Earnings call transcript: Olympic Steel Q2 2025 beats EPS expectations

Olympic Steel (ZEUS) reported its earnings for the second quarter of 2025, surpassing earnings per share (EPS) expectations with an actual EPS of $0.50 compared to a forecast of $0.43. This represents a surprise increase of 16.28%. The company experienced a slight revenue shortfall, with actual revenue at $496.48 million, just below the forecasted $499 million. According to InvestingPro analysis, the stock appears slightly undervalued at its current price of $31.10, with analysts setting a target price of $40. The company’s strong free cash flow yield and conservative valuation metrics suggest potential upside opportunity.

Key Takeaways

• EPS exceeded expectations by 16.28%, reaching $0.50.
• Revenue slightly missed projections, coming in at $496.48 million.
• Net income decreased to $5.2 million from $7.7 million in Q2 2024.
• The company reduced its debt to $233 million.
• Olympic Steel maintained a quarterly dividend of $0.16 per share.

Company Performance

Olympic Steel demonstrated resilience in a challenging market, with a notable performance in its specialty metals segment, which saw a 60% improvement in EBITDA from the previous quarter. The company’s focus on operational efficiency and value-added services contributed to maintaining positive EBITDA across all business segments, despite a contraction in the industry.

Financial Highlights

• Revenue: $496.48 million (down from forecast)
• Earnings per share: $0.50 (16.28% above forecast)
• Net income: $5.2 million (down from $7.7 million in Q2 2024)
• Adjusted EBITDA: $20.3 million (26% increase from Q1 2025)
• Debt reduced to $233 million

Earnings vs. Forecast

Olympic Steel’s EPS of $0.50 surpassed the forecasted $0.43, marking a significant positive surprise of 16.28%. In contrast, revenue fell short of expectations by 0.51%, coming in at $496.48 million against a forecast of $499 million. This marks a mixed performance compared to previous quarters, where revenue typically aligned more closely with forecasts.

Market Reaction

Despite the earnings beat, Olympic Steel’s stock price remained stable in after-hours trading, closing at $31.10. The stock is currently trading within its 52-week range of $26.32 to $45.23, reflecting cautious investor sentiment amidst industry contraction and a slight revenue miss.

Outlook & Guidance

Looking ahead, Olympic Steel anticipates continued challenges in the market environment but sees potential positive trends, including tariff resolutions and increased onshoring opportunities. With a beta of 1.66, the stock shows higher volatility than the market, potentially offering opportunities for active investors. The company plans to focus on strategic acquisitions and organic growth, with an EPS forecast of $0.49 for Q3 2025 and $1.46 for the full year. Discover detailed growth projections and company health metrics with a InvestingPro subscription, including access to the comprehensive Pro Research Report covering Olympic Steel’s strategic positioning and growth potential.

Executive Commentary

CEO Rick Maravito emphasized the company’s resilience, stating, "Despite that uncertainty, our strategies and disciplined approach, combined with a strong foundation we have built for a more resilient Olympic Steel, resulted in solid performance in a challenging environment." President and COO Andrew Greif added, "We are a resilient organization with the right strategy to lead us into the future, drive our growth and help us deliver profitable results under all market conditions."

Risks and Challenges

• Industry contraction may continue to pressure revenues.
• Potential volatility in steel pricing could impact margins.
• Economic uncertainty and potential regulatory changes pose risks.
• Supply chain disruptions may affect operational efficiency.

Q&A

During the earnings call, analysts inquired about margin improvements driven by index pricing and product mix. Executives also addressed the potential impacts of new tax legislation and international investments, highlighting increased deal flow in mergers and acquisitions as a key area of focus.

Full transcript - Olympic Steel Inc (ZEUS) Q2 2025:

Conference Operator: Good morning and welcome to the Olympic Steel twenty twenty five Second Quarter Financial Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. At this time, I’d like to hand the conference over to Rich Manson, Chief Financial Officer at Olympic Steel.

Please go ahead, sir.

