10q10k10q10k.net

What changed in OLYMPIC STEEL INC's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of OLYMPIC STEEL INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+237 added−226 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-23)

Top changes in OLYMPIC STEEL INC's 2024 10-K

237 paragraphs added · 226 removed · 208 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

56 edited+9 added−9 removed63 unchanged
Biggest changeSuch forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those implied by such statements including, but not limited to, those set forth in Item 1A (Risk Factors) below and the following: ● risks of falling metals prices and inventory devaluation; ● supply disruptions and inflationary pressures, including the availability and rising costs of labor and energy; ● risks associated with shortages of skilled labor, increased labor costs and our ability to attract and retain qualified personnel; ● rising interest rates and their impacts on our variable interest rate debt; ● supplier consolidation or addition of new capacity; ● risks associated with the invasion of Ukraine, including economic sanctions, and the conflicts in the Middle East, or additional war, military conflict, or hostilities could adversely affect global metals supply and pricing; ● general and global business, economic, financial and political conditions, including, but not limited to, recessionary conditions and legislation passed under the current administration; ● reduced production schedules, layoffs or work stoppages by our own, our suppliers’ or customers’ personnel; ● risks associated with supply chain disruption resulting from the imbalance of metal supply and end-user demands, including additional shutdowns as a result of infectious disease outbreaks in large markets, such as China and other factors; ● our ability to successfully integrate recent acquisitions, including CTB and Metal-Fab, into our business and risks inherent with the acquisitions in the achievement of expected results, including whether the acquisition will be accretive and within the expected timeframe; ● the adequacy of our existing information technology and business system software, including duplication and security processes; ● the levels of imported steel in the United States and the tariffs initiated by the U.S. government in 2018 under Section 232 of the Trade Expansion Act of 1962 and imposed tariffs and duties on exported steel or other products, U.S. trade policy and its impact on the U.S. manufacturing industry; ● the inflation or deflation existing within the metals industry, as well as product mix and inventory levels on hand, which can impact our cost of materials sold as a result of the fluctuations in the last-in, first-out, or LIFO, inventory valuation; ● risks associated with the infectious disease outbreaks, including, but not limited to customer closures, reduced sales and profit levels, slower payment of accounts receivable and potential increases in uncollectible accounts receivable, falling metals prices that could lead to lower of cost or net realizable value inventory adjustments and the impairment of intangible and long-lived assets, negative impacts on our liquidity position, inability to access our traditional financing sources and increased costs associated with and less ability to access funds under our asset-based credit facility, or ABL Credit Facility, and the capital markets; ● increased customer demand without corresponding increase in metal supply could lead to an inability to meet customer demand and result in lower sales and profits; ● competitive factors such as the availability, and global pricing of metals and production levels, industry shipping and inventory levels and rapid fluctuations in customer demand and metals pricing; ● customer, supplier and competitor consolidation, bankruptcy or insolvency; ● the timing and outcomes of inventory lower of cost or net realizable value adjustments and LIFO income or expense; ● cyclicality and volatility within the metals industry; ● reduced availability and productivity of our employees, increased operational risks as a result of remote work arrangements, including the potential effects on internal controls, as well as cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events; ● fluctuations in the value of the U.S. dollar and the related impact on foreign steel pricing, U.S. exports, and foreign imports to the United States; ● the successes of our efforts and initiatives to improve working capital turnover and cash flows, and achieve cost savings; 14 Table of Contents ● risks and uncertainties associated with intangible assets, including impairment charges related to indefinite lived intangible assets; ● our ability to generate free cash flow through operations and repay debt; ● the amounts, successes and our ability to continue our capital investments and strategic growth initiatives, including acquisitions and our business information system implementations; ● events or circumstances that could adversely impact the successful operation of our processing equipment and operations; ● the impacts of union organizing activities and the success of union contract renewals; ● changes in laws or regulations or the manner of their interpretation or enforcement could impact our financial performance and restrict our ability to operate our business or execute our strategies; ● events or circumstances that could impair or adversely impact the carrying value of any of our assets; ● our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; ● our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any; ● our ability to sell shares of our common stock under the at-the-market equity program; and ● unanticipated developments that could occur with respect to contingencies such as litigation, arbitration and environmental matters, including any developments that would require any increase in our costs for such contingencies.
Biggest changeSuch forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those implied by such statements including, but not limited to, those set forth in Item 1A (Risk Factors) below and the following: ● supply disruptions and inflationary pressures, including the availability and rising costs of labor and energy; ● risks associated with shortages of skilled labor, increased labor costs and our ability to attract and retain qualified personnel; ● risks of volatile metals prices and inventory devaluation; ● rising interest rates and their impacts on our variable interest rate debt; ● supplier consolidation or addition of new capacity; ● the levels of imported steel in the United States, imposed tariffs and duties on imported and exported steel or other products, U.S. trade policy and its impact on the U.S. manufacturing industry; ● risks associated with economic sanctions, and current global conflicts, or additional war, military conflict, or hostilities could adversely affect global metals supply and pricing; ● general and global business, economic, financial and political conditions, including, but not limited to, recessionary conditions and legislation passed under the current administration; ● reduced production schedules, layoffs or work stoppages by our own, our suppliers’ or customers’ personnel; ● our ability to successfully integrate recent acquisitions, including CTB, Metal-Fab and Metal Works, into our business and risks inherent with the acquisitions in the achievement of expected results, including whether the acquisition will be accretive and within the expected timeframe; ● the adequacy of our existing information technology and business system software, including duplication and security processes; ● the inflation or deflation existing within the metals industry, as well as product mix and inventory levels on hand, which can impact our cost of materials sold as a result of the fluctuations in the last-in, first-out, or LIFO, inventory valuation; ● competitive factors such as the availability, and global pricing of metals and production levels, industry shipping and inventory levels and rapid fluctuations in customer demand and metals pricing; ● risks associated with the infectious disease outbreaks, including, but not limited to customer closures, reduced sales and profit levels, slower payment of accounts receivable and potential increases in uncollectible accounts receivable, falling metals prices that could lead to lower of cost or net realizable value inventory adjustments and the impairment of intangible and long-lived assets, negative impacts on our liquidity position, inability to access our traditional financing sources and increased costs associated with and less ability to access funds under our asset-based credit facility, or ABL Credit Facility, and the capital markets; ● increased customer demand without corresponding increase in metal supply could lead to an inability to meet customer demand and result in lower sales and profits; ● cyclicality and volatility within the metals industry; ● customer, supplier and competitor consolidation, bankruptcy or insolvency; ● the timing and outcomes of inventory lower of cost or net realizable value adjustments and LIFO income or expense; ● fluctuations in the value of the U.S. dollar and the related impact on foreign steel pricing, U.S. exports, and foreign imports to the United States; ● reduced availability and productivity of our employees, increased operational risks as a result of remote work arrangements, including the potential effects on internal controls, as well as cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events; ● the successes of our efforts and initiatives to improve working capital turnover and cash flows, and achieve cost savings; 14 Table of Contents ● risks and uncertainties associated with intangible assets, including impairment charges related to indefinite lived intangible assets; ● our ability to generate free cash flow through operations and repay debt; ● the impacts of union organizing activities and the success of union contract renewals; ● the amounts, successes and our ability to continue our capital investments and strategic growth initiatives, including acquisitions and our business information system implementations; ● events or circumstances that could adversely impact the successful operation of our processing equipment and operations; ● changes in laws or regulations or the manner of their interpretation or enforcement could impact our financial performance and restrict our ability to operate our business or execute our strategies; ● events or circumstances that could impair or adversely impact the carrying value of any of our assets; ● our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; ● our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any; ● our ability to sell shares of our common stock under the at-the-market equity program; and ● unanticipated developments that could occur with respect to contingencies such as litigation, arbitration and environmental matters, including any developments that would require any increase in our costs for such contingencies.
These operating objectives are supported by: ● A set of core values, which are communicated, practiced, measured and rewarded throughout the Company. ● Our commitment to providing a safe work environment and promoting employee health and well-being through continuous improvement activities, education and communication. ● An internal communications program designed to engage and motivate employees to support our strategy, values and culture. ● Our “flawless execution” program, or Fe program, an internal continuous improvement program that rewards employees who achieve profitable growth by delivering superior customer service and exceeding customer expectations. ● Operational initiatives designed to improve efficiencies and reduce costs by improving and automating processes and creating an environment to facilitate change and improve the way we work and create value. ● Information systems and key metric reporting to focus managers on achieving specific operating objectives. ● Alignment of compensation with the financial objectives and performance of the Company and the achievement of specific financial and operating objectives. 5 Table of Contents We believe our depth of management experiences, facilities, locations, processing capabilities, inventory, focus on safety, quality and customer service, extensive and experienced sales force, and the strength of our customer and supplier relationships provide a strong foundation for implementation of our strategy and achievement of our objectives.
These operating objectives are supported by: ● A set of core values, which are communicated, practiced, measured and rewarded throughout the Company. ● Our commitment to providing a safe work environment and promoting employee health and well-being through automation, continuous improvement activities, education and communication. ● An internal communications program designed to engage and motivate employees to support our strategy, values and culture. ● Our “flawless execution” program, or Fe program, an internal continuous improvement program that rewards employees who achieve profitable growth by delivering superior customer service and exceeding customer expectations. ● Operational initiatives designed to improve efficiencies and reduce costs by improving and automating processes and creating an environment to facilitate change and improve the way we work and create value. ● Information systems and key metric reporting to focus managers on achieving specific operating objectives. ● Alignment of compensation with the financial objectives and performance of the Company and the achievement of specific financial and operating objectives. 5 Table of Contents We believe our depth of management experiences, facilities, locations, processing capabilities, inventory, focus on safety, quality and customer service, extensive and experienced sales force, and the strength of our customer and supplier relationships provide a strong foundation for implementation of our strategy and achievement of our objectives.
We have made investments in automated packaging, material handling and welding, among other solutions, to gain production efficiencies, decrease production costs, improve safety conditions for our employees and to ease labor shortage risks. Human Capital Management Our employees are our most valued resource. The unique insights and experiences of our diverse team are what fuel our safe, profitable growth.
We have made investments in automated packaging, material handling and welding, among other solutions, to gain production efficiencies, decrease production costs, improve safety conditions for our employees and to ease labor shortage risks. Human Capital Management Our employees are our most valued resource. The unique insights and experiences of our team are what fuel our safe, profitable growth.
Through the acquisition of Central Tube and Bar, or CTB, on October 2, 2023, the tubular and pipe products segment further expanded its geographic footprint and extended its value-added contract manufacturing capabilities. We also perform toll processing of customer-owned metals. We sell certain products internationally, primarily in Canada and Mexico.
Through the acquisition of Central Tube and Bar, Inc., or CTB, on October 2, 2023, the tubular and pipe products segment further expanded its geographic footprint and extended its value-added contract manufacturing capabilities. We also perform toll processing of customer-owned metals. We sell certain products internationally, primarily in Canada and Mexico.
Although general inflation, excluding increases in the price of metals and increased labor expense, has increased during 2023, it has not had a material effect on our financial results during the past three years, but may have a significant impact in future years. 12 Table of Contents Available Information We file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange Commission, or SEC, under the Securities Exchange Act of 1934.
Although general inflation, excluding increases in the price of metals and increased labor expense, has increased during 2024, it has not had a material effect on our financial results during the past three years, but may have a significant impact in future years. 12 Table of Contents Available Information We file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange Commission, or SEC, under the Securities Exchange Act of 1934, or the Exchange Act.
Our wholly owned subsidiary, ACT Acquisition, Inc., does business under the name “Action Stainless & Alloys.” Our wholly-owned subsidiary, SHAQ, Inc., does business under the name “Shaw Stainless & Alloys”. The registered trademarks “DYNAGUARD”, “DG”, “MF”, “METAL-FAB”, “METAL-FAB INC.”, “TEMP/GUARD”, “MICRO AIR”, “CORR/GUARD”, “SURELOCK”, “ROTO-PULSE”, “MISTMAX” and “FORCE” were acquired in conjunction with the acquisition of Metal-Fab.
Our wholly owned subsidiary, ACT Acquisition, Inc., does business under the name “Action Stainless & Alloys.” Our wholly-owned subsidiary, SHAQ, Inc., does business under the name “Shaw Stainless & Alloys”. The registered trademarks “DYNAGUARD”, “DG”, “MF”, “METAL-FAB”, “METAL-FAB INC.”, “TEMP/GUARD”, “MICRO AIR”, “CORR/GUARD”, “ROTO-PULSE”, “MISTMAX”, "HYDROMAX", and “FORCE” were acquired in conjunction with the acquisition of Metal-Fab.
We have quality labs for tensile testing at several of our facilities, including at our facilities in Cleveland, Ohio, Minneapolis, Minnesota, Buford, Georgia and Bettendorf, Iowa and an Underwriters Laboratory (UL) for electrical products testing at our facility in Wichita, Kansas. In addition, 31 of our facilities have earned International Organization for Standardization (ISO) 9001:2015 certifications.
We have quality labs for tensile testing at several of our facilities, including at our facilities in Cleveland, Ohio, Minneapolis, Minnesota, Buford, Georgia and Bettendorf, Iowa and an Underwriters Laboratory (UL) for electrical products testing at our facility in Wichita, Kansas. In addition, 32 of our facilities have earned International Organization for Standardization (ISO) 9001:2015 certifications.
Our carbon flat products segment's focus is on the direct sale and distribution of large volumes of processed carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. Through acquisitions, our carbon flat products segment has expanded its product offerings to include self-dumping metal hoppers and steel and stainless-steel dump inserts for pickup truck and service truck beds.
Our carbon flat products segment's focus is on the direct sale and distribution of large volumes of processed carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. Through acquisitions, our carbon flat products segment has expanded its product offerings to include self-dumping metal hoppers and steel and stainless-steel dump inserts for pickup truck and service bed trucks.
In addition, our annual reports on Form 10-K, as well as our quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to all of the foregoing reports, are made available free of charge on or through the “Investor Relations” section of our website at www.olysteel.com as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.
In addition, our annual reports on Form 10-K, as well as our quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to all of the foregoing reports, are made available free of charge on or through the “Investors” section of our website at www.olysteel.com as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.
We have a succession planning and leadership development process in place, which allows us to further enhance our management team by the promotions of employees to executive management positions within the organization.
We have a succession planning and leadership development process in place, which allows us to further enhance our management team by the promotions of employees to senior management positions within the organization.
Our carbon flat products segment expanded into manufacturing metal intensive branded products with the acquisitions of Metal-Fab in 2023 McCullough Industries, or McCullough, and certain assets related to the manufacturing of the EZ Dumper® hydraulic dump inserts, or EZ Dumper, in 2019.
Our carbon flat products segment expanded into manufacturing metal intensive branded products with the acquisitions of Metal Works in 2024, Metal-Fab in 2023, McCullough Industries, or McCullough, and certain assets related to the manufacturing of the EZ Dumper® hydraulic dump inserts, or EZ Dumper.
Our specialty metals flat products segment was established in 2015 and has expanded since its creation, with the acquisitions of Shaw Stainless & Alloy, Inc., or Shaw, in 2021, Action Stainless & Alloys, Inc., or Action Stainless, in 2020 and, Berlin Metals, LLC in 2018.
Our specialty metals flat products segment was established in 2015 and has expanded since its creation, with the acquisitions of Shaw Stainless & Alloy, Inc., or Shaw, Action Stainless & Alloys, Inc., or Action Stainless, and Berlin Metals, LLC.
The metals producing supply base has experienced significant consolidation, with a few suppliers accounting for a majority of the domestic carbon flat-rolled steel market. We purchased approximately 40% and 39% of our total metals requirements from our three largest suppliers in 2023 and 2022, respectively.
