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Edited Transcript of ZEUS earnings conference call or presentation 1-Aug-19 1:00pm GMT

Q2 2019 Olympic Steel Inc Earnings Call

Bedford Heights Sep 19, 2019 (Thomson StreetEvents) -- Edited Transcript of Olympic Steel Inc earnings conference call or presentation Thursday, August 1, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew S. Greiff

Olympic Steel, Inc. - Executive VP & COO

* David A. Wolfort

Olympic Steel, Inc. - President & Director

* Richard A. Manson

Olympic Steel, Inc. - CFO

* Richard T. Marabito

Olympic Steel, Inc. - CEO & Director

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Conference Call Participants

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* Aldo Mazzaferro;Mazzaferro Research;Steel Analyst

* Joichi Sakai

Singular Research, LLC - Equity Research Analyst

* Martin John Englert

Jefferies LLC, Research Division - Equity Analyst

* Philip Ross Gibbs

KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst

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Presentation

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Operator [1]

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Good morning, and welcome to the Olympic Steel 2019 Second Quarter Financial Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

Also, some statements made on today's call will be predictive and are intended to be made as forward-looking within the safe harbor protections 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 from those set forth in the company's reports on Forms 10-K and 10-Q and press releases filed with the Securities and Exchange Commission.

During today's discussion, we may reference adjusted net income per diluted share, which is non-GAAP financial measure. A reconciliation of this non-GAAP measure to the most directly comparable GAAP financial measure is provided in the press release that was issued this morning, and which also 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'd like to introduce your host for today's call, Olympic Steel's Chief Executive Officer, Rick Marabito. Thank you. You may go ahead.

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Richard T. Marabito, Olympic Steel, Inc. - CEO & Director [2]

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Thank you, operator. Good morning, and thank you for joining us to discuss Olympic Steel's 2019 second quarter results. Joining me on the call this morning are Olympic Steel's President, David Wolfort; Chief Financial Officer, Rich Manson; Executive Vice President and Chief Operating Officer, Andrew Greiff; and President of our Chicago Tube and Iron Business, Dr. Don McNeeley.

Reflecting on the past year, we have seen dramatic swings in the service center business. In the second quarter of 2018, we had one of our best quarterly performances in the history of Olympic Steel. Section 232 tariffs had recently been announced, customer demand was accelerating and steel prices were rapidly increasing, which drove customers to build inventories. Fast forward to the second quarter of 2019, and the environment was quite different. Certain tariffs were eliminated, prices were rapidly falling and industry shipments were declining. David will elaborate on these dynamics later in the call.

While the environment in the second quarter was challenging, our team focused on what we could control and took action to maintain our profitability, accelerate our inventory turnover, strengthen our cash flows and reduce debt to best position Olympic Steel for the second half of 2019.

In recapping our second quarter of 2019, net sales were 5% lower compared to the second quarter of 2018 due to volume declines, which were partially offset by higher year-over-year selling prices. Consistent with data reported throughout the industry, as steel prices fell sharply in June, shipments decreased, especially in carbon flat products. Many customers chose to sit on the sidelines until pricing bottomed in early July.

Net income in the second quarter was $2.1 million or $0.18 per diluted share compared with $15.8 million or $1.39 per diluted share in the same quarter a year ago. While our Carbon Flat Products segment results reflected the industry headwinds that I just described, our Specialty Metals and Pipe and Tube segments showed sales and earnings resiliency during the quarter.

We are also committed to execute on our growth and diversification strategy through acquisitions, including manufacturers of metal-intensive branded products, such as McCullough Industries, which we acquired in January of this year. These types of manufacturing businesses elongate our margins, improve our returns on carbon flat products and are countercyclical to the pricing dynamics of our steel distribution business.

Our desire is to continue to diversify our business by delivering strategic innovations that Olympic Steel, as a service center, can bring to the manufacturing process. We are actively evaluating additional opportunities to add to our metal-intensive branded products portfolio.

Looking ahead, pricing has quickly improved in July, with carbon flat-rolled prices rising after reaching a low in early July. We will continue to focus on the disciplines of cash flow, inventory and expense management and judicious capital spending during the second half of the year. Historically, the third quarter tends to be seasonally slower for service center shipments due to the impact of the July holiday and customary slowdowns in summer business schedules. We expect that to hold true this year.

