2022 Annual Report About the Company Olympic Steel is a leading metals servirr ce center that operates in three reportable segments: Specialty Metals Flat Products, Carbon Flat Products, and Tubular and Pipe Products. We provide metals processing and distribution servirr ces fof r a wide range of customers. Our Specialty Metals Flat Products segment’s fof cus is on the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and coil products, flat bar products, prime tin mill products and fabricated parts. Through the acquisition of Shaw Stainless & Alloy, Inc. (“Shaw”), on October 1, 2021, and Action Stainless & Alloys, Inc. (“Action Stainless”), on December 14, 2020, our Specialty Metals Flat Products segment expanded its geographic foff otprint and enhanced its product offff erings in stainless steel and aluminum plate, sheet, angles, rounds, flat bar, tubing and pipe. Shaw also manufactures and distributes stainless steel bollards and water treatment systems. Action Stainless offff ers a range of processing capabilities, including plasma, laser and waterjr et cutting and computer numerical control, or CNC machining. Our Carbon Flat Products segment’s fof cus 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. Through acquisitions, our Carbon Flat Products segment expanded its product offff erings to include self-ff dumping metal hoppers and steel and stainless-steel dump inserts fof r pickup truck and servirr ce truck beds. With the recent acquisition of Metal-Fab, Inc. (“Metal-Fab”) on January 3, 2023, our Carbon Flat Products segment will further expand our product offff erings to include the manufacture of venting, micro air and clean air products foff r residential, commercial and industrial applications. In addition, we distribute metal tubing, pipe, bar, valves and fittings and fabricate parts supplied to various industrial markets through our Tubular and Pipe Products segment. Financial Information In thousands, except per-share and ratio data 2022 2021 2020 For the YeYY ar Net sales Operating income Net income (loss) Net income (loss) per diluted share Weighted average diluted shares outstanding Capital expenditures At YeYY ar End Accounts receivable, net Inventories ToTT tal assets ToTT tal debt Shareholders’ equity Shareholders’ equity per share Debt-to-equity ratio $ 2,559,990 ) $ 2,312,253 ) $ 1,234,144 ) 133,747 ) 90,931 ) 7.87 ) 11,559 ) 19,854 ) 172,466 ) 121,051 ) 10.52 ) 11,503 ) 11,011 ) 219,789 ) 416,931 ) 284,570 ) 485,029 ) 891,627 ) 1,023,572 ) 165,658 ) 515,968 ) 46.36 ) 327,764 ) 424,439 ) 38.31 ) 573 ) (5,595)) (0.49)) 11,447 ) 9,803 ) 151,601 ) 240,001 ) 640,605 ) 160,609 ) 301,010 ) 27.18 ) 0.32 to 1 ) 0.77 to 1 ) 0.53 to 1) 2022 Letter to Shareholders Dear Fellow Shareholders, metals facility in Bartlett, Illinois, and expect the facility to be 2022 was another year of extraordinary performance for Olympic Steel. Thanks to the outstanding efforts of our entire team, we delivered the second most profitable year in our history. Notably,yy we achieved this milestone despite operational during the second quarter of 2023. This expansion is based on the successful fabrication model we employed in Georgia, and we look forward to the benefits it will have for our customers and our business. unprecedented declines in metals pricing, along with other In Pipe and Tube, our continued investments in tube fabrication macroeconomic and non-metal inflationary pressures. All of and fiber-optic lasers have strengthened our value-added our businesses performed well — with our Specialty Metals and business, and we expect the expansion of our Des Moines, Pipe and Tube segments both achieving record profitability Iowa, facility to be operational in the second half of 2023. and our Carbon segment remaining strong. For our Carbon segment, 2022 was a challenging year in the These results show that our strategy to reduce the impact of marketplace. Our team remained diligent in management of market cyclicality on our business is truly working. We have operating expenses and inventory levels, which drove positive been engaged in an intentional effort to build a more resilient, EBITDA despite the steepest and fastest pricing decline ever. diversified company that is delivering higher returns. We This impressive performance in the face of pricing headwinds have taken deliberate steps to focus our resources on areas again validates that our strategy is working. that align with our vision for the Company, diversifying into higher-return products and services through acquisitions and targeted organic investments in all three of our business segments. We are doing this while remaining relentlessly focused on safety and adhering to our operational disciplines to improve inventory turnover and right-size our cost profile. 2022 HIGHLIGHTS – OUR RESULTLL S VALVV IDATEAA OUR STRATEAA GY Olympic Steel reported record sales of $2.6 billion and $133.7 million of operating income, which was second only to 2021. It was also a record year for cash flow, which allowed us to reduce debt by a record $162 million, or 49%, strengthen our balance sheet and increase our ability to invest in growth opportunities. We achieved strong performance across our business. Both Specialty Metals and Pipe and Tube delivered their most profitable years ever,r and Carbon delivered positive EBITDA We also continued to expand our capabilities to serve growing demand in the Southeast region of the United States. In Winder,r Georgia, our second automotive stamping press and automated packaging line are now fully operational. And in Buford, Georgia, we installed additional laser cutting and new robotic welding capacity. Making strategic investments in automation to improve safety, drive efficiency and mitigate labor challenges is a priority for Olympic Steel. METALTT -FABFF ACQUISITION ACCELERATESAA GROWTH The most recent step in our strategic journey was the January 2023 purchase of Metal-Fab, the second-largest acquisition in our history and our sixth acquisition in the last five years. Based in Wichita, Kansas, Metal-Fab manufactures venting and air filtration products for residential, commercial and industrial applications. These products are constructed largely of coated carbon, stainless steel and aluminum, which makes the business a value-added, strategic fit for despite the steepest decline in carbon flat prices in history Olympic Steel. during the second half of 2022. Specialty Metals optimized the tailwinds in the market during the first half of the year and successfully navigated the headwinds in the second half. We began relocating fabrication equipment into our new 80,000-square-foot white “These results show that our strategy to reduce the impact of market cyclicality on our business is truly working.” 1 2022 Letter to Shareholders “Olympic Steel was named to Forbes magazine’s list of America’s Best Small Cap Companies, which indicates that the market is recognizing the work we have done to reposition the Company as a highly innovative, growing, acquisitive business that is more resilient to the cyclicality of the metals industry.” Metal-Fab has a recession-resistant track record of double-digit recruitment effff off rts because we believe veterans bring EBITDA margins, its values and operating principles are well- exceptionalvaluesandskills,andwewantmoreofthemon aligned to our culture and practices, and its manufacturing our team; expertise and catalog of products are strong additions to our growing portfoff lio of metal-intensive end-use products. The integration has been smooth, and we expect to benefit from operational and commercial synergies in the second half of 2023. COMMITMENT TO CORPORATAA E RESPONSIBILITY AND OUR CULTLL URE OF ENGAGEMENT At Olympic Steel, our Core VaVV lues support our commitment to achieve profitable growth by safely providing quality business solutions fof r metal product users and supporting the communities where we operate. Safety is our highest priority, and we are proud that our commitment to safety resulted in a 26% year-over-year reduction in OSHA recordable incidents in 2022. We also continued to make meaningful progress on our corporate responsibility initiatives. Milestones in 2022 included: • • Increased our support to a growing number of charities under our Corporate Citizenship initiatives to support the communities where we live and work; and Continued to execute on our long-term diversity, equity and inclusion plan to build a more inclusive culture where people increasingly want to belong and feel empowered to share their unique insights and experiences in support of Olympic Steel’s mission. For more on our approach to corporate responsibility and our commitment to the environment, our people and governance, please reference our Corporate Responsibility Report at www.olysty eel.com/corpporate-respponsibilityy. LEADERSHIP UPDATAA ES We continue to strengthen our team by making investments in people who support our strategy to grow and diversifyff into higher-return products and servirr ces. In 2022, David • • • • Published our first Corporate Responsibility Report, Gea was promoted to President – Carbon Flat-Rolled and which will be updated annually to share our progress; Michael ToTT okey joined Olympic Steel in the newly created Engaged a metals industryrr consulting firm to assist with our commitment to sustainable steel processing and distribution and calculate our greenhouse gas emissions; Joined more than 2,400 CEOs in signing the CEO Action role of Director – Coated Products. Both of these key moves in our Carbon segment support our strategy to accelerate continued growth in downstream carbon flat-rolled products and processes. foff r Diversity and Inclusion pledge; In early 2023, we announced the promotions of Lisa Christen to Developed a VeVV terans’ Network to connect our US active servir ce members and veterans internally and support our Vice President and Treasurer, and Kevin Eldridge to Corporate Controller. These long-tenured members of our financial management team have significant roles in overseeing our 2 2022 Letter to Shareholders regulatory compliance and reporting requirements as a public from $0.02 to $0.09 in the first quarter of 2022, reflecting company, and both are essential to our enterprise. the Company’s strong perfrr off rmance over the past two years. Across Olympic Steel, we pride ourselves on providing opportunities foff r growth, development and professional advancement fof r all employees. Guided by our Core VaVV lues, we are intent on developing our future leaders to help advance our Company’s success. LOOKING AHEAD – A STRONGER, MORE RESILIENT OLYLL MPIC STEEL As we begin 2023, Olympic Steel is stronger and more resilient than ever. The integration of Metal-Fab is a priority, coupled with the execution of a robust capital expenditure plan foff cused on additional capacity foff r growth, value-added fabrication and automation investments to further strengthen our Company. We will continue to evaluate acquisition and organic growth opportunities that align with our strategy, meet our return expectations and allow us to build upon our successful business model. We have had a busy start to 2023. In January, we upsized our asset-based revolver from $475 million to $625 million, providing additional capital to further execute our growth plans while simultaneously returning cash to our shareholders. In March 2023, we increased the regular quarterly cash dividend from $0.09 to $0.125 per share aftff er increasing the dividend Additionally, Olympic Steel was named to FoF rbrr es magazine’s list of America’s Best Small Cap Companies, which indicates that the market is recognizing the work we have done to reposition the Company as a highly innovative, growing, acquisitive business that is more resilient to the cyclicality of the metals industry. In closing, I am incredibly proud of the entire Olympic Steel team foff r the progress we have made together to strengthen our Company. But our job is not done. We will continue to foff cus on growing our business in a purposeful way while maintaining our commitments to safety, expense control, inventory management and smart, disciplined capital deployment. We are well-positioned to build on our success of 2022, and we are excited about the future of Olympic Steel. ToTT all of our shareholders and other stakeholders, thank you foff r your trust, support and confidence in Olympic Steel. Sincerely, Richard T. Marabito Chief Executive Offiff cer March 20, 2023 SPECIAL RECOGNITION FOR OUR EXECUTIVE CHAIRMAN We extend congratulations to Michael Siegal, Olympic Steel’s Executive Chairman of the Board, foff r receiving the Israeli Presidential Medal of Honor, the highest civil medal awarded by the President of Israel foff r outstanding contributions to the State of Israel or to humanity. Michael earned this recognition in 2022 fof r his many contributions to the State of Israel and his lifelong support of Jewish people around the world. He has server d in a variety of roles, both publicly and behind the scenes, in organizations that advocate foff r the advancement of Jewish individuals and causes. We are honored to congratulate Michael on this well-deserver d recognition of his lifelong commitment to honorable servir ce to others, which is consistent with Olympic Steel’s Corporate Citizenship Core VaVV lue. 3 MiMM chael Siegal,l Prerr sident of Israrr el leftff ,t and Isaac Herzorr g, ToTT tal Shareholder Return ThTT e peer grorr upu consistii stt of FrFF irr edmdd an Industrtt irr es, Inc., Relill ai nce Steel & Aluminii um Co., Russel Metalsll Inc., RyeR rsorr n Holdidd nii g Corprr ., and WoWW rtrr htt inii gton Industrtt irr es, Inc. Comparison of 1-YeYY ar ToTT tal Return December 2021 Comparison of 1-YeYY ar ToTT tal Return December 2022 76.9% 80% 70% 60% 50% 40% 30% 20% 10% 0% 35.1% 22.2% ZEUS NASDAQ Composite-ToTT tal Return Peer Group 44.6% 15.9% (32.5%) ZEUS Peer Group NASDAQ Composite-ToTT tal Return 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% 4 UNUU ITED STATES SECURITIES ANAA D EXCHANAA GE COMMISSION Washington, D.C. 20549 Form 10-K ANAA NN UAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANAA GE ACT OF 1934 For The Year Ended December 31, 2022 TRARR NAA SITION REPORT PURSUANAA T TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANAA GE ACT OF 1934 For The Transition Period From _______________ To _______________ Commission File Number 0-23320 __ ☒ ☐ OLYMPIC STEEL, INC. (Exact name of registrant as specififf ed in its charter) Ohio (State or other jurisdiction of incorprr oration or organization) 34-1245650 (I.R.S. Employer Identififf cation Number) 22901 Millcreek Boulevard, Suite 650, Highland Hills, OH (Address of principal executive offff iff ces) 44122 (Zip Code) Title of each class Common stock, without par value Registrant's telephone number, including area code (216) 292-3800 Securities registered pursuant to Section 12(b) of the Act: Trading Symbol(s) ZEUS Securities registered pursuant to Section 12(g) of the Act: None Name of each exchange on which registered The NASDAQ Stock Market, LLC. Indicate by check mark if the registrant is a well-knkk own seasoned issuer, as defiff ned in RulRR e 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to fiff le reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has fiff led all reports required to be fiff led by Section 13 or 15(d) of the Securuu ities Exchange Act of 1934 dud ring the preceding 12 montht s (or foff r such shorter period that the registrant was required to fiff le such reports), and (2) has been subu jb ect to such fiff ling requirements foff r the past 90 days. Yes ☒ No ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the fiff nancial statements of the registrant included in the fiff ling reflff ect the correction of an error to previously issued fiff nancial statements. Yes ☐ No ☐ Indicate by check mark whether any of those error corrections are restatements that required a recoveryrr analysis of incentive-based compensation received by any of the registrant’s executive offff iff cers dudd ring the relevant recoveryrr period pursuant to §240.10D-1(b). Yes ☐ No ☐ Indicate by check mark whether the registrant has subu mitted electronically everyrr Interactive Data File required to be subu mitted pursuant to RuRR le 405 of Regulation S-T (§232.405 of this chapa ter) durdd ing the preceding 12 months (or foff r such shorter period that the registrant was requq ired to subu mit such fiff les). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated fiff ler, an accelerated fiff ler, a non-accelerated fiff ler, a smaller reporting compam ny, or emerging growth company. See the defiff nitions of “large accelerated fiff ler,” “accelerated fiff ler,” “smaller reporting company” and “emerging growth company” in RuRR le 12b-2 of the Exchange Act. Large accelerated fiff ler ☐ Non-accelerated fiff ler ☐ Accelerated fiff ler ☒ Small 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 foff r complying with any new or revised fiff nancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has fiff led a report on and attestation to its management’s assessment of the effff eff ctiveness of its internrr al control over fiff nancial reporting under Section 404(b) of the Sarbr anes-Oxley Act (15 U.S.C. 7262(b)) by the registered pubu lic accounting fiff rm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the fiff nancial statements of the registrant include in the fiff ling reflff ect the correction of an error to previously issued fiff nancial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that requqq ired a recoveryrr analysis of incentive-based compensation received by any of the registrant’s executive offff iff cers dudd ring the relevant recoveryrr period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defiff ned in RuRR le 12b-2 of the Act). Yes ☐ No ☒ As of June 30, 2022, the aggregate market value of voting stock held by non-affff iff liates of the registrant based on the closing price at which such stock was sold on the Nasdaq Global Select Market on such date apa proximated $247,852,213. Indicate the number of shares of each of the issuer's classes of common stock, as of the latest practicaba le date: Class Common stock, without par value Outstanding as of Februrr aryrr 24, 2023 11,129,932 DOCUMENTS INCORPORARR TED BY REFERENCE The registrant intends to fiff le with the Securities and Exchange Commission a defiff nitive Proxy Statement pursuant to Regulation 14A of the Securities Exchange Act of 1934 within 120 days of the close of its fiff scal year ended December 31, 2022, portions of which document shall be deemed to be incorprr orated by refeff rence in Part III of this Annual Report on Form 10-K frff om the date such document is fiff led. TABLE OF CONTENTS Part I Item 1. Business ............................................................................................................................................... Item 1A. Risk Factors ......................................................................................................................................... Item 1B. Unresolved Staff Comments ................................................................................................................ Properties ............................................................................................................................................. Item 2. Item 3. Legal Proceedings ................................................................................................................................ Item 4. Mine Safety Disclosures ...................................................................................................................... Information About Our Executive Officers ......................................................................................... Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ............................................................................................................................... Item 6. [Reserved] ............................................................................................................................................ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .............. Item 7A. Quantitative and Qualitative Disclosures About Market Risk ............................................................. Financial Statements and Supplementary Data .................................................................................... Item 8. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .............. Item 9A. Controls and Procedures ...................................................................................................................... Item 9B. Other Information ................................................................................................................................ Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ................................................. Part III Item 10. Directors, Executive Officers and Corporate Governance ................................................................... Executive Compensation ..................................................................................................................... Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Item 12. Item 13. Item 14. Matters .............................................................................................................................................. Certain Relationships and Related Transactions, and Director Independence ..................................... Principal Accountant Fees and Services .............................................................................................. Part IV Item 15. Item 16. Exhibits and Financial Statement Schedules ....................................................................................... Index to Exhibits .................................................................................................................................. Form 10-K Summary ........................................................................................................................... Signatures ............................................................................................................................................ Page (cid:22) 1(cid:24) 2(cid:23) 2(cid:24) 2(cid:25) 2(cid:26) 2(cid:27) (cid:21)(cid:28) 3(cid:19) 3(cid:20) 4(cid:22) 4(cid:23) 7(cid:24) 7(cid:24) 7(cid:24) 7(cid:24) 7(cid:25) 7(cid:25) 7(cid:25) 7(cid:25) 7(cid:25) 7(cid:26) 7(cid:26) 8(cid:20) 8(cid:21) (cid:20) This pagea intentionallyl lefte blank ITEM 1. BUSINESS The Company PART I We are a leading metals service center tht at operates in tht ree reportaba le segments; specialty metals flff at produd cts, carbr on flff at products, and tut bular and pipe produd cts. We provide metals processing and distribution services foff r a wide range of customers. Our specialty metals flff at produdd cts segment’s foff cus is on tht e direct sale and distribution of processed aluminum and stainless flff at-rolled sheet and coil produd cts, flff at bar produd cts, prime tin mill products and faff ba ricated parts. Through the acquisition of Shaw Stainless & Alloy, Inc., or Shaw, on October 1, 2021 and Action Stainless & Alloys, Inc., or Action Stainless, on December 14, 2020, our specialty metals flff at produd cts segment expanded its geograpa hic foff otpt rint and enhanced its produd ct offff eff rings in stainless steel and aluminum plate, sheet, angles, rounds, flff at bar, tutt bu ing and pipe. Shaw also manufaff cturtt es and distributes stainless steel bollards and water treatmt ent systems. Action Stainless offff eff rs a range of processing capa aba ilities, including plasma, laser and waterjr et cutting and computer numerical control, or CNC, machining. Our carbr on flff at produd cts segment’s foff cus is on the direct sale and distribution of large volumes of processed carbr on and coated flff at-rolled sheet, coil and plate produd cts and faff ba ricated parts. Through acquisitions, our carbr on flff at products segment expanded its produd ct offff eff rings to include self-ff dumpm ing metal hoppers and steel and stainless-steel dud mpm inserts foff r pickuk pu trurr ck and service trurr ck beds. With the recent acquq isition of Metal-Faba , Inc., or Metal-Faba , on Januaryrr 3, 2023, our carbr on flff at produd cts segment will fuff rther expand our produd ct offff eff rings to include the manufaff ctutt re of venting, micro air and clean air products foff r residential, commercial and indud strial apa plications. Metal-Faba ’s operational results are not included in this Annual Report on Form 10-K. In addition, we distribute metal tut bing, pipe, bar, valves and fiff ttings and faff ba ricate parts supu plied to various indud strial markr ets through our tut bular and pipe produdd cts segment. Products that require more value-added processing generally have a higher gross profiff t. Accordingly, our overall gross profiff t is affff eff cted by, among other tht ings, product mix, tht e amount of processing perfoff rmed, tht e demand foff r and availaba ility of metals, and volatility in selling prices and material purchase costs. We also perfoff rm toll processing of customer-owned metals. We sell certain products internrr ationally, primarily in Canada and Mexico. Internr ational sales are immaterial to our consolidated fiff nancial results and to the individud al segments’ results. We are incorprr orated under tht e laws of tht e State of Ohio. Our executive offff iff ces are located at 22901 Millcreek Boulevard, Suite 650, Highland Hills, Ohio 44122. Our telephone number is (216) 292-3800, and our website address is www.olysteel.com. We are not including tht e infoff rmation on our website as a part of,ff or incorprr orating it by refeff rence into, this Annual Report on Form 10-K. Industry Overview The metals industrtt y is compm rised of three types of entities: metals produd cers, intermediate metals processors and metals service centers. Metals produd cers have historically empm hasized the sale of metals to volume purchasers and have generally viewed intermediate metals processors and metals service centers as part of tht eir customer base. However, all three typyy es of entities can compete foff r certain customers who purchase large quantities of metals. Intermediate metals processors tend to serve as processors in large quantities foff r metals producers and maja or indud strial consumers of processed metals. Servrr ices provided by metals servrr ice centers can range frff om storage and distribution of unpn rocessed metal produdd cts to compm lex, precision value-added metals processing. Metals service centers respond directly to customer needs and emphasize value-added processing of metals pursuant to specififf c customer demands, such as cutting-to-length, slitting, shearing, roll foff rming, shapa e correction and surfaff ce impm rovement, blanking, tempering, plate burnr ing, stampm ing, bending and welding. These processes produd ce metals to specififf ed lengtht s, widtht s, shapa es and surfaff ce characteristics through the use of specialized equipment. Metals service centers typically have lower cost strur ctut res than and provide services and value-added processing not otherwrr ise availaba le frff om, metals producers. End produd ct manufaff ctut rers and other metals users seek to purchase metals on shorter lead times and with more frff equent and reliaba le deliveries than can normally be provided by metals produd cers. Metals service centers generally have lower laba or costs than metals produd cers and consequq ently process metals on a more cost-effff eff ctive basis. In addition, dud e to this lower cost strur ctutt re, metals service centers are aba le to handle orders in quantities smaller than would be economical foff r metals producers. The benefiff ts to customers purchasing produd cts frff om metals service centers include lower inventoryr levels, lower overall cost of raw materials, more timely response and decreased manufaff ctut ring investmt ent, time and expense. Customers also benefiff t frff om a lower investment in produdd ction laba or, buildings and equq ipment, which allows them to foff cus on the engineering, assembly and marketing of tht eir produd cts. We believe tht at customers’ demands foff r just-in-time delivery of have 3 made the value-added inventoryrr , processing and deliveryrr important. fuff nctions perfoff rmr ed by metals service centers increasingly Corporate History Our compm any was foff unded in 1954 as a general steel service center. In the late 1980s, our business strategy changed frff om a foff cus on warehousing and distributing steel frff om a single faff cility with no maja or processing equipment to a foff cus on geograpa hic and produd ct growth, customer diversity and value-added processing. An integral part of our growth has been the acquisition and start-upu of processing and sales operations, and tht e investment in processing equq ipment. In 1994, we completed an initial pubu lic offff eff ring and, in 1996, we completed a foff llow-on offff eff ring of our common stock. Over the years, our compm any has expanded into new produdd ct offff eff rings through multiple acquisitions. Our tut bu ular and pipe products segment was estaba lished in 2011 aftff er the acquisition of Chicago Tubu e and Iron, or CTI, a private leading distributor of tut bu ing, pipe, bar, valves, and fiff ttings. Our specialty metals flff at produd cts segment was estaba lished in 2015 and has expanded since its creation, most recently with the acquisitions of Shaw in 2021, Action Stainless in 2020 and, Berlin Metals, LLC in 2018, and our carbr on flff at produd cts segment expanded into manufaff ctutt ring metal intensive branded produd cts with the acquisitions of McCullough Indud stries, or McCullough, and certain assets related to the manufaff ctut ring of tht e EZ Dumper® hydraulic dumpm inserts, or EZ Dumpm er, in 2019. Michael D. Siegal began his career with us in the early 1970s and serves as our Executive Chairman of the Board of Directors. Mr. Siegal served as our Chief Executive Offff iff cer frff om 1984 through 2018. Richard T. Maraba ito has served as our Chief Executive Offff iff cer since January 2019. Mr. Maraba ito joined us in 1994 and served as our Chief Financial Offff iff cer frff om 2000 through 2018. Richard A. Manson has served as our Chief Financial Offff iff cer since Januaryrr 2019. Mr. Manson has served in various capa acities at our company since 1996, and previously served as our Vice President and Treasurer. Andrew S. Greiffff has servrr ed as our President and Chief Operating Offff iff cer since January 2020. Mr. Greiffff joined us in 2009 to lead our specialty metals business and has previously servrr ed as our Executive Vice President and Chief Operating Offff iff cer. Business Strategy and Objectives We believe tht at the metals service center and processing indud stryrr trtt ends: (i) shiftff by customers to feff wer suppliers that are larger and fiff nancially strong; (ii) increased customer demand foff r more frff equq ent deliveries, higher quality products and services; and (iii) localization of metals indud stryrr participants. is driven by tht e foff llowing primaryrr In recognition of these industrt y trends, our foff cus has been on achieving profiff taba le geograpa hic and produd ct growtht tht rough the start-upu and acquq isition of service centers, processors, faff ba ricators and related businesses, and investments in people, infoff rmation systems, higher value-added processing equq ipment and services, while continuing our commitment to expanding and improving our operating effff iff ciencies, sales and servicing effff off rts. We are foff cused on specififf c operating objb ectives including: (i) impm roving safeff ty perfoff rmr ance; (ii) managing inventory tut rnrr over; (iii) managing operating expenses; (iv) providing on-time deliveryrr and quq ality perfoff rmance foff r our customers; (v) diversifyff ing produd ct offff eff rings; (vi) profiff taba ly growing our markr et share; (vii) increasing and providing more consistent retut rnr s; (viii) maintaining targeted cash tut rnr over rates and (ix) investing in technology and business infoff rmation systems. These operating objb ectives are supu ported by: ● A set of core values, which are communicated, practiced, measured and rewarded throughout the Company. ● Our commitment to providing a safeff work environment and promoting empm loyee health and well-being tht rough continuous impm rovement activities, edud cation and communication. ● An internrr al communications program designed to engage and motivate employees to supu port our strategy, values and cultut re. ● Our “flff awless execution” program, or Fe program, an internal continuous impm rovement program tht at rewards employees who achieve profiff taba le growth by delivering supu erior customer service and exceeding customer expectations. ● Operational initiatives designed to improve effff iff ciencies and reduce costs by impm roving and automating processes and creating an environment to faff cilitate change and impm rove the waya we work and create value. ● Infoff rmation systems and key metric reporting to foff cus managers on achieving specififf c operating objb ectives. 4 ● Alignment of compm ensation with the fiff nancial objb ectives and perfoff rmance of tht e Compm any and the achievement of specififf c fiff nancial and operating objb ectives. We believe our deptht of management experiences, faff cilities, locations, processing capa aba ilities, inventoryrr , foff cus on safeff ty, quality and customer service, extensive and experienced sales foff rce, and the strength of our customer and supu plier relationships provide a strong foff undation foff r implementation of our strategy and achievement of our objb ectives. Certain elements of our strategy are set foff rth in more detail below. InII vestmtt entstt and Acquisii itions. During the past three years, we have accelerated our growth tht rough acquisitions and capa ital investments in faff cilities and processing equipment. Our Vice President of Strtt ategic Development foff cuses on profiff taba le growtht opportutt nities, including acquisitions. On Januaryrr 3, 2023, we purchased all of the outstanding shares of capa ital stock of Metal-Fab, headquq artered in Wichita, Kansas. Metal-Fab is a manufaff ctut rer of venting, micro air and clean air produd cts foff r residential, commercial and indud strial apa plications. The acquq isition intends to expand our portfoff lio of metal-intensive end-use produd cts and widen our produd ct offff eff rings, manufaff ctutt ring capa aba ilities and geograpa hic reach. Metal-Faba ’s operational results are not included in tht is Annual Report on Form 10-K but will be included starting in tht e fiff rst quarter of 2023. On June 1, 2022, we began leasing an 81,400-square-foff ot metal faff ba rication faff cility, located in Bartlett, Illinois. This new faff cility is expected to be operational by the second quarter of 2023 and will be faff ba rication foff cused with an empm hasis on specialty metals flff at-rolled products and downstream value-added services. The transfeff r of the faff ba rication business to Bartlett, Illinois also supu ports our growth plans foff r tht e cut-to-length business out of tht e Schaumburg, Illinois faff cility. To support the growtht of our faff ba rication services, the new Bartlett faff cility will initially house two lasers and foff ur press brakes. On October 1, 2021, we acquired substantially all of the net assets of Shaw, based outside of Atlanta, Georgia. Shaw is a fuff ll- line distributor of stainless steel sheet, pipe, tut bu e, bar and angles. Shaw also manufaff ctures and distributes stainless steel bollards and water treatment systems. The acquisition expanded our stainless-steel distribution and faff ba rication capa aba ilities, as well as our entryrr into architectut ral and barrier defeff nse bollards. On December 14, 2020, we acquired subu stantially all of the net assets of Action Stainless, based outside of Dallas, Texas. Action Stainless is a fuff ll-line distributor of stainless steel and aluminum plate, sheet, angles, rounds, flff at bar, tut bu ing and pipe and offff eff rs a range of processing capa aba ilities, including plasma, laser and waterjr et cutting and CNC machining. The acquisition expanded the geograpa hic foff otpt rint of our specialty metals flff at produd cts segment with locations in Texas, Arkr ansas, South Carolina and Missouri. On June 1, 2020, we opened a 120,000-squq are-foff ot metal processing faff cility, located in Bufoff rd, Georgia. The location region foff otpt rint, which also includes faff cilities in Locust, North Carolina; Winder, Georgia; and expanded our southt easternr Hanceville, Alaba ama. The Bufoff rd faff cility acts as tht e region’s primaryrr flff at-rolled faff ba rication hubu , with fiff rst-stage metal processing anchored in the Winder faff cility, metal distribution in both tht e Winder, Georgia and Hanceville, Alaba ama locations, and pipe and tut bu e laser faff brication and bending and welding at the Locust, North Carolina location. As part of the expansion, we added a new Mitsubu ishi fiff ber optic laser, a new Eagle 20kwkk laser system, a 600-ton Verson stampm ing press with a COE coil feff ed system and 2 Lincoln robotic welding cells. The additional equipment and processing capa acity compm lement the region’s existing value-added faff ba rication capa aba ilities and support the Compm any’s commitment to automotive original equipment manufaff ctut rers, or OEMs, and their tier 1 and 2 parts makers, as well as responds to increasing demand frff om other OEM customers. In addition to tht e acquq isitions noted aba ove, our capa ital investments dud ring tht e past tht ree years have primarily consisted of additional processing equipment foff r all three of our segments. When the results of sales and markr eting effff off rts and our fiff nancial justififf cations indicate that tht ere is suffff iff cient customer demand foff r a particular produd ct, process or service, we may purchase equq ipment to satisfyff that demand. We also evaluate our existing equq ipment to ensure that it remains produd ctive, and we upu grade, replace, redeploy or dispose of equipment when necessary. We invest in processing equq ipment to support customer demand and to respond to the growing trend among OEMs (our customers) to outsource non-core produdd ction processes, such as plate processing, machining, welding and faff ba rication, in order to concentrate on engineering, design and assembm ly. Disii ps osition ofo Aff ssetstt : On September 17, 2021, we sold subu stantially all of the assets related to our Detroit, Michigan operation to Venturt e Steel (U.S.), Inc. The proceeds of the sale were used forff working capa ital needs as well as the acquisitions and investments in the subu sequent organic growth opportutt nities noted aba ove. The Detroit operation was primarily foff cused on the distribution of carbr on flff at-rolled steel to domestic automotive manufaff ctut rers and tht eir supu pliers. 