call over to Rick.

Richard T. Marabito: Thank you rich and good morning, everyone. Thank you for joining us today to discuss Olympic Steel's 2024 first quarter results.

Richard T. Marabito: Thank you for joining us today to discuss Olympic Steel's 2024 first quarter results. I'll begin by talking about the solid results we delivered in the first quarter and how our strategy to diversify and expand into higher value-added processing and manufactured metal products enables us to consistently deliver positive results regardless of market conditions. Then, Andrew will review our segment performance, and following that, Rich will discuss our financial results in more detail. And then, as always, we will open up the call to your questions.

I'll begin by talking about the solid results, we delivered in the first quarter and how our strategy to diversify and expand into higher value added processing and manufactured metal products enables us to consistently deliver positive results regardless of market conditions.

And Andrew will review our segment performance and following that rich will discuss our financial results in more detail and then as always we will open up the call for your questions.

Richard T. Marabito: Olympic Steel delivered a strong start to 2024, despite challenging market conditions during the first quarter. We reported first quarter sales of $527 million and net income of $8.7 million, and all segments contributed to our adjusted EBITDA of $23.7 million. Our shipping volumes increased 9% sequentially from the fourth quarter of 2023, and we maintained our margins despite unusually declining pricing dynamics for the first quarter. We typically start the new year in a strengthening market with increasing pricing, and that trend usually continues into the second quarter. However, this year we saw index pricing for hot rolled steel fall more than 31% from January through mid-March, while stainless steel surcharges also fell throughout the quarter.

Richard T. Marabito: Olympic Steel delivered a strong start to 2024, despite challenging market conditions during the first quarter.

We reported first quarter sales of $527 million and net income of $8 $7 million in all segments contributed to our adjusted EBITDA of $23 $7 million.

Richard T. Marabito: Our shipping volumes increased 9% sequentially from the fourth quarter of 2023, and we maintained our margins despite unusual declining pricing dynamics for the first quarter.

Richard T. Marabito: We typically start the new year, and a strengthening market with increasing pricing and that trend usually continues into the second quarter.

Richard T. Marabito: However, this year, we saw index pricing for hot rolled steel fall more than 31% from January through mid March while stainless steel surcharges also fell throughout the quarter.

Richard T. Marabito: So the movement in pricing was the opposite of what we normally experience in the first quarter. Nevertheless, despite these pricing challenges, we generated solid profitability, which reinforces that our strategy is working. Our efforts to diversify and expand our portfolio into higher-value manufactured metal products provide a natural counter-cyclical benefit to falling metal prices and helps drive profitability regardless of market conditions. In addition, our fabrication and value-added product capabilities drove new business wins, and we outpaced market shipments during the quarter in every product we sell.

Richard T. Marabito: So the movement in pricing was the opposite of what we normally experience in the first quarter.

Richard T. Marabito: Despite these pricing challenges, we generated solid profitability, which reinforces that our strategy is working.

Richard T. Marabito: Our efforts to diversify and expand our portfolio into higher value manufactured metal products provides a natural counter cyclical benefit to falling metal prices and helps drive profitability regardless of market conditions.

Richard T. Marabito: In addition, our fabrication and value added product capabilities drove new business wins, and we outpaced market shipments during the quarter and every product we sell.

Richard T. Marabito: We continue to see industrial manufacturers looking to outsource more long-term fabrication work, and we have made the strategic investments in people, technology, and equipment to capitalize on what we believe is a long-term trend. We hired industry veteran Max Fitzgerald to the newly created role of Vice President of Fabrication.

Richard T. Marabito: We continue to see industrial manufacturers looking to outsource more long term fabrication work and we have made the strategic investments in people technology and equipment to capitalize on what we believe is a long term trend.

Richard T. Marabito: We hired industry veteran Max Fitzgerald to the newly created role of Vice President of fabrication.