In addition, while we are turning our inventory quickly at 5x, we expect that it'll take the first half of the third quarter to work through the Carbon segment margin pressures. We anticipate Specialty Metals and Pipe and Tube will continue to show resiliency, but we'd expect third quarter shipments and earnings to be softer compared with the first half of 2019.

And lastly, in terms of shareholder returns, on August 1, the Board of Directors declared a regular cash dividend of $0.02 per share that is payable on September 17, 2019, to holders of record on September 3. This marks our 57th consecutive quarter that we have paid a cash dividend. We also repurchased 105,000 shares or approximately 1% of our outstanding shares during the second quarter that was under our share buyback program.

I will now turn the call over to David for his comments.

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David A. Wolfort, Olympic Steel, Inc. - President & Director [3]

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Thank you, Rick. During the second quarter, steel prices were under immense pressure after months of declines and customers slowed their orders as they waited for prices to hit bottom. In addition, trade relations and general economic concern weighed on the manufacturing sector, including some of our key end markets, such as auto and agriculture.

The announcement of the removal of Section 232 tariffs on Canada and Mexico were a catalyst that sent steel prices plunging in June. For those of us who have been in the service center industry for a long time, the second quarter was very unusual. Typically, metal prices and volumes are up in what is normally a seasonally strong quarter. In the second quarter of 2019, the industry saw steel prices drop and the shipments of carbon products declining by more than 7%, as reported by the MSCI.

We are pleased that even with the pressure on our shipping volumes and gross margins during the quarter, we were profitable. Our Specialty Metals and Pipe and Tube segments delivered solid performances, complementing both our organic and acquisitive strategies of the last decade. While we cannot control the market price of steel or U.S. trade and tariff policies, we have remained focused and we'll continue to stay focused to best position Olympic Steel in a rebounding market. First, in the 2019 second quarter, we lowered inventory levels and increased our flat product inventory turnover to 5x. Since the end of 2018, we have lowered our inventories by $81 million. Rich will detail this later in the call. Second, we remained disciplined in controlling operating expenses and have identified over $4 million in cost reduction opportunities, which will start in the second half of this year. These moves have enabled us to generate cash flow. We significantly reduced our debt by $49 million during the quarter, with an additional reduction of approximately $30 million in July.

And finally, we continue to execute on our plan to increase our manufacturing capabilities of metal-intensive branded products to offset the cyclical nature of our business.

As you may recall, we acquired Berlin Metals in 2018 to expand our light gauge stainless capabilities and made our entry into manufacturing metals products with the McCullough acquisition in 2019. Both are performing well and continue to be integrated into our operations.

We are close to completing another niche acquisition of a metal-intensive manufacturer this summer. As Rick mentioned in his opening comments, the past year had its ups and downs for our industry. It's at times like these when we're in prolonged cycles that it's important to reflect on what we are doing to offset the challenging conditions, such as controlling expenses, strengthening our balance sheet and remaining selective, yet opportunistic with our capital deployment. We will continue to be challenged by the overcapacity in the Carbon Flat market, which is not a new phenomenon to the steel business overall or to our 64-year-old enterprise. Yet, it is exactly why our diversification into Specialty Metals and Pipe and Tube products over the past decade has positioned us to manage through the sharp declines like the ones we have experienced in the last few quarters.

Experience managing through these cycles has made Olympic Steel the strong company that it is today. The experience of our team and the relationships we've built over the years are what enable us to rightsize our inventory levels and lower debt levels, so that we can participate in the growth of the market as it rebounds. Importantly, we will continue to invest in the talent and leadership that are responsive to the rapid market changes and innovations that will drive our and our customers' future success.

With that, I will turn the call over to Rich for his financial review.

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Richard A. Manson, Olympic Steel, Inc. - CFO [4]

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Thank you, David, and good morning to everyone. Before I go through our results, I want to remind everyone about a few things that impact our 2019 comparisons with 2018.

For the first half of 2019, the results include revenues and expenses from McCullough Industries, which we did not own in 2018. The first half of 2019 also includes the operations of Berlin Metals, which we did not own until April 2018, and lastly, our quarter-over-quarter comparisons were impacted by the Section 232 tariffs, which were enacted in late March 2018 and which led to rapidly increasing 2018 second quarter shipping volumes, prices, gross margins and profitability.