5 SaSS les and MaMM rkrr ekk ting. We believe that our commitments to quality, service, just-in-time deliveryrr and fiff eld sales personnel have enaba led us to build and maintain strong customer relationships. We continuously analyze our customer base to ensure that strategic customers are properly targeted and serviced, while foff cusing our effff off rts to supu ply and successfuff lly service multi-location customers frff om multiple Olympm ic Steel faff cilities. We service certain customers with carbr on and specialty metals flff at products and tutt bular and pipe products through cross-stocking of produd cts in certain faff cilities. We offff eff r business solutions to our customers through value-added and value-engineered services. We also provide inventory stocking programs and in-plant Olympm ic Steel employees located at certain customer faff cilities to help redud ce customers’ costs. Our owned trurr ck flff eet and dedicated carrier flff eet fuff rtht er enhance our just-in-time deliveries based on our customers’ requq irements. Our Flawless execution, or Fe, program is a commitment to provide supu erior customer service while striving to exceed customer expectations. This program includes tracking on-time deliveryrr and quality perfoff rmance against objb ectives, and recognition of employee initiatives to improve effff iff ciencies, streamline processes or redud ce operating expenses at each operation. We believe our large and experienced sales foff rce provides strategic advantages. Our sales foff rce makes direct daily sales calls to customers throughout the continental United States, and parts of Canada and Mexico. The continuous interaction between our sales foff rce and active and prospective customers provides us with valuable markr et infoff rmr ation and sales opportutt nities, including opportut nities foff r outsourcing, improving customer service and increasing sales. Our sales effff off rts are fuff rther supported by metallurgists, engineers, technical and quality service personnel and product specialists who have specififf c expertise in carbr on and stainless steel, aluminum, alloy plate and steel faff ba rication as well as tubu ular and pipe produd cts. Our services foff r certain customers also include integration into our internr al business systems to provide cost effff iff ciencies foff r both us and our customers. MaMM nagement. We believe one of our strengths is tht e deptht , knk owledge and experience of our management team. In addition to our executive offff iff cers, membm ers of our senior management team have a diversity of backgrounds within the metals indud stryrr , including management positions at metals produd cers and other metals service centers. They average 29 years of experience in the metals indud stryrr and 20 years witht our company. We have a succession plana ning and leadership development process in place, which allows us to furff ther enhance our management team by the promotions of employees to executive management positions within the organization. Products, Processing Services and Quality Standards We carrr yrr a wide selection of metals products and grades, rana ging frff om commercial quq ality to ultra-high strength steel and specialty metals including; ● Stainless steel and aluminum coil and sheet produd cts, angles, rounds and flff at bar; ● Alloy, heat treated and aba rasion resistant coil, sheet and plate; ● Coated metals including galvanized, galvannealed, electro galvanized, advanced high strengtht steels, aluminized, and aua tomotive grades of steel; ● Cold rolled carbr on including commercial quality, advanced high strengtht steel, drawing steel and automotive grades cold rolled steel coil and sheet produd cts; ● Hot rolled carbr on including hot rolled coil, sheet and plate steel produd cts including pickled and oiled, aua tomotive grades, advanced high strength steels, and high strength low alloys; ● Tubu e, pipe & bar produd cts including round, square, and rectangular mechanical and strtt ur ctutt ral tut bu ing; hydraua lic and stainless tutt bu ing; boiler tutt bu ing; carbr on, stainless, and aluminum pipe; and valves and fiff ttings; and ● Tin mill produd cts including electrolytic tinplate, electrolytic chromium coated steel and black plate. With the acquisitions of EZ Dumper and McCullough, we manufaff ctut re hydraulic dump inserts and self-ff dumping hoppers. With the acquisition of Shaw, we manufaff ctut re and distribute stainless steel bollards and water treatment systems. With the acquisition of Metal-Faba , we manufaff ctutt re venting, micro air and clean air products foff r residential, commercial and industrtt ial apa plications beginning in 2023. 6 Customer orders are entered or electronically transmitted into compm uterized order entryrr systems, and apa propriate inventoryrr is selected and scheduled foff r processing in accordance with the customer’s specififf ed deliveryrr date. We attempt to maximize yield and equipment effff iff ciency through the use of compm uter softff wtt are and by combining customer orders foff r processing each coil, plate, tut bu e or pipe to the fuff llest extent practicaba le. Our traditional service center and higher value-added processes include; ● Cut-to-length - cutting metal along the widtht of the coil, or to desired lengths; ● Slitting - cutting metal to specififf ed widths along tht e lengtht of the coil; ● Shearing - the process of cutting sheet metal; ● Blanking - cutting metal into specififf c shapa es with close tolerances; ● Tempering - cold rolling process that improves tht e unifoff rmitytt of tht e thickness and flff atness of tht e metals; ● Stretcher-leveling - strtt etching process that improves tht e unifoff rmitytt of tht e thicknk ess and flff atness of the metals; ● Plate and laser processing - cutting metal into specififf c shapa es and sizes via laser, plasma and flff ame cutting; ● Forming and machining - bending, drilling, milling, tapa ping, boring and sawing metal; ● Tubu e processing - tut bu e bending and end fiff nishing; ● Finishing - shot blasting, grinding, edging, tht reading and grooving, beveling and polishing; ● Faba rication - machining, welding, assembly, painting and kitting of compm onent parts; and ● Value added services, including saw cutting, laser cutting, beveling, threading and grooving. The flff at produd cts segment is separated into two reportaba le segments; specialty metals flff at products and carbr on flff at products. The flff at produdd cts segments’ assets and resources are shared by the specialty metals and carbr on flff at products segments and botht segments’ produd cts are, in some instances, stored in the shared faff cilities and processed on the shared equipment. The foff llowing taba le sets foff rtht , as of December 31, 2022, tht e maja or pieces of processing equipment in operation by segment: Processing Equipment Cut-to-length Slitting Shearing Blanking Tempering Stretcher-leveling Plate processing Laser processing Forming Machining Tubu e processing Finishing Painting Total Consolidated Flat Products 18 12 9 2 3 2 26 30 24 41 2 31 1 201 Tubular and Pipe Products 14 - - - - - - 10 - 82 35 3 1 145 Total 32 12 9 2 3 2 26 40 24 123 37 34 2 346 Our quality assurance system, led by certififf ed specialists and engineers, estaba lishes contrtt ols and procedud res covering all aspects of our produd cts frff om the time the material is ordered through receipt, processing and shipment to the customer. These contrt ols and procedudd res encompass periodic supu plier and customer aua dits, workr shops witht customers, inspection equipment and criteria, preventative actions, material traceaba ility and certififf cation. We have quality testing laba s at several of our faff cilities, including at our faff cilities in Cleveland, Ohio; Minneapa olis, Minnesota; Bufoff rd, Georgia and Bettendorf,ff Iowa. In addition, 28 of our faff cilities have earnr ed Internr ational Organization foff r Standardization (ISO) 9001:2015 certififf cations. Our Romeoville, Illinois and Locust, Northt Carolina faff cilities have earnr ed tht e American Society of Mechanical Engineers S Certififf cation and our Locust, North Carolina faff cility has earnr ed tht e National Board of Boiler & Pressure Vessel Inspectors R and U Certififf cations. 7 Our offff iff ce building in Winder, Georgia has received Leadership in Energy and Environmental Design (LEED) certififf cation. Customers and Distribution We have a diverse customer and geograpa hic base, which helps to reduce the inherent risk and cyclicality of our business. Net sales to our top three customers, in tht e aggregate, apa proximated 7%, 6% and 6% of our consolidated net sales in 2022, 2021 and 2020, respectively. We serve customers in metals consuming indud stries, including manufaff ctutt rers and faff bricators of transportation and material handling liftff equipment, construrr ction, mining and faff rm equq ipment, storage tanks, environmental and energy generation equq ipment, automobiles, foff od service and electrical equipment, as well as general and plate faff ba ricators and metals service centers. The taba le below shows the percentage of our consolidated net sales to tht e largest indud stries foff r tht e past tht ree years. Industry Indudd strial machinery and equq ipment manufaff ctut rers and their faff ba ricators Metals service centers Residential and commercial construrr ction Automobile manufaff ctut rers and their suppliers Transportation equipment manufaff ctut rers All others <5% 2022 52% 9% 7% 2% 8% 22% 2021 47% 11% 8% 7% 6% 21% 2020 47% 11% 8% 7% 6% 21% While we ship produd cts tht roughout the United States, most of our customers are located in tht e midwesternr , easternr and regions of tht e United States. Most customers are located within a 250-mile radius of one of our processing faff cilities, southt ernr thus enaba ling an effff iff cient deliveryrr system capa able of handling a high frff equq ency of short lead time orders. We transport our produd cts directly to customers via our owned trurr ck flff eet and dedicated carrier flff eet, which fuff rther supports tht e just-in-time deliveryrr requq irements of our customers, and third-partytt trurr cking fiff rms. We process our metals to specififf c customer orders as well as foff r stocking programs. Many of our larger customers commit to purchase on a regular basis at agreed upu on or indexed prices foff r periods ranging frff om three to twtt elve months. To help mitigate price volatility risks, these price commitments are generally matched with corrr esponding supply arrr angements, or to a lesser degree by commodities hedging. Customers notifyff us of specififf c release dates as processed products are required. Customers tytt pically notifyff us of release dates anywhere frff om a just-in-time basis to one month befoff re the release date. Therefoff re, we are required to carrrr yrr suffff iff cient inventoryrr requirements of our customers. to meet the short lead time and just-in-time deliveryrr Raw Materials Our principal raw materials are carbr on, coated, and stainless steel and aluminum, in the foff rms of pipe, tutt bu e, flff at-rolled sheet, coil and plate tht at we tytt pically purchase frff om multiple primaryrr metals produd cers. The metals indud stryrr as a whole is cyclical and at times pricing and availaba ility of material can be volatile dud e to numerous faff ctors beyond our control, including general domestic and global economic conditions; domestic and global supu ply and demand imbm alance; compm etition; quickly changing lead times and late deliveries frff om metals produd cers; flff uctut ations in tht e costs of raw materials necessaryrr to produd ce metals; import duties; tariffff sff and quotas; and currr ency exchange rates. This volatility can signififf cantly affff eff ct tht e availaba ility and cost of raw materials to us. Inventoryrr management is a key profiff taba ility driver in tht e metals service center indud stryrr . Similar to many other metals service centers, we maintain substantial inventories of metals to accommodate the short lead times and just-in-time deliveryrr requirements of our customers. Accordingly, we purchase metals in an effff off rt to maintain our inventoryrr at levels that we believe to be apa propriate to satisfyff the anticipated needs of our customers based upu on historic buying practices, purchase foff recasts and commitments with customers, supu plier lead times and market conditions. Our commitments to purchase metals are generally at prevailing market prices in effff eff ct at the time we place our orders. We enter into pass through nickel swapa s at the request of our customers in order to mitigate our customers’ risk of volatility in the price of metals. The swapa s are settled with tht e brokers at matut rity and the economic benefiff t or loss arising frff om the changes in faff ir value of the swapa s is contractutt ally passed through to tht e customer. 8 We have some fiff xed priced purchase agreements tht at supu port fiff xed priced sales agreements; however, in general we have no long-term, fiff xed-price metals purchase contracts, except foff r commodity hedges. When metals prices decline, customer demands foff r lower prices and our competitors’ responses to those demands could result in lower sale prices and, consequently, lower gross profiff ts and earnr ings as we use existing metals inventoryrr . When metals prices increase, competitive conditions will inflff uence how much of tht e price increase we can pass on to our customers. Suppliers We concentrate on developing supply relationships witht reliable high-quality domestic and internr ational metals produdd cers, using a coordinated effff off rt to be tht e customer of choice foff r business critical supu pliers. We employ sourcing strategies that maximize the quality, production lead times and transportation economies of a global supply base. We are an impm ortant customer of flff at-rolled coil and plate, pipe and tut bu e foff r many of our principal supu pliers, but we are not dependent on any one supplier. We purchase in bulk frff om metals producers in quantities that are effff iff cient foff r such produd cers. This enaba les us to maintain a continued source of supply that we believe is competitively priced. We believe the access to our faff cilities and equipment, and our high qualitytt customer servrr ices and solutions, combined with our long-standing prompt pay practices, will continue to be important faff ctors in maintaining strong relationships with metals suppliers. The metals produd cing supply base has experienced signififf cant consolidation, with a feff w suppliers accounting foff r a maja ority of the domestic carbr on flff at-rolled steel markr et. We purchased apa proximately 39% and 51% of our total metals requirements frff om our tht ree largest supu pliers in 2022 and 2021, respectively. Although we have no long-term supu ply commitments, we believe we have good relationships with our metals suppliers. If,ff in the fuff tut re, we are unaba le to obtain suffff iff cient amounts of metals on a timely basis, we may not be aba le to obtain metals frff om alternr ate sources at competitive prices. In addition, interrurr pu tions or reductions in our supu ply of metals could make it diffff iff cult to satisfyff our customers’ just-in-time deliveryrr requq irements, which could have a material adverse effff eff ct on our business, fiff nancial condition, results of operations and cash flff ows. Competition Our principal markets are highly competitive. We compete with other public and private regional and national metals service centers, single location service centers and, to a certain degree, metals produdd cers and intermediate metals processors on a regional basis. We have diffff eff rent competitors foff r each of our produd cts and within each region. We compete on the basis of price, produd ct selection and availaba ility, customer service, value-added capa aba ilities, quality, fiff nancial strength and geograpa hic proximity. Certain of our competitors have greater fiff nancial and operating resources than we have. With the exception of certain Canadian or Mexican operations, foff reign-located metals service centers are generally not a material competitive faff ctor in our principal domestic markets. Management Infoff rmation Systems Infoff rmation systems and technology are impm ortant compm onents of our strt ategy. We have invested in technologies and related personnel as a foff undation foff r growtht . We depend on our Enterprr rise Resource Planning, or ERP, systems foff r fiff nancial reporting, management decision-making, tracking and fuff lfiff llment and produd ction inventoryrr management, order optimization. We continue to upu grade and consolidate our systems foff r optimal use of resources and to assure we are taking advantage of apa propriate technology offff eff rings. Our infoff rmation systems foff cus on tht e foff llowing core apa plication areas: InII ventoryr MaMM nagement. Our infoff rmation systems trtt ack tht e statut s, quq antity and cost of inventories by produd ct, location and process in real time. This infoff rmation is essential to optimize inventoryrr management. Difi fff eff rentiated SeSS rvices ToTT CuCC stomersrr . Our infoff rmation systems supu port value-added services to customers, including quq ality control and on-time delivery monitoring and reporting, just-in-time inventoryrr management and shipping services. 9 E-CoCC mmerce and Advdd anced CuCC stomer InII teraction. We are actively participating in electronic commerce initiatives to reduce processing cost and time. In addition to fuff ll electronic data interchange, or EDI, capa aba ilities with our customers and vendors, we also have implemented extrtt anet sites foff r specififf c customers. SySS syy tem and Process EnEE hancementstt . We have completed development of business system solutions to replace our legacy infoff rmr ation systems and have successfuff lly implemented new ERPRR systems at most of our locations. We continue to impm lement these systems to provide standardized business processes, enhanced inventoryrr management, produd ction cost, sales administrative controls and redud ced technical support requq irements. Our business analysts work with our quality team to identifyff opportut nities foff r effff iff ciency and improved customer service. We collaba orate across the metal supu ply chain, working with metals produd cers, servrr ice providers, customers, and indud stryrr -sponsored organizations to develop indud stryr processing standards to drive cost out of the supply chain. Infoff rmation security and continuous availaba ility of infoff rmation processing are of highest priority. Our infoff rmation profeff ssionals employ proven security and monitoring practices, controls, education and tools to mitigate cyber-security risks and threats. In case of physical emergency or threat, our ERP systems, accounting systems, internr et and communications systems are dud pu licated at a secure offff -ff site computing faff cility or through secure, multi-site cloud providers. Automation Initiatives We believe that investing in processing automation solutions is an important component in realizing our profiff taba le growth strategy. We have made investments in automated packaging, material handling and welding, among other solutions, to gain produd ction effff iff ciencies, decrease produd ction costs, impm rove safeff ty conditions foff r our employees and to ease laba or shortage risks. Human Capital Management Our employees are our most valued resource. We work to attract a diverse, qualififf ed workfoff rce through an inclusive and accessible recrurr iting process that utilizes online recrur iting, campus outrt each, internships and job faff irs. We seek to retain and develop empm loyees by offff eff ring compm etitive wages, benefiff ts and training opportut nities, as well as promoting a safeff and healthy workpkk lace cultut re. We comply with all apa plicaba le state, local and internr ational laws governr ing nondiscrimination in location in which we operate. All apa plicants and employees are treated with the same high level of employment in everyrr respect regardless of their gender, ethnicity, religion, national origin, age, marital statut s, political affff iff liation, sexual orientation, gender identity, disaba ility, veteran or other protected statutt s. Our core values (Accountaba ility, Corprr orate Citizenship, Customer Satisfaff ction, Employee Development, Financial Staba ility, Integrity, Respect, Safeff ty and Teamwork) guide our decisions and behavior and set a standard of excellence that rewards our empm loyees. At December 31, 2022, we employed apa proximately 1,668 people. Approximately 179 of tht e hourly plant personnel are represented by seven separate collective bargaining units. The taba le below shows tht e expiration dates of the collective bargaining agreements. Facility Hammond, Indiana Locust, North Carolina St. Paua l, Minnesota Romeoville, Illinois Minneapa olis (coil), Minnesota Indianapa olis, Indiana Minneapa olis (plate), Minnesota Expiration date November 30, 2024 March 4, 2025 Mayaa 25, 2025 Maya 31, 2025 September 30, 2025 Januaryrr 29, 2026 March 31, 2027 We have never experienced a work stoppage and we believe that our relationship with employees is strong. However, any prolonged workr stoppages by our personnel represented by collective bargaining units could have a material adverse impact on our business, fiff nancial condition, results of operations and cash flff ows. 10 Service Marks, Trade Names and Patents We condud ct our business under the name “Olympm ic Steel.” A provision of feff deral law grants exclusive rights to the word “Olympic” to the U.S. Olympic Committee. The U.S. Supu reme Court has recognized, however, tht at certain users may continue to use the word based on long-termr and continuous use. We have used the name Olympic Steel since 1954, but are prevented frff om registering the name “Olympic” and frff om being qualififf ed to do business as a foff reign corprr oration under that name in certain states. In such states, we have registered under diffff eff rent names, including “Oly Steel” and “Olympia Steel.” Our wholly-owned subu sidiaryrr , Olympm ic Steel Iowa, Inc., does business in certain states under the name “Oly Steel Iowa, Inc.” Our Integrity Stainless operation condud cts business under tht e name “Integrity Stainless.” Our CTI operation condud cts business under the name “CTI Power.” Our operation in Monterrey, Mexico operates under the name “Metales de Olympm ic S. de R.L. de C.V.” Our wholly owned subsidiaryrr , B Metals, Inc., does business under the name “Berlin Metals.” Our wholly owned subu sidiary, MCI, Inc., does business under the name “McCullough Indud stries” and we conduct business under the name “EZ Dumper” foff r certain of our produd cts. Our wholly owned subu sidiaryrr , ACT Acquisition, Inc., does business under the name “Action Stainless & Alloys.” Our wholly-owned subu sidiaryrr , SHAQ, Inc., does business under the name “Shaw Stainless & Alloys”. We hold a trademark foff r our stainless steel sheet and plate produd ct “OLY-FLATBRITE,” which has a unique combm ination of surfaff ce fiff nish and flff atness and foff r our “WRIGHT” self-ff dud mping metal hoppers produd ced by McCullough. The registered trademark “ACTION STAINLESS” was acquired in conjn unction with the asset acquisition of Action Stainless. The “EZ DUMPER®” tradename was acquired by us in conjn unction with the acquisition of certain assets related to the manufaff ctutt ring of the EZ Dumpm er hydraua lic dud mpm inserts. The registered tradenames “SHAW STAINLESS” and “SHAW STAINLESS & ALLOY” were acquq ired by us in conjn unction with the asset acquisition of Shaw Stainless. We hold patents foff r certain bollard coverings and methods of manufaff ctut ring and use thereof which were acquq ired in conjn unction with the asset acquisition of Shaw Stainless. Government Regulation Our operations are governed by many laws and regulations, including those relating to workpk lace safeff ty and worker health, principally tht e Occupu ational Safeff ty and Healtht Act and regulations thereunder. We believe that we are in material compliance with these laws and regulations and do not believe that fuff tut re compliance with such laws and regulations will have a material adverse effff eff ct on our business, fiff nancial condition, results of operations and cash flff ows. Environmental We are committed to responsible environmental management practices and commit to tht e prevention of pollution by continually identifyff ing opportutt nities and impm roving environmental perfoff rmance in all aspects of our business. Our faff cilities are subject to certain feff deral, state and local requirements relating to the protection of the environment. We believe tht at we are in material compliance with all environmental laws, do not anticipate any material expenditut res to meet environmental requirements and do not believe that compliance with such laws and regulations will have a material adverse effff eff ct on our business, fiff nancial condition, results of operations and cash flff ows. Seasonality Seasonal faff ctors may causa e demand flff uctut ations within the year, which could impm act our results of operations. Typically, demand in tht e fiff rst half of the year is stronger than tht e second half of the year, as it contains more ship days and is not impm acted by tht e seasonal customer shut-downs in July, November and December due to holidays. Effff eff cts of Inflff ation Inflff ation generally affff eff cts us by increasing the cost of empm loyee wages and benefiff ts, transportation services, energy, borrr owings under our credit faff cility, processing equq ipment, and purchased metals. Although general inflff ation, excluding 11 increases in the price of metals and increased laba or and distribution expense, has increased dud ring 2022, it has not had a material effff eff ct on our fiff nancial results dudd ring the past three years, but may have a signififf cant impact in fuff tut re years. Available Infoff rmation We fiff le annual, quarterly, and currr ent reports, proxy statements, and otht er documents with tht e Securities and Exchange Commission, or SEC, under the Securities Exchange Act of 1934. The SEC maintains an Internrr et website that contains reports, proxy and infoff rmation statements, and otht er infoff rmr ation regarding issuers tht at fiff le electronically with tht e SEC. The pubu lic can obtain any documents that are fiff led by the Company at httpt ://// www.sec.gov. In addition, our annual reports on Formr 8-K and any amendments to all of the foff regoing reports, are made availaba le frff ee of charge on or tht rough tht e “Investor Relations” section of our website at www.olysteel.com as soon as reasonaba ly practicaba le aftff er such reports are electronically fiff led with or fuff rnrr ished to the SEC. 10-K, as well as our quq arterly reports on Form 10-Q, currrr ent reports on Formr Infoff rmation relating to our corpr orate governr ance at Olympic Steel, including our environmental, social and governance, or ESG, commitments to operating responsibly, our Business Ethics Policy, infoff rmation concerning our executive offff iff cers, directors and Board committees (including committee charters), and transactions in our securities by directors and offff iff cers, is availaba le frff ee of charge on or through tht e “Investor Relations” section of our website at www.olysteel.com. We are not including tht e infoff rmr ation on our website as a part of,ff or incorpr orating it by refeff rence into, this Annual Report on Formr 10-K. 12 Forward-Looking Infoff rmation This Annual Report on Form 10-K and other documents we fiff le with the SEC contain various foff rward-looking statements that are based on current expectations, estimates, forff ecasts and projo ections aba out our fuff tut re perfoff rmance, business, our beliefsff and our management’s assumpm tions. In addition, we, or otht ers on our behalf,ff may make foff rwrr ard-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, confeff rences, webcasts, phone calls and confeff rence calls. Words such as “may,” “will,” “anticipate,” “should,” “intend,” “expect,” “believe,” “estimate,” “projo ect,” “plan,” “potential,” and “continue,” as well as the negative of these terms or similar expressions are intended to identifyff foff rward-looking statements, which are made pursuant to the safeff harbr or provisions of the Private Securities Litigation Refoff rm Act of 1995. Such foff rwrr ard-looking statements are subu jb ect to certain risks and uncertainties that could cause our actutt al results to diffff eff r materially frff om those impm lied by such statements including, but not limited to, tht ose set foff rth in Item 1A (Risk Factors) below and the foff llowing: ● risks of faff lling metals prices and inventoryrr devaluation; ● supply disrurr pu tions and inflff ationaryrr pressures, including tht e availaba ility and rising costs of transportation, energy, logistical services and laba or; ● risks associated with shortages of skilled laba or, increased laba or costs and our aba ility to attract and retain qualififf ed personnel; ● rising interest rates and their impacts on our variaba le interest rate debt; ● risks associated with supply chain disrurr pu tion resulting frff om the imbalance of metal supu ply and end-user demands related to tht e novel coronavirurr s, or COVID-19, including additional shutdowns in large markets, such as China, and otht er faff ctors; ● supu plier consolidation or addition of new capa acitytt ; ● risks associated with the invasion of Ukrk aine, including economic sanctions, or additional war or militaryrr conflff ict, could adversely affff eff ct global metals supu ply and pricing; ● general and global business, economic, fiff nancial and political conditions, including, but not limited to, recessionaryrr conditions and legislation passed under the current administration; ● risks associated with tht e COVID-19 pandemic, including, but not limited to customer closures, redudd ced sales and profiff t levels, slower payment of accounts receivabla e and potential increases in uncollectible accounts receivaba le, faff lling metals prices that could lead to lower of cost or net realizable value inventoryrr adjd ustmt ents and the impairmr ent of intangible and long-lived assets, negative impacts on our liquidity position, inaba ility to access our traditional fiff nancing sources on the same or reasonaba ly similar termr s as were availaba le befoff re the COVID-19 pandemic and increased costs associated with and less aba ility to access fuff nds under our asset-based credit faff cility, or ABL Credit Facility, and tht e capa ital markets; ● the levels of imported steel in the United States and the tariffff sff initiated by the U.S. governr ment in 2018 under Section 232 of the Trade Expansion Act of 1962 and impm osed tariffff sff and dud ties on exported steel or otht er produd cts, U.S. trade policy and its impact on the U.S. manufaff ctutt ring indud stryrr ; ● the inflff ation or deflff ation existing within tht e metals industrt yrr , as well as produdd ct mix and inventory levels on hand, which can impm act our cost of materials sold as a result of the flff uctut ations in tht e last-in, fiff rst-out, or LIFO, inventoryr valuation; ● increased customer demand without corrr esponding increase in metal supu ply could lead to an inaba ility to meet customer demand and result in lower sales and profiff ts; ● compm etitive faff ctors such as tht e availaba ility, and global pricing of metals and production levels, indud stryrr shipping and inventoryrr levels and rapa id flff uctutt ations in customer demand and metals pricing; lower of cost or net realizaba le value adjd ustments and LIFO income or expense; ● customer, supplier and compm etitor consolidation, bankrurr pu tcy or insolvency; ● the timing and outcomes of inventoryrr ● redudd ced produdd ction schedules, layoffff sff or work stoppages by our own, our supu pliers’ or customers’ personnel; ● cyclicality and volatility within the metals industrtt yrr ; ● redud ced availaba ility and productivity of our empm loyees, increased operational risks as a result of remote work arrangements, including the potential effff eff cts on internrr al contrt ols, as well as cybersecurity risks and increased vulneraba ilityt to securitytt breaches, infoff rmation technology disrur pu tions and other similar events; ● flff uctut ations in the value of the U.S. dollar and the related impact on foff reign steel pricing, U.S. exports, and foff reign imports to the United States; ● the successes of our effff off rts and initiatives to improve working capa ital tut rnrr over and cash flff ows, and achieve cost savings; ● our aba ility to generate frff ee cash flff ow through operations and repayaa debt; 13 ● our aba ility to successfuff lly integrate recent acquisitions into our business and risks inherent with the acquisitions in the achievement of expected results, including whether the acquisition will be accretive and within the expected timefrff ame; ● the adequacy of our existing infoff rmation technology and business system softff wtt are, including dudd pu lication and securityt processes; ● the amounts, successes and our aba ility to continue our capa ital investments and strt ategic growth initiatives, including acquisitions and our business infoff rmation system implementations; ● events or circumstances that could adversely impact tht e successfuff l operation of our processing equipment and operations; ● the impacts of union organizing activities and the success of union contract renewals; ● changes in laws or regulations or the manner of tht eir interprr retation or enfoff rcement could impact our fiff nancial perfoff rmance and restrtt ict our aba ility to operate our business or execute our strategies; ● events or circumstances tht at could impair or adversely impact the carryrr ing value of any of our assets; ● risks and uncertainties associated with intangible assets, including impairment charges related to indefiff nite