Richard T. Marabito: Max is leading the execution of Olympic Steel's fabrication strategy, which is a key component to both our near-term and long-term growth. We are beginning to realize the benefits of the team's efforts to strengthen our fabrication capabilities and to integrate new, more efficient equipment, automation, and software into our operations. We are well-positioned to accelerate our growth, and we are excited for the opportunities to come as the U.S. rebuilds its infrastructure and our large OEM customers continue to outsource metal fabrication.

Richard T. Marabito: Max is leading the execution of Olympic steel fabrication strategy, which is a key component to both our near term and long term growth.

Richard T. Marabito: We are beginning to realize the benefits of the team's efforts to strengthen our fabrication capabilities and to integrate new more efficient equipment automation and software into our operations.

Richard T. Marabito: We are well positioned to accelerate our growth and we are excited for the opportunities to come as the U S rebuilds its infrastructure and our large OEM customers continue to outsource metal fabrication.

Richard T. Marabito: As we near the midpoint of the second quarter, pricing on some products has recovered, yet market conditions remain dynamic. While we monitor the evolving conditions, the entire Olympic Steel team remains focused on what we can control in our disciplines around working capital, operating expenses, and cash flow. Our balance sheet remains strong, and we have access to capital that will enable us to continue investing in organic growth and automation opportunities and a reinvigorated M&A market.

Richard T. Marabito: As we near the midpoint of the second quarter pricing on some products has recovered yet market conditions remain dynamic.

Richard T. Marabito: While we monitor the evolving conditions the entire Olympic steel team remains focused on what we can control our disciplines around working capital operating expenses and cash flow.

Richard T. Marabito: Our balance sheet remains strong and we have access to capital that will enable us to continue investing in organic growth and automation opportunities and a reinvigorated M&A market and that all aligns with our strategic priorities for our long term success. As we look ahead, we are optimistic about our.

Richard T. Marabito: And that all aligns with our strategic priorities for our long-term success. As we look ahead, we are optimistic about our ability to deliver consistent, profitable results and create value for our shareholders. I'll now turn the call over to Andrew.

Richard T. Marabito: Our ability to deliver consistent profitable results and create value for our shareholders.

Richard T. Marabito: Now I'll turn the call over to Andrew.

Andrew S. Greiff: Thank you, Rick. And good morning, everyone.

Andrew S. Greiff: Thank you Rick and good morning, everyone. Our diversification strategy has made Olympic steel a stronger more resilient company, our team's strategic execution and commitment to our operating disciplines delivered solid profitability this quarter despite pricing headwinds.

Andrew S. Greiff: Our diversification strategy has made Olympic Steel a stronger, more resilient company. Our team's strategic execution and commitment to our operating disciplines delivered solid profitability this quarter, despite pricing headwinds. The shipping volume for all segments was up sequentially from the fourth quarter of 2023, and the carbon and pipe and tube segments were up year over year versus the first quarter of 2023. However, our carbon segment faced softer market conditions moving into 2024.

Andrew S. Greiff: The shipping volume for all segments was up sequentially from the fourth quarter of 2023, and the carbon in pipe and tube segments were up year over year versus the first quarter of 2023.

Andrew S. Greiff: Our carbon segment faced softer market conditions moving into 2024.

Andrew S. Greiff: Our team remained focused on cost control disciplines and furthered our customer, product, and process diversification initiatives to help maximize profitability amid these shifting market dynamics. We continue to expand our coded offerings beyond Metal Fab, and coded shipments are increasing. As Rick highlighted, we are actively leveraging our fabrication capabilities as a complement to our traditional distribution business. As a result of these efforts, our carbon segment led our businesses in profitability with EBITDA of $12.7 million.

Andrew S. Greiff: Our team remained focus on cost control disciplines, and furthered our customer product and process diversification initiatives to help maximize profitability amid these shifting market dynamics.

Andrew S. Greiff: We continued to expand our coded offerings beyond metal fab and coated shipments are increasing as Rick highlighted we are actively leveraging our fabrication capabilities as a complement to our traditional distribution business. As a result of these efforts our carbon segment led our business.

Andrew S. Greiff: <unk> and profitability with EBITDA of $12 7 million.

