10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

(    ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ____________

Commission File Number 0-23320

OLYMPIC STEEL, INC.

(Exact name of registrant as specified in its charter)

Ohio	34-1245650
(State or other jurisdiction of incorporation or organization)	(I.R.S.Employer Identification Number)

22901 Millcreek Boulevard, Suite 650, Highland Hills, OH	44122
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code (216) 292-3800

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No (  )

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes (X) No (  )

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer (  )	Accelerated filer (X)
Non-accelerated filer (  )	Smaller reporting company (  )
(Do not check if a smaller reporting company)	Emerging growth company (  )

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. (  )

Indicate by check mark whether the registrant is a shell company (as defined Rule 12b-2 of the Exchange Act). Yes (  ) No (X)

Indicate the number of shares of each of the issuer's classes of common stock, as of the latest practicable date:

Class	Outstanding as of May 3, 2018
Common stock, without par value	10,998,480

Olympic Steel, Inc.

Index to Form 10-Q

Page No.

Part I.  FINANCIAL INFORMATION	3
Item 1.  Financial Statements	3
Consolidated Balance Sheets – March 31, 2018 and December 31, 2017 (unaudited)	3
Consolidated Statements of Comprehensive Income – for the three months ended March 31, 2018 and 2017 (unaudited)	4
Consolidated Statements of Cash Flows – for the three months ended March 31, 2018 and 2017 (unaudited)	5
Supplemental Disclosures of Cash Flow Information  – for the three months ended March 31, 2018 and 2017 (unaudited)	6
Notes to Unaudited Consolidated Financial Statements	7
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.  Controls and Procedures	28
Part II.  OTHER INFORMATION	29
Item 6.  Exhibits	29
SIGNATURES	30

2

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Olympic Steel, Inc.

Consolidated Balance Sheets

 (in thousands)

	As of
	March 31, 2018			December 31, 2017
	(unaudited)
Assets
Cash and cash equivalents	$	3,412		$	3,009
Accounts receivable, net		174,813			132,737
Inventories, net (includes LIFO debit of $4,837 and $5,337 as of March 31, 2018 and December 31, 2017, respectively)		319,024			275,307
Prepaid expenses and other		5,698			8,333
Assets held for sale		750			750
Total current assets		503,697			420,136
Property and equipment, at cost		384,218			376,710
Accumulated depreciation		(232,908	)		(229,062	)
Net property and equipment		151,310			147,648
Intangible assets, net		22,758			22,980
Other long-term assets		13,114			13,394
Total assets	$	690,879		$	604,158
Liabilities
Current portion of long-term debt	$	-		$	930
Accounts payable		112,518			84,034
Accrued payroll		9,782			11,999
Other accrued liabilities		14,567			14,184
Total current liabilities		136,867			111,147
Credit facility revolver		248,955			196,235
Other long-term liabilities		11,215			12,048
Deferred income taxes		12,827			12,145
Total liabilities		409,864			331,575
Shareholders' Equity
Preferred stock		-			-
Common stock		130,379			129,453
Treasury stock		(239	)		(337	)
Retained earnings		150,875			143,467
Total shareholders' equity		281,015			272,583
Total liabilities and shareholders' equity	$	690,879		$	604,158

The accompanying notes are an integral part of these consolidated statements.

3

Olympic Steel, Inc.

Consolidated Statements of Comprehensive Income

For the Three Months Ended March 31,

(in thousands, except per share data)

	2018		2017
	(unaudited)
Net sales	$	375,598	$	334,893
Costs and expenses
Cost of materials sold (excludes items shown seperately below)		294,777		258,454
Warehouse and processing		23,436		23,501
Administrative and general		18,872		18,165
Distribution		12,139		10,365
Selling		7,228		6,511
Occupancy		2,555		2,310
Depreciation		4,024		4,314
Amortization		222		222
Total costs and expenses		363,253		323,842
Operating income		12,345		11,051
Other loss, net		46		26
Income before interest and income taxes		12,299		11,025
Interest and other expense on debt		1,986		1,626
Income before income taxes		10,313		9,399
Income tax provision		2,684		1,700
Net income and total comprehensive income	$	7,629	$	7,699
Earnings per share:
Net income per share - basic	$	0.67	$	0.68
Weighted average shares outstanding - basic		11,418		11,369
Net income per share - diluted	$	0.67	$	0.68
Weighted average shares outstanding - diluted		11,418		11,369
Dividends declared per share of common stock	$	0.02	$	0.02

The accompanying notes are an integral part of these consolidated statements.

4

Olympic Steel, Inc.

Consolidated Statements of Cash Flows

For the Three Months Ended March 31,

(in thousands) 

	2018			2017
	(unaudited)
Cash flows from (used for) operating activities:
Net income	$	7,629		$	7,699
Adjustments to reconcile net income to net cash from (used for) operating activities -
Depreciation and amortization		4,357			4,766
Loss on disposition of property and equipment		7			7
Stock-based compensation		1,024			656
Other long-term assets		207			(335	)
Other long-term liabilities		(151	)		(1,406	)
		13,073			11,387
Changes in working capital:
Accounts receivable		(42,076	)		(38,379	)
Inventories		(43,717	)		(8,664	)
Prepaid expenses and other		2,616			2,075
Accounts payable		34,029			6,771
Change in outstanding checks		(5,545	)		982
Accrued payroll and other accrued liabilities		(1,835	)		136
		(56,528	)		(37,079	)
Net cash used for operating activities		(43,455	)		(25,692	)
Cash flows from (used for) investing activities:
Capital expenditures		(7,743	)		(2,066	)
Proceeds from disposition of property and equipment		50			84
Net cash used for investing activities		(7,693	)		(1,982	)
Cash flows from (used for) financing activities:
Credit facility revolver borrowings		129,549			105,463
Credit facility revolver repayments		(76,829	)		(77,091	)
Industrial revenue bond repayments		(930	)		-
Credit facility fees and expenses		(19	)		-
Proceeds from exercise of stock options (including tax benefit)		-			10
Dividends paid		(220	)		(219	)
Net cash from financing activities		51,551			28,163
Cash and cash equivalents:
Net change		403			489
Beginning balance		3,009			2,315
Ending balance	$	3,412		$	2,804

The accompanying notes are an integral part of these consolidated statements.

5

Olympic Steel, Inc.

Supplemental Disclosures of Cash Flow Information

For the Three Months Ended March 31,

(in thousands)

	2018		2017
	(unaudited)
Interest paid	$	1,841	$	1,365
Income taxes paid	$	52	$	26

The accompanying notes are an integral part of these consolidated statements.

6

Olympic Steel, Inc.

Notes to Unaudited Consolidated Financial Statements

March 31, 2018

1. Basis of Presentation:

The accompanying consolidated financial statements have been prepared from the financial records of Olympic Steel, Inc. and its wholly-owned subsidiaries (collectively, Olympic or the Company), without audit and reflect all normal and recurring adjustments which are, in the opinion of management, necessary to fairly state the results of the interim periods covered by this report. Year-to-date results are not necessarily indicative of 2018 annual results and these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. All intercompany transactions and balances have been eliminated in consolidation.

The Company operates in three reportable segments; carbon flat products, specialty metals flat products, and tubular and pipe products. The carbon flat products segment and the specialty metals flat products segments are at times consolidated and referred to as the flat products segments. Certain of the flat products segments’ assets and resources are shared by the carbon and specialty metals segments and both segments’ products are stored in the shared facilities and, in some locations, processed on shared equipment. Due to the shared assets and resources, certain of the flat products segment expenses are allocated between the carbon flat products segment and the specialty metals flat products segment based upon an established allocation methodology. Through its carbon flat products segment, the Company sells and distributes large volumes of processed carbon and coated flat-rolled sheet, coil and plate products, and fabricated parts. Through its specialty metals flat products segment, the Company sells and distributes processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. Through its tubular and pipe products segment, which consists of the Chicago Tube and Iron subsidiary (CTI), the Company distributes metal tubing, pipe, bar, valves and fittings and fabricate pressure parts supplied to various industrial markets.

Corporate expenses are reported as a separate line item for segment reporting purposes. Corporate expenses include the unallocated expenses related to managing the entire Company (i.e., all three segments), including payroll expenses for certain personnel, expenses related to being a publicly traded entity such as board of directors’ expenses, audit expenses, and various other professional fees.

Impact of Recently Issued Accounting Pronouncements

In August 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No 2017-12, “Derivatives and Hedging”. This ASU aligns an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the ASU expands and refines hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU also makes certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. This ASU is the final version of proposed ASU 2016-310, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”, which has been deleted. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted in any interim period after issuance of the ASU. All transition requirements and elections should be applied to hedging relationships existing (that is, hedging relationships in which the hedging instrument has not expired, been sold, terminated, or exercised or the entity has not removed the designation of the hedging relationship) on the date of adoption. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption. The adoption of this ASU is not expected to materially impact the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU No 2017-09, “Compensation – Stock Compensation (Topic 718)”. This ASU provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation – Stock Compensation, to a change to the terms or conditions of a share-based payment award. The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This ASU is the final version of proposed ASU 2016-360, “Compensation—Stock Compensation (Topic 718)—Scope of Modification Accounting,” which has been deleted. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The adoption of this ASU did not materially impact the Company’s consolidated financial statements.

7

In August 2016, the FASB issued ASU No 2016-15, “Classification of certain cash receipts and cash payments”. This ASU addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The guidance will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years with early adoption permitted. The adoption of this ASU did not materially impact the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which specifies the accounting for leases. The objective is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease. This ASU introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The guidance will be effective for annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years with early adoption permitted. The Company is in the process of evaluating the impact of the future adoption of this standard on the Company’s consolidated financial statements.

In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which deferred the effective date of ASU 2014-09 for all entities by one year. This update is effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. Earlier application was permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. ASU 2014-09 was to become effective for us beginning January 2017; however, ASU 2015-14 deferred our effective date until January 2018, which is when we adopted this standard. The ASU permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). The ASU also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required for customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract.  The Company completed the process of evaluating the effect of the adoption and determined there were no material changes required to the reported revenues as a result of the adoption. Substantially all of the revenue arrangements consist of a single performance obligation to transfer goods. Based on the evaluation process and review of the contracts with customers, the timing and amount of revenue recognized based on ASU 2015-14 is consistent with the revenue recognition policy under previous guidance. The adoption of this ASU on January 1, 2018 using the modified retrospective approach applied to those contracts which were not completed as of January 1, 2018 did not have a material impact on the Company’s consolidated financial statements.  Comparative information has not been restated and continues to be reported under the accounting standard in effect for those periods.  The impact of adopting ASU 606 was not material to the Company’s consolidated financial statements as of and for the three months ended March 31, 2018.  See note 2. 

2. Revenue Recognition:

The Company provides metals processing, distribution and delivery of large volumes of processed carbon, coated flat rolled sheet, coil and plate products, aluminum, and stainless flat rolled products, flat bar products, metal tubing, pipe, bar, valves, fittings, and fabricated parts.  The Company's contracts with customers are comprised of purchase orders with standard terms and conditions.  Occasionally the Company may also have long-term agreements with customers.  Substantially all of the contracts with customers require the delivery of metals which represent single performance obligations that are satisfied upon transfer of control of the product to the customer. 

Transfer of control is assessed based on the use of the product distributed and rights to payment for performance under the contract terms. Transfer of control and revenue recognition for substantially all of the Company’s sales occur upon shipment or delivery of the product, which is when title, ownership and risk of loss pass to the customer and is based on the applicable shipping terms. The shipping terms depend on the customer contract.  An invoice for payment is issued at time of shipment and terms are generally net 30 days.  The Company has certain fabrication contracts in one business unit for which revenue is recognized over time as performance obligations are achieved.  This fabrication business is not material to the Company's consolidated results.

8

Within the metals industry, revenue is frequently disaggregated by products sold. The table below disaggregates the Company’s revenues by segment and products sold.

	Disaggregated Revenue by Products Sold
	For the Three Months Ended March 31, 2018
	Carbon flat products		Specialty metals flat products		Tubular and pipe products		Total
Hot Rolled		36.6%		0.0%		0.0%		36.6%
Plate		12.5%		0.0%		0.0%		12.5%
Cold Rolled		5.2%		0.0%		0.0%		5.2%
Coated		8.2%		0.0%		0.0%		8.2%
Specialty		0.0%		17.4%		0.0%		17.4%
Tube		0.0%		0.0%		18.4%		18.4%
Other		1.7%		0.0%		0.0%		1.7%
Total		64.2%		17.4%		18.4%		100.0%

3. Accounts Receivable:

Accounts receivable are presented net of allowances for doubtful accounts and unissued credits of $3.1 million and $2.8 million as of March 31, 2018 and December 31, 2017, respectively. The allowance for doubtful accounts is maintained at a level considered appropriate based on historical experience and specific customer collection issues that have been identified. Estimations are based upon a calculated percentage of accounts receivable, which remains fairly level from year to year, and judgments about the probable effects of economic conditions on certain customers, which can fluctuate significantly from year to year. The Company cannot guarantee that the rate of future credit losses will be similar to past experience. The Company considers all available information when assessing the adequacy of its allowance for doubtful accounts and unissued credits each quarter.

4. Inventories:

Inventories consisted of the following:

	Inventory as of
(in thousands)	March 31, 2018		December 31, 2017
Unprocessed	$	264,837	$	225,187
Processed and finished		54,187		50,120
Totals	$	319,024	$	275,307

9

The Company values certain of its tubular and pipe products inventory at the last-in, first-out (LIFO) method. At March 31, 2018 and December 31, 2017, approximately $51.1 million, or 16.0% of consolidated inventory, and $48.1 million, or 17.5% of consolidated inventory, respectively, was reported under the LIFO method of accounting. The cost of the remainder of the tubular and pipe products inventory is determined using a weighted average rolling first-in, first-out (FIFO) method.

During the three months ended March 31, 2018, the Company recorded $0.5 million of LIFO expense as the current projections anticipate increased pricing and volume of LIFO inventory for the remainder of the year. During the three months ended March 31, 2017, the Company recorded $0.4 million of LIFO expense.

If the FIFO method had been in use, inventories would have been $4.8 million and $5.3 million lower than reported at March 31, 2018 and December 31, 2017, respectively.

5. Debt:

The Company’s debt is comprised of the following components:

	As of
	March 31,		December 31,
(in thousands)	2018		2017
Asset-based revolving credit facility due December 8, 2022	$	248,955	$	196,235
Industrial revenue bond due April 1, 2018		-		930
Total debt		248,955		197,165
Less current amount		-		(930	)
Total long-term debt	$	248,955	$	196,235

The Company’s asset-based credit facility (the ABL Credit Facility) is collateralized by the Company’s accounts receivable inventory and personal property. The ABL Credit Facility consists of (i) a revolving credit facility of $370 million, including a $20 million sub-limit for letters of credit and (ii) a first in, last out revolving credit facility of up to $30 million. Under the terms of the ABL Credit Facility, the Company may request additional commitments in the aggregate principal amount of up to $200 million to the extent that existing or new lenders agree to provide such additional commitments. Revolver borrowings are limited to the lesser of a borrowing base, comprised of eligible receivables and inventories, or $400 million in the aggregate. The ABL Credit Facility matures on December 8, 2022.

The ABL Credit Facility contains customary representations and warranties and certain covenants that limit the ability of the Company to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt; (iii) make investments; (iv) sell assets; (v) enter into agreements that restrict distributions or other payments from restricted subsidiaries to the Company; (vi) incur liens securing indebtedness; (vii) consolidate, merge or transfer all or substantially all of their assets; and (viii) engage in transactions with affiliates. In addition, the ABL Credit Facility contains a financial covenant which requires (i) if any commitments or obligations are outstanding and the Company’s availability is less than the greater of $30 million or 10.0% of the aggregate amount of revolver commitments ($40.0 million at March 31, 2018) or 10.0% of the aggregate borrowing base ($40.0 million at March 31, 2018) then the Company must maintain a ratio of Earnings before Interest, Taxes, Depreciation and Amortization (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.

The Company has the option to borrow under its revolver based on the agent’s base rate plus a premium ranging from 0.00% to 0.25% or the London Interbank Offered Rate (LIBOR) plus a premium ranging from 1.25% to 2.75%.

As of March 31, 2018, the Company was in compliance with its covenants and had approximately $148 million of availability under the ABL Credit Facility.

As of March 31, 2018, $1.8 million of bank financing fees were included in “Prepaid expenses and other” and “Other long-term assets” on the accompanying Consolidated Balance Sheets. The financing fees are being amortized over the five-year term of the ABL Credit Facility and are included in “Interest and other expense on debt” on the accompanying Consolidated Statements of Comprehensive Income.

10

As part of the CTI acquisition in July 2011, the Company assumed approximately $5.9 million of Industrial Revenue Bond (IRB) indebtedness. On March 1, 2018, the Company made the final $0.9 million payment on the IRB and the letter of credit and fixed interest rate swap associated with the IRB were terminated.

6. Derivative Instruments:

Metals swaps and embedded customer derivatives

During 2018 and 2017, the Company entered into nickel swaps indexed to the London Metal Exchange (LME) price of nickel with third-party brokers. The nickel swaps are accounted for as derivatives for accounting purposes. The Company entered into them to mitigate its customers’ risk of volatility in the price of metals. The outstanding nickel swaps mature in 2018. The swaps are settled with the brokers at maturity. The economic benefit or loss arising from the changes in fair value of the swaps is contractually passed through to the customer. The primary risk associated with the metals swaps is the ability of customers or third-party brokers to honor their agreements with the Company related to derivative instruments. If the customer or third-party brokers are unable to honor their agreements, the Company’s risk of loss is the fair value of the metals swaps.

These derivatives have not been designated as hedging instruments. The periodic changes in fair value of the metals and embedded customer derivative instruments are included in “Cost of materials sold” in the Consolidated Statements of Comprehensive Income. The Company recognizes derivative positions with both the customer and the third party for the derivatives and classifies cash settlement amounts associated with them as part of “Cost of materials sold” in the Consolidated Statements of Comprehensive Income. The cumulative change in fair value of the metals swaps that have not yet been settled are included in “Accounts receivable,” and the embedded customer derivatives are included in “Other accrued liabilities” on the Consolidated Balance Sheets at March 31, 2018 and December 31, 2017.