lived intangible assets; ● our aba ility to pay regular quarterly cash dividends and the amounts and timing of any fuff tut re dividends; ● our aba ility to repurchase shares of our common stock and the amounts and timing of repurchases, if any; ● our aba ilityt to sell shares of our common stock under the at-tht e-markr et equityt program; and ● unanticipated developments that could occur with respect to contingencies such as litigation, arbr itrtt ation and environmental matters, including any developments tht at would require any increase in our costs foff r such contingencies. Should one or more of these or otht er risks or uncertainties materialize, or should underlying assumpm tions prove incorrrr ect, actut al results may varyrr materially frff om those anticipated, intended, expected, believed, estimated, projo ected or planned. You are cautioned not to place undud e reliance on tht ese foff rwrr ard-looking statements, which speak only as of the date hereof.ff We undertake no obligation to repubu lish revised foff rwrr ard-looking statements to reflff ect the occurrrr ence of unanticipated events or circumstances aftff er the dataa e hereof,ff except as otht erwise required by law. 14 ITEM 1A. RISK FACTORS InII adddd ition to thtt e othtt er infn off rmr ation in thtt isii Annual Repe ort on FoFF rmrr thtt e SESS C,CC thtt e foff llowing risii k faff ctorsrr shouldl be carefe uff llyll considedd red in evaluating us and our businesee s befe off re investing in our common stock.kk ThTT e risii kskk and uncertatt inties dedd scribed below are not thtt e onlyll ones faff cing us. Adddd itional risii kskk and uncertainties, not presentlyll knkk own to us or othtt erwisii e, maya alsll o impm air our business. Althtt oughgg thtt e risii kskk are orgr anizii ed byb headingsgg , and each risii k isii disii cussed thtt at thtt e risii k has not sepe aratelyll ,yy manyn are interrelall ted.dd YoYY u shouldll not interpr ret thtt e disii closure ofo anyn risii k faff ctor to impm lyll alrl eadydd materializii ed.dd IfII anyn ofo thtt e risii kskk actuallyll occur,r our business, fiff nancial condition or resultstt ofo opo erations couldll be materiallyll and advdd ersrr elyll afa fff eff cted.dd InII thtt at case, thtt e trtt ading price ofo our common stock could dedd cline,e and investorsrr maya lose all or part ofo thtt eir investmtt ent. 10-K and our othtt er fiff lingsgg withtt Risks Related to our Business Volatile metals prices can cause signififf cant flff uctuations in our operating results. Our sales and operating income could decrease if we are unable to pass producer price increases on to our customers or if metals prices decline. Our principal raw materials are carbr on and stainless steel and aluminum flff at-rolled coil, sheet, plate, prime tin mill, pipe and tut be that we tytt py ically purchase frff om multiple primaryrr metals produd cers. The metals indud stryrr as a whole is cyclical and, at times, pricing and availaba ility of metals can be volatile dud e to numerous faff ctors beyond our control, including general domestic and internr ational economic conditions, sales levels, competition, levels of inventoryrr held by other metals service centers, produd cer lead times, higher raw material costs foff r tht e producers of metals, imports, import dud ties and tariffff sff and currency exchange rates. For example, startrr ing in August 2020, metals prices increased signififf cantly and reached record levels during 2021 befoff re beginning to decline in October 2021. Metals prices foff r all segments continued to decrease through December 2022. This volatility can signififf cantly affff eff ct tht e availaba ility and cost of raw materials to us. Similar to many otht er metals service centers, we maintain subu stantial inventories of metals to accommodate the short lead requirements of our customers. Accordingly, we purchase metals in an effff off rt to maintain our times and just-in-time deliveryrr inventory at levels tht at we believe to be apa propriate to satisfyff tht e anticipated needs of our customers based upu on historic buying practices, supu ply agreements with customers and market conditions. Our commitments to purchase metals are generally at prevailing market prices in effff eff ct at the time we place our orders. We have no long-term, fiff xed-price metals purchase contracts. When metals prices increase, compm etitive conditions will inflff uence how much of tht e price increase we can pass on to our customers. To the extent we are unaba le to pass on fuff tut re price increases in our raw materials to our customers, tht e net sales and profiff taba ility of our business could be adversely affff eff cted. Declining metals prices, customer demand foff r lower prices and our competitors’ responses to those demands could result in lower sale prices and, consequently, lower gross profiff ts and potentially inventoryrr lower of cost or net realizaba le value adjd ustmt ents as we use existing inventoryrr . Signififf cant or rapa id declines in metals prices or redud ctions in sales volumes could adversely impm act our aba ility to remain in compliance with certain fiff nancial covenants in our credit faff cility, as well as result in us incurrr ing inventoryrr or asset impairment charges. Changing metals prices therefoff re could signififf cantly impact our net sales, gross profiff t, operating income and net income, and could impm air or adversely impact the carryrr ing value of any of our assets. Our business is dependent on transportation and labor. Increases in the cost or availability of transportation or labor could adversely affff eff ct our business and operations, as we may be unable to pass cost increases on to our customers. We ship produd cts throughout the United States via our owned trurr ck flff eet, our dedicated carrier flff eet or by third-party trurr cking fiff rms. Our business depends on the daily transportation of a large number of produd cts. We depend to a certain extent on tht ird parties foff r transportation of our produd cts to customers as well as inbound deliveryrr of our raw materials. If any of tht ese providers were to faff il to deliver materials to us in a timely manner, we may be unaba le to process and deliver our produd cts in response to customer demand. If any of tht ese third parties were to cease operations or cease doing business with us, we may be unabla e to replace tht em at a reasonabla e cost. Failure of a third-party transportation provider to provide transportation services, or our inaba ility to hire drivers foff r our in-house trurr ck flff eet, could harm our reputation, negatively affff eff ct our customer relationships and have a material adverse effff eff ct on our fiff nancial position and results of operations. The continued demand foff r skilled laba or has resulted in tht e need to increase pay rates in certain markets. In addition, we have seen a decline in the skilled laba or apa plicant pool since tht e start of tht e COVID-19 pandemic and increased competition foff r skilled laba or. Our operations are dependent on the laba or used to operate our equipment and deliver produd cts to our customers. Decreased availaba ility of laba or could harm our reputation, negatively affff eff ct our customer relationships and have a material adverse effff eff ct on our fiff nancial position and results of operations. 15 The availaba ility of drivers and laba or is integral to our operations, and increases in our cost of transportation or laba or may have a material adverse effff eff ct on our fiff nancial position and results of operations. Increases in energy prices would increase our operating costs, and we may be unable to pass all these increases on to our customers in the foff rm of higher prices. If our energy costs increase disproportionately to our revenues, our earnrr ings could be redud ced. We use energy to process and transport our produdd cts. Our operating costs increase if energy costs, including electricitytt , diesel fuff el and natut ral gas, rise. During periods of higher energy costs, we may not be aba le to recover our operating cost increases through price increases without redud cing demand foff r our produd cts. In addition, we generally do not hedge our exposure to higher prices via energy fuff tutt res contracts. Increases in energy and fuff el prices will increase our operating costs and may reduce our profiff taba ility if we are unaba le to pass all of the increases on to our customers. Labor disruptions at any of our faff cilities or those of maja or customers could adversely affff eff ct our business, results of operations and fiff nancial condition. At December 31, 2022, we employed apa proximately 1,668 people. Approximately 179 of tht e hourly plant personnel are stoppages by our personnel represented by represented by seven separate collective bargaining units. Any prolonged workr collective bargaining units could have a material adverse impact on our business, fiff nancial condition, results of operations and cash flff ows. In addition, many of our larger customers have unionized workfoff rces and some have experienced signififf cant laba or disrurr pu tions in the past such as work stoppages, slow-downs and strikes. A laba or disrurr ption at one or more of our maja or customers could interrurr pu t produd ction or sales by that customer and caua se that customer to halt or limit orders foff r our products. Any such redud ction in the demand foff r our produd cts could adversely affff eff ct our business, fiff nancial condition, results of operations and cash flff ows. An interruption in the sources of our metals supply could have a material adverse effff eff ct on our results of operations. We purchased apa proximately 39% and 51% of our total metals requirements frff om our tht ree largest supu pliers in 2022 and 2021, respectively. Over tht e past years, supu plier consolidation, decreased mill produd ction dud e to the COVID-19 pandemic and import tariffff sff decreased steel availaba ility and increased mill lead times and steel prices. Fewer availaba le supu pliers increases tht e risk of supply disrurr pu tion through both schedud led and unschedud led supu plier outages. Conversely, the addition of new mill sources and decreased domestic demand could lead to domestic over capa acity, which could lead to a decrease in steel prices, which could have a material adverse effff eff ct on our business, fiff nancial condition, results of operations and cash flff ows. We have no long-term supply commitments with our metals supu pliers. If,ff in the fuff tut re, we are unaba le to obtain suffff iff cient amounts of metals on a timely basis, we may not be aba le to obtain metals frff om alternr ate sources at competitive prices. In addition, late deliveries, interrr urr ptions or reductions in our supply of metals could make it diffff iff cult to satisfyff our customers’ just-in-time deliveryrr requirements, which could have a material adverse effff eff ct on our business, fiff nancial condition, results of operations and cash flff ows. We service industries that are highly cyclical, and any flff uctuation in our customers’ demand could impact our sales, gross profiff ts and profiff tability. We sell our produdd cts in a variety of industrtt ies, including capa ital equipment manufaff ctut rers foff r indudd strial, agricultut ral and construrr ction use, the aua tomotive indud stryrr , the utilities indud stryr , and manufaff ctut rers of faff ba ricated metals produd cts. Numerous faff ctors, such as general economic conditions, flff uctut ations in the U.S. dollar, governr ment stimulus or regulation, availaba ility of adequq ate credit and fiff nancing, consumer confiff dence, signififf cant business interrrr urr ptions, laba or shortages or work stoppages, levels and other faff ctors beyond our control, may cause signififf cant demand energy prices, seasonality, customer inventoryrr flff uctut ations frff om one or more of tht ese industries. Any flff uctut ation in demand within one or more of tht ese indud stries may be signififf cant and may last foff r a lengthy period of time. In periods of economic slowdown or recession in the United States, excess customer or service center inventoryrr or a decrease in tht e prices that we cana realize frff om sales of our produdd cts to customers in any of tht ese indud stries could result in lower sales, gross profiff ts and profiff taba ility. 16 Approximately 52% and 47% of our 2022 and 2021 consolidated net sales, respectively, were to indud strial machineryrr and equipment manufaff ctut rers and their faff ba ricators. Due to the concentration of customers in the industrial machinery and equipment indud stryrr , a decline in production levels in tht at indudd stryrr could result in lower sales, gross profiff ts and profiff taba ility. Approximately 2% and 7% of our 2022 and 2021 consolidated net sales, respectively, were to aua tomotive manufaff ctut rers or manufaff ctutt rers of aua tomotive compm onents and parts, whom we refeff r to as automotive customers. Historically, due to tht e concentration of customers in the automotive indud stryrr , our gross profiff ts on these sales have generally been less than our gross profiff ts on sales to customers in other indud stries. On Septembm er 17, 2021, we sold subu stantially all of the assets related to our Detroit, Michigan operation. The Detrtt oit operation was primarily foff cused on tht e distribution of carbr on flff at-rolled steel to domestic automotive manufaff ctut rers and tht eir supu pliers. Aftff er the sale, less than 3% of our sales were to automotive manufaff ctutt rers or manufaff ctut rers of automotive compm onents and parts. Supply chain disruptions and inflff ationary pressures caused by the COVID-19 pandemic, and other faff ctors, has had, and could continue to have an adverse effff eff ct on our business, fiff nancial condition and liquidity. We are dependent on our supu pliers to provide us with metal. During 2021 and 2022, we experienced increased supu ply chain disrurr pu tions resulting frff om tht e imbalance of metal supu ply and end-user demands as customer demand increased without a corrr esponding increase in metal supply, as businesses reopened aftff er tht e COVID-19 pandemic. Our inaba ility to meet customer demand as a result of supu ply disrurr pu tions and inflff ationaryrr pressures could result in lower sales and profiff ts. Although it is not possible to predict tht e ultimate impact of the COVID-19 pandemic or fuff tutt re worldwide health emergencies, including on our business, fiff nancial position or liquidity, such impm acts that may be material include, but are not limited to: (i) reduced sales and profiff t levels, (ii) the slower payment of accounts receivaba le and potential increases in uncollectible adjd ustments and the accounts receivaba le, (iii) faff lling metals prices that could lead to lower of cost or market inventoryrr impairment of intangible and long-lived assets, (v) redud ced availaba ility and produd ctivity of our employees, (vi) increased operational risks as a result of remote work arrr angements, including the potential effff eff cts on internrr al controls, as well as cybersecurity risks and increased vulneraba ility to security breaches, infoff rmation technology disrurr pu tions and other similar events, (vii) negative impacts on our liquidity position, (viii) inaba ility to access our traditional fiff nancing sources on the same or reasonaba ly similar terms as were availaba le befoff re the a pandemic, and (ix) increased costs and less aba ility to access fuff nds under our ABL Credit Facility and the capa ital markets. To the extent the duration of any of these conditions extends foff r a longer period of time, tht e impact will generally be a more severe adverse impact. We cannot predict the impact that the COVID-19 pandemic or fuff tut re worldwide health emergencies ultimately will have on our customers, supu pliers, vendors, and other business partners, and each of their fiff nancial conditions; however, any material effff eff ct on tht ese parties could adversely impact us. The situt ation is changing rapa idly and additional impm acts may arise that we are not aware of currently. Our success is dependent upon our relationships with certain key customers. We have derived and expect to continue to derive a signififf cant portion of our revenues frff om a relatively limited number of customers. Collectively, our top tht ree customers accounted foff r apa proximately 7% and 6% of our consolidated net sales in 2022 and 2021, respectively. Approximately 52% and 47% of our consolidated net sales dud ring 2022 and 2021, respectively, were directly related to indud strial machineryrr and equipment manufaff ctut rers and their faff ba ricators. Due to the large concentration of customers in feff w segments, changes to demand of produdd ct by customers in the indud strial machineryrr and equipment manufaff ctut rers and tht eir faff ba ricators could have a material adverse effff eff ct on our business, our results of operations and our cash flff ows. Many of our larger customers commit to purchase on a regular basis at agreed upu on prices over periods frff om tht ree to twtt elve months. We generally do not have long-termr contrtt acts with our customers. As a result, the relationship, as well as particular orders, can generally be terminated with relatively little advance notice. The loss of any one of our maja or customers or decrease in demand by those customers or credit constraints placed on tht em could have a material adverse effff eff ct on our business, our results of operations and our cash flff ows. 17 Capital deployed foff r acquisitions and capital investments at our existing locations may be unable to achieve expected results, or sustain our growth and events or circumstances that could adversely impact operations could have a material adverse effff eff ct on our results of operations. We have grown through acquisitions and by increasing sales and servrr ices to our existing customers, aggressively pursuing new customers and services, building or purchasing new faff cilities, acquiring and upu grading processing equipment and expanding our produd ct mix in order to expand the range of customer services and produd cts that we offff eff r. We intend to actively pursue our growth strtt ategy in the fuff tutt re. Futut re expansion or construrr ction projo ects, could have adverse effff eff cts on our results of operations dudd e to the impm act of the associated start-upu costs and the potential foff r underurr tilization in the start-upu phase of a faff cility. We continue to pursue potential acquisition targets; however, we are unaba le to predict whether or when any prospective acquq isition candidate will become availaba le or the likelihood tht at any acquisition will be completed. Moreover, in pursuing acquisition opportut nities, we may compete foff r acquisition targets with other companies with similar growth strategies tht at may be larger and have greater fiff nancial and other resources than we have. Compm etition among potential acquirers could result in increased prices foff r acquisition targets. As a result, we may not be aba le to consummate acquisitions on terms satisfaff ctoryrr to us, or at all. The pursuit of acquisitions and other growth initiatives may divert management’s time and attention away frff om day-to-day through acquisitions, expansion of currr ent faff cilities, greenfiff eld constrtt ur ction or operations. In order to achieve growtht to otherwise, additional fuff nding sources may be needed and we may not be aba le to obtain the additional capa ital necessaryrr pursue our growth strt ategy on termr s that are satisfaff ctoryrr to us, or at all. We continue to invest in processing equipment to supu port customer demand. Although we have successfuff lly installed new and used processing equipment in the past, we can provide no assurance tht at fuff ture installations will be successfuff l, or achieve expected results. Risks associated with the installations include, but are not limited to: ● a signififf cant use of management and employee time; ● the possibility that the perfoff rmance of the equipment does not meet expectations; and ● the possibility that delays frff om the installations may make it diffff iff cult foff r us to maintain relationships with our customers, employees or suppliers. Diffff iff culties and delays associated with the installation of new processing equipment could adversely affff eff ct our business, our customer service, our results of operations and our cash flff ows. Customer and third-party credit constraints and credit losses could have a material adverse effff eff ct on our results of operations. Some of our customers may experience diffff iff culty obtaining and/or maintaining credit availaba ility. In particular, certain customers tht at are highly leveraged represent an increased credit risk. Interest rate volatility may fuff rtht er amplifyff this credit risk. Some customers have redud ced their purchases becaua se of these credit constraints. Moreover, our disciplined credit policies have, in some instances, resulted in lost sales. If we have misjs udged our credit estimations and they result in fuff tut re credit losses, lost sales or lost customers, there could be a material adverse effff eff ct on our business, fiff nancial condition, results of operations, cash flff ows and our allowance foff r credit losses. Impairment in the carrying value of intangible assets could result in the incurrence of impairment charges and negatively impact our results of operations. The net carryrr ing value of intangibles represents non-amortizable goodwill and trade names, covenant not to compm ete and customer relationships, net of accumulated amortization, related to recent acquisitions. Indefiff nitely lived assets are evaluated foff r impm airment annually or whenever events or changes in circumstance indicate tht at the carrrr yrr ing amounts of tht ese assets may not be recoveraba le. Amortizable intangible assets are evaluated forff impairment whenever events or changes in circumstance indicate tht at the carryr ing amounts of tht ese assets may not be recoveraba le. Impairmr ents to intangible assets may be caused by faff ctors outside our control, such as increased compm etitive pricing pressures, lower tht an expected revenue and profiff t growth rates, changes in discount rates based on changes in tht e cost of capa ital (interest rates, etc.), or tht e loss of a signififf cant customer and could result in the incurrence of impairmr ent charges and negatively impm act our results of operations. 18 Our infoff rmation technology systems could be negatively affff eff cted by cyber security threats. Increased global infoff rmation technology security requirements, vulneraba ilities, threats and a rise in sophisticated and targeted cybercrime pose a risk to the security of our systems, networkr s and tht e confiff dentiality, availaba ility and integrity of our data. The risk has been fuff rther enhanced with an increased remote workfoff rce post COVID-19 pandemic. Despite our effff off rts to protect sensitive infoff rmation and confiff dential and personal data, our faff cilities and systems and those of our tht ird-party service providers may be vulneraba le to security breaches. This could lead to disclosure, modififf cation or destrt ur ction of proprietary and other key infoff rmation, ransom payments, produdd ction downtimes and operational disrurr pu tions, which in tutt rnrr could adversely affff eff ct our business, fiff nancial condition, results of operations and cash flff ows. The faff ilure of our key computer-based systems could have a material adverse effff eff ct on our business. We maintain separate regional legacy compm uter-based systems in tht e operation of our business and we depend on these systems to a signififf cant degree, particularly foff r inventoryrr management. These systems are vulnerable to, among other things, damage or interrurr pu tion frff om fiff re, flff ood, tornado and otht er natut ral disasters, power loss, computer system and netwtt orkr faff ilures, operator negligence, physical and electronic loss of data or security breaches and compm uter virur ses. Although we have secure back-upu systems offff -ff site, the destrurr ction or faff ilure of any one of our computer-based systems foff r any signififf cant period of time could materially adversely affff eff ct our business, fiff nancial condition, results of operations and cash flff ows. Our implementation of infoff rmation systems could adversely affff eff ct our results of operations and cash flff ows. We are in tht e process of implementing infoff rmation systems and eliminating our legacy operating systems. The objb ective is to standardize and strtt eamline business processes and improve supu port foff r our service center and faff brication business. Risks associated with the phased implementation include, but are not limited to: ● a signififf cant deployment of capa ital and a signififf cant use of management and empm loyee time; ● the possibility that the timelines, costs or complexities related to tht e new system implementation will be greater than expected; ● limitations on tht e availaba ility and adequacy of proprietaryr softff wtt are or consulting, training and projo ect management services, as well as our aba ility to retain key personnel; ● the possibility that the softff wtt are, once fulff ● the possibility that softff ware and impm lementation vendors may not be aba le to support tht e projo ect as planned; ● the possibility that benefiff ts frff om tht e systems maya be less or take longer to realize than expected; and ● the possibility that disrurr pu tions frff om the implementation may make it diffff iff cult foff r us to maintain relationships ly implemented, does not fuff nction as planned; with our customers, empm loyees or suppliers. Although we have successfuff lly initiated use of tht e systems at most of our locations, we can provide no assurance that the rollout to the remaining locations will be successfuff l or will occur as planned and without disrurr ption to operations. Diffff iff culties associated with the design and implementation of new infoff rmr ation systems could adversely affff eff ct our business, our customer service, our results of operations and our cash flff ows. We depend on our senior management team and the loss of any member could prevent us frff om implementing our business strategy. Our success is dependent upu on tht e management and leadership skills of our senior management team. Michael D. Siegal has served as our Executive Chairman of the Board since Januaryrr 1, 2019, aftff er servrr ing as our Chief Executive Offff iff cer since 1984. Richard T. Maraba ito has served as our Chief Executive Offff iff cer since Januaryrr 1, 2019, aftff er serving as our Chief Financial Offff iff cer since 2010, and Richard A. Manson has served as our Chief Financial Offff iff cer since Januaryrr 1, 2019, aftff er serving as our Vice President and Treasurer since 2013. Andrew S. Greiffff has servrr ed as our President and Chief Operating Offff iff cer since Januaryrr 1, 2020 aftff er servrr ing as our Executive Vice President and Chief Operating Offff iff cer since 2016. The loss of any member of our senior management team or the faff ilure to attract and retain additional qualififf ed personnel could prevent us frff om implementing our business strategy. We have employment agreements, which include non-competition provisions, with our Chief Executive Offff iff cer, our President and Chief Operataa ing Offff iff cer, and our Chief Financial Offff iff cer that expire on Januaryrr 1, 2024, Januaryrr 1, 2025, and January 1, 2027, respectively. 19 Participation in multiemployer pension plans carry withdrawal liability risks, which could impact our results of operations and fiff nancial condition. Through our CTI subu sidiaryrr , we contribute to one multiemployer pension plan. The risks of participating in the multiempm loyer plan are diffff eff rent frff om a single-employer plan in that (i) assets contributed to the multiemployer plan by one employer may be used to provide benefiff ts to employees of other participating employers, (ii) if a participating empm loyer stops contributing to the plan, tht e unfuff nded obligations of the plan may be bornrr e by the remaining participating empm loyers, and (iii) if CTI chooses to stop participating in the multiempm loyer plan, CTI may be required to pay tht e plan an amount based on the unfuff nded statut s of the plan, refeff rrr ed to as a withdrawal liaba ility. Any fuff tutt re withdrawal liaba ility could adversely affff eff ct our business, fiff nancial condition, results of operations and cash flff ows. Our insurance coverage, customer indemnififf cations or other liability protections may be unavailable or inadequate to cover all of our signififf cant risks, which could have a material adverse effff eff ct on our results of operations. From time to time, we may be subu jb ect to litigation incidental to our businesses, including claims foff r damages arising out of use of our produdd cts, claims involving empm loyment matters, cyber security claims and commercial disputes. We currrr ently carryrr insurance frff om fiff nancially strt ong, highly rated counterprr arties in estaba lished markets to cover signififf cant risks and liaba ilities. However, our insurance coverage may be inadequq ate if such claims do arise and any liaba ility not covered by insurance could have a material adverse effff eff ct on our business. Disputes with insurance carrr iers, including over policy terms, reservation of rights, tht e apa plicaba ility of coverage (including exclusions), compm liance with provisions (including notice) and/dd or the insolvency of one or more of our insurers may signififf cantly affff eff ct the amount or timing of recoveryrr . Although we have been aba le to obtain insurance in amounts we believe to be apa propriate to cover such liaba ility to date, our insurance premiums may increase in the fuff tut re as a consequq ence of conditions in the insurance business generally or our situt ation in particular. Any such increase could result in lower net income or caua se tht e need to redud ce our insurance coverage. In addition, a fuff tut re claim may be brought against us tht at could have a material adverse effff eff ct on us. In some circumstances, we may be entitled to certain legal protections or indemnififf cations frff om our customers tht rough contrtt actut al provisions, laws, regulations or otherwise. However, these protections are not always availaba le, are tytt pically subjb ect to certain terms or limitations, including the availaba ility of fuff nds, and may not be suffff iff cient to cover all losses or liaba ilities incurrr ed. If insurance coverage, customer indemnififf cations and/dd or other legal protections are not availaba le or are not suffff iff cient to cover our risks or losses, it could have a material adverse effff eff ct on our results of operations. Risks Related to Our Industry Our business is highly competitive, and increased competition could reduce our market share and harm our fiff nancial perfoff rmance. Our business is highly competitive. We compete with metals service centers and, to a certain degree, metals producers and intermediate metals processors, on a regular basis, primarily on quality, price, inventoryrr availaba ility and the aba ility to meet the deliveryrr schedud les and service requq irements of our customers. We have diffff eff rent competitors foff r each of our products and within each region. Certain of tht ese competitors have fiff nancial and operating resources in excess of ours. Increased competition could lower our gross profiff ts or redud ce our market share and have a material adverse effff eff ct on our fiff nancial perfoff rmance. Risks Related to Our Debt Although we expect to fiff nance our growth initiatives through borrowings under our ABL Credit Facility, we may have to fiff nd additional sources of fuff nding, which could be diffff iff cult. Additionally, increased leverage and borrowing rates could adversely impact our business and results of operations. We expect to fiff nance our growth initiatives through borrr owings under our ABL Credit Facility, which matut res on June 16, initiatives, and we may 2026. However, our ABL Credit Facility may not be suffff iff cient or availaba le to fiff nance our growtht fuff nds and liquidity have to fiff nd additional sources of fiff nancing. It may be diffff iff cult foff r us in the fuff tut re to obtain the necessaryr on terms acceptaba le to us, or at all, to rur n and expand our business. 