Q3 2024 Olympic Steel Inc Earnings Call

Richard Manson; Chief Financial Officer; Olympic Steel Inc

Richard Marabito; Chief Executive Officer, Director; Olympic Steel Inc

Andrew Greiff; President, Chief Operating Officer; Olympic Steel Inc

David Storms; Analyst; Stonegate

Samuel McKinney; Analyst; KeyBanc Capital Markets

Chris Sakai; Analyst; Singular Research

Operator

Good morning, and welcome to the Olympic Steel 2024 third-quarter financial results conference call. (Operator Instructions) As a reminder, this conference 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.

Richard Manson

Thank you, operator. Welcome to Olympic Steel's earnings call for the third 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. 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.
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.
At this time, I'll turn the call over to Rick.

Richard Marabito

Thank you, Rich, and good morning, everyone. Thank you for joining us today to discuss Olympic Steel's 2024 third quarter results. I'll begin by summarizing our results for the third quarter, and then I'll review how our strategies for diversification and overall focus on investing in and expanding in our higher-margin opportunities are helping to drive results in difficult markets.
Andrew will then review our segment performance and highlight our CapEx growth initiatives, and following that, Rich will discuss our financial results in more detail. And then as always, we will open the call up for your questions. Challenging macroeconomic trends during the third quarter resulted in lower overall OEM demand, particularly in the heavy equipment sector, which is a significant end market for Olympic Steel. Reduced demand resulted in carbon pricing pressures that affected both our carbon flat-rolled and pipe and tube segments. Additionally, stainless steel surcharges fell during the quarter, creating pricing pressure in our Specialty Metals segment.
Despite these market headwinds, Olympic Steel has demonstrated continued resilience, as all three segments were EBITDA positive for the third quarter of 2024, generating $15 million in EBITDA on $470 million of sales. The results reflect the success of our strategy to diversify into countercyclical steel-intensive end products and invest in higher margin opportunities such as flat-rolled coated products and the expansion of our fabrication capabilities.
Given the ongoing uncertainty in the political and macroeconomic environment, our team is working diligently to manage costs and build efficiencies into our business. This includes investing in new equipment, automation and processing capabilities that will drive safety, efficiency, productivity and future growth.
We are closely managing our operating expenses and aligning our labor costs with customer demand. We believe the success of our acquisitions and capital investments in key organic growth areas has created a stronger, more resilient Olympic Steel. We are well positioned to continue to invest in these initiatives. Andrew will review recent equipment investments in a moment and we remain active in our pursuit of acquisitions that meet our success criteria.
During the third quarter, we reduced our debt by approximately $12 million to $197 million, and we entered the fourth quarter with approximately $304 million of credit availability to fund these growth initiatives.
Looking to the fourth quarter of 2024, we expect the macroeconomic headwinds to continue while we await the outcome of the presidential election and the Fed's direction on future interest rate cuts. We remain optimistic for the long-term outlook for Olympic Steel and our industry. We are confident that our strategy, combined with our financial flexibility to continue investing in organic and acquisitive growth opportunities will make us even more resilient and create additional value for our shareholders.
Now I'll turn the call over to Andrew for his comments on our segment performance.