Please ensure Javascript is enabled for purposes of website accessibility

Olympic Steel Inc (ZEUS) Q2 2021 Earnings Call Transcript

By Motley Fool Transcribers – Aug 6, 2021 at 1:01PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ZEUS earnings call for the period ending June 30, 2021.

Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Olympic Steel Inc (ZEUS 1.94%)
Q2 2021 Earnings Call
Aug 6, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello, and welcome to the Olympic Steel 2021 Second Quarter Financial Results Conference Call and Webcast. [Operator Instructions]

It's now my pleasure to turn the call over to Rich Manson, Chief Financial Officer at Olympic Steel. Please go ahead, sir.

10 stocks we like better than Olympic Steel
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* 

They just revealed what they believe are the ten best stocks for investors to buy right now... and Olympic Steel wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of June 7, 2021

Richard A. Manson -- Chief Financial Officer

Thank you, operator. Welcome to Olympic Steel's earnings call for the second quarter of 2021. Our call this morning will be hosted by our Chief Executive Officer, Rick Marabito; and we will also be joined by our President and Chief Operating Officer, Andrew Greiff.

Before we begin, I have a few reminders. Some statements made on today's call will be predictive and are intended to be made as forward-looking within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and may not reflect actual results. The company does not undertake to update such statements, changes in assumptions or changes in other factors affecting such forward-looking statements. Important assumptions, risks, uncertainties and other factors that could cause actual results to differ materially are set forth in the company's reports on Forms 10-K and 10-Q and the press releases filed with the Securities and Exchange Commission.

During today's discussion, we may refer to adjusted net income per diluted share, EBITDA and adjusted EBITDA, which are all non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures is provided in the press release that was issued last night and can be found on our website. Today's live broadcast will be archived and available for replay on Olympic Steel's website.

At this time, I'll turn the call over to Rick.

Richard T. Marabito -- Chief Executive Officer

Thank you, Rich. Good morning, everyone, and thank you for joining us to discuss Olympic Steel's results for the second quarter of 2021. I'll begin with some comments about our record quarterly performance and the progress on our long-term strategy to position our business to deliver consistent profitability. Then Andrew will review our business segment performance and our market outlook. Rich will conclude with a more detailed review of our second quarter financial results. After that, we'll be happy to take your questions.

This is truly an exceptional time for Olympic Steel. The second quarter was the most profitable quarter in the company's history, and we reported record sales for the second consecutive quarter. From a market perspective, demand continues to be good, metal prices continue to escalate to record highs and our shipping volumes are at pre-COVID levels. And from an operational perspective, our strategic execution, key investments and ongoing disciplines around working capital turnover and controlling expenses have propelled our success.

Our historic performance would not be possible without the efforts and talents of the entire Olympic Steel team. We are proud of how our team has worked together to provide superior service to our customers, while driving our operational initiatives and sustaining our culture of safety first. Collectively, these efforts resulted in record-setting quarter.

Our second quarter sales of $556 million were up more than $90 million from our record-setting first quarter. Net income totaled $29.6 million for the second quarter and adjusted EBITDA was a record $51.7 million. To put this in perspective, adjusted EBITDA for the second quarter alone was more than double the adjusted EBITDA for all of fiscal year 2020.

Market dynamics for the steel industry remained strong and pricing continues at record levels into the third quarter. Index pricing for carbon hot-rolled steel rose from $1,300 per ton to $1,723 per ton during the second quarter. And as of today, it is $1,863 per ton, marking the 51 consecutive week that the index has increased. This compares to the $400 to $500 per ton range that we experienced last summer. The robust market brings challenges however, and we continue to serve our customers by delivering metal while they navigate component shortages, supply chain disruptions and labor constraints. We expect these challenges to continue in the near-term.

We also continue to execute our long-term strategy to further diversify our business and deliver consistent profitability. Our investments in the Specialty Metals business, our expansion in the Southeast region of the United States and the successful integration of our recent acquisitions have helped us diversify our portfolio and improve our returns. We'll continue to focus on operational efficiencies, while deploying capital into investments with higher EBITDA returns to drive consistency in our earnings.

Looking ahead, our already strong balance sheet was bolstered recently by our amended and extended $475 million credit facility. The continued access to low cost capital and additional borrowing capacity, gives us the financial flexibility to pursue additional acquisitions and capital expenditures in organic growth. We have a strong pipeline of high return investment opportunities that we are actively pursuing for future growth.