20 The borrrr owings under our ABL Credit Facility are primarily at variaba le interest rates. If interest rates in tht e fuff tutt re, which may be highly volatile, were to increase 100 basis points (1.0%) frff om December 31, 2022 rates and, assuming no change in total debt frff om December 31, 2022 levels, the additional annual interest expense to us would be apa proximately $0.9 million. The discontinuance of the London Interbank Offff eff red Rate, or LIBOR, and adoption of the Secured Overnight Funding Rate, or SOFR, may adversely affff eff cted interest expense related to our outstanding debt, including amounts borrowed under the ABL Credit Facility. As of December 31, 2022, we had apa proximately $165.7 million of borrowings outstanding tht at was indexed to LIBOR. On Januaryrr 3, 2023, the Compm any entered into a Sixth Amendment to Third Amended and Restated Loan and Security Agreement, which amened our existing ABL Credit Facility. This amendment upu dated the refeff nce rate on these borrowings frff om LIBOR to SOFR. These changes may result in interest obligations tht at do not otherwise correlate exactly over time with the payments tht at would have been made on such debt if LIBOR had been used. We cannot be sure that this change will be without any adverse impacts, but we believe there will be no material impact on our fiff nancial position or results of operations Regulatory and Environmental Risks Quotas and tariffff sff operating results. imposed or removed as a result of government actions can cause signififf cant flff uctuations in our imposed as a result of Global demand and global metals pricing, supu ply and demand are impacted by quotas and tariffff sff initiated by tht e U.S. governr ment in 2018 under Section 232 of the Trade Expansion Act of governr ment actions. The tariffff sff 1962 (section 232 tariffff sff ) resulted in increased metals prices in the United States. Effff eff ctive Januaryrr 1, 2022, the United States and the European Union replaced tht e existing 25 percent tariffff on EU steel products and 10 percent tariffff on EU aluminum produd cts with a tariffff -ff rate quq ota, or TRQ. Under tht e TRQ arrrr angement, historically based volumes of EU steel and aluminum produd cts will enter tht e U.S. without apa plication of Section 232 dud ties subu jb ect to certain conditions. The removal and addition of countryrr -specififf c tariffff sff has caused uncertainty in the metals marketpt lace. Any additional fuff tutt re tariffff sff or quotas imposed on steel and aluminum impm orts may increase the price of metal, which may impact our sales, gross margin and profiff taba ility if we are unaba le to pass the increased prices onto our customers. The prolonged impm osition of tariffff sff could also lead to additional trade disputes that could impact the global demand foff r metals and impact our sales, gross margin and profiff taba ility. Conversely, the removal of existing tariffff sff could cause tht e price of metal to decline, which may impact our sales, gross margin and profiff taba ility. Changes in laws or regulations, including tax refoff rm legislation, or the manner of their interpretation or enfoff rcement could adversely impact our fiff nancial perfoff rmance and restrict our ability to operate our business or execute our strategies. New laws or regulations, or changes in existing laws or regulations, or tht e manner of their interprr retation or enfoff rcement, could increase our cost of doing business and restrict our aba ility to operate our business or execute our strategies. In particular, there may be signififf cant changes in U.S. laws and regulations and existing internr ational trade agreements by the currrr ent U.S. presidential administration tht at could affff eff ct a wide variety of indudd stries and businesses, including tht ose businesses we own and operate. If the U.S. presidential administration materially modififf es U.S. laws and regulations and internr ational trade agreements, our business, fiff nancial condition, and results of operations could be affff eff cted. 21 We are subject to signififf cant environmental, health and safeff ty laws and regulations and related compliance expenditures and liabilities. Our businesses are subject to many feff deral, state and local environmental, health and safeff ty laws and regulations, particularly with respect to the use, handling, treatment, and disposal of subu stances and waste used or generated in our manufaff ctut ring processes. We have incurred and expect to continue to incur expenditut res to compm ly with apa plicaba le environmental laws and regulations. Our faff ilure to comply with apa plicaba le environmental laws and regulations and permit requq irements could result in civil or criminal fiff nes or penalties or enfoff rcement actions, including regulatoryrr or judicial orders enjn oining or curtailing operations or requiring corrrr ective measures, installation of pollution control equq ipment or remedial actions. We may in the fuff tut re be required to incur costs relating to the investigation or remediation of property, and foff r addressing environmental conditions. Some environmental laws and regulations impm ose liaba ility and responsibility on present and foff rmer owners, operators or users of faff cilities and sites foff r contamination at such faff cilities and sites without regard to causation or knowledge of contamination. Consequently, we cannot assure you that existing or fuff tut re circumstances, tht e development of new faff cts or the faff ilure of third parties to address contamination at currr ent or foff rmer faff cilities or properties will not require signififf cant expenditut res by us. We expect to continue to be subjb ect to environmental and health and safeff ty laws and regulations. It is diffff iff cult to predict the fuff tutt re interprr retation and development of environmental and health and safeff ty laws and regulations or their impm act on our fuff tutt re earnr ings and operations. We anticipate that compm liance will continue to require increased capa ital expenditut res and operating costs. Any increase in these costs, or unanticipated liaba ilities arising foff r exampm le, out of discoveryrr of previously unknk own conditions or more aggressive enfoff rcement actions, could have a material adverse effff eff ct on our business, fiff nancial condition, results of operations and cash flff ows. We may be exposed to certain regulatory and fiff nancial risks related to climate change. Growing concernr s aba out climate change may result in tht e imposition of additional regulations or restrictions to which we may become subu jb ect. A numbm er of governments or governmental bodies have introdud ced or are contemplating regulatoryrr changes in response to climate change, including regulating greenhouse gas emissions. The outcome of new legislation or regulation in tht e United States may result in new or additional requirements, additional charges to fuff nd energy effff iff cient activities, and feff es or restrictions on certain activities. Compliance with these climate change initiatives may also result in additional costs to us, including, among other things, increased produd ction costs, additional taxes, reduced emission allowances or additional restrictions on produd ction or operations. Any adopted fuff tutt re climate change regulations could also negatively impact our aba ility to compete with companies situt ated in areas not subjb ect to such limitations. Even without such regulation, increased pubu lic awareness and adverse pubu licity aba out potential impm acts on climate change emanating frff om us us. We may not be aba le to recover the cost of compm liance with new or more stringent laws and or our indud stryrr could harmr regulations, which could adversely affff eff ct our results of operations, cash flff ow or fiff nancial condition. Expectations relating to environmental, social and governance considerations expose us to potential liabilities, increased costs, reputational harm and other adverse effff eff cts on our business. Many governrr ments, regulators, investors, employees, customers and other stakeholders are increasingly foff cused on environmental, social and governance (ESG) considerations relating to businesses, including climate change and greenhouse gas emissions, human capa ital and diversity, equity and inclusion. We make statements aba out our ESG goals and initiatives through infoff rmr ation provided on our website, press statements and other communications. Responding to tht ese ESG considerations and implementation of these goals and initiatives involves risks and uncertainties, requires investments, which could be material, and are impacted by faff ctors that may be outside of our control. In addition, some stakeholders may disagree with our goals and initiatives and the foff cus of stakeholders may change and evolve over time. Stakeholders also may have veryr diffff eff rent views on where ESG focff us should be placed, including diffff eff ring views of regulators in various jurisdictions in which we operate. Any faff ilure, or perceived faff ilure, by us to achieve our goals, fuff rther our initiatives, adhere to our pubu lic statements, comply with feff deral, state or international ESG laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatoryr proceedings against us and materially adversely affff eff ct ouru business, reputation, results of operations, fiff nancial condition and stock price. 22 The market price foff r our common stock may be volatile. Risks Related to Our Common Stock Historically, there has been volatility in the market price foff r our common stock. Furthermore, tht e market price of our common stock could flff uctut ate substantially in tht e fuff tut re in response to a number of faff ctors, including, but not limited to, the risk faff ctors described herein. Examples include: ● changes in commoditytt prices, especially metals; ● changes in fiff nancial estimates or recommendations by stock market analysts regarding us or our competitors; ● the operating and stock perfoff rmr ance of other compm anies that investors mayaa deem comparaba le; ● developments affff eff cting us, our customers or our suppliers; ● press releases, earnr ings releases or pubu licity relating to us or our competitors or relating to trends in the metals service center indud stryrr ; ● inaba ility to meet securities analysts’ and investors’ quarterly or annual estimates or targets of our perfoff rmance; ● sales of our common stock by large shareholders; ● the amount of shares acquired foff r short-term investments; ● general domestic or internr ational economic, market and political conditions; ● flff uctut ations in the value of the U.S. dollar; ● changes in tht e legal or regulatoryrr environment affff eff cting our business; and ● announcements by us or our compm etitors of signififf cant acquisitions, dispositions or joint ventut res, or other material events impacting tht e domestic or global metals indud stryrr . In the past, the stock market has experienced signififf cant price and volume flff uctutt ations. This volatility has had a signififf cant effff eff ct on the market prices of securities issued by many companies foff r reasons unrelated to their specififf c operating perfoff rmance. These faff ctors may adversely affff eff ct tht e trading price of our common stock, regardless of actut al operating perfoff rmance. In addition, stock markets frff om time to time experience extreme price and volume flff uctut ations tht at may be unrelated or disproportionate to the operating perfoff rmance of compm anies. In the past, some shareholders have brought securities class action lawsuits against compm anies foff llowing periods of volatility in the market price of their securities. We may in the fuff tutt re be the target of similar litigation. Securu ities litigation, regardless of whether our defeff nse is ultimately successfuff l, could result in substantial costs and divert management’s attention and resources. Our quarterly results may be volatile. Our operating results have varied on a quq arterly basis dudd ring our operating historyrr and are likely to flff uctut ate signififf cantly in the fuff tut re. Our operating results may be below tht e expectations of our investors or stock market analysts as a result of a variety of faff ctors, including the impact of LIFO expense estimates, many of which are outside of our control. Factors tht at may affff eff ct our quarterly operating results include, but are not limited to, tht e risk faff ctors listed aba ove. Many faff ctors could caua se our revenues and operating results to vary signififf cantly in tht e fuff tut re. Accordingly, we believe that quarter-to-quq arter compm arisons of our operating results are not necessarily meaningfuff l. Investors should not rely on the results of one quq arter as an indication of our fuff tutt re perfoff rmr ance. Furtht er, it is our practice not to provide foff rwrr ard-looking sales or earnr ings guidance and not to endorse any analyst’s sales or earnr ings estimates. Nonetheless, if our results of operations in any quarter do not meet analysts’ expectations, our stock price could materially decrease. Certain provisions in our charter documents and Ohio law could delay or prevent a change in management or a takeover attempt that you may consider to be in your best interest. We are subu jb ect to Chapa ter 1704 of the Ohio Revised Code, which prohibits certain business combinations and transactions between an “issuing public corpr oration” and an “Ohio law interested shareholder” foff r at least three years aftff er the Ohio law interested shareholder attains 10% ownership, unless the Board of Directors of tht e issuing pubu lic corpr oration apa proves the transaction befoff re tht e Ohio law interest shareholder attains 10% ownership. We are also subu jb ect to Section 1701.831 of the Ohio Revised Code, which provides tht at certain notice and infoff rmr ational fiff lings and special shareholder meeting and voting procedures must be foff llowed prior to consummation of a proposed “control share acquq isition.” Assuming compm liance witht the notice and infoff rmation fiff lings prescribed by the statut te, a proposed contrtt ol share acquisition may be made only if the 23 acquisition is apa proved by a maja ority of tht e voting power of the issuer represented at tht e meeting and at least a maja ority of the voting power remaining aftff er excluding the combined voting power of the “interested shares.” Certain provisions contained in our Amended and Restated Articles of Incorprr oration and Amended and Restated Code of Regulations and Ohio law could delay or prevent tht e removal of directors and otht er management and could make a merger, tender offff eff r or proxy contest involving us tht at you may consider to be in your best interest more diffff iff cult. For example, tht ese provisions: ● allow our Board of Directors to issue prefeff rrrr ed stock without shareholder apa proval; ● provide foff r our Board of Directors to be divided into two classes of directors servrr ing staggered terms; ● limit who can call a special meeting of shareholders; and ● estaba lish advance notice requirements foff r nomination foff r election to the Board of Directors or foff r proposing matters to be acted upu on at shareholder meetings. These provisions may discourage potential takeover attempts, discourage bids foff r our common stock at a premium over market price or adversely affff eff ct the market price of,ff and tht e voting and other rights of the holders of our common stock. These provisions could also discourage proxy contests and make it more diffff iff cult foff r you and otht er shareholders to elect directors other than tht e candidates nominated by our Board of Directors. Principal shareholders who own a signififf cant number of shares of our common stock may have interests that conflff ict with yours. Michael D. Siegal, our Executive Chairman of the Board and one of our largest shareholders, owned apa proximately 10.9% of our outstanding common stock as of December 31, 2022. Mr. Siegal may have the aba ility to signififf cantly inflff uence matters requq iring shareholder apa proval. In deciding how to vote on such matters, Mr. Siegal may be inflff uenced by interests that conflff ict with yours. General Risks Climate change may cause changes in weather patterns and increase the frff equency or severity of weather events and flff ooding. An increase in severe weatht er events, including those caua sed by climate change, may adversely impact us, our operations, and our aba ility to procure raw materials and process and transport our produd cts and could result in an adverse effff eff ct on our business, fiff nancial condition and results of operations. Extreme weather conditions may increase our costs, temporarily impact our production capa aba ilities or cause damage to our faff cilities. Severe weather may also adversely impact our suppliers and our customers and their aba ility to deliver and/or purchase and transport our produd cts. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 24 ITEM 2. PROPERTIES We believe that our properties are strategically situt ated relative to our domestic supu pliers, our customers and each other, allowing us to support customers frff om multiple locations. Produd ct is shipped frff om the most advantageous faff cility, regardless of where tht e customer order is taken. The faff cilities are located in the hubu s of maja or metals consumpm tion markets, and within a 250-mile radius of most of our customers, a distance apa proximating tht e one-day driving and delivery limit foff r trtt ur ck shipments. The foff llowing taba le sets foff rth certain infoff rmation concernr ing our principal properties including which segment’s products are serviced out of each location: Function Owned or Leased Carbon Flat Segment Specialty Metals Flat Tube and Pipe Corprr orate offff iff ces, coil processing and distribution center Coil and plate processing, distribution center and offff iff ces Plate processing, distribution center and offff iff ces Plate processing, faff ba rication and distribution center Coil and plate processing, distribution center and offff iff ces Plate processing, faff ba rication, distribution center and offff iff ces Plate processing, distribution center and offff iff ces Plate processing, faff ba rication, manufaff cturing, distribution center and offff iff ces Coil and plate processing, faff brication, distribution center and offff iff ces Coil and plate processing, faff brication, distribution center and offff iff ces Coil and plate processing, faff brication, and distribution center Plate processing, faff ba rication and distribution center Coil processing, distribution center and offff iff ces Coil processing, distribution center and offff iff ces Coil and sheet processing, distribution center and offff iff ces Coil and sheet processing, faff brication and distribution center Coil processing, distribution center and offff iff ces 107,000 Distribution center and offff iff ces Operation Location Cleveland Minneapolis Chambersburg Bedfoff rd Heights, Ohio (1) Bedfoff rd Heights, Ohio (1) Bedfoff rd Heights, Ohio (1) Dover, Ohio Plymouth, Minnesota Plymouth, Minnesota Chambersburg, Pennsylvania Square Feet 127,000 121,500 59,500 62,000 196,800 112,200 157,000 Chambersburg, Pennsylvania 150,000 Iowa Bettendorf,ff Iowa 244,000 Winder Winder, Georgia 285,000 Kentucky Buforff d, Georgia Mt. Sterling, Kentuckyk Mt. Sterling, Kentuckyk 120,000 100,000 Gary Connecticut Chicago Garyr , Indiana Milfoff rd, Connecticut Schaumburg, Illinois 183,000 134,000 122,500 Bartlett Bartlett, Illinois 81,400 Hammond, Indiana 117,950 Berlin Metals McCullough Industries Streetsboro Rock Hill Dallas Houston Streetsboro, Ohio Latrobe, Pennsylvania Rock Hill, South Carolina Carrollton, Texas Houston, Texas Kenton, Ohio 75,000 Manufaff cturing faff cility Coil and sheet processing, distribution center and offff iff ces Coil and sheet processing, distribution center 66,200 43,200 (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) Owned Owned Leased (2) Owned Owned Owned Owned Owned Owned Owned Leased (3) Owned Owned Owned Owned Owned Leased (4) Leased (5) Owned Owned Leased (6) 45,075 Distribution, processing center and offff iff ces 44,480 Distribution, processing center and offff iff ces 30,000 Distribution, processing center and offff iff ces Leased (7) Owned Owned 25 (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) Operation Location Square Feet Function Owned or Leased Carbon Flat Specialty Metals Flat Tube and Pipe (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) (cid:1591) Springdale Kansas City Powder Springs Marietta Hiram Albany Chicago St. Paul Charlotte Fond du Lac Indianapolis Des Moines Owatonna Springdale, Arkansas Riverside, Missouri Powder Springs, Georgia Powder Springs, Georgia Powder Springs, Georgia Marietta, Georgia Marietta, Georgia Hiram, Georgia Albany, Georgia Romeoville, Illinois St. Paul, Minnesota Locust, North Carolina Fond dudd Lac, Wisconsin Indianapa olis, Indiana Ankeny, Iowa Owatonna, Minnesota 12,200 Distribution, processing center and offff iff ces Leased (8) 11,300 Distribution, processing center and offff iff ces Leased (9) 11,275 Faba rication and offff iff ces 17,766 Faba rication 22,200 Faba rication 11,300 Distribution and offff iff ces 26,880 Distribution and offff iff ces 16,000 Fabra ication and offff iff ces 12,000 Distribution 363,000 Corprr orate offff iff ces, faff ba rication and distribution center 132,000 Distribution center and offff iff ces Leased (10) Leased (11) Leased (12) Leased (13) Leased (14) Leased (15) Leased (16) Owned Owned 127,600 Distribution center, faff ba rication and offff iff ces Owned 117,000 Distribution center and offff iff ces 79,000 Distribution center and offff iff ces 50,000 Distribution center and offff iff ces 23,000 Produd ction cutting center (cid:1591) Owned Owned Owned Owned (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) The Bedfoff rd Heights faff cilities are all adjd acent properties. This faff cility is leased frff om a related partrr y. The lease expires on December 31, 2023, with renewal options. The lease on this faff cility expires on July 1, 2027. The lease on this faff cility expires on June 30, 2027, with renewal options. The lease on this faff cilityt expires on August 31, 2024, with renewal options. The lease on this faff cility expires on May 1, 2024. The lease on this faff cilityt expires on October 31, 2025, with renewal options. The lease on this faff cility expires on July 1, 2023, with renewal options. The lease on this faff cilityt expires on January 31, 2026. The lease on this faff cility expires on June 30, 2029. The lease on this faff cility expires on June 30, 2029. The lease on this faff cility expires on June 30, 2029. The lease on this faff cility expires on June 30, 2029. The lease on this faff cility expires on June 30, 2029. The lease on this faff cility expires on June 30, 2029. The lease on this faff cility expires on January 1, 2029. In addition to tht e faff cilities listed aba ove, our executive offff iff ce is leased and located in Highland Hills, Ohio and we have leased offff iff ces located in Media, Pennsylvania; Bonita Springs, Florida; San Antonio, Texas and Monterrey, Mexico. Management believes we will be aba le to accommodate our capa acity needs foff r tht e immediate fuff tut re at our existing faff cilities. ITEM 3. LEGAL PROCEEDINGS to various legal actions that we believe are ordinaryr We are partytt in natutt re and incidental to the operation of our business. In the opinion of management, the outcome of tht e proceedings to which we are currr ently a party will not have a material adverse effff eff ct upon our results of operations, fiff nancial condition or cash flff ows. 26 ITEM 4. MINE SAFETY DISCLOSURES Not apa plicaba le. 27 INFORMATION ABOUT OUR EXECUTIVE OFFICERS This infoff rmation is included in this Annual Report on Form 10-K pursuant to Instrur ction 3 of Item 401(b) of Regulation S-K. The foff llowing is a list of our executive offff iff cers and a brief description of their business experience. Each executive offff iff cer will hold offff iff ce until his or her successor is chosen and qualififf ed. Michael D. Siegal, age 70, has served as the Executive Chairmr an of our Board of Directors since Januaryrr 2019. He previously served as our Chief Executive Offff iff cer frff om 1984 until December 2018 and as Chairman of our Board of Directors frff om 1994 until December 2018. From 1984 until Januaryrr 2001, he also served as our President. He has been employed by us in a variety of capa acities since 1974. Mr. Siegal serves on the Board of Directors of Twin City Fan Companies, Ltd. He is currr ently on the Board of tht e Development Corprr oration foff r Israel and the immediate past Chair of tht e Board of Trurr stees of the Jewish Agency foff r Israel. Richard T. Maraba ito, age 59, has served as our Chief Executive Offff iff cer since January 2019. From March 2000 through December 2018, he served as our Chief Financial Offff iff cer. He joined us in 1994 as Corprr orate Controller and served in this capa acity until March 2000. He also served as Treasurer frff om 1994 through 2002 and again frff om 2010 through 2012. Prior to joining us, Mr. Maraba ito served as Corprr orate Controller foff r a publicly traded wholesale distribution company and was employed by a national accounting fiff rm in its audit department. Mr. Maraba ito is the Chair of the Metals Service Center Institut te (MSCI), a Northt American metals indud stryr trade association. He serves on the Board of Trurr stees foff r the University of Mount Union and has been a Board and Audit Committee member of CBIZ (CBZ: NYSE), one of tht e nation’s top providers of accounting, tax and advisoryrr services, since August 2021. He servrr ed as a Board Member of the Make-A-Wish Foundation of Ohio, Kentutt cky and Indiana and was past Chair of its Northeast Ohio regional board. Richard A. Manson, age 54, has servrr ed as our Chief Financial Offff iff cer since Januaryrr 2019, and has been employed by us since 1996. From Januaryrr 2013 through December 2018, he servrr ed as our Vice President and Treasurer. From March 2010 through December 2012, he served as our Vice President of Human Resources and Administration. From Januaryrr 2003 tht rough March 2010, he served as our Treasurer and Corprr orate Controller. From 1996 through 2002, he served as our Director of Taxes and Risk Management. Prior to joining us, Mr. Manson was empm loyed foff r seven years by a national accounting fiff rmr in its tax departmt ent. Mr. Manson is a member of the Board of Directors of Catht olic Charities, Diocese of Cleveland and the Advisoryr Board of Seeds foff r Libertytt . Mr. Manson is a certrr ififf ed pubu lic accountant and member of tht e Ohio Society of Certififf ed Pubu lic Accountants and the American Institut te of Certififf ed Pubu lic Accountants. Andrew S. Greiffff ,ff age 61, has served as our President and Chief Operating Offff iff cer since Januaryrr 2020. From August 2016 through December 2019, he served as Executive Vice President and Chief Operating Offff iff cer. He previously served as President, Specialty Metals frff om 2011 to 2016 aftff er having joined us in 2009 as Vice President of Specialty Metals. Prior thereto, Mr. Greiffff spent 24 years in various positions within the steel indud stryr and served as tht e President and CEO of his own steel trading compm any. Mr. Greiffff servrr ed as a Board Member of the MSCI and a past director of Jewish Big Brother Big Sister and tht e Anti-Defaff mation League. Lisa K. Christen, age 46, has served as our Vice President & Treasurer since Januaryrr 2023. From Januaryrr 2019 through December 2022, she served as our Corprr orate Contrtt oller & Treasurer. From March 2010 through December 2018, she served as our Corprr orate Controller. From 1999 through 2010 she served in various positions witht in the accounting department. Ms. Christen serves as the Treasurer and is a Board Member of Seton Catholic School in Hudson, Ohio and serves on the fiff nance committee of Walsh Jesuit High School, in Cuyahoga Falls, Ohio. Ms. Christen is a certififf ed public accountant and member of the Ohio Society of Certififf ed Pubu lic Accountants and the American Institut te of Certififf ed Pubu lic Accountants. 28 PART II ITEM 5. MARKET FOR REGISTRARR NT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Our common stock trtt ades on tht e Nasdaq Global Select Market under the symbol “ZEUS.” Holders of Record As of January 31, 2023, we estimate there were apa proximately 99 holders of record of our common stock. Dividends We expect to continue to make regular quq arterly dividend distributions in tht e fuff tut re, subu jb ect to the continuing determr ination by our Board of Directors that the dividend remains in the best interest of our shareholders. Our ABL Credit Facility restrt icts the aggregate amount of dividends and common stock repurchases that we can pay to $15.0 million annually without limitations. Dividend distributions in excess of $15.0 million require us to (i) maintain availaba ility in excess of 20.0% of tht e aggregate revolver commitments or (ii) to maintain availaba ility equal to or greater than 15.0% of tht e aggregate revolver commitments, and we must maintain a pro-foff rma ratio of EBITDA, minus certain capa ital expenditut res and cash taxes paid to fiff xed charges of at least 1.00 to 1.00. Any determinations by tht e Board of Directors to pay cash dividends in the fuff tutt re will take into account various faff ctors, including our fiff nancial condition, results of operations, currr ent and anticipated cash needs, plans foff r expansion and restrictions under our credit agreement and any agreements governrr ing our fuff tut re debt. We cannot assure you tht at dividends will be paid in tht e fuff tutt re or that, if paid, the dividends will be at the same amount or frff equency. Issuer Purchases of Equity Securities We did not purchase any of our equity securities dud ring the quarter ended December 31, 2022. On October 2, 2015, we announced tht at our Board of Directors aua thorized a stock repurchase program of upu to 550,000 shares of tht e Compm any’s issued and outstanding common stock, which could include open market repurchases, negotiated block transactions, accelerated stock repurchases or open market solicitations foff r shares, all or some of which may be effff eff cted through RuRR le 10b5-1 plans. Any of the repurchased shares will be held in our treasuryr , or canceled and retired as our Board may determine frff om time to time. Any repurchases of common stock are subu jb ect to the covenants contained in tht e ABL Credit Facility. Our ABL Credit Facility restricts the aggregate amount of dividends and common stock repurchases that we can pay to $15.0 million annually without limitations. Purchases in excess of $15.0 million require us to (i) maintain availaba ility in excess of 20.0% of the aggregate revolver commitments or (ii) to maintain availaba ility equal to or greater tht an 15.0% of the aggregate revolver commitments and we must maintain a pro-foff rma ratio of EBITDA minus certain capa ital expenditut res and cash taxes paid to fiff xed 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 faff ctors, including market and business conditions, and limitations under the ABL Credit Facility. Repurchases may be discontinued at any time. As of Decembm er 31, 2022, 360,212 shares remain authorized foff r repurchase under the program. Recent Sales of Unregistered Securities We did not have any unregistered sales of equity securities during tht e quarter ended December 31, 2022. 29 ITEM 6. [RESERVED] 30 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERARR TIONS thtt at involve risii kskk and uncertainties. Our actual resultstt maya difi fff eff r materiallyll ThTT e foff llowing MaMM nagement’s Disii cussion and Analyll syy isii ofo FiFF nancial CoCC ndition and Resultstt ofo OpO erations contains foff rwrr ard-dd looking statementstt frff om thtt e resultstt disii cussed in thtt e foff rwrr ardr -dd looking statt tementstt . FaFF ctorsrr thtt at migi hgg t cause a difi fff eff rence includedd ,e but are not limited to, thtt ose disii cussed undedd r 10-K.KK ThTT e foff llowing section isii qualifi iff ed in itstt entiretytt byb thtt e more ItII em 1A, Risii k FaFF ctorsrr in thtt isii Annual Repe ort on FoFF rmr dedd tailed infn off rmrr ation, including our fiff nancial statementstt and thtt e notes thtt ereto, which apa ppp earsrr elsll ewhere in thtt isii Annual Repe ort. Overview We are a leading metals service center tht at operates in tht ree reportaba le segments; specialty metals flff at produd cts, carbr on flff at products, and tut bular and pipe produdd cts. We provide metals processing and distribution services foff r a wide range of customers. Our specialty metals flff at produdd cts segment’s foff cus is on tht e direct sale and distribution of processed aluminum and stainless flff at-rolled sheet and coil produd cts, flff at bar produd cts, prime tin mill products and faff ba ricated parts. Through the acquisition of Shaw Stainless & Alloy, Inc., or Shaw, on October 1, 2021 and Action Stainless & Alloys, Inc., or Action Stainless, on December 14, 2020, our specialty metals flff at produd cts segment expanded its geograpa hic foff otpt rint and enhanced its produd ct offff eff rings in stainless steel and aluminum plate, sheet, angles, rounds, flff at bar, tutt bu ing and pipe. Shaw also manufaff cturtt es and distributes stainless steel bollards and water treatmt ent systems. Action Stainless offff eff rs a range of processing capa aba ilities, including plasma, laser and waterjr et cutting and computer numerical control, or CNC, machining. Our carbr on flff at produd cts segment’s foff cus is on the direct sale and distribution of large volumes of processed carbr on and coated flff at-rolled sheet, coil and plate produd cts and faff ba ricated parts. Through acquisitions, our carbr on flff at products segment expanded its produd ct offff eff rings to include self-ff dumpm ing metal hoppers and steel and stainless-steel dud mpm inserts foff r pickuk pu trur ck and servrr ice trur ck beds. On September 17, 2021, tht e Compm any sold substantially all of the assets related to its Detroit operation. The Detroit operation was primarily foff cused on tht e distribution of carbr on flff at-rolled steel to domestic automotive manufaff ctutt rers and tht eir supu pliers and primarily included in the carbr on flff at-rolled segment. With the recent acquisition of Metal-Faba , on Januaryrr 3, 2023, our carbr on flff at produd cts segment will fuff rther expand our product offff eff rings to include the manufaff ctutt re of venting, micro air and clean air produd cts foff r residential, commercial and indud strial apa plications. Metal-Faba ’s operational results are not included in this Annual Report on Form 10-K. In addition, we distribute metal tut bing, pipe, bar, valves and fiff ttings and faff ba ricate pressure parts supu plied to various indud strial markets through our tut bu ular and pipe products segment. Produdd cts that require more value-added processing generally have a higher gross profiff t. Accordingly, our overall gross profiff t is affff eff cted by, among other things, produd ct mix, the amount of processing perfoff rmed, the demand foff r and availaba ility of metals, and volatility in selling prices and material purchase costs. We also perfoff rm toll processing of customer- owned metals. We sell certain produd cts internr ationally, primarily in Canada and Mexico. Internr ational sales are immaterial to our consolidated fiff nancial results and to the individud al segments’ results. Our results of operations are affff eff cted by numerous externr al faff ctors including, but not limited to: metals pricing, demand and availaba ility; the availaba ility, and increased costs of laba or; global supu ply, the level of metals impm orted into the United States, tariffff sff , and inventoryrr held in the supply chain; general and global business, economic, fiff nancial, banking and political conditions; competition; layoffff sff or work stoppages by our own, our suppliers’ or our customers’ personnel; flff uctut ations in the value of tht e U.S. dollar to foff reign currr encies; transportation and energy costs; pricing and availaba ility of raw materials used in the produd ction of metals and customers’ aba ility to manage tht eir credit line availaba ility. The metals indud stryrr also continues to be affff eff cted by the global consolidation of our suppliers, competitors and end-use customers. Like other metals service centers, we maintain subu stantial inventories of metals to accommodate the short lead times and just- requq irements of our customers. Accordingly, we purchase metals in an effff off rt to maintain our inventoryrr at in-time deliveryrr levels that we believe to be apa propriate to satisfyff the anticipated needs of our customers based upon customer forff ecasts, historic buying practices, supply agreements with customers and market conditions. Our commitments to purchase metals are generally at prevailing market prices in effff eff ct at the time we place our orders. From time to time, we have entered into pass- through nickel swapa s 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, fiff xed-price metals purchase contrtt acts. When metals prices decline, customer demands foff r lower prices and our competitors’ responses to tht ose demands could result in lower sale prices and, consequq ently, lower gross profiff ts and earnr ings as we use existing metals inventoryrr . When metals prices increase, compm etitive conditions will inflff uence how much of the price increase we can pass on to our customers. To the extent we are unaba le to pass on fuff tut re price increases in our raw materials to our customers, the net sales and gross profiff ts of our business could be adversely affff eff cted. 31 Reportable Segments We operate in three reportaba le segments: specialty metals flff at produd cts, carbr on flff at produdd cts and tut bu ular and pipe produd cts. The specialty metals flff at produd cts segment and the carbr on flff at produd cts segment are at times consolidated and refeff rred to as the flff at produd cts segment. Some of tht e flff at produd cts segments’ assets and resources are shared by the specialty metals and carbr on flff at products segments and botht segments’ produd cts are stored in the shared faff cilities and, in some locations, processed on shared equipment. As such, total assets and capa ital expenditut res are reported in the aggregate foff r the flff at products segments. Due to the shared assets and resources, certain of the flff at produd cts segment expenses are allocated between tht e specialty metals flff at produd cts segment and tht e carbr on flff at produdd cts segment based upu on an estaba lished allocation methodology. We foff llow the accounting guidance tht at requires the utilization of a “management apa proach” to defiff ne and report tht e fiff nancial results of operating segments. The management apa proach defiff nes operating segments along tht e lines used by tht e chief operating decision maker, or CODM, to assess perfoff rmance and make operating and resource allocation decisions. Our CODM evaluates perfoff rmance and allocates resources based primarily on operating income. Our operating segments are based primarily on internr al management reporting. Due to the natut re of the produd cts sold in each segment, there are signififf cant diffff eff rences in tht e segments’ average selling price and the cost of materials sold. The specialty metals flff at produd cts segment generally has the highest average selling price among the tht ree segments foff llowed by the tut bu ular and pipe products segment and carbr on flff at produdd cts segment. Due to tht e natut re of the tutt bular and pipe produd cts, we do not report tons sold or per ton infoff rmation. Gross profiff t per ton is generally higher in the specialty metals flff at produdd cts segment than the carbr on flff at products segment. Gross profiff t as a percentage of net sales is generally higher in tht e specialty metals flff at produd cts and tutt bular and pipe produd cts segments than tht e carbr on flff at products segment. Due to tht e diffff eff rences in average selling prices, gross profiff t and gross profiff t percentage among tht e segments, a change in the mix of sales could impm act total net sales, gross profiff t, and gross profiff t percentage. In addition, certain inventory in tht e tutt bular and pipe produd cts segment is valued under the last-in, fiff rst-out, or LIFO, method. Adjd ustmt ents to the LIFO inventoryrr value are recorded to cost of materials sold and may impm act tht e gross margin and gross margin percentage at the consolidated Compm any and tut bu ular and pipe produd cts segment levels. SpSS ecialtll ytt metatt lsll flff all t produd ctstt The primaryrr foff cus of our specialty metals flff at products segment is on the direct sale and distribution of processed aluminum and stainless flff at-rolled sheet and coil produd cts, flff at bar produdd cts, prime tin mill products and faff ba ricated parts. Through the acquisition of Action Stainless on December 14, 2020 and Shaw on October 1, 2021, our specialty metals flff at produd cts segment expanded its geograpa hic foff otpt rint and enhanced its produd ct offff eff rings in stainless steel and aluminum plate, sheet, angles, rounds, flff at bar, tutt bing and pipe. Shaw also manufaff ctut res and distributes stainless steel bollards and water treatment systems. Action Stainless offff eff rs a range of processing capa aba ilities, including plasma, laser and waterjr et cutting and CNC machining. We act as an intermediaryrr between metals producers and manufaff ctut rers that requq ire processed metals foff r their operations. We servrr e customers in various indud strt ies, including manufaff ctut rers of foff od service and commercial apa pliances, agricultut re equq ipment, transportation and automotive equq ipment. We distribute tht ese produd cts primarily tht rough a direct sales foff rce. CaCC rbon flff all t productstt The primaryrr foff cus of our carbr on flff at produd cts segment is on the direct sale and distribution of large volumes of processed carbr on and coated flff at-rolled sheet, coil and plate produd cts and faff ba ricated parts. Through acquq isitions, including the acquisition of Metal-Faba on Januaryrr 3, 2023, our carbr on flff at produd cts segment expanded its produd ct offff eff rings to include self-ff dud mping metal hoppers, steel and stainless-steel dud mpm inserts foff r pickuk pu trurr ck and service trur ck beds and venting, micro air and clean air produd cts foff r residential, commercial and indud strt ial apa plications. We act as an intermediaryr betwtt een metals producers and manufaff ctutt rers that requq ire processed metals foff r their operations. We serve customers in most metals consuming indudd stries, including manufaff ctut rers and faff ba ricators of transportation and material handling equq ipment, constrt ur ction and faff rm machineryrr , storage tanks, environmental and energy generation equipment, automobiles, militaryrr vehicles and equipment, as well as general and plate faff ba ricators and metals service centers. We distribute these produd cts primarily tht rough a direct sales foff rce. Combined, the carbr on and specialty metals flff at produd cts segments have 34 strategically-located processing and distribution faff cilities in the United States and one in Monterrrr ey, Mexico. Many of our faff cilities service both the carbr on and tht e specialty metals flff at produd cts segments, and certain assets and resources are shared by tht e segments. Our geograpa hic foff otptt rint allows us to foff cus on regional customers and larger national and multi-national accounts, primarily located throughout the midwestern, eastern and southern United States. 