Q2 2024 Olympic Steel Inc Earnings Call
Operator: Good morning, and welcome to the Olympic Steel 2024 second quarter financial resources conference call. At this time, all participants are in a listen-only mode. 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. Please note, this conference call is being recorded. At this time, I would like to hand the conference call over to Rich Manson, Chief Financial Officer at Olympic Steel. Please go ahead, sir.
Good morning, and welcome to the Olympic Steel 2024 second quarter financial results Conference call.
Speaker Change: At this time all participants are in a listen only mode.
Operator: A question after the session will follow the formal prioritization. If anyone wants to require operators to assist in doing a conference, please press start below on your telephone keypad. Please note this conference is being recorded.
Question and answer session will follow the formal presentation, if any what should be quiet operate assistance. During the conference. Please press star zero on your telephone keypad. Please note. This call is being recorded.
Rich Manson: At this time, I would like to hand the conference call over to Rich Manson, Chief Financial Officer at Olympic Steel. Please go ahead, sir.
At this time I would like to hand, the conference call over to Rich Manson Chief Financial Officer at Olympic Steel. Please go ahead Sir.
Richard Manson: Thank you, Operator. Welcome to Olympic Steel's earnings call for the second 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.
Rich Manson: Thank you, operator.
Rick Marabito: Welcome to Olympic Steel's earnings call for the second 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.
Thank you operator, welcome to Olympic Steel's earnings call for the second 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 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 financial 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.
Rick Marabito: Before we begin, I have a few reminders. Some statements made on today's call will be 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 company's reports on forms 10-K and 10-Q, and the press releases filed with the Securities and Exchange Commission.
Speaker Change: 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 imports.
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.
Rick Marabito: During today's discussion, we may refer to adjusted net income for 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 financial measures is provided in the press release that was issued last night and can be found on our website.
Speaker Change: 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 financial measures is provided in the press release that was issued last night and can be found on our website.
Rick Marabito: Today's live broadcast will be archived and available for replay on Olympic Steel's website.
Today's live broadcast will be archived and available for replay on Olympic steels website.
Rick Marabito: At this time, I'll turn the call over to Rick. Thank you, Rich, and good morning, everyone. Thank you for joining us today to discuss Olympic Steel's 2024 second quarter results. I'll begin by summarizing our results for the second quarter. I'll all three of our segments deliver profitable results, despite a challenging pricing environment. And I'll talk about how our diversified offerings and end products are richer, higher margin, mix of flat roll products and additional fabrication capabilities are all helping to drive that profitability.
Richard Manson: At this time, I'll turn the call over to Rick. Thank you, Rich. And good morning, everyone.
Speaker Change: At this time I'll turn the call over to Rick.
Rick Marabito: Thank you for joining us today to discuss Olympic Steel's 2024 second quarter results. I'll begin by summarizing our results for the second quarter and how all three of our segments delivered profitable results despite a challenging pricing environment. And I'll talk about how our diversified offerings and end product, a richer, higher-margin mix of flat roll products and additional fabrication capabilities are all helping to drive that profitability. Andrew will then review our segment performance, and following that, Rich will discuss our financial results in more detail.
Rick Mirabito: Thank you rich and good morning, everyone.
Rick Mirabito: Thank you for joining us today to discuss Olympic Steel's 2024 second quarter results.
Rick Mirabito: I'll begin by summarizing our results for the second quarter, how all three of our segments delivered profitable results, despite a challenging pricing environment.
Rick Mirabito: And I'll talk about how our diversified offerings and end products.
Speaker Change: A richer higher margin mix of flat rolled products and additional fabrication capabilities are all helping to drive that profitability.
Rick Marabito: Andrew will then review our second performance, and following that, Rich will discuss our financial results in more detail, and then, as always, we'll open up the call for your questions. Olympic Steel's ability to deliver solid results in a time when the steel industry is facing significant pricing pressure is a true testament to the success of our diversification strategy. For perspective, the hot rolled index pricing felt 22% during the second quarter alone, and 39% since the beginning of the year. Despite this challenging pricing environment, we increased our shipping volume and reported sales of $526 million, with net income of $50 million and $22 million of VBTA.
Speaker Change: Andrew will then review our segment performance and following that rich will discuss our financial results in more detail and then as always we'll open up the call for your questions.
Rick Marabito: And then, as always, we'll open up the call for your questions. Olympic Steel's ability to deliver solid results at a time when the steel industry is facing significant pricing pressure is a true testament to the success of our diversification strategy. For perspective, the hot rolled index price fell 22% during the second quarter alone and 39% since the beginning of the year.
Speaker Change: Olympic Steel's ability to deliver solid results at a time when the steel industry is facing significant pricing pressure is a true testament to the success of our diversification strategy.
Rich Manson: For perspective, the hot rolled index pricing fell 22% during the second quarter alone and 39% since the beginning of the year.
Rick Marabito: Despite this challenging pricing environment, we increased our shipping volume and reported sales of $526 million with a net income of $50 million and $22 million in EBITDA. Our teams continue to drive profitability across all three of our business sectors; our efforts to grow and expand and manufacture products, higher-margin flat roll products, including coated carbon, and additional fabrication capabilities have strengthened our business and made us more resilient to market downturns and pricing pressures.
Speaker Change: Despite this challenging pricing environment, we increased our shipping volume and reported sales of $526 million with net income of $50 million and $22 million of EBITDA.
Rick Marabito: Our teams continue to drive profitability across all three of our business sites.
Rich Manson: Our teams continue to drive profitability across all three of our business segments, our efforts to grow and expand and manufactured products higher margin flat rolled products, including coated carbon.
Rick Marabito: statements. Our efforts to grow and expand and manufacture products, higher margin flat role products, including coated carbon, and additional fabrication capabilities have strengthened our business and make us more resilient to market downturns and pricing pressures. We continue to proactively identify and evaluate additional opportunities for growth, especially in higher-return product lines that further our diversification strategy. We're in an excellent financial position to make these investments, with more than $340 million in borrowing availability under our existing credit facility.
Speaker Change: An additional fabrication capabilities have strengthened our business and make us more resilient to market downturns and pricing pressures.
Rick Marabito: We continue to proactively identify and evaluate additional opportunities for growth, especially in higher-return product lines that further our diversification strategy. We're in an excellent financial position to make these investments, with more than $340 million in borrowing availability under our existing credit facility.
Speaker Change: We continued to proactively identify and evaluate additional opportunities for growth.
Rich Manson: Especially in higher return product lines that further our diversification strategy.