Rich Manson, Chief Financial Officer, Olympic Steel: Thank you, operator. Welcome to Olympic Steel’s earnings call for the 2025. Our call this morning will be hosted by our Chief Executive Officer, Rick Maravito, and we will also be joined by President and Chief Operating Officer, Andrew Greif. 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 Form 10 ks 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.

Now, I’ll turn the call over to Rick.

Rick Maravito, Chief Executive Officer, Olympic Steel: Thank you, Rich, and good morning, everyone. Thank you for joining us today to discuss Olympic Steel’s twenty twenty five second quarter results. I’ll begin by providing some perspective on our performance in the second quarter and how we’re navigating the current environment. Andrew will then review our second performance. And following that, Rich will discuss our financial results in more detail.

And then as always, we’ll open the call up for your questions. As we all know, news around tariffs has been dominating the headlines and creating uncertainty throughout the manufacturing industry, the metal supply chain and with our customers. Despite that uncertainty, our strategies and disciplined approach, combined with a strong foundation we have built for a more resilient Olympic Steel, resulted in solid performance in a challenging environment. In the second quarter, we reported sales of $496,000,000 and net income of $5,200,000 As we mentioned on our last call, we saw significant buy ahead activity by customers late in the first quarter as they reacted to the initial steel and aluminum tariffs and the potential for reciprocal tariffs. As a result, there was some sequential volume pullback in the second quarter, yet our flat rolled shipping volumes for the 2025 remained slightly ahead of volume for the 2024, while the industry actually experienced contraction for that period.

While second quarter volumes were down sequentially, margins from our flat rolled business improved, and we delivered adjusted EBITDA of $20,300,000 That’s a 26% increase compared with the first quarter. And importantly, all three of our business segments continued to deliver positive EBITDA. This performance is the result of our strategy to build a stronger, more resilient Olympic Steel. Our efforts to diversify into higher value metal intensive products, expand our fabricating capabilities and lean into our operational disciplines have put us in a position to deliver profitable results, even when industry shipping volumes and pricing are falling. With a strong balance sheet and more than $300,000,000 of borrowing availability, we are in excellent financial position to make additional accretive acquisitions, as well as fund our organic investments to drive profitable growth, further efficiencies and enhance safety in our operations.

As we previously announced, our robust 2025 CapEx plan, which includes new processing and automation equipment, continues to proceed as scheduled. Andrew will share more specifics in a few moments. Our track record on the M and A front has been highly successful, completing eight acquisitions in the last seven years. The integration of our most recent acquisition, Metalworks, has gone seamlessly, and their results have been accretive to earnings. As we look ahead to the second half of the year, we expect the environment will remain challenging.

We do, however, see a few positive emerging trends, like resolution of reciprocal tariffs and the new tax legislation that reinforce our optimism for the longer term outlook for the steel industry and especially for Olympic Steel. Andrew will have more to share on that in his comments. As always, I’m proud of our team for their hard work and dedication to Olympic Steel. I’m confident that together, we continue to build on our strengths and ensure Olympic Steel continues to deliver profitable results, no matter the market environment. I’ll now turn the call over to Andrew.

Andrew Greif, President and Chief Operating Officer, Olympic Steel: Thank you, Rick, and good morning, everyone. We continue to navigate an unprecedented environment for the metals industry. As previously noted, the twenty five percent sequential increase in first quarter twenty twenty five volume was generated by purchasing ahead of anticipated price increases. Shipping data from our trade association indicates that for most products, service center shipping rates in 2025 are below 2024. Despite this negative trend, our first half twenty twenty five flat roll shipments remain above our first half twenty twenty four shipping levels.

As Rick discussed, our team has done an excellent job positioning Olympic Steel for success in even the toughest markets. During the second quarter, we improved margins for our flat roll products. This improvement, combined with the steadiness of our end products businesses, helped to drive a 26% sequential increase in adjusted EBITDA, showing once again our ability to be profitable in the face of challenging conditions. This was an outstanding effort by our team to stay focused on controlling what we can control. Second quarter activity in our Carbon segment reflected the overall metals industry sentiment.

