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spk02: Good morning and welcome to the Olympic Steel 2020 fourth quarter financial results conference call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I would now like to hand the conference over to Rich Manson, Chief Financial Officer at Olympic Steel. Please go ahead, sir.
spk04: Thank you, operator. Welcome to Olympic Steel's earnings call for the fourth quarter and full year 2020. 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 Greif. 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 release is filed with the Securities and Exchange Commission. During today's discussion, we may refer to adjusted net income for diluted share, EBITDA, or 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 this morning 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.
spk05: Thank you Rich and good morning everyone and thank you for joining us to discuss Olympic Steel's results for the fourth quarter and the full year 2020. I'll begin with some comments about our quarterly performance and the tremendous progress our team made during really an incredible year. Andrew will then review our business segment performance and will then share some thoughts about what I think we're all most interested in and that's the future and our outlook. Rich will finish up with some additional details about our financial results. And after that, we'll be happy to take your questions. So as we reflect on a truly unprecedented year, we're immensely proud of the Olympic Steel team, its resiliency and accomplishments. Together, we took decisive actions that resulted in sustainable advancements across the organization. Today, we are a safer company with a permanently lower operating expense base a faster-turning inventory, a stronger balance sheet, and cultural resolve, which, combined with improved market conditions, enabled us to deliver our strongest quarter of the year and, more importantly, position us for success as we enter 2021. Our fourth quarter net sales were $332 million, compared with $320 million for the fourth quarter of last year. Net income for the fourth quarter rose to $1.8 million, or 16 cents per diluted share, compared with a net loss of $890,000, or 8 cents per diluted share, a year ago. Adjusted EBITDA was $9.9 million for the quarter, and that's up from $3.4 million a year ago. Market dynamics became increasingly favorable in the fourth quarter, and metals prices increased rapidly to unprecedented levels. As we shared on our last call, we began to see stronger demand in the late third quarter, and that demand continued in the fourth quarter as volumes approached pre-pandemic levels. Our fourth quarter shipping volumes not only increased year over year, but they also increased sequentially from the third quarter. Together, these trends drove sales improvement across all three of our segments during the quarter. While we're certainly pleased with our fourth quarter performance, we are most excited about our future and the opportunities in front of us. We remain vigilant on our operational disciplines as we move forward and build on our successes. We ended the year with consolidated operating expenses down nearly 10% year over year, and our flat product inventory turns approached six times during the fourth quarter. We also reduced debt to a four-year low while increasing availability under our asset-based loan to well above pre-pandemic levels, and that's after making an acquisition. Our strong counter-cyclical cash flow generation in tougher markets is often not fully appreciated. In a COVID-ravaged year, we actually reduced our debt by $32 million, and we increased our ABL borrowing availability by $30 million, all after spending almost $30 million on CapEx and an acquisition. We also remain committed to strategically growing the company and reducing cyclicality in our returns. One of the highlights of the quarter was our acquisition of Action Stainless and Alloys in December. Action brings a strong and talented team, a great culture, additional products and capabilities, and an expanded distribution footprint to our specialty metals business. We are actively seeking additional acquisitions that support our strategy to grow and niche high-performing applications that offer higher return opportunities for our business. Continued growth of our specialty metals business is also an important element of our strategy. So as we start 2021, we're optimistic and have strong momentum in a recovering economy. We are organizationally prepared for the opportunities from a growing economy and rapidly changing industry dynamics. As further evidenced by last week's energy distribution issues in Texas, we are also hopeful that the Biden administration will push Congress to pass a much needed comprehensive infrastructure bill to spur America's rebuild. In summary, we believe we are in excellent position to drive significantly higher profitability and returns in the first quarter of 2021. With that, I'll now turn the call over to Andrew for some additional comments.