Speaker Change: We're in an excellent financial position to make these investments with more than $340 million in borrowing availability under our existing credit facility.
Rick Marabito: Later in the call, Rich will highlight how we're investing in new equipment and CAPX. Additionally, our team has an impressive track record of acquiring well-run businesses that are the right fit for Olympic Steel, as well as successfully integrating these companies' post-acquisition. We hope to continue to build on this success, as we've seen M&A opportunities increasing as the year progresses. Looking ahead to the second half of 2024, we remain focused on profitability and delivering on our disciplines around working capital and operating efficiencies. While we expect market conditions to remain challenging in the near-term, we are optimistic about the future of the domestic metals industry and remain confident that Olympic Steel is positioned to navigate short-term pressures to deliver consistent results for our shareholders.
Rick Marabito: Later in the call, Rich will highlight how we're investing in new equipment and CapEx. Additionally, our team has an impressive track record of acquiring well-run businesses that are the right fit for Olympic Steel, as well as successfully integrating these companies post-acquisition. We hope to continue to build on this success as we've seen M&A opportunities increase as the year progresses. Looking ahead to the second half of 2024, we remain focused on profitability and delivering on our disciplines around working capital and operating efficiency.
Speaker Change: Later in the call Rich will highlight how we're investing in new equipment and Capex. Additionally, our team has an impressive track record of acquiring well run businesses that are the right fit for Olympic steel as well as successfully integrating these companies post acquisition.
Rich Manson: We hope to continue to build on this success as we've seen M&A opportunities increasing as the year progresses.
Speaker Change: Looking ahead to the second half of 2024, we remain focused on profitability and delivering on our disciplines around working capital and operating efficiencies, while we expect market conditions to remain challenging in the near term we are optimistic about the future of the domestic metals industry and remain.
Rick Marabito: While we expect market conditions to remain challenging in the near term, we are optimistic about the future of the domestic metals industry and remain confident that Olympic Steel is positioned to navigate short-term pressures to deliver consistent results for our shareholders. Before I turn the call over to Andrew, I'd like to mention that we published our latest corporate responsibility report in June, and that can be found on our website. We are indeed proud of our progress and commitments in areas such as safety, team and culture, and environmental responsibility. I also want to take a moment to celebrate our incredible team and another milestone.
Speaker Change: Confident that Olympic steel is positioned to navigate short term pressures to deliver consistent results for our shareholders.
Rick Marabito: Before I turn the call over to Andrew, I like to mention that we published our latest Corporate Responsibility report in June, and that can be found on our website. We are indeed proud of our progress in commitment in areas such as safety, team and culture, and environmental responsibility.
Speaker Change: Before I turn the call over to Andrew I'd like to mention that we published our latest corporate responsibility report in June and that can be found on our website.
Speaker Change: R&D proud of our progress and commitments in areas, such as safety team and culture and environmental responsibility.
Rick Marabito: I also want to take a moment to celebrate our incredible team and another milestone. 2024 marks the 70th anniversary of Olympic Steel's formation in Cleveland, Ohio. I'm so proud of the company and the culture we've built together. We're stronger than ever because our team and their dedication to our organization, to our customers and business partners, and to our shareholders.
Speaker Change: I also wanted to take a moment to celebrate our incredible team and another milestone two.
Rick Marabito: 2024 marks the 70th anniversary of Olympic Steel's formation in Cleveland, Ohio. I'm so proud of the company and the culture we've built together. We're stronger than ever because of our team and their dedication to our organization, to our customers and business partners, and to our shareholders. I'll now turn the call over to Andrew. Thank you, Rick, and good morning, everyone.
Speaker Change: 2024 marks the 70 <unk> anniversary of Olympic Steels formation in Cleveland, Ohio, I'm, So proud of the company and the culture, we built together with.
Speaker Change: We're stronger than ever because our team.
Speaker Change: And their dedication to our organization to our customers and business partners and to our shareholders I will now turn the call over to Andrew.
Andrew Greiff: I'll now turn the call over to Andrew. Thank you, Rick, and good morning, everyone. As Rick mentioned, we had a profitable quarter with all three segments contributing to our solid results. We continue to see that our diversification strategy has made Olympic Steel a stronger and more resilient company. Our addition of value added end product manufacturing companies provide counter-cyclical benefit during falling metals pricing markets.
Andrew Greiff: As Rick mentioned, we had a profitable quarter with all three segments contributing to our solid result. We continue to see that our diversification strategy has made Olympic Steel a stronger and more resilient company. Our edition of value-added end product manufacturing companies provides a counter-cyclical benefit during falling metals prices markets. Now I'll provide some detail on each segment's results.
Andrew Greiff: Thank you Rick and good morning, everyone as Rick mentioned, we had a profitable quarter with all three segments contributing to our solid results.
Andrew Greiff: We continue to see that our diversification strategy has made Olympic steel a stronger and more resilient company.
Andrew Greiff: Our addition of value added end product manufacturing companies provides counter cyclical benefit during falling metals pricing markets now I'll provide some detail on each segment's results.
Andrew Greiff: Now, I'll provide some detail on each segment's results. First in our carbon segment, we continue to face challenging market conditions in the second quarter because of the pricing pressures we have noted, as well as softer-than-anticipated demand from some larger OEM customers. The good news is that the team was able to grow the business despite this pressure on pricing and demand. Carbon shipping volumes improved 1.2% year over year and 4.3% sequentially from the first quarter of 2024. The carbon segment also led the way in profitability, generating $9.5 million in the EBITDA in the second quarter of 2024.
Andrew Greiff: First, in our carbon segment, we continue to face challenging market conditions in the second quarter because of the pricing pressures we have noted, as well as softer-than-anticipated demand from some larger OEM customers. The good news is that the team was able to grow the business despite this pressure on pricing and demand. Carbon shipping volumes improved 1.2% year-over-year and 4.3% sequentially from the first quarter of 2024. The carbon segment also led the way in profitability, generating $9.5 million in EBITDA in the second quarter of 2024.
Speaker Change: First in our carbon segment, we continued to face challenging market conditions in the second quarter because of the pricing pressures, we have noted as well as softer than anticipated demand from some larger OEM customers. The good news is that the team was able to grow the business. Despite this pressure on pricing and demand.
Speaker Change: Carbon shipping volumes improved one 2% year over year and four 3% sequentially from the first quarter of 2020 for the carbon segment also led the way and profitability generating $9 5 million and EBITDA in the second quarter of 2024.