Interest rate swap

CTI entered into an interest rate swap to reduce the impact of changes in interest rates on its IRB. The swap agreement was terminated in March 2018 upon repayment of the IRB. The periodic changes in fair value of the interest rate swap and cash settlement amounts associated with the interest rate swap are included in “Interest and other expense on debt” in the Consolidated Statements of Comprehensive Income.

There was no net impact from the nickel swaps or embedded customer derivative agreements to the Company’s Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018 and 2017. The table below shows the total impact to the Company’s Consolidated Statements of Comprehensive Income through net income of the derivatives for the three months ended March 31, 2018 and 2017.

	Net Gain (Loss) Recognized
	For the Three Months Ended March 31,
(in thousands)	2018			2017
Interest rate swap (CTI)	$	(5	)	$	(13	)
Metals swaps		106			14
Embedded customer derivatives		(106	)		(14	)
Total loss	$	(5	)	$	(13	)

7. Fair Value of Financial Instruments:

During the three months ended March 31, 2018, there were no transfers of financial assets between Levels 1, 2 or 3 fair value measurements. There have been no changes in the methodologies used at March 31, 2018 since December 31, 2017. Following is a description of the valuation methodologies used for assets and liabilities measured at fair value as of March 31, 2018 and December 31, 2017:

Metals swaps and embedded customer derivatives – Determined by using Level 2 inputs that include the price of nickel indexed to the LME. The fair value is determined based on quoted market prices and reflects the estimated amounts the Company would pay or receive to terminate the nickel swaps.

11

Interest rate swaps – Based on the present value of the expected future cash flows, considering the risks involved, and using discount rates appropriate for the maturity date. Market observable Level 2 inputs are used to determine the present value of future cash flows.

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company:

	Value of Items Recorded at Fair Value
	As of March 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Metal swaps	$	-	$	278	$	-	$	278
Total assets at fair value	$	-	$	278	$	-	$	278
Liabilities:
Embedded customer derivative	$	-	$	278	$	-	$	278
Total liabilities recorded at fair value	$	-	$	278	$	-	$	278

	Value of Items Not Recorded at Fair Value
	As of March 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Liabilities:
Revolver		-		248,955		-		248,955
Total liabilities not recorded at fair value	$	-	$	248,955	$	-	$	248,955

The value of the items not recorded at fair value represent the carrying value of the liabilities.

	Value of Items Recorded at Fair Value
	As of December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Metals swaps	$	-	$	382	$	-	$	382
Total assets at fair value	$	-	$	382	$	-	$	382
Liabilities:
Embedded customer derivatives	$	-	$	382	$	-	$	382
Interest rate swap (CTI)		-		5		-		5
Total liabilities recorded at fair value	$	-	$	387	$	-	$	387

	Value of Items Not Recorded at Fair Value
	As of December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total
Liabilities:
IRB	$	930	$	-	$	-	$	930
Revolver		-		196,235		-		196,235
Total liabilities not recorded at fair value	$	930	$	196,235	$	-	$	197,165

The value of the items not recorded at fair value represent the carrying value of the liabilities.

The fair value of the IRB was determined using Level 1 inputs. The carrying value and the fair value of the IRB that qualified as financial instruments were $0.9 million at December 31, 2017.

12

The fair value of the revolver is determined using Level 2 inputs. The Level 2 fair value of the Company's long-term debt was estimated using prevailing market interest rates on debt with similar credit worthiness, terms and maturities.

8. Equity Plans:

Restricted Stock Units and Performance Share Units

Pursuant to the Amended and Restated Olympic Steel 2007 Omnibus Incentive Plan (the Plan), the Company may grant stock options, stock appreciation rights, restricted shares, restricted share units, performance shares, and other stock- and cash-based awards to employees and Directors of, and consultants to, the Company and its affiliates. Since adoption of the Plan, 1,000,000 shares of common stock have been authorized for equity grants.

On March 13, 2018 and March 13, 2017, the Compensation Committee of the Company’s Board of Directors approved the grant of 3,496 and 3,501 restricted stock units (RSUs), respectively, to each non-employee Director. Subject to the terms of the Plan and the RSU agreement, the RSUs vest after one year of service (from the date of grant). The RSUs are not converted into shares of common stock until the director either resigns or is terminated from the Board of Directors. The fair value of each RSU was estimated to be the closing price of the Company’s common stock on the date of the grant, which was $22.88 and $19.99 on March 13, 2018 and March 31, 2017, respectively.

On July 1, 2016, the Company created a new Senior Management Stock Incentive Program (the Plan) for certain participants that operates under the Plan. Under the Plan, each participant is awarded RSUs with a dollar value equal to 10% of the participant’s base salary, up to an annual maximum of $17,500. The RSUs have a five-year vesting period and the RSUs will convert into the right to receive shares of common stock upon a participant’s retirement, or earlier upon the participant’s death or disability or upon a change in control of the Company. The carbon and specialty metals flat products segments adopted the Plan on July 1, 2016 and the tubular and pipe products segment adopted the Plan on January 1, 2017.

Stock-based compensation expense recognized on RSUs for the three months ended March 31, 2018 and 2017, respectively, is summarized in the following table:

	For the Three Months Ended
	March 31,
(in thousands, except per share data)	2018		2017
RSU expense before taxes	$	138	$	120
RSU expense after taxes	$	102	$	73

All pre-tax charges related to RSUs were included in the caption “Administrative and general” on the accompanying Consolidated Statements of Comprehensive Income.

The following table summarizes the activity related to RSUs for the three months ended March 31, 2018:

	Number of			Weighted Average
	Shares			Granted Price
Outstanding at December 31, 2017		469,068		$	20.11
Granted		55,532			22.88
Converted into shares		(9,178	)		17.08
Forfeited		-			-
Outstanding at March 31, 2018		515,422		$	20.46
Vested at March 31, 2018		481,862		$	20.52

9. Income Taxes:

For the three months ended March 31, 2018, the Company recorded an income tax provision of $2.7 million or 26.0%, compared to an income tax provision of $1.7 million, or 18.1%, for the three months ended March 31, 2017. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (Tax Act). The Tax Act, among other things, lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018.

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While the Company has substantially completed its analysis of the income tax effects of the Tax Act and recorded a reasonable estimate of such effects, certain items related to the Tax Act may differ, possibly materially, due to further refinement of the calculations, changes in interpretations and assumptions made, additional guidance that may be issued by the U.S. government, and actions related to accounting policy decisions the Company may make as a result of the Tax Act. The Company will complete its analysis of these items over a one-year measurement period ending December 22, 2018, and any adjustment provided by the SEC under SAB 118 during this measurement period will be included in net earnings from continuing operations as an adjustment to income tax expense (benefit) in the reporting period when such adjustments are determined.

In the first quarter of 2017, the Company made an out-of-period adjustment to correct and record previously unrecognized deferred tax assets, and the associated tax benefit, related to a portion of the SERP that had previously been considered non-deductible under Section 162(m) limitations in prior years. Due to the mandatory waiting period of six months prior to any SERP payment distribution, in 2017 the Company determined that the Section 162(m) non-deductibility limitations did not apply. The adjustment, which had accumulated since the inception of the SERP in 2005, resulted in an increase to after-tax income of $1.9 million in 2017.  The Company determined that this adjustment was not material to its current or prior period consolidated financial statements.

The tax provision or benefit for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items that are taken into account in the relevant period. Each quarter the Company updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, the Company makes a cumulative adjustment.

The quarterly tax provision and the quarterly estimate of the annual effective tax rate is subject to significant volatility due to several factors, including variability in accurately predicting the Company’s pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, changes in law and relative changes of expenses or losses for which tax benefits are not recognized. Additionally, the effective tax rate can be more or less volatile based on the amount of pre-tax income. For example, the impact of discrete items and non-deductible expenses on the effective tax rate is greater when the pre-tax income is lower.

10. Shares Outstanding and Earnings Per Share:

Earnings per share have been calculated based on the weighted average number of shares outstanding as set forth below:

	For the Three Months Ended
	March 31,
(in thousands, except per share data)	2018		2017
Weighted average basic shares outstanding		11,418		11,369
Assumed exercise of stock options and issuance of stock awards		-		-
Weighted average diluted shares outstanding		11,418		11,369
Net income	$	7,629	$	7,699
Basic earnings per share	$	0.67	$	0.68
Diluted earnings per share	$	0.67	$	0.68
Anti-dilutive securities outstanding		65		42

11. Segment Information:

The Company follows the accounting guidance that requires the utilization of a “management approach” to define and report the financial results of operating segments. The management approach defines operating segments along the lines used by the Company’s chief operating decision maker (CODM) to assess performance and make operating and resource allocation decisions. The CODM evaluates performance and allocates resources based primarily on operating income (loss). The operating segments are based primarily on internal management reporting.

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The Company operates in three reportable segments; carbon flat products, specialty metals flat products, and tubular and pipe products. The flat products segments’ assets and resources are shared by the carbon and specialty metals 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. Due to the shared assets and resources, certain of the flat products segment expenses are allocated between the carbon flat products segment and the specialty metals flat products segment based upon an established allocation methodology. Through its carbon flat products segment, the Company sells and distributes large volumes of processed carbon and coated flat-rolled sheet, coil and plate products. Through its specialty metals flat products segment, the Company sells and distributes processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. Through its tubular and pipe products segment, the Company distributes metal tubing, pipe, bar, valve and fittings and fabricates pressure parts supplied to various industrial markets.

Corporate expenses are reported as a separate line item for segment reporting purposes. Corporate expenses include the unallocated expenses related to managing the entire Company (i.e., all three segments), including compensation for certain personnel, expenses related to being a publicly traded entity such as board of directors’ expenses, audit expenses, and various other professional fees.

The following table provides financial information by segment and reconciles the Company’s operating income by segment to the consolidated income before income taxes for the three months ended March 31, 2018 and 2017.

	For the Three Months Ended
	March 31,
(in thousands)	2018			2017
Net sales
Carbon flat products	$	240,894		$	216,916
Specialty metals flat products		65,529			57,955
Tubular and pipe products		69,175			60,022
Total net sales	$	375,598		$	334,893
Depreciation and amortization
Carbon flat products	$	2,560		$	2,889
Specialty metals flat products		204			226
Tubular and pipe products		1,456			1,396
Corporate		26			25
Total depreciation and amortization	$	4,246		$	4,536
Operating income (loss)
Carbon flat products	$	8,106		$	7,375
Specialty metals flat products		3,011			3,985
Tubular and pipe products		4,267			2,487
Corporate expenses		(3,039	)		(2,796	)
Total operating income	$	12,345		$	11,051
Other income (loss), net		(46	)		(26	)
Income before interest and income taxes		12,299			11,025
Interest and other expense on debt		1,986			1,626
Income before income taxes	$	10,313		$	9,399

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	For the Three Months Ended
	March 31,
(in thousands)	2018		2017
Capital expenditures
Flat products segments	$	4,944	$	1,405
Tubular and pipe products		2,710		661
Corporate		89		-
Total capital expenditures	$	7,743	$	2,066

	As of
	March 31,		December 31,
(in thouands)	2018		2017
Assets
Flat products segments	$	490,622	$	409,116
Tubular and pipe products		199,938		194,787
Corporate		319		255
Total assets	$	690,879	$	604,158

There were no material revenue transactions between the carbon flat products, specialty metals products, and tubular and pipe products segments.

The Company sells certain products internationally, primarily in Canada, Mexico and Dominican Republic. International sales are immaterial to the consolidated financial results and to the individual segments’ results.

12. Subsequent Event:

On April 2, 2018, the Company acquired all of the net assets of Berlin Metals, LLC, based in Hammond, Indiana. Berlin Metals was founded in 1967 and is one of the largest North American service centers processing and distributing prime tin mill products and stainless steel strip in slit coil form. Berlin Metals is also a supplier of galvanized, light gauge cold rolled sheet and strip and other coated metals in coil forms, to customers in the building products, automotive and specialized industrial markets.

The acquisition will be accounted for as a business combination and the assets valued at fair market value. The acquisition is not considered significant and Berlin Metals’ results will be included in the Company’s specialty metals flat products segment in the Company’s second quarter of 2018 financial results. The acquisition is expected to be accretive to 2018 earnings. Upon the acquisition, the Company entered into an amendment to include the eligible assets of Berlin Metals in its ABL Credit Facility.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and accompanying notes contained herein and our consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2017. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed under Item 1A (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2017. The following section is qualified in its entirety by the more detailed information, including our financial statements and the notes thereto, which appear elsewhere in this Quarterly Report on Form 10-Q.

Forward-Looking Information

This Quarterly Report on Form 10-Q and other documents we file with the SEC contain various forward-looking statements that are based on current expectations, estimates, forecasts and projections about our future performance, business, our beliefs and management’s assumptions. In addition, we, or others on our behalf, may make forward-looking statements in press releases or written statements, or in our communications and discussions with investors and analysts in the normal course of business through meetings, conferences, webcasts, phone calls and conference calls. Words such as “may,” “will,” “anticipate,” “should,” “intend,” “expect,” “believe,” “estimate,” “project,” “plan,” “potential,” and “continue,” as well as the negative of these terms or similar expressions, are intended to identify forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such 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:

● general and global business, economic, financial and political conditions;

● competitive factors such as the availability, global production levels and pricing of metals, industry shipping and inventory levels and rapid fluctuations in customer demand and metals pricing;

● cyclicality and volatility within the metals industry;

● 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 levels of imported steel in the United States and any associated tariffs and duties;

● the availability and rising costs of transportation and logistical services;

● the successes of our efforts and initiatives to increase sales and earnings, maintain or improve working capital turnover and free cash flows, improve our customer service, and achieve cost savings;

● our ability to generate free cash flow through operations and repay debt within anticipated time frames;

● events or circumstances that could impair or adversely impact the carrying value of any of our assets;

● risks and uncertainties associated with intangible assets, including additional impairment charges related to indefinite lived intangible assets;

● events or circumstances that could adversely impact the successful operation of our processing equipment and operations;

● the amounts, successes and our ability to continue our capital investments and strategic growth initiatives, including acquisitions and our business information system implementations;

● our ability to successfully integrate Berlin Metals, LLC, or Berlin Metals, into our business and risks inherent with the Berlin Metals acquisition in the achievement of expected results, including whether the acquisition will be accretive and within the expected timeframe;

● the success of our operational initiatives to improve our operating, cultural and management systems and reduce our costs;

● the ability to comply with the terms of our asset-based credit facility;

● the ability of our customers and third parties to honor their agreements related to derivative instruments;

● customer, supplier and competitor consolidation, bankruptcy or insolvency;

● reduced production schedules, layoffs or work stoppages by our own, our suppliers’ or customers’ personnel;

● the impacts of union organizing activities and the success of union contract renewals;

● the timing and outcomes of inventory lower of cost or market adjustments and last-in, first-out, or LIFO, income or expense;

● the ability of our customers (especially those that may be highly leveraged, and those with inadequate liquidity) to maintain their credit availability;

● the inflation or deflation existing within the metals industry, as well as our product mix and inventory levels on hand, which can impact our cost of materials sold as a result of the fluctuations in the LIFO inventory valuation;

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● the adequacy of our existing information technology and business system software, including duplication and security processes;

● the adequacy of our efforts to mitigate cyber security risks and threats;

● access to capital and global credit markets;

● 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;

● 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; and

● 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.

Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, intended, expected, believed, estimated, projected or planned. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to republish revised forward-looking statements to reflect the occurrence of unanticipated events or circumstances after the date hereof, except as otherwise required by law.

Overview

We are a leading metals service center that operates in three reportable segments; carbon flat products, specialty metals flat products, and tubular and pipe products. We provide metals processing and distribution services for a wide range of customers. 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. Our specialty metals flat products segment’s focus is on the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. In addition, we distribute metal tubing, pipe, bar, valves and fittings and fabricate pressure parts supplied to various industrial markets. Products that require more value-added processing generally have a higher gross profit. Accordingly, our overall gross profit is affected by, among other things, product mix, the amount of processing performed, the demand for and availability of metals, and volatility in selling prices and material purchase costs. We also perform toll processing of customer-owned metals. We sell certain products internationally, primarily in Canada, Mexico and Central and South America. International sales are immaterial to our consolidated financial results and to the individual segments’ results.

Our results of operations are affected by numerous external factors including, but not limited to: general and global business, economic, financial, banking and political conditions; fluctuations in the value of the U.S. dollar to foreign currencies, competition; metals pricing, demand and availability; transportation and energy costs; pricing and availability of raw materials used in the production of metals; global supply, the level of metals imported into the United States, and inventory held in the supply chain; customers’ ability to manage their credit line availability; and layoffs or work stoppages by our own, our suppliers’ or our customers’ personnel. The metals industry also continues to be affected by the global consolidation of our suppliers, competitors and end-use customers.

Like other metals service centers, we maintain substantial inventories of metals to accommodate the short lead times and just-in-time delivery requirements of our customers.  Accordingly, we purchase metals in an effort to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon customer forecasts, historic buying practices, supply agreements with customers and market conditions.  Our commitments to purchase metals are generally at prevailing market prices in effect at the time we place our orders.  We have entered into nickel and carbon swaps at the request of our customers in order to mitigate our customers’ risk of volatility in the price of metals, and we have entered into metals hedges to mitigate our risk of volatility in the price of metals.  We have no long-term, fixed-price metals purchase contracts.  When metals prices decline, customer demands for lower prices and our competitors’ responses to those demands could result in lower sale prices and, consequently, lower gross profits and earnings as we use existing metals inventory.  When metals prices increase, competitive conditions will influence how much of the price increase we can pass on to our customers.  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.

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At March 31, 2018, we employed approximately 1,700 people. Approximately 280 of the hourly plant personnel at the facilities listed below are represented by nine separate collective bargaining units. The table below shows the expiration dates of the collective bargaining agreements.

Facility	Expiration date
St. Paul, Minnesota	May 25, 2018
Milan, Illinois	August 12, 2018
Locust, North Carolina	March 4, 2020
Romeoville, Illinois	May 31, 2020
Minneapolis coil, Minnesota	September 30, 2020
Indianapolis, Indiana	January 29, 2021
Minneapolis plate, Minnesota	March 31, 2022
Detroit, Michigan	August 31, 2022
Duluth, Minnesota	December 22, 2020

We have never experienced a work stoppage and we believe that our relationship with employees is good. 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.