Profitability remained solid with second quarter EBITDA of $12,500,000 with strength from our manufactured product companies. The Pipe and Tube segment recorded adjusted EBITDA of $6,700,000 with the goal to grow this business and drive margin improvement. We expect improved second half twenty twenty five demand for data center work related to Pipe and Tube. Business conditions for both stainless and aluminum products began to improve during the second quarter, resulting in sequential improvements in both volume and profitability for the Specialty Metals Group. EBITDA was $5,900,000 and more than 60% improvement from the first quarter.

We also gained market share across our stainless and aluminum product lines. We are seeing momentum in the market for the 2025 following the doubling of Section two thirty two tariffs on steel and aluminum to 50% and subsequent domestic mill price increases. Our robust CapEx plan for 2025 includes $35,000,000 of spending, primarily on organic growth opportunities, which include a new cut to length line in Minneapolis, Minnesota, a new white metals cut to length line in Schaumburg, Illinois, the automation of our warehouse in Chambersburg, PA and the expansion of Action Stainless’ presence in Houston, Texas along with a new high speed stainless slitter at our Berlin Metals operation outside of Gary, Indiana. With the exception of the slitter, the other projects are expected to be operational by the 2025 and will help fuel our growth in 2026 and beyond. The Berlin Slitter is expected to be operational by the end of the first quarter of twenty twenty six.

While we expect market uncertainty to remain in the near term, we are encouraged by the emerging trends and opportunities for the steel industry. For example, we are seeing increased increase for fabrication services, especially amongst OEMs looking to onshore, outsource or expand their first stages of manufacturing in The U. S. Olympic Steel is well positioned to capitalize on the trend to increase U. S.

Manufacturing in the months and years to come. We are a resilient organization with the right strategy to lead us into the future, drive our growth and help us deliver profitable results under all market conditions. With that, I’ll turn the call over to Rich.

Rich Manson, Chief Financial Officer, Olympic Steel: Thank you, Andrew. As you’ve heard from both Rick and Andrew, our team did an excellent job delivering solid results during the second quarter despite significant macroeconomic challenges and uncertainty. The benefits of our focus on controlling what we can control is apparent in our results. Before I discuss the results in more detail, I want to remind everyone that comparisons are impacted by the November 2024 acquisition of Metalworks, whose results are included in the Carbon segment. Second quarter net income totaled $5,200,000 compared with $7,700,000 in the 2024.

Adjusted EBITDA in the quarter was $20,300,000 compared with $21,300,000 in the prior year period. These results include $750,000 of LIFO expense in the 2025, compared with $1,000,000 of LIFO pretax income in the 2024. Adjusted EBITDA for the 2025 was 26% stronger than the adjusted EBITDA for the 2025. Consolidated operating expenses for the second quarter totaled $110,400,000 compared with $104,600,000 in the 2024. Our second quarter twenty twenty five operating expenses reflect the addition of Metal Works, which does not report tons sold.

Therefore, operating expenses per ton at the consolidated level and for the Carbon segment will appear higher year over year. As a reminder, we do not report tons sold for McCullough Industries, EZ Dumper, Metal Fab, Shaw Stainless or the entire Pipe and Tube segment. Second quarter consolidated operating expenses included $2,500,000 of Metal Works operating and acquisition related expenses and $200,000 of lower incentive expenses when compared to the 2024. We reduced debt during the second quarter, bringing our total debt to $233,000,000 which is $39,000,000 lower than year end levels. We have approximately $3.00 $5,000,000 of availability under our asset based revolving credit facility, providing us with an excellent source of flexible, low cost capital to fund our strategic growth initiatives.