Andrew Greiff: Our end product manufacturing companies had a strong quarter, increasing their EBITDA margins as their cost of goods sold fell as metal pricing declined. Again, highlighting the countercyclical benefit to profitability of our end product manufacturing capabilities. Also, critical to our success is the continued expansion of our coded business, which has a high gross margin profile than base hot roll carbon steel. In the first half of 2024, our coded shipments increased 32 percent versus a 3 percent increase for the industry. Coded products now represent 12 percent of our overall product mix. We are continuing to win new fabrication business led by Max Fitzgerald. Our new fabrication team structure and consistency of process are accelerating growth that provides margin stability during periods of falling metals pricing.
Andrew Greiff: Our end product manufacturing companies had a strong quarter, increasing their EBITDA margins as their cost of goods sold fell as metal prices declined, again highlighting the counter-cyclical benefit to profitability of our end product manufacturing capability. Also, critical to our success is the continued expansion of our coated business, which has a higher gross margin profile than base hot roll carbon steel. In the first half of 2024, our coated shipments increased 32% versus a 3% increase for the industry. Coated products now represent 12% of our overall product mix.
Speaker Change: Sure.
Speaker Change: Our end product manufacturing companies had a strong quarter, increasing their EBITDA margins as their cost of goods sold fell as metal pricing declined again, highlighting the counter cyclical benefit to profitability of our end product manufacturing capabilities.
Speaker Change: Also critical to our success is the continued expansion of our coated business, which has a higher gross margin profile than base hot rolled carbon steel.
Speaker Change: In the first half of 2020 for our coated shipments increased 32% versus a 3% increase for the industry coated products now represents 12% of our overall product mix.
Andrew Greiff: We are continuing to win new fabrication business; led by Max Fitzgerald, our new fabrication team structure and consistency of process are accelerating growth that provides margin stability during periods of falling metals prices. Our expanded fabrication capabilities also add market growth potential and the outsourcing of labor and supply chain dynamics in this post-COVID economy. The pipe and tube segment posted solid results in the second quarter of 2024 with adjusted EBITDA of $7.7 million, including an 8.5% increase in shipping volume year over year.
Max Fitzgerald: We are continuing to win new fabrication business led by Max Fitzgerald, our new fabrication team structure and consistency of process.
Speaker Change: Creating growth that provides margin stability during periods of falling metals pricing.
Andrew Greiff: Our expanded fabrication capabilities also add market growth potential in the outsourcing of labor and supply chain dynamics in this post-COVID economy.
Speaker Change: Our expanded fabrication capabilities also add market growth potential and the outsourcing of labor and supply chain dynamics in this post COVID-19 economy.
Andrew Greiff: The Pipe and Tube segment posted solid results in the second quarter of 2024, with adjusted EBITDA of $7.7 million, including an 8.5 percent increase in shipping volume year over year. Our strategy to expand our value added services has increased our margins and allowed us to maintain profitability in declining hot roll steel markets. The integration of central tube and bar continues to go well, and that business will continue to help drive our Pipe and Tube margins going forward. Our enhance their production capabilities, which services the value added portion of our business. During the first half of 2024, our CTI operation in Romeoville, Illinois, added a new 6-axis tube laser, and CTV is slated to add a new tube laser in the third quarter of 2024.
Speaker Change: The pipe and tube segment posted solid results in the second quarter of 2024, with adjusted EBITDA of $7 $7 million, including an eight 5% increase in shipping volume year over year.
Andrew Greiff: Our strategy to expand our value-added services has increased our margins and allowed us to maintain profitability in declining hot-roll steel markets. The integration of central tube and bar continues to go well, and that business will continue to help drive our pipe and tube margins going forward. Our legacy pipe and tube business and the central tube and bar facility continue to enhance their production capabilities, which services the value-added portion of our business. During the first half of 2024, our CTI operation in Romeoville, Illinois, added a new 6-axis tube laser, and CTB is slated to add a new tube laser in the third quarter of 2024.
Speaker Change: Our strategy to expand our value added services has increased our margins and allowed us to maintain profitability and declining hot roll steel markets. The.
Speaker Change: The integration of central tube and bar continues to go well and that business will continue to help drive our pipe and tube margins going forward.
Speaker Change: Our legacy pipe and tube business and the central tube and bar facility continued to enhance their production capabilities, which services the value added portion of our business.
Speaker Change: During the first half of 2020.
Speaker Change: Our <unk> operation in Romeoville, Illinois added a new six axis tube laser in CTV is slated to add new tube late in the third quarter of 2024, our ability to provide quick turnaround of quality fabricated parts has enabled us to win more of this business further.
Andrew Greiff: Our ability to provide quick turnaround of quality fabricated parts has enabled us to win more of this business, furthering our growth and higher return strategy. The specialty metals segment experienced its best quarter for both volume and profitability since the first quarter of 2023. Shipping volumes during the second quarter of 2024 increased 10.4% year-over-year and 6% sequentially from the first quarter of 2024. The segment contributed $8.8 million of EVTA during the quarter.
Andrew Greiff: Our ability to provide quick turnaround of quality fabricated parts has enabled us to win more of this business, furthering our growth and higher return strategy.
Andrew Greiff: The specialty metals segments experience its best quarter, but both volume and profitability since the first quarter of 2023. Shipping volumes during the second quarter of 2024 increased 10.4 percent year over year and 6 percent sequentially from the first quarter of 2024. The segment contributed $8.8 million of EBITDA during the quarter. Overall, we are pleased with the team's ability to win new business and deliver profitable results in the challenging environment.
Speaker Change: During our growth in higher return strategy the.
Speaker Change: The specialty metals segment experienced its best quarter for both volume and profitability since the first quarter of 2023 shipping volumes during the second quarter of 2024 increased 10, 4% year over year and 6% sequentially from the first quarter of 2020 for the <unk>.
Rich Manson: Overall, we are pleased with the team's ability to win new business and deliver profitable results in a challenging environment. As we navigate an uncertain market in the second half of 2024, we will continue to focus on the things we can control. Operating expense and inventory discipline, along with superior customer service, will remain at the forefront. Now, I'll turn the call over to Rich. Thank you, Andrew.
Speaker Change: <unk> contributed $8 8 million of EBITDA during the quarter overall.
Speaker Change: Overall, we are pleased with the team's ability to win new business and deliver profitable results in a challenging environment as we navigate an uncertain market in the second half of 2024, we will continue to focus on the things we can control operating expense and inventory discipline, along with superior customer service.
Andrew Greiff: As we navigate an uncertain market in the second half of 2024, we will continue to focus on the things we can control. Operating expense and inventory discipline, along with superior customer service, will remain at the forefront.