spk06: Thank you, Rick, and good morning. As Rick mentioned, our ongoing commitment to safety, operating improvements, and executing on strategic initiatives benefited all of our segments. Specialty metal sales were up 9%, pipe and tube sales increased by 5%, and carbon flat sales improved 1% compared to the prior year. Each segment also positively contributed EBITDA for the second consecutive quarter, which is a testament to the decisive actions of our leadership group and outstanding execution by our teams. Specialty Metals, under the leadership of our Specialty Metals President, Andy Markowitz, posted the third strongest quarter in the segment's history and was our most profitable segment for the year, as the team navigated the turbulence of the market. The segment achieved all-time highs for stainless and aluminum market share, as measured by our Industry Trade Association. As the fourth quarter came to a close, we also completed the acquisition of Action Stainless, which brings new complementary products and additional processing capabilities, including plasma, laser, and water jet cutting and CNC machining, along with an expanded geographic footprint in Texas, Missouri, South Carolina, and Arkansas. The acquisition furthers our strategy of enhancing the consistency and diversification of our company's earnings and our continued push to grow the stainless and aluminum product line at the aggressive pace and trajectory of the past decade. Our recent expansion in Schaumburg, Illinois, where we added approximately 50,000 square feet to house our dedicated white metals cut-to-length line, has performed extremely well, as has our additional white metals slitting line in Streetsboro, Ohio. We continue to actively seek strategic acquisitions and specialty metals and expect to further grow our white metal scope in the southern United States. Our pipe and tube segment, under the leadership of Bill Zielinski, reported a 5% increase in fourth quarter 2020 sales versus the prior year. We are starting 2021 strong with the recent addition of a new LT-free five-axis robotic laser cutting system in our Chicago facility which is capable of precision processing of bent tube. In addition, in 2020, we successfully completed our new ERP installation in the midst of COVID. We are excited about our growing white metals tubing products and our geographic growth in the southeast, which, coupled with our continued improvements in inventory turnover and commercial integration opportunities with Action Stainless, provide our optimism that the pipe and tube segment is positioned to return to strong profitability levels as we head into 2021. Our carbon segment produced the most EBITDA of our three segments in the fourth quarter of 2020, with a $3.8 million improvement sequentially versus the third quarter of 2020. We are thrilled with the rapid and profitable startup of our new fabricating operation in Beaufort, Georgia. It was a great collaboration effort to open this 120,000 square foot facility during the height of the COVID pandemic this past summer. Our processing capabilities there include laser and plasma cutting, forming, machining, welding, kitting, and assembly. In addition to expanding the fabricating services we provide to our customers in the southeast, the opening of the Buford facility freed up valuable space and resources in our existing Wyandotte, Georgia operation for our traditional distribution business and growing market for automotive supply in the region. As part of the expansion, we added a new Mitsubishi fiber optic laser in Beaufort and a 600-ton automotive stamping press in Winder. As we spoke to earlier, the carbon segment was also an internal leader in making significant improvements in inventory turnover and expense reduction during 2020. As we turn to the current and rapidly changing market, our industrial OEM customers are projecting higher metal usage for the year, as we have already seen in our key end-user markets, including agriculture, heavy-duty equipment, truck, trailer, and construction. Metal supply remains tight, mill lead times remain extended, and certainly, as you all know, metal prices are at a record high. In this environment, we will remain focused on servicing our customers and maintaining our internal disciplines around safety, operating expenses, inventory management, and strategically growing our business and returns. Now I'll turn the call over to Rich.
spk04: Thank you, Andrew, and good morning, everyone. As Rick noted, the fourth quarter was our most profitable quarter of the year, with all three of our operating segments generating positive EBITDA for the quarter. Net income for the quarter was $1.8 million, which included $400,000 of LIFO pre-tax income. This compares with a net loss of $890,000, which included $2.4 million of LIFO pre-tax income in the fourth quarter of 2019. Adjusted EBITDA for the fourth quarter of 2020 was $9.9 million, a nearly 200% improvement compared with the prior year and a 130% improvement sequentially. This improved level of profitability is a direct result of the outstanding work by our team to lower operating expenses, even as demand strengthened. This focus and discipline will continue to position us well as we move forward. Net sales were $332 million in the fourth quarter of 2020, up approximately 4% from $320 million a year ago, primarily due to a 3% increase in consolidated volume. Daily volumes return to near pre-pandemic levels as our end markets continue to recover, and we successfully shipped more volume than we did in the fourth quarter of last year with approximately 17% less employees. We also maintain tight control on our inventories, turning flat-rolled inventory in excess of five turns, sometimes approaching six turns. We believe that our focus on inventory turns will be even more beneficial as we navigate unprecedented pricing levels in the beginning of 2021. Our continued disciplines around accounts receivable and inventory allowed us to reduce our working capital needs and use the free cash flow to reduce debt. We ended the year with $161 million of debt, which is a four-year low, and $121 million of availability, which is $30 million higher than pre-pandemic levels. this is after paying for the action stainless acquisition in december we are in an excellent position to fund additional acquisitions and other organic growth opportunities that are aligned with our strategic goals capital expenditures for the year totaled 9.8 million dollars versus 17.7 million dollars of depreciation as we navigated the uncertainties of the pandemic we anticipate 2021 capital expenditures who increased to the range of 75% to 100% of expected depreciation expense. Our effective tax rate in the fourth quarter of 2020 was 53%, compared to 31% in the fourth quarter of 2019. The higher tax rate was caused by an increase in pre-tax income during the fourth quarter, which erased an expected net operating loss carryback refund that was booked in prior quarters. For 2021, we expect our effective tax rate to be in the typical 27 to 30% range. As a final note, our Board of Directors has approved the regular quarterly dividend of two cents per share. We are proud that Olympic Steel has now paid a dividend for 63 consecutive quarters. In conclusion, the decisive actions we took during the early days of the pandemic helped propel the fourth quarter to be our most profitable quarter of the year. That momentum has continued into this year, and our actions have successfully positioned Olympic Steel to drive significantly higher profitability in the first quarter of 2021. We are optimistic about the market in the near term and hopeful that the economic recovery will continue to accelerate and to drive metal demand. Now, operator, let's open the call for questions.