Total capital expenditures totaled $17,500,000 in the 2025 compared with depreciation of $13,000,000 We estimate that 2025 capital expenditures will be approximately $35,000,000 The investment is higher than historical levels as we focus on supporting our automation and additional organic growth initiatives, as Andrew noted. Our second quarter twenty twenty five effective tax rate was compared to 28.4% in the same period last year. We expect our 2025 tax rate to approximate 28% to 29%. In addition, we paid a quarterly dividend of $0.16 per share in the second quarter. Our Board of Directors approved our next regular quarterly cash dividend of $0.16 per share, which is payable on 09/15/2025 to shareholders of record on 09/02/2025.

The company has now paid regular quarterly dividends dating back to 02/2006. Before we open the call for your questions, I would like to thank the entire Olympic Steel team for all their efforts in the second quarter. We know there are challenges and uncertainty, but we also know our business, our markets and our customers very well. Our team is executing in a consistent and strategic manner that enables us to deliver these results and to continue to build shareholder value. Operator, we are now ready for questions.

Conference Operator: Thank you. At this time, we’ll be conducting a question and answer session. Please proceed with your question.

Sam, Analyst: Thanks for the color earlier, Andrew, on some of the new equipment that you’re getting in. Wanted to dive a little more into the new processing and automation equipment that’s beginning to arrive. Just maybe talk a little more about the benefits that you’ll see once those pieces start to contribute and if possible, quantify some of the benefits that you’ll glean from those.

Andrew Greif, President and Chief Operating Officer, Olympic Steel: Yeah, great question. Thanks, Sam. So this has been a project that has been years in making. The equipment is a combination of things including high speed lasers, in addition to a whole casto system that allows us to move product throughout the building with very little touch from employees. So part of the automation will be number one, to improve safety so that we’re touching the product less.

And it will at some point reduce the number of employees that we have in that specific location as the automation gets going.

Rick Maravito, Chief Executive Officer, Olympic Steel: And then some of the other CapEx that Andrew talked about also really will enhance productivity. So maybe you could talk about, some of the new cut to length lines and the slitter also. Think those

Chris Sakai, Analyst, Singular Research: are Sure.

Andrew Greif, President and Chief Operating Officer, Olympic Steel: So we have, as you know, we have, two cut to length lines. One is going into our Minneapolis facility, the other is going into our Schaumburg facility. The Schaumburg facility cut to length line will be primarily for aluminum. It’s a very fast growing product line for us, as you know Sam. The Minneapolis line is going to be a light gauge line, so going to be focusing a lot on galvanized and other tandem products.

As well as the new slitter that’s going to be going into our Berlin operation, that won’t be operational until the beginning of next year. But that is a very light gauge, so somewhere in the, call it in the 10 range is what that will end up doing for us.

Rick Maravito, Chief Executive Officer, Olympic Steel: Yes, then Sam, in terms of kind of quantification, obviously, as Andrew said, of the equipment is just becoming operational, call it in the fourth quarter, with the exception of the Berlin Slitter, as he mentioned. So really the ramp up in terms of seeing the results in our results will be more towards next year. As you know, we do a pretty rigorous process in terms of justification on CapEx and acquisitions. So we’re pretty excited about the return profiles of all five of these big projects. But you’d start to see them phasing in early next year.

Sam, Analyst: Thank you, guys. That was very helpful. And then it was great to see Pipe and Tube gross margins stay safely above that 30% mark. I know a component component of that segment’s profitability transformation over the last few years has been the OEM outsourcing fabrication work. Any more detail you can provide on the work you’re doing for those OEMs, the incremental increase in interest since the tariff announcements or if some of that increase has also been on the carbon side?

Dave Storms, Analyst, Stonegate Investment Group: Well,

Andrew Greif, President and Chief Operating Officer, Olympic Steel: it has been a continuation of the customer kind of as on the flat roll side, Sam, where instead of supplying the tube, they’re now looking for something else to be done. We have 19 high speed tube lasers that are very active and going into a variety of industries. So very strong in the industrial OEMs and where we’re really seeing an increase in that business has been in the data centers. We’ve seen significant growth on that side of it. And so whether it’s in the carbon side or even in stainless side for the pipe and tube, the growth has been pretty extraordinary on the fabrication.