As Rick mentioned, the challenging market conditions persisted in the second quarter of 2019. However, we produced a profitable quarter despite lower shipping volumes and continued pressure on margins. For the second quarter, we reported net sales of $429 million, a decrease of 5% when compared with 2018's second quarter. While selling prices increased 5% in the second quarter versus the same period a year ago, volume declines offset those increases.

Our Pipe and Tube segment weathered the difficult second quarter and posted an increase in sales in the second quarter of 2019 when compared to the second quarter of 2018.

For the first half, net sales reached $875 million, a 5.6% increase compared with last year. We continue to be impacted by industry-wide pricing dynamics as steel prices were in decline from July 2018 through June of 2019. This, combined with the additional challenges that Rick outlined in his remarks, put pressure on gross margins, particularly in carbon flat products.

Specialty Metals also faced pressure, although to a lesser extent, and the Pipe and Tube gross margins remained relatively flat. As a result, our consolidated gross margin was down compared with the same period of last year.

For the first half, consolidated margins were 18% compared to the 21.4% last year. The results for the second quarter of 2019 include $250,000 of LIFO income compared to $1.5 million of LIFO expense in the second quarter of 2018. And the results for the first half of 2019 include $250,000 of LIFO income compared to $2 million of LIFO expense in the first half of 2018.

Our operating expenses for the quarter were $71.7 million, which was down $800,000 or 1.1% compared to the second quarter of last year. And for the first half of 2019, operating expenses were $145 million compared with $141 million last year and decreased as a percentage of sales from 16.6% in 2019 compared with 17% in 2018. And keep in mind that the 2018 results do not include any operating expenses for McCullough and only one quarter of operating expenses for Berlin Metals.

For the second quarter of 2019, we reported net income of $2.1 million or $0.18 per share, which compares with $15.8 million or $1.39 per share in the same quarter last year. Excluding LIFO, we earned $0.16 per share in the second quarter of 2019 compared to $1.49 per share in the second quarter of 2018. In calculating our net income, we recorded an effective tax rate of 23% in the second quarter of 2019 compared with 26.5% in the second quarter of 2018.

The lower tax rate was due to lower operating income in states that had higher tax rates, and we expect our effective tax rate to be between 24% and 27% for the remainder of the year. For the first half of 2019, we recorded net income of $4.1 million compared with $23.5 million in the first half of 2018.

Now moving over to the balance sheet. At June 30, 2019, we had total assets of $724 million, a $36 million decrease when compared with the December 31 balance. The decrease in assets was primarily attributable to our reduction in inventory, which was offset by the recognition of approximately $30 million of a right-to-use asset under the new lease accounting standard. The quality of our accounts receivable remains strong, and we continue to focus on efficiently converting our accounts receivable and inventory into cash.

For the quarter, we reported DSOs of 41 days and approximately 91% of our consolidated receivables are aged 60 days or less. As Rick mentioned earlier, we are very focused on managing our inventory levels. Inventory at June 30 declined by $55 million from the first quarter and $81 million from year-end. At this lower level, we are turning inventory faster to help combat falling metal prices. We turned flat rolled inventory 5x, an improvement over our 4.7x in the first quarter of 2019 and 4.3x in 2018.

Capital expenditures for the quarter totaled $4.4 million, consisting of the final capitalization of the Schaumburg building expansion project and some maintenance CapEx. And given the market conditions, we anticipate our capital expenditures to continue at this run rate in the second half of 2019.

Our total debt decreased by $49 million to $265 million in the second quarter, and this is primarily attributable to our efforts to lower our inventory levels. Furthermore, during the month of July, we've lowered our debt by approximately $30 million more, and we expect modest additional reductions in the balance of the second half of 2019. Later, we plan to file our Form 10-Q, which will provide additional details on the operating results for the second quarter and the first half of 2019.

Now operator, let's open the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question here is from Martin Englert from Jefferies.

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Martin John Englert, Jefferies LLC, Research Division - Equity Analyst [2]

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Can you discuss what you've seen regarding end user buying activity since we've seen these carbon flat-rolled price increases announced, as well as any end user inventory trends or changes that you're seeing there?