On April 2, 2018, the Company acquired all of the net assets of Berlin Metals, based in Hammond, Indiana. Berlin Metals was founded in 1967 and is one of the largest North American service centers processing and distributing prime tin mill products and stainless steel strip in slit coil form. Berlin Metals is also a supplier of galvanized, light gauge cold rolled sheet and strip and other coated metals in coil forms, to customers in the building products, automotive and specialized industrial markets.

The acquisition will be accounted for as a business combination and the assets valued at fair market value. The acquisition is not considered significant and Berlin Metals’ results will be included in the Company’s specialty metals flat products segment in the Company’s second quarter of 2018 financial results. The acquisition is expected to be accretive to 2018 earnings.

Reportable Segments

The Company operates in three reportable segments; carbon flat products, specialty metals flat products and tubular and pipe products. The carbon flat products segment and the specialty metals flat products segment are at times consolidated and referred to as the flat products segment. Some of the flat products segments’ assets and resources are shared by the carbon and specialty metals 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. Due to the shared assets and resources, certain of the flat products segment expenses are allocated between the carbon flat products segment and the specialty metals flat products segment based upon an established allocation methodology.

We follow the accounting guidance that requires the utilization of a “management approach” to define and report the financial results of operating segments. 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.

Due to the nature of the products sold in each segment, there are significant differences in the segments’ average selling price and the cost of materials sold. The tubular and pipe products segment generally has the highest average selling price among the three segments followed by the specialty metals flat products and carbon flat products segments. Due to the nature of the tubular and pipe products, we do not report tons sold or per ton information. Gross profit per ton is generally higher in the specialty metals flat products segment than the carbon flat products segment. Gross profit as a percentage of net sales is generally highest in the tubular and pipe products segment, followed by the carbon and specialty metals flat products segments.

Due to the differences in average selling prices, gross profit and gross profit percentage among the segments, a change in the mix of sales could impact total net sales, gross profit, and gross profit percentage. In addition, certain inventory in the tubular and pipe products segment is valued under the LIFO method. Adjustments to the LIFO inventory value are recorded to cost of materials sold and may impact the gross margin and gross margin percentage at the consolidated Company and tubular and pipe products segment levels.

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Carbon flat products

The primary focus of our carbon flat products segment 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. We act as an intermediary between metals producers and manufacturers that require processed metals for their operations. We serve customers in most metals consuming industries, including manufacturers and fabricators of transportation and material handling equipment, construction and farm machinery, storage tanks, environmental and energy generation equipment, automobiles, military vehicles and equipment, as well as general and plate fabricators and metals service centers. We distribute these products primarily through a direct sales force.

Specialty metals flat products

The primary focus of our specialty metals flat products segment is on the direct sale and distribution of processed stainless and aluminum flat-rolled sheet and coil products, flat bar products and fabricated parts. We act as an intermediary between metals producers and manufacturers that require processed metals for their operations. We serve customers in various industries, including manufacturers of food service and commercial appliances, agriculture equipment, transportation and automotive equipment. We distribute these products primarily through a direct sales force.

Combined, the carbon and specialty metals flat products segments have 20 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. 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.

Tubular and pipe products

The tubular and pipe products segment consists of the Chicago Tube and Iron, or CTI, business, acquired in 2011. Through our tubular and pipe products segment, we distribute metal tubing, pipe, bar, valve and fittings and fabricate pressure parts supplied to various industrial markets. Founded in 1914, CTI operates from nine locations in the midwestern and southeastern United States. The tubular and pipe products segment distributes its products primarily through a direct sales force.

Corporate expenses

Corporate expenses are reported as a separate line item for segment reporting purposes. Corporate expenses include the unallocated expenses related to managing the entire Company (i.e., all three segments), including compensation for certain personnel, expenses related to being a publicly traded entity such as board of directors’ expenses, audit expenses, and various other professional fees.

Results of Operations

Our results of operations are impacted by the market price of metals. Over the past 24 months, metals prices fluctuated 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. The pricing increases experienced throughout 2017 continued through the first quarter of 2018. Average market metals prices were 20% higher in the first quarter of 2018 than the first quarter of 2017, and 22% higher than the average metals prices in the fourth quarter of 2017. The price increases are a result of increased raw materials costs, duties and tariffs imposed on certain metals imports, and increased customer demand.

Transactional or “spot” selling prices generally move in tandem with market price changes, while fixed selling prices typically lag and reset quarterly. Similarly, inventory costs (and, therefore, cost of materials sold) tend to move slower than market selling price changes due to mill lead times and inventory turnover impacting the rate of change in average cost. When average selling prices increase, and net sales increase, gross profit and operating expenses as a percentage of net sales will generally decrease. Our net sales and earnings were positively impacted by the price increases and increased customer demand during the first quarter of 2018, and we expect this trend to continue into the second quarter of 2018.

Distribution expenses increased in the first quarter of 2018 across all segments as anticipated.  The increase accounted for 57.4% of the consolidated operating expense increase.  The increase is related to a shortage of drivers and limited driver hours per day resulting from the Electronic Log Device mandate by the Federal Motor Carrier Safety Administration issued in 2017. 

During the second quarter of 2017, we announced the permanent closure of our carbon flat products segment’s Siler City, North Carolina operation. The facility ceased operations in the third quarter of 2017. The land and building associated with the operation is classified as Assets held for sale on the accompanying Consolidated Balance Sheets. The operating loss related to the Siler City, North Carolina operation was $26 thousand and $376 thousand for the first quarter of 2018 and 2017, respectively.

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Consolidated Operations

The following table presents consolidated operating results for the periods indicated (dollars are shown in thousands):

	For the Three Months Ended March 31,
	2018					2017
	$			% of net sales		$			% of net sales
Net sales	$	375,598			100.0	$	334,893			100.0
Cost of materials sold (a)		294,777			78.5		258,454			77.2
Gross profit (b)		80,821			21.5		76,439			22.8
Operating expenses (c)		68,476			18.2		65,388			19.5
Operating income		12,345			3.3		11,051			3.3
Other loss, net		(46	)		-		(26	)		-
Interest and other expense on debt		1,986			0.5		1,626			0.5
Income before income taxes		10,313			2.7		9,399			2.8
Income tax provision		2,684			0.7		1,700			0.5
Net income	$	7,629			2.0	$	7,699			2.3

(a) Includes $500 and $375 of LIFO expense for 2018 and 2017, respectively.

(b) Gross profit is calculated as net sales less the cost of materials sold.

(c) Operating expenses are calculated as total costs and expenses from the Statement of Comprehensive Income less the cost of materials sold.

Net sales increased 12.2% to $375.6 million in the first quarter of 2018 from $334.9 million in the first quarter of 2017.  Carbon flat products net sales were 64.2% of total net sales in the first quarter of 2018 compared to 64.8% of total net sales in the first quarter of 2017.  Specialty metals products net sales were 17.4% of total net sales in the first quarter of 2018 compared to 17.3% of total net sales in the first quarter of 2017.  Tubular and pipe products net sales were 18.4% of total net sales in the first quarter of 2018 compared to 17.9% of total net sales in the first quarter of 2017.  The increase in net sales was due to a 12.5% increase in average selling prices during the first quarter of 2018 compared to the first quarter of 2017, as consolidated sales volume was flat year over year.  We expect shipping levels and metals prices to remain elevated during the second quarter of 2018.

Cost of materials sold increased 14.1% to $294.8 million in the first quarter of 2018 from $258.5 million in the first quarter of 2017. The 14% increase in cost of materials sold in the first quarter of 2018 is related to the increased metals pricing discussed above.

As a percentage of net sales, gross profit (as defined in footnote (b) in the table above) decreased to 21.5% in the first quarter of 2018 from 22.8% in the first quarter of 2017. The decrease in the gross profit as a percentage of net sales is due to the impact of higher average selling prices, as the average gross profit per ton increased in the first quarter of 2018 compared to the first quarter of 2017.

Operating expenses in the first quarter of 2017 increased $3.1 million, or 4.7%, to $68.5 million in the first quarter of 2018 from $65.4 million in the first quarter of 2017.  As a percentage of net sales, operating expenses decreased to 18.2% for the first quarter of 2018 from 19.5% in the comparable 2017 period.  Operating expenses in the carbon flat products segment increased $2.6 million, operating expenses in the specialty metals products segment increased $0.7 million, operating expenses in the tubular and pipe products segment decreased $0.5 million and Corporate expenses increased $0.2 million.  The most significant operating expense increase in the first quarter of 2018 was related to distribution expenses.  Distribution expenses increased $1.7 million, or 17.1%, and accounted for 57.4% of the total operating expense increase as discussed above.  Selling expenses increased $0.7 million, or 11.0%, as a result of increased variable based incentive compensation and medical expenses.

Interest and other expense on debt totaled $2.0 million, or 0.5% of net sales, for the first quarter of 2018 compared to $1.6 million, or 0.5% of net sales, for the first quarter of 2017. The increase was due to increased borrowings to fund working capital needs and increased interest rates. Our effective borrowing rate, exclusive of deferred financing fees and commitment fees, was 3.4% for the first three months of 2018 compared to 2.7% for the first three months of 2017 due to the increase in LIBOR rates since the first quarter of 2017.

For the first quarter of 2018, income before income taxes totaled $10.3 million compared to $9.4 million in the first quarter of 2017.

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An income tax provision of 26.0% was recorded for the first quarter of 2018, compared to an income tax provision of 18.1% for the first quarter of 2017. The income tax provision for the first quarter of 2017 included an out-of-period adjustment to correct and record previously unrecognized deferred tax assets, and the associated tax benefit, related to our supplemental executive retirement plan. The adjustment, which had accumulated since the inception of the plan in 2005, resulted in an increase to after-tax income of $1.9 million, or 20.8% of the income tax provision.

Our tax provision or benefit for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items that are considered in the relevant period. Each quarter, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. We expect our operational effective tax rate to approximate 26% to 28% on an annual basis in 2018, which is a decrease from the 2017 operational effective tax rate as a result of the Tax Cuts and Jobs Act signed into law in the fourth quarter of 2017.

Net income for the first quarter of 2017 totaled $7.6 million or $0.67 per basic and diluted share, compared to $7.7 million or $0.68 per basic and diluted share for the first quarter of 2017. The out-of-period adjustment impacted earnings per share by $0.17 in the first quarter of 2017.

Segment Operations

Carbon flat products

The following table presents selected operating results for our carbon flat products segment for the periods indicated (dollars are shown in thousands, except for per ton information):

	For the Three Months Ended March 31,
	2018				2017
			% of net sales				% of net sales
Direct tons sold		274,509				281,228
Toll tons sold		23,095				22,564
Total tons sold		297,604				303,792
Net sales	$	240,894		100.0	$	216,916		100.0
Average selling price per ton		809				714
Cost of materials sold		189,775		78.8		169,173		78.0
Gross profit (a)		51,119		21.2		47,743		22.0
Operating expenses (b)		43,013		17.9		40,368		18.6
Operating income	$	8,106		3.3	$	7,375		3.4

(a) Gross profit is calculated as net sales less the cost of materials sold.

(b) Operating expenses are calculated as total costs and expenses less the cost of materials sold.

Tons sold by our flat products segment decreased 2.0% to 298 thousand in the first quarter of 2018 from 304 thousand in the first quarter of 2017. The decrease in tons sold is due to the strategic decision to eliminate low margin international trading sales and the closure of our North Carolina operation in the third quarter of 2017, which accounted for a decrease year-over-year of approximately 12,500 tons. Excluding these strategic decisions, the carbon flat products segment experienced tonnage increases similar to the overall market growth of 3%. Customer demand was strong in the first quarter of 2018, and we expect similar year-over-year growth it to continue into the second quarter of 2018.

Net sales in our carbon flat products segment increased $24.0 million, or 11.1%, to $240.9 million in the first quarter of 2018 from $216.9 million in the first quarter of 2017. The increase in sales was attributable to the 13.4% increase in average selling prices in the first quarter of 2018 compared to the first quarter of 2017. Average selling prices in the first quarter of 2018 increased 13.4% to $809 per ton, compared with $714 per ton in the first quarter of 2017 and $774 per ton in the fourth quarter of 2017. The increase in the average selling price is a result of the market pricing dynamics discussed in the overview of Results of Operations above.

Cost of materials sold increased $20.6 million, or 12.2%, to $189.8 million in the first quarter of 2018 from $169.2 million in the first quarter of 2017. The increase was due to the increased market price for metals discussed above. The average cost of materials sold per ton increased by 14.5% in the first quarter of 2018 compared to the same period in 2017.

As a percentage of net sales, gross profit (as defined in footnote (a) in the table above) decreased to 21.2% in the first quarter of 2018 compared to 22.0% in the first quarter of 2017. The decrease in gross profit percentage in 2018 was primarily due to the impact of higher average selling prices, as the gross profit per ton increased by 9.3% or $15 per ton in the first quarter of 2018 compared to the first quarter of 2017.

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Operating expenses in the first quarter of 2018 increased $2.6 million, or 6.6%, to $43.0 million from $40.4 million in the first quarter of 2017.  The most significant operating expense increase in the first quarter of 2018 was related to distribution expenses as discussed above.  Variable operating expenses, such as warehouse and processing, increased as a result of increased sales volume at our current operating facilities.  As a percentage of net sales, operating expenses decreased to 17.9% for the first quarter of 2018 compared to 18.6% for first quarter of 2017. 

Operating income for the first quarter of 2018 totaled $8.1 million, or 3.4% of net sales, compared to $7.4 million, or 3.4% of net sales, for the first quarter of 2017.

Specialty metals flat products

The following table presents selected operating results for our specialty metals flat products segment for the periods indicated (dollars are shown in thousands, except for per ton information):

	For the Three Months Ended March 31,
	2018				2017
	$		% of net sales		$		% of net sales
Direct tons sold		24,848				23,149
Toll tons sold		15				44
Total tons sold		24,863				23,193
Net sales	$	65,529		100.0	$	57,955		100.0
Average selling price per ton		2,636				2,499
Cost of materials sold		56,131		85.7		48,284		83.3
Gross profit (a)		9,398		14.3		9,671		16.7
Operating expenses (b)		6,387		9.7		5,686		9.8
Operating income	$	3,011		4.6	$	3,985		6.9

(a)	Gross profit is calculated as net sales less the cost of materials sold.
(b)	Operating expenses are calculated as total costs and expenses less the cost of materials sold.

Tons sold by our specialty metals flat products segment increased 7.2% to 25 thousand in the first quarter of 2018 from 23 thousand in the first quarter of 2017. The increase in tons sold is due to increased demand from customers.

Net sales in our specialty metals flat products segment increased $7.6 million, or 13.1%, to $65.5 million in the first quarter of 2018 from $58.0 million in the first quarter of 2017. The increase in sales was due to a 7.2% increase in volume and an 5.5% increase in the average selling price during the first quarter of 2018 compared to the first quarter of 2017. Average selling prices in the first quarter of 2018 were $2,636 per ton, compared with $2,499 per ton in the first quarter of 2017, and $2,522 per ton in the fourth quarter of 2017. The increase in the year over year average selling price per ton is a result of the increased market prices for metals we sell.

Cost of materials sold increased $7.8 million, or 16.3%, to $56.1 million in the first quarter of 2018 from $48.3 million in the first quarter of 2017. The increase was due to a 7.2% increase in sales volume and a 8.4% increase in the average cost of materials sold during the first quarter of 2018 compared to the first quarter of 2017.

As a percentage of net sales, gross profit (as defined in footnote (a) in the table above) decreased to 14.3% in the first quarter of 2018 from 16.7% in the first quarter of 2017. The gross profit per ton decreased 9.4% to $378 per ton from $417 per ton in the first quarter of 2017. The decrease in the gross profit percentage and the gross profit per ton is a result of our averaging selling price increasing less than the average cost of materials sold during the first quarter of 2018 compared to the first quarter of 2017. In the first quarter of 2017, average selling prices were increasing faster than the average cost of material sold due to the impact of surcharges on certain products that we sell.

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Operating expenses in the first quarter of 2017 increased $0.7 million, or 12.3%, to $6.4 million from $5.7 million in the first quarter of 2017.  The most significant operating expense increase in the first quarter of 2018 was related to distribution expenses as discussed above.  Variable operating expenses, such as warehouse and processing increased as a result of higher sales volumes.  Selling and administrative and general expenses increased as a result of increased variable based incentive compensation related to the increased sales and profit.  As a percentage of net sales, operating expenses decreased to 9.7% for the first quarter of 2018 compared to 9.8% for the first quarter of 2017. 

Operating income for the first quarter of 2018 totaled $3.0 million, or 4.6% of net sales, compared to $4.0 million, or 6.9% of net sales, for the first quarter of 2017.

Tubular and pipe products

The following table presents selected operating results for our tubular and pipe products segment for the periods indicated (dollars are shown in thousands):

	For the Three Months Ended March 31,
	2018				2017
	$		% of net sales		$		% of net sales
Net sales	$	69,175		100.0	$	60,022		100.0
Cost of materials sold (a)		48,871		70.6		40,997		68.3
Gross profit (b)		20,304		29.4		19,025		31.7
Operating expenses (c)		16,037		23.2		16,538		27.6
Operating income	$	4,267		6.2	$	2,487		4.1

(a)	Includes $500 and $375 of LIFO expense for 2018 and 2017, respectively.
(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 increased $9.2 million, or 15.2%, to $69.2 million in the first quarter of 2018 from $60.0 million in the first quarter of 2017. The increase is primarily a result of a 16.5% increase in shipping volume as average selling prices decreased by 1.1% during the first quarter of 2018 compared to the first quarter of 2017.

Cost of materials sold increased $7.9 million, or 19.2%, to $48.9 million in the first quarter of 2018 from $41.0 million in the first quarter of 2017. The increase in cost of materials sold is primarily a result of the 16.5% increase in sales volume and the 2.3% increase in the average cost of materials sold in the first quarter of 2018 compared to the first quarter of 2017. During the first quarter of 2018, $0.5 million of LIFO expense was recorded in anticipation of higher inventory costs at December 31, 2018 compared to December 31, 2017. During the first quarter of 2017, $0.4 million of LIFO expense was recorded.