Rich Manson: Now, I'll turn the call over to Rich. Thank you, Andrew. As you heard from Rick and Andrew, all three segments contributed to our profitability despite the challenging market conditions. Our second quarter results reflect the impact of our diversification strategy and our team's continued execution of our operating discipline.
Speaker Change: <unk> will remain at the forefront.
Rich Manson: As you heard from Rick and Andrew, all three segments contributed to our profitability despite the challenging market conditions. Our second quarter results reflect the impact of our diversification strategy and our team's continued execution of our operating discipline. Before I discuss the results in more detail, I want to remind everyone 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 second quarter, net income totaled $7.7 million compared with $15 million in the second quarter of 2023. EBITDA in the quarter was $22.3 million, compared with $32.2 million in the prior year period.
Speaker Change: Now I'll turn the call over to rich.
Rich Manson: Thank you Andrew as you heard from Rick and Andrew All three segments contributed to our profitability. Despite the challenging market conditions, our second quarter results reflect the impact of our diversification strategy and our team's continued execution of our operating disciplines.
Rich Manson: Before I discuss the results in more detail, I want to remind everyone that your over-year comparisons are impacted by the October 2023 acquisition of Central Tube and Bar, whose results are included in our pipe and tube segments. For the second quarter, net income totaled $7.7 million compared with $15 million in the second quarter of 2023. EBITDA in the quarter was $22.3 million compared with $32.2 million in the prior year period. Both the second quarter of 2024 and 2023 include $1 million of LIFO pre-tax income. Consolidated operating expenses for the second quarter totaled $104.6 million compared with $101.6 million in the second quarter of 2023.
Rich Manson: Both the second quarter of 2024 and 2023 include $1 million of LIFO pre-tax income. Consolidated operating expenses for the second quarter totaled $104.6 million compared with $101.6 million in the second quarter of 2023. Our second quarter operating expenses reflect the addition of central tube and bar, 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 McCulloch Industries, EZ Dumper, Metal Fab, Shaw Stainless, or the entire pipe and tube segment.
Speaker Change: Before I discuss the results in more detail I want to remind everyone 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.
Speaker Change: For the second quarter net income totaled $7 $7 million compared with $15 million in the second quarter of 2023.
Speaker Change: EBITDA in the quarter was $22 3 million compared with $32 $2 million in the prior year period also.
Speaker Change: Both the second quarter of 2024, and 2023 include $1 million of LIFO pretax income.
Speaker Change: Consolidated operating expenses for the second quarter totaled $104 6 million.
Speaker Change: <unk> compared with $101 $6 million in the second quarter of 2023.
Rich Manson: Our second quarter operating expenses reflect the addition of Central Tube and Bar, 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 from Acola Industries, Easy Dumber, Metal Fab, Shaw Stamless, or the entire pipe and tube segment. Consolidated operating expenses for the second quarter included $4 million of CTB operating expenses and $1.8 million of lower incentive expenses when compared with the second quarter of 2023. Our effective borrowing rate in the second quarter of 2024 is also higher due to the expiration of our interest rate hedge.
Speaker Change: Our second quarter operating expenses reflect the addition of central tube and bar, 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.
Speaker Change: As a reminder, we do not report tons sold from Mccullough industries, EZ dumper metal fab Shah stainless or the entire pipe and tube segment.
Rich Manson: Consolidated operating expenses for the second quarter included $4 million of CTB operating expenses and $1.8 million of lower incentive expenses when compared with the second quarter of 2023. Our effective borrowing rate in the second quarter of 2024 was also higher due to the expiration of our interest rate hedge. We ended the quarter with total debt of $209 million, an increase from $190 million at year-end.
Speaker Change: Consolidated operating expenses for the second quarter included $4 million of CTV operating expenses and $1 $8 million of lower incentive expenses when compared with the second quarter of 2023.
Speaker Change: Our effective borrowing rate in the second quarter of 2024 is also higher due to the expiration of our interest rate hedge.
Rich Manson: We ended the quarter with total debt of $209 million and increased from $190 million at year-end. This increase was driven by our need to fund higher levels of working capital during the first half of 2024. We continue to have access to more than $340 million in additional borrowing availability to support investments and higher return opportunities. Our capital expenditures for the first half of 2024 are about $13.2 million compared with depreciation of $11.8 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 results in higher gross margin opportunities and more consistent results.
Speaker Change: We ended the quarter with total debt of $209 million, an increase from $190 million at year end. This increase was driven by our need to fund higher levels of working capital during the first half of 2024.
Rich Manson: This increase was driven by our need to fund higher levels of working capital during the first half of 2024. We continue to have access to more than $340 million in additional borrowing availability to support investments in higher return opportunities. Our capital expenditures for the first half of 2024 totaled $13.2 million compared with depreciation of $11.8 million. Equipment lead times remain long, and we estimate that our 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.
Speaker Change: We continue to have access to more than $340 million in additional borrowing availability to support investments in higher return opportunities.
Speaker Change: Our capital expenditures for the first half of 2024 totaled $13 2 million compared with depreciation of $11 8 million.
Speaker Change: 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.
Rich Manson: As noted in our earnings release last night, we recently ordered two new cut-to-length lines and one high-speed splitter to further expand our efforts in our coded and specialty metals product lines.
Rich Manson: As noted in our earnings release last night, we recently ordered two new cut-to-length lines and one high-speed splitter to further expand our efforts in our coated and specialty metals product line. The majority of the cash flow associated with those expenditures will occur in 2025 and early 2026. Additionally, during the first half of 2024, we added additional leased flat-rolled laser capacity in our Cleveland operation and leased tube laser capacity in our Romeoville location.
Speaker Change: As noted in our earnings release last night, we recently ordered two new cut to length, <unk> and one high speed splitter to further expand our efforts in our coated and specialty metals product lines.
Rich Manson: The majority of the cash flow associated with those expenditures will occur in 2025 and early 2026. During the first half of 2024, we added additional least flat-rolled laser capacity in our Cleveland operation and least two-blaser capacity in our Romeoville location. We will add additional least two-blaser capacity at CTB during third quarter of 2024. The leasing of these value-added laser lines is not reflected in our CAPX numbers, but is included in our operating expenses. Our second quarter 2024 effective income tax rate was 28.4%, compared to 30.3% in the same period last year. We expect our 2024 tax rate to approximate 28-29%.
Speaker Change: The majority of the cash flow associated with those expenditures will occur in 2025 and early 2026 <unk>.
Speaker Change: During the first half of 'twenty 'twenty four we added additional leased flat rolled laser capacity in our Cleveland operation and least tube laser capacity in our romeoville location, we will add additional leased two blazer capacity at CTV during the third quarter of 2024.