32 TuTT bulall r and pipii e productstt The tut bu ular and pipe produd cts segment consists of the Chicago Tubu e and Iron, or CTI, business, acquq ired in 2011. Through our tut bu ular and pipe produd cts segment, we distribute metal tut bing, pipe, bar, valve and fiff ttings and faff ba ricate pressure parts supu plied to various indud strial markets. Founded in 1914, CTI operates frff om seven locations in tht e Midwesternrr and southt easternrr United States. The tutt bular and pipe produd cts segment distributes its produdd cts primarily through a direct sales foff rce. CoCC rprr oratett exee pxx enses Corpr orate expenses are reported as a separate line item foff r segment reporting purprr oses. Corpr orate expenses include the unallocated expenses related to managing tht e entire Company (i.e., all three segments), including compm ensation foff r certain personnel, expenses related to being a pubu licly traded entity such as board of directors’ expenses, audit expenses, and various other profeff ssional feff es. Results of Operations This section of this Annual Report on Formr 10-K generally discusses 2022 and 2021 items and year-to-year compm arisons between 2022 and 2021. Discussions of 2020 items and year-to-year compm arisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K can be foff und in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of tht e Compm any's Annual Report on Form 10-K foff r tht e fiff scal year ended December 31, 2021. 2022 Compared to 2021 Our results of operations are impacted by the market price of metals. Metals prices flff uctutt ate signififf cantly and changes to our net sales, cost of materials sold, gross profiff t, cost of inventoryrr and profiff taba ility, are all impacted by industrtt y metals pricing. Metals prices in our specialty metals products segment increased during 2022 compm ared to 2021 dud e to the unpn recedented increase in metal surcharges experienced dud ring 2022. The average price of stainless surcharges increased 40.7% dud ring 2022 compm ared to 2021. Indud stryrr metals pricing on hot rolled coil steel decreased during 2022 by $872 per ton, or 56.8%. Despite the decrease in indud stryrr metals pricing during 2022, our average selling prices and average cost of materials sold were higher during 2022 than 2021 in tht e carbr on flff at products segment due to contract selling prices and higher inventory costs. Metals pricing foff r tht e tut bular and pipe produdd cts segment lags behind the carbr on flff at produdd cts segment by several months. Transactional or “spot” selling prices generally move in tandem with market price changes, while fiff xed selling prices typyy ically lag and reset quq arterly. Similarly, inventoryrr costs (and, therefoff re, cost of materials sold) tend to move slower tht an market selling price changes dud e to mill lead times and inventoryrr tut rnrr over impm acting the rate of change in average cost. When average selling prices increase, and net sales increase, gross profiff t and operating expenses as a percentage of net sales will generally decrease. During 2022, our year-over-year sales volumu es were negatively impacted by the sale of our Detroit operations on Septembm er 17, 2021, currrr ent economic trends and the aba sence of a large one-time pipe and tut bu e contrtt act shipment in 2021; however, our net sales were positively impacted by tht e price increases discussed aba ove. 33 CoCC nsolill di add tett d OpO eratitt ons The foff llowing taba le sets foff rtht certain consolidated income statement data foff r the years ended December 31, 2022 and 2021 (dollars shown in thousands): 2022 $ % of net sales Net sales Cost of materials sold (a) Gross profiff t (b) Operating expenses (c) Operating income Other loss, net Interest and otht er expense on debt Income befoff re income taxes Income taxes Net income $ $ 2,559,990 2,073,930 486,060 352,313 133,747 45 10,080 123,622 32,691 90,931 100.0 81.0 19.0 13.8 5.2 0.0 0.4 4.8 1.2 3.6 $ $ 2021 $ 2,312,253 1,802,052 510,201 337,735 172,466 36 7,631 164,799 43,748 121,051 % of net sales 100.0 77.9 22.1 14.6 7.5 0.0 0.3 7.1 1.9 5.2 (a) Includes $565 and $21,850 of LIFO expense in 2022 and 2021, respectively. (b) Gross profiff t 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 $247.7 million, or 10.7%, to $2.6 billion in 2022 frff om $2.3 billion in 2021. Specialty metals flff at produd cts net sales increased $190.3 million, or 32.5%, to $776.0 million in 2022 compm ared to $585.8 million in 2021 and were 30.3% of total net sales in 2022 compm ared to 25.3% of total net sales in 2021. Carbr on flff at produd cts net sales increased $12.5 million, or 0.9%, to $1.4 billion in 2022 compm ared to $1.3 billion in 2021 and were 53.0% of total net sales in 2022 compm ared to 58.1% of total net sales in 2021. Tubu ular and pipe products net sales increased $45.0 million, or 11.8%, to $427.4 million in 2022 compm ared to $382.4 million in 2021 and were 16.7% of total net sales in 2022 compm ared to 16.5% of total net sales in 2021. The increase in net sales was dud e to a 26.0% increase in consolidated average selling prices during 2022 compm ared to 2021 partially offff sff et by a 12.2% decrease in consolidated volume. Average selling prices in 2022 were $2,448 per ton, compm ared to $1,942 per ton in 2021. The increase in the average selling price is a result of the market pricing dyd namics discussed aba ove in Results of Operations. Cost of materials sold increased $271.9 million, or 15.1%, to $2.1 billion in 2022 frff om $1.8 billion in 2021. During 2022, we recorded LIFO expense of $0.6 million compm ared to LIFO expense of $21.9 million in 2021. The increase in cost of materials sold in 2022 is primarily related to increased metals pricing in 2022 compm ared to 2021. As a percentage of net sales, gross profiff t (as defiff ned in foff otnote (b) in tht e taba le above) decreased to 19.0% in 2022 frff om 22.1% in 2021. The decrease in tht e gross profiff t as a percentage of net sales is dud e to the average costs of inventoryrr increasing more quickly tht an the average selling prices discussed aba ove in Results of Operations. Operating expenses (as defiff ned in foff otnote (c) in the taba le aba ove) increased $14.6 million, or 4.3%, to $352.3 million in 2022 frff om $337.7 million in 2021. As a percentage of net sales, operating expenses decreased to 13.8% in 2022 frff om 14.6% in 2021. Operating expenses in tht e specialty metals flff at produd cts segment increased $19.5 million, operating expenses in the carbr on flff at products segment decreased $7.3 million, operating expenses in the tutt bular and pipe produd cts segment decreased $1.9 million, and corprr orate expenses increased $4.3 million. Operating expenses increased dud ring 2022 as a result of the inclusion of operating expenses related to the October 2021 acquisition of Shaw, increased inflff ationaryrr impm acts on transportation, laba or, and otht er produdd ct supu port costs and increased variable perfoff rmance-based compensation foff r the specialty metals flff at produd cts and pipe and tutt bular produd cts segments, partially offff sff et by lower year-over-year variable perfoff rmance-based incentive compensation foff r the carbr on flff at produd cts segment. During 2021, we recorded a $3.5 million gain, net of expenses, on the sale of our Detroit operations on September 17, 2021. Interest and other expense on debt totaled $10.1 million in 2022 compm ared to $7.6 million in 2021. Our effff eff ctive borrr owing rate, exclusive of defeff rred fiff nancing feff es and commitment feff es, was 3.2% in 2022 compm ared to 2.5% in 2021. The increased effff eff ctive borrowing rate is dudd e to higher interest rates compared to 2021. Total average borrowings increased $24.6 million, or 9.6%, to $280.4 million in 2022 frff om $255.8 million in 2021, primarily related to increased working capa ital needs in 2022. Income befoff re income taxes totaled $123.6 million, or 4.8% of net sales, in 2022, compm ared to income befoff re taxes of $164.8 million, or 7.1% of net sales, in 2021. 34 An income tax provision of 26.4% was recorded in 2022, compm ared to an income tax provision of 26.5% in 2021. Net income in 2022 totaled $90.9 million, or $7.87 per basic and diluted share, compm ared to net income of $121.1 million, or $10.53 per basic and $10.52 per diluted share, in 2021. Segment Results of Operations SpSS ecialtll ytt metatt lsll flff all t productstt The foff llowing taba le sets foff rtht certain income statement data foff r tht e specialty metals flff at produd cts segment foff r the years ended December 31, 2022 and 2021 (dollars shown in thousana ds, except per ton data): 2022 % of net sales 2021 % of net sales Direct tons sold Toll tons sold Total tons sold Net sales Average selling price per ton Cost of materials sold Gross profiff t (a) Operating expenses (b) Operating income $ $ 135,584 6,508 142,092 776,022 5,461 589,472 186,550 92,888 93,662 149,935 7,872 157,807 585,751 3,712 441,825 143,926 73,382 70,544 100.0 $ 76.0 24.0 11.9 12.1 $ 100.0 75.4 24.6 12.5 12.0 (a) Gross profiff t 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 in our specialty metals flff at product segment decreased 16 tht ousand tons, or 10.0%, to 142 tht ousand tons in 2022 frff om 158 thousand tons in 2021. The decrease in tons sold was dudd e to a shiftff towards lower volume faff ba rication and value- added servrr ices and current economic trtt ends. We do not report tons sold foff r our Shaw operation. Net sales in our specialty metals flff at produd cts segment increased $190.3 million, or 32.5%, to $776.0 million in 2022 frff om $585.8 million in 2021. The increase in sales was dud e to a 47.1% increase in average selling prices partially offff sff et by a 10.0% decrease in sales volume dud ring 2022 compared to 2021. Average selling prices in 2022 increased to $5,461 per ton, compm ared to $3,712 per ton in 2021. The increase in the year over year average selling price per ton is a result of the increased indud stryrr metals pricing discussed aba ove in Results of Operations. Cost of materials sold increased $147.6 million, or 33.4%, to $589.5 million in 2022 frff om $441.8 million in 2021. The increase in cost of materials sold was dud e to tht e increase in indud stryrr metals pricing discussed aba ove in Results of Operations. As a percentage of net sales, gross profiff t (as defiff ned in foff otnote (a) in the taba le above) decreased to 24.0% in 2022 frff om 24.6% in 2021. The average gross profiff t per ton sold totaled $1,313 in 2022 compm ared to $912 in 2021. The decrease in the gross profiff t as a percentage of net sales is dud e to average selling price decreasing more quickly tht an the average cost of inventory as discussed aba ove in Results of Operations. Operating expenses (as defiff ned in foff otnote (b) in the taba le aba ove) increased $19.5 million, or 26.6%, to $92.9 million in 2022 frff om $73.4 million in 2021. As a percentage of net sales, operating expenses decreased to 12.0% of net sales in 2022 frff om 12.5% in 2021. The increase in operating expenses was primarily attributaba le to the inclusion of operating expenses related to the October 2021 acquq isition of Shaw, which accounted foff r $6.1 million of tht e operating expense increase; increased variaba le expenses related to variaba le perfoff rmance-based incentive compm ensation; and inflff ationaryrr impm acts on laba or, transportation and otht er produd ct support costs. Operating income foff r 2022 totaled $93.7 million, or 12.1% of net sales, compared to $70.5 million, or 12.0% of net sales, in 2021. 35 CaCC rbon flff all t produd ctstt The foff llowing taba le sets foff rth certain income statement data foff r the carbr on flff at produd cts segment foff r tht e years ended December 31, 2022 and 2021 (dollars shown in thousana ds, except per ton data): 2022 % of net sales 2021 % of net sales Direct tons sold Toll tons sold Total tons sold Net sales Average selling price per ton Cost of materials sold Gross profiff t (a) Operating expenses (b) Operating income (loss) 777,748 29,171 806,919 $ 1,356,605 1,681 1,164,459 192,146 167,131 25,015 $ 868,775 52,520 921,295 100.0 $ 1,344,150 1,459 1,059,620 284,530 174,456 110,074 85.8 14.2 12.4 1.8 $ 100.0 78.8 21.2 13.0 8.1 (a) Gross profiff t 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 decreased 114 tht ousand tons, or 12.4%, to 807 thousand tons in 2022 frff om 921 thousand tons in 2021. Toll tons sold decreased 23 thousand tons, or 44.4%, to 29 thousand tons in 2022 frff om 53 thousand tons in 2021. The decrease in tons sold was primarily due to tht e sale of our Detroit operations on September 17, 2021. Net sales increased $12.5 million, or 0.9%, to $1.4 billion in 2022 frff om $1.3 billion in 2021. The increase in sales was dudd e to a 15.2% increase in average selling prices offff sff et by a 12.4% decrease in sales volume. Average selling prices in 2022 increased to $1,681 per ton, compm ared to $1,459 per ton in 2021. Cost of materials sold increased $104.8 million, or 9.9%, to $1.2 billion in 2022 frff om $1.1 billion in 2021. The increase in cost of materials sold was dud e to increased indud strtt y metals pricing discussed aba ove in Results of Operations. As a percentage of net sales, gross profiff t (as defiff ned in foff otnote (a) in the taba le above) decreased to 14.2% in 2022 frff om 21.2% in 2021. The average gross profiff t per ton sold decreased $71 per ton, or 22.9%, to $238 in 2022 frff om $309 in 2021. The decrease in gross profiff t as a percentage of net sales, and per ton, is a result of average selling prices decreasing more quickly tht an the average cost of inventoryrr as discussed aba ove in Results of Operations. Operating expenses in 2022 decreased $7.3 million, or 4.2%, to $167.1 million frff om $174.5 million in 2021. As a percentage of net sales, operating expenses decreased to 12.3% in 2022 frff om 13.0% in 2021. Operating expenses decreased primarily dud e to lower variable perfoff rmance-based incentive compm ensation and decreased operating costs dud e to tht e sale of our Detroit operations on Septembm er 17, 2021 partially offff sff et by increased inflff ationary impacts on trt ansportation and laba or. Operating income totaled $25.0 million, or 1.8% of net sales, in 2022 compm ared to operating income of $110.1 million, or 8.1% of net sales, in 2021. Beginning in 2023, the carbr on flff at-produd cts segment will include the results of Metal-Faba , which we acquired on Januaryrr 3, 2023. During the fiff rst quarter of 2023, we expect to record apa proximately $4.0 to $5.0 million of required GAAP-related purchase price expenses and adjd ustments, primarily expensed deal feff es, tht e write-upu of inventoryrr to faff ir markr et value and the amortization of certain acquired intangible assets. 36 TuTT bulall r and pipii e productstt The foff llowing taba le sets foff rth certain income statement data foff r the tut bu ular and pipe produdd cts segment foff r tht e years ended December 31, 2022 and 2021 (dollars shown in thousands). Net sales Cost of materials sold (a) Gross profiff t (b) Operating expenses (c) Operating income 2022 2021 $ 427,363 319,999 107,364 72,508 34,856 $ $ % of net sales 100.0 $ 74.9 25.1 16.9 8.2 $ $ 382,352 300,607 81,745 74,392 7,353 % of net sales 100.0 78.6 21.4 19.4 1.9 (a) Includes $565 and $21,850 of LIFO expense in 2022 and 2021, respectively. (b) Gross profiff t 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 $45.0 million, or 11.8%, to $427.4 million in 2022 frff om $382.4 million in 2021. The increase in net sales was dud e to a 28.8% increase in average selling prices offff sff et by a 13.2% decrease in sales volume dud ring 2022. The decrease in sales volume is primarily dud e to the aba sence of a large one-time contract shipment in 2021. Cost of materials sold increased $19.4 million, or 6.5%, to $320.0 million in 2022 frff om $300.6 million in 2021. The increase in cost of materials sold is dud e to increased metals pricing discussed aba ove in Results of Operations. As a result of continued increasing prices, dud ring 2022, our tut bu ular and pipe produd cts segment recorded $0.6 million of LIFO expense, compm ared to $21.9 million of LIFO expense recorded in 2021. As a percentage of net sales, gross profiff t (as defiff ned in foff otntt ote (b) in the taba le above) increased to 25.1% in 2022 compm ared to 21.4% in 2021. As a percentage of net sales, the LIFO expense recorded in 2022 decreased gross profiff t by 0.2% compared to the LIFO expense recorded in 2021, which decreased gross profiff t by 5.7%. Operating expenses (as defiff ned in foff otnote (c) in the taba le aba ove) decreased $1.9 million, or 2.5%, to $72.5 million in 2022 frff om $74.4 million in 2021. As a percentage of net sales, operating expenses decreased to 16.9% in 2022 compm ared to 19.4% in 2021. Operating expenses decreased as a result of the $2.1 million gain on sale of the Milan, Iowa faff cility in the fiff rst quarter of 2022; partially offff sff et by increased inflff ationaryrr impacts on laba or, transportation, variable perfoff rmance-based incentive compm ensation and otht er produd ct supu port costs. Operating income foff r 2022 totaled $34.9 million, or 8.2% of net sales, compm ared to $7.4 million, or 1.9% of net sales, in 2021. CoCC rprr oratett exee pxx enses Corprr orate expenses increased $4.3 million, or 27.6%, to $19.8 million in 2022 compm ared to $15.5 million in 2021. Corprr orate expense increased as a result of tht e $3.5 million gain, net of expenses recorded, on tht e sale of our Detroit operation on Septembm er 17, 2021, partially offff sff et by decreased variaba le perfoff rmr ance-based incentive compm ensation. Liquidity, Capital Resources and Cash Flows Our principal capa ital requirements include fuff nding workr ing capa ital needs, purchasing, upu grading and acquiring processing equipment and faff cilities, making acquq isitions and paying dividends. We use cash generated frff om operations and borrrr owings under our asset-based credit faff cility, or ABL Credit Facility, to fuff nd tht ese requirements. We believe tht at fuff nds availaba le under our ABL Credit Facility, together with fuff nds generated frff om operations, will be suffff iff cient to provide us with the liquidity necessaryrr to fuff nd anticipated working capa ital requirements, capa ital expenditut re requq irements, our dividend payments and any share repurchases and business acquq isitions over at least the next 12 months and foff r tht e foff reseeaba le fuff tutt re thereaftff er. In tht e fuff ture, we may as part of our business strtt ategy, acquire and dispose of assets lines of business, or enter into or exit strategic alliances and joint ventutt res. or other compm anies in tht e same or compm lementaryrr 37 Accordingly, the timing and size of our capa ital requirements are subu jb ect to change as business conditions warrr ant and opportutt nities arise. 2022 Compared to 2021 OpOO eratitt nii gn Actitt vitii itt es During 2022, we generated $185.9 million of cash frff om operations, of which $111.8 million was generated frff om operating activities and $74.1 million was generated frff om working capa ital. Net cash frff om operations dud ring 2022 was primarily compm rised of net income of $90.9 million and the $20.2 million addbd ack of non-cash depreciation and amortization expense. During 2021, we used $146.4 million of net cash foff r operations, of which $137.5 million was generated frff om operating activities and $284.9 million was used foff r working capa ital needs. Net cash frff om operations dud ring 2021 was primarily comprised of net income of $121.1 million and the $21.0 million addbdd ack of non-cash depreciation and amortization expense. Working capa ital at December 31, 2022 totaled $493.4 million, a $71.7 million decrease frff om December 31, 2021. The decrease was primarily attributaba le to a $68.1 million decrease in inventoryr , a $64.8 million decrease in accounts receivabla e, and a $0.8 million decrease in prepaid expenses and otht er, offff sff et by a $47.2 million decrease in accounts payaba le and outstanding checks and a $12.4 million decrease in accrurr ed payroll and otht er accrurr ed liaba ilities. InII vestitt nii gn Actitt vitii itt es Net cash used foff r investing activities was $16.6 million dud ring 2022, compared to $13.5 million dud ring 2021. Investment activities in 2022 included $19.9 million of capa ital expenditutt res, primarily attributaba le to processing equipment at our existing faff cilities offff sff et by $3.3 million in proceeds frff om disposition of property and equq ipment, primarily attributaba le to tht e sale of the Milan, Iowa faff cility. Investment activities in 2021 included the acquq isition of Shaw foff r $12.1 million and $11.0 million of capa ital expenditut res, primarily attributaba le to processing equipment at our existing faff cilities. Net proceeds frff om the sale of propertytt and equipment of our Detroit operation totaled $9.5 million. During 2023, we expect our capa ital spending to exceed our annual depreciation expense. FiFF nii ancinii gn Actitt vitii itt es During 2022, $166.9 million of cash was used foff r fiff nancing activities, which primarily consisted of $162.1 million of net repayments under our ABL Credit Facility, $4.0 million of dividends paid, $0.7 million of principal payments foff r fiff nancing lease obligations and a $0.1 million payment foff r credit faff cility feff es and expenses. During 2021, $164.1 million of cash was generated frff om fiff nancing activities, which primarily consisted of $167.2 million of net borrr owings under our ABL Credit Facility, offff sff et by $1.3 million of credit faff cility feff es and expenses related to our refiff nancing, $0.9 million of dividends paid and $0.8 million of principal payments foff r fiff nancing lease obligations. In Februrr aryrr 2023, our Board of Directors apa proved a regular quarterly dividend of $0.125 per share, which is payaba le on March 15, 2023 to shareholders of record as of March 1, 2023. Our Board previously apa proved 2022 and 2021 regular quarterly dividends of $0.09 per share and $0.02 per share, respectively, which were paid in March, June, September and December of 2022 and 2021. Dividend distributions in the fuff tut re are subu jb ect to the availaba ility of cash, limitations on cash dividends 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. In Januaryrr 2023, we purchased all of tht e outstanding shares of capaa ital stock of Metal-Faba foff r a cash purchase price of $131.0 million, subu jb ect to a fiff nal working capa ital adjd ustment, using borrrr owings under our ABL Credit Facility, tht e availaba ility of which was increased frff om $475 million to $625 million. StSS ott ck Repee urchase PrPP ogo ram In 2015, our Board of Directors aua thorized 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 foff r shares, all or some of which may be effff eff cted through RuRR le 10b5-1 plans. Repurchased shares will be held in our treasuryrr , or canceled and retired as our Board of Directors may determine frff om time to time. Any repurchases of common stock are subjb ect to the covenants contained in the ABL Credit Facility. Under tht e ABL Credit Facility, we may repurchase common stock and pay dividends upu to $15.0 million in tht e aggregate during any trailing twelve months without restrictions. Purchases in excess of $15.0 million requq ire us to (i) maintain availaba ility in excess of 20% of the aggregate revolver commitments ($95.0 million at December 31, 2022) or (ii) to maintain availaba ility equal to or greater 38 than 15% of tht e aggregate revolver commitmt ents ($71.3 million at December 31, 2022) and we must maintain a pro foff rma ratio of earnings befoff re interest, taxes, depreciation and amortization, or EBITDA, minus certain capaa ital expenditut res and cash taxes paid to fiff xed 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 faff ctors, including market and business conditions, and limitations under the ABL Credit Facility, and repurchases may be discontinued at any time. As of December 31, 2022, 360,212 shares remain autht orized foff r repurchase under the program. There were no shares repurchased dud ring 2022. During 2021 we repurchased 15,000 shares foff r an aggregate cost of $0.1 million. At-tt thtt e-M- aMM rkrr et Equitii ytt PrPP ogo ram On Septembm er 3, 2021, we commenced an at-the-markr et, or ATM, equq ity program under our shelf registration statement, which allows us to sell and issue upu to $50 million in shares of our common stock frff om time to time. We entered into an Equq ity Distribution Agreement on September 3, 2021 witht KeyBanc Capa ital Markets Inc., or KeyBanc, relating to the issuance and sale of shares of common stock pursuant to the program. KeyBanc is not requq ired to sell any specififf c amount of securities but will act as our sales agent using commercially reasonaba le effff off rts consistent with its normal trading and sales practices, on mutut ally agreed terms between KeyBanc and us. KeyBanc will be entitled to compensation foff r shares sold pursuant to the program of 2.0% of the gross proceeds of any shares of common stock sold under the Equq ity Distribution Agreement. No shares were sold under tht e ATM program during 2022 or 2021. Debt Arrangn ementstt We are parties to a Third Amended and Restated Loan and Security Agreement, as amended which provides foff r a $625 million ABL Credit Facility consisting of:ff (i) a revolving credit faff cility of up to $595 million, including a $20 million subu - limit foff r letters of credit, and (ii) a fiff rst in, last out revolving credit faff cility of up to $30 million. Under the terms of the ABL Credit Facility, we may, subjb ect to the satisfaff ction of certain conditions, request additional commitments under the revolving credit faff cility in the aggregate principal amount of upu to $200 million to the extent that existing or new lenders agree to provide such additional commitments and add real estate as collateral at our discretion. The ABL Credit Facility matut res on June 16, 2026. The ABL Credit Facility contains customaryrr representations and warrr anties and certain covenants that limit our aba ility to, among other tht ings: (i) incur or guarantee additional indebtedness; (ii) pay distributions on, redeem or repurchase capa ital stock or redeem or repurchase subu ordinated debt; (iii) make investmt ents; (iv) sell assets; (v) enter into agreements that restrict distributions or other payments frff om restrtt icted subsidiaries to us; (vi) incur or suffff eff r to exist liens securing indebtedness; (vii) consolidate, merge or transfeff r all or subu stantially all of their assets; and (viii) engage in transactions with affff iff liates. In addition, the ABL Credit Facility contains a fiff nancial covenant which provides that: (i) if any commitments or obligations are outstanding and our availaba ility is less than the greater of $30 million or 10.0% of the aggregate amount of revolver commitments ($47.5 million at December 31, 2022) or 10.0% of the aggregate borrowing base ($47.5 million at December 31, 2022), tht en we must maintain a ratio of EBITDA minus certain capa ital expenditut res and cash taxes paid to fiff xed charges of at least 1.00 to 1.00 foff r tht e most recent twtt elve fiff scal month period. We have the option to borrow under its revolver based on the agent’s base rate plus a premium ranging frff om 0.00% to 0.25% or the London Interbr ank Offff eff red Rate, or LIBOR, plus a premium ranging frff om 1.25% to 2.75%. As of December 31, 2022, we were in compm liance with our covenants and had apa proximately $305.6 million of availaba ility under the ABL Credit Facility. As of December 31, 2022, $1.2 million of bank fiff nancing feff es were included in “Prepaid expenses and otht er” and “Other long-term assets” on the accompanying Consolidated Balance Sheets. The fiff nancing feff es are being amortized over the fiff ve- year term of tht e ABL Credit Facility and are included in “Interest and other expense on debt” on tht e accompm anying Consolidated Statements of Comprehensive Income (Loss). On Januaryrr 10, 2019, we entered into a fiff ve-year foff rwrr ard starting fiff xed rate interest rate hedge in order to eliminate the variaba ility of cash interest payments on $75 million of the outstanding LIBOR based borrr owings under tht e ABL Credit Facility. The interest rate hedge fiff xed tht e rate at 2.57%. 39 Contractual and Other Obligations The foff llowing taba le reflff ects the material cash requq irements foff r our contractutt al and other obligations as of December 31, 2022. We believe tht at fuff nds availaba le under our ABL Credit Facility, together with fuff nds generated frff om operations, will be suffff iff cient to provide us with the liquidity necessaryrr these obligations in tht e short-term over the next 12 montht s and also in the long-term beyond tht e next 12 months. to satisfyff Contractutt al and Other Obligations (amounts in thousands) Long-term debt obligations Interest obligations Finance lease obligations Unrecognized tax positions Other long-term liaba ilities Total contractutt al and otht er obligations (a) (b) (c) (d) (e) Total 165,658 $ 33,164 1,708 220 12,464 213,214 $ $ $ Less than 1 year 1-3 years 3-5 years More tht an 5 years - $ 8,690 640 10 - 9,340 $ - $ 19,905 867 210 7,641 28,623 $ 165,658 $ 4,569 198 - 3,490 173,915 $ - - 3 - 1,333 1,336 (a) (b) (c) (d) (e) See Note 10 to the Consolidated Financial Statements. Future interest obligations are calculated using the debt balances and interest rates in effff eff ct on December 31, 2022. See Note 9 to the Consolidated Financial Statements. See Note 15 to the Consolidated Financial Statements. Classififf cation is based on expected settlement dates and the expiration of certain statut tes of limitations. Consists of retirement liaba ilities, long-term cash incentives and defeff rrrr ed compm ensation payaba le in fuff tutt re years. Offff -ff Balance Sheet Arrangements An offff -ff balance sheet arrr angement is any contractut al arrr angement involving an unconsolidated entity under which a compm any has (a) made guarantees, (b) a retained or a contingent interest in transfeff rrrr ed assets, (c) any obligation under certain derivataa ive instrurr ments or (d) any obligation under a material variaba le interest in an unconsolidated entity that provides fiff nancing, liquidity, markr et risk or credit risk supu port to a compm any, or engages in leasing, hedging, or research and development services within a compm any. Other than derivative instrurr ments discussed in Note 11 to the Consolidated Financial Statements, as of December 31, 2022, we had no material offff -ff balance sheet arrangements. Effff eff cts of Inflff ation Inflff ation generally affff eff cts us by increasing the cost of empm loyee wages and benefiff ts, transportation services, energy, borrr owings under our credit faff cility, processing equq ipment, and purchased metals. Although general inflff ation, excluding increases in the price of metals and increased laba or and distribution expense, has increased dudd ring 2022, it has not had a material effff eff ct on our fiff nancial results dud ring the past three years, but may have a signififf cant impact in fuff tut re years. Critical Accounting Estimates This discussion and analysis of fiff nancial condition and results of operations is based on our consolidated fiff nancial statements, which have been prepared in confoff rmity with accounting principles generally accepted in the United States. The preparation of tht ese fiff nancial statements requires management to make estimates and assumptions that affff eff ct the amounts reported in the fiff nancial statements. Actutt al results could diffff eff r frff om these estimates under diffff eff rent assumptions or conditions. On an on- going basis, we monitor and evaluate our estimates and assumptions. We believe tht e accounting estimates employed are apa propriate and the resulting balances are reasonaba le; however, dud e to the inherent uncertainties in developing estimates, actutt al results could diffff eff r frff om tht e original estimates, requiring adjd ustmt ents to these balances in fuff tut re periods. See Note 1 to our consolidated fiff nancial statements foff r our signififf cant accounting policies related to our critical accounting estimates. 