As a percentage of net sales, gross profit (as defined in footnote (b) in the table above) decreased to 29.47% in the first quarter of 2018 compared to 31.7% in the first quarter of 2017. As a percentage of net sales, the LIFO expense recorded in the first quarter of 2018 decreased gross profit by 0.7% compared to 0.6% in the first quarter of 2017.

Operating expenses in the first quarter of 2018 decreased $0.5 million, or 3.0%, to $16.0 million from $16.5 million in the first quarter of 2017.  Operating expenses decreased in the first quarter of 2018 as a result of more labor and overhead capitalization into inventory and decreased employment costs offset by increased distribution expense as discussed above and increased variable incentive compensation related to increased gross profit and operating income.  Operating expenses decreased to 23.2% of net sales in the first quarter of 2018 compared to 27.6% in the first quarter of 2017. 

Operating income for the first quarter 2018 totaled $4.3 million, or 6.2% of net sales, compared to $2.5 million, or 4.1% of net sales, for the first quarter of 2017.

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Corporate expenses

Corporate expenses increased $0.2 million to $3.0 million in the first quarter of 2018 compared to $2.8 million in the first quarter of 2017. The increase in corporate expenses is primarily attributable to increased employee expenses and the professional fees incurred in connection with the Berlin Metals acquisition on April 2, 2018.

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, leasing transactions and borrowings under our credit facility to fund these requirements.

We believe that funds available under our existing asset-based credit facility (the ABL Credit Facility), lease arrangement proceeds and the sale of equity or debt securities, together with funds generated from operations, will be sufficient to provide us with the liquidity necessary to fund anticipated working capital requirements, capital expenditure requirements, our dividend payments and any business acquisitions over at least the next 12 months. In the future, we may, as part of our business strategy, acquire and dispose of assets or other companies in the same or complementary lines of business, or enter into or exit strategic alliances and joint ventures. Accordingly, the timing and size of our capital requirements are subject to change as business conditions warrant and opportunities arise.

Operating Activities

For the three months ended March 31, 2018, we used $43.5 million of net cash for operations, of which $13.1 million was generated from operating activities and $56.5 million was used for working capital. For the three months ended March 31, 2017, we used $25.7 million of net cash for operations, of which $11.4 million was generated from operating activities and $37.1 million was used for working capital.

Net cash from operations totaled $13.1 million during the first quarter of 2018 and mainly consisted of net income of $7.6 million, depreciation and amortization of $4.4 million and stock-based compensation of $1.0 million. Net cash from operations totaled $11.4 million during the first quarter of 2017 and was generated from net income of $7.7 million, depreciation and amortization of $4.8 million, stock-based compensation of $0.7 million, offset by a decrease in net long-term assets and liabilities of $1.7 million.

Working capital at March 31, 2018 totaled $366.8 million, a $57.8 million increase from December 31, 2017. The increase was primarily attributable to a $42.1 million, or 31.7%, increase in accounts receivable (resulting from higher sales prices and higher sales normally experienced in the first quarter compared to the lower sales in the fourth quarter) and a $43.7 million, or 15.9%, increase in inventories (resulting from increased inventory purchases and higher average inventory costs in the first quarter of 2018 compared to the fourth quarter of 2017) offset by a $28.5 million, or 33.9%, increase in accounts payable and outstanding checks (related to the increased inventory purchases discussed above).

Investing Activities

Net cash used for investing activities was $7.7 million during the three months ended March 31, 2018, compared to $2.0 million during the three months ended March 31, 2017. The $7.7 million of 2018 capital expenditures were primarily attributable to a building expansion and additional processing equipment at our existing facilities. During 2018, we expect our capital spending to approximate $25 million primarily related to a building expansion and new processing equipment at our existing facilities.

Financing Activities

During the first three months of 2018, $51.6 million of cash was generated from financing activities, which primarily consisted of $52.7 million of net borrowings under our ABL Credit Facility offset by the final Industrial Revenue Bond (IRB) payment of $0.9 million and $0.2 million of dividends paid.  During the second quarter of 2018, we expect our net borrowings under our ABL facility to increase due to the continued rising prices and working capital needs and the acquisition of Berlin Metals on April 2, 2018. 

Dividends paid were $0.2 million for both the three months ended March 31, 2018 and March 31, 2017. In May 2018, our Board of Directors approved a regular quarterly dividend of $0.02 per share, which will be paid on June 15, 2018 to shareholders of record as of June 1, 2018. Regular dividend distributions in the future are subject to the availability of cash, the $5.0 million annual limitation on cash dividends and common stock repurchases under our ABL Credit Facility and continuing determination by our Board of Directors that the payment of dividends remains in the best interest of our shareholders.

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Stock Repurchase Program

In 2015, our Board of Directors authorized a stock repurchase program of up to 550,000 shares of our issued and outstanding common stock, which could include open market repurchases, negotiated block transactions, accelerated stock repurchases or open market solicitations for shares, all or some of which may be effected through Rule 10b5-1 plans. Repurchased shares will be held in our treasury, or canceled and retired as our Board may determine from time to time. Any repurchases of common stock are subject to the covenants contained in the ABL Credit Facility. Under the ABL Credit Facility, we may repurchase common stock and pay dividends up to $5.0 million in the aggregate during any trailing twelve months without restrictions. Purchases in excess of $5.0 million require us to (i) maintain availability in excess of 20% of the aggregate revolver commitments ($80.0 million at March 31, 2018) or (ii) to maintain availability equal to or greater than 15% of the aggregate revolver commitments ($60.0 million at March 31, 2018) and we must maintain a pro-forma ratio of EBITDA, minus certain capital expenditures and cash taxes paid to fixed charges of at least 1.00 to 1.00. 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.

No share repurchases were made during the first quarter of 2018.

Debt Arrangements

Our ABL Credit Facility is collateralized by our accounts receivable, inventory and personal property. The ABL Credit Facility consists of (i) a revolving credit facility of $370 million, including a $20 million sub-limit for letters of credit and (ii) a first in, last out revolving credit facility of up to $30 million. Under the terms of the ABL Credit Facility, we may request additional commitments in the aggregate principal amount of up to $200 million to the extent that existing or new lenders agree to provide such additional commitments. Revolver borrowings are limited to the lesser of a borrowing base, comprised of eligible receivables, inventories and personal property, or $400 million in the aggregate. The ABL Credit Facility matures on December 8, 2022.

The ABL Credit Facility contains customary representations and warranties and certain covenants that limit our ability to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt; (iii) make investments; (iv) sell assets; (v) enter into agreements that restrict distributions or other payments from restricted subsidiaries to us; (vi) incur liens securing indebtedness; (vii) consolidate, merge or transfer all or substantially all of our assets; and (viii) engage in transactions with affiliates. In addition, the ABL Credit Facility contains a financial covenant which requires: (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 ($40.0 million at March 31, 2018) or 10.0% of the aggregate borrowing base ($40.0 million at March 31, 2018) 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.

We have the option to borrow under our revolver based on the agent’s base rate plus a premium ranging from 0.00% to 0.25% or the London Interbank Offered Rate, or LIBOR, plus a premium ranging from 1.25% to 2.75%.

As of March 31, 2018, we were in compliance with our covenants and had approximately $148 million of availability under the ABL Credit Facility.

As of March 31, 2018, $1.8 million of bank financing fees were included in “Prepaid expenses and other” and “Other long-term assets” on the accompanying Consolidated Balance Sheets. The financing fees are being amortized over the five-year term of the ABL Credit Facility and are included in “Interest and other expense on debt” on the accompanying Consolidated Statements of Comprehensive Income.

On March 1, 2018, we made the final $0.9 million payment on our IRB and the letter of credit and fixed interest rate swap associated with the IRB were terminated.

Critical Accounting Policies

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on the consolidated financial statements included in this Quarterly Report on Form 10-Q, which have been prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements. We monitor and evaluate our estimates and assumptions, based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.

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We review our financial reporting and disclosure practices and accounting practices quarterly to ensure they provide accurate and transparent information relative to the current economic and business environment. For further information regarding the accounting policies that we believe to be critical accounting policies that affect our more significant judgments and estimates used in preparing our consolidated financial statements, see Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2017.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our principal raw materials are carbon, coated and stainless steel, and aluminum, pipe and tube, flat rolled coil, sheet and plate that we typically purchase from multiple primary metals producers. The 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. This volatility can significantly affect the availability and cost of raw materials for us.

We, like many other metals service centers, maintain substantial inventories of metals to accommodate the short lead times and just-in-time delivery requirements of our customers. Accordingly, we purchase metals in an effort to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon historic buying practices, supply agreements with customers and market conditions. Our commitments to purchase metals are generally at prevailing market prices in effect at the time we place our orders. We have no long-term, fixed-price metals purchase contracts. When metals prices increase, competitive conditions will influence how much of the price increase we can pass on to our customers. To the extent we are unable to pass on future price increases in our raw materials to our customers, the net sales and profitability of our business could be adversely affected. When metals prices decline, customer demands for lower prices and our competitors’ responses to those demands could result in lower sale prices and, consequently, lower gross profits and inventory lower of cost or market adjustments as we sell existing inventory. Significant or rapid declines in metals prices or reductions in sales volumes could adversely impact our ability to remain in compliance with certain financial covenants in our credit facility, as well as result in us incurring inventory or intangible asset impairment charges. Changing metals prices therefore could significantly impact our net sales, gross profits, operating income and net income.

Rising metals prices result in higher working capital requirements for us and our customers. Some customers may not have sufficient credit lines or liquidity to absorb significant increases in the price of metals. While we have generally been successful in the past in passing on producers’ price increases and surcharges to our customers, there is no guarantee that we will be able to pass on price increases to our customers in the future. 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 50% of our consolidated net sales during the first three months of 2018 and 2017, were directly related to industrial machinery and equipment manufacturers and their fabricators. 

Inflation generally affects us by increasing the cost of employee wages and benefits, transportation services, processing equipment, energy and borrowings under our credit facility. General inflation, excluding increases in the price of metals and increased distribution expense, has not had a material effect on our financial results during the past two years. We expect transportation expenses to increase significantly in excess of general inflation in 2018 due to a shortage of truck drivers and the Electronic Log Device mandate by the Federal Motor Carrier Safety Administration issued in 2017.

We are exposed to the impact of fluctuating metals prices and interest rate changes. During 2018 and 2017, 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.

Our primary interest rate risk exposure results from variable rate debt. We have the option to enter into 30- to 180-day fixed base rate LIBOR loans under the ABL Credit Facility.

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Item 4. Controls and Procedures

The evaluation required by Rule 13a-15(e) of the Securities Exchange Act of 1934 of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report on Form 10-Q has been carried out under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. These disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in reports that are filed with or submitted to the SEC is: (i) accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (ii) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2018, our disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting that occurred during the first quarter of 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. OTHER INFORMATION

Items 1, 1A, 2, 3, 4 and 5 of this Part II are either inapplicable or are answered in the negative and are omitted pursuant to the instructions to Part II.

Item 6. Exhibits

Exhibit	Description of Document	Reference
4.25	Joinder and First Amendment to Bank Agreement, dated as of April 4, 2018, to Third Amended and Restated Loan and Security Agreement, dated as of December 8, 2017, by and among the Registrant, the financial institutions from time to time party thereto, Bank of America, N.A., as administrative agent, and the other agents from time to time party thereto.`	Filed herewith
10.38	Amendment to Employment Agreement, dated as of February 9, 2018, between Olympic Steel, Inc. and Andrew S. Greiff.	Filed herewith
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
32.2	Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	OLYMPIC STEEL, INC. (Registrant)
Date: May 3, 2018	By: /s/ Michael D. Siegal  Michael D. Siegal  Chairman of the Board and Chief Executive Officer
	By: /s/ Richard T. Marabito Richard T. Marabito Chief Financial Officer (Principal Financial and Accounting Officer)

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EX-4.25

Exhibit 4.25

JOINDER AND FIRST AMENDMENT TO

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This JOINDER AND FIRST Amendment to THIRD AMENDED AND RESTATED Loan and Security Agreement (this “Agreement”) is entered into as of April 4, 2018 by and among OLYMPIC STEEL, INC., an Ohio corporation (“Olympic Steel”), OLYMPIC STEEL LAFAYETTE, INC., an Ohio corporation (“Olympic Lafayette”), OLYMPIC STEEL MINNEAPOLIS, INC., a Minnesota corporation (“Olympic Minneapolis”), OLYMPIC STEEL IOWA, INC., an Iowa corporation (“Olympic Iowa”), OLY STEEL NC, INC., a Delaware corporation (“Oly NC”), IS Acquisition, Inc., an Ohio corporation (“IS Acquisition”), CHICAGO TUBE AND IRON COMPANY, a Delaware corporation (“Chicago Tube and Iron”) (Olympic Steel, Olympic Lafayette, Olympic Minneapolis, Olympic Iowa, Oly NC, IS Acquisition and Chicago Tube and Iron, collectively, “Existing Borrowers”), and B METALS, INC., an Ohio corporation (the “Joining Borrower” and together with the Existing Borrowers, the "Borrowers"), BANK OF AMERICA, N.A., a national banking association, as agent for Lenders (together with its successors and assigns, “Agent”), and Lenders party hereto.

Recitals

A.     Existing Borrowers, Lenders and Agent are party to that certain Third Amended and Restated Loan and Security Agreement, dated as of December 8, 2017 (as such agreement may be amended, restated, or otherwise modified from time to time, the “Loan Agreement”) pursuant to which Lenders have agreed to make certain loans and extend certain other financial accommodations to Borrowers as provided therein. Terms defined in the Loan Agreement, where used in this Agreement, shall have the same meanings in this Agreement as are prescribed by the Loan Agreement.

B.     Olympic Steel and Joining Borrower are acquiring (the “Acquisition”) substantially all the assets of Berlin Metals LLC (“Target”), which assets shall be owned by the Joining Borrower, a wholly owned subsidiary of Olympic Steel, all pursuant to the terms of the certain Asset Purchase Agreement dated as of March 28, 2018 (the “Purchase Agreement”) by and among, Olympic Steel, the Joining Borrower, the Target, Roy Berlin and certain other owners of the Target.

C.      The Joining Borrower and the Existing Borrowers will derive substantial direct and indirect benefit from the Loans and Letters of Credit under the Loan Documents to be made or issued by Lenders and Issuing Bank to or for the benefit of the Existing Borrowers and/or the Joining Borrower and the other financial accommodations to the Borrowers and their respective Subsidiaries as may be made available by the Lenders;

D.     The Joining Borrower is willing to become a Borrower under the Loan Documents as hereinafter provided in order to obtain such benefits; and

E.     In connection with the addition of the Joining Borrower, the Borrowers have requested that Lenders amend certain terms of the Loan Agreement as set forth herein.

NOW, THEREFORE, in consideration of the terms and conditions contained herein, and of any loans or financial accommodations heretofore, now, or hereafter made to or for the benefit of Borrowers by Lenders, it hereby is agreed as follows:

ARTICLE 1

JOINDER AND AMENDMENTS TO LOAN AGREEMENT

Section 1.1     Joinder. The Joining Borrower agrees to, and does hereby, become a “Borrower” under the Loan Agreement and become bound by the Loan Agreement with the same force and effect as if it were an original party to the Loan Agreement. Each party hereto hereby acknowledges and agrees that each reference in the Loan Agreement to a “Borrower” shall also mean and be a reference to the Joining Borrower.

(a)     Joint and Several Liability. Without limiting the generality of the foregoing, subject to and in accordance with the Loan Agreement, the Joining Borrower hereby agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Agent and Lenders the prompt payment and performance of, all Obligations of each Borrower to the Lenders arising under the Loan Agreement and any other Loan Document (and, for the avoidance of doubt, each of the Existing Borrowers hereby agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Agent and Lenders the prompt payment and performance of, all Obligations of the Joining Borrower to the Lenders arising under the Loan Agreement and any other Loan Document).

(b)     Security Interests. Without limiting the generality of the foregoing, subject to and in accordance with Section 7 of the Loan Agreement, the Joining Borrower hereby assigns and pledges to Agent, its successors and assigns, for the ratable benefit of the Secured Parties and hereby grants to Agent, its successors and assigns, for the ratable benefit of the Secured Parties, as security for the payment or performance in full of the Obligations, a security interest in all right, title and interest of the Joining Borrower in, to and under any and all of the Collateral now owned or at any time hereafter acquired by the Joining Borrower or in which the Joining Borrower now has or at any time in the future may acquire any right, title or interest.

(c)     Representations and Warranties. The Joining Borrower represents, warrants, acknowledges and affirms with respect to itself and its properties, that each of the representations and warranties contained in the Loan Agreement and the other Loan Documents as it relates to the Joining Borrower is true and correct in all material respects (except where any such representation or warranty is otherwise qualified by materiality, in which case such representation or warranty is true and correct in all respects) as of the date hereof, with the same effect as though such representation had been made on and as of the date hereof after giving effect to the joinder of the Joining Borrower as an additional Borrower and Obligor under the Loan Agreement and the other Loan Documents.

(d)     Loan Documents. The Joining Borrower joins and agrees to be obligated and bound by all the terms, provisions and covenants under each of the Loan Documents which are binding on each Existing Borrower, including, without limitation, that certain Pledge Agreement dated as of June 30, 2010 (together with all amendments thereto) by and among each of the pledgors signatory thereto and the Agent.

(e)     Acknowledgement. The Borrower Agent and each Existing Borrower hereby acknowledges and consents to the Loan Documents, as supplemented by this Agreement, and confirms and ratifies in all respects the Obligations of each Borrower under the Loan Documents to which it is a party, as so supplemented, which shall remain in full force and effect.

(f)     Borrower Agent. The Joining Borrower hereby appoints the Borrower Agent as representative and agent for all purposes under the Loan Documents as further specified in Section 4.4 of the Loan Agreement.

Section 1.2     Amendments. The Loan Agreement is hereby amended as follows (with the deletions of any stricken text in any existing provision indicated in the same manner as the following example: stricken text and with the insertions of any additional text in any existing provision indicated in the same manner as the following example: inserted text):

(a)     The following new defined terms are inserted in Section 1.1 of the Loan Agreement in appropriate alphabetical order:

Acceptable Appraisal: an appraisal conducted by an appraiser acceptable to Agent, with scope, procedures and results acceptable to Agent, all of the foregoing determined in accordance with Agent’s Permitted Discretion, and to be shared with each Lender.