Rich Manson: We will add additional leased tube laser capacity at CTB during the third quarter of 2024. The leasing of these value-added laser lines is not reflected in our CapEx numbers but is included in our operating expenses. Our second quarter 2024 effective income tax rate was 28.4% compared to 30.3% in the same period last year. We expect our 2024 tax rate to approximate 28 to 29%.
Speaker Change: The leasing of these value added laser lines is not reflected in our capex numbers, but are included in our operating expenses.
Speaker Change: Our second quarter 2024 effective income tax rate was 28, 4% compared to 33% in the same period last year.
Rich Manson: In addition, we paid a quarterly dividend of $0.15 per share on the second quarter. Our board of directors approved our next regular quarterly cash dividend of $0.15 per share, which is payable on September 16th, 2024, to shareholders on record as of September 2nd, 2024. The company is now paid regular quarterly dividends, dating back to 2006, increasing the dividend in ESA for the last three years. As we look ahead, we continue to be optimistic about our ability to system profitable results at the segment and enterprise levels. We have expanded into higher margin, higher value added opportunities, and as a result, we've been able to grow the business with existing customers and win new customers.
Rich Manson: In addition, we paid a quarterly dividend of $0.15 per share in the second quarter. Our Board of Directors approved our next regular quarterly cash dividend of $0.15 per share, which is payable on September 16, 2024, to shareholders on record as of September 2, 2024. The company has now paid regular quarterly dividends dating back to 2006, increasing the dividend in each of the last three years.
Speaker Change: We expect our 2024 tax rate to approximate 28% to 29%.
Speaker Change: In addition, we paid a quarterly dividend of <unk> 15 per share in the second quarter. Our board of directors approved our next regular quarterly cash dividend of <unk> 15 per share, which is payable on September 16th 2024 to shareholders on record as of September <unk> 2020 for.
Speaker Change: The company has now paid regular quarterly dividends dating back to 2006, increasing the dividend in each of the last three years.
Rich Manson: As we look ahead, we continue to be optimistic about our ability to deliver consistent profitable results at the segment and enterprise levels. We've expanded into higher margin, higher value-added opportunities, and as a result, we've been able to grow business with existing customers and win new customers. We also remain in a strong operational and financial position to continue to invest in our future. We are part of a team that is focused on controlling what we can control and delivering value for our customers and our shareholders. Operator, we are now ready for questions. Thank you. We will now be
Speaker Change: As we look ahead, we continue to be optimistic about our ability.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Consistent profitable results at the segment and enterprise levels, we've expanded into higher margin higher value added opportunities and as a result, we've been able to grow their business with existing customers and win new customers.
Rich Manson: We also remain in a strong operational and financial position to continue to invest in our future. We are proud of our team that is focused on controlling what we can control and delivering value for our customers and our shareholders.
Speaker Change: We also remain in a strong operational and financial position to continue to invest in our future.
Rich Manson: Operator, we are now ready for questions. Thank you.
Speaker Change: We're proud of our team that is focused on controlling what we can control and delivering value for our customers and our shareholders. Operator, we are now ready for questions.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. 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 your handset before pressing the star key. One moment while we pull up our first question. Our first question comes from Samuel McKinney with KeyBank. Please proceed.
Operator: We will now be conducting a question after session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in a question queue. You may press star 2 if you would like to remove your question from the queue. For participants who can speak equipment, it may be necessary to pick up your handset before pressing star keys.
Speaker Change: Thank you we will now be conducting a question answer session.
Speaker Change: We would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Hey, confirmation tone will indicate your line is in the question queue you May press star two.
Speaker Change: If you would like to remove your question from the queue.
Operator: One moment while we pull for our first question.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset people comfortable sparky one moment, while we poll question.
Samuel Mckinney: Our first question comes from Samuel McKinney with KeyBank. Please proceed.
Samuel Mckinney: All right, good morning, guys. That's starting in Piping 2. Great gross margins this quarter, around 34%, despite the lower sales. They've now been above 30% for six quarters in a row.
Speaker Change: Our first question comes from Samuel Mckinney with Keybanc. Please proceed.
Samuel Mckinney: Starting in Piping 2, great gross margins this quarter of around 34% despite the lower sales. They've now been above 30% for six quarters in a row.
Samuel Mckinney: Hey, good morning, guys.
Speaker Change: Good morning.
Speaker Change: That's starting in pipe into great gross margins this quarter around 34%. Despite the lower sales they've now been above 30% for six quarters in a row, what drove the uptick in second quarter gross margin. Despite those lower sales and do you think margins can hang in that 33, 34% range as you continue to glean more benefits from fabrication.
Andrew Greiff: What drove the uptick in second quarter gross margins despite those lower sales? Do you think margins can hang in that 33%, 34% range as you continue to glean more benefits from fabrication, automation, and customer outsourcing?
Andrew Greiff: What drove the uptick in second quarter gross margins despite those lower sales? And do you think margins can hang in that 33-34% range as you continue to glean more benefits from fabrication, automation, and customer outsourcing? Sam, this is Andrew.
Andrew Greiff: So the answer is yes. It's been a strategy for our CTI group to continue to grow in the fabrication part of the business. We are investing in more fabrication equipment, and we do expect that those margins will be there and probably grow. And it's really part of our downstream strategy to do more value added. We are still very interested in the distribution of the pipe and tube, but certainly, the growth part of it has come in the fabrication, and I think the other piece is the acquisition, which certainly has a strong margin profile.
Andrew Greiff: Sam, this is Andrew. So the answer is yes. It's been a strategy for our CTI group to continue to grow in the fabrication part of the business. We are investing in more fabrication equipment. We do expect that those margins will be there and probably grow. It's really part of our downstream strategy to do more value added. We are still very interested in the distribution of the piping tube, but certainly the growth part of it has come in the fabrication side.
Speaker Change: Automation and customer outsourcing.
Samuel Mckinney: Yeah.
Sam: Sam This is Andrew.
Andrew Greiff: So the answer is yes.
Sam: It's been a strategy for our CGI group to continue to grow in the fabrication part of the business we are investing.
Samuel Mckinney: In and more fabrication equipment, we do expect that those margins will will be there and probably grow.
Samuel Mckinney: And it's really part of our downstream strategy to do more value added we are still very interested in the distribution of the pipe and tube, but certainly the growth part of it is coming in the fabrication side, Yeah, and I think the other pieces is the acquisition of <unk>.