We expect that demand environment remains strong as positive industry dynamics continue in a strengthening economy. For the long-term, we're hopeful that the U.S. infrastructure legislation will be passed this year. And we are in an excellent position to be a key supplier to customers we'll play a critical role in the rebuilding of our nation's roads, bridges and other infrastructure projects that really could extend the higher metal demand for many years to come. For these reasons, we're optimistic about the future and anticipate a similarly strong third quarter.

Now, I will turn the call over to Andrew for some additional comments.

Andrew Greiff -- President and Chief Operating Officer

Thank you, Rick, and good morning, everybody. As Rick mentioned, our record performance for the second quarter and first half of 2021 was more than just the result of strong market momentum. It was a testament to the extraordinary collaborative efforts of everyone on our team, focusing on customers, keeping metals shipping and controlling operating expenses in an environment of rising labor, material and freight costs, all while maintaining safe operations throughout our organization.

It's also worth noting that shipments for our higher margin products in Specialty Metals and Pipe and Tube, once again outpaced the market in the second quarter. Our record EBITDA and pre-tax results were supported by excellent performances in all three of our reporting segments. Specialty Metals, led by Andy Markowitz, had an exceptional quarter. Second quarter sales were up more than 150% from a year ago and EBITDA was $14.6 million. While stainless and aluminum supply remain constrained, our shipments still outpaced the industry and we grew our market share.

Our OEMs, including truck-trailer, industrial appliance and restaurant equipment manufacturers remained very strong. Tight supply drove price increases throughout the quarter, which helped us deliver record profitability in this segment. We expect stainless steel allocations to remain through the fourth quarter of 2021 and likely into the first half of 2022. Action Stainless, which we acquired in December 2020, has performed extremely well in the first half of 2021.

Our Pipe and Tube segment, led by those Bill Zielinski, continues to perform extremely well. Sales for this segment increased 75% from a year ago and adjusted EBITDA was $8.4 million, bringing the segment's adjusted EBITDA for the first half to a record 17.2%. Led by an outstanding team, our Pipe and Tube segment continues to support our long-term growth strategy and deliver consistent profitability. As we look ahead, we believe the segment's value-added services will be a key differentiator as customers' supply chain issues will create more need for our outsourced services.

Our Carbon segment had an extraordinary quarter. Sales for the segment increased 131% from a year ago and EBITDA was $33 million. We saw significant year-over-year improvement. At all of our facilities, we have focused on controlling expenses and rightsizing inventory to create sustainable operating models that can generate consistent profitability. Our strong performance was also driven by the success of our automotive stamping line in Winder, Georgia and investments in our Buford Georgia facility, both of which support our growing presence in the Southeast region. Our second automotive stamping and automated packaging lines for Winder is being built and expected to be operational in the second quarter of 2022.

As we started the third quarter, volumes have remained steady and margins continued to be strong. Our industrial OEM customers are busy, but they are also dealing with continuing supply chain challenges. While we have experienced many of the same supply chain challenges as our customers, particularly with respect to labor, we expect to continue to invest in automated equipment at a number of our facilities to help us meet the demand for value-added products from our large industrial customers.

Signals point to continued healthy demand and tight supply as we head into the second half of this year. We believe these favorable market conditions will continued to be conducive for strong earnings. We will stay vigilant when it comes to safety, performing for our customers, expenses and inventory turnover, focusing on what we can control. I am proud of our leadership, support staff and all of our team members for their resiliency and impactful sustainable changes that we have made and look forward to building on these successes as we move forward.

Now I'll turn the call over to Rich.

Richard A. Manson -- Chief Financial Officer

Thank you, Andrew, and good morning, everyone. As Rick noted, our continued focus on working capital and operating expenses, coupled with strong markets and increases in metal prices, contributed to the most profitable quarter in Olympic Steel history. Net income for the quarter totaled $29.6 million compared with a net loss of $6.5 million in the second quarter of 2020 and adjusted EBITDA was $51.7 million compared with $500,000 for the second quarter of last year. These results include $4 million of LIFO pre-tax expense in the second quarter of 2021 compared with $500,000 of LIFO pre-tax income in the same period a year ago.