Acquired Equipment: in Agent’s sole discretion, Eligible Equipment acquired by a Borrower after the Closing Date as part of a Permitted Acquisition.

Acquired Equipment Amortization Amount: the 7-year straight–line amortization amount established by Agent on each Acquired Equipment Inclusion Date based on the Acquired Equipment Value to be included in the Borrowing Base on such date, such amount to be established relative to both the respective dollar value and respective amortization period of all such Acquired Equipment, all as reflected on an amortization schedule prepared by Agent as of such Acquired Equipment Inclusion Date with respect to such Acquired Equipment and attached to the Credit Agreement as Schedule 1.2, and as may be further updated from time to time by agreement between Agent and Borrower Agent. The calculation of Acquired Equipment Amortization Amount on any subsequent Acquired Equipment Inclusion Date shall include the remaining Acquired Equipment Amortization Amount of any current Acquired Equipment continuing to be included in the Borrowing Base (i.e., not being newly included on such date).

Acquired Equipment Formula Amount: as of any date of determination, 85% of Acquired Equipment Value as of the applicable Acquired Equipment Inclusion Date less the cumulative Acquired Equipment Amortization Amount since the applicable Acquired Equipment Inclusion Date.

Acquired Equipment Inclusion Date: the date of the inclusion of Acquired Equipment in the Borrowing Base as requested and identified in a written notice delivered to Agent by the Borrower Agent not less than 10 Business Days prior to the date of such proposed inclusion, so long as, as of the date of such notice and upon inclusion, (a) no Default or Event of Default is continuing, (b) the Fixed Charge Coverage Ratio as of the end of the most recent Measurement Period for which financial statements have been delivered is equal to or greater than 1.00 to 1.00, and (c) Agent shall have received not less than 5 Business Days prior to such date of inclusion an Acceptable Appraisal with respect to such Acquired Equipment, and (d) a certificate of an Authorized Officer of the Borrower Agent, in form and substance acceptable to Agent, certifying compliance with the preceding clauses (a) and (b) and demonstrating (in reasonable detail) the calculations required thereby.

Acquired Equipment Value: means the net orderly liquidation value of Acquired Equipment as established pursuant to an Acceptable Appraisal.

Eligible Equipment Formula Amount: the Acquired Equipment Formula Amount plus the Existing Equipment Formula Amount; provided that the Eligible Equipment Formula Amount shall be reduced to (and shall be deemed to be) zero ($0) on the Tranche A Revolver Termination Date or such earlier date on which the Tranche A Revolver Commitments are terminated in accordance with this Agreement.

Existing Equipment Formula Amount: Existing Equipment Availability less the cumulative Existing Equipment Amortization Amount.

Existing Equipment Amortization Amount: the sum of the quarterly amortization amount equal to $1,280,312.50 accruing on the first day of each fiscal quarter after the Closing Date, commencing April 1, 2018.

Existing Equipment Availability: $35,848,750.

First Amendment Date: April 4, 2018.

(b)     The definition of “Tranche A Borrowing Base” set forth in Section 1.1 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

Tranche A Borrowing Base: on any date of determination, an amount equal to the lesser of (a) the aggregate amount of Tranche A Revolver Commitments, minus the LC Reserve; or (b) the sum of the Tranche A Accounts Formula Amount, plus the Tranche A Inventory Formula Amount, plus the Eligible Equipment ComponentFormula Amount plus the Segregated Account Cash Balance.

(c)     Section 8.6.2(d) of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

“(d)     In the event of any casualty loss of any Equipment, any condemnation of any Equipment and any Permitted Asset Disposition of Equipment, Borrowers shall update the Eligible Equipment ComponentFormula Amount as approved by the Administrative Agent in its Permitted Discretion and in writing and reflect such updated Eligible Equipment ComponentFormula Amount in the Borrowing Base Certificate, commencing with the Borrowing Base Certificate delivered immediately following such casualty loss, condemnation or Permitted Asset Disposition.”

(d)     The definitions of “Eligible Equipment Component” and “Equipment Component Amortization” set forth in Section 1.1 of the Loan Agreement are hereby deleted in their entirety.

(e)     Schedule 1.2 attached hereto is hereby attached to the Loan Agreement as Schedule 1.2 thereto.

ARTICLE 2

MISCELLANEOUS

Section 2.1      Conditions to Effectiveness.      This Agreement shall become effective on the date upon satisfaction or waiver of the following conditions precedent, as determined by Agent in its sole discretion:

(a)     this Agreement shall have been duly executed and delivered by Agent, each Borrower and each Lender;

(b)     with respect to the Joining Borrower, Agent shall have been authorized to make all filings or recordations necessary to perfect its Liens in the Collateral, and shall have received UCC and Lien searches and other evidence satisfactory to Agent that such Liens are the only Liens upon the Collateral, except Permitted Liens;

(c)     Agent shall have received that certain Pledge Amendment, in form and substance satisfactory to Agent, dated as of the date hereof, executed by Olympic Steel in favor of Agent;

(d)     Agent shall have received that certain Perfection Certificate, in form and substance satisfactory to Agent, dated as of the date hereof, executed by the Borrowers;

(e)     Agent shall have received a certificate, in form and substance satisfactory to it, from a knowledgeable officer of the Borrower Agent certifying that (i) the Acquisition has been consummated in accordance with the Purchase Agreement, (ii) the Acquisition constitutes a “Permitted Acquisition” under the Loan Agreement, (iii) after giving effect to this Agreement, no Default or Event of Default exists; and (iv) after giving effect to this Agreement, the representations and warranties set forth in the Loan Agreement are true and correct in all material respects;

(f)     Agent shall have received a certificate of a duly authorized officer of the Joining Borrower, certifying (i) that the copies thereto attached of the Joining Borrower’s organization documents are true and complete, and in full force and effect, without amendment except as shown; (ii) that a thereto attached copy of resolutions authorizing execution and delivery of this Agreement is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified, revoked or contradicted by any other resolution; and (iii) to the title, name and signature of each Person authorized to sign this Agreement and other Loan Documents. Agent may conclusively rely on these certifications until it is otherwise notified by the Joining Borrower in writing;

(g)     Agent shall have received a written opinion of Jones Day, as counsel to the Borrowers, in form and substance reasonably satisfactory to Agent;

(h)     Agent shall have received a duly executed copy of the Purchase Agreement;

(i)     Agent shall have received copies of the charter documents of the Joining Borrower, certified by the Secretary of State or other appropriate official of the Joining Borrower’s jurisdiction of organization, Agent shall have received good standing certificates for Joining Borrower issued by the Secretary of State or other appropriate official of the Joining Borrower’s jurisdiction of organization and each jurisdiction where the Joining Borrower’s conduct of business or ownership of Property necessitates qualification and where the failure to be so qualified could reasonably be expected to have a Material Adverse Effect;

(j)     Agent shall have received copies of policies or certificates of insurance for the insurance policies carried by the Joining Borrower, together with lender’s loss payee endorsements, all in compliance with the Loan Documents;

(k)     all requisite material governmental authorizations and third party consents and approvals necessary in connection with the Acquisition and entering into this Agreement and the other Loan Documents by the Joining Borrower shall have been obtained (without the imposition of any conditions that are not acceptable to Lenders) and shall remain in effect; all applicable waiting periods for governmental authorizations in connection therewith shall have expired without any action being taken by any Governmental Authority, and no Applicable Law shall be applicable in the judgment of Agent, in each case that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated hereby or the rights of the Obligors or their Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them, including all documentation and information required to comply with any obligations under any "know your customer," anti-money laundering or other requirements of Applicable Law or other requirements set forth in Section 14.16 of the Loan Agreement;

(l)     Borrowers shall have paid all fees and expenses to be paid to Agent and Lenders required to be paid pursuant to Section 3.4 of the Loan Agreement; and

(m)     All documentation and other legal matters incident to this Agreement shall be satisfactory to the Agent in its sole and absolute discretion.

Section 2.2.     Representations, Warranties, and Covenants of Borrowers. Without limitation of the representations and warranties of the Joining Borrower in Section 1.1(d) above, each Borrower hereby represents and warrants that as of the date of this Agreement and after giving effect hereto (a) no event has occurred and is continuing which constitutes a Default or an Event of Default, (b) the representations and warranties of such Borrower contained in the Loan Agreement and the other Loan Documents are true and correct in all material respects on and as of the date hereof to the same extent as though made on and as of the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case they are true and correct in all material respects as of such earlier date, (c) the execution and delivery by such Borrower of this Agreement and the performance by such Borrower of the Loan Agreement, as amended by this Agreement, are within such Borrower’s corporate powers and have been duly authorized by all necessary action, (d) this Agreement and the Loan Agreement, as amended by this Agreement, are legal, valid, and binding obligations of such Borrower enforceable against such Borrower in accordance with their terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law), and (e) the execution and delivery by such Borrower of this Agreement and the performance by such Borrower of the Loan Agreement, as amended by this Agreement, do not require the consent of any Person (other than that which has been obtained) and do not contravene the terms of such Borrower’s Organic Documents, any Restrictive Agreement or any other indenture, agreement, or undertaking to which such Borrower is a party or by which such Borrower or any of its property is bound.

Section 2.3     Reference to and Effect on the Loan Agreement. Except as expressly provided herein, the Loan Agreement and all other Loan Documents shall remain unmodified and in full force and effect and are hereby ratified and confirmed. The execution, delivery, and effectiveness of this Agreement shall not operate as a waiver or forbearance of (a) any right, power, or remedy of Lenders under the Loan Agreement or any of the other Loan Documents or (b) any Default or Event of Default. This Agreement shall constitute a Loan Document.

Section 2.4     Fees, Costs, and Expenses. Subject to and in accordance with Section 3.4 of the Loan Agreement, Borrowers agree to pay on demand all reasonable costs and expenses of Agent in connection with the preparation, negotiation, execution and delivery, and closing of this Agreement and all related documentation, including the fees and out-of-pocket expenses of counsel for Agent with respect thereto.

Section 2.5     Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto as separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, when taken together, shall constitute but one and the same agreement. A telecopy, pdf or similar electronic file of any such executed counterpart shall be deemed valid and may be relied upon as an original.

Section 2.6     Effect; Ratification.

(a)     Except as specifically set forth above, the Loan Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.

(b)     The execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy of Agent or any Lender under the Loan Agreement or any other Loan Document, nor constitute amendment of any provision of the Loan Agreement or any other Loan Document, except as specifically set forth herein. Upon the effectiveness of this Agreement, each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of similar import shall mean and be a reference to the Loan Agreement as amended hereby.

(c)     Each Borrower acknowledges and agrees that the amendments set forth herein are effective solely for the purposes set forth herein and that the execution and delivery by Agent and Lenders of this Agreement shall not be deemed (i) except as expressly provided in this Agreement, to be a consent to any amendment, waiver or modification of any term or condition of the Loan Agreement or of any other Loan Document, (ii) to create a course of dealing or otherwise obligate Agent or Lenders to forbear, waive, consent or execute similar amendments under the same or similar circumstances in the future, or (iii) to amend, prejudice, relinquish or impair any right of Agent or Lenders to receive any indemnity or similar payment from any Person or entity as a result of any matter arising from or relating to this Agreement.

Section 2.7     Reaffirmation. Each Borrower hereby acknowledges and reaffirms all of its obligations and undertakings under each of the Loan Documents to which it is a party and acknowledges and agrees that subsequent to, and after taking account of the provisions of this Agreement, each such Loan Document is and shall remain in full force and effect in accordance with the terms thereof.

Section 2.8     No Oral Agreements. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

Section 2.9     GOVERNING LAW. THIS AMENDMENT, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).

Section 2.10     Post-Closing. Within forty-five (45) days following the date hereof, the Borrowers shall deliver to Agent duly executed Deposit Account Control Agreements for the Deposit Accounts of the Joining Borrower, in form and substance, and with financial institutions, satisfactory to Agent, in each case to the extent required under the Loan Agreement.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.

JOINING BORROWER: B METALS, INC.
By: Name: Title:	/s/ Richard A. Manson Richard A. Manson Vice President & Treasurer

EXISTING BORROWERS: OLYMPIC STEEL, INC.
By: Name: Title:	/s/ Richard A. Manson Richard A. Manson Vice President & Treasurer
OLYMPIC STEEL LAFAYETTE, INC.
By: Name: Title:	/s/ Richard A. Manson Richard A. Manson Vice President & Treasurer
OLYMPIC STEEL MINNEAPOLIS, INC.
By: Name: Title:	/s/ Richard A. Manson Richard A. Manson Vice President & Treasurer
OLYMPIC STEEL IOWA, INC.
By: Name: Title:	/s/ Richard A. Manson Richard A. Manson Vice President & Treasurer

OLY STEEL NC, INC.
By: Name: Title:	/s/ Richard A. Manson Richard A. Manson Vice President & Treasurer

IS Acquisition, Inc.
By: Name: Title:	/s/ Richard A. Manson Richard A. Manson Vice President & Treasurer

chicago tube AND iron company
By: Name: Title:	/s/ Richard A. Manson Richard A. Manson Vice President & Treasurer

AGENT AND LENDERS: BANK OF AMERICA, N.A., as Agent and Lender
By:	/s/ Thomas H. Herron
Name:	Thomas H. Herron
Title:	Senior Vice President

THE HUNTINGTON NATIONAL BANK, as Lender
By:	/s/ Roger F. Reeder
Name:	Roger F. Reeder
Title:	Vice President

JPMORGAN CHASE BANK, N.A., as Lender
By:	/s/ Tracy Martinov
Name:	Tracy Martinov
Title:	Authorized Signatory

KEYBANK NATIONAL ASSOCIATION, as Lender
By:	/s/ Paul H. Steiger
Name:	Paul H. Steiger
Title:	Vice President

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Lender
By:	/s/ Mark Bradford
Name:	Mark Bradford
Title:	Senior Vice President

BMO HARRIS BANK N.A., as Lender
By:	/s/ Dan Duffy
Name:	Dan Duffy
Title:	Vice President

Schedule 1.2

Amortization schedule

(See attached.)

EX-10.38

 Exhibit 10.38

OLYMPIC STEEL, INC.

AMENDMENT TO EMPLOYMENT AGREEMENT

This AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”) is entered into as of _February 9, 2018_ (the “Effective Date”) by and between OLYMPIC STEEL, INC., an Ohio corporation (the “Company”) and the Company employee identified on the signature page of this Amendment below (“Executive”).

WHEREAS, Executive is currently a party to an Employment Agreement entered into between the Company and Executive as of August 19, 2016 (the “EA”);

WHEREAS, the parties hereto mutually desire to enter into this Amendment to amend the EA, effective as of the Effective Date, to change the methodology for determining the Executive’s Annual Bonus;

WHEREAS, the Company and Executive may amend the EA through this Amendment if signed by both the Company and Executive; and

WHEREAS, certain capitalized terms used in this Amendment without definition have the meanings ascribed to them in the EA.

NOW, THEREFORE, the Company and Executive hereby acknowledge and agree, effective as of the Effective Date, as follows:

1.     Amendment and Restatement of Third Sentence of Section 3(d) of the EA. The third sentence of Section 3(d) of the EA is hereby amended and restated in its entirety as follows: “For calendar year 2017, Executive shall participate in the ZEUS consolidated pool of the Plan with 18.18 units, and for calendar year 2018 and thereafter during the Employment Period, Executive shall receive a cash incentive equal to 0.85% of the Company’s consolidated earnings before interest, taxes, depreciation and amortization (computed without respect to any LIFO income or expense), subject to performance factors established by the Board, that may change from time to time.”

2.     Entire Agreement. The amended EA, consisting of the EA as amended as of the Effective Date by the Amendment, constitutes the full and entire understanding and agreement between the parties to the EA with regard to the subjects hereof and thereof.

3.     Continuing Effectiveness. Except as otherwise provided in the Amendment, the EA shall continue in full force and effect in accordance with its terms.

[signature page follows]

IN WITNESS WHEREOF, the Company and Executive have executed this Amendment effective as of the Effective Date.

OLYMPIC STEEL, INC.

By: /s/ Richard A. Manson

Name: Richard A. Manson

Title: VP & Treasurer

/s/ Andrew S. Greiff

Andrew S. Greiff

EX-31.1

Exhibit 31.1

Certification of the Principal Executive Officer

Pursuant to 15 U.S.C. 78m(a) or 78o(d)

(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Michael D. Siegal, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Olympic Steel, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

By: /s/ Michael D. Siegal

Michael D. Siegal
Olympic Steel, Inc.
Chairman and Chief Executive Officer

May 3, 2018

EX-31.2

Exhibit 31.2

Certification of the Principal Financial Officer

Pursuant to 15 U.S.C. 78m(a) or 78o(d)

(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Richard T. Marabito, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Olympic Steel, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

By: /s/ Richard T. Marabito

Richard T. Marabito
Olympic Steel, Inc.
Chief Financial Officer

May 3, 2018

EX-32.1

Exhibit 32.1

Certification of the Principal Executive Officer

Pursuant to 18 U.S.C. 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

I, Michael D. Siegal, the Chairman & Chief Executive Officer of Olympic Steel, Inc. (the "Company"), certify that to the best of my knowledge, based upon a review of this report on Form 10-Q for the period ended March 31, 2018 of the Company (the “Report”):

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company, as of the dates and for the periods expressed in this Report.

By: /s/ Michael D. Siegal

Michael D. Siegal
Olympic Steel, Inc.
Chairman & Chief Executive Officer

May 3, 2018

EX-32.2

Exhibit 32.2

Certification of the Principal Financial Officer

Pursuant to 18 U.S.C. 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

I, Richard T. Marabito, the Chief Financial Officer of Olympic Steel, Inc. (the "Company"), certify that to the best of my knowledge, based upon a review of this report on Form 10-Q for the period ended March 31, 2018 of the Company (the “Report”):

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in this Report.