Andrew S. Greiff: At the start of the second quarter, we have the tailwind of announced steel mill price increases on flat roll products. This is typically our strongest period of the year from a demand perspective, and we expect to see stabilized demand throughout the second quarter. However, we do expect to see some margin compression on carbon products in the second quarter. The pipe and tube segment performed well in the first quarter with adjusted EBITDA of $10.3 million. The integration of the central tube and bar has gone well.

Andrew S. Greiff: At the start of the second quarter, we have the tailwind of announced steel mills price increases on flat rolled products. This is typically our strongest period of the year from a demand perspective, and we expect to see stabilized demand throughout the second quarter. However, we do expect to see some margin compression.

Andrew S. Greiff: On carbon products in the second quarter.

Andrew S. Greiff: The pipe and tube segment performed well in the first quarter with adjusted EBITDA of $10 3 million.

The integration of central tube and bar has gone well, we continue to upgrade our laser equipment, including enhancing production capabilities at CTV with a new laser that is expected to be operational in July.

Andrew S. Greiff: We continue to upgrade our laser equipment, including enhancing production capabilities at CTV with the new laser that is expected to be operational in July. Our legacy CTI business is also upgrading this year to a new jumbo laser that will replace two original tube lasers. These new lasers have an increased speed and efficiency rate of 30% as compared to the old equipment.

Our legacy <unk> business is also upgrading this year to a new jumbo laser that will replace two original tube lasers. These new lasers have been increased speed and efficiency rate of 30% as compared to the old equipment.

Andrew S. Greiff: Overall, our major capabilities put Olympic Steel in a strong position to win new opportunities and support our strategic objectives. For the past year and a half, the specialty metals segment has faced challenging market conditions, namely falling commodity prices and softer demand as the industry worked through elevated inventory levels. However, during the first quarter, we started to see signs of those headwinds waning.

Andrew S. Greiff: Overall.

Andrew S. Greiff: Capabilities put Olympic steel in a strong position to win new opportunities and support our strategic objectives.

Andrew S. Greiff: For the past year and a half the specialty metals segment has faced challenging market conditions, namely falling commodity prices and softer demand as the industry work through elevated inventory levels during.

During the first quarter, we started to see signs of those headwinds waning. We ended the quarter with our best reported volume since the first quarter of 2023, and this segment contributed $4 $9 million of EBITDA.

Andrew S. Greiff: We ended the quarter with our best reported volume since the first quarter of 2023, and the segment contributed $4.9 million of EBITDA. Looking ahead, we are optimistic as prices for both nickel, the primary driver of stainless surcharges, and aluminum were up in April, and we are anticipating another bump in the near term. Additionally, we are onboarding new business that we expect to ramp up in the second quarter. We are pleased with the progress our segments are making to execute on our diversification strategy. We expect 2024 to be another solid year for Olympic Steel and are confident in our ability to deliver profitable results in all market environments. Now, I'll turn the call over to Rich.

Andrew S. Greiff: Looking ahead, we are optimistic as prices for both nickel the primary driver of stainless surcharges and aluminum were up in April and we are anticipating another bump in the near term.

Andrew S. Greiff: Additionally, we are on boarding new business that we expect to ramp up in the second quarter.

Andrew S. Greiff: We are pleased with the progress our segments are making to execute on our diversification strategy. We expect 2024 to be another solid year for Olympic steel and are confident in our ability to deliver profitable results in all market environments now I will turn the call over to rich.

Richard A. Manson: Thank you, Andrew. As you've heard from Rick and Andrew, our team did an excellent job in the first quarter navigating pricing headwinds and shifting market dynamics to deliver solid performance to start the year. Before I discuss the results in more detail, I want to remind you that year-over-year comparisons are impacted by the October 2023 acquisition of Central Tube & Bar, whose results are included in our Pipe & Tube segment. For the first quarter, net income totaled $8.7 million compared with $9.9 million in the first quarter of 2023.

Richard A. Manson: Thank you Andrew as you've heard from Rick and Andrew our team did an excellent job in the first quarter to navigate pricing headwinds and shifting market dynamics to deliver solid performance to start the year.