Sales for the quarter totaled $556 million compared with $248 million a year ago. Volumes were up slightly from the first quarter of this year as our customers deal with constraints in the supply chain, which Andrew mentioned earlier. We expect third quarter shipping volumes to approximate second quarter shipping volumes. As a result of the focus on inventory management, our inventories are lean and continued to turn at historically high levels. Our flat-rolled inventory turns 6.1 times year-to-date and our Pipe and Tube inventory turns 4.2 times year-to-date.

In June, we announced that we amended and extended the maturity of our existing $475 million asset-based revolving credit facility through June 16, 2026 with an accordion feature of up to $200 million. We also have the flexibility and discretion to include our unencumbered real estate portfolio as borrowing base collateral, which provides greater borrowing base capacity, if it's needed. The updated facility provides us with an excellent source of low cost capital to sustain our ongoing operations as well as additional funds to fund acquisitions and organic growth.

At the end of the second quarter, the company had total debt of $269 million, an increase of $108 million from year end. As we discussed last quarter, higher metal price is resulting the need to fund working capital requirements. The increase in our debt has been caused by the funding of approximately $162 million and higher working capital levels associated with higher metal prices and higher year-over-year shipping volumes. The need to fund higher working capital levels will continue into the third quarter as metal pricing continues to increase.

Consolidated operating expenses for the second quarter were $84.9 million, an increase of $25.4 million compared with the second quarter a year ago. Included in the increase is $3.3 million of expenses associated with Action Stainless, which was purchased in December 2020 and approximately $10 million of incremental incentive expense associated with our increased profitability as well as processing and distribution expenses, which were associated with an approximate 36% increase in our shipping levels. As a percent of sales, operating expenses dropped to 15.3% in the second quarter compared with 24% last year.

Capital expenditures totaled $4.6 million for the first half of 2021 compared with depreciation of $9.3 million. Our effective income tax rate for the second quarter was 26.6% compared with 31.4% for the second quarter of last year. We expect the effective income tax rate for the second half of 2021 to be similar to the first half of the year. We also announced that the board of directors approved a regular quarterly cash dividend of $0.02 per share, which is payable on September 15, 2021 to shareholders of record on September 1, 2021.

In conclusion, our ongoing success has been the result of many factors, including our disciplined focus on working capital and expense control, our strategic positioning of our company for consistent long-term profitability and strong markets. We are proud of our entire team and our accomplishments thus far in 2021, and we're looking forward to a strong third quarter.

Now operator, let's open the call for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question today is coming from Marco Rodriguez from Stonegate Capital Markets. Your line is now live.

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Good morning, everyone. Thank you for taking my questions.

Richard T. Marabito -- Chief Executive Officer

Good morning, Marco.

Richard A. Manson -- Chief Financial Officer

Good morning.

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Good morning. I was wondering if we can start on here on the Carbon Flat segment. Sequentially, you had some pretty nice increases in volumes as well as pricing, but the gross margin was pretty similar to Q1. Can you maybe talk a little bit about the drivers there?

Richard T. Marabito -- Chief Executive Officer

Yeah. Sure, Marco. I think one of the things we've always talked about is that we're not as focused on gross margin percentage as we are focused on gross margin dollars per ton. And so what you saw in the first quarter was that the selling price dramatically increased, and you saw a commensurate increase in the gross margin dollars per ton, right? So the percentage may be relatively similar to the first quarter, but we generated far more gross margin dollars per ton in the second quarter. And that's really what propelled the quarter to be a record quarter.

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Got it. And then in terms of the Specialty Metals segment, you mentioned in the prepared remarks that you're still expecting the industry to sort of be on allocation through fiscal '22. I was wondering if you can maybe kind of update us on what you're sort of seeing there by end markets? And then also if you can update us on what lead times might look like?

Andrew Greiff -- President and Chief Operating Officer

Marco, this is Andrew. So the expectation on stainless, in particular, is that the allocation will go through at least mid next year. We are already seeing it in discussions that we have with the mills, the domestic mills. And we would expect that that's just going to continue as we go into next year. The sectors that we continue to see strong are the truck-trailer and appliance our really strong right now and the food equipment sector is also very strong. And so from our perspective, it is to support the growth of our existing customers and making sure that there is enough metal for them as we go into next year to be able to support what they're looking for before we look to take on additional business.

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Got it. And any update on what the lead times look like?

Andrew Greiff -- President and Chief Operating Officer

Lead times are fairly steady. I mean, right now, they're probably in the four to six week range. Some of the lighter gauges are -- will extend out much further than that.