By: /s/ Richard T. Marabito

Richard T. Marabito
Olympic Steel, Inc.
Chief Financial Officer

May 3, 2018

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 03, 2018
Document Information [Line Items]
Entity Registrant Name	OLYMPIC STEEL INC
Entity Central Index Key	0000917470
Trading Symbol	zeus
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		10,998,480
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Assets
Cash and cash equivalents	$ 3,412	$ 3,009
Accounts receivable, net	174,813	132,737
Inventories, net (includes LIFO debit of $4,837 and $5,337 as of March 31, 2018 and December 31, 2017, respectively)	319,024	275,307
Prepaid expenses and other	5,698	8,333
Assets held for sale	750	750
Total current assets	503,697	420,136
Property and equipment, at cost	384,218	376,710
Accumulated depreciation	(232,908)	(229,062)
Net property and equipment	151,310	147,648
Intangible assets, net	22,758	22,980
Other long-term assets	13,114	13,394
Total assets	690,879	604,158
Liabilities
Current portion of long-term debt		930
Accounts payable	112,518	84,034
Accrued payroll	9,782	11,999
Other accrued liabilities	14,567	14,184
Total current liabilities	136,867	111,147
Credit facility revolver	248,955	196,235
Other long-term liabilities	11,215	12,048
Deferred income taxes	12,827	12,145
Total liabilities	409,864	331,575
Shareholders' Equity
Preferred stock
Common stock	130,379	129,453
Treasury stock	(239)	(337)
Retained earnings	150,875	143,467
Total shareholders' equity	281,015	272,583
Total liabilities and shareholders' equity	$ 690,879	$ 604,158

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Inventories, LIFO debit	$ 4,837	$ 5,337

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net sales	$ 375,598	$ 334,893
Costs and expenses
Cost of materials sold (excludes items shown seperately below)	294,777	258,454
Warehouse and processing	23,436	23,501
Administrative and general	18,872	18,165
Distribution	12,139	10,365
Selling	7,228	6,511
Occupancy	2,555	2,310
Depreciation	4,024	4,314
Amortization	222	222
Total costs and expenses	363,253	323,842
Operating income	12,345	11,051
Other loss, net	46	26
Income before interest and income taxes	12,299	11,025
Interest and other expense on debt	1,986	1,626
Income before income taxes	10,313	9,399
Income tax provision	2,684	1,700
Net income and total comprehensive income	$ 7,629	$ 7,699
Earnings per share:
Net income per share - basic (in dollars per share)	$ 0.67	$ 0.68
Weighted average shares outstanding - basic (in shares)	11,418	11,369
Net income per share - diluted (in dollars per share)	$ 0.67	$ 0.68
Weighted average shares outstanding - diluted (in shares)	11,418	11,369
Dividends declared per share of common stock (in dollars per share)	$ 0.02	$ 0.02

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from (used for) operating activities:
Net income	$ 7,629	$ 7,699
Adjustments to reconcile net income to net cash from (used for) operating activities -
Depreciation and amortization	4,357	4,766
Loss on disposition of property and equipment	7	7
Stock-based compensation	1,024	656
Other long-term assets	207	(335)
Other long-term liabilities	(151)	(1,406)
	13,073	11,387
Changes in working capital:
Accounts receivable	(42,076)	(38,379)
Inventories	(43,717)	(8,664)
Prepaid expenses and other	2,616	2,075
Accounts payable	34,029	6,771
Change in outstanding checks	(5,545)	982
Accrued payroll and other accrued liabilities	(1,835)	136
	(56,528)	(37,079)
Net cash used for operating activities	(43,455)	(25,692)
Cash flows from (used for) investing activities:
Capital expenditures	(7,743)	(2,066)
Proceeds from disposition of property and equipment	50	84
Net cash used for investing activities	(7,693)	(1,982)
Cash flows from (used for) financing activities:
Credit facility revolver borrowings	129,549	105,463
Credit facility revolver repayments	(76,829)	(77,091)
Industrial revenue bond repayments	(930)
Credit facility fees and expenses	(19)
Proceeds from exercise of stock options (including tax benefit)		10
Dividends paid	(220)	(219)
Net cash from financing activities	51,551	28,163
Net change	403	489
Beginning balance	3,009	2,315
Ending balance	3,412	2,804
Interest paid	1,841	1,365
Income taxes paid	$ 52	$ 26

XML

Note 1 - Basis of Presentation

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

1. Basis of Presentation :

The accompanying consolidated financial statements have been prepared from the financial records of Olympic Steel, Inc. and its wholly-owned subsidiaries (collectively, Olympic or the Company), without audit and reflect all normal and recurring adjustments which are, in the opinion of management, necessary to fairly state the results of the interim periods covered by this report. Year-to-date results are

not

necessarily indicative of

2018

annual results and these financial statements should be read in conjunction with the Company’s Annual Report on Form

10

-K for the year ended

December 31, 2017.

All intercompany transactions and balances have been eliminated in consolidation.

The Company operates in

three

reportable segments; carbon flat products, specialty metals flat products, and tubular and pipe products. The carbon flat products segment and the specialty metals flat products segments are at times consolidated and referred to as the flat products segments. Certain of the flat products segments’ assets and resources are shared by the carbon and specialty metals segments and both segments’ products are stored in the shared facilities and, in some locations, processed on shared equipment. Due to the shared assets and resources, certain of the flat products segment expenses are allocated between the carbon flat products segment and the specialty metals flat products segment based upon an established allocation methodology. Through its carbon flat products segment, the Company sells and distributes large volumes of processed carbon and coated flat-rolled sheet, coil and plate products, and fabricated parts. Through its specialty metals flat products segment, the Company sells and distributes processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. Through its tubular and pipe products segment, which consists of the Chicago Tube and Iron subsidiary (CTI), the Company distributes metal tubing, pipe, bar, valves and fittings and fabricate pressure parts supplied to various industrial markets.

Corporate expenses are reported as a separate line item for segment reporting purposes. Corporate expenses include the unallocated expenses related to managing the entire Company (i.e., all

three

segments), including payroll expenses for certain personnel, expenses related to being a publicly traded entity such as board of directors’ expenses, audit expenses, and various other professional fees.

Impact of Recently Issued Accounting Pronouncements

In

August 2017,

the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)

No

2017

-

12,

“Derivatives and Hedging”. This ASU aligns an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the ASU expands and refines hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU also makes certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. This ASU is the final version of proposed ASU

2016

-

310

,

“Derivatives and Hedging (Topic

815

): Targeted Improvements to Accounting for Hedging Activities”, which has been deleted. For public business entities, this ASU is effective for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after

December 15, 2019,

and interim periods within fiscal years beginning after

December 15, 2020.

Early application is permitted in any interim period after issuance of the ASU. All transition requirements and elections should be applied to hedging relationships existing (that is, hedging relationships in which the hedging instrument has

not

expired, been sold, terminated, or exercised or the entity has

not

removed the designation of the hedging relationship) on the date of adoption. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption. The adoption of this ASU is

not

expected to materially impact the Company’s consolidated financial statements.

In

May 2017,

the FASB issued ASU

No

2017

-

09,

“Compensation – Stock Compensation (Topic

718

)”. This ASU provides clarity and reduces both (

1

) diversity in practice and (

2

) cost and complexity when applying the guidance in Topic

718,

Compensation – Stock Compensation, to a change to the terms or conditions of a share-based payment award. The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic

718.

This ASU is the final version of proposed ASU

2016

-

360,

“Compensation—Stock Compensation (Topic

718

)—Scope of Modification Accounting,” which has been deleted. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after

December 15, 2017.

The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The adoption of this ASU did

not

materially impact the Company’s consolidated financial statements.

In

August 2016,

the FASB issued ASU

No

2016

-

15,

“Classification of certain cash receipts and cash payments”. This ASU addresses the following

eight

specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of

zero

-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The guidance will be effective for annual reporting periods beginning after

December 15, 2017,

and interim periods within those fiscal years with early adoption permitted. The adoption of this ASU did

not

materially impact the Company’s consolidated financial statements.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

“Leases,” which specifies the accounting for leases. The objective is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease. This ASU introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The guidance will be effective for annual reporting periods beginning after

December 15, 2018

and interim periods within those fiscal years with early adoption permitted. The Company is in the process of evaluating the impact of the future adoption of this standard on the Company’s consolidated financial statements.

In

August 2015,

the FASB issued ASU

2015

-

14,

“Revenue from Contracts with Customers (Topic

606

): Deferral of the Effective Date,” which deferred the effective date of ASU

2014

-

09

for all entities by

one

year. This update is effective for public business entities for annual reporting periods beginning after

December 15, 2017,

including interim periods within those reporting periods. Earlier application was permitted only as of annual reporting periods beginning after

December 15, 2016,

including interim reporting periods within that reporting period. ASU

2014

-

09

was to become effective for us beginning

January 2017;

however, ASU

2015

-

14

deferred our effective date until

January 2018,

which is when we adopted this standard. The ASU permits

two

methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). The ASU also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required for customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract.  The Company completed the process of evaluating the effect of the adoption and determined there were

no

material changes required to the reported revenues as a result of the adoption. Substantially all of the revenue arrangements consist of a single performance obligation to transfer goods. Based on the evaluation process and review of the contracts with customers, the timing and amount of revenue recognized based on ASU

2015

-

14

is consistent with the revenue recognition policy under previous guidance. The adoption of this ASU on

January 1, 2018

using the modified retrospective approach applied to those contracts which were

not

completed as of

January 1, 2018

did

not

have a material impact on the Company’s consolidated financial statements.  Comparative information has

not

been restated and continues to be reported under the accounting standard in effect for those periods.  The impact of adopting ASU

606

was

not

material to the Company’s consolidated financial statements as of and for the

three

months ended

March 31, 2018. 

See note

2.

XML

Note 2 - Revenue Recognition

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

2. Revenue Recognition:

The Company provides metals processing, distribution and delivery of large volumes of processed carbon, coated flat rolled sheet, coil and plate products, aluminum, and stainless flat rolled products, flat bar products, metal tubing, pipe, bar, valves, fittings, and fabricated parts.  The Company's contracts with customers are comprised of purchase orders with standard terms and conditions.  Occasionally the Company

may

also have long-term agreements with customers.  Substantially all of the contracts with customers require the delivery of metals which represent single performance obligations that are satisfied upon transfer of control of the product to the customer. 

Transfer of control is assessed based on the use of the product distributed and rights to payment for performance under the contract terms. Transfer of control and revenue recognition for substantially all of the Company’s sales occur upon shipment or delivery of the product, which is when title, ownership and risk of loss pass to the customer and is based on the applicable shipping terms. The shipping terms depend on the customer contract.  An invoice for payment is issued at time of shipment and terms are generally net

30

days.  The Company has certain fabrication contracts in

one

business unit for which revenue is recognized over time as performance obligations are achieved.  This fabrication business is

not

material to the Company's consolidated results.

Within the metals industry, revenue is frequently disaggregated by products sold. The table below disaggregates the Company’s revenues by segment and products sold.

	Disaggregated Revenue by Products Sold
	For the Three Months Ended March 31, 2018
	Carbon flat products		Specialty metals flat products		Tubular and pipe products		Total
Hot Rolled		36.6%		0.0%		0.0%		36.6%
Plate		12.5%		0.0%		0.0%		12.5%
Cold Rolled		5.2%		0.0%		0.0%		5.2%
Coated		8.2%		0.0%		0.0%		8.2%
Specialty		0.0%		17.4%		0.0%		17.4%
Tube		0.0%		0.0%		18.4%		18.4%
Other		1.7%		0.0%		0.0%		1.7%
Total		64.2%		17.4%		18.4%		100.0%

XML

Note 3 - Accounts Receivable

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Financing Receivables [Text Block]

3. Accounts Receivable :

Accounts receivable are presented net of allowances for doubtful accounts and unissued credits of

$3.1

million and

$2.8

million as of

March 31, 2018

and

December 31, 2017,

respectively. The allowance for doubtful accounts is maintained at a level considered appropriate based on historical experience and specific customer collection issues that have been identified. Estimations are based upon a calculated percentage of accounts receivable, which remains fairly level from year to year, and judgments about the probable effects of economic conditions on certain customers, which can fluctuate significantly from year to year. The Company cannot guarantee that the rate of future credit losses will be similar to past experience. The Company considers all available information when assessing the adequacy of its allowance for doubtful accounts and unissued credits each quarter.

XML

Note 4 - Inventories

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Inventory Disclosure [Text Block]

4. I nventories:

Inventories consisted of the following:

	Inventory as of
(in thousands)	March 31, 2018		December 31, 2017
Unprocessed	$	264,837	$	225,187
Processed and finished		54,187		50,120
Totals	$	319,024	$	275,307

The Company values certain of its tubular and pipe products inventory at the last-in,

first

-out (LIFO) method. At

March 31, 2018

and

December 31, 2017,

approximately

$51.1

million, or

16.0%

of consolidated inventory, and

$48.1

million, or

17.5%

of consolidated inventory, respectively, was reported under the LIFO method of accounting. The cost of the remainder of the tubular and pipe products inventory is determined using a weighted average rolling

first

-in,

first

-out (FIFO) method.

During the

three

months ended

March 31, 2018,

the Company recorded

$0.5

million of LIFO expense as the current projections anticipate increased pricing and volume of LIFO inventory for the remainder of the year. During the

three

months ended

March 31, 2017,

the Company recorded

$0.4

million of LIFO expense.

If the FIFO method had been in use, inventories would have been

$4.8

million and

$5.3

million lower than reported at

March 31, 2018

and

December 31, 2017,

respectively.

XML

Note 5 - Debt

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

5. Debt :

The Company’s debt is comprised of the following components:

	As of
	March 31,		December 31,
(in thousands)	2018		2017
Asset-based revolving credit facility due December 8, 2022	$	248,955	$	196,235
Industrial revenue bond due April 1, 2018		-		930
Total debt		248,955		197,165
Less current amount		-		(930	)
Total long-term debt	$	248,955	$	196,235

The Company’s asset-based credit facility (the ABL Credit Facility) is collateralized by the Company’s accounts receivable inventory and personal property. The ABL Credit Facility consists of (i) a revolving credit facility of

$370

million, including a

$20

million sub-limit for letters of credit and (ii) a

first

in, last out revolving credit facility of up to

$30

million. Under the terms of the ABL Credit Facility, the Company

may

request additional commitments in the aggregate principal amount of up to

$200

million to the extent that existing or new lenders agree to provide such additional commitments. Revolver borrowings are limited to the lesser of a borrowing base, comprised of eligible receivables and inventories, or

$400

million in the aggregate. The ABL Credit Facility matures on

December 8, 2022.

The ABL Credit Facility contains customary representations and warranties and certain covenants that limit the ability of the Company to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt; (iii) make investments; (iv) sell assets; (v) enter into agreements that restrict distributions or other payments from restricted subsidiaries to the Company; (vi) incur liens securing indebtedness; (vii) consolidate, merge or transfer all or substantially all of their assets; and (viii) engage in transactions with affiliates. In addition, the ABL Credit Facility contains a financial covenant which requires (i) if any commitments or obligations are outstanding and the Company’s availability is less than the greater of

$30

million or

10.0%

of the aggregate amount of revolver commitments (

$40.0

million at

March 31, 2018)

or

10.0%

of the aggregate borrowing base (

$40.0

million at

March 31, 2018)

then the Company must maintain a ratio of Earnings before Interest, Taxes, Depreciation and Amortization (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.

The Company has the option to borrow under its revolver based on the agent’s base rate plus a premium ranging from

0.00%

to

0.25%

or the London Interbank Offered Rate (LIBOR) plus a premium ranging from

1.25%

to

2.75%.

As of

March 31, 2018,

the Company was in compliance with its covenants and had approximately

$148

million of availability under the ABL Credit Facility.

As of

March 31, 2018,

$1.8

million of bank financing fees were included in “Prepaid expenses and other” and “Other long-term assets” on the accompanying Consolidated Balance Sheets. The financing fees are being amortized over the

five

-year term of the ABL Credit Facility and are included in “Interest and other expense on debt” on the accompanying Consolidated Statements of Comprehensive Income.

As part of the CTI acquisition in

July 2011,

the Company assumed approximately

$5.9

million of Industrial Revenue Bond (IRB) indebtedness. On

March 1, 2018,

the Company made the final

$0.9

million payment on the IRB and the letter of credit and fixed interest rate swap associated with the IRB were terminated.

XML

Note 6 - Derivative Instruments

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

6. Derivative Instruments :

Metals

swaps

and embedded customer derivatives

During

2018

and

2017,

the Company entered into nickel swaps indexed to the London Metal Exchange (LME) price of nickel with

third

-party brokers. The nickel swaps are accounted for as derivatives for accounting purposes. The Company entered into them to mitigate its customers’ risk of volatility in the price of metals. The outstanding nickel swaps mature in

2018.

The swaps are settled with the brokers at maturity. The economic benefit or loss arising from the changes in fair value of the swaps is contractually passed through to the customer. The primary risk associated with the metals swaps is the ability of customers or

third

-party brokers to honor their agreements with the Company related to derivative instruments. If the customer or

third

-party brokers are unable to honor their agreements, the Company’s risk of loss is the fair value of the metals swaps.

These derivatives have

not

been designated as hedging instruments. The periodic changes in fair value of the metals and embedded customer derivative instruments are included in “Cost of materials sold” in the Consolidated Statements of Comprehensive Income. The Company recognizes derivative positions with both the customer and the

third

party for the derivatives and classifies cash settlement amounts associated with them as part of “Cost of materials sold” in the Consolidated Statements of Comprehensive Income. The cumulative change in fair value of the metals swaps that have

not

yet been settled are included in “Accounts receivable,” and the embedded customer derivatives are included in “Other accrued liabilities” on the Consolidated Balance Sheets at

March 31, 2018

and

December 31, 2017.

Interest rate swap

CTI entered into an interest rate swap to reduce the impact of changes in interest rates on its IRB. The swap agreement was terminated in

March 2018

upon repayment of the IRB. The periodic changes in fair value of the interest rate swap and cash settlement amounts associated with the interest rate swap are included in “Interest and other expense on debt” in the Consolidated Statements of Comprehensive Income.

There was

no

net impact from the nickel swaps or embedded customer derivative agreements to the Company’s Consolidated Statements of Comprehensive Income for the

three

months ended

March 31, 2018

and

2017.