Sam, Analyst: Okay. And then last one for me. Obviously, first quarter demand with some pull forward and then coming off the second quarter volume decline in carbon flat, how were trends in July and how do you think things are shaping up for August?

Rich Manson, Chief Financial Officer, Olympic Steel: Hey Sam, it’s Rich. I think what we typically see is this is a typical seasonal year, right? And what we’ve seen historically say over the last five to six years is third quarter is typically down 5% to 6% sequentially from Q2. And that’s really all due kind of to the July holiday. The first two weeks of July typically are very slow and didn’t see anything different this year than we typically see in other years.

Sam, Analyst: Okay, thanks guys and congrats on the solid quarter.

Andrew Greif, President and Chief Operating Officer, Olympic Steel: Thank you. Thank you.

Conference Operator: Our next question comes from Dave Storms with Stonegate Investment Group. Please proceed with your question.

Dave Storms, Analyst, Stonegate Investment Group: Morning, everyone, and thanks for taking my questions. I just wanted to start with some of the flat roll margin improvements that you mentioned. How should we be thinking about maybe the main drivers of this margin improvement?

Rich Manson, Chief Financial Officer, Olympic Steel: David, it’s Rich. And I think it was just really kind of a function of how the index pricing changed throughout the first half of the year. And so, obviously, pricing shut up after the announcements in February with the tariffs. We had secured some inventory at lower pricing that allowed you to sell that at higher prices coming into the second quarter. That’s essentially the margin improvement that you see based on index pricing.

Rick Maravito, Chief Executive Officer, Olympic Steel: Yeah, then the other thing I’d add, this is Rick Dave. The other thing I’d add is, obviously, we’ve talked a lot about it the last several years, strategically, as we’ve also tried to enrich our mix. And when I say enrich our mix, it’s everything including on the carbon side doing more coated product, a product that carries a slightly higher pricing point and better margins. It’s doing more fabricating and value add work. And a big piece of it is our acquisition strategy, where we’ve gained diversification by owning, some companies that make some end products.

So it’s all of that. And sometimes, when the markets start to recede, is the time you see the manifestation of that. And so I think that’s part of what you’re seeing, aside from the basics in service center pricing market and where the cost of the metal is.

Dave Storms, Analyst, Stonegate Investment Group: That’s very helpful. Thank you. I know you also mentioned in your prepared remarks, you’re seeing some inbound inquiries jumping up and that’s a nice leading indicator. Are there any other leading indicators to maybe highlight, maybe some divergence in contract for spot price, lead times extending, anything like that?

Rick Maravito, Chief Executive Officer, Olympic Steel: No, I think from my perspective, as I take a little bit of a longer view, I think getting some of the uncertainties settled out of Washington DC will be helpful. So I think we checked the box on the tax legislation. So that’s a good thing. The tariffs are still, as evidenced by last night’s all the announcements, but the tariffs are still in flux. Hopefully, we get some resolution on those in the near term.

We do like and Andrew talked about it, continue to see really strong quoting on fabricating and, outsource value add work from a lot of our OEMs. And I think, that’s really a continuation from what we’ve talked about as far back as coming out of COVID. So we see that. Andrew mentioned some strength in data center business, which we’re a big participant in, and really many of our divisions and many of our products. So those would be some of the positives.

I think it’s always July as Rich said, July is always a more of a muted seasonally slow month. And we obviously saw that this year, but it’ll be good moving into August. I think we’ll see some normal pickup in business. But yeah, that’s what we see. And then I tell you the general backdrop hasn’t changed though that much.

Dave Storms, Analyst, Stonegate Investment Group: That’s informative. Thank you. And then just one more for me if I could. You mentioned that comment to checking the box on tax legislation. Hoping to spend a little more time there.

Any other impacts from the tax legislation other than maybe just the bonus depreciation that could work as a tailwind for you guys? Anything else here that you’re keeping your eye on as it evolves?