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David A. Wolfort, Olympic Steel, Inc. - President & Director [3]

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Martin, Dave Wolfort here. And in the second quarter, we saw a sluggishness. And then subsequent to that, as we've seen the 3 flat-rolled price increases, we've seen a reemergence of the spot market and a rekindling of some implied further growth for the balance of the year with our OEM customers. As we've said earlier, we have a sluggishness in the agricultural market and in automotive marketplace that was exacerbated in Q2 by the steep degradation in the CRU. And now we've had an increase of about 42% as opposed to the aggregated losses of the CRU. So we had to uptick literally in pricing for the whole month of July, including yesterday's significant uptick and more activity going forward in August, and we would predict September, too.

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Martin John Englert, Jefferies LLC, Research Division - Equity Analyst [4]

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And I'm sorry, when -- more activity amongst end user buying?

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David A. Wolfort, Olympic Steel, Inc. - President & Director [5]

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Spot market more -- actually more confidence in the marketplace going forward into the back half of the third quarter.

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Martin John Englert, Jefferies LLC, Research Division - Equity Analyst [6]

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Okay. Thanks for all the detail there. And then, looking at some of the gross profits per ton within Carbon as well as Specialty, maybe can you speak to some of your expectations what you're thinking there quarter-on-quarter versus Q2?

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Richard T. Marabito, Olympic Steel, Inc. - CEO & Director [7]

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Yes. I think -- Martin, it's Rick. I think July will be the pressure point in terms of the margin squeezes. So certainly, with the slower seasonality in July plus the timing of the price increases starting in July, that will be our pressure point. So the way we see it is as we move through August and September, we'll have margin improvements. And so I think the first half of the third quarter is going to have some margin pressure, probably that looks a lot like the end of the second quarter. And then, as we start moving through the quarter, I think we'll start to see some expansion.

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Martin John Englert, Jefferies LLC, Research Division - Equity Analyst [8]

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Okay. And would you expect that margin pressure in both your Specialty and your Carbon relative to 2Q or just within the Carbon Flats?

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Richard T. Marabito, Olympic Steel, Inc. - CEO & Director [9]

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Well, definitely, in the Carbon Flats. And Andrew, why don't you talk a little bit about the Specialty Metals side and stainless?

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Andrew S. Greiff, Olympic Steel, Inc. - Executive VP & COO [10]

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Well, Martin, I think we'll see a little bit of a steadiness, if not a bump. Surcharges will be up over the next month or so as we've seen nickel come up. And the domestic mills have been fairly steady on their pricing. So I would expect to see normalized to a little bit up on the margin.

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Martin John Englert, Jefferies LLC, Research Division - Equity Analyst [11]

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Okay. And that would be relative to this most recent quarter here or margins recovered fairly well, yes?

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Andrew S. Greiff, Olympic Steel, Inc. - Executive VP & COO [12]

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On the stainless, I'm talking specifically for our Specialty Metals.

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Operator [13]

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Our next question is from Phil Gibbs from KeyBanc Capital Markets.

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Philip Ross Gibbs, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [14]

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Rick, did you say in your opening remarks that you expected volumes to be lower in the second half? I mean, that's typically normal, but I just want to reiterate that you -- that's what you said? And then did you also give color that second half profits would be lower or that -- was that just sales?

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Richard T. Marabito, Olympic Steel, Inc. - CEO & Director [15]

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So yes, I mean, obviously, we've got seasonality, right? So the back half of the year, seasonally, in terms of shipping, in number of shipping days, is less. Obviously, July and December are the 2 months where that manifests itself. I think third quarter, in terms of the outlook on profitability, third quarter is going to be the challenging and the pinch point for what we saw happen in the marketplace on the cascading price declines in the second quarter. So certainly, our view is that third quarter is the low point and the pressure point for us and probably most in the industry in terms of profitability. We do like the outlook coming, starting in the back half of the third quarter and moving into the fourth quarter, however.

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Philip Ross Gibbs, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [16]

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Okay. So it sounds like, just given seasonality and where the margin pinch points are early part of the third quarter, last part of the fourth quarter are always challenging, but the July piece is more challenging this year given timing. And then August, September, October and a little bit of November is -- should be solid given what we're seeing on the spot side?