The table below shows the total impact to the Company’s Consolidated Statements of Comprehensive Income through net income of the derivatives for the

three

months ended

March 31, 2018

and

2017.

	Net Gain (Loss) Recognized
	For the Three Months Ended March 31,
(in thousands)	2018			2017
Interest rate swap (CTI)	$	(5	)	$	(13	)
Metals swaps		106			14
Embedded customer derivatives		(106	)		(14	)
Total loss	$	(5	)	$	(13	)

XML

Note 7 - Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Fair Value Disclosures [Text Block]

7. Fair Value of Financial Instruments :

During the

three

months ended

March 31, 2018,

there were

no

transfers of financial assets between Levels

1,

2

or

3

fair value measurements. There have been

no

changes in the methodologies used at

March 31, 2018

since

December 

31,

2017.

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value as of

March 31, 2018

and

December 

31,

2017:

Metals

swaps and embedded customer derivatives

– Determined by using Level

2

inputs that include the price of nickel indexed to the LME. The fair value is determined based on quoted market prices and reflects the estimated amounts the Company would pay or receive to terminate the nickel swaps.

Interest rate swap

s

– Based on the present value of the expected future cash flows, considering the risks involved, and using discount rates appropriate for the maturity date. Market observable Level

2

inputs are used to determine the present value of future cash flows.

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company:

	Value of Items Recorded at Fair Value
	As of March 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Metal swaps	$	-	$	278	$	-	$	278
Total assets at fair value	$	-	$	278	$	-	$	278
Liabilities:
Embedded customer derivative	$	-	$	278	$	-	$	278
Total liabilities recorded at fair value	$	-	$	278	$	-	$	278

	Value of Items Not Recorded at Fair Value
	As of March 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Liabilities:
Revolver		-		248,955		-		248,955
Total liabilities not recorded at fair value	$	-	$	248,955	$	-	$	248,955

The value of the items

not

recorded at fair value represent the carrying value of the liabilities.

	Value of Items Recorded at Fair Value
	As of December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Metals swaps	$	-	$	382	$	-	$	382
Total assets at fair value	$	-	$	382	$	-	$	382
Liabilities:
Embedded customer derivatives	$	-	$	382	$	-	$	382
Interest rate swap (CTI)		-		5		-		5
Total liabilities recorded at fair value	$	-	$	387	$	-	$	387

	Value of Items Not Recorded at Fair Value
	As of December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total
Liabilities:
IRB	$	930	$	-	$	-	$	930
Revolver		-		196,235		-		196,235
Total liabilities not recorded at fair value	$	930	$	196,235	$	-	$	197,165

The value of the items

not

recorded at fair value represent the carrying value of the liabilities.

The fair value of the IRB was determined using Level

1

inputs. The carrying value and the fair value of the IRB that qualified as financial instruments were

$0.9

million at

December 31, 2017.

The fair value of the revolver is determined using Level

2

inputs. The Level

2

fair value of the Company's long-term debt was estimated using prevailing market interest rates on debt with similar credit worthiness, terms and maturities.

XML

Note 8 - Equity Plans

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

8. Equity Plans :

Restricted Stock Un

its and Performance Share Units

Pursuant to the Amended and Restated Olympic Steel

2007

Omnibus Incentive Plan (the Plan), the Company

may

grant stock options, stock appreciation rights, restricted shares, restricted share units, performance shares, and other stock- and cash-based awards to employees and Directors of, and consultants to, the Company and its affiliates. Since adoption of the Plan,

1,000,000

shares of common stock have been authorized for equity grants.

On

March 13, 2018

and

March 13, 2017,

the Compensation Committee of the Company’s Board of Directors approved the grant of

3,496

and

3,501

restricted stock units (RSUs), respectively, to each non-employee Director. Subject to the terms of the Plan and the RSU agreement, the RSUs vest after

one

year of service (from the date of grant). The RSUs are

not

converted into shares of common stock until the director either resigns or is terminated from the Board of Directors. The fair value of each RSU was estimated to be the closing price of the Company’s common stock on the date of the grant, which was

$22.88

and

$19.99

on

March 13, 2018

and

March 31, 2017,

respectively.

On

July 1, 2016,

the Company created a new Senior Management Stock Incentive Program (the Plan) for certain participants that operates under the Plan. Under the Plan, each participant is awarded RSUs with a dollar value equal to

10%

of the participant’s base salary, up to an annual maximum of

$17,500.

The RSUs have a

five

-year vesting period and the RSUs will convert into the right to receive shares of common stock upon a participant’s retirement, or earlier upon the participant’s death or disability or upon a change in control of the Company. The carbon and specialty metals flat products segments adopted the Plan on

July 1, 2016

and the tubular and pipe products segment adopted the Plan on

January 1, 2017.

Stock-based compensation expense recognized on RSUs for the

three

months ended

March 31, 2018

and

2017,

respectively, is summarized in the following table:

	For the Three Months Ended
	March 31,
(in thousands, except per share data)	2018		2017
RSU expense before taxes	$	138	$	120
RSU expense after taxes	$	102	$	73

All pre-tax charges related to RSUs were included in the caption “Administrative and general” on the accompanying Consolidated Statements of Comprehensive Income.

The following table summarizes the activity related to RSUs for the

three

months ended

March 31, 2018:

	Number of			Weighted Average
	Shares			Granted Price
Outstanding at December 31, 2017		469,068		$	20.11
Granted		55,532			22.88
Converted into shares		(9,178	)		17.08
Forfeited		-			-
Outstanding at March 31, 2018		515,422		$	20.46
Vested at March 31, 2018		481,862		$	20.52

XML

Note 9 - Income Taxes

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

9. Income Taxes :

For the

three

months ended

March 31, 2018,

the Company recorded an income tax provision of

$2.7

million or

26.0%,

compared to an income tax provision of

$1.7

million, or

18.1%,

for the

three

months ended

March 31, 2017.

On

December 22, 2017,

the President of the United States signed into law the Tax Cuts and Jobs Act (Tax Act). The Tax Act, among other things, lowered the U.S. corporate income tax rate from

35%

to

21%

effective

January 1, 2018.

While the Company has substantially completed its analysis of the income tax effects of the Tax Act and recorded a reasonable estimate of such effects, certain items related to the Tax Act

may

differ, possibly materially, due to further refinement of the calculations, changes in interpretations and assumptions made, additional guidance that

may

be issued by the U.S. government, and actions related to accounting policy decisions the Company

may

make as a result of the Tax Act. The Company will complete its analysis of these items over a

one

-year measurement period ending

December 22, 2018,

and any adjustment provided by the SEC under SAB

118

during this measurement period will be included in net earnings from continuing operations as an adjustment to income tax expense (benefit) in the reporting period when such adjustments are determined.

In the

first

quarter of

2017,

the Company made an out-of-period adjustment to correct and record previously unrecognized deferred tax assets, and the associated tax benefit, related to a portion of the SERP that had previously been considered non-deductible under Section

162

(m) limitations in prior years. Due to the mandatory waiting period of

six

months prior to any SERP payment distribution, in

2017

the Company determined that the Section

162

(m) non-deductibility limitations did

not

apply. The adjustment, which had accumulated since the inception of the SERP in

2005,

resulted in an increase to after-tax income of

$1.9

million in

2017.

  The Company determined that this adjustment was

not

material to its current or prior period consolidated financial statements.

The tax provision or benefit for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items that are taken into account in the relevant period. Each quarter the Company updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, the Company makes a cumulative adjustment.

The quarterly tax provision and the quarterly estimate of the annual effective tax rate is subject to significant volatility due to several factors, including variability in accurately predicting the Company’s pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, changes in law and relative changes of expenses or losses for which tax benefits are

not

recognized. Additionally, the effective tax rate can be more or less volatile based on the amount of pre-tax income. For example, the impact of discrete items and non-deductible expenses on the effective tax rate is greater when the pre-tax income is lower.

XML

Note 10 - Shares Outstanding and Earnings Per Share

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Earnings Per Share [Text Block]

10. Shares Outstanding and Earnings Per Share :

Earnings per share have been calculated based on the weighted average number of shares outstanding as set forth below:

	For the Three Months Ended
	March 31,
(in thousands, except per share data)	2018		2017
Weighted average basic shares outstanding		11,418		11,369
Assumed exercise of stock options and issuance of stock awards		-		-
Weighted average diluted shares outstanding		11,418		11,369
Net income	$	7,629	$	7,699
Basic earnings per share	$	0.67	$	0.68
Diluted earnings per share	$	0.67	$	0.68
Anti-dilutive securities outstanding		65		42

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Note 11 - Segment Information

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

11. Segment Information :

The Company follows the accounting guidance that requires the utilization of a “management approach” to define and report the financial results of operating segments. The management approach defines operating segments along the lines used by the Company’s chief operating decision maker (CODM) to assess performance and make operating and resource allocation decisions. The CODM evaluates performance and allocates resources based primarily on operating income (loss). The operating segments are based primarily on internal management reporting.

The Company operates in

three

reportable segments; carbon flat products, specialty metals flat products, and tubular and pipe products. The flat products segments’ assets and resources are shared by the carbon and specialty metals 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. Due to the shared assets and resources, certain of the flat products segment expenses are allocated between the carbon flat products segment and the specialty metals flat products segment based upon an established allocation methodology. Through its carbon flat products segment, the Company sells and distributes large volumes of processed carbon and coated flat-rolled sheet, coil and plate products. Through its specialty metals flat products segment, the Company sells and distributes processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. Through its tubular and pipe products segment, the Company distributes metal tubing, pipe, bar, valve and fittings and fabricates pressure parts supplied to various industrial markets.

Corporate expenses are reported as a separate line item for segment reporting purposes. Corporate expenses include the unallocated expenses related to managing the entire Company (i.e., all

three

segments), including compensation for certain personnel, expenses related to being a publicly traded entity such as board of directors’ expenses, audit expenses, and various other professional fees.

The following table provides financial information by segment and reconciles the Company’s operating income by segment to the consolidated income before income taxes for the

three

months ended

March 31, 2018

and

2017.

	For the Three Months Ended
	March 31,
(in thousands)	2018			2017
Net sales
Carbon flat products	$	240,894		$	216,916
Specialty metals flat products		65,529			57,955
Tubular and pipe products		69,175			60,022
Total net sales	$	375,598		$	334,893
Depreciation and amortization
Carbon flat products	$	2,560		$	2,889
Specialty metals flat products		204			226
Tubular and pipe products		1,456			1,396
Corporate		26			25
Total depreciation and amortization	$	4,246		$	4,536
Operating income (loss)
Carbon flat products	$	8,106		$	7,375
Specialty metals flat products		3,011			3,985
Tubular and pipe products		4,267			2,487
Corporate expenses		(3,039	)		(2,796	)
Total operating income	$	12,345		$	11,051
Other income (loss), net		(46	)		(26	)
Income before interest and income taxes		12,299			11,025
Interest and other expense on debt		1,986			1,626
Income before income taxes	$	10,313		$	9,399

	For the Three Months Ended
	March 31,
(in thousands)	2018		2017
Capital expenditures
Flat products segments	$	4,944	$	1,405
Tubular and pipe products		2,710		661
Corporate		89		-
Total capital expenditures	$	7,743	$	2,066

	As of
	March 31,		December 31,
(in thouands)	2018		2017
Assets
Flat products segments	$	490,622	$	409,116
Tubular and pipe products		199,938		194,787
Corporate		319		255
Total assets	$	690,879	$	604,158

There were

no

material revenue transactions between the carbon flat products, specialty metals products, and tubular and pipe products segments.

The Company sells certain products internationally, primarily in Canada, Mexico and Dominican Republic. International sales are immaterial to the consolidated financial results and to the individual segments’ results.

XML

Note 12 - Subsequent Events

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Subsequent Events [Text Block]

12. Subsequent Event :

On

April 2, 2018,

the Company acquired all of the net assets of Berlin Metals, LLC, based in Hammond, Indiana. Berlin Metals was founded in

1967

and is

one

of the largest North American service centers processing and distributing prime tin mill products and stainless steel strip in slit coil form. Berlin Metals is also a supplier of galvanized, light gauge cold rolled sheet and strip and other coated metals in coil forms, to customers in the building products, automotive and specialized industrial markets.

The acquisition will be accounted for as a business combination and the assets valued at fair market value. The acquisition is

not

considered significant and Berlin Metals’ results will be included in the Company’s specialty metals flat products segment in the Company’s

second

quarter of

2018

financial results. The acquisition is expected to be accretive to

2018

earnings. Upon the acquisition, the Company entered into an amendment to include the eligible assets of Berlin Metals in its ABL Credit Facility.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Impact of Recently Issued Accounting Pronouncements

In

August 2017,

the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)

No

2017

-

12,

“Derivatives and Hedging”. This ASU aligns an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the ASU expands and refines hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU also makes certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. This ASU is the final version of proposed ASU

2016

-

310

,

“Derivatives and Hedging (Topic

815

): Targeted Improvements to Accounting for Hedging Activities”, which has been deleted. For public business entities, this ASU is effective for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after

December 15, 2019,

and interim periods within fiscal years beginning after

December 15, 2020.

Early application is permitted in any interim period after issuance of the ASU. All transition requirements and elections should be applied to hedging relationships existing (that is, hedging relationships in which the hedging instrument has

not

expired, been sold, terminated, or exercised or the entity has

not

removed the designation of the hedging relationship) on the date of adoption. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption. The adoption of this ASU is

not

expected to materially impact the Company’s consolidated financial statements.

In

May 2017,

the FASB issued ASU

No

2017

-

09,

“Compensation – Stock Compensation (Topic

718

)”. This ASU provides clarity and reduces both (

1

) diversity in practice and (

2

) cost and complexity when applying the guidance in Topic

718,

Compensation – Stock Compensation, to a change to the terms or conditions of a share-based payment award. The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic

718.

This ASU is the final version of proposed ASU

2016

-

360,

“Compensation—Stock Compensation (Topic

718

)—Scope of Modification Accounting,” which has been deleted. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after

December 15, 2017.

The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The adoption of this ASU did

not

materially impact the Company’s consolidated financial statements.

In

August 2016,

the FASB issued ASU

No

2016

-

15,

“Classification of certain cash receipts and cash payments”. This ASU addresses the following

eight

specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of

zero

-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The guidance will be effective for annual reporting periods beginning after

December 15, 2017,

and interim periods within those fiscal years with early adoption permitted. The adoption of this ASU did

not

materially impact the Company’s consolidated financial statements.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

“Leases,” which specifies the accounting for leases. The objective is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease. This ASU introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The guidance will be effective for annual reporting periods beginning after

December 15, 2018

and interim periods within those fiscal years with early adoption permitted. The Company is in the process of evaluating the impact of the future adoption of this standard on the Company’s consolidated financial statements.

In

August 2015,

the FASB issued ASU

2015

-

14,

“Revenue from Contracts with Customers (Topic

606

): Deferral of the Effective Date,” which deferred the effective date of ASU

2014

-

09

for all entities by

one

year. This update is effective for public business entities for annual reporting periods beginning after

December 15, 2017,

including interim periods within those reporting periods. Earlier application was permitted only as of annual reporting periods beginning after

December 15, 2016,

including interim reporting periods within that reporting period. ASU

2014

-

09

was to become effective for us beginning

January 2017;

however, ASU

2015

-

14

deferred our effective date until

January 2018,

which is when we adopted this standard. The ASU permits

two

methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). The ASU also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required for customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract.  The Company completed the process of evaluating the effect of the adoption and determined there were

no

material changes required to the reported revenues as a result of the adoption. Substantially all of the revenue arrangements consist of a single performance obligation to transfer goods. Based on the evaluation process and review of the contracts with customers, the timing and amount of revenue recognized based on ASU

2015

-

14

is consistent with the revenue recognition policy under previous guidance. The adoption of this ASU on

January 1, 2018

using the modified retrospective approach applied to those contracts which were

not

completed as of

January 1, 2018

did

not

have a material impact on the Company’s consolidated financial statements.  Comparative information has

not

been restated and continues to be reported under the accounting standard in effect for those periods.  The impact of adopting ASU

606

was

not

material to the Company’s consolidated financial statements as of and for the

three

months ended

March 31, 2018. 

See note

2.