Richard A. Manson: Before I discuss the results in more detail I want to remind you that year over year comparisons are impacted by the October 2023 acquisition of Central tube Inbar, whose results are included in our pipe and tube segment.

Richard A. Manson: For the first quarter net income totaled $8 $7 million compared with $9 $9 million in the first quarter of 2023.

Richard A. Manson: EBITDA in the quarter was $23.2 million compared to $23.9 million in the prior year period. First quarter 2024 results include $400,000 of LIFO expense compared with no LIFO adjustment in the first quarter of 2023. Consolidated operating expenses for the first quarter totaled $103.2 million, compared with $102.7 million in the first quarter of 2023. Our first quarter operating expenses reflect the addition of CTB, which does not report tons sold. Therefore, operating expenses per ton at the consolidated level and for the pipe and tube segment will appear higher year over year. As a reminder, we do not report tons sold for McCullough Industries, EZ Dumper, Metal Fab, Shaw Stainless, or the entire pipe and tube segment.

Richard A. Manson: EBITDA in the quarter was $23 2 million compared with $23 $9 million in the prior year period.

Richard A. Manson: First quarter 2024 results include $400000 of LIFO expense compared with no LIFO adjustment in the first quarter of 2023.

Richard A. Manson: Consolidated operating expenses for the first quarter totaled $103 2 million compared with $102 $7 million in the first quarter of 2023.

Richard A. Manson: Our first quarter operating expenses reflect the addition of CTV, which does not report tons sold therefore operating expenses per ton at the consolidated level and for the pipe and tube segment will appear higher year over year.

Richard A. Manson: As a reminder, we do not report tons sold for Mccullough industries, EZ dumper metal fab Shaw stainless or the entire pipe and tube segment.

Richard A. Manson: Consolidated operating expenses for the fourth quarter include $4 million of CTB operating expenses and $1.7 million of lower incentive expenses when compared with the first quarter of 2023. Our effective borrowing rate in the first quarter of 2024 is also impacted by the expiration of our interest rate hedge. Our balance sheet remains strong. We ended the year with debt of $197 million, an increase of $7 million since year-end. The additional debt was used to fund the $16 million increase in working capital during the quarter, which supported a 9% increase in sales sequentially from the fourth quarter.

Richard A. Manson: Consolidated operating expenses for the fourth quarter include $4 million of CTV operating expenses and $1 $7 million of lower incentive expenses when compared with the first quarter of 2023.

Richard A. Manson: Our effective borrowing rate in the first quarter of 2024 is also impacted by the expiration of our interest rate hedge.

Richard A. Manson: Our balance sheet remains strong we ended the year with debt of $197 million, an increase of $7 million since year end.

Richard A. Manson: The additional debt was used to fund the $16 million increase in working capital during the quarter, which supported a 9% increase in sales sequentially from the fourth quarter.

Richard A. Manson: We ended the quarter with availability of approximately $366 million, keeping us very well positioned to continue investing in higher return opportunities. Our capital expenditures totaled $4.8 million in the first quarter of 2024, compared with depreciation expense of $6 million. Equipment lead times remain long, and we estimate that 2024 capital expenditures will be approximately $30 million, as we continue to make investments in automation, fabrication, and equipment that result in higher gross margin opportunities and more consistent results. Our first quarter 2024 effective income tax rate was 27% compared to 26.8% in the same period last year. We expect our 2024 tax rate to be between 27.5 and 28.5 percent.

Richard A. Manson: We ended the quarter with availability of approximately $366 million, keeping us very well positioned to continue investing in higher return opportunities.

Richard A. Manson: Our capital expenditures totaled $4 8 million in the first quarter of 2024, compared with depreciation expense of $6 million equip.

Richard A. Manson: Equipment lead times remain long and we estimate that 2020 for capital expenditures will be approximately $30 million as we continue to make investments in automation and fabrication and equipment that results in higher gross margin opportunities and more consistent results.

Richard A. Manson: Our first quarter 2024 effective income tax rate was 27% compared to 26, 8% in the same period last year.