40 Allowance foff r Credit Losses The allowance foff r credit losses is maintained at a level considered apa propriate based on historical experience and specififf c customer collection issues that we have identififf ed. Estimations are based upu on the apa plication of a historical collection rate to the outstanding accounts receivaba le balance, which remains faff irly level frff om year to year, and judgments about the probable effff eff cts of economic conditions on certain customers, which can flff uctut ate signififf cantly frff om year to year. We cannot be certain that the rate of fuff tutt re credit losses will be similar to past experience. We consider all availaba le infoff rmation when assessing the adequq acy of our allowance foff r credit losses each quarter. Valuation of Inventoryrr Non-LIFO inventories are stated at tht e lower of its cost or net realizaba le value. Net realizaba le value is the estimated selling price in tht e ordinaryr course of business, less reasonaba ly predictaba le costs of compm letion, disposal and transportation. LIFO inventories are stated at the lower of cost or market. Market is the estimated selling price in the ordinaryrr course of business, less reasonaba le predictaba le costs of completion. Inventoryrr costs include tht e costs of purchased metal, inbound frff eight, external and internrr al processing and apa plicaba le laba or and overhead costs. The cost of our specialty metals and carbr on flff at produd cts segments’ inventories, including flff at-rolled sheet, coil and plate products are determined using the specififf c identififf cation method. Certain inventoried produd cts of our tutt bular and pipe segment are stated under the LIFO method. At December 31, 2022, and December 31, 2021, apa proximately $46.3 million, or 11.1% of consolidated inventoryr , and $55.4 million, or 11.4% of consolidated inventoryrr , respectively, was reported under tht e LIFO method of accounting. The cost of the remainder of our is determined using a weighted average rolling fiff rst-in, fiff rst-out (FIFO) method. tut bular and pipe product segment’s inventoryrr On tht e Consolidated Statements of Comprehensive Income (Loss), “Costs of materials sold” consists of the cost of purchased metals, inbn ound and internrr al trtt ansfeff r frff eight, externrr al processing costs, and LIFO income or expense. Valuation of Defeff rrr ed Tax Assets The aba ility to realize defeff rrr ed tax assets depends on tht e aba ility to generate suffff iff cient taxaba le income witht in tht e carrr yrr back or carryrr foff rwrr ard periods provided foff r in the tax law foff r each apa plicaba le tax jurisdiction. The assessment regarding whetht er a valuation allowance is required or should be adjd usted is based on an evaluation of possible sources of taxaba le income and also considers all availaba le positive and negative evidence faff ctors. Defeff rrr ed income taxes on tht e consolidated balance sheet include, as an offff sff et to the estimated temporaryrr diffff eff rences between the tax basis of assets and liaba ilities and the reported amounts on the consolidated balance sheets, tht e tax effff eff ct of operating loss and tax credit carrr yrr foff rwrr ards. If we determine that we will not be aba le to fuff lly realize a defeff rrr ed tax asset, we will record a valuation allowance to reduce such defeff rrr ed tax asset to its net realizaba le value. We recognize the fiff nancial statement benefiff t of a tax position only aftff er determining that the relevant tax authority would more likely than not sustain tht e position foff llowing an audit. For tax positions meeting tht e more- likely-than-not threshold, tht e amount recognized in the fiff nancial statements is tht e largest benefiff t that has a greater tht an 50 percent likelihood of being realized upu on ultimate settlement with the relevant tax authority. Impact of Recently Issued Accounting Pronouncements In March 2020, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2020-04, “Refeff rence Rate Refoff rm (Topic 848): Facilitation of the Effff eff cts of Refeff rence Rate Refoff rm on Financial Reporting”. The objb ective of tht is ASU is to ease the potential burden in accounting foff r (or recognizing tht e effff eff cts of)ff refeff rence rate refoff rmr on fiff nancial reporting. The amendments in this ASU are elective and apa ply to all entities, subu jb ect to meeting certain criteria, that have contracts, hedging relationships and otht er transactions that refeff rence LIBOR or another refeff rence rate expected to be discontinued because of refeff rence rate refoff rm. Then in December 2022, tht e FASB issued ASU No. 2022-06 “Defeff rrr al of the Sunset Date of Topic 848” which amends and extends tht e sunset date to December 31, 2024. We plan to elect to adopt this ASU in the fiff rst quarter of 2023 foff r tht e modififf cation of the interest rate hedge, however, we do not expect the adoption during tht e fiff rst quarter of 2023 to have a material impact on our Consolidated Financial Statements. 41 In December 2019, the FASB, issued ASU No. 2019-12, “Income Taxes (Topic 740): Simpm lifyff ing the Accounting foff r Income tht e accounting foff r income taxes by removing certain exceptions to general Taxes.” The objb ective of this ASU is to simplifyff principles in ASC 740 and by clarifyff ing and amending existing guidance within U.S. generally accepted accounting principles. ASU 2019-12 is effff eff ctive foff r pubu lic business entities foff r fiff scal years, and interim periods within those fiff scal years, beginning aftff er Decembm er 15, 2020. Diffff eff rent compm onents of the guidance requq ire retrospective, modififf ed retrospective or prospective adoption, and early adoption is permitted. The adoption of this ASU dud ring tht e fiff rst quarter of 2021 did not have a material impact on our Consolidated Financial Statements. 42 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our principal raw materials are carbr on, coated and stainless steel, and aluminum, pipe and tut bu e, flff at rolled coil, sheet and plate that we tytt pically purchase frff om multiple primaryrr metals producers. The metals industrt y as a whole is cyclical and, at times, pricing and availaba ility of metals can be volatile dud e to numerous faff ctors beyond our control, including general domestic and internr ational economic conditions, the levels of metals imported into tht e United States, laba or costs, sales levels, competition, levels of inventoryrr held by otht er metals service centers, consolidation of metals produd cers, new global capa acity by metals produd cers, higher raw material costs foff r the produd cers of metals, import dud ties and tariffff sff and currency exchange rates. This volatility can signififf cantly affff eff ct tht e availaba ility and cost of raw materials foff r us. Like many otht er metals service centers, we maintain subu stantial inventories of metals to accommodate the short lead times requirements of our customers. Accordingly, we purchase metals in an effff off rt to maintain our and just-in-time deliveryrr inventory at levels tht at we believe to be apa propriate to satisfyff tht e anticipated needs of our customers based upu on historic buying practices, supu ply agreements with customers and market conditions. Our commitments to purchase metals are generally at prevailing market prices in effff eff ct at the time we place our orders. We have no long-term, fiff xed-price metals purchase contracts. When metals prices increase, compm etitive conditions will inflff uence how much of tht e price increase we can pass on to our customers. To the extent we are unaba le to pass on fuff tut re price increases in our raw materials to our customers, the net sales and profiff taba ility of our business could be adversely affff eff cted. When metals prices decline, customer demands foff r lower prices and our competitors’ responses to those demands could result in lower sale prices and, consequently, lower gross profiff ts and inventory lower of cost or markr et adjd ustments as we sell existing inventoryrr . Signififf cant or rapa id declines in metals prices or reductions in sales volumes could adversely impact our aba ility to remain in compm liance with certain fiff nancial covenants in our credit faff cility, as well as result in us incurrr ing inventoryrr or intangible asset impairment charges. Changing metals prices therefoff re could signififf cantly impact our net sales, gross profiff ts, operating income and net income. Rising metals prices result in higher working capa ital requirements foff r us and our customers. Some customers may not have suffff iff cient credit lines or liquidity to aba sorbr signififf cant increases in tht e price of metals. While we have generally been successfuff l in tht e past in passing on produd cers’ price increases and surcharges to our customers, tht ere is no guarantee tht at we will be aba le to pass on price increases to our customers in the fuff tutt re. Declining metals prices have generally adversely affff eff cted our net sales and net income, while increasing metals prices have generally faff voraba ly affff eff cted our net sales and net income. Approximately 52%, 47% and 45% of our consolidated net sales in 2022, 2021 and 2020, respectively, were directly related to indud strial machinery and equipment manufaff ctutt rers and their faff ba ricators. Inflff ation generally affff eff cts us by increasing the cost of empm loyee wages and benefiff ts, transportation services, energy, borrr owings under our credit faff cility, processing equq ipment, and purchased metals. Although general inflff ation, excluding increases in the price of metals and increased laba or and distribution expense, has increased dud ring 2022, it has not had a material effff eff ct on our fiff nancial results dudd ring the past three years, but may have a signififf cant impact in fuff tut re years. We are exposed to tht e impact of flff uctutt ating metals prices and interest rate changes. During 2022, 2021 and 2020, we entered into metals swapa s at the requq est of customers. These derivatives have not been designated as hedging instrur ments. For certain customers, we enter into contrtt actut al relationships that entitle us to pass-through tht e economic effff eff ct of trading positions that we take with otht er third parties on our customers’ behalf.ff Our primary interest rate risk exposure results frff om variaba le rate debt. If interest rates in tht e fuff tutt re were to increase 100 basis points (1.0%) frff om December 31, 2022 rates and, assuming no change in total debt frff om December 31, 2022 levels, the additional annual interest expense to us would be apa proximately $0.9 million. We have the option to enter into 30- to 180- day fiff xed base rate LIBOR loans under the revolving credit faff cility provided by our ABL Credit Facility. On Januaryrr 10, 2019, we entered into a fiff ve-year interest rate swapa that locked the interest rate at 2.567% on $75 million of our revolving debt. 43 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARYRR DATA Olympic Steel, Inc. Index to Consolidated Financial Statements Reports of Independent Registered Pubu lic Accounting Firms (PCAOB ID Number 248)................................................ Management’s Report on Internr al Contrt ol Over Financial Reporting .............................................................................. Consolidated Statements of Comprehensive Income (Loss) foff r the Years Ended December 31, 2022, 2021 and 2020 .. Consolidated Balance Sheets as of December 31, 2022 and 2021 .................................................................................... Consolidated Statements of Cash Flows foff r tht e Years Ended Decembem r 31, 2022, 2021 and 2020................................. Supplemental Disclosures of Cash Flow Infoff rmation foff r the Years Ended December 31, 2022, 2021 and 2020 ............ Consolidated Statements of Shareholders’ Equitytt foff r the Years Ended December 31, 2022, 2021 and 2020.................. Notes to Consolidated Financial Statements foff r tht e Years Ended December 31, 2022, 2021 and 2020........................... Schedule II – Valuation and Qualifyff ing Accounts foff r tht e Years Ended December 31, 2022, 2021 and 2020 ................. Page 46 49 50 51 52 53 54 55 75 44 Report of Independent Registered Public Accounting Firm Board of Directors and Shareholders Olympic Steel, Inc. Opinion on the fiff nancial statements We have audited the accompm anying consolidated balance sheets of Olympm ic Steel, Inc. (an Ohio corprr oration) and subsidiaries (the “Company”) as of Decembm er 31, 2022 and 2021, tht e related consolidated statements of comprehensive income (loss), shareholders’ equity, and cash flff ows foff r each of the three years in the period ended December 31, 2022, and the related notes and fiff nancial statement schedud le included under Item 15(a) (collectively refeff rred to as the “fiff nancial statements”). In our opinion, the fiff nancial statements present faff irly, in all material respects, the fiff nancial position of the Company as of December 31, 2022 and 2021, and tht e results of its operations and its cash flff ows foff r each of the tht ree years in the period ended December 31, 2022, in confoff rmity with accounting principles generally accepted in tht e United States of America. We also have aua dited, in accordance with tht e standards of the Pubu lic Compm any Accounting Oversight Board (United States) (“PCAOB”), the Company’s internr al control over fiff nancial reporting as of December 31, 2022, based on criteria estaba lished in the 2013 InII ternrr al CoCC ntrtt ol—ll the Treadway Commission (“COSO”), and our report dated Februr ary 24, 2023 expressed an unquq alififf ed opinion. I— nII tege rated FrFF ameworkrr issued by the Committee of Sponsoring Organizations of Basis foff r opinion These fiff nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s fiff nancial statements based on our aua dits. We are a pubu lic accounting fiff rm registered with the PCAOB and are required to be independent with respect to the Compm any in accordance with the U.S. feff deral securities laws and the apa plicaba le rurr les and regulations of the Securities and Exchange Commission and tht e PCAOB. We condud cted our aua dits in accordance with the standards of the PCAOB. Those standards require that we plan and perfoff rm the aua dit to obtain reasonaba le assurance aba out whether tht e fiff nancial statements are frff ee of material misstatement, whetht er dud e to error or frff aua d. Our aua dits included perfoff rmr ing procedud res to assess the risks of material misstatement of the fiff nancial statements, whether dud e to errrr or or frff aua d, and perfoff rming procedures tht at respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the fiff nancial statements. Our audits also included evaluating tht e accounting principles used and signififf cant estimates made by management, as well as evaluating tht e overall presentation of the fiff nancial statements. We believe that our audits provide a reasonaba le basis foff r our opinion. Critical audit matter The critical audit matter communicated below is a matter arising frff om the currr ent period audit of the fiff nancial statements that was communicated or required to be communicated to the aua dit committee and that: (1) relates to accounts or disclosures that are material to the fiff nancial statements and (2) involved our especially challenging, subu jb ective, or compm lex judgments. The communication of critical audit matters does not alter in any way our opinion on the fiff nancial statements, taken as a whole, and we are not, by communicating tht e critical audit matter below, providing a separate opinion on the critical audit matter or on tht e accounts or disclosures to which it relates. InII ventoryr VaVV luation As described fuff rtht er in Note 1, inventories not stated under the last-in, fiff rst-out (LIFO) method, are stated at the lower of its cost or net realizable value and inventories stated under the LIFO metht od, are stated at the lower of its cost or markr et value. Inventory costs include the costs of the purchased metals, inbound frff eight, externr al and internr al processing and apa plicaba le laba or and overhr ead costs. Net realizaba le value is the estimated selling price in the ordinaryrr course of business, less reasonaba ly predictaba le costs of completion, disposal and transportation. Market value is typically replacement cost unless it exceeds net realizaba le value. At December 31, 2022, the Compm any’s net inventoryrr balance was $416.9 million. We identififf ed inventoryrr valuation as a critical audit matter. 45 The principal consideration foff r our determination that inventoryrr valuation is a critical audit matter is tht at auditing management’s evaluation of the estimates of the inventories net realizaba le value or market value is challenging dud e to the high degree of subu jb ective auditor judgment necessaryrr in evaluating management’s assumpm tions of reasonaba ly predictaba le costs of completion, disposal and transportation costs and sales prices. These signififf cant assumpm tions are foff rwrr ard-looking and could be affff eff cted by fuff tut re economic and market conditions. Our aua dit procedures related inventoryrr valuation included the foff llowing, among otht ers: ● We tested the design and operating effff eff ctiveness of the control over the Company’s inventoryrr carrr yrr ing value adjd ustment determination process. ● We analyzed tht e changing price of metals using data obtained frff om third partytt sources to assess pricing trends that could result in a lower of cost or net realizaba le value or market value adjd ustment and compared tht e trends we identififf ed to tht e assumptions used by management in their analysis. ● We selected a sample of sales invoices frff om the subu sequq ent period and compared the selling price per tht e invoice to the cost of tht e fiff nished goods inventoryrr on hand at December 31, 2022, deducting apa plicable costs to sell the produd ct, to determine if tht e inventoryrr cost was less than net realizable value or market value. We evaluated the sales price per the invoice to corrr oborate our understanding of fuff tut re sales prices. ● We perfoff rmed a sensitivity analysis on management’s estimated costs to complete, dispose, and trtt ansport the inventory items and related sales prices. ● The procedures perfoff rmr ed included consideration of whetht er the infoff rmation tested was consistent with evidence obtained in other areas of tht e audit. /s/ GRARR NAA T THORNRR TON LLP We have servrr ed as the Compm any’s auditor since 2019. Cleveland, Ohio Februr ary 24, 2023 46 Report of Independent Registered Public Accounting Firm Board of Directors and Shareholders Olympic Steel, Inc. Opinion on internal control over fiff nancial reporting We have audited the internr al contrtt ol over fiff nancial reporting of Olympic Steel, Inc. (an Ohio corprr oration) and subsidiaries (the “Company”) as of December 31, 2022, based on criteria estaba lished in the 2013 Internr al Control—Integrated Frameworkr the Company maintained, in all material respects, effff eff ctive internr al control over fiff nancial reporting as of December 31, 2022, based on criteria estaba lished in the 2013 Internr al Contrt ol—Integrated Frameworkr issued by tht e Committee of Sponsoring Organizations of tht e Treadway Commission (“COSO”). In our opinion, issued by COSO. We also have aua dited, in accordance with tht e standards of the Pubu lic Compm any Accounting Oversight Board (United States) (“PCAOB”), the consolidated fiff nanaa cial statements of the Company as of and foff r the year ended December 31, 2022, and our report dated Februrr aryrr 24, 2023, expressed an unquq alififf ed opinion on those fiff nancial statements. Basis foff r opinion The Compm any’s management is responsible foff r maintaining effff eff ctive internr al contrt ol over fiff nancial reporting and foff r its assessment of tht e effff eff ctiveness of internr al control over fiff nancial reporting, included in the accompanying Management’s Report on Internr al Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internr al contrtt ol over fiff nancial reporting based on our audit. We are a pubu lic accounting fiff rm registered with tht e PCAOB and are requq ired to be independent with respect to tht e Compm any in accordance with the U.S. feff deral securities laws and the apa plicaba le rurr les and regulations of the Securuu ities and Exchange Commission and tht e PCAOB. We condud cted our aua dit in accordance with the standards of the PCAOB. Those standards require that we plan and perfoff rmr the audit to obtain reasonaba le assurance aba out whetht er effff eff ctive internr al control over fiff nancial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over fiff nancial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effff eff ctiveness of internr al control based on the assessed risk, and perfoff rming such otht er procedud res as we considered necessaryr in the circumstances. We believe tht at our aua dit provides a reasonaba le basis foff r our opinion. Defiff nition and limitations of internal control over fiff nancial reporting A compm any’s internrr al control over fiff nancial reporting is a process designed to provide reasonable assurance regarding tht e reliaba ility of fiff nancial reporting and tht e preparation of fiff nancial statements foff r externr al purprr oses in accordance with generally accepted accounting principles. A company’s internal control over fiff nancial reporting includes those policies and procedures tht at (1) pertain to the maintenance of records that, in reasonaba le detail, accurately and faff irly reflff ect the transactions and dispositions of the assets of the company; (2) provide reasonaba le assurance that trtt ansactions are recorded to permit preparation of fiff nancial statements in accordance with generally accepted accounting principles, and as necessaryrr that receipts and expenditut res of the company are being made only in accordance with aua thorizations of management and directors of the compm any; and (3) provide reasonable assurance regarding prevention or timely detection of unaua thorized acquisition, use, or disposition of the company’s assets that could have a material effff eff ct on the fiff nancial statements. Because of its inherent limitations, internal control over fiff nancial reporting may not prevent or detect misstatements. Also, projo ections of any evaluation of effff eff ctiveness to fuff tutt re periods are subject to the risk that controls may become inadequq ate because of changes in conditions, or that the degree of compliance with tht e policies or procedud res may deteriorate. /s/ GRARR NAA T THORNRR TON LLP Cleveland, Ohio Februr ary 24, 2023 47 Management’s Report on Internal Control Over Financial Reporting Our management is responsible foff r estaba lishing and maintaining adequate internr al control over fiff nancial reporting. Our internr al control over fiff nancial reporting is a process designed to provide reasonaba le assurance regarding the reliaba ility of our fiff nancial reporting and tht e preparation of fiff nancial statements foff r externr al purpr oses in accordance with generally accepted accounting principles. Becaua se of its inherent limitations, internr al control over fiff nancial reporting may not prevent or detect misstatements. Our management assessed tht e effff eff ctiveness of our internal contrt ol over fiff nancial reporting as of December 31, 2022. In making tht is assessment, our management used the criteria estaba lished in InII ternrr al CoCC ntrtt ol - InII tege rated FrFF ameworkrr (2(( 013)3 , issued by tht e Committee of Sponsoring Organizations of tht e Treadway Commission (COSO). Based on our assessment, we concluded tht at, as of December 31, 2022, our internrr al contrtt ol over fiff nancial reporting was effff eff ctive based on those criteria. The effff eff ctiveness of our internr al control over fiff nancial reporting as of December 31, 2022 has been audited by Grant Thornr ton LLP, an independent registered pubu lic accounting fiff rmr , as stated in tht eir report, which apa pears herein. 48 Olympic Steel, Inc. Consolidated Statements of Comprehensive Income (Loss) For The Years Ended December 31, (in tht ousands, except per share data) Net sales Costs and expenses Cost of materials sold (excludes items shown separately below) Warehouse and processing Administrative and general Distribution Selling Occupu ancy Depreciation Amortization Total costs and expenses Operating income Other loss, net Income befoff re interest and income taxes Interest and otht er expense on debt Income (loss) befoff re income taxes Income tax provision (benefiff t) Net income (loss) Gain (loss) on cash flff ow hedges Tax effff eff ct of hedges Total compm rehensive income (loss) Net income (loss) per share - basic Weighted average shares outstanding - basic Net income (loss) per share - diluted Weighted average shares outstanding - diluted Dividends declared per share of common stock 2022 2021 2020 $ 2,559,990 $ 2,312,253 $ 1,234,144 2,073,930 104,668 114,004 60,529 40,174 13,200 17,285 2,453 2,426,243 133,747 45 133,702 10,080 123,622 32,691 90,931 $ 4,409 (1,102) 94,238 $ 7.87 $ 11,551 7.87 $ 11,559 1,802,052 103,017 104,617 55,404 41,881 12,500 17,952 2,364 2,139,787 172,466 36 172,430 7,631 164,799 43,748 121,051 $ 2,960 (740) 123,271 $ 10.53 $ 11,492 10.52 $ 11,503 979,099 83,091 71,451 44,728 26,050 9,662 17,936 1,554 1,233,571 573 73 500 7,411 (6,911) (1,316) (5,595) (2,579) 645 (7,529) (0.49) 11,447 (0.49) 11,447 0.36 $ 0.08 $ 0.08 $ $ $ $ $ ThTT e accompm anyn ing notes are an intege rgg al part ofo thtt ese consolidadd ted statt tementstt . 49 Olympic Steel, Inc. Consolidated Balance Sheets As of December 31, (in tht ousands) Assets Cash and cash equivalents Accounts receivaba le, net Inventories, net (includes LIFO reservrr es of $20,301 and of $19,736 as of December 31, 2022 and 2021, respectively) Prepaid expenses and other Total currr ent assets Property and equipment, at cost Accumulated depreciation Net property and equq ipment Goodwill Intangible assets, net Other long-term assets Right-of use assets, net Total assets Accounts payaba le Accrurr ed payroll Other accrur ed liaba ilities Currr ent portion of lease liaba ilities Total currr ent liaba ilities Credit faff cility revolver Other long-term liaba ilities Defeff rred income taxes Lease liaba ilities Total liaba ilities Liabilities Commitments and contingencies (Note 14) Prefeff rred stock, without par value, 5,000 shares aua thorized, no shares issued or Shareholders' Equity outstanding Common stock, without par value, 20,000 shares authorized; 11,130 and 11,124 issued; 11,130 and 11,124 shares outstanding Treasuryrr stock, at cost, 0 and 0 shares held Accumulated other compm rehensive income (loss) Retained earnr ings Total shareholders' equq ityt Total liaba ilities and shareholders' equityt 2022 2021 12,189 219,789 $ 9,812 284,570 416,931 9,197 658,106 429,810 (281,478) 148,332 10,496 32,035 14,434 28,224 891,627 101,446 40,334 16,824 6,098 164,702 165,658 12,619 10,025 22,655 375,659 - 134,724 - 1,311 379,933 515,968 891,627 $ $ $ 485,029 9,989 789,400 413,396 (266,340) 147,056 10,496 33,653 15,241 27,726 1,023,572 148,649 44,352 25,395 5,940 224,336 327,764 15,006 9,890 22,137 599,133 - 133,427 - (1,996) 293,008 424,439 1,023,572 $ $ $ $ ThTT e accompm anyn ing notes are an intege rgg al part ofo thtt ese consolidadd ted statt tementstt . 50 Olympic Steel, Inc. Consolidated Statements of Cash Flows For The Years Ended December 31, (in tht ousands) Adjd ustments to reconcile net income (loss) to net cash frff om (used foff r) operating activities. Net income (loss) Adjd ustments to reconcile net income (loss) to net cash frff om (used foff r) operating activities - Depreciation and amortization (Gain) loss on disposition of property and equipment Gain on disposition of Detroit operation (befoff re expenses of $2,569) Stock-based compensation Intangibles and other long-termr Defeff rred income taxes and other long-term liaba ilities assets Changes in working capa ital: Accounts receivaba le Inventories Prepaid expenses and other Accounts payaba le Change in outstanding checks Accrurr ed payroll and other accrurr ed liaba ilities Net cash frff om (used foff r) operating activities Cash flff ows frff om (used foff r) investing activities: Acquisitions Capa ital expenditut res Proceeds frff om sale of Detrtt oit property and equipment Proceeds frff om disposition of property and equipment Net cash used foff r investing activities Cash flff ows frff om (used foff r) fiff nancing activities: Credit faff cility revolver borrowings Credit faff cility revolver repayaa ments Principal payments under fiff nance lease obligation Credit faff cility feff es and expenses Repurchase of common stock Dividends paid Net cash frff om (used foff r) fiff nancing activities Cash and cash equivalents: Net change Beginning balance Ending balance 2022 2021 2020 $ 90,931 $ 121,051 $ (5,595) 20,206 (2,185) - 1,297 1,304 235 111,788 64,781 68,098 792 (52,274) 5,071 (12,403) 74,065 185,853 - (19,854) - 3,293 (16,561) 685,269 (847,375) (703) (100) - (4,006) (166,915) 20,954 (22) (6,068) 1,045 6,796 (6,231) 137,525 (131,459) (241,899) (4,850) 60,538 (1,189) 34,960 (283,899) (146,374) (12,105) (11,011) 9,506 146 (13,464) 757,788 (590,632) (828) (1,325) - (886) 164,117 20,008 2,026 - 1,215 (4,349) 1,220 14,525 (14,790) 37,186 2,112 23,333 (6,893) 6,179 47,127 61,652 (19,500) (9,803) - 1,154 (28,149) 339,538 (371,854) (242) (124) (145) (885) (33,712) 2,377 9,812 12,189 $ $ 4,279 5,533 9,812 $ (209) 5,742 5,533 ThTT e accompm anyn ing notes are an intege rgg al part ofo thtt ese consolidadd ted statt tementstt .. 51 Olympic Steel, Inc. Supplemental Disclosures of Cash Flow Infoff rmation For The Years Ended December 31, (in tht ousands) Interest paid Income taxes paid 2022 2021 2020 $ $ 9,635 $ 33,404 $ 6,843 $ 46,548 $ 7,002 1 The Company incurrr ed fiff nancing lease obligations of $0.4 million, $0.0 million and $1.4 million dud ring the years ended December 31, 2022, 2021 and 2020, respectively. This non-cash transaction has been excluded frff om the Consolidated Statement of Cash Flows foff r tht e years ended December 31, 2022, 2021 and 2020. ThTT e accompm anyn ing notes are an intege rgg al part ofo thtt ese consolidadd ted statt tementstt 52 Olympic Steel, Inc. Consolidated Statements of Shareholders’ Equity For The Years Ended December 31, (in tht ousands) Accumulated Other Treasury Comprehensive Retained Earnings Income (Loss) Stock Common Stock Total Equity 131,647 $ (335) $ (2,281) $ 179,321 $ 308,352 Balance at December 31, 2019 Net loss Payment of dividends Stock-based compensation Stock repurchase Change in faff ir value of hedges Other Balance at December 31, 2020 Net income Payment of dividends Stock-based compensation Change in faff ir value of hedges Other Balance at December 31, 2021 Net income Payment of dividends Stock-based compensation Change in faff ir value of hedges $ $ $ $ $ $ - $ - 735 - - - 132,382 $ - $ - 1,045 - - 133,427 $ - $ - 1,297 - Balance at December 31, 2022 $ 134,724 $ - $ - 480 (145) - - - $ - $ - - - - - $ - $ - - - - $ - $ - - (1,934) - (4,215) $ - $ - - 2,220 (1) (1,996) $ - $ - - 3,307 1,311 $ (5,595) $ (885) - - - 2 172,843 $ 121,051 $ (886) - - - 293,008 $ 90,931 $ (4,006) - - 379,933 $ (5,595) (885) 1,215 (145) (1,934) 2 301,010 121,051 (886) 1,045 2,220 (1) 424,439 90,931 (4,006) 1,297 3,307 515,968 ThTT e accompm anyn ing notes are an intege rgg al part ofo thtt ese consolidadd ted statt tementstt . 53 Olympic Steel, Inc. Notes to Consolidated Financial Statements For The Years Ended December 31, 2022, 2021 and 2020 1. Summaryr ofo SiSS gi ngg ifi iff cant Accountitt nii g PoPP lill cies: Nature of Business The Compm any operates in three reportaba le segments: specialty metals flff at produd cts, carbr on flff at produd cts, and tut bu ular and pipe products. The specialty metals flff at produd cts segment and tht e carbr on flff at produd cts segment are at times consolidated and refeff rred to as the flff at produd cts segments. Certain of the flff at produd cts segments’ assets and resources are shared by tht e specialty metals and carbr on flff at produd cts segments, and both segments’ produd cts are stored in the shared faff cilities and, in some locations, processed on shared equipment. Due to the shared assets and resources, certain of the flff at produd cts segment expenses are allocated between tht e specialty metals flff at produd cts segment and the carbr on flff at produdd cts segment based upu on an estaba lished allocation metht odology. The specialty metals flff at products segment sells and distributes processed aluminum and stainless flff at-rolled sheet and coil produd cts, flff at bar produdd cts and faff ba ricated parts. On October 1, 2021, tht e Company acquired subu stantially all of tht e net assets of Shaw Stainless & Alloy, Inc. (Shaw), based in Powder Springs, Georgia. Shaw is a fuff ll-line distributor of stainless steel sheet, pipe, tutt bu e, bar and angles. Shaw also manufaff ctut res and distributes stainless steel bollards and water treatmt ent systems. Through the acquisition of Action Stainless & Alloys, Inc. (Action Stainless) on December 14, 2020, the specialty metals flff at products segment expanded its geograpaa hic foff otptt rint and enhanced its produd ct offff eff rings in stainless steel and aluminum plate, sheet, angles, rounds, flff at bar, tut bu ing and pipe. Action Stainless offff eff rs a ranaa ge of processing capa aba ilities, including plasma, laser and waterjr et cutting and compm uter numerical control (CNC) machining. The acquisition includes Shaw's stainless-steel distribution and faff brication businesses as well as its architectut ral and barrrr ier defeff nse businesses. The carbr on flff at produd cts segment sells and distributes large volumes of processed carbonr and coated flff at- rolled sheet, coil and plate produd cts, faff ba ricated parts and faff bricated produd cts, including self-ff dumping metal hoppers and steel and stainless-steel dumpm inserts foff r pickukk pu trur ck and service trurr ck beds. On September 17, 2021, the Compm any sold substantially all of the assets related to its Detroit operation. The Detroit operation was primarily foff cused on the distribution of carbr on flff at-rolled steel to domestic automotive manufaff ctut rers and their supu pliers. With the recent acquisition of Metal- Faba , Inc. (Metal-Faba ) on Januaryrr 3, 2023, the carbr on flff at produd cts segment will fuff rtht er expand tht e Compm any’s produd ct offff eff rings to include tht e manufaff ctutt re of venting, micro air and clean air produd cts foff r residential, commercial and indud strtt ial (CTI), applications. The tut bu ular and pipe products segment, which consists of the Chicago Tubu e and Iron subu sidiaryrr distributes metal tut bing, pipe, bar, valves and fiff ttings and faff ba ricates pressure parts supplied to various indud strial markets. Corpr orate expenses are reported as a separate line item foff r segment reporting purprr oses. Corpr orate expenses include the unallocated expenses related to managing tht e entire Compm any (i.e., all three segments), including paya roll expenses foff r certain personnel, expenses related to being a pubu licly traded entity such as board of directors’ expenses, audit expenses, and various other profeff ssional feff es. Principles of Consolidation and Basis of Presentation The accompanying consolidated fiff nancial statements have been prepared frff om the fiff nancial records of Olympic Steel, Inc. and its wholly-owned subsidiaries (collectively, Olympm ic or the Company), aftff er elimination of intercompm any accounts and transactions. Accounting Estimates The preparation of fiff nancial statements in confoff rmity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affff eff ct the reported amounts of assets and liaba ilities and disclosure of contingent assets and liaba ilities at tht e date of the fiff nancial statements and the reported amounts of revenues and expenses dudd ring the reporting period. Actut al results could diffff eff r frff om tht ose estimates. Concentration Risks The Company is a maja or customer of flff at-rolled coil and plate and tut bu ular and pipe steel foff r many of its principal supu pliers, but is not dependent on any one supu plier. The Compm any purchased apa proximately 39%, 51% and 56% of its total steel requq irements frff om its tht ree largest suppliers in 2022, 2021 and 2020, respectively. 