Rick Maravito, Chief Executive Officer, Olympic Steel: Well, why don’t you answer for Olympic, and then we can also talk about why it’s good for our business in terms of the bonus depreciation.

Rich Manson, Chief Financial Officer, Olympic Steel: Yeah, absolutely, Dave. So it’s Rich. Yeah, I think depreciation of anything is the most significant part of the tax legislation. This has happened a number of times over, say, the last decade through various tax legislation, and it’s very helpful to our customer base. So for us, it will obviously allow us to depreciate some of the projects that not the current projects, but any projects that we’ve entered into after January 2025 on a faster basis.

But I think the bigger impact really is our customer base. That really does help, you know, kind of the OEMs and their customer base, the need, know, helps drive demand, which is always good for us and good for the industry.

Rick Maravito, Chief Executive Officer, Olympic Steel: Yeah, I think the depreciation, deductibility for customers, when you combine that with when we start to see interest rates come down, whenever that will be, those two things, I think, will be a pretty powerful boost to demand. So we’ve got part of the equation in place, but the bigger part is really the interest rates.

Dave Storms, Analyst, Stonegate Investment Group: Understood. Thank you for the time and, good luck in Q3.

Sam, Analyst: Thank you.

Conference Operator: Our next question comes from Chris Sakai with Singular Research. Please proceed with your question.

Chris Sakai, Analyst, Singular Research: Yes, hi, good morning.

Rich Manson, Chief Financial Officer, Olympic Steel: Morning, Chris.

Chris Sakai, Analyst, Singular Research: Can you talk about the gross margin in Carbon Flat? Looks like it improved year over year. What initiatives really helped that improvement?

Rich Manson, Chief Financial Officer, Olympic Steel: Hey, Chris, it’s Rich. I think Rick had addressed a couple of those on the last question. But I think that what you saw was a combination of an increase in index pricing. You saw the better mix that we’ve had, as Rick indicated, we got a better concentration in some higher margin products. It’s the focus on fabrication and I’ll give a shout out to our end products companies who did have a very strong second quarter, all of that combined to help that gross margin on the carbon side.

Chris Sakai, Analyst, Singular Research: Okay, great. Can you talk about operating expenses? What should we be expecting for the rest of the year and operating expenses?

Rich Manson, Chief Financial Officer, Olympic Steel: Yeah, Chris, I mean, I think what you saw is operating expenses were relatively flat in Q2 versus Q1. And what we try to do is make sure that those operating expenses move on a variable basis with volume. We did in an earlier question say that typically Q3 is seasonally slower than Q2. With that, we’d expect to take the operating expenses down commensurately with volume.

Chris Sakai, Analyst, Singular Research: Can you talk about do you have an outlook for the pricing for hot rolled steel in the second half of the year? Do you see any stabilization there?

Andrew Greif, President and Chief Operating Officer, Olympic Steel: Yeah, Chris, this is Andrew. I think you’ll see the second half of the year is going to be similar to what you’ll see, what we saw in the first half. Think there’s some variables that could change that. Certainly you have a 50% tariff. If the tariff is reduced, as you know, it went from 25% to 50%.

If it’s reduced back to 25%, if the tariff is replaced by a quota and the economy stays, at least with our customers the way that we see it, you could see some pressure. But barring that, I think you’re going to see some stability for the second half of the year.

Chris Sakai, Analyst, Singular Research: Okay, thanks. And last one, this is more of a macro question, but we’re seeing some large investments from other countries like Japan and Europe from these tariff deals, is that going to be affecting demand?

Andrew Greif, President and Chief Operating Officer, Olympic Steel: Chris, this is Andrew. I think it’s a little early to tell. There have been a lot of numbers that have been reported. I would say soft on specifics. And I think the more manufacturing that can come to The United States, the better it’s going to be for The United States and certainly the steel industry.

And so we’re encouraged by the news out of Washington and the tariff deals that have been made that’s talking about countries investing in The US and the building and potential opportunities for us and manufacturing in general.