spk02: And at this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. One moment please while we poll for questions. Our first question is from Marco, I'm sorry, our first question is from Andrews Bogan-Huser with UBS. Please proceed with your question.
spk00: Well, thank you very much. Thank you very much for the comments and the set of results. Just a couple of quick questions from me. In terms of downstream demand, where are you seeing particular strength at the moment and where are you seeing demand a little bit more challenging in your view? And maybe if you have any comments about how much you're seeing is pent-up demand and how much is a little bit more sustainable, that would be great to get some clarity on that. And number two, obviously a lot of conversations about whether the White House or the current administration is going to partly or fully remove Section 232 and what that does to the industry. Any thoughts on where you guys stand on that and what you think is the optimal environment for you guys? Those are my questions. Thank you very much.
spk06: Thank you for the question, Darius. This is Andrew. We've actually seen across the board strength in all three of our segments. So industrial equipment, agriculture, construction has been very strong. Auto clearly has been strong, even with the chip issue that's been widely discussed. Truck, trailer, the recreation vehicles were actually very strong during 2020 and just continuing into 21. And construction. especially the utilization of coated products, has been strong. On the white metal side of the business, again, automotive has been strong, appliance really strong, and we're just starting to see the kitchen restaurant food equipment group starting to come back. Pipe and tube kind of falls into both categories, and so there really is not at this moment an industry that is underperforming I think everybody, especially our contract customers, are very optimistic going into this year. And we've already started to see increases over their forecasts from even what they talked about fourth quarter into the first quarter. The issue that we will have, we think, for a little bit is just metal supply. The mills are still behind, and so getting caught up probably will take another, couple of months until we're back to where we want to be. 232, I don't know, Rick, if you want to talk about.
spk05: Yeah, I think 232, obviously with the new administration, and I think they're a pretty large agenda, it seems like 232 is probably not at the top of the agenda here in the first few months of the new administration. Certainly, with the record high pricing we've had, I'm quite certain there's a lot of petitioning going on in Washington to consider the elimination of the 232. You know, our view is that we're entering a pretty good period of time, we think, for end demand and growth in demand. And we're big fans of that demand really providing a much more stable marketplace, regardless of whether you've got tariffs in place. or not, but so we do see a significantly growing demand environment. I think you had asked Andrew about, you know, the sustainability of that demand, and we do think it's sustainable. So, you know, we'll see. You know, I think, though, in the near term, it looks like the tariffs are going to remain in place.
spk00: Okay, that's very clear, and maybe one follow-up, if I may, just on demand. I mean, in terms of, you know, kind of further off-site from here, How are you kind of gauging where demand is today versus where we kind of work pre-COVID? I mean, are we still catching up to kind of the pre-COVID levels and is that further upside into your upcoming quarters? Or are we already, you know, past, you know, pre-COVID and we're exceeding those levels? If you have any thoughts there.
spk06: Yeah, no, this is Andrew again. I would tell you we're not there yet. We are approaching those levels. Certainly, we've seen the strength coming through the first quarter. And as we get into March and certainly into the second quarter, we believe that we'll be there and probably in a relatively short time hit those numbers and then probably exceed them as demand continues to show the strength that customers are forecasting right now.
spk05: And I think really what's holding the demand back a little bit right now is just the long lead times on supply and the The spot marketplace is where we haven't seen the full recovery to, I call it, pre-pandemic levels. I think the OEM base looks strong, and I characterize the OEM business as at, or in some cases, maybe even looking to exceed pre-pandemic levels. It's that transactional marketplace that's still a little lagging. Well, that's right.
