Olympic Steel Inc: The Early Stages Of A Winner
Olympic Steel Inc: The Early Stages Of A Winner
Olympic Steel is a leading U.S. metals service center focused on the direct sale and distribution of large volumes of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel, aluminum, tin, pipe, and tubular products.
July 19, 2021
Price (as of close on July 16, 2021)
$28.54
Rating
Buy Long-Term
Price Target
Olympic Steel Inc. (ZEUS)
Q1:21 earnings were strong from improving market conditions. Strong demand and limited supply have caused metal prices to rise, and the trend is likely to continue for the remainder of the year. We increase our target price 
and maintain our rating at Buy Long-Term.
Q1:21 Highlights
Q1:21 revenues were $463.1 million, up ~30.7% from Q1:20 due to higher pricing (+32.1% YOY).
➢ All three segments - Carbon Flat (+21.4% YOY), Special Metals Flat (+42.8% YOY), and Tubular & Pipe Products (+43.7% YOY) reported higher sales.
➢ Operating income was $31.5 million in Q1:21 versus operating income of $3.0 million in Q1:20. We note that there was LIFO income of ~$1.0 million in Q1:21.
➢ Adjusted EBITDA was $37.8 million in Q1:21 versus $7.4 million in Q1:20. All three segments delivered positive EBITDA for the quarter.
➢ Excluding LIFO income, adjusted EPS was $1.97 in Q1:21 compared to $0.02 in Q1:20.
➢ Management expects favorable market conditions to continue for the rest of the year.
➢ We adjust our estimates for 2021. We maintain our rating at Buy Long-Term and increase our target price to .
PRIMARY RISKS
➢ The Company’s sales and earnings are highly dependent on steel prices and any decline in prices could negatively affect operating results.
➢ The Company faces risks stemming from a heightened U.S.-China trade war. Any further escalation could weaken results.
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