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Richard T. Marabito, Olympic Steel, Inc. - CEO & Director [17]

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Correct. That's how we see it.

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Philip Ross Gibbs, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [18]

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Okay, Rick. And then, I think you had -- may have missed the first part of your prepared remarks. But in your release, you had mentioned being close to the finish line on another transaction. Similar in size and scope and narrative as McCullough?

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Richard T. Marabito, Olympic Steel, Inc. - CEO & Director [19]

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Yes, very similar. A little bit smaller probably than McCullough. We're pretty excited about executing on a second transaction. And I did say in my prepared comments that we're committed to doing more of these. So yes, very similar in type in terms of the types of business and the business model and the benefits and the synergies that Olympic Steel can bring.

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Operator [20]

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Our next question is from Aldo Mazzaferro from Mazzaferro Research.

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Aldo Mazzaferro;Mazzaferro Research;Steel Analyst, [21]

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On the segment results, Rick, the average selling price per ton in your carbon flat products on a year-to-year basis, looks like it was up and the index is on track on plate and hot-rolled are all down sharply. So I'm just wondering, was that the impact of the McCullough mix or was it that dramatic on your average selling price in the Carbon?

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Richard T. Marabito, Olympic Steel, Inc. - CEO & Director [22]

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No, Aldo. It's really the timing, right? If you graph the lags in the industry in terms of when the market prices change and then, a mix of our business has contractual-related pricing. So it's really just, if you were to map the pricing and the timing, the sell prices, yes, year-over-year this quarter versus second quarter, are up, even though on the market pricing, you're on a decline. So it's really just the timing lag. It's not McCullough in terms of the numbers looking the way they are.

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Aldo Mazzaferro;Mazzaferro Research;Steel Analyst, [23]

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Can you say whether McCullough was profitable in the quarter or may be (inaudible)?

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Richard T. Marabito, Olympic Steel, Inc. - CEO & Director [24]

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Oh, most definitely. So Aldo, I'd tell you, the strategy of acquiring a manufacturing company that's metal-intensive and the benefits that we bring and the synergies. After 6 months, I will tell you, it's better than we thought, In terms of Olympic Steel supplying the process metal into McCullough. And let me remind everybody, McCullough was a very profitable company when we acquired them. And so we're seeing returns, whichever way you want to cut it, returns on investment, profit returns to sales, however you want to look at it. We're looking at profitability that is multiples of what the base service center yields. So it's been very successful for us. That's why we're excited to do more of it.

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Richard A. Manson, Olympic Steel, Inc. - CFO [25]

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Yes. And Aldo, it's Rich, and to add to that, the countercyclical nature of it is great as well. So as metal prices are declining here in the second quarter and driving to a low, that just gives more opportunity for McCullough to make profit in the back end on the lower cost of goods sold.

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Aldo Mazzaferro;Mazzaferro Research;Steel Analyst, [26]

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Great. I wanted to ask you about the stock buyback also, Rick. And I know in the past, the companies had some concerns about like reducing the liquidity and stuff. But I think, in my opinion anyway, buying the stock at under 50% of your tangible book is probably a good investment. I wonder if there's -- if this is a little bit of a change in the company's strategy that you might devote some of your free cash flow in the future to stock buybacks on a regular basis, assuming the shares remain as attractive as they are.

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Richard T. Marabito, Olympic Steel, Inc. - CEO & Director [27]

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Yes. So I'd tell you, it's not really a change in our strategy. I think, as you know, and you've followed us for a long, long time, we've executed on buybacks in the past. Our view is exactly what you said at the -- where the pricing was. We felt that, given where the company is going and our performance and what our capital position was that it was a wise choice to execute on about 1% of the shares outstanding in terms of a buyback. But I wouldn't say that it was necessarily a change in strategy or something going forward that we've made a significant change in terms of how we're looking at our business and how we're looking at capital deployment.

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Aldo Mazzaferro;Mazzaferro Research;Steel Analyst, [28]

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Got you. And one last one, Rick. It's kind of like Phil's question when he was asking about the guidance. I can see how you can say seasonality, the second half would be weaker. I think that applies to the -- all your business trends. But given the price moves, do you think all 3 of your segments would have lower results than you just saw in the first -- in the second quarter? It seems hard to believe that the carbon business wouldn't rebound somewhat in terms of operating profit.