Richard A. Manson: We expect our 2024 tax rate to approximate 27, 5% to 28, 5%.

Richard A. Manson: In addition, we paid a quarterly dividend of $0.15 per share in the first quarter. This was an increase of $0.025 per share, or 20%, from the company's previous quarterly dividend. Our board of directors approved our next regular quarterly cash dividend of $0.15 per share, which is payable on June 17, 2024, to shareholders of record as of June 3, 2024. The company has paid regular quarterly dividends dating back to 2006. Before we open the call to your questions, I would like to thank the entire Olympic Steel team for all their efforts in the first quarter.

Richard A. Manson: In addition, we paid a quarterly dividend of <unk> 15 per share in the first quarter. This was an increase of $2.05 per share or 20% from the company's previous quarterly dividend.

Richard A. Manson: Our board of Directors approved our next regular quarterly cash dividend of <unk> 15 per share, which is payable on June 17th 2024 to shareholders of record as of June <unk> 2024. The company has now paid regular quarterly dividends dating back to 2006.

Speaker Change: Before we open the call for your questions I would like to thank the entire Olympic steel team for all their efforts in the first quarter, it's because of the team's hard work and dedication that Olympic steel remains in a strong operational and financial position and is equipped to invest an additional higher value growth opportunities and continue to advance our strategic plans.

Richard A. Manson: It's because of the team's hard work and dedication that Olympic Steel remains in a strong operational and financial position and is equipped to invest in additional higher value growth opportunities and continue to advance our strategic plans. Operator, we are now ready for questions.

Speaker Change: Operator, we are now ready for questions.

Operator: Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Again, that's star number one to register a question at this time. Today's first question is coming from Dave Storms of Stonegate. Please go ahead.

Thank you the floor is now open for questions. If you would like to ask a question. Please press star one on your telephone keypad at this time.

Speaker Change: Tony will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue.

Speaker Change: Disappoints using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.

Speaker Change: Again, Thats Star one to register a question at this time.

Speaker Change: First question is coming from Dave storms of Stonegate. Please go ahead.

David Joseph Storms: Fair enough.

David Joseph Storms: Good morning, Dave. Good morning. Thank you.

David Joseph Storms: Good morning, Dave Good morning.

Richard T. Marabito: I'm just hoping we can start with lead times. You mentioned in your remarks that they're still maybe a little longer than you'd like them to be. Is this a product of, you know, bringing in more value-added services? And if it is, at what point does automation start bringing those lead times down? Kind of where's the tipping point there?

David Joseph Storms: Just hoping we could start with lead times you mentioned in your remarks sensors still maybe a little longer.

David Joseph Storms: Like them to be.

David Joseph Storms: Is this a product.

David Joseph Storms: Bringing in more value added services and.

David Joseph Storms: At what point does automation start, bringing those lead times down, whereas the tipping point there.

So.

Richard T. Marabito: So, Dave, it's Rick. Is your question about our comment about longer lead times related to some of our CapEx equipment, or is it about our business levels, lead times with customers?

David Joseph Storms: David Rick is your question on our comment about lead longer lead times related to.

Some of our Capex equipment or is it or is it on our business levels lead times with customers.

David Joseph Storms: My understanding was that it was lead times for longer on business levels. If I have that wrong, Apologies.

Speaker Change: My understanding was that lead times are long run business levels, if I have that wrong apologies.

Richard T. Marabito: Yeah. I mean, I think our lead times are, I call them, pretty normal. Andrew, I don't know if we've been seeing any real difference over the quarter into the second quarter, but I think they're pretty stable. Yeah.

Speaker Change: Yeah.

Speaker Change: I mean, I think I think our lead times are I call them pretty normal Andrew I don't know.

Speaker Change: We have been seeing any real difference.

Speaker Change: Over the quarter into the second quarter, but I think they are pretty stable, but yes. They are.