The metals producing supply base has experienced significant consolidation, with a few suppliers accounting for a majority of the domestic carbon flat-rolled steel market. We purchased approximately 38% and 40% of our total metals requirements from our three largest suppliers in 2024 and 2023, respectively.
We believe that customers’ demands for just-in-time delivery have made the value-added inventory, processing and delivery functions performed by metals service centers increasingly important. 4 Table of Contents Corporate History Our company was founded in 1954 as a general steel service center.
We believe that customers’ demands for just-in-time delivery and their desires to outsource metal processing have made the value-added inventory, processing and delivery functions performed by metals service centers increasingly important. 4 Table of Contents Corporate History Our company was founded in 1954 as a general steel service center.
In addition to our executive officers, members of our senior management team have a diversity of backgrounds within the metals industry, including management positions at metals producers and other metals service centers. They average 29 years of experience in the metals industry and 21 years with our company.
In addition to our executive officers, members of our senior management team have a diversity of backgrounds within the metals industry, including management positions at metals producers and other metals service centers. They average 27 years of experience in the metals industry and 17 years with our company.
Our core values (Accountability, Corporate Citizenship, Customer Satisfaction, Employee Development, Financial Stability, Integrity, Respect, Safety and Teamwork) guide our decisions and behavior and set a standard of excellence that rewards our employees. At December 31, 2023, we employed approximately 2,168 people. Approximately 244 of the hourly plant personnel are represented by seven separate collective bargaining units.
Our core values (Accountability, Corporate Citizenship, Customer Satisfaction, Employee Development, Financial Stability, Integrity, Respect, Safety and Teamwork) guide our decisions and behavior and set a standard of excellence that rewards our employees. At December 31, 2024 , we employed approximately 2,163 people. Approximately 229 of the hourly plant personnel are represented by seven separate collective bargaining units.
Business Strategy and Objectives We believe that the metals service center and processing industry is driven by the following primary trends: (i) shift by customers to fewer suppliers that are larger and financially strong; (ii) increased customer demand for more frequent deliveries, higher quality products and services; and (iii) localization of metals industry participants.
Business Strategy and Objectives We believe that the metals service center and processing industry is driven by the following primary trends: (i) shift by customers to fewer suppliers that are larger and financially strong; (ii) increased customer demand for more frequent deliveries, more value-added processing, higher quality products and services; (iii) localization of metals industry participants; and (iv) simplified supply chains.
Information relating to our corporate governance at Olympic Steel, including our environmental, social and governance, or ESG, commitments to operating responsibly, our Business Ethics Policy, information concerning our executive officers, directors and Board committees (including committee charters), and transactions in our securities by directors and officers, is available free of charge on or through the “Investor Relations” section of our website at www.olysteel.com.
Information relating to our corporate governance at Olympic Steel, including our commitments to operating responsibly, our Business Ethics Policy, information concerning our executive officers, directors and Board committees (including committee charters), and transactions in our securities by directors and officers, is available free of charge on or through the “Investors” section of our website at www.olysteel.com.
Our sales efforts are further supported by metallurgists, engineers, technical and quality service personnel and product specialists who have specific expertise in carbon and stainless steel, aluminum, alloy plate and steel fabrication as well as tubular and pipe products.
Our sales efforts are further supported by a customer relationship management system, metallurgists, engineers, technical and quality service personnel and product specialists who have specific expertise in carbon and stainless steel, aluminum, alloy plate and steel fabrication as well as tubular and pipe products.
We invest in processing equipment to support customer demand and to respond to the growing trend among OEMs (our customers) to outsource non-core production processes, such as plate processing, machining, welding and fabrication, in order to concentrate on engineering, design and assembly.
We invest in processing equipment to support customer demand and to respond to the growing trend among OEMs (our customers) to outsource non-core production processes, such as plate processing, machining, welding and fabrication, in order to concentrate on engineering, design and assembly. 6 Table of Contents Sales and Marketing .
Then, our role as a metals service center is to break that bulk supply into smaller quantities to sell to our customers. We also support OEMs and other customers by cutting, shaping, and otherwise processing carbon steel, stainless steel and aluminum.
We buy metal products in bulk from metal producers. Then, our role as a metals service center is to break that bulk supply into smaller quantities to sell to our customers. We also support OEMs and other customers by cutting, shaping, and otherwise processing carbon steel, stainless steel and aluminum.
Net sales to our top three customers, in the aggregate, approximated 8%, 7% and 6% of our consolidated net sales in 2023, 2022 and 2021, respectively.
Net sales to our top three customers, in the aggregate, approximated 9%, 8% and 7% of our consolidated net sales in 2024, 2023 and 2022, respectively.
Our commitments to purchase metals are generally at prevailing market prices in effect at the time we place our orders. We enter into pass through nickel swaps at the request of our customers in order to mitigate our customers’ risk of volatility in the price of metals.
Our commitments to purchase metals are generally at prevailing market prices in effect at the time we place our orders, with some fixed-price purchase agreements that support fixed-price sales agreements. We enter into pass through nickel swaps at the request of our customers in order to mitigate our customers’ risk of volatility in the price of metals.
The table below shows the expiration dates of the collective bargaining agreements. Facility Expiration date Hammond, Indiana November 30, 2024 Locust, North Carolina March 4, 2025 St.
The table below shows the expiration dates of the collective bargaining agreements. Facility Expiration date Locust, North Carolina March 4, 2025 St.
Industry 2023 2022 2021 Industrial machinery and equipment manufacturers and their fabricators 48 % 52 % 47 % Metals service centers 9 % 9 % 11 % Transportation equipment manufacturers 8 % 8 % 6 % Residential and commercial construction 6 % 7 % 8 % Agricultural and farm equipment 6 % 5 % 4 % End use products 6 % 1 % 1 % All others 17 % 18 % 23 % While we ship products throughout the United States, most of our customers are located in the midwestern, eastern and southern regions of the United States.
Industry 2024 2023 2022 Industrial machinery and equipment manufacturers and their fabricators 49 % 48 % 52 % Metals service centers 7 % 9 % 9 % Transportation equipment manufacturers 7 % 8 % 8 % Residential and commercial construction 7 % 6 % 7 % Agricultural and farm equipment 6 % 6 % 5 % End use products 6 % 6 % 1 % All others 18 % 17 % 18 % While we ship products throughout the United States, most of our customers are located in the Midwest, South and Northeast regions of the United States.
An integral part of our growth has been the acquisition and start-up of processing and sales operations, and the investment in processing equipment. In 1994, we completed an initial public offering and, in 1996, we completed a follow-on offering of our common stock. Over the years, our company has expanded into new product offerings through multiple acquisitions.
An integral part of our growth has been the acquisition and start-up of processing and sales operations, and the investment in processing equipment. In 1994, we completed an initial public offering and, in 1996, we completed a follow-on offering of our common stock.
The following table sets forth, as of December 31, 2023, the major pieces of processing equipment in operation by segment: Processing Equipment Consolidated Flat Products Tubular and Pipe Products Total Cut-to-length 22 15 37 Slitting 12 - 12 Shearing 10 - 10 Blanking 3 - 3 Tempering 3 - 3 Stretcher-leveling 2 - 2 Plate processing 29 - 29 Laser processing 31 20 51 Forming 31 - 31 Machining 36 67 103 Tube processing - 40 40 Finishing 38 5 43 Painting 3 1 4 Total 220 148 368 Our quality assurance system, led by certified specialists and engineers, establishes controls and procedures covering all aspects of our products from the time the material is ordered through receipt, processing and shipment to the customer.
The following table sets forth, as of December 31, 2024, the major pieces of processing equipment in operation by segment: Processing Equipment Consolidated Flat Products Tubular and Pipe Products Total Cut-to-length 26 18 44 Slitting 13 - 13 Shearing 10 - 10 Blanking 3 - 3 Tempering 3 - 3 Stretcher-leveling 2 - 2 Plate processing 29 - 29 Laser processing 31 24 55 Forming 38 - 38 Machining 39 67 106 Tube processing - 40 40 Finishing 45 5 50 Painting 3 1 4 Total 242 155 397 Our quality assurance system, led by certified specialists and engineers, establishes controls and procedures covering all aspects of our products from the time the material is ordered through receipt, processing and shipment to the customer.
Raw Materials Our principal raw materials are carbon, coated, and stainless steel and aluminum, in the forms of pipe, tube, flat-rolled sheet, coil and plate that we typically purchase from multiple primary metals producers.
Therefore, we are required to carry sufficient inventory to meet the short lead time and just-in-time delivery requirements of our customers. Raw Materials Our principal raw materials are carbon, coated, and stainless steel and aluminum, in the forms of pipe, tube, flat-rolled sheet, coil and plate that we typically purchase from multiple primary metals producers.
However, any prolonged work stoppages by our personnel represented by collective bargaining units could have a material adverse impact on our business, financial condition, results of operations and cash flows. 11 Table of Contents Environmental Olympic Steel is a metals service center. We warehouse, process, and distribute metal products; however, we are not a metals producer (steel mill).
We have never experienced a work stoppage and we believe that our relationship with employees is strong. However, any prolonged work stoppages by our personnel represented by collective bargaining units could have a material adverse impact on our business, financial condition, results of operations and cash flows. 11 Table of Contents Environmental Olympic Steel is a metals service center.
With the acquisitions of EZ Dumper and McCullough, we manufacture hydraulic dump inserts and self-dumping hoppers. With the acquisition of Shaw, we manufacture and distribute stainless steel bollards and water treatment systems.
With the acquisitions of EZ Dumper and McCullough, we manufacture hydraulic dump inserts and self-dumping hoppers. With the acquisition of Shaw, we manufacture and distribute stainless steel bollards and water treatment systems. With the acquisition of Metal-Fab, we manufacture venting, micro air and clean air products for residential, commercial and industrial applications.
We hold a patent for a certain welding fume collector, the apparatus and associated methodology, used during the process of welding which was acquired in conjunction with the acquisition of Metal-Fab. We also hold patents for certain bollard coverings and methods of manufacturing and use thereof which were acquired in conjunction with the asset acquisition of Shaw Stainless.
The registered tradenames “SHAW STAINLESS” and “SHAW STAINLESS & ALLOY” were acquired by us in conjunction with the asset acquisition of Shaw Stainless. We hold a patent for a certain welding fume collector, the apparatus and associated methodology, used during the process of welding which was acquired in conjunction with the acquisition of Metal-Fab.
As such, we do not have the same potential to introduce pollutants into the water or the air that occur during some other metals manufacturing processes. Instead, we're part of the supply chain that makes products out of metal. We buy metal products in bulk from metal producers.
We warehouse, process, and distribute metal products; however, we are not a metals producer (steel mill). As such, we do not have the same potential to introduce pollutants into the water or the air that occur during some other metals manufacturing processes. Instead, we are part of the supply chain that makes products out of metal.
Our Fe program is a commitment to provide superior customer service while striving to exceed customer expectations. This program includes tracking on-time delivery and quality performance against objectives, and recognition of employee initiatives to improve efficiencies, streamline processes or reduce operating expenses at each operation. We believe our large and experienced sales force provides strategic advantages.
Our dedicated carrier fleet further enhances our just-in-time deliveries based on our customers’ requirements. Our Fe program is a commitment to provide superior customer service while striving to exceed customer expectations. This program includes tracking on-time delivery and quality performance against objectives, and recognition of employee initiatives to improve efficiencies, streamline processes or reduce operating expenses at each operation.
The “EZ DUMPER®” tradename was acquired by us in conjunction with the acquisition of certain assets related to the manufacturing of the EZ Dumper hydraulic dump inserts. The registered tradenames “SHAW STAINLESS” and “SHAW STAINLESS & ALLOY” were acquired by us in conjunction with the asset acquisition of Shaw Stainless.
The "MetalWorks" tradename was acquired by us in conjunction with the asset acquisition of Metal Works. The “EZ DUMPER®” tradename was acquired by us in conjunction with the acquisition of certain assets related to the manufacturing of the EZ Dumper hydraulic dump inserts.
We strive to comply with all applicable state, local and international laws governing nondiscrimination in employment in every location in which we operate. All applicants and employees are treated with the same high level of respect regardless of their gender, ethnicity, religion, national origin, age, marital status, political affiliation, sexual orientation, gender identity, disability, veteran or other protected status.
All applicants and employees are treated with the same high level of respect regardless of their gender, ethnicity, religion, national origin, age, marital status, political affiliation, sexual orientation, gender identity, disability, veteran or other protected status.
Our sales force makes direct daily sales calls to customers throughout the continental United States, and parts of Canada and Mexico. The continuous interaction between our sales force and active and prospective customers provides us with valuable market information and sales opportunities, including opportunities for outsourcing, improving customer service and increasing sales.
The continuous interaction between our sales force and active and prospective customers provides us with valuable market information and sales opportunities, including opportunities for outsourcing, improving customer service and increasing sales.
Through best practice sharing and an emphasis on leading indicators, we are strengthening our safety culture of learning and building a safer work environment. We believe that engagement from every employee is critical. Our Safety Committees at each division help us increase engagement, while emphasizing our proactive commitment to safety.
And, it starts with me!". We are relentlessly focused on safety. Through best practice sharing and an emphasis on leading indicators, we are strengthening our safety culture of learning and building a safer work environment. We believe that engagement from every employee is critical.
On January 3, 2023, we purchased all of the outstanding shares of capital stock of Metal-Fab, headquartered in Wichita, Kansas. Metal-Fab is a manufacturer of venting, micro air and clean air products for residential, commercial and industrial applications. The acquisition expanded our portfolio of metal-intensive end-use products and widened our product offerings, manufacturing capabilities and geographic reach.
The acquisition expanded our tubular and pipe products segment's fabrication capabilities for the transportation, agricultural, commercial furniture and data center construction industries. On January 3, 2023, we acquired all of the outstanding shares of capital stock of Metal-Fab, headquartered in Wichita, Kansas. Metal-Fab is a manufacturer of venting, micro air and clean air products for residential, commercial and industrial applications.
On June 1, 2022, we began leasing an 81,400 square-foot metal fabrication facility, located in Bartlett, Illinois. This new facility is fabrication focused with an emphasis on specialty metals flat-rolled products and downstream value-added services. The transfer of the fabrication business to Bartlett, Illinois also supports our growth plans for the cut-to-length business out of the Schaumburg, Illinois facility.
The acquisition expanded our portfolio of metal-intensive end-use products and widened our product offerings, manufacturing capabilities and geographic reach. On June 1, 2022, we began operating an 81,400 square-foot metal fabrication facility, located in Bartlett, Illinois. This new facility is fabrication focused with an emphasis on specialty metals flat-rolled products and downstream value-added services.
We offer business solutions to our customers through value-added and value-engineered services. We also provide inventory stocking programs and in-plant Olympic Steel employees located at certain customer facilities to help reduce customers’ costs. Our owned truck fleet and dedicated carrier fleet further enhance our just-in-time deliveries based on our customers’ requirements.
We service certain customers with carbon and specialty metals flat products and tubular and pipe products through cross-stocking of products in certain facilities. We offer business solutions to our customers through value-added and value-engineered services. We also provide inventory stocking programs and in-plant Olympic Steel employees located at certain customer facilities to help reduce customers’ costs.
Most customers are located within a 250-mile radius of one of our processing facilities, thus enabling an efficient delivery system capable of handling a high frequency of short lead time orders.
Most customers are located within a 250-mile radius of one of our processing facilities, thus enabling an efficient delivery system capable of handling a high frequency of short lead time orders. We transport our products directly to customers via a dedicated carrier fleet, which further supports the just-in-time delivery requirements of our customers, and third-party trucking firms.
With the acquisition of Metal-Fab, we manufacture venting, micro air and clean air products for residential, commercial and industrial applications. 7 Table of Contents Customer orders are entered or electronically transmitted into computerized order entry systems, and appropriate inventory is selected and scheduled for processing in accordance with the customer’s specified delivery date.