Andrew Greiff: I think the other piece is the acquisition of CTB last year. They've certainly got a strong margin profile, so that would be the other piece of it.
David: CTV last year David.
Andrew Greiff: Okay, and then moving to the balance sheet, inventory value on the balance sheet stayed pretty similar despite the steep pricing declines during the second quarter that you called out in the release. Assuming that that sequential steadiness is more of a function of volume, how do you view your current inventory levels against lead times headed into the back half of the year? Sam, it's Rich. I'll take the value first.
Samuel Mckinney: Okay, and then moving to the balance sheet. Inventory value on the balance sheet stayed pretty similar despite the steep pricing declines during the second quarter that you called out in the release.
David: <unk> certainly got a strong margin profile, so that would be the other piece of it right.
Speaker Change: Okay, and then moving to the balance sheet inventory value on the balance sheet stayed pretty similar despite the steep pricing declines during the second quarter that you called out in the release, assuming that that sequential steadiness is more of a function of volume how do you view your current inventory levels against lead times headed into.
Andrew Greiff: Assuming that sequential steadiness is more of a function of volume, how do you view your current inventory levels against lead times headed into the back half of the year?
Rich Manson: And so I think what you saw in the second quarter was not really an increase in quantity. What it was was a flip really between stainless surcharges went up 15% during the quarter. So you saw a higher value for stainless inventory while carbon inventory values went down. I'll turn it over to Andrew for the other part of the question. Yes, Sam. So I think the inventory level is at an appropriate level. I think that there's a little bit more work that we certainly can do as we get through the third quarter and into the fourth quarter, but I think the inventory level is appropriate.
Rich Manson: I'll take the value first. So I think what you saw in the second quarter, really it's not an increase in quantity. What it was was a flip really between stainless surcharge is one of 15% during the quarter. So you saw a higher value of stainless inventory, while carbon inventory values went down.
David: In the back half of the year.
David: Sam it's rich I'll take the value for us and so I think what you saw in the second quarter really it is not an increase in quantity. What it was was a flip really between stainless stainless surcharges went up 15% during the quarter. So you saw higher value of stainless inventory, while carbon inventory values went down.
Andrew Greiff: I'll turn over to Andrew for the other part of the question. Yeah, Sam, so I think the inventory level is at an appropriate level. I think that there's a little bit more work that we certainly can do as we get through the third quarter into the fourth quarter, but I think the inventory level is appropriate.
Andrew Greiff: Ill turn it over to Andrew for the other part of the question, Yes, Sam So I think the inventory level is at a appropriate level.
Speaker Change: I think that there is a little bit more work that we certainly can do as we get through the third quarter into the fourth quarter, but.
Samuel Mckinney: Okay, thanks, guys. That's it for me. Thank you.
Andrew Greiff: Okay, thanks guys, that's it for me. Thanks, Sam.
Operator: Thank you. The next question comes from Dave Storms with Stonegate. Please proceed. Good morning.
Andrew Greiff: But I think the inventory level is appropriate.
Dave: The next question comes on Dave's phone with Stonegate, please proceed.
Speaker Change: Okay. Thanks, guys. That's it for me thanks.
Dave: Good morning. Good morning, Dave. Just hope, you know, volumes are up real nicely.
Andrew Greiff: Thanks Sam.
David Storms: Just hoping, you know volumes are up real nicely it looks like. Just hoping, wondering if you have any thoughts around any pricing outlook, if there's any kind of green shoots that you're starting to see, maybe inventory levels industry-wide, change in bidding environment, any momentum in the stock market, anything like that.
Speaker Change: Thank you. The next question comes from Dave spoke with Stonegate. Please proceed.
Dave: It looks like just hoping. I wonder if you have any thoughts around any pricing outlook.
Dave Spoke: Good morning.
Dave: There's any kind of green shoes say you're starting to see maybe inventory levels in the shoe wide change in bid and environment. Any movement in the stock spot market, anything like that.
Dave: Good morning, Dave.
Dave: Volumes are up nicely it looks like I'm, just hoping I wonder if you have any thoughts around any pricing outlook or is there any kind of green shoots that you're starting to see maybe.
Speaker Change: Tori levels industrywide.
Rich Manson: David's rich and so what we would tell you is that you know as we pointed out in the release and in our comments that you know second quarter hot roll pricing declined about 20% we've seen that decline a little further here into July that's really on the pricing side but you know what we've continued to see from a demand side is that you know we're performing better year over year I think what you saw in the second quarter as well as the first half is that we were up about 2% year over year you know we expect that to continue that trend to continue into the third quarter but that's what we're seeing on the volume and we saw a nice jump up you know q2 versus q1 sequentially
Rich Manson: David's rich, and so what we would tell you is that, you know, as we pointed out in the release and in our comments that, you know, second quarter, however, pricing declined about 20%. We've seen that decline a little further here into July. That's really on the pricing side, but, you know, what we've continued to see from a demand side is that, you know, we're performing better year over year.
Speaker Change: <unk> been an environment any momentum in the spot market or anything like that.
Speaker Change: David's rich and so what we would tell you is that as we pointed out in our release and in our comments that second quarter Hot rolled pricing declined about 20% we've seen that decline a little further here into July that's really on the pricing side, but we've continued to see from a demand.
Rich Manson: I think what you saw in the second quarter, as well as the first half, is that we were up about 2% year over year. You know, we expect that trend to continue into the third quarter, but that's what we're seeing on the volume. And we saw a nice jump up, you know, Q2 versus Q1 sequentially. Understood.
Andrew Greiff: <unk> side is that for <unk>.
Speaker Change: Forming better year over year, I think what you saw in the second quarter as well as the first half is that we were up about 2% year over year, we expect that to continue that trend to continue into the third quarter.
David Storms: And then just on CODED for carbon, what's the outlook for this going forward, you know, through the back half of 2024? Is there an optimal call percent of carbon that you would like this to take up by the end of 2024? Just any outlook you have there would be helpful.
Rich Manson: Thank you.
Rich Manson: And then just on coded for carbon, what's that look for this going forward, you know, through the back half of 2024? Is there an optimal call percent of carbon that you would like us to take up by then to 2024? Just any outlook you have there would be helpful. Yeah, so what I would say, David, is we've seen terrific growth. Mike Tokie runs our coded for a length back. He's doing a great job. I would say that growth has been about 34% over last year.
Andrew Greiff: But that's what we're seeing on the volume and we saw a nice jump up Q2 versus Q1 sequentially.
Speaker Change: Understood. Thank you and then just on <unk>.
Arvind: Got it for Arvind.
Speaker Change: What's the outlook for this going forward.