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Got it. Helpful. And then switching gears to tubular. You had a pretty substantial revenue growth in the quarter, again, here versus Q1 and year-over-year obviously. And if I annualize your year-to-date performance in that segment, you're up about 25% over fiscal '19 revenues, so kind of the pre-pandemic look, if you will. And I believe last quarter you had sort of a large order from a customer that wasn't expected to repeat. So can you perhaps talk about what sort of drivers you saw on the revenue side in the tubular area? If anything may be accelerating the quarter or any other sort of one-time events?

Andrew Greiff -- President and Chief Operating Officer

No, I think we are back to the more traditional business. That segment is very strong on the transactional side of the business and for the quarter. It really reverted back to more traditional business and certainly had picked up. We have a number of sectors that were stronger in the second quarter than the first. And I expect that we're going to see that continue for the balance of the year.

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Understood. Then on the working capital movements in the quarter, fairly significant movements in the usage and receivables inventory and some help from payables. Can you talk a little bit about those movements and what you might be expecting for the remainder of the year?

Richard A. Manson -- Chief Financial Officer

Sure, Marco. It's Rich. And as we look at it obviously in prices -- in times of escalating prices, there is a draw in working capital. So you've seen a substantial increase in our receivables, a substantial increase in our inventory. And you're right, it's offset a little bit by the payables. So while we've had a record first half year, for every dollar we've spent -- every dollar we've earned an EBITDA, we've spent about $2 in working capital, and that's traditionally what we see in these types of markets.

The good news is that the way our ABL works is that it provides plenty of capital for us to continue to work off of. At the end of the second quarter, we were at $202 million of availability. So even though debt and working capital were up substantially in the second quarter, we grew our availability by another $40 million. And so with the amend and extend that we did there in June, we've got access to plenty of low cost capital that will help us sustain us through this working capital draw as prices continue. And I think I did allude to my prepared comments that we do expect the drain to continue a little bit in the third quarter, and it's just going to be tied to pricing. So as index pricing continues to increase during the third quarter, you will see a commensurate increase in accounts receivable and inventory that will fund through the line.

Richard T. Marabito -- Chief Executive Officer

Yeah. Marco, it's Rick. The other thing I'd just reiterate and Rich mentioned in his prepared comments, even though the working capital pool has been pretty substantial, we're really locked in on inventory turnover. So talked about both the flat and the Pipe and Tube being at record turn level. So we're going to stay focused on that. And the thing we didn't talk about, but our turnover on receivables has been rock solid as well. So we feel pretty good about how we're managing the working capital. And as Rich said, it's really a function of the pricing continuing to escalate each month.

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Got it. And last question from me, kind of a higher level question. Just assuming that the infrastructure bill is passed and sort of given the constraints that you see now and what you might be expecting, can you maybe talk about how you see this sort of unfolding as it relates to the industry's ability to meet that potential coming demand?

Richard T. Marabito -- Chief Executive Officer

Sure. Really good question. First, I guess the way we're looking at this is as we look at timing. We're hopeful that by the end of this year we have some legislation in place. I think that would put our industry and Olympic in a spot probably in 2023 to start to see the metal actually flowing to the infrastructure projects. So the first thing as I look at, boy, there would be a great bridge. 2022, we're pretty optimistic about without an infrastructure spend that I think sort of the trends we've been experiencing here as the rest of the world kind of catches up on an economic activity to the U.S. and maybe China in 2022 that we continue to have a pretty strong steel dynamic and steel industry economy. And then you bridge that and get to '23 and beyond with several years of infrastructure supply, I think we're setup for potentially a really nice cycle here in terms of demand.

In terms of the industry and Olympic's ability to I think meet the needs of the infrastructure, I don't think that will be a problem at all. Certainly, I would say given the timing I outlined, I think we'll hopefully have a lot of the supply chain disruptions behind us. And certainly from our perspective, I think our long and deep relationships that we've built with our domestic North American partners on the mill side, I feel really comfortable that we will fully participate in an increasing demand environment by the infrastructure spend. So we're optimistic about it. I think it would be great for America. I think we need it. I think it will be great for our entire economy. And certainly, Olympic Steel will be a great participator in that.

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Excellent. Thank you, guys. I really appreciate your time.

Richard T. Marabito -- Chief Executive Officer

Thanks, Marco.

Andrew Greiff -- President and Chief Operating Officer

Thanks, Marco.