With the acquisition of Metal Works, we manufacture service station canopies, deck clips, long gutters, trim and boat docks, as well as solar canopy and ground racking components. 7 Table of Contents Customer orders are entered or electronically transmitted into computerized order entry systems, and appropriate inventory is selected and scheduled for processing in accordance with the customer’s specified delivery date.
We purchase in bulk from metals producers in quantities that are efficient for such producers. This enables us to maintain a continued source of supply that we believe is competitively priced.
We are an important customer of flat-rolled coil and plate, pipe and tube for many of our principal suppliers, but we are not dependent on any one supplier. We purchase in bulk from metals producers in quantities that are efficient for such producers. This enables us to maintain a continued source of supply that we believe is competitively priced.
Certain elements of our strategy are set forth in more detail below. Investments and Acquisitions . During the past three years, we have accelerated our growth through acquisitions and capital investments in facilities and processing equipment. On October 2, 2023, we acquired all membership interest of CTB, headquartered in Conway, Arkansas with operations also located in Tulsa, Oklahoma.
Certain elements of our strategy are set forth in more detail below. Investments and Acquisitions . During the past three years, we have accelerated our growth through acquisitions and capital investments in facilities and processing equipment. On November 11, 2024, we acquired substantially all of the net assets of Metal Works, based in Oakwood, Georgia.
The swaps are settled with the brokers at maturity and the economic benefit or loss arising from the changes in fair value of the swaps is contractually passed through to the customer. We have some fixed-priced purchase agreements that support fixed-priced sales agreements; however, in general we have no long-term, fixed-price metals purchase contracts, except for commodity hedges.
The swaps are settled with the brokers at maturity and the economic benefit or loss arising from the changes in fair value of the swaps is contractually passed through to the customer.
We want our teams to reflect the diverse communities where we live and work. We have a focus on inclusion committed to building a culture that strives to acknowledge and overcome bias and cultivates leaders who value, support and celebrate diversity of thought and perspective.
We want our teams to actively participate in the communities where we live and work. We have a focus on inclusion, with a culture committed to cultivating leaders who value, support and celebrate different thoughts and perspectives.
We seek to retain and develop employees by offering competitive wages, benefits and training opportunities, as well as promoting a safe and healthy workplace culture. Our safety motto is, "Safety first. Always. And, it starts with me!". We are relentlessly focused on safety.
We work to attract a qualified workforce through an inclusive and accessible recruiting process that utilizes online recruiting, campus outreach, internships and job fairs. We seek to retain and develop employees by offering competitive wages, benefits and training opportunities, as well as promoting a safe and healthy workplace culture. Our safety motto is, "Safety first. Always.
Government Regulation Our operations are governed by many laws and regulations, including those relating to workplace safety and worker health, principally the Occupational Safety and Health Act and regulations thereunder.
We also hold patents for certain bollard coverings and methods of manufacturing and use thereof which were acquired in conjunction with the asset acquisition of Shaw Stainless. Government Regulation Our operations are governed by many laws and regulations, including those relating to workplace safety and worker health, principally the Occupational Safety and Health Act and regulations thereunder.
We continuously analyze our customer base to ensure that strategic customers are properly targeted and serviced, while focusing our efforts to supply and successfully service multi-location customers from multiple Olympic Steel facilities. We service certain customers with carbon and specialty metals flat products and tubular and pipe products through cross-stocking of products in certain facilities.
We believe that our commitments to quality, service, just-in-time delivery and field sales personnel have enabled us to build and maintain strong customer relationships. We continuously analyze our customer base to ensure that strategic customers are properly targeted and serviced, while focusing our efforts to supply and successfully service multi-location customers from multiple Olympic Steel facilities.
In addition, interruptions or reductions in our supply of metals could make it difficult to satisfy our customers’ just-in-time delivery requirements, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Competition Our principal markets are highly competitive.
In addition, extreme material interruptions or reductions in our supply of metals could impede our customers' just-in-time delivery requirements, which could have a material adverse effect on our business; however, this risk is mitigated through the vast network of suppliers that provide us metal today. Competition Our principal markets are highly competitive.
Although we have no long-term supply commitments, we believe we have good relationships with our metals suppliers. If, in the future, we are unable to obtain sufficient amounts of metals on a timely basis, we may not be able to obtain metals from alternate sources at competitive prices.
If, in the future, we are unable to obtain sufficient amounts of metals on a timely basis, we can also look to alternative sources but these may be at less competitive prices.
Near-miss reports, risk assessments, job safety analyses and weekly safety audits/walks are some of the ways we contribute to our safety culture of learning and growth. While we diligently manage safety policies, programs, and training on an ongoing basis, we believe our employee-driven safety culture has the biggest impact.
Our Safety Committees at each division help us increase engagement, while emphasizing our proactive commitment to safety. Near-miss reports, safety improvement actions, risk assessments, job safety analyses and weekly safety audits/walks are some of the ways we contribute to our safety culture of learning and growth.
Many of our larger customers commit to purchase on a regular basis at agreed upon or indexed prices for periods ranging from three to twelve months. To help mitigate price volatility risks, these price commitments are generally matched with corresponding supply arrangements, or to a lesser degree by commodities hedging.
We process our metals to specific customer orders as well as for stocking programs. Many of our larger customers commit to purchase on a regular basis at agreed upon or indexed prices for periods ranging from three to twelve months.
Customers notify us of specific release dates as processed products are required. Customers typically notify us of release dates anywhere from a just-in-time basis to one month before the release date. Therefore, we are required to carry sufficient inventory to meet the short lead time and just-in-time delivery requirements of our customers.
To help mitigate price volatility risks, these price commitments are generally matched with corresponding supply arrangements, or to a lesser degree by commodities hedging. Customers notify us of specific release dates as processed products are required. Customers typically notify us of release dates anywhere from a just-in-time basis to one month before the release date.
Paul, Minnesota May 25, 2025 Romeoville, Illinois May 31, 2025 Minneapolis (coil), Minnesota September 30, 2025 Indianapolis, Indiana January 29, 2026 Minneapolis (plate), Minnesota March 31, 2027 We have never experienced a work stoppage and we believe that our relationship with employees is strong.
Paul, Minnesota May 25, 2025 Romeoville, Illinois May 31, 2025 Minneapolis (coil), Minnesota September 30, 2025 Indianapolis, Indiana January 29, 2026 Minneapolis (plate), Minnesota March 31, 2027 Hammond, Indiana November 30, 2029 The Locust, North Carolina union agreement is set to expire on March 4, 2025.
CTB offers a range of value-added fabrication services, including tube laser cutting, tube bending, robotic welding, flat laser burning and brake press forming. The acquisition expanded our tubular and pipe products segment's fabrication capabilities for the transportation, agricultural, commercial furniture and data center construction industries.
On October 2, 2023, we acquired all membership interest of CTB, headquartered in Conway, Arkansas with operations also located in Tulsa, Oklahoma. CTB offers a range of value-added fabrication services, including tube laser cutting, tube bending, robotic welding, flat laser burning and brake press forming.
Removed
To support the growth of our fabrication services, the new Bartlett facility initially houses two lasers and three press brakes. On October 1, 2021, we acquired substantially all of the net assets of Shaw, based outside of Atlanta, Georgia. Shaw is a full-line distributor of stainless steel sheet, pipe, tube, bar and angles.
Added
Through the recent acquisition of Metal Works, LLC, or Metal Works, on November 11, 2024, the carbon flat products segment further expanded its product offerings to include the manufacturing of service station canopies, deck clips, long gutters, trim, boat docks and solar canopy and ground racking components.
Removed
Shaw also manufactures and distributes stainless steel bollards and water treatment systems. The acquisition expanded our stainless-steel distribution and fabrication capabilities, as well as our entry into architectural and barrier defense bollards.
Added
Over the years, our company has expanded into new product offerings through multiple acquisitions as well as expanding our fabricating an manufacturing capabilities.
Removed
Disposition of Assets: On September 17, 2021, we sold substantially all of the assets related to our Detroit, Michigan operation to Venture Steel (U.S.), Inc. The proceeds of the sale were used for working capital needs as well as the acquisitions and investments in the subsequent organic growth opportunities noted above.
Added
Metal Works is a manufacturer of service station canopies and the business also manufactures deck clips, long gutters, trim and boat docks, as well as solar canopy and ground racking components. The acquisition expanded our carbon flat products segment's product offerings.
Removed
The Detroit operation was primarily focused on the distribution of carbon flat-rolled steel to domestic automotive manufacturers and their suppliers. 6 Table of Contents Sales and Marketing . We believe that our commitments to quality, service, just-in-time delivery and field sales personnel have enabled us to build and maintain strong customer relationships.
Added
The transfer of the fabrication business to Bartlett, Illinois also supports our growth plans for the cut-to-length and distribution business out of the Schaumburg, Illinois facility. To support the growth of our fabrication services, the new Bartlett facility houses lasers and press brakes.
Removed
Our Romeoville, Illinois and Locust, North Carolina facilities have earned the American Society of Mechanical Engineers S Certification and our Locust, North Carolina facility has earned the National Board of Boiler & Pressure Vessel Inspectors R and U Certifications.
Added
We believe our large and experienced sales force provides strategic advantages. Our sales force makes direct daily sales calls to customers throughout the continental United States, and parts of Canada and Mexico.
Removed
We transport our products directly to customers via our owned truck fleet and dedicated carrier fleet, which further supports the just-in-time delivery requirements of our customers, and third-party trucking firms. We process our metals to specific customer orders as well as for stocking programs.
Added
We employ sourcing strategies that maximize the quality, production lead times and transportation economies of a global supply base. As a result of our sourcing strategies, approximately 90% of the steel we purchase is from domestic suppliers; thus, limiting our exposure to the inherent risk of foreign supply chains, such as the lead time, valuation and foreign policy risk.
Removed
We employ sourcing strategies that maximize the quality, production lead times and transportation economies of a global supply base. We are an important customer of flat-rolled coil and plate, pipe and tube for many of our principal suppliers, but we are not dependent on any one supplier.
Added
Although we have no long-term supply commitments, we have a long history with many mills and believe we have good relationships with our metals suppliers, resulting in competitively priced materials and timely deliveries.
Removed
We work to attract a diverse, qualified workforce through an inclusive and accessible recruiting process that utilizes online recruiting, campus outreach, internships and job fairs.
Added
While we diligently manage safety policies, programs, and training on an ongoing basis, we believe our employee-driven safety culture has the biggest impact. We strive to comply with all applicable state, local and international laws governing nondiscrimination in employment in every location in which we operate.
Removed
Olympic Steel's Diversity, Equity and Inclusion, or DEI, work started as a women's development initiative several years ago and the scope has since broadened to build a sustainable program, working with industry peers and other outside partners to gather insights and best practices that will help shape the future of our organization.
Added
The employees covered by this union agreement continue to work as the new contract is negotiated. We have historically been successful in negotiating renewals to expiring agreements without any material disruptions of operating activities and we do not anticipate any material disruptions prior to ratification of the new agreement.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

31 edited+6 added−5 removed94 unchanged
Biggest changeIf any of these providers were to fail to deliver materials to us in a timely manner, we may be unable to process and deliver our products in response to customer demand. If any of these third parties were to cease operations or cease doing business with us, we may be unable to replace them at a reasonable cost.
Biggest changeWe depend to a certain extent on third parties for transportation of our products to customers as well as inbound delivery of our raw materials. If any of these providers were to fail to deliver materials to us in a timely manner, we may be unable to process and deliver our products in response to customer demand.
Although it is not possible to predict the ultimate impact of the pandemic or future worldwide health emergencies, including on our business, financial position or liquidity, such impacts that may be material include, but are not limited to: (i) reduced sales and profit levels, (ii) the slower payment of accounts receivable and potential increases in uncollectible accounts receivable, (iii) falling metals prices that could lead to lower of cost or market inventory adjustments and the impairment of intangible and long-lived assets, (v) reduced availability and productivity of our employees, (vi) increased operational risks as a result of remote work arrangements, including the potential effects on internal controls, as well as cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events, (vii) negative impacts on our liquidity position, (viii) inability to access our traditional financing sources on the same or reasonably similar terms as were available before the a pandemic, and (ix) increased costs and less ability to access funds under our ABL Credit Facility and the capital markets.
Although it is not possible to predict the ultimate impact of future worldwide health emergencies, including another pandemic, on our business, financial position or liquidity, such impacts that may be material include, but are not limited to: (i) reduced sales and profit levels, (ii) the slower payment of accounts receivable and potential increases in uncollectible accounts receivable, (iii) falling metals prices that could lead to lower of cost or market inventory adjustments and the impairment of intangible and long-lived assets, (v) reduced availability and productivity of our employees, (vi) increased operational risks as a result of remote work arrangements, including the potential effects on internal controls, as well as cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events, (vii) negative impacts on our liquidity position, (viii) inability to access our traditional financing sources on the same or reasonably similar terms as were available before the pandemic, and (ix) increased costs and less ability to access funds under our ABL Credit Facility and the capital markets.
We are also subject to Section 1701.831 of the Ohio Revised Code, which provides that certain notice and informational filings and special shareholder meeting and voting procedures must be followed prior to consummation of a proposed “control share acquisition.” Assuming compliance with the notice and information filings prescribed by the statute, a proposed control share acquisition may be made only if the acquisition is approved by a majority of the voting power of the issuer represented at the meeting and at least a majority of the voting power remaining after excluding the combined voting power of the “interested shares.” 24 Table of Contents Certain provisions contained in our Amended and Restated Articles of Incorporation and Amended and Restated Code of Regulations and Ohio law could delay or prevent the removal of directors and other management and could make a merger, tender offer or proxy contest involving us that you may consider to be in your best interest more difficult.
We are also subject to Section 1701.831 of the Ohio Revised Code, which provides that certain notice and informational filings and special shareholder meeting and voting procedures must be followed prior to consummation of a proposed “control share acquisition.” Assuming compliance with the notice and information filings prescribed by the statute, a proposed control share acquisition may be made only if the acquisition is approved by a majority of the voting power of the issuer represented at the meeting and at least a majority of the voting power remaining after excluding the combined voting power of the “interested shares.” 23 Table of Contents Certain provisions contained in our Amended and Restated Articles of Incorporation and Amended and Restated Code of Regulations and Ohio law could delay or prevent the removal of directors and other management and could make a merger, tender offer or proxy contest involving us that you may consider to be in your best interest more difficult.
During 2021 and 2022, we experienced increased supply chain disruptions resulting from the imbalance of metal supply and end-user demands as customer demand increased without a corresponding increase in metal supply, as businesses reopened after the pandemic. Our inability to meet customer demand as a result of supply disruptions and inflationary pressures could result in lower sales and profits.
During 2022, we experienced increased supply chain disruptions resulting from the imbalance of metal supply and end-user demands as customer demand increased without a corresponding increase in metal supply, as businesses reopened after the pandemic. Our inability to meet customer demand as a result of supply disruptions and inflationary pressures could result in lower sales and profits.
The availability of drivers and labor is integral to our operations, and increases in our cost of transportation or labor may have a material adverse effect on our financial position and results of operations. Labor disruptions at any of our facilities or those of major customers could adversely affect our business, results of operations and financial condition.
The availability of transportation and labor is integral to our operations, and increases in our cost of transportation or labor may have a material adverse effect on our financial position and results of operations. Labor disruptions at any of our facilities or those of major customers could adversely affect our business, results of operations and financial condition.
Siegal, our Executive Chairman of the Board and one of our largest shareholders, owned approximately 9.9% of our outstanding common stock as of December 31, 2023. Mr. Siegal may have the ability to significantly influence matters requiring shareholder approval. In deciding how to vote on such matters, Mr. Siegal may be influenced by interests that conflict with yours.