54 The Company has a diversififf ed customer and geograpa hic base, which reduces the inherent risk and cyclicality of its business. The concentration of net sales to the Compm any’s top 20 customers apa proximated 26%, 23% and 25% of consolidated net sales in 2022, 2021 and 2020, respectively. In addition, tht e Compm any’s largest customer accounted foff r apa proximately 3%, 2% and 2% of consolidated net sales in 2022, 2021 and 2020, respectively. Sales to indud strial machinery and equq ipment manufaff ctut rers and their faff ba ricators accounted foff r 52%, 47% and 45% of consolidated net sales in 2022, 2021, and 2020, respectively. Cash and Cash Equivalents Cash equivalents consist of short-term highly liquid investments, witht a three montht or less matut rity, which are readily convertible into cash. The Company maintains cash levels in bank accounts that, at times, may exceed feff derally-insured limits. The Company has not experienced signififf cant loss, and believe we are not exposed to signififf cant risk of loss, in these accounts. Fair Market Value Fair value is defiff ned as the exchange price that would be received foff r an asset or paid to transfeff r a liaba ility in the principal or most advantageous market foff r the liaba ility in an orderly transaction between market participants on the measurement date. Valuation techniquq es must maximize the use of observrr aba le inpn uts and minimize the use of unobservrr able inpn uts. To measure faff ir value, the Company apa plies a faff ir value hierarchy tht at is based on three levels of inputs, of which the fiff rst two are considered observaba le and the last unobservaba le, as foff llows: Level 1 – Quoted prices in active markets foff r identical assets or liaba ilities. Level 2 – Inputs otht er than Level 1 that are observaba le, either directly or indirectly, such as quoted prices foff r similar assets or liaba ilities; quoted prices that are not active; or other inputs tht at are observaba le or can be corroborated by observaba le market data foff r subu stantially the fuff ll term of tht e assets or liaba ilities. Level 3 – Unobservaba le inputs that are supu ported by little or no market activity and that are signififf cant to the faff ir value of the assets or liaba ilities. Financial instrur ments, such as cash and cash equivalents, accounts receivaba le, accounts payaba le and tht e credit faff cility, are stated at their carrr yrr ing value, which is a reasonaba le estimate of faff ir value. The faff ir value of marketaba le securities is based on quoted market prices. Allowance foff r Credit Losses The Company’s allowance foff r credit losses is maintained at a level considered apa propriate based on historical experience and specififf c customer collection issues that the Compm any has identififf ed. Estimations are based upu on the apa plication of a historical collection rate to the outstanding accounts receivable balance, which remains faff irly level frff om year to year, and judgments aba out tht e probaba le effff eff cts of economic conditions on certain customers, which can flff uctut ate signififf cantly frff om year to year. The Company cannot guarantee that the rate of fuff tutt re credit losses will be similar to past experience. The Company considers all availabla e inforff mation when assessing the adequacy of the allowance foff r credit losses each quarter. Inventory Valuation Non-LIFO inventories are stated at tht e lower of its cost or net realizaba le value. Net realizaba le value is the estimated selling price in tht e ordinary course of business, less reasonaba ly predictaba le costs of compm letion, disposal and transportation. LIFO inventories are stated at the lower of cost or market. Market is the estimated selling price in the ordinaryrr course of business, less reasonaba le predictaba le costs of compm letion. Inventoryrr costs include tht e costs of the purchased metals, inbn ound frff eight, external and internal processing and apaa plicaba le laba or and overhead costs. Costs of the Company’s specialty metals and carbr on flff at produd cts segments’ inventories, including flff at-rolled sheet, coil and plate produd cts are determined using the specififf c identififf cation method. is stated under the LIFO method. At December 31, 2022 and Certain of the Compm any’s tut bu ular and pipe products inventoryrr December 31, 2021, apa proximately $46.3 million, or 11.1% of consolidated inventoryr , and $55.4 million, or 11.4% of consolidated inventoryrr , respectively, was reported under the LIFO metht od of accounting. The cost of tht e remainder of tut bu ular and pipe product segment’s inventoryrr is determined using a weighted average rolling fiff rst-in, fiff rst-out (FIFO) method. 55 On tht e Consolidated Statements of Comprehensive Income (Loss), “Cost of materials sold (exclusive of items shown separately below)” consists of the cost of purchased metals, inbound and internr al transfeff r frff eight, externr al processing costs, and LIFO income or expense. Property and Equipment, and Depreciation Property and equipment are stated at cost. Depreciation is provided using the straight-line metht od over the estimated usefuff l lives of the assets ranging frff om two to 30 years. The Compm any capa italizes the costs of obtaining or developing internrr al-use softff wtt are, including directly related payroll costs. The Company amortizes those costs over fiff ve years, beginning when tht e softff wtt are is ready foff r its intended use. Intangible Assets and Recoverability of Long-lived Assets The Compm any perfoff rms an annual impm airmr ent test of indefiff nite-lived intangible assets in the foff urth quarter, or more frff equently if changes in circumstances or the occurrrr ence of events indicate potential impm airment. Events or changes in circumstances that could trigger an impairmr ent review include signififf cant nonpn erfoff rmance relative to the expected historical or projo ected fuff tut re operating results, signififf cant changes in the manner of the use of the acquired assets or the strategy foff r the ine whether to use overall business or signififf cant negative industrtt y or economic trends. Management uses judgment to determr a qualitative analysis or a quantitative faff ir value measurement foff r each of the Company’s reporting units that carrr yrr intangible assets. If a quantitative faff ir value measurement is used, tht e faff ir value of each indefiff nite-lived intangible asset is compm ared to its carryirr ng value and an impairment charge is recorded if tht e carryrr ing value exceeds the faff ir value. The Company estimates the faff ir value of indefiff nite-lived intangible assets using a discounted cash flff ow metht odology. Management’s assumpm tions used foff r the calculations are based on historical results, projo ected fiff nancial infoff rmr ation and recent economic events. Actutt al results could diffff eff r frff om these estimates under diffff eff rent assumpm tions or conditions, which could adversely affff eff ct the reported value of intangible assets. The Company evaluates the recoveraba ility of long-lived assets and tht e related estimated remaining lives whenever events or changes in circumstances indicate that the carryrr ing value may not be recoveraba le. Events or changes in circumstances that could trigger an impm airment review include signififf cant underprr erfoff rmance relative to the expected historical or projo ected fuff tutt re operating results, signififf cant changes in the manner of the use of the acquq ired assets or the strategy foff r the overall business or signififf cant negative indud stryr or economic trends. The Compm any records an impairment or change in usefuff l lifeff whenever events or changes in circumstances indicate tht at the carryrr ing amount may not be recoverable or the usefuff l lifeff has changed. Income Taxes The Compm any records, as an offff sff et to the estimated effff eff ct of temporaryrr diffff eff rences between tht e tax basis of assets and liaba ilities and the reported amounts in its consolidated balance sheets, the tax effff eff ct of operating loss and tax credit carrr yrr foff rwrr ards. If the Compm any determines that it will not be aba le to fuff lly realize a defeff rrr ed tax asset, it will record a valuation allowance to redud ce such defeff rred tax asset to its realizaba le value. The Company recognizes interest accrurr ed related to unrecognized tax benefiff ts in income tax expense. Penalties, if incurrr ed, would be recognized as a compm onent of administrative and general expense. The Company recognizes tht e fiff nancial statement benefiff t of a tax position only aftff er determining that tht e relevant tax authority would more likely than not sustain the position foff llowing an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the fiff nancial statements is the largest benefiff t that has a greater tht an 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company had no material unrecognized tax benefiff ts as of or dud ring tht e year ended December 31, 2022. The Company expects no signififf cant increases or decrease in unrecognized tax benefiff ts due to changes in tax positions within one year of December 31, 2022. 56 Revenue Recognition The Company's contracts with customers are comprised of purchase orders with standard terms and conditions. Occasionally the Company may also have longer-term agreements with customers. Subu stantially all of the contracts with customers require the deliveryrr of metals, which represent single perfoff rmance obligations tht at are satisfiff ed upu on transfeff r of contrtt ol of tht e produd ct to the customer. Transfeff r of control is assessed based on tht e use of the produdd ct distributed and rights to payment foff r perfoff rmance under the contrt act terms. Transfeff r of control and revenue recognition foff r substantially all of the Compm any’s sales occur upon shipment or deliveryrr of tht e produd ct, which is when title, ownership and risk of loss pass to tht e customer and is based on the apa plicaba le shipping terms. The shipping terms depend on tht e customer contract. An invoice foff r payment is issued at time of shipment and termr s are generally net 30 days. The Company has certain faff brication contrtt acts in one business unit foff r which revenue is recognized over time as perfoff rmr ance obligations are achieved. This faff ba rication business is immaterial to tht e Company's consolidated results. Sales retutt rnr s and allowances are treated as redud ctions to sales and are provided foff r based on historical experience and currrr ent estimates and are immaterial to the consolidated fiff nancial statements. Shipping and Handling Fees and Costs Amounts charged to customers foff r shipping and otht er transportation services are included in net sales. The distribution expense line on the accompm anying Consolidated Statements of Comprehensive Income (Loss) is entirely compm rised of all shipping and other transportation costs incurrrr ed by tht e Compm any in shipping goods to its customers. Stock-Based Compensation The Company records compensation expense foff r stock awards issued to empm loyees and directors. For additional infoff rmation, see Note 13, Equity Plans. Impact of Recently Issued Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020- 04, “Refeff rence Rate Refoff rm (Topic 848): Facilitation of the Effff eff cts of Refeff rence Rate Refoff rm on Financial Reporting”. The objb ective of this ASU is to ease the potential burden in accounting foff r (or recognizing tht e effff eff cts of)ff refeff rence rate refoff rmr on fiff nancial reporting. The amendments in this ASU are elective and apa ply to all entities, subu jb ect to meeting certain criteria, that have contracts, hedging relationships and otht er trtt ansactions that refeff rence LIBOR or another refeff rence rate expected to be discontinued because of refeff rence rate refoff rm. Then in Decembm er 2022, tht e FASB issued ASU No. 2022-06 “Defeff rral of the Sunset Date of Topic 848” which amends and extends the sunset date to December 31, 2024. We plan to adopt this ASU in the fiff rst quarter of 2023 foff r the modififf cation of the interest rate hedge, however, we do not expect tht e adoption dud ring the fiff rst quarter of 2023 to have a material impact on our Consolidated Financial Statements. In December 2019, tht e FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifyff ing tht e Accounting foff r Income Taxes.” The objb ective of this ASU is to simplifyff tht e accounting foff r income taxes by removing certain exceptions to general principles in ASC 740 and by clarifyff ing and amending existing guidance within U.S. generally accepted accounting principles. ASU 2019-12 is effff eff ctive foff r pubu lic business entities foff r fiff scal years, and interim periods within those fiff scal years, beginning aftff er Decembm er 15, 2020. Diffff eff rent compm onents of the guidance requq ire retrospective, modififf ed retrospective or prospective adoption, and early adoption is permitted. The adoption of this ASU dud ring tht e fiff rst quarter of 2021 did not have a material impact on the Company’s Consolidated Financial Statements. 2. Acquisii itii itt ons On October 1, 2021, tht e Company acquired substantially all of tht e net assets of Shaw, based in Powder Springs, Georgia, foff r $12.1 million. Shaw is a fuff ll-line distributor of stainless steel sheet, pipe, tutt be, bar and angles. Shaw also manufaff ctut res and distributes stainless steel bollards and water treatment systems. The acquisition includes Shaw's stainless-steel distribution and faff ba rication businesses as well as its architectut ral and barrr ier defeff nse businesses. As of the effff eff ctive date of the acquisition, Shaw’s results are included in tht e Compm any’s specialty metals flff at products segment. Upon the acquq isition, the Compm any entered into an amendment to its credit faff cility to include tht e eligible assets of Shaw as collateral. 57 On December 14, 2020, tht e Company acquired subu stantially all of the net assets of Action Stainless, based outside of Dallas, Texas, foff r $19.5 million. Action Stainless is a fuff ll line distributor of stainless steel and aluminum plate, sheet, angles, rounu ds, flff at bar, tutt bing and pipe and offff eff rs a wide range of processing capa aba ilities including plasma, laser and waterjr et cutting and CNC machining. As of tht e effff eff ctive date of tht e acquisition, Action Stainless results are included in tht e Compm any’s specialty metals flff at products segment. Upon the acquq isition, tht e Compm any entered into an amendment to its credit faff cility to include the eligible assets of Action Stainless as collateral. The acquisitions are not considered signififf cant and thus pro foff rma infoff rmation has not been provided. The acquisitions were accounted foff r as business combinations and tht e assets and liaba ilities were valued at faff ir mara ket value. The taba le below summarizes tht e fiff nal purchase price allocation of tht e faff ir maraa ket values of the assets acquired and liaba ilities assumed. Details of Acquisition (in thtt ousands) Assets acquired Accounts receivaba le, net Inventories Property and equipment Prepaid expenses and other Goodwill Intangible assets Total assets acquired Total liaba ilities assumed Cash paid Shaw As of October 1, 2021 Action Stainless As of December 14, 2020 $ $ 1,510 $ 3,129 1,886 5,986 5,262 2,750 20,523 (8,418) 12,105 $ 3,239 3,656 10,610 204 1,894 4,410 24,013 (4,513) 19,500 The purchase price allocations presented aba ove are based upu on management’s estimate of tht e faff ir value of the acquired assets and assumed liaba ilities using Level 3 valuation techniques including income, cost and market apa proaches. The faff ir value estimates involve the use of estimates and assumptions, including, but not limited to, the timing and amounts of fuff tut re cash flff ows, revenue growtht rates, discount rates, and royalty rates. The total liaba ilities assumed foff r Action Stainless include an immaterial earnr -out amount. 3. Disii ps ositii itt on ofo Assetstt On September 17, 2021, the Compm any sold substantially all of the assets related to its Detrtt oit operation to Ventutt re Steel (U.S.), Inc. foff r $58.4 million plus a working capa ital adjd ustment of $12.6 million, which was settled on Februrr aryrr 8, 2022. The working capa ital adjd ustment is included in “Accounts Receivaba le, net” on the Consolidated Balance Sheets as of December 31, 2021. The sale price included $9.5 million foff r property and equipment and the remaining assets and liaba ilities were sold at faff ir value, which equaled carrr yrr ing value. The Detroit operation was primarily foff cused on the distrtt ibution of carbr on flff at- rolled steel to domestic automotive manufaff ctut rers and tht eir supuu pliers. The sale of tht e Detroit operation does not indicate a strategic shiftff in the Company’s operations. The gain on the sale net of associated profeff ssional and legal feff es totaled $3.5 million and is included in “Administrative and general” in the Corprr orate segment in the Consolidated Statements of Comprehensive Income (Loss) foff r tht e year ended December 31, 2021. The operating results of the Detroit operation were included in tht e flff at-produdd cts segments prior to the disposition. 4.44 Revenue Recogo ngg itii itt on The Compm any provides metals processing, distribution and deliveryrr of large volumes of processed carbr on, coated flff at-rolled sheet, coil and plate produd cts, aluminum, and stainless flff at-rolled produd cts, prime tin mill produd cts, flff at bar produdd cts, metal tut bing, pipe, bar, valves, fiff ttings, and faff ba ricated parts. The Compm any's contracts with customers are compm rised of purchase orders with standard terms and conditions. Occasionally the Company may also have longer-term agreements with customers. Subu stantially all of the contracts with customers require the deliveryr of metals, which represent single perfoff rmance obligations that are satisfiff ed at a point in time upu on trtt ansfeff r of control of the produd ct to tht e customer. 58 Transfeff r of control is assessed based on tht e use of the produd ct distributed and rights to payment foff r perfoff rmance under the contrtt act terms. Transfeff r of control and revenue recognition foff r substantially all of the Compm any’s sales occur upon shipment or deliveryr of tht e produd ct, which is when title, ownership and risk of loss pass to tht e customer and is based on the apa plicaba le shipping terms. The shipping terms depend on tht e customer contract. An invoice foff r payment is issued at time of shipment and termr s are generally net 30 days. The Company has certain faff brication contrtt acts in one business unit foff r which revenue is recognized over time as perfoff rmr ance obligations are achieved. This faff ba rication business is not material to tht e Compm any's consolidated results. Within the metals indud stryrr , revenue is frff equently disaggregated by produd cts sold. The taba les below disaggregates the Compm any’s revenues by segment and produd cts sold foff r the year ended December 31, 2022, 2021 and 2020, respectively. Hot Rolled Plate Cold Rolled Coated Specialty Pipe & Tubu e Other Total Hot Rolled Plate Cold Rolled Coated Specialty Pipe & Tubu e Other Total Hot Rolled Plate Cold Rolled Coated Specialty Pipe & Tubu e Other Total Disaggregated Revenue by Products Sold For the Twelve Months Ended December 31, 2022 Carbon flff at products Specialty metals flff at products Tubular and pipe products Total 29.8% 13.3% 4.7% 4.5% - - 0.7% 53.0% - - - - 30.3% - - 30.3% - - - - - 16.7% - 16.7% 29.8% 13.3% 4.7% 4.5% 30.3% 16.7% 0.7% 100.0% Disaggregated Revenue by Products Sold For the Twelve Months Ended December 31, 2021 Carbon flff at products Specialty metals flff at products Tubular and pipe products Total 31.4% 10.4% 7.0% 7.7% - - 1.6% 58.1% - - - - 25.3% - 0.1% 25.4% - - - - - 16.5% - 16.5% 31.4% 10.4% 7.0% 7.7% 25.3% 16.5% 1.7% 100.0% Disaggregated Revenue by Products Sold For the Twelve Months Ended December 31, 2020 Carbon flff at products Specialty metals flff at products Tubular and pipe products Total 29.7% 9.6% 5.9% 9.6% - - 1.1% 55.9% - - - - 23.5% - 1.9% 25.4% - - - - - 18.7% - 18.7% 29.7% 9.6% 5.9% 9.6% 23.5% 18.7% 3.0% 100.0% 59 5.55 Accountstt Receivablell : Accounts receivaba le are presented net of allowances foff r credit losses and unissued credits of $4.3 million and $4.4 million as of December 31, 2022 and 2021, respectively. Credit loss expense totaled $2.2 million, $1.3 million and $1.2 million in 2022, 2021 and 2020, respectively. The allowance foff r credit losses is maintained at a level considered apa propriate based on historical experience, specififf c customer collection issues tht at have been identififf ed, currr ent market conditions and estimates foff r supportaba le foff recasts when apa propriate. Estimations are based upu on a calculated percentage of accounts receivaba le, which remains faff irly level frff om year to year, and judgments aba out the probaba le effff eff cts of economic conditions on certain customers, which can flff uctut ate signififf cantly frff om year to year. The Compm any cannot guarantee tht at the rate of fuff tutt re credit losses will be similar to past experience. The Company considers all availaba le infoff rmation when assessing the adequq acy of its allowance foff r credit losses and unissued credits. 6.66 InII ventott ries: Inventories consisted of the foff llowing: (in tht ousands) Unpn rocessed Processed and fiff nished Total As of December 31, 2022 2021 $ $ 356,588 $ 60,343 416,931 $ 417,595 67,434 485,029 During 2022, tht e Compm any recorded $0.6 million of LIFO expense as a result of increased metals pricing dud ring 2022. The LIFO expense decreased the Compm any’s inventory balance and increased its cost of materials sold. During 2021, the Compm any recorded $21.9 million of LIFO expense as a result of increased metals pricing during 2021. The LIFO expense decreased the Company’s inventoryrr balance and increased its cost of materials sold. Our pipe and tutt bular inventoryrr quantities were reduced during 2022 and 2021 resulting in a liquidation of LIFO inventoryrr layers (a LIFO decrement). A LIFO decrement results in the erosion of layers created in earlier years, and, tht erefoff re, a LIFO layer is not created foff r years that have decrements. For tht e years ended December 31, 2022 and 2021, tht e effff eff ct of the LIFO decrement impacted cost of materials sold by an immaterial amount. If the FIFO method had been in use, inventories would have been $20.3 million and $19.7 million higher than reported at December 31, 2022 and 2021, respectively. 60 7.77 PrPP opo ertytt and Equipii ment: Property and equipment consists of the foff llowing: (in thousands) Land Land impm rovements Buildings and impm rovements Machineryrr and equq ipment Furnrr itut re and fiff xtut res Compm uter softff wtt are and equq ipment Vehicles Financing lease Constrtt ur ction in progress Less accumulated depreciation Net property and equq ipment Depreciable Lives December 31, 2022 December 31, 2021 - $ 5 - 10 7 - 30 2 - 15 3 - 7 2 - 5 2 - 5 - - $ 15,058 $ 4,160 141,585 221,375 6,829 25,338 4,049 3,144 8,272 429,810 (281,478) 148,332 $ 15,238 3,780 141,979 210,410 6,229 25,053 3,054 2,710 4,943 413,396 (266,340) 147,056 Leasehold improvements are included with buildings and impm rovements and are depreciated over the lifeff of tht e lease or seven years, whichever is less. Constrtt ur ction in progress as of December 31, 2022 primarily consisted of payments foff r additional processing equipment, equipment and building upgrades to our existing faff cilities that were not yet placed into service. Constrtt ur ction in progress as of December 31, 2021, primarily consisted of payments foff r additional processing equq ipment at our existing faff cilities that were not yet placed into service. 8.8 GoGG odwdd ilii lll and InII tatt ngn ibii lell Assetstt : The Company’s intangible assets were recorded in connection with its acquisitions of Shaw in 2021, Action Stainless in 2020, EZ Dumper® hydraulic dud mpm inserts and McCullough Indudd stries in 2019, Berlin Metals, LLC in 2018 and Chicago Tubu e and Iron (CTI) in 2011. The intangible assets were evaluated on tht e premise of highest and best use to a market participant, primarily utilizing tht e income apa proach valuation metht odology. Goodwill, by reportaba le unit, was as foff llows as of December 31, 2022 and December 31, 2021, respectively. The goodwill is dedud ctible foff r tax purprr oses. (in tht ousands) Balance as of December 31, 2020 Acquq isitions Impm airments Balance as of December 31, 2021 Acquisitions Impm airments Balance as of December 31, 2022 Carbon Flat Products Specialty Metals Flat Products Tubular and Pipe Products Total $ $ 1,065 $ - - 1,065 - - 1,065 $ 4,058 $ 5,373 - 9,431 - - 9,431 $ - $ - - - - - - $ 5,123 5,373 - 10,496 - - 10,496 61 Intangible assets, net, consisted of the foff llowing as of December 31, 2022 and 2021, respectively: (in tht ousands) Customer relationships - subu jb ect to amortization Covenant not to compm ete - subu jb ect to amortization Trade name - not subjb ect to amortization (in tht ousands) Customer relationships - subu jb ect to amortization Covenant not to compm ete - subu jb ect to amortization Trade name - not subjb ect to amortization Gross Carryrr ing Amount As of December 31, 2022 Accumulated Amortization Intangible Assets, Net 22,559 $ 509 21,368 44,436 $ (12,100) $ (301) - (12,401) $ 10,459 208 21,368 32,035 Gross Carryrr ing Amount As of December 31, 2021 Accumulated Amortization Intangible Assets, Net 22,559 $ 509 21,368 44,436 $ (10,552) $ (231) - (10,783) $ 12,007 278 21,368 33,653 $ $ $ $ The usefuff l lifeff of tht e customer relationships was determined to be ten to 15 years, based primarily on tht e consistent and the existing customer base, the present value of which extends through tht e predictaba le revenue source associated witht amortization period. The usefuff l lifeff of the non-compete agreements was determined to be tht e length of tht e non-compete agreements, which range frff om one to fiff ve years. The usefuff l lifeff of tht e trade names was determined to be indefiff nite primarily dud e to tht eir historyrr and reputation in the marketptt lace, the Company’s expectation that tht e trade names will continue to be used, and tht e conclusion that there are currently no other faff ctors identififf ed that would limit their usefuff l lifeff . The Company will continue to evaluate tht e usefuff l lifeff assigned to its amortizaba le customer relationships and noncompm ete agreements in fuff tutt re periods. During 2022 and 2021, a qualitative test was perfoff rmed foff r goodwill and tht e otht er indefiff nitely lived intangible assets and no indication of impairment was identififf ed. The Company estimates that amortization expense foff r its intangible assets subjb ect to amortization will be apa proximately $1.6 million per year foff r the next tht ree years, $1.2 million foff r the next year and $0.7 million per year tht ereaftff er. 9.99 Leases: The Company leases warehouses and offff iff ce space, indud strial equipment, offff iff ce equipment, vehicles, indud strial gas tanks and foff rkliftff s frff om other parties and leases land and warehouse space to third parties. The Company determines if a contract contains a lease when the contract conveys the right to control the use of identififf ed assets foff r a period of time in exchange foff r consideration. Upon identififf cation and commencement of a lease, the Company estaba lishes a right-of-ff use (ROU) asset and a lease liaba ility. Operating leases are included in ROU assets, currr ent portion of lease liaba ilities, and lease liaba ilities on the accompm anying Consolidated Balance Sheets. Financing leases are included in property, plant and equipment, otht er accrurr ed liaba ilities and other long-term liaba ilities. The Company has remaining lease terms ranging frff om one year to 16 years, some of these include options to renew the lease foff r upu to fiff ve years. The total lease term is determined by considering the initial term per tht e lease agreement, which is adjd usted to include any renewal options that the Compm any is reasonaba ly certain to exercise as well as any period tht at the Company has contrtt ol over the space befoff re the stated initial term of the agreement. If the Company determines a reasonaba le certainty of exercising termination or early buyout options, then tht e lease terms are adjd usted to account foff r these faff cts. The Company leases one warehouse frff om a related partytt . The Company’s Executive Chairman of the Board owns 50% of an entity that owns one of the Cleveland warehouses and leases it to tht e Company at a faff ir market value annual rental of $0.2 million. The lease expires on December 31, 2023 with three fiff ve-year renewal options. 62 ROU assets and lease liaba ilities are recognized based on tht e present value of tht e fuff tutt re minimum lease payments over the lease term at commencement date. As most of tht e leases do not provide an impm licit rate, the Compm any uses its incremental borrr owing rate based on the infoff rmation availaba le at commencement date in determining tht e present value of fuff tut re payments. Lease expense is recognized on a straight-line basis over the lease term. The compm onents of lease expense were as foff llows foff r tht e years ended December 31, 2022, 2021 and 2020: (in tht ousands) Operating lease cost Finance lease cost Amortization Interest on lease liaba ilities 2022 2021 2020 7,446 $ 6,952 $ 7,089 720 67 787 $ 721 71 792 $ 254 54 308 $ $ Supu plemental cash flff ow infoff rmation related to leases was as foff llows foff r the years ended December 31, 2022, 2021 and 2020: (in tht ousands) 2022 2021 2020 Cash paid foff r amounts included in the measurement of lease liaba ilities: Operating cash flff ows frff om operating leases Operating cash flff ows frff om fiff nance leases Financing cash flff ows frff om fiff nance leases Total cash paid foff r amounts included in the measurement of lease liaba ilities $ $ 7,268 $ 67 703 6,830 $ 71 828 8,038 $ 7,729 $ 6,996 54 242 7,292 Supu plemental balance sheet infoff rmation related to leases was as foff llows: (in tht ousands) 2022 2021 Operating leases Operating lease Operating lease accumulated amortization Operating lease right of use asset, net Operating lease currr ent liaba ilities Operating lease liaba ilities (in tht ousands) Finance leases Finance lease Finance lease accumulated depreciation Finance lease, net Finance lease currrr ent liaba ilities Finance lease liaba ilities $ $ $ $ $ $ 45,987 $ (17,763) 28,224 $ 6,098 22,655 28,753 $ 42,023 (14,297) 27,726 5,940 22,137 28,077 2022 2021 3,144 $ (1,585) 1,559 $ 594 1,025 1,619 $ 2,710 (965) 1,745 661 1,115 1,776 Weighted average remaining lease term (in years) Operating leases Finance leases 2022 2021 6 3 6 4 Weighted average discount rate Operating leases Finance leases 63 3.41% 3.56% 3.44% 3.42% Matut rities of lease liaba ilities were as foff llows: (in tht ousands) Year Ending December 31, 2023 2024 2025 2026 2027 Thereaftff er Total fuff tut re minimum lease payments Less remaining imputed interest Total Operating Lease Finance Lease $ $ $ 7,100 $ 6,342 5,121 4,215 3,317 5,734 31,829 $ (3,076) 28,753 $ 640 531 336 157 41 3 1,708 (89) 1,619 10.00 Debt:tt The Company’s debt is comprised of tht e foff llowing components: (in tht ousands) Asset-based revolving credit faff cilitytt dud e June 16, 2026 Total debt Less currrr ent amount Total long-termr debt As of December 31, 2022 2021 $ $ 165,658 165,658 - 165,658 $ $ 327,764 327,764 - 327,764 The Company’s asset-based credit faff cility (the ABL Credit Facility) is collateralized by tht e Company’s accounts receivaba le, inventoryrr and personal property. The $625 million ABL Credit Facility consists of:ff (i) a revolving credit faff cility of upu to $595 million, including a $20 million subu -limit foff r letters of credit, and (ii) a fiff rst in, last out revolving credit faff cility of upu to $30 million. Under the terms of tht e ABL Credit Facility, the Company may, subu jb ect to the satisfaff ction of certain conditions, requq est additional commitments under tht e revolving credit faff cility in the aggregate principal amount of upu to $200 million to the extent tht at existing or new lenders agree to provide such additional commitments, and add real estate as collateral at the Company’s discretion. The ABL Facility matut res on June 16, 2026. representations and warrr anties and certain covenants that limit the aba ility of the The ABL Credit Facility contains customaryrr Compm any to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay distributions on, redeem or repurchase capa ital stock or redeem or repurchase subu ordinated debt; (iii) make investments; (iv) sell assets; (v) enter into agreements that restrict distributions or otht er payments frff om restricted subu sidiaries to the Company; (vi) incur or suffff eff r to exist liens securing indebtedness; (vii) consolidate, merge or transfeff r all or subu stantially all of their assets; and (viii) engage in transactions with affff iff liates. In addition, tht e ABL Credit Facility contains a fiff nancial covenant which provides tht at: (i) if any commitments or obligations are outstanding and tht e Company’s availaba ility is less than the greater of $30 million or 10.0% of the aggregate amount of revolver commitments ($47.5 million at December 31, 2022) or 10.0% of the aggregate borrowing base ($47.5 million at December 31, 2022), tht en the Company must maintain a ratio of Earnings befoff re Interest, Taxes, Depreciation and Amortization (EBITDA) minus certain capa ital expenditut res and cash taxes paid to fiff xed charges of at least 1.00 to 1.00 foff r the most recent twelve fiff scal montht period. The Compm any has the option to borrr ow under its revolver based on the agent’s base rate plus a premium ranging frff om 0.00% to 0.25% or the London Interbr ank Offff eff red Rate (LIBOR) plus a premium ranging frff om 1.25% to 2.75%. As of December 31, 2022, tht e Company was in compliance with its covenants and had apa proximately $305.6 million of availaba ility under the ABL Credit Facility. As of December 31, 2022 and Decembm er 31, 2021, $1.2 million and $1.6 million, respectively, of bank fiff nancing feff es were included in “Prepaid expenses and other” and “Other long-term assets” on the accompanying Consolidated Balance Sheets. The fiff nancing feff es are being amortized over the fiff ve-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 (Loss). 64 Scheduled Debt Maturities, Interest, Debt Carrying Values The Company’s principal payments over tht e next fiff ve years, as of December 31, 2022, are detailed in the taba le below: (in thousands) ABL Credit Facility Total principal paya ments $ $ 2023 2024 2025 2026 2027 Total - $ - $ - $ - $ - $ - $ 165,658 $ 165,658 $ - $ - $ 165,658 165,658 he overall effff eff ctive interest rate foff r all debt, exclusive of defeff rred fiff nancing feff es and defeff rrr ed commitmt ent feff es, amounted to 3.2%, 2.5% and 3.3% in 2022, 2021 and 2020, respectively. Interest paid totaled $9.6 million, $6.8 million and $7.0 million foff r the years ended December 31, 2022, 2021 and 2020, respectively. Average total debt outstanding was $280.4 million, $255.8 million and $188.4 million in 2022, 2021 and 2020, respectively. 