Andrew S. Greiff: I would tell you that on the carbon side, lead times in hot roll are probably still in the four to five weeks, probably similar to a little bit longer tandem products or cold roll galvanized, more like six to seven weeks. On the specialty side, stainless and aluminum, about the same, probably four to five weeks. From us, certainly to our customers, we have a lot of JIT programs established. So in some cases, it's same-day deliveries, just depending on the customer and the agreements that we have.

Speaker Change: I would tell you that on the carbon side lead times in Hot roll is probably still in the four to five week probably similar.

Speaker Change: A little bit longer tandem products on cold rolled galvanized more like six to seven weeks on the specialty side.

Speaker Change: Stainless and aluminum about the same probably four to five weeks.

Speaker Change: From us certainly to our customers.

Speaker Change: A lot of JIT programs establish so in some cases, it's at the same day deliveries just depending on the customer and the agreements that we have.

Speaker Change: Understood. Thank you for the clarification there.

Richard T. Marabito: All right. Thank you for the clarification. One more question: how should we be thinking about price momentum going into Q2 and then beyond Q2, if you have any visibility there? Yeah, I would say on the carbon side, we've seen some...

Speaker Change: One more for me.

Speaker Change: How should we be thinking about price momentum going.

Speaker Change: Going into Q2 and then.

Speaker Change: Beyond Q2.

Speaker Change: Any visibility there.

Speaker Change: Yes, I would say on the carbon side, we've seen some stability in the market index pricing is down.

Andrew S. Greiff: On the carbon side, we've seen some stability in the market. Index pricing is down a little bit, but we've seen some stability in carbon. We're encouraged by stainless and aluminum. Nickel and aluminum have both shown some strength in the past couple of weeks. We anticipate that we'll see more stability as we head through the second quarter, so we feel pretty good.

Speaker Change: Little bit but.

Speaker Change: We've seen some stability in the carbon we're encouraged.

Speaker Change: Stainless and aluminum nickel and aluminum have both shown some strength.

Speaker Change: In the past couple of weeks.

Speaker Change: We anticipate that we will see.

More stability as we head through the second quarter, So we feel pretty good.

Alan W. Weber: Thank you. Our next question is coming from Alan Weber of Rabati Advisors. Please go ahead.

Thank you. Our next question is coming from Alan Weber of her body advisors. Please go ahead.

Alan Weber: Good morning can you talk about one is just maintenance capital spending and then in terms of.

Alan Weber: Acquisitions could you just talk about how you're thinking about things today, and what's changed given where the economy is et cetera.

Richard A. Manson: Sure. Good morning, Alan.

Alan Weber: Sure good morning elements rich with respect to Capex.

Alan W. Weber: It's Rich. With respect to CapEx, maintenance CapEx is between $7 and $10 million per year. And, as we indicated in the prepared comments, we expect to spend about $30 million this year. And I think we have POs out there for quite a bit. It's just that in the prepared comments, we indicated that it's a particularly long lead time to get processing equipment. Now, I'll let Rick answer the question about M&A. Yeah, thanks, Alan.

Alan Weber: Maintenance Capex is between 7% and $10 million per year and as we indicated in the prepared comments, we expect to spend about $30 million this year and.

I think we have pose out there for quite a bit. It just added the prepared comments, we indicated that it's a particular long lead time to get processing equipment now I'll, let Rick answer the question on M&A, Yes. Thanks, Alan Good question on the M&A.

Richard T. Marabito: So we saw a bit of just in general I think the M&A market.

Really contracted towards the end part of last year and as we open this year and I think part of that was.

Some of the.

Richard T. Marabito: That may be of higher interest rates.

Richard T. Marabito: As you know and we've talked a lot about it.

Richard T. Marabito: Strategically we will continue to aggressively look at growth.

Richard T. Marabito: Both from internal.

Richard T. Marabito: Capex growth and acquisitions. So we've remained very active in terms of looking.

Richard T. Marabito: What I'd say is probably in the last month to six weeks, we've seen the M&A market in general start to open up more.

Richard T. Marabito: The reasoning behind that I think it may be.

Richard T. Marabito: People are settling in at what.

Richard T. Marabito: The federal funds rate is.

Richard T. Marabito: Even if we're not going to go down here.