Siegal, our Executive Chairman of the Board and one of our largest shareholders, owned approximately 9.6% of our outstanding common stock as of December 31, 2024 . Mr. Siegal may have the ability to significantly influence matters requiring shareholder approval. In deciding how to vote on such matters, Mr. Siegal may be influenced by interests that conflict with yours.
The loss of any one of our major customers or decrease in demand by those customers or credit constraints placed on them could have a material adverse effect on our business, our results of operations and our cash flows. 17 Table of Contents Our information technology systems and those of our third party providers, as well as our data, could be negatively affected by cybersecurity threats.
The loss of any one of our major customers or decrease in demand by those customers or credit constraints placed on them could have a material adverse effect on our business, our results of operations and our cash flows. 17 Table of Contents Our information technology systems and those of our third party providers, as well as our data, could be negatively affected by cybersecurity threats, attacks, disruptions and failures, and cybersecurity incidents.
If the U.S. presidential administration materially modifies U.S. laws and regulations and international trade agreements, our business, financial condition, and results of operations could be affected. 22 Table of Contents We are subject to significant environmental, health and safety laws and regulations and related compliance expenditures and liabilities.
If the U.S. presidential administration materially modifies U.S. laws and regulations and international trade agreements, our business, financial condition, and results of operations could be affected. We are subject to significant environmental, health and safety laws and regulations and related compliance expenditures and liabilities.
Any additional future tariffs or quotas imposed on steel and aluminum imports may increase the price of metal, which may impact our sales, gross margin and profitability if we are unable to pass the increased prices onto our customers.
These recently announced or any additional future tariffs or quotas imposed on steel and aluminum imports may increase the price of metal, which may impact our sales, gross margin and profitability if we are unable to pass the increased prices onto our customers.
We purchased approximately 40% and 39% of our total metals requirements from our three largest suppliers in 2023 and 2022, respectively. Over the past years, supplier consolidation, decreased mill production due to the pandemic and import tariffs decreased steel availability and increased mill lead times and steel prices.
We purchased approximately 38% and 40% of our total metals requirements from our three largest suppliers in 2024 and 2023, respectively. Over the past years, supplier consolidation, decreased mill production due to the pandemic and import tariffs decreased steel availability and increased mill lead times and steel prices.
Supply chain disruptions and inflationary pressures, caused by the pandemic, increases in energy prices, and other factors, has had, and could continue to have an adverse effect on our business, financial condition and liquidity. We are dependent on our suppliers to provide us with metal.
Supply chain disruptions and inflationary pressures, increases in energy prices, and other factors, has had, and could continue to have an adverse effect on our business, financial condition and liquidity. We are dependent on our suppliers to provide us with metal.
Any failure, or perceived failure, by us to achieve our goals, further our initiatives, adhere to our public statements, comply with federal, state or international ESG laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price. 23 Table of Contents Risks Related to Our Common Stock The market price for our common stock may be volatile.
Any failure, or perceived failure, by us to achieve our targets or goals, further our initiatives, adhere to our public statements, comply with federal, state or international environmental, social and governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price. 22 Table of Contents Risks Related to Our Common Stock The market price for our common stock may be volatile.
Increased global information technology security requirements, vulnerabilities, threats and a rise in sophisticated and targeted cybercrime pose a risk to the security of our systems, networks and the confidentiality, availability and integrity of our data and systems. The risk has been further enhanced with an increased remote workforce.
Increased global information technology security requirements, vulnerabilities, threats and a rise in sophisticated and targeted cybercrime and ongoing attacks and recurring threats of all kinds pose a risk to the security of our systems, networks and the confidentiality, availability and integrity of our data and systems. The risk has been further enhanced with an increased remote workforce.
At December 31, 2023, we employed approximately 2,168 people. Approximately 244 of the hourly plant personnel are represented by seven separate collective bargaining units. Any prolonged work stoppages by our personnel represented by collective bargaining units could have a material adverse impact on our business, financial condition, results of operations and cash flows.
At December 31, 2024, we employed approximately 2,163 people. Approximately 229 of the hourly plant personnel are represented by seven separate collective bargaining units. Any prolonged work stoppages by our personnel represented by collective bargaining units could have a material adverse impact on our business, financial condition, results of operations and cash flows.
Increases in the cost or availability of transportation or labor could adversely affect our business and operations, as we may be unable to pass cost increases on to our customers. We ship products throughout the United States via our truck fleet, our dedicated carrier fleet or by third-party trucking firms.
Increases in the cost or availability of transportation or labor could adversely affect our business and operations, as we may be unable to pass cost increases on to our customers. We ship products throughout the United States via a dedicated carrier fleet or by third-party trucking firms. Our business depends on the daily transportation of a large number of products.
Collectively, our top three customers accounted for approximately 8% and 7% of our consolidated net sales in 2023 and 2022, respectively. Approximately 48% and 52% of our consolidated net sales during 2023 and 2022, respectively, were directly related to industrial machinery and equipment manufacturers and their fabricators.
Collectively, our top three customers accounted for approximately 9% and 8% of our consolidated net sales in 2024 and 2023, respectively. Approximately 49% and 48% of our consolidated net sales during 2024 and 2023, respectively, were directly related to industrial machinery and equipment manufacturers and their fabricators.
This volatility can significantly affect the availability and cost of raw materials to us. During 2022, metals prices decreased 57% throughout the year, whereas during 2023, metals prices decreased 45% from April to September and increased 66% from October to December.
This volatility can significantly affect the availability and cost of raw materials to us. For example, during 2022, metals prices decreased 57% throughout the year, whereas during 2023, metals prices decreased 45% from April to September and increased 66% from October to December and then metals prices decreased 40.3% from December 2023 to July 2024.
Approximately 48% and 52% of our 2023 and 2022 consolidated net sales, respectively, were to industrial machinery and equipment manufacturers and their fabricators.
Approximately 49% and 48% of our 2024 and 2023 consolidated net sales, respectively, were to industrial machinery and equipment manufacturers and their fabricators.
Our operations are dependent on the labor used to operate our equipment and deliver products to our customers. Decreased availability of labor could harm our reputation, negatively affect our customer relationships and have a material adverse effect on our financial position and results of operations.
Decreased availability of labor could harm our reputation, negatively affect our customer relationships and have a material adverse effect on our financial position and results of operations.
Our sales and operating income could decrease if we are unable to pass producer price increases on to our customers or if metals prices decline. Our principal raw materials are carbon and stainless steel and aluminum flat-rolled coil, sheet, plate, prime tin mill, pipe and tube that we typically purchase from multiple primary metals producers.
Our principal raw materials are carbon and stainless steel and aluminum flat-rolled coil, sheet, plate, prime tin mill, pipe and tube that we typically purchase from multiple primary metals producers.
Expectations relating to environmental, social and governance considerations expose us to potential liabilities, increased costs, reputational harm and other adverse effects on our business. Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on ESG considerations relating to businesses, including climate change and greenhouse gas emissions, human capital and diversity, equity and inclusion.
Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on environmental, social and governance and sustainability considerations relating to businesses, including climate change and greenhouse gas emissions, data privacy, artificial intelligence, human capital and diversity, equity and inclusion.
Increases in energy and fuel prices will increase our operating costs and may reduce our profitability if we are unable to pass all of the increases on to our customers.
Increases in energy and fuel prices will increase our operating costs and may reduce our profitability if we are unable to pass all of the increases on to our customers. 18 Table of Contents Impairment in the carrying value of intangible assets could result in the incurrence of impairment charges and negatively impact our results of operations.
In addition, some stakeholders may disagree with our goals and initiatives and the focus of stakeholders may change and evolve over time. Stakeholders also may have very different views on where ESG focus should be placed, including differing views of regulators in various jurisdictions in which we operate.
Stakeholders also may have very different views on where our focus on environmental, social and governance and sustainability issues should be placed, including differing views of regulators in various jurisdictions in which we operate.
Additional risks and uncertainties, not presently known to us or otherwise, may also impair our business. Although the risks are organized by headings, and each risk is discussed separately, many are interrelated. You should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.
Additional risks and uncertainties, not presently known to us or otherwise, may also impair our business. Although the risks are organized by headings, and each risk is discussed separately, many are interrelated. If any of the risks actually occur, our business, financial condition or results of operations could be materially and adversely affected.
If any of the risks actually occur, our business, financial condition or results of operations could be materially and adversely affected. In that case, the trading price of our common stock could decline, and investors may lose all or part of their investment. Risks Related to our Business Volatile metals prices can cause significant fluctuations in our operating results.
In that case, the trading price of our common stock could decline, and investors may lose all or part of their investment. Risks Related to our Business Quotas and tariffs imposed or removed as a result of government actions can cause significant fluctuations in our operating results.
We make statements about our ESG goals and initiatives through information provided on our website, press statements and other communications. Responding to these ESG considerations and implementation of these goals and initiatives involves risks and uncertainties, requires investments, which could be material, and are impacted by factors that may be outside of our control.
Responding to these environmental, social and governance considerations and implementation of these goals and initiatives, including those described in our Corporate Responsibility Report, involves risks and uncertainties, requires investments, which could be material, and are impacted by factors that may be outside of our control.
Failure of a third-party transportation provider to provide transportation services, or our inability to hire drivers for our in-house truck fleet, could harm our reputation, negatively affect our customer relationships and have a material adverse effect on our financial position and results of operations.
If any of these third parties were to cease operations or cease doing business with us, we may be unable to replace them at a reasonable cost. Failure of a third-party transportation provider to provide transportation services could harm our reputation, negatively affect our customer relationships and have a material adverse effect on our financial position and results of operations.
If interest rates, which may be highly volatile, were to increase 100 basis points (1.0%) from December 31, 2023 rates and, assuming no change in total debt from December 31, 2023 levels, the additional annual interest expense to us would be approximately $1.9 million. 21 Table of Contents Regulatory and Environmental Risks Quotas and tariffs imposed or removed as a result of government actions can cause significant fluctuations in our operating results.
If interest rates, which may be highly volatile, were to increase 100 basis points (1.0%) from December 31, 2024 rates and, assuming no change in total debt from December 31, 2024 levels, the additional annual interest expense to us would be approximately $2.0 million. 21 Table of Contents Regulatory and Environmental Risks Changes in laws or regulations, including tax reform legislation, or the manner of their interpretation or enforcement could adversely impact our financial performance and restrict our ability to operate our business or execute our strategies.
Through our Chicago Tube and Iron, or CTI, subsidiary, we contribute to one multiemployer pension plan.
Participation in multiemployer pension plans carry withdrawal liability risks, which could impact our results of operations and financial condition. Through our Chicago Tube and Iron, or CTI, subsidiary, we contribute to one multiemployer pension plan.
Despite our efforts to protect sensitive information, our facilities and systems and those of our third-party service providers may be vulnerable to cybersecurity threats.
Cybersecurity threat actors also may attempt to exploit vulnerabilities through software that is commonly used by companies in cloud-based services and bundled software. Despite our efforts to protect information, our facilities and systems and those of our third-party service providers may be vulnerable to cybersecurity threats, failures, attacks, and cybersecurity incidents.
The continued demand for skilled labor has resulted in the need to increase pay rates in certain markets. In addition, we have seen a decline in the skilled labor applicant pool since the start of the pandemic and increased competition for skilled labor.
The continued demand for skilled labor has resulted in the need to increase pay rates in certain markets. Our operations are dependent on the labor used to operate our equipment and deliver products to our customers.
Removed
Our business depends on the daily transportation of a large number of products. We depend to a certain extent on third parties for transportation of our products to customers as well as inbound delivery of our raw materials.
Added
Recently, in February 2025, the U.S. government announced the reinstatement of a 25 percent tariff on all steel imports and an increase in aluminum tariffs from 10 percent to 25 percent. The proposed tariffs would apply to goods entered into the U.S. for consumption or withdrawn from a warehouse for consumption on or after March 12, 2025.
Removed
We cannot predict the impact that the pandemic or future worldwide health emergencies ultimately will have on our customers, suppliers, vendors, and other business partners, and each of their financial conditions; however, any material effect on these parties could adversely impact us.
Added
Volatile metals prices can cause significant fluctuations in our operating results. Our sales and operating income could decrease if we are unable to pass producer price increases on to our customers or if metals prices decline.
Removed
The situation is changing rapidly and additional impacts may arise that we are not aware of currently. 18 Table of Contents Impairment in the carrying value of intangible assets could result in the incurrence of impairment charges and negatively impact our results of operations.
Added
Expectations relating to environmental, social and governance considerations expose us to potential liabilities, increased costs, reputational harm and other adverse effects on our business.
Removed
We have employment agreements, which include non-competition provisions, with our President and Chief Operating Officer, and our Chief Financial Officer that expire on January 1, 2025 and January 1, 2027, respectively. Participation in multiemployer pension plans carry withdrawal liability risks, which could impact our results of operations and financial condition.
Added
We make statements about our environmental, social and governance targets, goals and initiatives through information provided on our website, press statements and other communications.
Removed
Changes in laws or regulations, including tax reform legislation, or the manner of their interpretation or enforcement could adversely impact our financial performance and restrict our ability to operate our business or execute our strategies.
Added
In addition, some stakeholders may disagree with our goals and initiatives and the focus of stakeholders may change and evolve over time.
Added
We may also amend, abandon or replace our targets, goals and initiatives due to a change in strategy, reduced relevance of such targets, goal and initiatives or changing market conditions, and we may take certain actions that stakeholders or regulators view as contrary to such targets, goals and initiatives.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−0 removed7 unchanged
Biggest changeOur cybersecurity team also engages third-party security experts for risk assessment and system enhancements. In addition, our cybersecurity team provides training to all appropriate employees. Our board of directors has overall oversight responsibility for our risk management, and delegates cybersecurity risk management oversight to the audit committee of the board of directors.
Biggest changeOur cybersecurity team also engages third-party security experts for risk assessment and system enhancements. In addition, our cybersecurity team provides training to employees, based on their role. Our board of directors has overall oversight responsibility for our risk management, and delegates cybersecurity risk management oversight to the audit committee of the board of directors.
In 2023, we did not identify any cybersecurity incidents that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident.
In 2024, we did not identify any cybersecurity incidents that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident.
For more information about these risks, please see "Risk Factors - Risks Related to our Business" in this Annual Report on Form 10-k. 25 Table of Contents
For more information about these risks, please see "Risk Factors - Risks Related to our Business" in this Annual Report on Form 10-k. 24 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

7 edited+1 added−0 removed4 unchanged
Biggest changeIn addition to the facilities listed above, our executive office is leased and located in Highland Hills, Ohio and we have leased offices located in Bonita Springs, Florida; San Antonio, Texas and Monterrey, Mexico. Management believes we will be able to accommodate our capacity needs for the immediate future at our existing facilities.
Biggest change(18) The lease on this facility expires on August 31, 2026, with renewal options. In addition to the facilities listed above, our executive office is leased and located in Highland Hills, Ohio and we have leased offices located in Bonita Springs, Florida; San Antonio, Texas and Monterrey, Mexico.