spk06: And so we'll certainly see on the carbon side, we still see coal roll encoded. It's going to be tight probably through the first half. You know, as you know, in stainless, the mills, the domestic mills have, for the most part, put customers on allocation. We're seeing, you know, commodity availability on aluminum very tight. And so Rick is 100% correct. You know, the coverage for our contract business, which is a strong part of our business, we're certainly very focused on, and it does leave a little bit less for some of the spot today.
spk00: That's very clear. I appreciate that answer. One more, if I may. You mentioned supply and the tightness there. Do you see imports coming in and helping alleviate that current tightness? I know that import lead times are long, stretching into the summer at the moment, but is that what we should just expect from here on? Do you get a little bit more imports into the market to help to balance it and maybe put a cap on prices, or are we not there yet?
spk06: It's a really good question. I would tell you that lead times are, for the most part, into the summer, June, July. The pricing is at an elevated level from our perspective that it's not worth the risk as we look at it today. We certainly are, we had been in the past, a much bigger importer in particular to our East Coast facility in Connecticut and where we could down in our Georgia facility. But the numbers today, certainly in hot roll, are not particularly attractive as far as we see it. Maybe some opportunities in cold roll and in coated just because of the tightness in the market here. But the prices are really not particularly attractive at the moment.
spk00: That's very clear. I appreciate you answering my question. Thank you very much, gentlemen. Thank you.
spk02: And our next question is from Marco Rodriguez with Stonegate Capital Markets. Please proceed with your question.
spk01: Good morning. Thank you for taking my questions. Thank you. It sounds like you've got some pretty decent tailwinds from a demand perspective, just listening to your responses here. I was wondering if maybe you could also kind of take us through your expectations as those volumes sort of start to come back to you towards the pre-pandemic and beyond levels. You had made a comment earlier about having less employees and delivering still pretty, I think it was plus 3% volume growth year over year. How should we kind of be thinking about the operating structure as those volumes start to surpass pre-COVID levels, how that sort of flexes with that volume increase.
spk04: Sure. Thanks, Marco, for the question. It's rich. And so you're correct. When we look at fourth quarter of 20 versus fourth quarter of 19, we were up about 3% in volume, but we were able to take out about 3% of operating expenses, including about 11% decline in warehouse and processing year over year. And so we are down about 17% total headcount compared to pre-COVID times. And we really have been pretty stable at that number here pretty much since the second quarter. We've been addressing the increase in demand through overtime. But you're right, we do, and as Andrew did say, we do expect at some point here as we maybe get into the second quarter that we can get back above pre-COVID levels. And so we will have to add a little bit of headcount. But our focus is really on keeping that expense-based variable with the increase in volume that we see. And I think we've done a really good job of that here in the back half of 2020. And those disciplines remain well into 2021. And we're very committed to keeping that headcount at the right level for the volume of business we're doing.
spk01: Got it. And then just wondering if you could perhaps talk a bit about – your expectations of major drivers for your growth, maybe throughout the whole fiscal year. Obviously, the picture becomes a little bit cloudier in the second half versus the first half. But if you can just kind of give us some sort of ranking of buckets as far as where you see the biggest growth drivers for this fiscal year would be helpful.
spk05: Sure. Great question. We're going to continue to be actively seeking acquisition. Strategically, if you look at our last three or four acquisitions, they've been in, I call them, more niche, high return areas for the business. So that's certainly a growth strategy for us. I mentioned earlier specialty metals we're really excited about and think we have a lot of potential to really continue the growth in the specialty metals on both the stainless and the aluminum side. We're excited about some of the aluminum growth that we're seeing. We continue to add to our product team in aluminum. And then we're really excited about growth in the southeast. Certainly, Andrew touched on some of the investments that we made this past year down in Georgia. We see that as a really nice growth engine for Olympic Steel. Andrew touched on it. We've really migrated and started to build a nice automotive supply business in the southeast, and we expect that to continue to grow. And I think the diversification into the two locations in Georgia, one focusing on the fabrication and then one on the traditional service center business, has been an enormous win for us. And so we're expecting continued growth. there. Andrew, any other items I kind of missed on the hit list there? I think those are the big drivers.