Richard T. Marabito: In the near term in the next couple of quarters. I think is always businesses adjusted valuations adjust and and I think thats whats happened. So we're starting to really see.

Richard T. Marabito: Larger inflow into the pipeline, which is really good.

Richard T. Marabito: As I've said numerous times, we anticipate.

Richard T. Marabito: Being continuing to be successful you know we've made six acquisitions in the last five years.

Richard T. Marabito: We would we would fully intend to stay on that trend.

Richard T. Marabito: We will also stay disciplined.

Richard T. Marabito: We'll look for target companies that are similar to what you've seen in our recent track record.

Richard T. Marabito: That are high performing companies, good fits and immediately accretive to Olympics. So.

Richard T. Marabito: That's kind of a snapshot of what we're seeing.

Richard T. Marabito: And just my last question, when you look out long-term, has anything changed in your view in terms of, you know, the quote-unquote infrastructure spending and on-shoring and like that?

Richard T. Marabito: And just my last question when you look out long term.

Richard T. Marabito: <unk> changed in your view in terms of you know.

The quote unquote infrastructure spending and onshoring and like that.

Richard T. Marabito: Yeah, I think the only thing that's probably changed over the three years since the government announced a lot of funding is probably just the time that it's going to take to get all the money spent. And some of it isn't just releasing the money; it's really the labor situation and the ability to get these projects done. So I would say the good news coming out of that is that I think the spend and the cycle will maybe be a little bit longer than maybe we had thought three years ago.

Richard T. Marabito: Yeah, I think the only thing thats probably changed over the three years.

Richard T. Marabito: The government announced a lot of funding is probably just the time that it's going to take to get all the money spent.

Richard T. Marabito: And some of it isn't just releasing the money, it's really the the labor situation and the ability.

Richard T. Marabito: To get these projects done so I would say the good news coming out of that is I think the spend and the cycle will maybe be a little bit longer than maybe what we had thought three years ago.

Richard T. Marabito: We're seeing that in certain pockets pockets we.

Richard T. Marabito: And, you know, we're seeing that in certain pockets. We, you know, the build out of the data centers; we're a supplier to that. And, you know, that looks pretty robust over the coming years. But, you know, in that cycle, there's some ebbs and flows in terms of, you know, how that happens. And a lot of it isn't just based on the money; it's based on the labor and the ability to get these projects done.

Richard T. Marabito: The build out of the data centers, where a supplier into that and.

Richard T. Marabito: That looks pretty robust over the coming years, but.

Richard T. Marabito: In the in that cycle, there's some ebbs and flows in terms of.

Richard T. Marabito: How that happens in a lot of it is isn't just based on the money. It's based on the labor and the ability to get these projects done, but and then the second part I mean, Andrew I think you can talk about what we're seeing from our customers and certainly the tie into our strategy.

Richard T. Marabito: And then the second part, I mean, Andrew, I think you can talk about what we're seeing from our customers and certainly the tie into our strategy of outsourcing and bringing more work to us in terms of our capabilities.

Outsourcing and bringing more work to us in terms of our capabilities. So we've certainly seen the industrial Oems has been doing more outsourcing as as we've seen more onshoring taking place.

Andrew S. Greiff: Yes, so we've certainly seen industrial OEMs have been doing more outsourcing as we've seen more on-shoring taking place. As Rick talked about, labor, I think, is going to continue to be a little bit of a challenge on the industrial side. And I think for us, we're in a really good position with existing customers and new customers to take advantage of these fabrication opportunities. Rick also talked about data centers. We've certainly been a player in that part of it, more on the tube side of it, and think that's going to really continue to grow over the next, certainly two to five.

Speaker Change: As Rick talked about labor I think is going to continue.

Speaker Change: On the industrial side to be a little bit of a challenge.

Speaker Change: And I think for us where we're in a really good position with existing customers and new customers.

Speaker Change: To take advantage of these fabrication opportunities Rick also talked about data centers.

Speaker Change: Ben.

Speaker Change: Certainly a player in that part of it more on the on the tube side of it and figure that's going to really continue to grow over the next.