Sterling, Kentucky 107,000 Distribution center and offices Owned ✔ ✔ Gary Gary, Indiana 183,000 Coil processing, distribution center and offices Owned ✔ ✔ Connecticut Milford, Connecticut 134,000 Coil processing, distribution center and offices Owned ✔ ✔ Chicago Schaumburg, Illinois 122,500 Coil and sheet processing, distribution center and offices Owned ✔ ✔ Bartlett Bartlett, Illinois 81,400 Coil and sheet processing, fabrication and distribution center Leased (5) ✔ ✔ Berlin Metals Hammond, Indiana 117,950 Coil processing, distribution center and offices Leased (6) ✔ McCullough Industries Kenton, Ohio 75,000 Manufacturing facility Owned ✔ ✔ Streetsboro Streetsboro, Ohio 66,200 Coil and sheet processing, distribution center and offices Owned ✔ Latrobe, Pennsylvania 43,200 Coil and sheet processing, distribution center Leased (7) ✔ Rock Hill Rock Hill, South Carolina 45,075 Distribution, processing center and offices Owned ✔ Dallas Carrollton, Texas 44,480 Distribution, processing center and offices Owned ✔ Houston Houston, Texas 30,000 Distribution, processing center and offices Leased (8) ✔ 26 Table of Contents Operation Location Square Feet Function Owned or Leased Carbon Flat Specialty Metals Flat Tube and Pipe Springdale Springdale, Arkansas 12,200 Distribution, processing center and offices Leased (9) ✔ Kansas City Riverside, Missouri 11,300 Distribution, processing center and offices Leased (10) ✔ Powder Springs Powder Springs, Georgia 11,275 Fabrication and offices Leased (11) ✔ Powder Springs, Georgia 17,766 Fabrication Leased (12) ✔ Powder Springs, Georgia 22,200 Fabrication Leased (13) ✔ Marietta Marietta, Georgia 11,300 Distribution and offices Leased (14) ✔ Marietta, Georgia 26,880 Distribution and offices Leased (15) ✔ Hiram Hiram, Georgia 16,000 Fabrication and offices Leased (16) ✔ Albany Albany, Georgia 12,000 Distribution Leased (17) ✔ Wichita Wichita, KS 265,404 Manufacturing, distribution and offices Owned ✔ Wichita, KS 162,738 Manufacturing, distribution and offices Leased (18) ✔ Chicago Romeoville, Illinois 363,000 Corporate offices, fabrication and distribution center Owned ✔ St.
Sterling, Kentucky 107,000 Distribution center and offices Owned ✔ ✔ Gary Gary, Indiana 183,000 Coil processing, distribution center and offices Owned ✔ ✔ Connecticut Milford, Connecticut 134,000 Coil processing, distribution center and offices Owned ✔ ✔ Chicago Schaumburg, Illinois 122,500 Coil and sheet processing, distribution center and offices Owned ✔ ✔ Bartlett Bartlett, Illinois 81,400 Coil and sheet processing, fabrication and distribution center Leased (5) ✔ ✔ Berlin Metals Hammond, Indiana 117,950 Coil processing, distribution center and offices Leased (6) ✔ McCullough Industries Kenton, Ohio 75,000 Manufacturing facility Owned ✔ ✔ Streetsboro Streetsboro, Ohio 66,200 Coil and sheet processing, distribution center and offices Owned ✔ Latrobe Latrobe, Pennsylvania 43,200 Coil and sheet processing, distribution center Leased (7) ✔ Rock Hill Rock Hill, South Carolina 45,075 Distribution, processing center and offices Owned ✔ Dallas Carrollton, Texas 44,480 Distribution, processing center and offices Owned ✔ Houston Houston, Texas 105,300 Distribution, processing center and offices Leased (8) ✔ 25 Table of Contents Operation Location Square Feet Function Owned or Leased Carbon Flat Specialty Metals Flat Tube and Pipe Kansas City Riverside, Missouri 11,300 Distribution, processing center and offices Leased (9) ✔ Powder Springs Powder Springs, Georgia 11,275 Fabrication and offices Leased (10) ✔ Powder Springs, Georgia 17,766 Fabrication Leased (11) ✔ Powder Springs, Georgia 22,200 Fabrication Leased (12) ✔ Marietta Marietta, Georgia 11,300 Distribution and offices Leased (13) ✔ Marietta, Georgia 26,880 Distribution and offices Leased (14) ✔ Hiram Hiram, Georgia 16,000 Fabrication and offices Leased (15) ✔ Albany Albany, Georgia 12,000 Distribution Leased (16) ✔ Wichita Wichita, KS 265,404 Manufacturing, distribution and offices Owned ✔ Wichita, KS 162,738 Manufacturing, distribution and offices Leased (17) ✔ Chicago Romeoville, Illinois 363,000 Corporate offices, fabrication and distribution center Owned ✔ St.
(2) This facility is leased from a related party. The lease expires on December 31, 2028, with renewal options. (3) The lease on this facility expires on July 1, 2027. (4) The lease on this facility expires on November 30, 2025, with renewal options. (5) The lease on this facility expires on June 30, 2027, with renewal options.
(2) This facility is leased from a related party. The lease expires on December 31, 2028, with renewal options. (3) The lease on this facility expires on July 1, 2027, with renewal options. (4) The lease on this facility expires on November 30, 2025, with renewal options.
Paul, Minnesota 132,000 Distribution center and offices Owned ✔ Charlotte Locust, North Carolina 127,600 Distribution center, fabrication and offices Owned ✔ Fond du Lac Fond du Lac, Wisconsin 117,000 Distribution center and offices Owned ✔ ✔ Indianapolis Indianapolis, Indiana 79,000 Distribution center and offices Owned ✔ Des Moines Ankeny, Iowa 50,000 Distribution center and offices Owned ✔ Owatonna Owatonna, Minnesota 23,000 Production cutting center Owned ✔ Conway Conway, Arkansas 35,000 Manufacturing and offices Owned ✔ Conway, Arkansas 72,480 Manufacturing and fabrication Leased (19) ✔ Tulsa Tulsa, Oklahoma 50,000 Manufacturing and fabrication Owned ✔ (1) The Bedford Heights facilities are all adjacent properties.
Paul, Minnesota 132,000 Distribution center and offices Owned ✔ Charlotte Locust, North Carolina 127,600 Distribution center, fabrication and offices Owned ✔ Fond du Lac Fond du Lac, Wisconsin 117,000 Distribution center and offices Owned ✔ ✔ Indianapolis Indianapolis, Indiana 79,000 Distribution center and offices Owned ✔ Des Moines Ankeny, Iowa 50,000 Distribution center and offices Owned ✔ Owatonna Owatonna, Minnesota 23,000 Production cutting center Owned ✔ Conway Conway, Arkansas 35,000 Manufacturing and offices Owned ✔ Conway, Arkansas 72,480 Manufacturing and fabrication Leased (18) ✔ Tulsa Tulsa, Oklahoma 50,000 Manufacturing and fabrication Owned ✔ Oakwood Oakwood, Georgia 48,720 Manufacturing and offices Owned ✔ (1) The Bedford Heights facilities are all adjacent properties.
(10) The lease on this facility expires on January 31, 2026. (11) The lease on this facility expires on June 30, 2029. (12) The lease on this facility expires on June 30, 2029. (13) The lease on this facility expires on June 30, 2029. (14) The lease on this facility expires on June 30, 2029.
(9) The lease on this facility expires on January 31, 2026. (10) The lease on this facility expires on June 30, 2029. (11) The lease on this facility expires on June 30, 2029. (12) The lease on this facility expires on June 30, 2029. (13) The lease on this facility expires on June 30, 2029.
(15) The lease on this facility expires on June 30, 2029. (16) The lease on this facility expires on June 30, 2029. (17) The lease on this facility expires on January 1, 2029. (18) The lease on this facility expires on June 14, 2034. (19) The lease on this facility expires on August 31, 2026, with renewal options.
(14) The lease on this facility expires on June 30, 2029. (15) The lease on this facility expires on June 30, 2029. (16) The lease on this facility expires on June 15, 2031, with renewal options. (17) The lease on this facility expires on June 14, 2034.
(6) The lease on this facility expires on August 31, 2024, with renewal options. (7) The lease on this facility expires on May 31, 2025, with renewal options. (8) The lease on this facility expires on October 31, 2025, with renewal options. (9) The lease on this facility expires on June 30, 2024, with renewal options.
(5) The lease on this facility expires on June 30, 2027, with renewal options. (6) The lease on this facility expires on August 31, 2034. (7) The lease on this facility expires on May 31, 2026, with renewal options. (8) The lease on this facility expires on April 30, 2035, with renewal options.
Added
Management believes we will be able to accommodate our capacity needs for the immediate future at our existing facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeIn the opinion of management, the outcome of the proceedings to which we are currently a party will not have a material adverse effect upon our results of operations, financial condition or cash flows. 27 Table of Contents
Biggest changeIn the opinion of management, the outcome of the proceedings to which we are currently a party will not have a material adverse effect upon our results of operations, financial condition or cash flows. 26 Table of Contents

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

10 edited+3 added−0 removed5 unchanged
Biggest changeFrom 1984 until January 2001, he also served as our President. He has been employed by us in a variety of capacities since 1974. Mr. Siegal serves on the Board of Directors of Twin City Fan Companies, Ltd. He currently serves as volunteer President of the World Maccabi Union and the Global Jewish Sports Movement. Richard T.
Biggest changeHe has served as the Executive Chairman of our Board of Directors since January 2019 after serving as our Chief Executive Officer of the Company from 1984 until December 2018 and in the role of Chairman of our Board of Directors since 1994. Since 2018, Mr. Siegal serves on the Board of Directors of Twin City Fan.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 28 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS This information is included in this Annual Report on Form 10-K pursuant to Instruction 3 of Item 401(b) of Regulation S-K. The following is a list of our executive officers and a brief description of their business experience.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 27 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS This information is included in this Annual Report on Form 10-K pursuant to Instruction 3 of Item 401(b) of Regulation S-K. The following is a list of our executive officers and a brief description of their business experience.
Greiff, age 62, has served as our President and Chief Operating Officer since January 2020. From August 2016 through December 2019, he served as Executive Vice President and Chief Operating Officer. He previously served as President, Specialty Metals from 2011 to 2016 after having joined us in 2009 as Vice President of Specialty Metals. Prior thereto, Mr.
Greiff, age 63, has served as our President and Chief Operating Officer since January 2020. From August 2016 through December 2019, he served as Executive Vice President and Chief Operating Officer. He previously served as President, Specialty Metals from 2011 to 2016 after having joined us in 2009 as Vice President of Specialty Metals. Prior thereto, Mr.
Manson, age 55, has served as our Chief Financial Officer since January 2019, and has been employed by us since 1996. From January 2013 through December 2018, he served as our Vice President and Treasurer. From March 2010 through December 2012, he served as our Vice President of Human Resources and Administration.
Manson, age 56, has served as our Chief Financial Officer since January 2019, and has been employed by us since 1996. From January 2013 through December 2018, he served as our Vice President and Treasurer. From March 2010 through December 2012, he served as our Vice President of Human Resources and Administration.
Christen, age 47, has served as our Vice President & Treasurer since January 2023. From January 2019 through December 2022, she served as our Corporate Controller & Treasurer. From March 2010 through December 2018, she served as our Corporate Controller. From 1999 through 2010 she served in various positions within the accounting department. Ms.
Christen, age 48, has served as our Vice President & Treasurer since January 2023. From January 2019 through December 2022, she served as our Corporate Controller & Treasurer. From March 2010 through December 2018, she served as our Corporate Controller. From 1999 through 2010 she served in various positions within the accounting department. Ms.
Christen serves as the Treasurer and is a Board Member of Seton Catholic School in Hudson, Ohio and serves on the finance committee of Walsh Jesuit High School, in Cuyahoga Falls, Ohio. Ms.
Christen served as the Treasurer and as a Board Member of Seton Catholic School in Hudson, Ohio and serves on the finance committee of Walsh Jesuit High School, in Cuyahoga Falls, Ohio. Ms.
Christen is a certified public accountant and member of the Ohio Society of Certified Public Accountants and the American Institute of Certified Public Accountants. 29 Table of Contents PART II
Christen is a certified public accountant and member of the Ohio Society of Certified Public Accountants and the American Institute of Certified Public Accountants. 28 Table of Contents PART II
Prior to joining us, Mr. Marabito served as Corporate Controller for a publicly traded wholesale distribution company and was employed by a national accounting firm in its audit department. Mr. Marabito is a Board Member and the past Chair of the Metals Service Center Institute (MSCI), a North American metals industry trade association.
Marabito served as Corporate Controller for a publicly traded wholesale distribution company and was employed by a national accounting firm in its audit department. Mr. Marabito is a Board Member and the past Chair of the MSCI, a North American metals industry trade association.
Marabito, age 60, has served as our Chief Executive Officer since January 2019. From March 2000 through December 2018, he served as our Chief Financial Officer. He joined us in 1994 as Corporate Controller and served in this capacity until March 2000. He also served as Treasurer from 1994 through 2002 and again from 2010 through 2012.
From March 2000 through December 2018, he served as our Chief Financial Officer. He joined us in 1994 as Corporate Controller and served in this capacity until March 2000. He also served as Treasurer from 1994 through 2002 and again from 2010 through 2012. Prior to joining us, Mr.
Each executive officer will hold office until his or her successor is chosen and qualified. Michael D. Siegal, age 71, has served as the Executive Chairman of our Board of Directors since January 2019. He previously served as our Chief Executive Officer from 1984 until December 2018 and as Chairman of our Board of Directors from 1994 until December 2018.
Each executive officer will hold office until his or her successor is chosen and qualified. Michael D. Siegal, age 72, joined the Board in 1984.
Added
He also serves on the board of directors of the Development Corporation for Israel and is the immediate past Chair of the Board of Trustees of the Jewish Agency for Israel. Mr.
Added
Siegal has previously served on the board of directors of the Metals Service Center Institute (MSCI), a North American metal industry trade association, Cleveland-Cliffs, Inc., University Hospitals of Cleveland and the Rock & Roll Hall of Fame. He also previously served as the Board Chair of the Jewish Federation of North America and the Jewish Federation of Cleveland.
Added
With over 30 years of executive experience at the Company, Mr. Siegal possesses proven managerial skills and firsthand knowledge of nearly every aspect of the Company's business operations. Mr. Siegal is a substantial long-term shareholder and a member of the founding family of the Company. Richard T. Marabito, age 61, has served as our Chief Executive Officer since January 2019.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed7 unchanged
Biggest changeITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Our common stock trades on the Nasdaq Global Select Market under the symbol “ZEUS.” Holders of Record As of January 31, 2024, there were approximately 98 holders of record of our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Our common stock trades on the Nasdaq Global Select Market under the symbol “ZEUS.” Holders of Record As of January 31, 2025, there were approximately 106 holders of record of our common stock.
The timing and amount of any repurchases under the stock repurchase program will depend upon several factors, including market and business conditions, and limitations under the ABL Credit Facility. Repurchases may be discontinued at any time. As of December 31, 2023, 360,212 shares remain authorized for repurchase under the program.
The timing and amount of any repurchases under the stock repurchase program will depend upon several factors, including market and business conditions, and limitations under the ABL Credit Facility. Repurchases may be discontinued at any time. As of December 31, 2024, 360,212 shares remain authorized for repurchase under the program.
We cannot assure you that dividends will be paid in the future or that, if paid, the dividends will be at the same amount or frequency. Issuer Purchases of Equity Securities We did not purchase any of our equity securities during the quarter ended December 31, 2023.
We cannot assure you that dividends will be paid in the future or that, if paid, the dividends will be at the same amount or frequency. Issuer Purchases of Equity Securities We did not purchase any of our equity securities during the quarter ended December 31, 2024.
Recent Sales of Unregistered Securities We did not have any unregistered sales of equity securities during the quarter ended December 31, 2023. 30 Table of Contents
Recent Sales of Unregistered Securities We did not have any unregistered sales of equity securities during the quarter ended December 31, 2024. 29 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

89 edited+10 added−4 removed55 unchanged
Biggest changeSegment Results of Operations Specialty metals flat products The following table sets forth certain income statement data for the specialty metals flat products segment for the years ended December 31, 2023 and 2022 (dollars shown in thousands, except per ton data): 2023 2022 % of net sales % of net sales Direct tons sold 112,412 135,584 Toll tons sold 3,175 6,508 Total tons sold 115,587 142,092 Net sales $ 567,728 100.0 $ 776,022 100.0 Average selling price per ton 4,912 5,461 Cost of materials sold 473,784 83.5 589,472 76.0 Gross profit (a) 93,944 16.5 186,550 24.0 Operating expenses (b) 71,060 12.5 92,888 11.9 Operating income $ 22,884 4.0 $ 93,662 12.1 (a) Gross profit is calculated as net sales less the cost of materials sold.
