Olympic Steel buys Metal Works of Georgia | Crain's Cleveland Business

Nov 13, 2024

Olympic Steel Inc. (Nasdaq: ZEUS), a national metals service center based in Cleveland, announced it has bought a manufacturer of metal canopies and other products made primarily from coated carbon steel and aluminum.

Terms of the all-cash acquisition of Georgia-based Metal Works were not disclosed. Olympic Steel said it expects the purchase to be "immediately accretive" to its financial results.

Metal Works makes canopies for service stations. It also produces deck clips, long gutters, boat docks and solar canopy and ground racking components, Olympic Steel said in announcing the deal on Monday, Nov. 11. The company operates from two facilities in Oakwood, Georgia, totaling nearly 50,000 square feet and including roll forming and folding machines among its equipment, according to Olympic Steel.

Richard A. Manson, chief financial officer of Olympic Steel, noted in an email that the company in its deal announcement did not disclose annual revenue or employment figures for Metal Works. He wrote in the email that Olympic Steel will "provide more financial detail around the acquisition in our 10-K which we be filed in February, as well as our 4Q earnings call that will also occur in February."

Olympic Steel CEO Richard T. Marabito said in a statement that Metal Works is a good fit for the company because "continued growth in manufactured metal products is a key component of our strategy."

Manson wrote in his email that manufactured metal products "represent 6%-7% of our total sales." He added, "In general, the manufactured metal products have lower sales dollars than our traditional distribution business, but provide a higher return on investment and have a higher EBITDA margin. Our desire to grow in manufactured metal products is due to the ability to earn profit countercyclically to our metal distribution business, especially in a year like 2024 where metal pricing has been challenging."

Olympic Steel now has completed eight acquisitions in the past seven years, Manson noted, including McCullough Industries of Kenton, Ohio, which makes industrial hoppers, and Metal-Fab of Wichita, Kanas, a maker of HVAC components and air ventilation products. Both McCullough and Metal-Fab "have been key acquisitions in our growth into manufactured metal products," Manson wrote.

Metal Works, which opened in 2003, will continue to operate under that name and will be led by its president, Ben Houston. Olympic Steel said Metal Works will report financial results as part of the company’s Carbon Flat Rolled business segment.

Olympic Steel, founded in 1954, sells and processes carbon and coated sheet, plate and coil steel products; stainless steel sheet, plate, bar and coil; aluminum sheet, plate and coil; pipe, tube, bar, valves and fittings; and other products. It has 49 facilities in North America.

The company on Oct. 31 reported third-quarter sales of $470 million, compared with $526 million in the third quarter of 2023. The drop was "due primarily to year-over-year declines in metal pricing," Olympic Steel said.

Olympic Steel stock at 11 a.m. Monday was trading at $41.34 per share, up about 1% from its close on Friday, Nov. 8. The stock's 52-week high is $73.43, and the 52-week low is $32.23.