Arvind: Back half of 'twenty 'twenty four is there an optimal.
Andrew Greiff: Yes, so what I would say, Dave, is... We've seen terrific growth. Mike Tookie runs are coded for Olympic.
Speaker Change: Call it percent of carbon that you would like this to take off.
Speaker Change: By the end of 2024, just any outlook you have there would be helpful.
Speaker Change: Yes, so what I would say David.
Speaker Change: We've seen terrific growth, Mike Turkey runs are coded.
Andrew Greiff: He's doing a great job, I would say. That growth has been about 34 percent over last year. We expect to continue to see that through the balance of the year and actually see that accelerate as we get into 2025 as we continue to make headway into construction in the HVAC market.
Mike Turkey: For Olympics. He is doing is doing a great job I would say.
Rich Manson: We expect to continue to see that through the balance of the year and actually see that accelerate as we get into 25 as we continue to make head roads into construction and the HVAC markets. Understood.
Speaker Change: That growth has been about 34% over last year.
Speaker Change: We expect to continue to see that through the balance of the year and actually see that accelerate as we get into <unk> into 'twenty five as we continue to make head roads into.
David Storms: Thanks for taking the questions and good luck in 3Q. Thank you.
Dave: Thanks for taking the questions, and good luck, and through you.
Dave: Thank you.
Speaker Change: Construction in the HVAC markets.
Chris: The next question comes from Chris, the car with singular research.
Operator: The next question comes from Chris Sakai with Cingular Research. Please proceed.
Chris: Please proceed. Hi. Good morning.
Speaker Change: Understood. Thanks for taking the questions and good luck and thank you.
Dave Spoke: Thanks, Dave.
Chris Sakai: I want to talk about a I guess if pricing is facing some headwinds, how is that affecting M&A valuations? Is it decreasing them?
Chris: I wanted to talk about a I guess it was pricing and facing some headwinds. How is that affecting M&A valuations?
Speaker Change: The next question comes from Chris Sakai with singular research. Please proceed.
Chris Sakai: Hi, good morning.
Speaker Change: Alright.
Speaker Change: I wanted to talk.
Speaker Change: Talk about.
Rick Marabito: Is it decreasing them?
Speaker Change: I guess the pricing facing some headwinds.
Rick Marabito: Hi Chris, it's Rick. Really good question. I think valuations remain pretty steady in our industry. I think the real trick to valuations is looking over a performance cycle. The ups and downs in pricing and trying to look at a company's value over that cycle. That's how we tend to look at it. So certainly in the short term, with some pricing pressure, as you've seen in the steel industry, the last couple quarters. The earnings have been a little bit compressed. But what I tell you is, at least our approach on M&A, we're looking for really good, well-run companies that are consistently profitable, that have consistently high return models, and looking at those companies and considering where pricing in the market is certainly part of the valuation, but it's really more important to look at how they...
Rick Marabito: Hi Chris, it's Rick. Really good question. I think valuations remain pretty steady in our industry. I think the real trick to valuation is looking over a performance cycle, the ups and downs in pricing, and trying to look at a company's value over that cycle. That's how we tend to look at it.
Speaker Change: How is that effecting.
Speaker Change: M&A valuations.
Speaker Change: The decrease in them.
Rick Mirabito: Hi, Chris It's Rick.
Speaker Change: Really good question I think.
Speaker Change: <unk> remained pretty steady in our industry.
Speaker Change: I think the real trick devaluation.
Speaker Change: Looking over our performance cycle, the ups and downs in pricing and trying to look at.
Chris Sakai: So certainly in the short term, with some pricing pressure, as you've seen in the steel industry in the last couple of quarters, earnings have been a little bit compressed. But what I can tell you is, at least in our approach to M&A, we're looking for really good, well-run companies that are consistently profitable, that have consistently high return models. And looking at those companies and considering where pricing in the market is certainly part of the valuation, but it's really more important to look at how they perform over the cycle.
Speaker Change: Company's value over that cycle, that's how we tend to look at it so certainly in the short term with some pricing pressure.
Speaker Change: As you've seen in the steel industry the last couple of quarters.
Speaker Change: Earnings have been a little bit compressed.
Speaker Change: But you know.
Speaker Change: What I would tell you is is.
Speaker Change: At least our approach on M&A, we're looking for really good well run companies that are consistently profitable that have consistently high.
Speaker Change: Return models and looking at those companies and.
Rick Marabito: Perform over the cycle.
Speaker Change: And considering where pricing in the market is certainly part of the valuation, but it's really more important to look at how they perform over the cycle.
Chris Sakai: So I think on M&A we're active. You know we've been active for the last five years. We've seen the activity and the flow pick up in the second quarter, and certainly, as we mentioned in our comments, certainly consider M&A to be part of our growth strategy.
Rick Marabito: So I think on M&A, we're active. You know we've been active the last five years. We've seen the activity and the flow pick up in the second quarter, and certainly continue to have that part, as we mentioned in our comment. Certainly consider M&A to be part of our growth strategy.
Speaker Change: So I think on M&A, we're active.
Speaker Change: You know we've been active the last five years, we've seen.
Speaker Change: Seen the activity in the flow pickup.
Speaker Change: In the second quarter and <unk>.
Speaker Change: Certainly continue to have that part as we mentioned in our comments.
Andrew Greiff: Okay, thanks. And then in this type of environment, is there any specific part of the business that you're focusing on more, or that's performing better than the others? And which would that be and why?
Andrew Greiff: Okay, thanks. And then, in this type of environment, is there any specific part of the business that you're focusing on more or that's performing better than the others? And which would that be and why?
Speaker Change: Certainly consider M&A to be part of.
Speaker Change: Our growth strategy.
Speaker Change: Okay. Thanks, and then we'll move type of environment.
Speaker Change: Is there any.
Andrew Greiff: Well, so Chris, this is Andrew. What I would say is fabrication has become a big growth strategy for us. We have seen post-COVID the opportunities really explode, in particular from the industrial OEMs, the opportunities to be able to supply as they are looking for a finished product that can go right into assembly. And we've seen an acceleration of not only opportunities, but picking up some fairly significant business. But I would also tell you that, you know, in all three of our segments, there are pockets of business that are starting to improve. On the specialty side, you know, we're seeing a nice improvement in the food equipment of the truck trail of the appliance side of the business.
Andrew Greiff: Well, Chris, this is Andrew. What I would say is that fabrication has become a big growth strategy for us. We have seen opportunities really explode, in particular from the industrial OEMs, opportunities to be able to supply as they are looking for a finished product that can go right into assembly. And we've seen an acceleration of not only opportunities but picking up some fairly significant business. But I would also tell you that, you know, in all three of our segments, there are pockets of business that are starting to improve.