XML

Note 2 - Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Disaggregated Revenue by Products Sold
	For the Three Months Ended March 31, 2018
	Carbon flat products		Specialty metals flat products		Tubular and pipe products		Total
Hot Rolled		36.6%		0.0%		0.0%		36.6%
Plate		12.5%		0.0%		0.0%		12.5%
Cold Rolled		5.2%		0.0%		0.0%		5.2%
Coated		8.2%		0.0%		0.0%		8.2%
Specialty		0.0%		17.4%		0.0%		17.4%
Tube		0.0%		0.0%		18.4%		18.4%
Other		1.7%		0.0%		0.0%		1.7%
Total		64.2%		17.4%		18.4%		100.0%

XML

Note 4 - Inventories (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	Inventory as of
(in thousands)	March 31, 2018		December 31, 2017
Unprocessed	$	264,837	$	225,187
Processed and finished		54,187		50,120
Totals	$	319,024	$	275,307

XML

Note 5 - Debt (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Debt [Table Text Block]

	As of
	March 31,		December 31,
(in thousands)	2018		2017
Asset-based revolving credit facility due December 8, 2022	$	248,955	$	196,235
Industrial revenue bond due April 1, 2018		-		930
Total debt		248,955		197,165
Less current amount		-		(930	)
Total long-term debt	$	248,955	$	196,235

XML

Note 6 - Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) [Table Text Block]

	Net Gain (Loss) Recognized
	For the Three Months Ended March 31,
(in thousands)	2018			2017
Interest rate swap (CTI)	$	(5	)	$	(13	)
Metals swaps		106			14
Embedded customer derivatives		(106	)		(14	)
Total loss	$	(5	)	$	(13	)

XML

Note 7 - Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	Value of Items Recorded at Fair Value
	As of March 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Metal swaps	$	-	$	278	$	-	$	278
Total assets at fair value	$	-	$	278	$	-	$	278
Liabilities:
Embedded customer derivative	$	-	$	278	$	-	$	278
Total liabilities recorded at fair value	$	-	$	278	$	-	$	278

	Value of Items Recorded at Fair Value
	As of December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Metals swaps	$	-	$	382	$	-	$	382
Total assets at fair value	$	-	$	382	$	-	$	382
Liabilities:
Embedded customer derivatives	$	-	$	382	$	-	$	382
Interest rate swap (CTI)		-		5		-		5
Total liabilities recorded at fair value	$	-	$	387	$	-	$	387

Fair Value, by Balance Sheet Grouping [Table Text Block]

	Value of Items Not Recorded at Fair Value
	As of March 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Liabilities:
Revolver		-		248,955		-		248,955
Total liabilities not recorded at fair value	$	-	$	248,955	$	-	$	248,955

	Value of Items Not Recorded at Fair Value
	As of December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total
Liabilities:
IRB	$	930	$	-	$	-	$	930
Revolver		-		196,235		-		196,235
Total liabilities not recorded at fair value	$	930	$	196,235	$	-	$	197,165

XML

Note 8 - Equity Plans (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

	For the Three Months Ended
	March 31,
(in thousands, except per share data)	2018		2017
RSU expense before taxes	$	138	$	120
RSU expense after taxes	$	102	$	73

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

	Number of			Weighted Average
	Shares			Granted Price
Outstanding at December 31, 2017		469,068		$	20.11
Granted		55,532			22.88
Converted into shares		(9,178	)		17.08
Forfeited		-			-
Outstanding at March 31, 2018		515,422		$	20.46
Vested at March 31, 2018		481,862		$	20.52

XML

Note 10 - Shares Outstanding and Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the Three Months Ended
	March 31,
(in thousands, except per share data)	2018		2017
Weighted average basic shares outstanding		11,418		11,369
Assumed exercise of stock options and issuance of stock awards		-		-
Weighted average diluted shares outstanding		11,418		11,369
Net income	$	7,629	$	7,699
Basic earnings per share	$	0.67	$	0.68
Diluted earnings per share	$	0.67	$	0.68
Anti-dilutive securities outstanding		65		42

XML

Note 11 - Segment Information (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Reconciliation of Revenue from Segments to Consolidated [Table Text Block]

	For the Three Months Ended
	March 31,
(in thousands)	2018			2017
Net sales
Carbon flat products	$	240,894		$	216,916
Specialty metals flat products		65,529			57,955
Tubular and pipe products		69,175			60,022
Total net sales	$	375,598		$	334,893
Depreciation and amortization
Carbon flat products	$	2,560		$	2,889
Specialty metals flat products		204			226
Tubular and pipe products		1,456			1,396
Corporate		26			25
Total depreciation and amortization	$	4,246		$	4,536
Operating income (loss)
Carbon flat products	$	8,106		$	7,375
Specialty metals flat products		3,011			3,985
Tubular and pipe products		4,267			2,487
Corporate expenses		(3,039	)		(2,796	)
Total operating income	$	12,345		$	11,051
Other income (loss), net		(46	)		(26	)
Income before interest and income taxes		12,299			11,025
Interest and other expense on debt		1,986			1,626
Income before income taxes	$	10,313		$	9,399

Reconciliation of Other Significant Reconciling Items from Segments to Consolidated [Table Text Block]

	For the Three Months Ended
	March 31,
(in thousands)	2018		2017
Capital expenditures
Flat products segments	$	4,944	$	1,405
Tubular and pipe products		2,710		661
Corporate		89		-
Total capital expenditures	$	7,743	$	2,066

	As of
	March 31,		December 31,
(in thouands)	2018		2017
Assets
Flat products segments	$	490,622	$	409,116
Tubular and pipe products		199,938		194,787
Corporate		319		255
Total assets	$	690,879	$	604,158

XML

Note 1 - Basis of Presentation (Details Textual)	3 Months Ended
	Mar. 31, 2018
Number of Reportable Segments	3

XML

Note 2 - Revenue Recognition - Disaggregation of Revenues, Percentage (Details)	3 Months Ended
	Mar. 31, 2018
Percentage of net sales	100.00%
Hot Rolled Products [Member]
Percentage of net sales	36.60%
Plate Products [Member]
Percentage of net sales	12.50%
Cold Rolled Products [Member]
Percentage of net sales	5.20%
Coated Products [Member]
Percentage of net sales	8.20%
Specialty [Member]
Percentage of net sales	17.40%
Tube Products [Member]
Percentage of net sales	18.40%
Product and Service, Other [Member]
Percentage of net sales	1.70%
Carbon Flat Products [Member]
Percentage of net sales	64.20%
Carbon Flat Products [Member] | Hot Rolled Products [Member]
Percentage of net sales	36.60%
Carbon Flat Products [Member] | Plate Products [Member]
Percentage of net sales	12.50%
Carbon Flat Products [Member] | Cold Rolled Products [Member]
Percentage of net sales	5.20%
Carbon Flat Products [Member] | Coated Products [Member]
Percentage of net sales	8.20%
Carbon Flat Products [Member] | Specialty [Member]
Percentage of net sales	0.00%
Carbon Flat Products [Member] | Tube Products [Member]
Percentage of net sales	0.00%
Carbon Flat Products [Member] | Product and Service, Other [Member]
Percentage of net sales	1.70%
Specialty Metals Flat Products [Member]
Percentage of net sales	17.40%
Specialty Metals Flat Products [Member] | Hot Rolled Products [Member]
Percentage of net sales	0.00%
Specialty Metals Flat Products [Member] | Plate Products [Member]
Percentage of net sales	0.00%
Specialty Metals Flat Products [Member] | Cold Rolled Products [Member]
Percentage of net sales	0.00%
Specialty Metals Flat Products [Member] | Coated Products [Member]
Percentage of net sales	0.00%
Specialty Metals Flat Products [Member] | Specialty [Member]
Percentage of net sales	17.40%
Specialty Metals Flat Products [Member] | Tube Products [Member]
Percentage of net sales	0.00%
Specialty Metals Flat Products [Member] | Product and Service, Other [Member]
Percentage of net sales	0.00%
Tubular and Pipe Products [Member]
Percentage of net sales	18.40%
Tubular and Pipe Products [Member] | Hot Rolled Products [Member]
Percentage of net sales	0.00%
Tubular and Pipe Products [Member] | Plate Products [Member]
Percentage of net sales	0.00%
Tubular and Pipe Products [Member] | Cold Rolled Products [Member]
Percentage of net sales	0.00%
Tubular and Pipe Products [Member] | Coated Products [Member]
Percentage of net sales	0.00%
Tubular and Pipe Products [Member] | Specialty [Member]
Percentage of net sales	0.00%
Tubular and Pipe Products [Member] | Tube Products [Member]
Percentage of net sales	18.40%
Tubular and Pipe Products [Member] | Product and Service, Other [Member]
Percentage of net sales	0.00%

XML

Note 3 - Accounts Receivable (Details Textual) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Allowance for Doubtful Accounts Receivable, Current, Ending Balance	$ 3.1	$ 2.8

XML

Note 4 - Inventories (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
LIFO Inventory Amount	$ 51.1		$ 48.1
Percentage of LIFO Inventory	16.00%		17.50%
Inventory, LIFO Reserve, Period Charge	$ 0.5	$ 0.4
Inventory Difference Using FIFO Basis	$ 4.8		$ 5.3

XML

Note 4 - Inventories - Steel Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Unprocessed	$ 264,837	$ 225,187
Processed and finished	54,187	50,120
Totals	$ 319,024	$ 275,307

XML

Note 5 - Debt (Details Textual) $ in Thousands		3 Months Ended
	Mar. 01, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jul. 31, 2011 USD ($)
Prepaid Expense and Other Assets, Current		$ 5,698	$ 8,333
Industrial Revenue Bonds [Member]
Repayments of Long-term Debt, Total	$ 900
Industrial Revenue Bonds [Member] | Chicago Tube and Iron Company Acquisition [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Long-term Debt				$ 5,900
Amortized Banking Fees [Member]
Prepaid Expense and Other Assets, Current		$ 1,800
ABL Credit Facility [Member]
Debt Instrument, Term		5 years
Asset Based Revolving Credit Facility Due December 8, 2022 [Member] | ABL Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 370,000
Letters of Credit, Maximum Borrowing Capacity		20,000
Maximum First In, Last Out Revolving Credit Facility		30,000
Line of Credit Facility, Additional Commitments, Maximum		200,000
Line of Credit Facility, Current Borrowing Capacity		400,000
Line Of Credit Facility Covenant Terms Monetary		$ 30,000
Line of Credit Facility Covenant Terms Percentage of Revolver Commitments		10.00%
Balance Required for Compliance with Revolver Commitments		$ 40,000
Line of Credit Facility Covenant Terms Percentage of Aggregate Borrowing Base		10.00%
Line of Credit Facility Covenant Terms Aggregate Borrowing Base		$ 40,000
Line of Credit Facility Covenant Terms EBITDA Ratio		1
Line of Credit Facility, Remaining Borrowing Capacity		$ 148,000
Asset Based Revolving Credit Facility Due December 8, 2022 [Member] | ABL Credit Facility [Member] | Minimum [Member] | Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		0.00%
Asset Based Revolving Credit Facility Due December 8, 2022 [Member] | ABL Credit Facility [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		1.25%
Asset Based Revolving Credit Facility Due December 8, 2022 [Member] | ABL Credit Facility [Member] | Maximum [Member] | Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		0.25%
Asset Based Revolving Credit Facility Due December 8, 2022 [Member] | ABL Credit Facility [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		2.75%

XML

Note 5 - Debt - Summary of Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Revolver	$ 248,955	$ 196,235
Total debt	248,955	197,165
Less current amount		(930)
Total long-term debt	248,955	196,235
Asset Based Revolving Credit Facility Due December 8, 2022 [Member]
Revolver	248,955	196,235
Industrial Revenue Bonds [Member]
IRB		$ 930

XML

Note 6 - Derivative Instruments - Impact From Derivatives on Consolidated Statements of Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Derivatives	$ (5)	$ (13)
Interest Rate Swap [Member] | Chicago Tube and Iron Company Acquisition [Member]
Derivatives	(5)	(13)
Metal Swaps [Member]
Derivatives	106	14
Embedded Customer Derivatives [Member]
Derivatives	$ (106)	$ (14)

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Note 7 - Fair Value of Financial Instruments (Details Textual) $ in Millions	Dec. 31, 2017 USD ($)
Industrial Revenue Bonds [Member]
Long-term Debt, Fair Value	$ 0.9

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Note 7 - Fair Value of Financial Instruments - Fair Value Measurements, Recorded (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Derivative assets	$ 278	$ 382
Liabilities:
Embedded customer derivatives	278	382
Total liabilities recorded at fair value	278	387
Assets:
Derivative assets	278	382
Metal Swaps [Member]
Derivative assets	278
Liabilities:
Derivative liabilities		382
Assets:
Derivative liabilities		382
Derivative assets	278
Interest Rate Swap [Member]
Liabilities:
Derivative liabilities		5
Assets:
Derivative liabilities		5
Fair Value, Inputs, Level 1 [Member]
Derivative assets
Liabilities:
Embedded customer derivatives
Total liabilities recorded at fair value
Assets:
Derivative assets
Fair Value, Inputs, Level 1 [Member] | Metal Swaps [Member]
Derivative assets
Liabilities:
Derivative liabilities
Assets:
Derivative liabilities
Derivative assets
Fair Value, Inputs, Level 1 [Member] | Interest Rate Swap [Member]
Liabilities:
Derivative liabilities
Assets:
Derivative liabilities
Fair Value, Inputs, Level 2 [Member]
Derivative assets	278	382
Liabilities:
Embedded customer derivatives	278	382
Total liabilities recorded at fair value	278	387
Assets:
Derivative assets	278	382
Fair Value, Inputs, Level 2 [Member] | Metal Swaps [Member]
Derivative assets	278
Liabilities:
Derivative liabilities		382
Assets:
Derivative liabilities		382
Derivative assets	278
Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member]
Liabilities:
Derivative liabilities		5
Assets:
Derivative liabilities		5
Fair Value, Inputs, Level 3 [Member]
Derivative assets
Liabilities:
Embedded customer derivatives
Total liabilities recorded at fair value
Assets:
Derivative assets
Fair Value, Inputs, Level 3 [Member] | Metal Swaps [Member]
Derivative assets
Liabilities:
Derivative liabilities
Assets:
Derivative liabilities
Derivative assets
Fair Value, Inputs, Level 3 [Member] | Interest Rate Swap [Member]
Liabilities:
Derivative liabilities
Assets:
Derivative liabilities

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Note 7 - Fair Value of Financial Instruments - Fair Value Measurements, Not Recorded (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Liabilities
Revolver	$ 248,955	$ 196,235
Carrying Value [Member]
Liabilities
Total liabilities not recorded at fair value	248,955	197,165
Industrial Revenue Bonds [Member]
Liabilities
IRB		930
Revolver [Member]
Liabilities
Revolver	248,955	196,235
Fair Value, Inputs, Level 1 [Member] | Carrying Value [Member]
Liabilities
Total liabilities not recorded at fair value		930
Fair Value, Inputs, Level 1 [Member] | Industrial Revenue Bonds [Member]
Liabilities
IRB		930
Fair Value, Inputs, Level 1 [Member] | Revolver [Member]
Liabilities
Revolver
Fair Value, Inputs, Level 2 [Member] | Carrying Value [Member]
Liabilities
Total liabilities not recorded at fair value	248,955	196,235
Fair Value, Inputs, Level 2 [Member] | Industrial Revenue Bonds [Member]
Liabilities
IRB
Fair Value, Inputs, Level 2 [Member] | Revolver [Member]
Liabilities
Revolver	248,955	196,235
Fair Value, Inputs, Level 3 [Member] | Carrying Value [Member]
Liabilities
Total liabilities not recorded at fair value
Fair Value, Inputs, Level 3 [Member] | Industrial Revenue Bonds [Member]
Liabilities
IRB
Fair Value, Inputs, Level 3 [Member] | Revolver [Member]
Liabilities
Revolver

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Note 8 - Equity Plans (Details Textual) - USD ($)				3 Months Ended
	Mar. 13, 2018	Mar. 13, 2017	Jul. 01, 2016	Mar. 31, 2018	Mar. 31, 2017
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				55,532
Restricted Stock Units (RSUs) [Member] | Senior Management Stock Incentive Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			5 years
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Participant's Base Salary			10.00%
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Amount Per Employee			$ 17,500
Restricted Stock Units (RSUs) [Member] | Non-Employee Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	3,496	3,501
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				1 year
Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant				1,000,000
Share Price	$ 22.88				$ 19.99

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Note 8 - Equity Plans - Stock-based Compensation Expense Recognized on Restricted Stock Units (Details) - Restricted Stock Units (RSUs) [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
RSU expense before taxes	$ 138	$ 120
RSU expense after taxes	$ 102	$ 73

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Note 8 - Equity Plans - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member]	3 Months Ended
	Mar. 31, 2018 $ / shares shares
Outstanding, beginning balance (in shares) | shares	469,068
Outstanding, beginning balance (in dollars per share) | $ / shares	$ 20.11
Granted (in shares) | shares	55,532
Granted (in dollars per share) | $ / shares	$ 22.88
Converted into shares (in shares) | shares	(9,178)
Converted into shares (in dollars per share) | $ / shares	$ 17.08
Forfeited (in shares) | shares
Forfeited (in dollars per share) | $ / shares
Outstanding, ending balance (in shares) | shares	515,422
Outstanding, ending balance (in dollars per share) | $ / shares	$ 20.46
Vested (in shares) | shares	481,862
Vested (in dollars per share) | $ / shares	$ 20.52

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Note 9 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Income Tax Expense (Benefit), Total	$ 2,684	$ 1,700
Effective Income Tax Rate Reconciliation, Percent, Total	26.00%	18.10%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%		35.00%
Restatement Adjustment [Member]
Income Tax Expense (Benefit), Total			$ (1,900)

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Note 10 - Shares Outstanding and Earnings Per Share - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Weighted average basic shares outstanding (in shares)	11,418	11,369
Assumed exercise of stock options and issuance of stock awards (in shares)
Weighted average diluted shares outstanding (in shares)	11,418	11,369
Net income	$ 7,629	$ 7,699
Basic earnings per share (in dollars per share)	$ 0.67	$ 0.68
Diluted earnings per share (in dollars per share)	$ 0.67	$ 0.68
Anti-dilutive securities outstanding (in shares)	65	42

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Note 11 - Segment Information (Details Textual)	3 Months Ended
	Mar. 31, 2018
Number of Reportable Segments	3

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Note 11 - Segment Information - Segment Reporting Information by Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net sales:
Net sales	$ 375,598	$ 334,893
Depreciation and amortization:
Depreciation and amortization	4,246	4,536
Operating income (loss):
Operating income	12,345	11,051
Other income (loss), net	(46)	(26)
Income before interest and income taxes	12,299	11,025
Interest and other expense on debt	1,986	1,626
Income before income taxes	10,313	9,399
Carbon Flat Products [Member]
Net sales:
Net sales	240,894	216,916
Depreciation and amortization:
Depreciation and amortization	2,560	2,889
Operating income (loss):
Operating income	8,106	7,375
Specialty Metals Flat Products [Member]
Net sales:
Net sales	65,529	57,955
Depreciation and amortization:
Depreciation and amortization	204	226
Operating income (loss):
Operating income	3,011	3,985
Tubular and Pipe Products [Member]
Net sales:
Net sales	69,175	60,022
Depreciation and amortization:
Depreciation and amortization	1,456	1,396
Operating income (loss):
Operating income	4,267	2,487
Corporate Segment [Member]
Depreciation and amortization:
Depreciation and amortization	26	25
Operating income (loss):
Operating income	$ (3,039)	$ (2,796)

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Note 11 - Segment Information - Segment Reporting Information by Capital Expenditures (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Capital expenditures:
Capital expenditures	$ 7,743	$ 2,066
Assets
Total assets	690,879	604,158	$ 604,158
Flat Products Segment [Member]
Capital expenditures:
Capital expenditures	4,944	1,405
Assets
Total assets	490,622	409,116
Tubular and Pipe Products [Member]
Capital expenditures:
Capital expenditures	2,710	661
Assets
Total assets	199,938	194,787
Corporate Segment [Member]
Capital expenditures:
Capital expenditures	89
Assets
Total assets	$ 319	$ 255