Chris Sakai, Analyst, Singular Research: Okay, great. Thanks for the answers.

Andrew Greif, President and Chief Operating Officer, Olympic Steel: Thanks, Chris. Our

Conference Operator: next question comes from Phil Gibbs with KeyBanc Capital Markets. Please proceed with your question.

Phil Gibbs, Analyst, KeyBanc Capital Markets: Hey, good morning.

Rick Maravito, Chief Executive Officer, Olympic Steel: Good morning, Phil.

Phil Gibbs, Analyst, KeyBanc Capital Markets: I know there was a question earlier about the big beautiful bill. Are there actual discrete tax benefits that you all will realize in the ’5, given a lot of the investments you’re putting in place this year?

Rich Manson, Chief Financial Officer, Olympic Steel: Hey, Phil, it’s Rich. Yeah, unfortunately, we went forward with this large organic growth opportunities before January 2025, which that’s the cutoff date for those. So we will not get the bonus depreciation on those. But yeah, future projects, we certainly will look to get that benefit, but I do not expect to have a significant impact on the 2025 tax rate.

Phil Gibbs, Analyst, KeyBanc Capital Markets: Okay, And then regarding that working capital, typically the second half is a source of cash for you all. I know pricing has been kind of been volatile across products, but you typically do have a second half tailwind and cash flow associated with that. What are you expecting this year?

Rich Manson, Chief Financial Officer, Olympic Steel: Yes, Phil, I think we’re evaluating that right now. I think the thing that has changed since we had the last call was that the 25% base increase in stainless pricing. So we’re evaluating some opportunities in stainless. And so my outlook right now for Q3 is probably more flattish on debt than a pay down.

Phil Gibbs, Analyst, KeyBanc Capital Markets: And in Q4, you typically will still get that release?

Rich Manson, Chief Financial Officer, Olympic Steel: Well, we’ll see where pricing goes. So I’m going quarter by quarter right now. And so based on what I know, I think we’re flattish for Q3.

Phil Gibbs, Analyst, KeyBanc Capital Markets: Okay. And then lastly, mentioned have over $300,000,000 of liquidity available to you all. I know M and A has been a big part of your strategy over the last several years. Are there still a swath of decent opportunities out there that you could be exploring?

Rick Maravito, Chief Executive Officer, Olympic Steel: Yes, Phil. Great question. It’s Rick. Really, we saw the opportunity flow really slow down towards the end of last year and through the first quarter. We’ve seen it pick up in the second quarter.

So we’re certainly seeing and looking at more things. Obviously, as we’ve stated every quarter, M and A is still a big piece of our strategy in addition to, the pretty large CapEx plan we went through for this year. So we’re actively looking. I think we’re starting to see, some better candidates that really fit our target zone. So more to come on that as we work through the third quarter.

But the good news is, I think that little bit of a hesitation and pause that we saw for, call it, three or four months seems to start to be that logjam of nothing happening seems to be opening up a bit. So we’ll continue to be active. We’re looking at a lot of things and we’ll continue to be disciplined too, Phil. We’ve said it many times, while growth through a combination of organic growth our CapEx and acquisition is the way forward for us strategically. We’re going to stay disciplined and we’re not going to make an acquisition just to say we have to make an acquisition because it’s been a couple of quarters.

I’m optimistic as we work through the back half that we’ll continue to see some, really good fits for Olympic.

Phil Gibbs, Analyst, KeyBanc Capital Markets: Thank you.

Conference Operator: We have reached the end of the question and answer session. I’d now like to turn the call back over to Rick Marabito for closing comments.

Rick Maravito, Chief Executive Officer, Olympic Steel: Thank you, operator. And I just want to thank all of you for joining us today on our call. We appreciate your continued interest in Olympic Steel, and we look forward to speaking with you again next quarter. Thank you, and everyone have a great day.

Conference Operator: This concludes today’s conference. You may disconnect your lines at this time, and we thank you you for your participation.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.