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Richard T. Marabito, Olympic Steel, Inc. - CEO & Director [29]

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So I think that the carbon business will rebound, certainly. I think it's a timing issue, as I've talked about. I think the low point, in terms of the pricing impacts, is going to hit in July. So I think our view is that July is the bottom of the market for carbon. And we do anticipate the carbon business, going forward, picking up. In terms of the Specialty Metals and the Tube -- Pipe and Tube business, pretty steady as she goes. I mean, our view is that third quarter for those 2 segments looks pretty good as it compares to sort of the run rates, if you will, of the first half. So the carbon business and the cyclicality there, and obviously, the steepness in the price declines that we saw in the back half of second quarter after we get through a turn of inventory. And again, I think that low point is July. Yes, we're pretty optimistic that we see that profitability pop back up.

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Aldo Mazzaferro;Mazzaferro Research;Steel Analyst, [30]

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Can I just ask one more? If I read this right, the market for plate seems to have had a stronger price trend, and now more recently, it has had some weakness and maybe rebounding now but it's been much stronger overall than the HRC business. I'm just wondering, can you tell us what your mix of plate is, roughly, in terms of how much of your carbon steel business is in the form of plate versus how much is in the form of sheets?

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Richard T. Marabito, Olympic Steel, Inc. - CEO & Director [31]

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So we -- obviously, we don't break those out in terms of individual products. But I think suffice to say, we're a big plate player. Certainly, our mix is skewed on the carbon flat more towards the sheet side, but we're a pretty big plate player.

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David A. Wolfort, Olympic Steel, Inc. - President & Director [32]

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Aldo, David here. That's a number that we keep kind of quiet. And as Rick said, we have a pretty bold participation. But remember, we're running -- we're also running 3 temper mills, and we're running 2 stretch lines, and we're running a lot of heavy gauge wide material through there. So that heavy gauge HRC is a nice companion to discrete plate coming out of the mills.

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Aldo Mazzaferro;Mazzaferro Research;Steel Analyst, [33]

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Great. David, do you think the -- that recent infrastructure bill that came out of the committee and Senate is a big deal for steel demand?

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David A. Wolfort, Olympic Steel, Inc. - President & Director [34]

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Well, Aldo, I've been hopeful for 30 years that there'd be an infrastructure bill. And I'm still hopeful that I'm gainfully employed by the time it's exercised.

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Operator [35]

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(Operator Instructions) Next question here is from Chris Sakai from Singular Research.

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Joichi Sakai, Singular Research, LLC - Equity Research Analyst [36]

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Just one question I had on your operating expense reduction. I wanted to see what you're doing there? And wanted to know if it were -- if it could be sustainable going forward?

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Richard A. Manson, Olympic Steel, Inc. - CFO [37]

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Chris, it's Rich. Yes, I think what we looked at primarily is -- normally, when you go into a second quarter, you expect it to be seasonally stronger, and this was a little bit of a surprise for us (inaudible) and the industry as well. And so with the tightness in the labor market, we had pretty much held on to our labor force because it's been pretty hard to find people for work. And potentially, as volumes kind of declined during the second quarter and we have a seasonally slower third quarter, what we've looked at is not being as adamant that our people maintain as much of the workforce that they had. We're not really laying people off, but we're really looking closely at over time, we're looking at temp labor. And in cases where you have people with open positions, we're just telling them not to fill them at this point in time, and then basically kind of doing a hiring freeze. And we think that that is sustainable here through the second half of the year. If the first quarter and the second quarter of next year will come back more on the fashion of 2017 and 2018, we'd have the flexibility to go back and increase that if we needed to.

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Operator [38]

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This concludes the question-and-answer session. I'd now like to turn the floor back over to management for any closing comments.

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Richard T. Marabito, Olympic Steel, Inc. - CEO & Director [39]

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Thank you, operator. Once again, thank you for joining us this morning, and thanks for your interest in Olympic Steel. We hope to speak with some of you at the upcoming Jefferies Conference next week in New York. In the meantime, have a great day, and we'll look forward to talking with you again next quarter. Thank you.

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Operator [40]

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This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.