Olympic Steel: Historic, Record-Breaking Results in Q2

Olympic’s net income was $29.6 million in Q2, a big turnaround from the $6 million net loss one year ago. Shipping volumes returned to pre-COVID levels and – despite persistent component shortages and other supply chain and labor constraints – are expected to remain strong in the second half of the year, said Rick Marabito, Olympic’s CEO.

Carbon steel was the company’s best performer with $33 million in EBITDA, a 130% jump in sales year on year, as the company focused on rightsizing inventories due to ongoing supply chain disruptions. Specialty metals had a record quarter with a 150% surge in sales over the same period totaling $14.6 million, while pipe and tube rose 75%. Shipments for all three segments outperformed the market in the second quarter despite labor-driven supply-chain issues. While trade actions on aluminum have reduced imports and constrained supplies, Olympic’s shipments still outpaced the industry as the company grew market share in the segment.

“We see volumes remaining steady, and margins continue to be strong as the third quarter begins,” said Andrew Greiff, Olympics’ president and COO. “Our industrial OEM customers are busy but continuing to deal with supply-chain challenges. While we’ve experienced the same supply-chain challenges as our customers, particularly with respect to labor, we’ve continued to invest in automation to meet growing demand for value-added steel products.”

Marabito added that a robust market brings certain challenges, but the company continues to deliver metal to its customers despite supply shortages. “Our customers are navigating component shortages, supply-chain disruptions and labor constraints. We expect these challenges to continue in the near-term.”

The company continues to keep lean inventories, turning them at historically high rates as a function of escalating metal prices. Supplies are at historic lows and lead times are still lengthening, said the Olympic execs. Hot rolled delivery times have nearly doubled, and so have cold rolled and specialty metals lead times. 

Olympic Steel expects strong profits again in the third quarter. Indicators point to healthy demand and ongoing supply-side limitations as the market heads into the second half of 2021, said company execs, adding that favorable market conditions will continue to be conducive for strong earnings.

Olympic Steel is very optimistic regarding infrastructure, said Marabito when asked about the pending infrastructure bill in Washington. “The added demand for infrastructure supply in 2023 and beyond positions the steel industry for a very nice cycle…. We are certainly set to play a significant role and to fully participate in the increasing demand driven by the new environment of an infrastructure spend,” he said.

By David Schollaert, David@SteelMarketUpdate.com