Biggest changeNet income in 2024 totaled $23.0 million, or $ 1.97 per basic and diluted share, compared to net income of $44.5 million, or $ 3.85 per basic and diluted share, in 2023. 34 Table of Contents Segment Results of Operations Specialty metals flat products The following table sets forth certain income statement data for the specialty metals flat products segment for the years ended December 31, 2024 and 2023 (dollars shown in thousands, except per ton data): 2024 2023 % of net sales % of net sales Direct tons sold 113,046 112,412 Toll tons sold 4,462 3,175 Total tons sold 117,508 115,587 Net sales $ 496,854 100.0 $ 567,728 100.0 Average selling price per ton 4,228 4,912 Cost of materials sold 406,229 81.8 473,784 83.5 Gross profit (a) 90,625 18.2 93,944 16.5 Operating expenses (b) 70,897 14.2 71,060 12.5 Operating income $ 19,728 4.0 $ 22,884 4.0 (a) Gross profit is calculated as net sales less the cost of materials sold.
Through acquisitions, our specialty metals flat products segment has expanded its geographical footprint and enhanced its product offerings in stainless steel and aluminum plate, sheet, angles, rounds, flat bar, tube and pipe and the manufacturing and distribution of stainless steel bollards and water treatment systems.
Through acquisitions, our specialty metals flat products segment has expanded its geographical footprint and enhanced its product offerings in stainless steel and aluminum plate, sheet, angles, rounds, flat bar, tube and pipe and the manufacturing and distribution of stainless steel bollards and water treatment systems.
The objective of this ASU is to improve the information a reporting entity provides to users of financials statements about the entity's operations and the effects of related tax risks and tax planning on the entity's tax rate and potential future cash flows. The ASU enhances disclosures regarding the rate reconciliation, income taxes paid and other items.
The objective of this ASU is to improve the information a reporting entity provides to users of financials statements about the entity's operations and the effects of related tax risks and tax planning on the entity's tax rate and potential future cash flows. This ASU enhances disclosures regarding the rate reconciliation, income taxes paid and other items.
The ASU is effective for annual periods beginning after December 15, 2024 for public business entities. We are not an early adopter of this guidance and its impacts are not included prospectively or retrospectively on our Consolidated Financial Statements included in this Annual Report on Form 10-K.
This ASU is effective for annual periods beginning after December 15, 2024 for public business entities. We are not an early adopter of this guidance and its impacts are not included prospectively or retrospectively on our Consolidated Financial Statements included in this Annual Report on Form 10-K.
Some of the flat products segments’ assets and resources are shared by the specialty metals and carbon flat products segments and both segments’ products are stored in the shared facilities and, in some locations, processed on shared equipment. As such, total assets and capital expenditures are reported in the aggregate for the flat products segments.
Some of the flat products segment's assets and resources are shared by the specialty metals and carbon flat products segments and both segments’ products are stored in the shared facilities and, in some locations, processed on shared equipment. As such, total assets and capital expenditures are reported in the aggregate for the flat products segments.
Purchases in excess of $15.0 million require us to (i) maintain availability in excess of 20.0% of the aggregate revolver commitments ($125.0 million at December 31, 2023) or (ii) to maintain availability equal to or greater than $15.0 of the aggregate revolver commitments ($93.8 million at December 31, 2023) and we must maintain a pro forma ratio of earnings before interest, taxes, depreciation and amortization, or EBITDA, minus certain capital expenditures and cash taxes paid to fixed charges of at least 1.00 to 1.00.
Purchases in excess of $15.0 million require us to (i) maintain availability in excess of 20.0% of the aggregate revolver commitments ( $125.0 million at December 31, 2024 ) or (ii) to maintain availability equal to or greater than $15.0 of the aggregate revolver commitments ( $93.8 million at December 31, 2024 ) and we must maintain a pro forma ratio of earnings before interest, taxes, depreciation and amortization, or EBITDA, minus certain capital expenditures and cash taxes paid to fixed charges of at least 1.00 to 1.00 .
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022. 2023 Compared to 2022 Our results of operations are impacted by the market price of metals.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023. 2024 Compared to 2023 Our results of operations are impacted by the market price of metals.
Our geographic footprint allows us to focus on regional customers and larger national and multi-national accounts, primarily located throughout the midwestern, eastern and southern United States. 33 Table of Contents Tubular and pipe products The primary focus of our tubular and pipe products segment is on the distribution of metal tubing, pipe, bar, valve and fittings and the fabrication of pressure parts supplied to various industrial markets.
Our geographic footprint allows us to focus on regional customers and larger national and multi-national accounts, primarily located throughout the midwestern, eastern and southern United States. 32 Table of Contents Tubular and pipe products The primary focus of our tubular and pipe products segment is on the distribution of metal tubing, pipe, bar, valve and fittings and the fabrication of pressure parts supplied to various industrial markets.
See Note 1 to our consolidated financial statements for our significant accounting policies related to our critical accounting estimates. 41 Table of Contents Allowance for Credit Losses The allowance for credit losses is maintained at a level considered appropriate based on historical experience and specific customer collection issues that we have identified.
See Note 1 to our consolidated financial statements for our significant accounting policies related to our critical accounting estimates. 40 Table of Contents Allowance for Credit Losses The allowance for credit losses is maintained at a level considered appropriate based on historical experience and specific customer collection issues that we have identified.
To the extent we are unable to pass on future price increases in our raw materials to our customers, the net sales and gross profits of our business could be adversely affected. 32 Table of Contents Reportable Segments We operate in three reportable segments: specialty metals flat products, carbon flat products and tubular and pipe products.
To the extent we are unable to pass on future price increases in our raw materials to our customers, the net sales and gross profits of our business could be adversely affected. 31 Table of Contents Reportable Segments We operate in three reportable segments: specialty metals flat products, carbon flat products and tubular and pipe products.
The timing and amount of any repurchases under the stock repurchase program will depend upon several factors, including market and business conditions, and limitations under the ABL Credit Facility, and repurchases may be discontinued at any time. As of December 31, 2023, 360,212 shares remain authorized for repurchase under the program.
The timing and amount of any repurchases under the stock repurchase program will depend upon several factors, including market and business conditions, and limitations under the ABL Credit Facility, and repurchases may be discontinued at any time. As of December 31, 2024 , 360,212 shares remain authorized for repurchase under the program.
Metals prices fluctuate significantly and changes to our net sales, cost of materials sold, gross profit, cost of inventory and profitability, are all impacted by industry metals pricing. Metals prices in our specialty metals products segment decreased during 2023 compared to 2022 due to decreases in metal surcharges experienced during 2023.
Metals prices fluctuate significantly and changes to our net sales, cost of materials sold, gross profit, cost of inventory and profitability, are all impacted by industry metals pricing. Metals prices in our specialty metals products segment decreased during 2024 compared to 2023 due to decreases in metal surcharges experienced during 2024.
Combined, the carbon and specialty metals flat products segments have 36 strategically-located processing and distribution facilities in the United States and one in Monterrey, Mexico. Many of our facilities service both the carbon and the specialty metals flat products segments, and certain assets and resources are shared by the segments.
Combined, the carbon and specialty metals flat products segments have 37 strategically-located processing and distribution facilities in the United States and one in Monterrey, Mexico. Many of our facilities service both the carbon and the specialty metals flat products segments, and certain assets and resources are shared by the segments.
Through the acquisition of Metal-Fab, on January 3, 2023, the carbon flat products segment further expanded its product offerings to include venting, micro air and clean air products for residential, commercial and industrial applications.
Through the acquisition of Metal-Fab, Inc., or Metal-Fab, on January 3, 2023, the carbon flat products segment further expanded its product offerings to include venting, micro air and clean air products for residential, commercial and industrial applications.
Our carbon flat products segment's focus is on the direct sale and distribution of large volumes of processed carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. Through acquisitions, our carbon flat products segment has expanded its product offerings to include self-dumping metal hoppers and steel and stainless-steel dump inserts for pickup truck and service truck beds.
Our carbon flat products segment's focus is on the direct sale and distribution of large volumes of processed carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. Through acquisitions, our carbon flat products segment has expanded its product offerings to include self-dumping metal hoppers and steel and stainless-steel dump inserts for pickup truck and service bed trucks.
KeyBanc will be entitled to compensation for shares sold pursuant to the program of 2.0% of the gross proceeds of any shares of common stock sold under the Equity Distribution Agreement. No shares were sold under the ATM program during 2023 or 2022.
KeyBanc will be entitled to compensation for shares sold pursuant to the program of 2.0% of the gross proceeds of any shares of common stock sold under the Equity Distribution Agreement. No shares were sold under the ATM program during 2024 or 2023 .
In addition, the ABL Credit Facility contains a financial covenant which provides that: (i) if any commitments or obligations are outstanding and our availability is less than the greater of $30 million or 10.0% of the aggregate amount of revolver commitments ($62.5 million at December 31, 2023) or 10.0% of the aggregate borrowing base ($53.4 million at December 31, 2023), then we must maintain a ratio of EBITDA minus certain capital expenditures and cash taxes paid to fixed charges of at least 1.00 to 1.00 for the most recent twelve fiscal month period.
In addition, the ABL Credit Facility contains a financial covenant which provides that: (i) if any commitments or obligations are outstanding and our availability is less than the greater of $30 million or 10.0% of the aggregate amount of revolver commitments ( $62.5 million at December 31, 2024 ) or 10.0% of the aggregate borrowing base ( $47.0 million at December 31, 2024 ), then we must maintain a ratio of EBITDA minus certain capital expenditures and cash taxes paid to fixed charges of at least 1.00 to 1.00 for the most recent twelve fiscal month period.
Financing Activities During 2023, $16.8 million of cash was generated from financing activities, which primarily consisted of $24.5 million of net borrowings under our ABL Credit Facility, offset by, $5.6 million of dividends paid, $1.2 million of payments for credit facility fees and expenses and a $1.0 million of principal payments for financing lease obligations.
During 2023 , $ 16.7 million of cash was generated from financing activities, which primarily consisted of $24.5 million of net borrowings under our ABL Credit Facility, offset by $5.6 million of dividends paid, $1.2 million of credit facility fees and expenses and $1.0 million of principal payments for financing lease obligations.
Other than derivative instruments discussed in Note 11 to the Consolidated Financial Statements, as of December 31, 2023, we had no material off-balance sheet arrangements. Effects of Inflation Inflation generally affects us by increasing the cost of employee wages and benefits, transportation services, energy, borrowings under our credit facility, processing equipment, and purchased metals.
Other than derivative instruments discussed in Note 10 to the Consolidated Financial Statements, as of December 31, 2024 , we had no material off-balance sheet arrangements. Effects of Inflation Inflation generally affects us by increasing the cost of employee wages and benefits, transportation services, energy, borrowings under our credit facility, processing equipment, and purchased metals.
Results of Operations This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Results of Operations This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
The management approach defines operating segments along the lines used by the chief operating decision maker, or CODM, to assess performance and make operating and resource allocation decisions. Our CODM evaluates performance and allocates resources based primarily on operating income. Our operating segments are based primarily on internal management reporting.
The management approach defines operating segments along the lines used by the chief operating decision maker, or CODM, to assess performance and make operating and resource allocation decisions. Our CODM, who is our Chief Executive Officer, evaluates performance and allocates resources based primarily on operating income. Our operating segments are based primarily on internal management reporting.
Although general inflation, excluding increases in the price of metals and increased labor, has increased during 2023, it has not had a material effect on our financial results during the past three years, but may have a significant impact in future years.
Although general inflation, excluding increases in the price of metals, increased labor and interest rates, has increased during 2024, it has not had a material effect on our financial results during the past three years, but may have a significant impact in future years.
Then in December 2022, the FASB issued ASU No. 2022-06 “Deferral of the Sunset Date of Topic 848” which amends and extends the sunset date to December 31, 2024.
Then in December 2022 , the FASB issued ASU No. 2022-06, “Deferral of the Sunset Date of Topic 848,” which amends and extends the sunset date to December 31, 2024 .
(b) Future interest obligations are calculated using the debt balances and interest rates in effect on December 31, 2023. (c) See Note 9 to the Consolidated Financial Statements. (d) See Note 15 to the Consolidated Financial Statements. Classification is based on expected settlement dates and the expiration of certain statutes of limitations.
(b) Future interest obligations are calculated using the debt balances and interest rates in effect on December 31, 2024. (c) See Note 8 to the Consolidated Financial Statements. (d) See Note 14 to the Consolidated Financial Statements. Classification is based on expected settlement dates and the expiration of certain statutes of limitations.
Through the acquisition of CTB, on October 2, 2023, the tubular and pipe products segment further expanded its geographic footprint and extended its value-added contract manufacturing capabilities. The tubular and pipe products segment operates from 10 locations in the Midwestern and Southern United States. The tubular and pipe products segment distributes its products primarily through a direct sales force.
Through the acquisition of CTB, the tubular and pipe products segment further expanded its geographic footprint and extended its value-added contract manufacturing capabilities. The tubular and pipe products segment operates from ten locations in the Midwestern and Southern United States. The tubular and pipe products segment distributes its products primarily through a direct sales force.
Our Board previously approved 2023 and 2022 regular quarterly dividends of $0.125 per share and $0.09 per share, respectively, which were paid in March, June, September and December of 2023 and 2022.
Our Board previously approved 2024 and 2023 regular quarterly dividends of $0.150 per share and $0.125 per share, respectively, which were paid in March, June, September and December of 2024 and 2023.
Average selling prices in 2023 decreased to $4,912 per ton, compared to $5,461 per ton in 2022. The decrease in the year-over-year average selling price per ton is a result of the decreased industry metals pricing discussed above in Results of Operations.
Average selling prices in 2024 decreased to $4,228 per ton, compared to $4,912 per ton in 2023. The decrease in the year-over-year average selling price per ton is a result of the decreased industry metals pricing discussed above in Results of Operations.
The decrease in cost of materials sold in 2023 is primarily related to decreased average metals pricing in 2023 compared to 2022. As a percentage of net sales, gross profit (as defined in footnote (b) in the table above) increased to 21.9% in 2023 from 19.0% in 2022.
The decrease in cost of materials sold in 2024 is primarily related to decreased average metals pricing in 2024 compared to 2023. As a percentage of net sales, gross profit (as defined in footnote (b) in the table above) increased to 23.2 % in 2024 from 21.9 % in 2023 .
The decrease in cost of materials sold is due to decreased metals pricing discussed above in Results of Operations. As a result of continued decreasing prices, during 2023, our tubular and pipe products segment recorded $8.3 million of LIFO income, compared to $0.6 million of LIFO expense recorded in 2022.
The decrease in cost of materials sold is due to decreased metals pricing discussed above in Results of Operations. As a result of continued decreasing prices, during 2024 , our tubular and pipe products segment recorded $5.7 million of LIFO income, compared to $8.3 million of LIFO income recorded in 2023 .
As of December 31, 2023, we were in compliance with our covenants and had approximately $339.4 million of availability under the ABL Credit Facility. As of December 31, 2023, $1.7 million of bank financing fees were included in “Prepaid expenses and other” and “Other long-term assets” on the accompanying Consolidated Balance Sheets.
As of December 31, 2024 , we were in compliance with our covenants and had approximately $192.8 million of availability under the ABL Credit Facility. As of December 31, 2024 , $1.1 million of bank financing fees were included in “Prepaid expenses and other” and “Other long-term assets” on the accompanying Consolidated Balance Sheets.
