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Olympic Steel Acquires Metal-Fab to Diversify

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Olympic Steel Inc. (ZEUS Instant Quote) ZEUS –  announced the acquisition of Metal-Fab, Inc., a maker of venting and filtering products. Olympic Steel’s ambition to diversify and grow in higher-return goods and services will benefit from the acquisition. ZEUS will increase its product options, production capabilities, and geographic reach as a result of the acquisition.

Olympic Steel’s $131 million acquisition of Metal-Fab is its sixth acquisition in the last five years and its second-largest transaction overall.

Metal-Fab, founded in 1958, has two warehousing and fabrication sites in Kansas. The company creates venting and filtering products, mostly made of coated carbon and stainless steel, for use in residential, commercial, and industrial settings.

Olympic Steel now has a solid foundation for expansion in two major market segments: stainless steel and carbon coated. Olympic Steel’s growing array of metal-intensive end-use products will benefit from Metal-manufacturing Fab’s experience and diverse product offering.

After acquiring Metal-Fab, Olympic Steel expanded its asset-based revolving credit capacity to $625 million from $475 million. Olympic Steel’s total debt under the revolving credit facility is currently around $297 million, with an additional $280 million available. This will allow Olympic Steel to diversify further through investments.

In the third quarter of 2022, Olympic Steel reported adjusted earnings of $1.14 per share, beating the Zacks Consensus Estimate of 93 cents. Notably, the company reported earnings of $4.09 per share a year ago. Net sales for the third quarter totaled $634 million, down 5.1% year over year. The top line missed the Zacks Consensus Estimate of $678 million.

The company’s third-quarter results were hurt by a significant decline in metal prices in the quarter and macroeconomic uncertainty caused by the ongoing supply-chain constraints, labor shortages and inflation.

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