Tariffs, M&A, and Market Share: Unpacking Contradictions in the Latest Fabrication Earnings Call

Sales and Volume Trends:
- Olympic Steel reported sales of $496 million in Q2 2025, with flat-rolled shipping volumes for the first half of 2025 remaining slightly ahead of the first half of 2024 despite an overall industry contraction.
- The sequential volume pullback in Q2 was due to customer buy-ahead activity in response to initial steel and aluminum tariffs and potential reciprocal tariffs.

Earnings and Profitability:
- The company reported a net income of $5.2 million in Q2 2025, with adjusted EBITDA increasing by 26% sequentially to $20.3 million.
- Improved margins in the flat-rolled products segment and steadiness in end products businesses contributed to the profitability despite falling industry shipping volumes and pricing.

Tariff Impact and Market Uncertainty:
- The company has been navigating uncertainties due to tariffs impacting the metals industry and its customers.
- Despite these challenges, Olympic Steel's strategies and disciplined approach have resulted in solid performance through diversification into higher-value products and expanded fabricating capabilities.

Capital Expenditure and Acquisitions:
- Olympic Steel's 2025 CapEx plan includes $35 million in spending, focusing on organic growth opportunities such as new processing and automation equipment.
- The company completed 8 acquisitions in the last 7 years, with the integration of MetalWorks being seamless and accretive to earnings.

Outlook and Tax Legislation:
- The company expects the environment to remain challenging in the second half of 2025 but sees positive trends such as the resolution of reciprocal tariffs and new tax legislation.
- The new tax legislation, including bonus depreciation, is expected to benefit the company's customer base and help drive demand for the steel industry.