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Olympic Steel Reports Record Fourth-Quarter and Full-Year 2018 Net Sales

Full-Year Net Sales Increased 29%, Versus 2017, to Record-High $1.7 Billion in 2018

Full-Year Operating Income Grew 138% to $57 Million in 2018

CLEVELAND–(BUSINESS WIRE)–February 15, 2019–Olympic Steel Inc. (Nasdaq: ZEUS), a leading national metals service center, today announced financial results for the three and twelve months ended Dec. 31, 2018. As filed with the SEC.

Full-Year 2018 Results

Net sales rose 29% in 2018, reaching $1.7 billion, compared with $1.3 billion in 2017. Increased year-over-year shipping volume, combined with higher average prices in all three of the Company’s operating segments, drove the net sales increase. Operating income more than doubled in 2018, to $57.1 million, up from $24.0 million in the prior year. Full-year 2018 (GAAP) net income improved 78% to $33.8 million, or $2.95 per diluted share, compared with net income of $19.0 million, or $1.67 per diluted share in 2017.

“All three operating segments achieved record net sales in 2018,” said Chief Executive Officer Richard T. Marabito. “Building on the strong results generated in 2017, our 2018 results marked the third-most profitable year in our Company’s history.”

In 2018, LIFO expense totaled $8.4 million, or $0.56 per diluted share, compared with LIFO expense of $2.7 million, or $0.15 per diluted share, in the prior year. In 2017, results were also impacted by a $6.2 million deferred tax liability revaluation benefit, partially offset by a $1.0 million commercial settlement, and a write-off of $0.2 million in deferred financing expenses, which were realized in the fourth quarter of 2017.

“On Jan. 2, 2019, we announced our acquisition of McCullough Industries. This is our first acquisition of a manufacturer of metal-intensive branded products,” Marabito said. “The vertical downstream advantages of the McCullough acquisition and capital expenditures in all three of our operating segments in 2018 advance our long-term growth strategy to deploy capital for higher financial returns while reducing volatility. We continue to seek additional manufacturers of branded products where we can deploy our purchasing, logistics and processing expertise to achieve synergies.”

Fourth-Quarter 2018 Results

The Company achieved record fourth quarter sales of $430 million in 2018, up 39% from $308 million in sales during the fourth quarter of 2017. Fourth quarter 2018 operating income totaled $1.8 million, compared to an operating loss of $2.0 million in 2017. The current quarter results include $3.7 million of LIFO expense. The impacts of higher LIFO expense in 2018, and the aforementioned fourth quarter 2017 tax benefit and other unusual items, resulted in a (GAAP) net loss of $1.3 million, or $0.11 per share in 2018, compared to net income of $4.2 million or $0.37 per share last year. Adjusting for the LIFO expenses in both periods, and for the 2017 tax income and other unusual items, adjusted (non-GAAP) earnings per share improved to $0.14 in the fourth quarter of 2018, versus an adjusted (non-GAAP) net loss per share of $0.04 in last year’s fourth quarter. The table that follows provides a reconciliation of non-GAAP measured to measures prepared in accordance with GAAP.