spk06: Yeah, no, I think you covered it, Rick. I think we're just going to continue to see, you know, most of the customers as we're coming into 2021, you know, in particular on the industrial equipment guys, had all talked about not so much comparing from a growth rate over 20, but almost going back to where 19 was and and talking about what their original goal was from 19 going into 20. And that really is what we're seeing. So in some cases, we're going to be seeing growth over 20 of, you know, 30 to 40% in a couple of really key areas, whether it's on the agriculture side, the construction side. We're excited to see truck trailer coming back. There was a little bit of a lull, but certainly that's starting to pick up. But Automotive and appliance have just been booming, and we continue to see that. Certainly, we think that's going to continue through this year.
spk01: Got it. And then just a quick follow-up. In regard to part of the strategy of obviously adding acquisitions that you also mentioned as a potential growth trafficker for this fiscal year, can you maybe talk a little bit about what that pipeline looks like, maybe in comparison to where it was last year at this time? And then if also you can maybe talk a little bit about what valuations kind of look like.
spk05: Sure. I tell you, the pipeline looks good. I think the pipeline has been refilled post-COVID. So obviously, you know, for a period of time there in the middle part of last year, everyone was being cautious on the buy-sell side from acquisitions. Obviously, we got one done. However, we're thrilled. in the year of COVID to have one done. But I tell you, the pipeline, the opportunities we're looking at, the pipeline's pretty good. We're excited about some of the opportunities we're looking at. In terms of valuations, I think the valuations have remained pretty steady. I haven't really seen much of a significant shift there. Obviously, with the COVID year, that always adds in, you know, last year's some some debate in terms of valuation for companies, in terms of, you know, what were the one-time impacts from the virus. But beyond that, I'd say valuations have been pretty consistent.
spk01: Understood. Thanks a lot, guys. We really appreciate the time.
spk02: Thank you. Thank you. Our next question is from Chris Sakai with Singular Research. Please proceed with your question.
spk07: Hi, good morning. I just had a question. I know you guys have mentioned that demand in automotive and appliances has been really strong. I wanted to know, do you believe that this is sort of a sign of a strong economic rebound that's occurring?
spk06: I think it's a combination of a strong economic rebound. I think there was some pent-up demand. And I think you have to remember, if you go back automotive from basically the middle of March through June, there was really nothing produced on the auto side. And so inventory at the dealership got down to historic lows. People had the opportunity to, because travel and entertainment was basically nonexistent, there was some demand for autos and people had the availability of money to be able to go out and buy. And so I think we've started to see a lot of dealerships now getting backfilled. And so inventory levels did get very low. And what I would tell you, Chris, is we see automotive going strong through this year. There is nothing for us to indicate in talking to our customers and the subcontractors. It's going to be strong. There's already discussion about what may or may not take place this summer relative to tradition automotive shutdowns during July. And appliances, you know, if you just go into any of the lows of the Home Depots, there's a back order, and it's going to take you time to get what you're looking for. And so I think we can see certainly through the first half, and I think we're going to have pretty strong demand going into the second half.
spk07: Okay. Great. Thanks. And then I just wanted to know, I guess from an overall perspective, For this last quarter, what were you most pleased about and what is an area where you think you could have the most improvement?
spk05: Great question, Chris. What I'm always most pleased about is our safety record. We didn't talk a lot about it, but we had really huge improvements in our safety environment and that's a really kudos to our entire team. So that's what I'm really most proud of. The second thing is really navigating a very challenging year and the team at Olympic coming together, all the things that we highlighted earlier in terms of the operational disciplines, but at the same time, executing on a couple really key and strategic growth initiatives in a really tough year. So the growth initiative down in the southeast and completing an acquisition in the year of COVID. So those have all been great and really just proud of the Olympic team, especially our production workers, who, as you know, is an essential business. While most of the country was shut down, Olympic and others in the steel business kept clicking along and they came to work every day and did a phenomenal job. So those are the things in terms of looking forward and not necessarily what we could do better, but just really pleased with the momentum that we have. I tell you, we're excited regardless of where the market conditions go. I think some of the fundamental principles that we have in place we're excited about the returns that those are going to yield for Olympic and our shareholders.
spk07: Okay, great. Thanks.
spk02: Thanks, Chris. Thank you. And our next question is from Aldo Mazzaferro with Mazzaferro Research. Please proceed with your question.
spk03: Hey, good morning, Rick.
spk02: Good morning, Aldo.
spk03: Good morning, Aldo. How are you? It's been a while. I had a few questions. I think you touched on both of them already, but I wanted to talk a little bit about the very recent trends in deliveries and in lead times, especially since the disruptions from the storms in Texas. Would you say that the mills are having even more trouble now catching up with deliveries than they were, say, in the fourth quarter?
