Olympic Steel (ZEUS) Sidoti Small-Cap Virtual Conference summary

Company overview and business model

• Operates as a metal service center, bridging metal producers and end users, with 54 locations and 4.4 million sq ft, mainly in the eastern U.S. and one facility in Mexico.

• Sources over 90% of metal domestically, with less than 10% imported, mainly from Canada.

• Generates about $2 billion in sales, with 2,100 employees; product mix is 57% carbon, 26% stainless/aluminum, and the rest pipe/tube.

• Focuses on reducing cyclicality through product diversification, acquisitions, and disciplined capital deployment.

Strategic growth and acquisitions

• Completed eight acquisitions in seven years, including end-product manufacturers to counteract industry cyclicality.

• Recent acquisition of Metal Works for $80 million, yielding 25-30% EBITDA returns, integrates supply chain and processing synergies.

• End-product portfolio includes industrial containers, bollards, HVAC parts, metal canopies, and dump truck retrofits.

• Growth strategy aims to double normalized EBITDA, with a shift toward higher-margin segments like stainless, aluminum, and tubing.

• Mix of organic and acquisition-driven growth across all product segments.

Financial position and capital structure

• Maintains a simple balance sheet with a $625 million asset-based loan, $250 million drawn, and over $200 million available.

• Strong cash flow generation, especially in countercyclical markets, allowing for debt reduction and funding growth.

• Most real estate is unencumbered, providing additional financial flexibility.

• Comfortable with debt/EBITDA ratios around 2, with a preference not to exceed 4-5.