Speaker Change: Part of the business that you're focusing on more or that is performing better than the others and what would that be in Hawaii.
Speaker Change: Well so Chris this is Andrew.
Andrew Greiff: What I would say is fabrication has become.
Andrew Greiff: Big growth strategy for us we've seen post COVID-19 the opportunities really explode in particular from the industrial Oems the opportunities to be able to supply as they are looking for.
Speaker Change: A finished product that can go right into assembly.
Chris Sakai: And we've seen an acceleration not only opportunities, but picking up some fairly significant business.
Speaker Change: But I would also tell you that in all three of our segments.
Andrew Greiff: On the specialty side, you know, we're seeing a nice improvement in the food equipment side of the truck trailer business, and the appliance side of the business. In our pipe and tube business, we're making some nice inroads with data centers.
Speaker Change: There is there are pockets of business that that are starting to improve.
Andrew Greiff: And our pipe and tube, we're making some nice inroads with data centers. And in our carbon business, again, from a fabrication perspective, that's been pretty big. And we've seen some of the other industrials coming back a little bit. So we're pleased for all three segments with what we're saying.
Speaker Change: On the specialty side, we're seeing a nice a nice improvement in the food equipment of the truck trailer the appliance side of the business and our pipe and tube, where we're making some nice inroads with with data centers and in our carbon business again from a fabrication perspective.
Andrew Greiff: And in our carbon business, again, from a fabrication perspective, that's been pretty big, and we've seen some of the other industrials coming back a little bit. So we're pleased with all three segments with what we're seeing. And Chris, it's Rich.
Speaker Change: That's been pretty big and we have seen.
Rich Manson: I would add that, you know, in periods of time when pricing may compress the distribution margins, you're seeing us expand the margins on our unmanufactured products, as their cost of goods sold comes down in these periods. And that was a nice balance in the second quarter. Yeah, exactly.
Rick Marabito: And Chris, it's Reg. I would add that, you know, in periods of time, we're pricing may compress the distribution margins. You're seeing as expand the margins on our and manufactured products. Is there a cost of goods sold come down in these periods? And that was a nice balance in the second quarter. Yeah, exactly. I think Chris, what you've seen is in the evidence was there, and we talked about it a little bit. Really a nice balance in all three of our business segments. And that's really the fruition of very strategic initiatives that we've taken over the years.
Speaker Change: We've seen some of the other industrials coming back a little bit. So we're pleased for all three segments with what we're saying and Chris its rich I would add that in periods of time, where pricing may compress the distribution margins youre seeing us expand the margins on our end manufactured products as their cost of goods sold come down in each of these periods and that was a nice.
Andrew Greiff: I think, Chris, what you've seen is, and the evidence was there, and we talked about it a little bit, really a nice balance in all three of our business segments. And that's really the fruition of very strategic initiatives that we've taken over the years. Andrew talked about the fabrication.
Speaker Change: Balance in the second quarter, Yeah, exactly I think Chris what you've seen is.
Speaker Change: And the evidence was there and we talked about it a little bit really a nice balance in all three of our business segments and that's really the fruition of very strategic initiatives that we've taken over the years, Andrew has talked about the fabrication rich just talked about the end products and.
Rich Manson: Rich just talked about the end products and, you know, the offset and the counter-cyclicality of that. Certainly, we just talked about the mix within our carbon division of moving to more of the coded products. So, we talked about acquisitions, like in pipe and tube; we had a question about the margins and the CTB acquisition. So, that's really what we've been laser focused on, together with controlling the things we can control that we say every quarter. And, you know, keeping our expenses really in line and turning our inventory. So, that's it. And that's what we're focused on. And, you know, we're going to continue to do so.
Rick Marabito: Andrews talked about the fabrication. Rich just talked about the end products and, you know, the offset and the countercyclicality of that. Certainly, we just talked about the mix within our carbon division of moving to more of the coated products. So we talked about acquisitions like in the pipe and tube. We had a question about the margins and the CTB acquisition. So that's really what we've been laser focused on. Together with controlling the things we can control, that we say every quarter. And, you know, keeping our expenses really in line and turning our inventory. So that's it.
Speaker Change: The offset in the counter cyclicality of that certainly we just talked about the mix within our carbon division of moving to more of the coated products. So we talked about acquisitions like in the pipe and tube. We had a question about the margins in and the <unk> acquisition. So.
Speaker Change: That's really what we've been laser focused on together with controlling the things we can't control that we say every quarter.
Rick Marabito: And that's what we're focused on. And, you know, we're going to continue to focus on that.
Speaker Change: And keeping our expenses really in line and turning our inventory so.
Chris: Okay, great. Thanks for the answers.
Chris Sakai: Okay, great. Thanks for the answers.
Speaker Change: That's it and that's what we're focused on and we're going to continue to focus on that.
Chris: Thanks, Chris.
Rick Marabito: Thank you.
Rick Marabito: Thank you. At this time, I would like to turn the floor back over to Mr. Rick Marabito for closing comments.
Rick Marabito: At this time, I would like to turn the floor back over to Mr. Greiff Marabito for closing comments. Thank you so much, and thank you everybody for joining us on the call this morning. We appreciate your continued interest in Olympic Steel, and we look forward to speaking with you again next quarter. If not sooner. Thank you.
Speaker Change: Okay, great. Thanks for the answers.
Rick Marabito: Thank you so much, and thank you everybody for joining us on the call this morning. We appreciate your continued interest in Olympic Steel, and we look forward to speaking with you again next quarter, if not sooner. Thank you. Have a great day.
Chris Sakai: Thanks, Chris.
Rick <unk>: Thank you at this time I would like to turn the floor back over to Mr. Rick <unk>.
Roberto: Roberto for closing comment.
Roberto: Thank you so much and thank you everybody for joining us on the call. This morning. We appreciate your continued interest in Olympic Steel and we look forward to speaking with you again next quarter if not sooner. Thank you have a great day.
Operator: Have a great day. Thank you.
Operator: Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.
Operator: This thus concludes today's teleconference. You may disconnect your minds this time.
Operator: ?? ?? ?? ?? ?? ?? ??
Operator: Thank you for your participation, and have a great day. Thank you.
Speaker Change: Thank you. This does concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a great day.
Roberto: Okay.
Roberto: Okay.
Roberto: Okay.
Roberto: Yes.
Roberto: Yeah.
Roberto: Yes.