Certain inventoried products of our tubular and pipe segment are stated under the LIFO method. At December 31, 2023, and December 31, 2022, approximately $38.2 million, or 9.9% of consolidated inventory, and $46.3 million, or 11.1% of consolidated inventory, respectively, was reported under the LIFO method of accounting.
Certain inventoried products of our tubular and pipe segment are stated under the LIFO method. At December 31, 2024 , and December 31, 2023 , approximately $31.3 million, or 8.0% of consolidated inventory, and $38.2 million, or 9.9% of consolidated inventory, respectively, was reported under the LIFO method of accounting.
We adopted this ASU in the first quarter of 2023 for the modification of the asset-based credit facility (the ABL Credit Facility) and the interest rate hedge which did not have a material impact on our Consolidated Financial Statements. 43 Table of Contents
We adopted this ASU in the first quarter of 2024 for the modification of the ABL Credit Facility and the corresponding interest rate hedge, which did not have a material impact on our Consolidated Financial Statements. 42 Table of Contents
At- the-Market Equity Program On September 3, 2021, we commenced an at-the-market, or ATM, equity program under our shelf registration statement, which allows us to sell and issue up to $50 million in shares of our common stock from time to time.
There were no shares repurchased during 2024 or 2023 . 38 Table of Contents At- the-Market Equity Program On September 3, 2021 , we commenced an at-the-market, or ATM, equity program under our shelf registration statement, which allows us to sell and issue up to $50 million in shares of our common stock from time to time.
Interest and other expense on debt totaled $16.0 million in 2023 compared to $10.1 million in 2022. Our effective borrowing rate, exclusive of deferred financing fees and commitment fees, was 5.9% in 2023 compared to 3.2% in 2022. The increased effective borrowing rate is due to higher interest rates compared to 2022.
Interest and other expense on debt totaled $ 16.5 million in 2024 compared to $ 16.0 million in 2023 . Our effective borrowing rate, exclusive of deferred financing fees and commitment fees, was 6.7% in 2024 compared to 5.9% in 2023 . The increased effective borrowing rate is due to higher market interest rates in 2024 when compared to 2023.
In February 2024, our Board of Directors approved a regular quarterly dividend of $0.15 per share, which is payable on March 15, 2024 to shareholders of record as of March 4, 2024.
In February 2025, our Board of Directors approved a regular quarterly dividend of $0.16 per share, which is payable on March 17, 2025 to shareholders of record as of March 3, 2025.
The decrease in the average selling price is a result of the market pricing dynamics discussed above in Results of Operations. Cost of materials sold decreased $389.3 million, or 18.8%, to $1.7 billion in 2023 from $2.1 billion in 2022. During 2023, we recorded LIFO income of $8.3 million compared to LIFO expense of $0.6 million in 2022.
The decrease in the average selling price is a result of the market pricing dynamics discussed above in Results of Operations. Cost of materials sold decreased $194.2 mi llion, or 11.5%, to $1.5 billion in 2024 from $1.7 billion in 2023. During 2024, we recorded LIFO income of $5.7 million compared to LIFO income of $8.3 million in 2023.
For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. 42 Table of Contents Impact of Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure".
For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. 41 Table of Contents Impact of Recently Issued Accounting Pronouncements In November 2024, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2024-03 "Income Statement-Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses".
On January 10, 2019, we entered into a five-year forward starting fixed rate interest rate hedge in order to eliminate the variability of cash interest payments on $75 million of the outstanding SOFR based borrowings under the ABL Credit Facility. The interest rate hedge fixed the rate at 2.42%.
On August 15, 2024 , we entered into a two -year forward starting fixed rate interest rate hedge in order to eliminate the variability of cash interest payments on $75 million of the outstanding SOFR based borrowings under the ABL Credit Facility. The interest rate hedge fixed the rate at 3.82% .
The increase in the gross profit as a percentage of net sales is due to the acquisitions of Metal-Fab and CTB during 2023, as well as average costs of inventory decreasing more quickly than the average selling prices as discussed above in Results of Operations.
The increase in the gross profit as a percentage of net sales is due to the average cost of inventory decreasing more quickly than the average selling prices as discussed above in Results of Operations.
(b) Gross profit is calculated as net sales less the cost of materials sold. (c) Operating expenses are calculated as total costs and expenses less the cost of materials sold. Net sales decreased $58.0 million, or 13.6%, to $369.3 million in 2023 from $427.4 million in 2022.
(b) Gross profit is calculated as net sales less the cost of materials sold. (c) Operating expenses are calculated as total costs and expenses less the cost of materials sold. Net sales decreased $33.6 million, or 9.1% , to $335.7 million in 2024 from $369.3 million in 2023.
Investing Activities Net cash used for investing activities was $190.8 million during 2023, compared to $16.6 million during 2022. Investment activities in 2023 included $169.8 million for the acquisitions of Metal-Fab on January 3, 2023 and CTB on October 2, 2023 and $21.3 million of capital expenditures, primarily attributable to processing equipment at our existing facilities.
Investment activities in 2023 included $169.8 million for the acquisitions of Metal-Fab in January 2023 and CTB in October 2023 and $21.3 million of capital expenditures, primarily attributable to processing equipment at our existing facilities.
As a percentage of net sales, gross profit (as defined in footnote (a) in the table above) decreased to 16.5% in 2023 from 24.0% in 2022. The average gross profit per ton sold totaled $813 in 2023 compared to $1,313 in 2022.
As a percentage of net sales, gross profit (as defined in footnote (a) in the table above) increased to 18.2% in 2024 from 16.5% in 2023. The average gross profit per ton sold totaled $771 in 2024 compared to $813 in 2023.
(b) Gross profit is calculated as net sales less the cost of materials sold. (c) Operating expenses are calculated as total costs and expenses less the cost of materials sold. Net sales decreased $401.8 million, or 15.7%, to $2.2 billion in 2023 from $2.6 billion in 2022.
(b) Gross profit is calculated as net sales less the cost of materials sold. (c) Operating expenses are calculated as total costs and expenses less the cost of materials sold. Net sales decreased $216.5 million, or 10.0% , to $1.9 billion in 2024 from $2.2 billion in 2023 .
Accordingly, the timing and size of our capital requirements are subject to change as business conditions warrant and opportunities arise. 38 Table of Contents 2023 Compared to 2022 Operating Activities During 2023, we generated $175.2 million of cash from operations, of which $94.1 million was generated from working capital and $81.1 million was generated from operating activities.
Accordingly, the timing and size of our capital requirements are subject to change as business conditions warrant and opportunities arise. 37 Table of Contents 2024 Compared to 2023 Operating Activities During 2024 , we generated $ 33.7 million of cash from operations, of which $ 53.9 million was generated from operating activities and $20.2 million was u sed for working capital requirements.
Operating income totaled $34.6 million, or 2.8% of net sales, in 2023 compared to operating income of $25.0 million, or 1.8% of net sales, in 2022. 37 Table of Contents Tubular and pipe products The following table sets forth certain income statement data for the tubular and pipe products segment for the years ended December 31, 2023 and 2022 (dollars shown in thousands). 2023 2022 % of net sales % of net sales Net sales $ 369,342 100.0 $ 427,363 100.0 Cost of materials sold (a) 247,212 66.9 319,999 74.9 Gross profit (b) 122,130 33.1 107,364 25.1 Operating expenses (c) 81,438 22.0 72,508 16.9 Operating income $ 40,692 11.0 $ 34,856 8.2 (a) Includes $8,258 of LIFO income and $565 of LIFO expense in 2023 and 2022, respectively.
Operating income totaled $16.4 million, or 1.5 % of net sales, in 2024 compared to operating income of $34.6 million, or 2.8 % of net sales, in 2023 . 36 Table of Contents Tubular and pipe products The following table sets forth certain income statement data for the tubular and pipe products segment for the years ended December 31, 2024 and 2023 (dollars shown in thousands). 2024 2023 % of net sales % of net sales Net sales $ 335,718 100.0 $ 369,342 100.0 Cost of materials sold (a) 219,672 65.4 247,212 66.9 Gross profit (b) 116,046 34.6 122,130 33.1 Operating expenses (c) 87,237 26.0 81,438 22.1 Operating income $ 28,809 8.6 $ 40,692 11.0 (a) Includes $5,702 and $8,258 of LIFO income in 2024 and 2023, respectively.
Operating expenses (as defined in footnote (c) in the table above) increased $43.5 million, or 12.4%, to $395.8 million in 2023 from $352.3 million in 2022. As a percentage of net sales, operating expenses increased to 18.3% in 2023 from 13.8% in 2022.
Operating expenses (as defined in footnote (c) in the table above) increased $7.5 million, or 1.9% , to $403.3 million in 2024 from $395.8 million in 2023 . As a percentage of net sales, operating expenses increased to 20.7% in 2024 from 18.3% in 2023 .
Cost of materials sold decreased $115.7 million, or 19.6%, to $473.8 million in 2023 from $589.5 million in 2022. The decrease in cost of materials sold was due to the decrease in industry metals pricing discussed above in Results of Operations.
Cost of materials sold decreased $67.6 million, or 14.3%, to $406.2 million in 2024 from $473.8 million in 2023. The decrease in cost of materials sold was due to the decrease in industry metals pricing discussed above in Results of Operations.
Tubular and pipe products net sales decreased $58.0 million, or 13.6%, to $369.3 million in 2023 compared to $427.4 million in 2022 and were 17.1% of total net sales in 2023 compared to 16.7% of total net sales in 2022.
Tubular and pipe products net sales decreased $33.6 million, or 9.1%, to $335.7 million in 2024 compared to $369.3 million in 2023 and were 17.3% of total net sales in 2024 compared to 17.1% of total net sales in 2023.
Net cash from operations during 2022 was primarily comprised of net income of $90.9 million and the $20.2 million addback of non-cash depreciation and amortization expense. Working capital at December 31, 2023 totaled $422.9 million, a $70.5 million decrease from December 31, 2022.
Net cash from operations during 2023 was primarily comprised of net income of $44.5 million and the $ 27.2 million addback of non-cash depreciation and amortization expense. Working capital at December 31, 2024 totaled $448.0 million, a $25.0 million increase from December 31, 2023 .
The decrease was primarily attributable to a $51.5 million decrease in inventory, a $44.6 million decrease in accounts receivable, a $12.1 million increase in accounts payable and outstanding checks, offset by a $11.9 million decrease in accrued payroll and other accrued liabilities and a $2.3 million increase in prepaid expenses and other.
The incr ease was primarily attributable to a $39.1 million decrease in accounts payable and outstanding checks, a $8.0 million decrease in accrued payroll and other accrued liabilities and a $0.6 million increase in inventory, offset by a $27.2 million decrease in accounts receivable and a $0.4 million decrease in prepaid expenses and other.
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. The objective of this ASU is to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.
The objective of this ASU is to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.
Through acquisitions, our carbon flat products segment has expanded its product offerings to include self-dumping hoppers and steel and stainless-steel dump inserts for pickup truck and service truck beds.
Through acquisitions, our carbon flat products segment has expanded its product offerings to self-dumping metal hoppers and steel and stainless-steel dump inserts for pickup truck and service truck beds. Through the acquisition of Metal-Fab, the carbon flat products segment further expanded its product offerings to include venting, micro air and clean air products for residential, commercial and industrial applications.
When average selling prices increase, and net sales increase, gross profit and operating expenses as a percentage of net sales will generally decrease. 34 Table of Contents Consolidated Operations The following table sets forth certain consolidated income statement data for the years ended December 31, 2023 and 2022 (dollars shown in thousands): 2023 2022 % of net sales % of net sales Net sales $ 2,158,163 100.0 $ 2,559,990 100.0 Cost of materials sold (a) 1,684,663 78.1 2,073,930 81.0 Gross profit (b) 473,500 21.9 486,060 19.0 Operating expenses (c) 395,829 18.3 352,313 13.8 Operating income 77,671 3.6 133,747 5.2 Other loss, net 78 0.0 45 0.0 Interest and other expense on debt 16,006 0.7 10,080 0.4 Income before income taxes 61,587 2.9 123,622 4.8 Income taxes 17,058 0.8 32,691 1.2 Net income $ 44,529 2.1 $ 90,931 3.6 (a) Includes $8,258 of LIFO income and $565 of LIFO expense in 2023 and 2022, respectively.
When average selling prices increase, and net sales increase, gross profit and operating expenses as a percentage of net sales will generally decrease. 33 Table of Contents Consolidated Operations The following table sets forth certain consolidated income statement data for the years ended December 31, 2024 and 2023 (dollars shown in thousands): 2024 2023 % of net sales % of net sales Net sales $ 1,941,672 100.0 $ 2,158,163 100.0 Cost of materials sold (a) 1,490,491 76.8 1,684,663 78.1 Gross profit (b) 451,181 23.2 473,500 21.9 Operating expenses (c) 403,322 20.7 395,829 18.3 Operating income 47,859 2.5 77,671 3.6 Other loss, net 93 0.0 78 0.0 Interest and other expense on debt 16,461 0.9 16,006 0.7 Income before income taxes 31,305 1.6 61,587 2.9 Income taxes 8,325 0.4 17,058 0.8 Net income $ 22,980 1.2 $ 44,529 2.1 (a) Includes $5,702 and $8,258 of LIFO income in 2024 and 2023, respectively.
Operating income for 2023 totaled $22.9 million, or 4.0% of net sales, compared to $93.7 million, or 12.1% of net sales, in 2022. 36 Table of Contents Carbon flat products The following table sets forth certain income statement data for the carbon flat products segment for the years ended December 31, 2023 and 2022 (dollars shown in thousands, except per ton data): 2023 2022 % of net sales % of net sales Direct tons sold 820,144 777,748 Toll tons sold 34,048 29,171 Total tons sold 854,192 806,919 Net sales $ 1,221,093 100.0 $ 1,356,605 100.0 Average selling price per ton 1,430 1,681 Cost of materials sold 963,667 78.9 1,164,459 85.8 Gross profit (a) 257,426 21.1 192,146 14.2 Operating expenses (b) 222,844 18.2 167,131 12.4 Operating income $ 34,582 2.8 $ 25,015 1.8 (a) Gross profit is calculated as net sales less the cost of materials sold.
Operating income for 2024 totaled $19.7 million, or 4.0 % of net sales, compared to $22.9 million, or 4.0 % of net sales, in 2023 . 35 Table of Contents Carbon flat products The following table sets forth certain income statement data for the carbon flat products segment for the years ended December 31, 2024 and 2023 (dollars shown in thousands, except per ton data): 2024 2023 % of net sales % of net sales Direct tons sold 811,023 820,144 Toll tons sold 28,676 34,048 Total tons sold 839,699 854,192 Net sales $ 1,109,100 100.0 $ 1,221,093 100.0 Average selling price per ton 1,321 1,430 Cost of materials sold 864,590 78.0 963,667 78.9 Gross profit (a) 244,510 22.0 257,426 21.1 Operating expenses (b) 228,095 20.5 222,844 18.3 Operating income $ 16,415 1.5 $ 34,582 2.8 (a) Gross profit is calculated as net sales less the cost of materials sold.
Operating expenses in the specialty metals flat products segment decreased $21.8 million, operating expenses in the carbon flat products segment increased $55.7 million, operating expenses in the tubular and pipe products segment increased $8.9 million, and corporate expenses increased $0.7 million.
Operating expenses in the specialty metals flat products segment decreased $0.2 million, operating expenses in the carbon flat products segment increased $5.3 million, operating expenses in the tubular and pipe products segment increased $5.8 million, and corporate expenses decreased $3.4 millio n.