Operator

Thank you. Our next question is coming from Michael Leshock from KeyBanc Capital Markets. Your line is now live.

Michael Leshock -- KeyBanc Capital Markets -- Analyst

Hey, guys. Good morning.

Andrew Greiff -- President and Chief Operating Officer

Good morning.

Richard T. Marabito -- Chief Executive Officer

Good morning, Mike.

Michael Leshock -- KeyBanc Capital Markets -- Analyst

So first, I just wanted to ask, do you expect incremental opex increases in the third quarter just given some of the further inflationary pressures that we're seeing? And then what are the costs primarily driving that, whether it be labor, freight or otherwise?

Richard A. Manson -- Chief Financial Officer

Yeah, Mike, it's Rich, and I think you hit on the two biggies. Labor and freight are pretty much the things we talk about the most. I think when you look at it kind of Q3 on Q2, we do think Q3 looks a lot like Q2. And so as you look at Q2 of '21 versus Q2 of '20, it's kind of weird because you're comparing a COVID quarter at the worst time versus our greatest quarter that we've ever had in the company history, right?

And so as we noted in the comments, while opex expense was up $25 million year-over-year, there is $3.3 million of that which was Action Stainless which wasn't there in 2020 and you had about $10 million in incremental incentive expense that wasn't there in 2020. And so when you look at how we handle expenses, we're very cognizant of trying to keep everything tied to volume. And so all things kind of being equal, if volumes maintain kind of Q3 over Q2, we would expect operating expenses to kind of be in the same ballpark. We would also expect that with the higher profitability that you would see that variable incentive expense be up as well. So all things being said, I do think Q3 looks a lot like Q2.

Richard T. Marabito -- Chief Executive Officer

Yeah. And I think, Mike, there is -- there may be a little bit more inflationary pressure. I think we continued to see prices for the areas that you talked about increase during the second quarter. But I don't think the sort of the quarter-on-quarter or certainly the year-over-year rate increases that are really due to inflation are going to continue at the same level. So it seems like it's starting to level off a little bit, but there could be a little more inflationary pressure in the third quarter. But Rich is right. The big chunk of it I think for the reasons he explained, third quarter expenses will probably look a lot like second quarter.

Michael Leshock -- KeyBanc Capital Markets -- Analyst

Got it. That's helpful. And then what are you seeing in the import market given how tight domestic capacity has been? Are you seeing some of these domestic players incentivized to pivot to imports?

Andrew Greiff -- President and Chief Operating Officer

Well, we're certainly seeing imports -- the statistics have shown that month-over-month we're seeing certainly a great -- a greater amount of imports coming in. I would tell you, depending on which part of the country, certainly for us, it's much more impactful. I think we'll see imports as we get into the second half of the year certainly on the carbon side of the business. What I will tell you is that on the stainless side of the business, it's much more active. The last, I'd say, three to four years has not been as active as what we have seen certainly coming in now and going into the balance of the year, there is a great need for more stainless supply, certainly on the East Coast and in the south, and I think we'll see more of that. Again, carbon hot-rolled, probably less in the East Coast, a little bit more in the south and certainly in the West. Plate, we're going to see a little bit more important as well.

Michael Leshock -- KeyBanc Capital Markets -- Analyst

And then lastly for me. Just what did you see in terms of daily demand in July versus the second quarter as a whole? I'm just trying to get a feel for the cadence, the momentum that you saw as you exited the quarter and then began the third quarter. Thanks.

Andrew Greiff -- President and Chief Operating Officer

Yeah. I would say pretty steady. I mean, we really have not seen any huge increases. I think customers were expecting and they certainly had forecasted greater growth. But I think with the supply chain disruptions Rich talked about, certainly the freight and the labor on the automotive side, chips as well as issues that we're seeing in the industrials who are having issues with everything from also chips to engines. And so I think there was great expectation that we were going to see some growth based on their forecast, but it's been relatively steady, and we think that's going to continue through Q3.

Richard A. Manson -- Chief Financial Officer

Yeah. And I would just add, Mike, that with the timing of the July 4 holiday, you'd lost a couple of effective shipping days there in the beginning of the month. But right after the holiday, it picked right back up, as Andy said, to steady state.

Richard T. Marabito -- Chief Executive Officer

Yeah. And I'd say for -- normally for July, I'd characterize July as really good, really good based on -- historically, as you know, Mike, July is one of the seasonally slower months. And I think Rich said it well, the day -- the business day before and the business day after the 4th. Other than that, it was right back at it at levels like Andrew said, pretty consistent with what we saw in Q2. So that's a good July in my book.