Speaker Change: Certainly two to five years.

Speaker Change: Okay, great. Thank you very much.

Alan W. Weber: Okay, great. Thank you very much.

Joichi Sakai: Thank you. The next question is coming from Chris Sakai of Singular Research.

Speaker Change: Thank you. The next question is coming from.

Speaker Change: Chris Sakai of singular research. Please go ahead.

Joichi Sakai: Hi, good morning. One of the things I wanted to ask you about inventory levels. How should we be thinking about them throughout the year?

Joichi Sakai: Hi, good morning, good morning.

Joichi Sakai: Good morning, Chris.

Joichi Sakai: Wanted to ask about inventory levels, how should we be thinking about them.

Joichi Sakai: About the year.

Joichi Sakai: Yeah.

Andrew S. Greiff: Well, we think we're at appropriate levels today, really, across the board. And I think as lead times continue to, I would say, Chris. To be at normal levels again, we see hot roll in the four to five week, cold roll in the six week, stainless and aluminum in the four to five weeks. I think we'll get back to traditional inventory turns. We target certainly five times turns, and we think we'll certainly be there. And I think for the second half of the year, I think we'll be in good shape inventory-wise.

Joichi Sakai: While we think we are in.

Joichi Sakai: Were at appropriate levels today really across the board.

Joichi Sakai: And I think as lead times continue.

Joichi Sakai: <unk>.

Speaker Change: I would say Chris.

Speaker Change: Be at normal levels again, we see hot rolled in the four to five week cold roll and the six week stainless and aluminum in four to five week I think we.

Speaker Change: We will get back to traditional inventory turns we target.

Speaker Change: Suddenly five times turns and we think.

We'll certainly be there.

Speaker Change: And I think for the second half of the year I think we'll be we'll be in good shape inventory wise.

Joichi Sakai: Okay, thanks. Thanks for that. Can you comment on the quarterly cadence for capital expenditures for the next three quarters? Yeah, sure, Chris, as I indicated in

Speaker Change: Okay. Thanks, Thanks for that.

Speaker Change: On the quarterly cadence of capital expenditures for the next three quarters.

Richard A. Manson: Yeah, sure, Chris, as I indicated in our comments, we think that the full-year spend will be in the $30 million range. We've just been, you know, we've ordered a lot of equipment, it's just taking a long time, the lead times are long to get it in. But I think that number's a solid number to use for the full-year forecast.

Yes, sure Chris as I indicated in our comments, we think that the full year spend will be in the $30 million range.

Speaker Change: We've just been.

Speaker Change: We've ordered a lot of equipment, it's just taking a long time and the lead times are long to get it in but.

Joichi Sakai: That number's, a solid number to use for the full year forecast.

Okay. Thanks.

Operator: Once again, ladies and gentlemen, if you do have a question, please press star 1 on your telephone keypad at this time. We'll pause for any additional questions. We're showing no additional questions in queue at this time. I would like to turn the floor back over to Mr. Marabito for closing.

Once again, ladies and gentlemen, if you do have a question. Please press star one on your telephone keypad at this time, we will pause a moment for any additional questions.

Speaker Change: Were showing no additional questions in queue at this time I would like to turn the floor back over to Mr. <unk> for closing.

Richard T. Marabito: Thank you, Operator, and thank you all for joining us on our call this morning. We certainly appreciate your continued interest in Olympic Steel, and we look forward to speaking with you again next quarter.

Speaker Change: Thank you operator, and thank you all for joining us on our call. This morning. We certainly appreciate your continued interest in Olympic Steel and we look forward to speaking with you again next quarter have a nice day. Thank you.

Operator: Have a nice day. Ladies and gentlemen, this concludes today's event. You may disconnect your lines and log off the webcast at this time and enjoy the rest of your day.

Operator: ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??

Speaker Change: Ladies and gentlemen, thank you for your participation. This concludes today's event you may disconnect. Your lines have a log off the webcast at this time and enjoy the rest of your day.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Uh huh.

Speaker Change: Okay.

[music].