Net cash from operations during 2023 was primarily comprised of net income of $44.5 million and the $27.2 million addback of non-cash depreciation and amortization expense. During 2022, we generated $185.9 million of net cash for operations, of which $111.8 million was generated from operating activities and $74.1 million was generated from working capital.
Net cash from operations during 2024 was primarily comprised of net income of $23.0 million and the $ 30.9 million addback of non-cash depreciation and amortization expense. During 2023 , we generated $ 175.2 million of net cash from operations, of which $ 94.1 million was generated from working capital and $ 81.1 million was generated from operating activities.
The decrease in net sales was due to a 17.4% decrease in consolidated average selling prices during 2023 compared to 2022 partially offset by a 2.0% increase in consolidated volume. Average selling prices in 2023 were $2,023 per ton, compared to $2,448 per ton in 2022.
The decrease in net sales was due to a 9.2% decrease in consolidated average selling prices during 2024 compared to 2023 and a 0.9% decrease in consolidated volume. Average selling prices in 2024 were $1,837 per ton, compared to $2,023 per ton in 2023.
During 2022, $166.9 million of cash was used for financing activities, which primarily consisted of $162.1 million of net repayments under our ABL Credit Facility, $4.0 million of dividends paid, $0.7 million of principal payments for financing lease obligations and $0.1 million of payments for credit facility fees and expenses.
Financing Activities During 2024 , $ 74.4 million of cash was generated from financing activities, which primarily consisted of $82.3 million of net borrowings under our ABL Credit Facility, offset by $6.7 million of dividends paid, $1.0 million of principal payments for financing lease obligations and $0.2 million of payments for credit facility fees and expenses.
Carbon flat products net sales decreased $135.5 million, or 10.0%, to $1.2 billion in 2023 compared to $1.4 billion in 2022 and were 56.6% of total net sales in 2023 compared to 53.0% of total net sales in 2022.
Carbon flat p roducts net sales decreased $112.0 million, or 9.2%, to $1.1 billion in 2024 compared to $1.2 billion in 2023 and were 57.1% of total net sales in 2024 compared to 56.6% of total net sales in 2023.
As a percentage of net sales, gross profit (as defined in footnote (b) in the table above) increased to 33.1% in 2023 compared to 25.1% in 2022. As a percentage of net sales, the LIFO income recorded in 2023 increased gross profit by 2.2% compared to the LIFO expense recorded in 2022, which decreased gross profit by 0.1%.
As a percentage of net sales, the LIFO income recorded in 2024 increased gross profit by 1.7% compared to the LIFO income recorded in 2023 , which increased gross profit by 2.2% .
Operating expenses (as defined in footnote (c) in the table above) increased $8.9 million, or 12.3%, to $81.4 million in 2023 from $72.5 million in 2022. As a percentage of net sales, operating expenses increased to 22.0% in 2023 compared to 16.9% in 2022. Operating expenses increased primarily due to the October 2, 2023 acquisition of CTB.
Operating expenses (as defined in footnote (c) in the table above) increased $5.8 million, or 7.1% , to $87.2 million in 2024 from $81.4 millio n in 2023. As a percentage of net sales, operating expenses increased to 26.0% in 2024 compared to 22.1% in 2023.
The increase in gross profit as a percentage of net sales, and per ton, is a result of the acquisition of Metal-Fab during 2023, as well as average cost of inventory decreasing more quickly than the average selling prices as discussed above in Results of Operations.
The increase in gross profit as a percentage of net sales is a result of the average cost of inventory decreasing more quickly than the average selling prices as discussed above in Results of Operations, to the value-added acquisitions from 2023 having a continued positive impact on gross profit as well as the November 11, 2024 acquisition of Metal Works.
Operating expenses increased during 2023 as a result of the inclusion of operating expenses related to the January 3, 2023 acquisition of Metal-Fab for the carbon flat products segment and the October 2, 2023 acquisition of CTB for the tubular and pipe segment, partially offset by lower year-over-year variable performance-based incentive compensation and reduced operating costs for the specialty metals flat products segment.
Operating expenses increased during 2024 as a result of the inclusion of operating expenses related to the November 2024 acquisition of Metal Works for the carbon flat products segment, the October 2023 acquisition of CTB in the tubular and pipe products segment and the absence of year-over-year employee retention credits, or ERCs, provided through CARES Act in 2023, partially offset by lower year-over-year acquisition-related fees and variable performance-based incentive compensation.
Specialty metals flat products net sales decreased $208.3 million, or 26.8%, to $567.7 million in 2023 compared to $776.0 million in 2022 and were 26.3% of total net sales in 2023 compared to 30.3% of total net sales in 2022.
Specialty metals flat products net sales decreased $70.9 million, or 12.5% , to $496.9 million in 2024 compared to $567.7 million in 2023 and were 25.6% of total net sales in 2024 compared to 26.3% of total net sales in 2023 .
(b) Operating expenses are calculated as total costs and expenses less the cost of materials sold. Tons sold in our specialty metals flat product segment decreased 27 thousand tons, or 18.7%, to 115 thousand tons in 2023 from 142 thousand tons in 2022.
(b) Operating expenses are calculated as total costs and expenses less the cost of materials sold. Tons sold decreased 14 thousand tons, or 1.7% , to 840 thousand tons in 2024 from 854 thousand tons in 2023 .
Net sales in our specialty metals flat products segment decreased $208.3 million, or 26.8%, to $567.7 million in 2023 from $776.0 million in 2022. The decrease in sales was due to a 10.1% decrease in average selling prices and by a 18.7% decrease in sales volume during 2023 compared to 2022.
Net sales in our specialty metals flat products segment decreased $70.9 million, or 12.5%, to $496.9 million in 2024 from $567.7 million in 2023. The decrease in sales was due to a 13.9% decrease in average selling prices partially offset by a 1.7% increase in sales volume during 2024 compared to 2023.
The objective of this ASU is to enhance the disclosures a public entity provides about their reportable segments. The ASU does not amend any of the existing guidance or requirements in Topic 280, Segment Reporting. Under the ASU, public entities must disclose incremental segment information on both an annual and interim basis.
In November 2023, FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure". The objective of this ASU is to enhance the disclosures a public entity provides about their reportable segments. The ASU does not amend any of the existing guidance or requirements in Topic 280, Segment Reporting.
Our tubular and pipe products segment's focus is on the distribution of metal tubing, pipe, bar, valves and fittings and the fabrication of parts supplied to various industrial markets. Through the acquisition of CTB, on October 2, 2023, the tubular and pipe products segment further expanded its geographic footprint and extended its value-added contract manufacturing capabilities.
Our tubular and pipe products segment's focus is on the distribution of metal tubing, pipe, bar, valves and fittings and the fabrication of parts supplied to various industrial markets.
The decrease in net sales was due to a 13.9% decrease in average selling prices offset by a 0.3% increase in sales volume during 2023. Cost of materials sold decreased $72.8 million, or 22.7%, to $247.2 million in 2023 from $320.0 million in 2022.
The decrease in net sales was due to a 11.4% decrease in average selling prices partially offset by a 2.6% increase in sales volume during 2024 due, in part to the CTB acquisition. Cost of materials sold decreased $27.5 million, or 11.1% , to $219.7 million in 2024 from $247.2 millio n in 2023.
We do not report tons sold for our end-use products. Net sales decreased $135.5 million, or 10.0%, to $1.2 billion in 2023 from $1.4 billion in 2022. The decrease in sales was due to a 15.0% decrease in average selling prices partially offset by a 5.9% increase in sales volume.
Toll tons sold decreased 5 thousand tons, or 15.8% , to 29 thousand tons in 2024 from 34 thousand tons in 2023 . We do not report tons sold for our end-use products. Net sales decreased $112.0 million, or 9.2% , to $1.1 billion in 2024 from $1.2 billion in 2023.
The ASU is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024, applied retroactively. We do not anticipate this having a material impact on our Consolidated Financial Statements. In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures".
This ASU is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. We are in the process of evaluating the effect of this new guidance on the related disclosures. In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures".
We use cash generated from operations and borrowings under our asset-based credit facility, or ABL Credit Facility, to fund these requirements.
Liquidity, Capital Resources and Cash Flows Our principal capital requirements include funding working capital needs, purchasing, upgrading and acquiring processing equipment and facilities, making acquisitions and paying dividends. We use cash generated from operations and borrowings under our asset-based credit facility, or ABL Credit Facility, to fund these requirements.
Operating expenses in 2023 increased $55.7 million, or 33.3%, to $222.8 million from $167.1 million in 2022. As a percentage of net sales, operating expenses increased to 18.2% in 2023 from 12.4% in 2022. Operating expenses increased primarily due to the January 3, 2023 acquisition of Metal-Fab and a 5.9% increase in year-over-year sales volume.
Operating expenses in 2024 increased $5.3 million, or 2.4% , to $228.1 million from $222.8 million in 2023 . As a percentage of net sales, operating expenses increased to 20.5% in 2024 from 18.3% in 2023.
Through the acquisition of Metal-Fab, on January 3, 2023, the carbon flat products segment further expanded its product offerings to include venting, micro air and clean air products for residential, commercial and industrial applications. We act as an intermediary between metals producers and manufacturers that require processed metals for their operations.
Through the recent acquisition of Metal Works, the carbon flat products segment further expanded its product offerings to include the manufacturing of service station canopies, deck clips, long gutters, trim, boat docks and solar canopy and ground racking components. We act as an intermediary between metals producers and manufacturers that require processed metals for their operations.
As a percentage of net sales, operating expenses increased to 12.5% of net sales in 2023 from 11.9% in 2022. The decrease in operating expenses was primarily attributable to lower year-over-year variable performance-based incentive compensation and reduced operating costs.
The decrease in operating expenses was primarily attributable to lower year-over-year variable performance-based incentive compensation.
As a percentage of net sales, gross profit (as defined in footnote (a) in the table above) increased to 21.1% in 2023 from 14.2% in 2022. The average gross profit per ton sold increased $63 per ton, or 26.6%, to $301 in 2023 from $238 in 2022.
As a percentage of net sales, gross profit (as defined in footnote (b) in the table above) increased to 34.6% in 2024 compared to 33.1% in 2023 .
Average selling prices in 2023 decreased to $1,430 per ton, compared to $1,681 per ton in 2022. Cost of materials sold decreased $200.8 million, or 17.2%, to $963.7 million in 2023 from $1.2 billion in 2022. The decrease in cost of materials sold was due to decreased industry metals pricing discussed above in Results of Operations.
The decrease in sales was due to a 7.6% decrease in average selling prices and a 1.7% decrease in sales volume. Averag e selling prices in 2024 decreased to $1,321 per ton, compared to $1,430 per ton in 2023 . Cost of materials sold decreased $99.1 million, or 10.3% , to $864.6 million in 2024 from $963.7 million in 2023.
The decrease in the gross profit as a percentage of net sales is due to average selling price decreasing more quickly than the average cost of inventory as discussed above in Results of Operations. Operating expenses (as defined in footnote (b) in the table above) decreased $21.8 million, or 23.5%, to $71.1 million in 2023 from $92.9 million in 2022.
Operating expenses (as defined in footnote (b) in the table above) decreased $0.2 million, or 0.2%, to $70.9 million in 2024 from $71.1 million in 2023. As a percentage of net sales, operating expenses increased to 14.2% of net sales in 2024 from 12.5% in 2023.
The interest rate swap expired on January 10, 2024. 40 Table of Contents Contractual and Other Obligations The following table reflects the material cash requirements for our contractual and other obligations as of December 31, 2023.
Although we are exposed to credit losses in the event of nonperformance by the other party to the interest rate hedge agreement, we anticipate performance by the counterparty. 39 Table of Contents Contractual and Other Obligations The following table reflects the material cash requirements for our contractual and other obligations as of December 31, 2024.
Income before income taxes totaled $61.6 million, or 2.9% of net sales, in 2023, compared to income before taxes of $123.6 million, or 4.8% of net sales, in 2022. 35 Table of Contents An income tax provision of 27.7% was recorded in 2023, compared to an income tax provision of 26.4% in 2022.
An income tax provision of 26.6% was recorded in 2024, compared to an income tax provision of 27.7% in 2023.

… 23 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed9 unchanged
Biggest changeThe metals industry as a whole is cyclical and, at times, pricing and availability of metals can be volatile due to numerous factors beyond our control, including general domestic and international economic conditions, the levels of metals imported into the United States, labor costs, sales levels, competition, levels of inventory held by other metals service centers, consolidation of metals producers, new global capacity by metals producers, higher raw material costs for the producers of metals, import duties and tariffs and currency exchange rates.
Biggest changeThe metals industry as a whole is cyclical and, at times, pricing and availability of metals can be volatile due to numerous factors beyond our control, including general domestic and international economic conditions, the levels of metals imported into the United States, labor costs, sales levels, competition, levels of inventory held by other metals service centers, consolidation of metals producers, new global capacity by metals producers, higher raw material costs for the producers of metals, import duties and tariffs, including the proposed reinstatement of tariffs on steel and increases to aluminum announced in February 2025, and currency exchange rates.
During 2023, 2022 and 2021, we entered into metals swaps at the request of customers. These derivatives have not been designated as hedging instruments. For certain customers, we enter into contractual relationships that entitle us to pass-through the economic effect of trading positions that we take with other third parties on our customers’ behalf.
During 2024 , 2023 and 2022 , we entered into metals swaps at the request of customers. These derivatives have not been designated as hedging instruments. For certain customers, we enter into contractual relationships that entitle us to pass-through the economic effect of trading positions that we take with other third parties on our customers’ behalf.
Although general inflation, excluding increases in the price of metals and increased labor and distribution expense, has increased during 2023, it has not had a material effect on our financial results during the past three years, but may have a significant impact in future years. We are exposed to the impact of fluctuating metals prices and interest rate changes.
Although general inflation, excluding increases in the price of metals and increased labor and distribution expense, has increased during 2024, it has not had a material effect on our financial results during the past three years, but may have a significant impact in future years. We are exposed to the impact of fluctuating metals prices and interest rate changes.
Our primary interest rate risk exposure results from variable rate debt. If interest rates in the future were to increase 100 basis points (1.0%) from December 31, 2023 rates and, assuming no change in total debt from December 31, 2023 levels, the additional annual interest expense to us would be approximately $1.9 million.
Our primary interest rate risk exposure results from variable rate debt. If interest rates in the future were to increase 100 basis points (1.0%) from December 31, 2024 rates and, assuming no change in total debt from December 31, 2024 levels, the additional annual interest expense to us would be approximately $2.0 million.
Declining metals prices have generally adversely affected our net sales and net income, while increasing metals prices have generally favorably affected our net sales and net income. Approximately 48%, 52% and 47% of our consolidated net sales in 2023, 2022 and 2021, respectively, were directly related to industrial machinery and equipment manufacturers and their fabricators.
Declining metals prices have generally adversely affected our net sales and net income, while increasing metals prices have generally favorably affected our net sales and net income. Approximately 49% , 48% and 52% of our consolidated net sales in 2024 , 2023 and 2022 , respectively, were directly related to industrial machinery and equipment manufacturers and their fabricators.
We have the option to enter into 30- to 180-day fixed base rate SOFR loans under the revolving credit facility provided by our ABL Credit Facility. On January 10, 2019, we entered into a five-year interest rate swap that locked the interest rate at 2.42% on $75 million of our revolving debt.
We have the option to enter into 30- to 180-day fixed base rate SOFR loans under the revolving credit facility provided by our ABL Credit Facility. On August 15, 2024 , we entered into a two -year interest rate swap that locked the interest rate at 3.82% on $75 million of our revolving debt.
The interest rate swap expired on January 10, 2024. 44 Table of Contents
The interest rate swap exp ires on August 15, 2026. 43 Table of Contents

Other ZEUS 10-K year-over-year comparisons