Michael Leshock -- KeyBanc Capital Markets -- Analyst

Got it. That's helpful. Thanks, guys.

Richard T. Marabito -- Chief Executive Officer

Thank you.

Richard A. Manson -- Chief Financial Officer

Thanks, Mike.

Operator

Thank you. [Operator Instructions] Our next question is coming from Chris Sakai from Singular Research. Your line is now live.

Christopher J. Sakai -- Singular Research -- Analyst

Hello? Can you hear me?

Andrew Greiff -- President and Chief Operating Officer

Yes. Hi, Chris.

Christopher J. Sakai -- Singular Research -- Analyst

Sorry about that. I just -- Yeah, I had -- couldn't hear you guys for a second. Great. I just had a question. I guess, how do you guys feel about the price of steel? I mean, do you think it will level off or come down? And how are you preparing for a decline?

Andrew Greiff -- President and Chief Operating Officer

Well, it's great question, Chris. I would tell you that I think we are surprised to see carbon index numbers where they are at today. So do we think that they're going to come down? I mean, the answer is, eventually they will. But there's great momentum, there is certainly discipline at the mills. For us, it's focusing on inventory. It's focusing on our inventory turns. It's focusing on making sure that we have the right inventory and staying with those disciplines. I mean, we really do focus on the things that we can control. We can't control where prices are going, but we certainly can control what we're bringing in and how we're moving out our inventory.

Christopher J. Sakai -- Singular Research -- Analyst

Okay, great. All right. Thanks for that. And I mean in a price decline, would you say that Specialty Metals would actually wouldn't see as much of a decline?

Andrew Greiff -- President and Chief Operating Officer

Yeah. Well, I'd tell you, Chris. I mean, you take a look, nickel is strong right now, aluminum is really strong, including with the Midwest spot, you're at record levels of over $600 a ton. And again, I think on the stainless side, in particular, because of the allocation, you're going to just see consistency I think through this year going into at least the first half of next year.

Christopher J. Sakai -- Singular Research -- Analyst

Okay. And then I guess on a general kind of question, general economy question. Are you seeing any effects of the delta variant on your business and on demand so far?

Andrew Greiff -- President and Chief Operating Officer

Well, I'll tell you, Chris, the area certainly has been the growth. And so the growth of our customer has been forwarded I think not just from the delta variant, but kind of as you think about concerns about that as well as supply chain disruption. I think a combination of the two has prevented forecasted growth from our customers, who certainly are disappointed that they are not able to grow at the levels that they had forecasted, and quite honestly, I don't see that changing much as we go into the second half of this year. Certainly, the cases of the delta variant are increasing.

There is certainly concern about going back to a time of more mask wearing and certainly vigilance in terms of less -- spending less time with larger crowds and certainly the ability for the workforces to continue to work in safe environments and to ensure that people are safe where they're working, it's certainly what we're focused on. And so that certainly can -- that certainly is not going to be helpful going forward in conjunction with supply chain disruptions. So I think we're expecting, as we've talked about pretty steady going through the second half of the year. But certainly, what you're seeing with delta, could add a little more of a twist.

Christopher J. Sakai -- Singular Research -- Analyst

Okay, great. Thanks, and congrats on the quarter.

Richard T. Marabito -- Chief Executive Officer

Thanks, Chris.

Andrew Greiff -- President and Chief Operating Officer

Thank you.

Operator

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

Richard T. Marabito -- Chief Executive Officer

Thank you so much, and thank all of you for joining us on our call this morning. We appreciate your continued interest in Olympic Steel and look forward to speaking with you again next quarter if not sooner. Thank you, and have a good day.

Operator

[Operator Closing Remarks]

Duration: 35 minutes

Call participants:

Richard A. Manson -- Chief Financial Officer

Richard T. Marabito -- Chief Executive Officer

Andrew Greiff -- President and Chief Operating Officer

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Michael Leshock -- KeyBanc Capital Markets -- Analyst

Christopher J. Sakai -- Singular Research -- Analyst

More ZEUS analysis

All earnings call transcripts

AlphaStreet Logo

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Olympic Steel Stock Quote
Olympic Steel
ZEUS
$35.16 (1.94%) $0.67

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.