spk06: Yes. Yes. I would say that, Aldo, because there's a couple things that, and you certainly understand, the mills are just trying to catch up from a production perspective, but even once they do and they have metal that's ready to ship, trucking has been incredibly challenging. You know, there's been product at a couple of our suppliers that's been sitting for the last couple of weeks that they just can't find trucks. And so I think with the storms and some of, whether it's natural gas, nitrogen, we just got some letters yesterday that there's some issues on nitrogen. And so I think it's going to just continue to exacerbate itself, certainly for the next at least 30 to 60 days. But I don't see trucking relieving itself anytime soon. And If you can find the trucks, Aldo, you're paying significantly higher.
spk03: Great. I know. With the dollar getting weaker and the tariffs still in place, I don't think imports can offer a relief on the supply side at this point, it seems.
spk06: No, I think you're right. And as you certainly know and as you've been following, you know, the cost of containers has also skyrocketed. So, you know, this – What we're in at the moment, this pricing cycle, does not appear that it's going to really relieve itself any time in the near future. Right.
spk03: That's great. So my other question was going to focus on the southeast strategy that you're pursuing as you're growing there. And I heard you mention automotive is a focus for sure. I'm wondering, are there any other markets that you're seeing expand strongly there? And a key question I have is, like, what are your competitors doing in that region as well?
spk06: Well, I can't speak so much to the competitors, Aldo, as I just will our strategy. And so we added a 125,000 square foot facility in Beaufort. We pulled out our fabrication equipment from our winder facility that really opened space. In our winder facility today, we have our stretch line, cut length, and slitter. But we put in the first of what we think will be a number of automotive stamping presses. We like the business down south. We have excellent relationships with some of the direct automotive companies as well as some of the sub-tiers and have great optimism that that's going to be a big part of what we're doing. Our Alabama facility has performed extremely well. We opened that over a year ago as a plate distribution facility. And we like more and more as business continues to migrate into the southeast, we think we're prepared and in very good shape to be able to service it. We have, you know, facilities now in North Carolina, South Carolina, as well as in Alabama and Georgia. And we're very excited kind of as we, you know, now have a footprint in Texas. It's exciting for us and it really allows us, if you kind of think of from Alabama to Texas, it allows us to be able to service customers, you know, in Louisiana and Mississippi, you know, in a way that we really have not been able to before. And we think it's just we've looked to really grow in this region, and we're excited about it.
spk05: And we got nice opportunities additionally in the pipe and tube business at CTI down in the southeast. That's Aldo, that's been another strategic growth area for us. And as we look at growing our pipe and tube business, you're going to see us continuing to grow down in the southeast as well. And then we talked about it, the stainless and aluminum opportunities there also we're really excited about.
spk03: Great. Just one final question I had on strategy. I mean, this is probably a time you'd love to have, you know, $25 or $50 million more inventory on hand if you could. But is there a Are you trying to build inventory at this point and being unable to? Is that why turns are so high? Or would you say you still have a strategy to keep your inventories low?
spk05: Our strategy is not to keep our inventories low so much as the word low. It's really to turn it at what we think is optimal for Olympic Steel. Five inventory turns is what we've always talked about. The first part of the answer is over the last two years, we've really put a very intense effort on making sure that we're a better turning inventory company, and we've achieved that. And that really has nothing to do with COVID and the current situation. The second piece of your question is, Yeah, our inventory is turning a little bit faster right now just because of the supply dynamics. And so the longer lead times and the shortage of inventory out there for the spot marketplace, certainly I think if we had additional inventory for the spot marketplace, we'd be utilizing that. So that's where the pinch point really is. It's on that transactional business side.
spk03: Well, thanks very much. I just want to congratulate you guys on taking a very tough year and coming out with a tail end much stronger.
spk05: Thank you, Aldo.
spk03: Thank you, Aldo.
spk05: Appreciate that.
spk02: Take care. Thank you. And we have reached the end of the question and answer session, and I'll now turn the call over to Richard T. Maravito for closing remarks.
spk05: Thank you, Operator, and I want to thank all of you for joining us on our conference call this morning. We Certainly appreciate your continued interest in Olympic Steel, and we look forward to speaking with you again next quarter, if not sooner. Thank you, and have a great day.
spk02: And this concludes our conference. You may disconnect your lines at this time. Thank you, and have a good day.
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