11. Derivatitt ve InII strtt umentstt : MeMM talsll swapa s During 2022, 2021 and 2020, the Compm any entered into nickel swapa s indexed to the London Metal Exchange (LME) price of nickel with tht ird-partytt brokers. The nickel swapa s are trtt eated as derivatives foff r accounting purprr oses and were included in “Other accrurr ed liaba ilities” and “Prepaid expenses and other” on the Consolidated Balance Sheets at December 31, 2021. There were no outstanding metal swapa s at December 31, 2022. The Compm any entered into tht e swapa s to mitigate its customers’ risk of volatility in tht e price of metals. The swapa s are settled with the brokers at matutt rity. The economic benefiff t or loss arising risk associated with frff om tht e changes in faff ir value of tht e swapa s is contrtt actut ally passed tht rough to the customer. The primaryr the metals swapa s is the aba ility of customers or tht ird-partytt brokers to honor their agreements with the Compm any related to derivative instrurr ments. If the customer or tht ird-party brokers are unable to honor their agreements, tht e Compm any’s risk of loss is tht e faff ir value of the metals swapa s. While these derivatives are intended to help tht e Compm any manage risk, tht ey have not been designated as hedging instrurr ments. The periodic changes in faff ir value of the metals and embedded customer derivative instrtt ur ments are included in “Cost of materials sold” in the Consolidated Statements of Comprehensive Income (Loss). The Company recognizes derivative the customer and the tht ird party foff r tht e derivatives and classififf es cash settlement amounts associated with positions with botht them as part of “Cost of materials sold” in the Consolidated Statements of Comprehensive Income (Loss). The cumulative change in faff ir value of tht e metals swapa s that had not yet settled as of December 31, 2021 were included in “Accounts Receivabla e, net” and the embem dded customer derivatives are included in “Otht er accrurr ed liaba ilities” on the Consolidated Balance Sheets. There were no outstanding cumulative changes in faff ir value of tht e metal swapa s tht at have not yet settled at December 31, 2022. FiFF xii ed rate interest rate hedgd e On Januaryrr 10, 2019, the Compm any entered into a fiff ve-year foff rwrr ard starting fiff xed rate interest rate hedge in order to eliminate the variaba ility of cash interest payments on $75 million of the outstanding LIBOR based borrr owings under tht e ABL Credit Facility. The interest rate hedge fiff xed the rate at 2.57%. The interest rate hedge is included in “Other long-term assets” on the Consolidated Balance Sheets as of December 31, 2022 and in “Other long-term liaba ilities” on tht e Consolidated Balance Sheets as of December 31, 2021 and had a faff ir value of $1.7 million and $2.7 million, respectively. The mark-to-market adjd ustment of tht e faff ir value of the hedge is recorded to “Accumulated other comprehensive income (loss)” on the Company’s Consolidated Balance Sheets. Although tht e Company is exposed to credit loss in the event of nonpn erfoff rmance by the other partytt to the interest rate hedge agreement, the Compm any anticipates perfoff rmr ance by the counterpr artytt . There was no net impact frff om the nickel swapa s or embm edded customer derivative agreements to tht e Company’s Consolidated Statements of Comprehensive Income (Loss) foff r the years ended December 31, 2022, 2021 and 2020. The taba le below shows the total impm act to the Compm any’s Consolidated Statements of Comprehensive Income (Loss) through “Net income (loss)” of the derivatives foff r the years ended December 31, 2022, 2021 and 2020. 65 (in tht ousands) Fixed interest rate hedge Metals swapsa Embedded customer derivatives Total loss $ $ Net Gain (Loss) Recognized 2021 2020 2022 (664) $ 633 (633) (664) $ (1,880) $ 418 (418) (1,880) $ (1,520) 55 (55) (1,520) 12. FaFF irii VaVV lue ofo Assetstt and Liabilii ill tii itt es: The Company’s fiff nancial instrtt ur ments include cash and cash equivalents, short-term trtt ade receivaba les, derivative instrtt urr ments, accounts payaba le and debt instrur ments. For short-term instrtt urr ments, other tht an those required to be reported at faff ir value on a recurrr ing basis and foff r which additional disclosures are included below, management concluded the historical carrr yrr ing value is a reasonabla e estimate of faff ir value becausa e of tht e short period of time betwtt een the origination of such instrurr ments and their expected realization. During 2022 and 2021, there were no transfeff rs of fiff nancial assets betwtt een Levels 1, 2 or 3 faff ir value measurements. There have been no changes in the methodologies used at December 31, 2022. Following is a description of the valuation methodologies used foff r assets and liaba ilities measured at faff ir value as of December 31, 2022: MeMM talsll swaps and embedded customer derivatives – Determined by using Level 2 inpn uts that include the price of nickel indexed to tht e LME. The faff ir value is determr ined based on quq oted markr et prices and reflff ects the estimated amounts the Company would pay or receive to terminate the nickel swapa s. FiFF xii ed rate interest rate hedgd e – Based on the present value of tht e expected fuff tutt re cash flff ows, considering the risks involved, and using discount rates apa propriate foff r the matutt ru ity date. Market observaba le Level 2 inpn uts are used to determine the present value of fuff tut re cash flff ows. The foff llowing taba les present infoff rmation aba out the Compm any’s assets and liaba ilities that were measured at faff ir value on a recurrr ing basis and indicates tht e faff ir value hierarchy of tht e valuation techniques utilized by the Compm any: (in tht ousands) Assets: Fixed interest rate hedge Total assets at faff ir value (in tht ousands) Assets: Metal Swapa s Total assets at faff ir value Liabilities: Metal Swapa s Fixed interest rate hedge Total liabilities recorded at faff ir value Value of Items Recorded at Fair Value As of December 31, 2022 Level 2 Level 3 Total Level 1 $ $ $ $ $ $ - $ - $ 1,748 $ 1,748 $ - $ - $ 1,748 1,748 Value of Items Recorded at Fair Value As of December 31, 2021 Level 1 Level 2 Level 3 Total - $ - $ - $ - - $ 2,286 $ 2,286 $ 2,178 $ 2,661 4,839 $ - $ - $ - $ - $ - $ 2,286 2,286 2,178 2,661 4,839 The value of tht e items not recorded at faff ir value represent tht e carrr yrr ing value of the liaba ilities. The carryrr ing value of tht e ABL Credit Facility was $165.7 million anaa d $327.8 million at Decembm er 31, 2022 and 2021, respectively. Management believes that the ABL Credit Facility’s carrr yrr ing value apa proximates its faff ir value dud e to the variaba le interest rate on tht e ABL Credit Facility. 66 13. Equitii ytt PlPP all ns: Restricted Stock Units and Perfoff rmance Share Units Pursuant to tht e Amended and Restated Olympm ic Steel 2007 Omnibus Incentive Plan (the Incentive Plan), the Company may grant stock options, stock apa preciation rights, restricted shares, restricted share units (RSUs), perfoff rmance shares, and other stock- and cash-based awards to employees and directors of,ff and consultants to, the Compm any and its affff iff liates. Since adoption of the Incentive Plan, 1,400,000 shares of common stock have been autht orized foff r equq ity grants. On an annual basis, the compensation committee of the Company’s Board of Directors awards RSUs to each non-employee director as part of tht eir annual compensation. The annual awards foff r 2022 and 2021 per director were $80,000. Subjb ect to the terms of the Incentive Plan and tht e RSU agreement, the RSUs vest aftff er one year of servrr ice (frff om the date of grant). The RSUs are not converted into shares of common stock until the director either resigns or is termr inated frff om the board of directors. Prior to 2021, under the Incentive Plan, each eligible participant was awarded RSUs with a dollar value equq al to 10% of tht e participant’s base salaryrr , upu to an annual maximum of $17,500. The RSUs have a fiff ve-year vesting period and tht e RSUs convert into the right to receive shares of common stock upu on a participant’s retirement, or earlier upu on tht e participant’s death or disaba ility or upu on a change in contrtt ol of tht e Company. Under tht e Incentive Plan, the Compm any awards RSUs to newly-apa pointed executive offff iff cers, based upu on a percentage of their base salaryrr . Upon Mr. Greiffff ’ff s promotion to President and Chief Operating Offff iff cer on Januaryr 1, 2020, he received 15,694 RSUs. The RSUs will vest fiff ve years frff om the grant date, or earlier upon deatht or disaba ility or upu on a change in control of the Company. Due to the COVID-19 pandemic, no RSU awards were granted in 2021. In Januaryrr 2022, the Company adopted a new C-Suite Long-Term Incentive Plan (tht e C-Suite Plan) that operates under tht e Senior Manager Stock Incentive Plan. Under the C-Suite Plan, the Chief Executive Offff iff cer, the Chief Financial Offff iff cer and the President and Chief Operating Offff iff cer are eligible foff r participation. In each calendar year, tht e Committee may award eligible participants a long-term incentive of both a restricted stock unit (RSU) grant and a perfoff rmance stock unit (PSU) grant. Additionally, tht e Committee may offff eff r a long-term cash incentive (split equally between service and perfoff rmance- based portions) to supu plement botht the RSU and PSU grants in order to arrr ive at the total long-term award target. The total long-term award target is $1.1 million foff r the Chief Executive Offff iff cer, $0.3 million foff r the Chief Financial Offff iff cer and $0.6 million foff r the President and Chief Operating Offff iff cer. The PSUs will vest if the retutt rnr on net assets, calculated as EBITDA divided by Average Accounts Receivaba le, Inventoryr and Property and Equipment, exceeds 5 percent. Each RSU and service- based cash incentive vests three years aftff er tht e grant date. Each vested RSU will convert into the right to receive one share of common stock. During 2022, a total of 20,000 RSUs and 20,000 PSUs were granted to tht e participants under the C-Suite Plan, and $0.5 million and $0.5 million, respectively, were granted in servrr ice-based and perfoff rmance-based cash awards. If the retut rnr on net assets faff lls below 5 percent, no perfoff rmance-based incentive will be awarded. The maximum perfoff rmance- based award is achieved if retutt rnrr on net assets exceeds ten percent, and is capa ped at 150% of the grant. The perfoff rmance-based awards granted in 2022 are expected to vest at 150% of the grant. All pre-tax charges related to the long-term cash incentives were included in the capa tion “Administrative and general” on the accompm anying Consolidated Statements of Comprehensive Income (Loss). The total remaining estimated compm ensation cost of non-vested awards total $0.9 million and the weighted average remaining vesting period is 2 years as of December 31, 2022. Stock-based compensation expense recognized on RSUs foff r the years ended December 31, 2022, 2021 and 2020, respectively, is summarized in the foff llowing taba le: (in thousands) RSU expense befoff re taxes of the Plan RSU expense aftff er taxes For the years ended December 31, 2020 2021 2022 $ 1,297 $ 954 1,045 $ 767 1,265 1,024 All pre-tax charges related to RSUs and PSUs were included in the capa tion “Administrative and general” on the accompanying Consolidated Statements of Comprehensive Income (Loss). The total compensation cost of non-vested awards totaled $1.3 million and tht e weighted average remaining vesting period is 1.2 years as of December 31, 2022. 67 The foff llowing taba le summarizes the activity related to RSUs and PSUs foff r the year ended December 31, 2022, 2021 and 2020: 2022 2021 2020 Beginning balance Granted Converted into shares Forfeff ited Outstanding at December 31 Weighted Average Estimated Fair Value 18.29 25.56 18.16 17.52 18.95 Weighted Average Estimated Fair Value 18.14 23.29 18.67 17.55 18.29 Weighted Average Estimated Fair Value 19.25 11.92 20.27 18.14 18.14 Number of Shares 636,086 $ 70,588 (94,161) (1,973) 610,540 $ Number of Shares 610,540 $ 20,604 (49,191) (5,086) 576,867 $ Number of Shares 576,867 $ 55,558 (5,841) (9,066) 617,518 $ Vested at December 31 423,941 $ 19.24 370,771 $ 18.78 375,692 $ 18.88 No RSUs were used to fuff nd the Supu plemental Executive Retirement Plan, or SERPRR , in 2022, 2021 or 2020. Phantom Stock Units In Januaryrr 2022, the Compm any adopted a new Senior Manager Phantom Stock Plan (the “Phantom Stock Plan”) tht at operates under the Senior Manager Stock Incentive Plan. Under the Phantom Stock Plan, certain senior managers are eligible to participate in tht e plan. The Phantom Stock Plan supu ersedes any previous stock incentive programs offff eff red to the eligible participants. Each year, eligible participants will receive an award of Phantom Stock Units (“Phantom Units”) of upu to $30 thousand. The number of Phantom Units granted on tht e Grant Date is determined by dividing the amount of the Phantom Units granted by tht e closing price of a share of the Compm any’s common stock on tht e Grant Date. Each Phantom Unit Award under tht is plan shall vest 3 years aftff er the Grant Date (“the Vesting Date”). Upon vesting, the Compm any will pay tht e Participant in cash, the value of the vested Phantom Units multiplied by the closing price of a share of the Company’s common stock on tht e Vesting Date. Pre-tax charges related to Phantom Stock Units foff r the year ended December 31, 2022, totaled $0.3 million and were included in the capa tion “Administrative and general” on the accompanying Consolidated Statements of Comprehensive Income (Loss). The total estimated remaining compensation cost of non-vested awards total $0.7 million and the weighted average remaining vesting period is 2 years as of December 31, 2022. 14.44 CoCC mmitii mtt entstt and CoCC ntitt nii gn encies: The Compm any is party to various legal actions tht at it believes are ordinaryrr in natut re and incidental to the operation of its business. In tht e opinion of management, the outcome of the proceedings to which the Compm any is currrr ently a party will not have a material adverse effff eff ct upu on its results of operations, fiff nancial condition or cash flff ows. In the normal course of business, tht e Company periodically enters into agreements that incorprr orate indemnififf cation provisions. While the maximum amount to which the Compm any may be exposed under such agreements cannot be estimated, it is the opinion of management that these indemnififf cations are not expected to have a material adverse effff eff ct on tht e Company’s results of operations or fiff nancial condition. At December 31, 2022, apa proximately 179 of the hourly plant personnel are represented by seven separate collective bargaining units. The taba le below shows tht e expiration dates of the collective bargaining agreements. Facility Hammond, Indiana Locust, North Carolina St. Paua l, Minnesota Romeoville, Illinois Minneapa olis (coil), Minnesota Indianapa olis, Indiana Minneapa olis (plate), Minnesota Expiration date November 30, 2024 March 4, 2025 Mayaa 25, 2025 Maya 31, 2025 Septembm er 30, 2025 Januaryrr 29, 2026 April 1, 2027 68 15.55 InII come TaTT xaa esee : The components of the Company’s provision (benefiff t) foff r income taxes frff om continuing operations were as foff llows: (in tht ousands) Currrr ent: Federal Internrr ational State and local Defeff rred Income tax provision (benefiff t) 2022 As of December 31, 2021 2020 $ $ 27,865 $ 102 5,691 33,658 (967) 32,691 $ 36,592 $ 85 7,739 44,416 (668) 43,748 $ 321 103 59 483 (1,799) (1,316) The components of the Company’s defeff rred income taxes at December 31 are as foff llows: (in tht ousands) Defeff rred tax assets: Inventoryrr (excluding LIFO reserve) Net operating loss and tax credit carrr yrr foff rwards Allowance foff r credit losses Accrurr ed expenses Lease liaba ilities Interest rate hedge Other Defeff rred tax assets befoff re valuation allowance Valuation allowance Total defeff rrr ed tax assets Defeff rred tax liaba ilities: LIFO reserve Property and equipment Lease right of use assets Interest rate hedge Intangibles Total defeff rrr ed tax liaba ilities Defeff rrr ed tax liaba ilities, net 2022 2021 $ $ 2,176 $ 1,029 833 6,114 7,916 - 214 18,282 (919) 17,363 (3,451) (12,194) (7,769) (437) (3,537) (27,388) (10,025) $ 2,198 1,375 626 5,288 8,568 665 205 18,925 (1,197) 17,728 (3,500) (12,293) (8,483) - (3,342) (27,618) (9,890) The net defeff rrr ed tax liaba ility increased by $1.1 million related to the fiff xed interest rate hedge, which is recorded in “Other Comprehensive Income (Loss)” in the Consolidated Statements of Compm rehensive Income (Loss). The foff llowing taba le summarizes the activity related to tht e Company’s gross unrecognized tax benefiff ts: (in thousands) Balance as of Januaryrr 1 Change in tax dud e to tax law Increases related to current year tax positions (Decrease) Increase related to prior year tax positions Decreases related to lapa sing of statut te of limitations Balance as of December 31 $ $ 2022 2021 2020 228 $ - - (8) - 220 $ 28 $ - 8 200 (8) 228 $ 28 - 8 - (8) 28 It is expected that the amount of unrecognized tax benefiff ts will not materially change in the next twtt elve months. The tax years 2019 through 2021 remain open to examination by maja or taxing jurisdictions to which the Compm any is subjb ect. The Company recognized interest related to uncertain tax positions in tht e income tax provision. 69 The foff llowing taba le reconciles the U.S. feff deral statut toryrr rate to the Company’s effff eff ctive tax rate: rate in effff eff ct U.S. feff deral statut toryrr State and local taxes, net of feff deral benefiff t Meals and entertainment Tax credits Stock based compm ensation All other, net Effff eff ctive income tax rate 2022 2021 2020 21.0% 4.5% 0.2% (0.1%) 0.0% 0.8% 26.4% 21.0% 4.5% 0.1% (0.1%) 0.0% 1.0% 26.5% 21.0% 1.0% (1.8%) 2.0% (3.4%) 0.2% 19.0% Income taxes paid in 2022, 2021 and 2020 totaled $33.4 million, $46.5 million and $1 thousand, respectively. Some subsidiaries of the Compm any’s consolidated group fiff le state tax retut rnrr s on a separate company basis and have state net operating loss carryrr foff rwrr ards expiring over the next fiff ftff een to 20 years. A valuation allowance is recorded to redud ce certain defeff rrr ed tax assets to the amount that is more likely than not to be realized. The valuation allowances recorded as of December 31, 2022 and 2021 were related to certain state net operating losses and totaled $0.9 million and $1.2 million, respectively. 16.66 ShSS ares Outstt tatt ndidd nii gn and Earnrr inii gsgg PePP r ShSS are: Earnings per share have been calculated based on the weighted average numbm er of shares outstanding as set foff rtht below: (in tht ousands, except per share data) For the years ended December 31, 2021 2022 2020 Weighted average basic shares outstanding Assumed exercise of stock options and issuance of stock awards Weighted average diluted shares outstanding 11,551 8 11,559 11,492 11 11,503 11,447 - 11,447 Net income (loss) Basic earnings (loss) per share Diluted earnr ings (loss) per share Unvested RSUs and PSUs 17.77 Equitii ytt PrPP ogo rams: Stock Repurchase Program $ $ $ 90,931 $ 121,051 $ (5,595) 7.87 $ 7.87 $ 10.53 $ 10.52 $ 194 206 (0.49) (0.49) 235 On October 2, 2015, tht e Company announced that its Board of Directors authorized a stock repurchase program of up to 550,000 shares of the Compm any’s issued and outstanding common stock, which could include open markr et repurchases, negotiated block trtt ansactions, accelerated stock repurchases or open market solicitations foff r shares, all or some of which may be affff eff cted through RuRR le 10b5-1 plans. Any of the repurchased shares are held in the Company’s treasuryrr , or canceled and retired as tht e Board of Directors may determine frff om time to time. Any repurchases of common stock are subu jb ect to the covenants contained in the ABL Credit Facility. Under tht e ABL Credit Facility, the Compm any may repurchase common stock and pay dividends upu to $15.0 million in the aggregate dud ring any trailing twelve montht s witht out restrt ictions. Purchases of common stock or dividend payments in excess of $15.0 million in the aggregate requq ire the Compm any to (i) maintain availaba ility in excess of 20.0% of the aggregate revolver commitments ($95.0 million at December 31, 2022) or (ii) to maintain availaba ility equal to or greater than 15.0% of the aggregate revolver commitments ($71.3 million at December 31, 2022) and the Compm any must maintain a pro-foff rma ratio of EBITDA minus certain capa ital expenditut res and cash taxes paid to fiff xed charges of at least 1.00 to 1.00. As of December 31, 2022, 360,212 shares remain aua thorized foff r repurchase under tht e program. There were no shares repurchased during 2022 or 2021. During 2020, the Compm any repurchased 15,000 shares foff r an aggregate cost of $0.1 million. 70 At-the-Market Equity Program On Septembm er 3, 2021, tht e Compm any commenced an at-the-market (ATM) equq ity program under its shelf registration statement, which allows it to sell and issue upu to $50 million in shares of its common stock frff om time to time. The Compm any entered into an Equity Distribution Agreement on September 3, 2021 with KeyBanc Capa ital Markets Inc. (KeyBanc) relating to the issuance and sale of shares of common stock pursuant to the program. KeyBanc is not required to sell any specififf c amount of securities but will act as the Company’s sales agent using commercially reasonaba le effff off rts consistent with its normal trading and sales practices, on mutut ally agreed terms between KeyBanc and tht e Compm any. KeyBanc will be entitled to compm ensation foff r shares sold pursuant to tht e program of 2.0% of the gross proceeds of any shares of common stock sold under the Equq ity Distribution Agreement. No shares were sold under tht e ATM program during 2022 or 2021. 18.88 SeSS ge mgg ent InII fn off rmrr atitt on: The Company foff llows the accounting guidance that requires the utilization of a “management apa proach” to defiff ne and report the fiff nancial results of operating segments. The management apa proach defiff nes operating segments along tht e lines used by the Compm any’s chief operating decision maker (CODM) to assess perfoff rmr ance and make operating and resource allocation decisions. The CODM evaluates perfoff rmana ce and allocates resources based primarily on operating income. The operating segments are based primarily on internrr al management reporting. The Compm any operates in three reportaba le segments; specialty metals flff at produd cts, carbr on flff at produd cts, and tut bu ular and pipe products. The specialty metals flff at produd cts segment and tht e carbr on flff at produd cts segment are at times consolidated and refeff rred to as tht e flff at produd cts segments, as certain of the flff at produd cts segments’ assets and resources are shared by the specialty metals and carbr on flff at produd cts segments and both segments’ produd cts are stored in the shared faff cilities and, in some locations, processed on shared equq ipment. Corpr orate expenses are reported as a separate line item foff r segment reporting purprr oses. Corpr orate expenses include the unallocated expenses related to managing tht e entire Company (i.e., all three segments), including compm ensation foff r certain personnel, expenses related to being a pubu licly traded entity such as board of directors’ expenses, audit expenses, and various other profeff ssional feff es. 71 The foff llowing taba le provides fiff nancial infoff rmation by segment and reconciles the Compm any’s operating income by segment to the consolidated income (loss) befoff re income taxes foff r tht e years ended December 31, 2022, 2021 and 2020. (in tht ousands) Net sales Specialty metals flff at produd cts Carbr on flff at products Tubu ular and pipe products Total net sales Depreciation and amortization Specialty metals flff at produd cts Carbr on flff at products Tubu ular and pipe products Corprr orate Total depreciation and amortization Operating income Specialty metals flff at produd cts Carbr on flff at products Tubu ular and pipe products Corprr orate Total operating income Other loss, net Income befoff re interest and income taxes Interest and otht er expense on debt Income (loss) befoff re income taxes (in tht ousands) Capa ital expenditures Flat products Tubu ular and pipe products Corprr orate Total capa ital expenditut res Assets Flat products Tubu ular and pipe products Corprr orate Total assets $ $ $ $ $ $ $ $ $ $ $ For the Year Ended December 31, 2021 2022 2020 776,022 $ 1,356,605 427,363 2,559,990 $ 585,751 $ 1,344,150 382,352 2,312,253 $ 313,190 690,273 230,681 1,234,144 4,060 $ 10,695 4,913 70 19,738 $ 93,662 $ 25,015 34,856 (19,786) 133,747 $ 45 133,702 10,080 123,622 $ 3,692 $ 11,286 5,267 71 20,316 $ 70,544 $ 110,074 7,353 (15,505) 172,466 $ 36 172,430 7,631 164,799 $ 1,951 11,941 5,478 120 19,490 11,666 (10,289) 9,019 (9,823) 573 73 500 7,411 (6,911) For the Year Ended December 31, 2021 2020 2022 15,299 $ 4,555 - 19,854 $ 8,797 $ 2,214 - 11,011 $ 7,589 2,214 - 9,803 631,607 $ 258,412 1,608 891,627 $ 777,074 245,962 536 1,023,572 There were no material revenue transactions between tht e carbonr and pipe products segments foff r the years ended December 31, 2022, 2021 and 2020. flff at produd cts, specialty metals flff at produd cts and tutt bular The Company sells certain produd cts internr ationally, primarily in Canada and Mexico. Internr ational sales are immaterial to the consolidated fiff nancial results and to the individual segments’ results. 19.99 Retitt rii ement PlPP all ns: The Compm any’s retirement plans consist of 401(k) plans covering union and non-union empm loyees, a multi-empm loyer pension plan covering certain CTI employees and a SERP covering certain executive offff iff cers of tht e Company. The 401(k) retirement plans allow eligible employees to contribute upu to the statut toryrr maximum. The Compm any’s non-union 401(k) matching contribution is determined annually by the Board of Directors and is based on a percentage of eligible 72 employees’ earnings and contributions. For the 401(k) retirement plans, the Company matched one-half of each eligible empm loyee’s contribution, limited to the fiff rst 6% of eligible compensation. For the Action Stainless 401(k) retirement plans, the Compm any matched 100% of tht e fiff rst 3% of eligible compm ensation and one-half of tht e next 2% of each eligible empm loyee’s contrt ibution, limited to 4% of eligible compensation. In 2005, tht e Board of Directors adopted a SERP, which has been amended frff om time to time. Contributions to the SERP are based on: (i) a portion of the participants’ compm ensation multiplied by a faff ctor of 6.5% or 13% depending on participant; and (ii) foff r certain participants a portion of the participants’ compm ensation multiplied by a faff ctor, which is contingent upu on tht e Compm any’s retutt rnrr on invested capa ital. Benefiff ts are subu jb ect to a vesting schedudd le of upu to seven years. The Company, through its CTI subsidiaryrr , contributes to a multiemployer pension plan. CTI contributes to the Multiemployer Plan under tht e terms of a collective bargaining agreement that covers certain of its union employees, and which expires May 31, 2025. CTI contrt ibutions to the Multiemployer Plan were immaterial forff the years ended December 31, 2022, 2021 and 2020. Retirement plan expense, which includes all Company 401(k), SERPRR defiff ned contributions and the Multiemployer Plan, amounted to $4.1 million, $3.8 million and $2.0 million foff r the years ended December 31, 2022, 2021 and 2020, respectively. As part of the COVID-19 related cost reduction effff off rts, the Compm any suspended contrtt ibutions into the SERP foff r 2020. The faff ir values of tht e Company's SERP assets as of December 31, 2022 and 2021 were $7.7 million and $8.7 million, respectively, and are measured at Net Asset Value (NAV) as a practical expedient to estimate faff ir value and tht erefoff re are not classififf ed in the faff ir value hierarchy. Under the practical expedient apa proach, the NAV is based on the faff ir value of tht e underlying investments held by each fuff nd less its liaba ilities. This practical expedient would not be used when it is determined to be probaba le that the fuff nd will sell the investment foff r an amount diffff eff rent tht an the reported NAV. The faff ir value of the SERP assets are included in Other Long Term Assets on the Consolidated Balance Sheets. 20.00 Relall tett d-dd P- aPP rtytt TrTT ansactitt ons: The Compm any’s Executive Chairman of tht e Board owns 50% of an entity that owns one of tht e Cleveland warehouses and leases it to the Compm any at a faff ir market value annual rental of $0.2 million. The lease expires on December 31, 2023 with three fiff ve-year renewal options. 21. Subsequent Eventstt : On Januaryrr 3, 2023, the Compm any purchased all of the outstanding shares of capa ital stock of Metal-Faba foff r a cash purchase price of $131.0 million, subu jb ect to a fiff nal working capa ital adjd ustment. Metal-Faba , headquartered in Wichita, Kansas, is a manufaff ctutt rer of venting, micro air and clean air produdd cts foff r residential, commercial and indudd strial apa plications. The acquisition will be accounted forff as a business combination and the assets and liaba ilities valued at faff ir market value. Metal- Faba will be included within tht e Company’s carbr on flff at-produd cts segment in the Company’s fiff rst quarter of 2023 fiff nancial results. In connection with the Metal-Faba acquisition, the Company entered into a Sixth Amendment to Third Amended and Restated Loan and Security Agreement, which increased the availaba ility under our existing ABL Credit Facility frff om $475.0 million to $625.0 million. In addition, the amendment allows the Company to include the eligible assets of Metal-Faba in its borrr owing base and upu dated the refeff rence rate frff om LIBOR to Secured Overnr ight Financing Rate (SOFR). Additionally, the Company amended its fiff xed interest rate hedge frff om LIBOR to SOFR. This change to the interest rate hedge fiff xes tht e rate at 2.42%, down frff om 2.57%. The Compm any has the option to borrow under its revolver based on the agent’s base rate plus a premium ranging frff om 0.00% to 0.25% or SOFR plus a premium ranging frff om 1.25% to 2.75%. 73 Schedule II – Valuation and Qualifyff ing Accounts (in tht ousands) Description Year Ended December 31, 2020 Allowance foff r credit losses Tax valuation reserve Year Ended December 31, 2021 Allowance foff r credit losses Tax valuation reserve Year Ended December 31, 2022 Allowance foff r credit losses Tax valuation reserve Additions Balance at Beginning of Period Charged to Costs and Expenses Charged to Other Accounts Deductions Balance at End of Period $ $ $ $ $ $ 1,965 2,215 1,726 2,302 2,502 1,197 $ $ $ $ $ $ 1,154 87 1,250 236 2,184 - $ $ $ $ $ $ - - - - - - $ $ $ $ $ $ (1,393) $ $ - (474) $ (1,341) $ 1,726 2,302 2,502 1,197 (855) $ (278) $ 3,831 919 74 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures Evaluations required by RuRR le 13a-15 of tht e Securities Exchange Act of 1934, or Exchange Act, of tht e effff eff ctiveness of our disclosure contrt ols and procedud res (as defiff ned in RuRR le 13a-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report have been carried out under the supu ervision and with the participation of our management, including our Chief Executive Offff iff cer and Chief Finana cial Offff iff cer. Based upon such evaluations, the Chief Executive Offff iff cer and Chief Financial Offff iff cer concluded that our disclosure controls and procedures were effff eff ctive as of December 31, 2022 in providing reasonaba le assurance that infoff rmation required to be disclosed by us in reports fiff led or submitted under the Exchange Act is recorded, processed, summarized and reported within time periods specififf ed in the rur les and foff rms of tht e SEC and that such infoff rmation is accumulated and communicated to allow timely decisions regarding required disclosure. Management’s Report on Internal Control Over Financial Reporting Management’s Report on Internal Control Over Financial Reporting is set foff rth in Part II, Item 8 of tht is Annual Report on Formr 10-K and is incorprr orated herein. Grant Thornrr ton LLP, our independent registered pubu lic accounting fiff rm, has audited the effff eff ctiveness of our internr al control over fiff nancial reporting as of December 31, 2022, as stated in their report, which apa pears in Part II, Item 8 of tht is Annual Report. Changes in Internal Control Over Financial Reporting There have been no changes in our internr al contrtt ol over fiff nancial reporting during the quq arter ended December 31, 2022 that have materially affff eff cted, or are reasonaba ly likely to materially affff eff ct, our internr al control over fiff nancial reporting. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not apa plicaba le. 75 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRARR NT AND CORPORATE GOVERNANCE Infoff rmation required by Item 10 as to the executive offff iff cers is provided in Part I of this Annual Report on Form 10-K and is incorprr orated by refeff rence into this section. Other infoff rmation requq ired by Item 10 will be incorprr orated herein by refeff rence to the infoff rmation set foff rtht in our defiff nitive proxy statement foff r our 2023 Annual Meeting of Shareholders. ITEM 11. EXECUTIVE COMPENSATION Infoff rmation required by Item 11 will be incorprr orated herein by refeff rence to the infoff rmation set foff rtht statement foff r our 2023 Annual Meeting of Shareholders. in our defiff nitive proxy ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Infoff rmation required by Item 12 will be incorprr orated herein by refeff rence to the infoff rmation set foff rtht statement foff r our 2023 Annual Meeting of Shareholders. in our defiff nitive proxy ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRARR NSACTIONS, AND DIRECTOR INDEPENDENCE Infoff rmation required by Item 13 will be incorprr orated herein by refeff rence to the infoff rmation set foff rtht statement foff r our 2023 Annual Meeting of Shareholders. in our defiff nitive proxy ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Infoff rmation required by Item 14 will be incorprr orated herein by refeff rence to the infoff rmation set foff rtht statement foff r our 2023 Annual Meeting of Shareholders. in our defiff nitive proxy 76 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)(1) The foff llowing fiff nancial statements are included in Part II, Item 8: PART IV Report of Independent Registered Public Accounting Firm Management’s Report on Internal Contrtt ol Over Financial Reporting Consolidated Statements of Comprehensive Income (Loss) foff r the Years Ended Decembem r 31, 2022, 2021 and 2020 Consolidated Balance Sheets as of December 31, 2022 and 2021 Consolidated Statements of Cash Flows foff r tht e Years Ended December 31, 2022, 2021 and 2020 Supu plemental Disclosures of Cash Flow Infoff rmation foff r the Years Ended December 31, 2022, 2021 and 2020 Consolidated Statements of Shareholders' Equity foff r the Years Ended December 31, 2022, 2021 and 2020 Notes to Consolidated Financial Statements foff r tht e Years Ended December 31, 2022, 2021 and 2020 (a)(2) Financial Statement Schedules. Schedule II – Valuation and Qualifyff ing Accounts (a)(3) Exhibits. The Exhibits fiff led herewith are set foff rtht on the Index to Exhibits fiff led as part of tht is Annual Report and incorpor ated herein by refeff rence. r INDEX TO EXHIBITS Exhibit 2.1 2.2 Description Refeff rence Asset Purchase Agreement, dated as of September 17, 2021, by and among Ventutt re Steel (U.S), Inc., Olympic Steel Lafaff yette, Inc. and Olympic Steel, Inc Incorprr orated by refeff rence to Exhibit 2.1 to tht e Registrant’s Form 8-K fiff led with the Commission on September 22, 2021 (Commission File No. 0-23320). Stock Purchase Agreement, dated as of January 3, 2023, among Olympic Steel, Inc., OS Holdings, Inc., Metal-Faba , Inc., tht e sellers party tht ereto and the representative of the sellers. Incorprr orated by refeff rence to Exhibit 2.2 to tht e Registrant’s Form 8-K fiff led with the Commission on Januaryrr 3, 2022 (Commission File No. 0-23320). 3.1(i) Amended and Restated Articles of Incorprr oration 3.1(ii) Amended and Restated Code of Regulations 3.1(iii) Amendment to Amended and Restated Articles of Incorprr oration 4.25 4.26 Third Amended and Restated Loan and Security Agreement, dated as of December 8, 2017, by and among the Registrant, the fiff nancial institut tions frff om time to time party tht ereto, Bank of America, N.A., as administrative agent, and the otht er agents frff om time to time partytt thereto 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 fiff nancial institut tions frff om time to time partytt thereto, Bank of America, N.A., as administrative agent, and tht e other agents frff om time to time partytt tht ereto. 77 Incorprr orated by refeff rence to Exhibit 3.1(i) to the Registration Statement on Form S-1 (Registration No. 33-73992) fiff led with the Commission on Januaryrr 12, 1994. Incorprr orated by refeff rence to Exhibit 3.1 to Compm any’s Form 10-Q fiff led with the Commission on August 6, 2015 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 3.1 to Compm any’s Form 10-Q fiff led with the Commission on August 6, 2021 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 4.25 to Registrant's Form 8-K fiff led with the Commission on December 14, 2017 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 4.25 to Registrant's Form 10-Q fiff led with the Commission on May 3, 2018 (Commission File No. 0-23320). Exhibit 4.27 Description Refeff rence Joinder and Second Amendment to Third Amended and Restated Loan and Security Agreement, dated as of November 30, 2018, by and among the Registrant, tht e fiff nancial institut tions frff om time to time party thereto, Bank of America, N.A., as administrative agent, and tht e other agents frff om time to time partytt thereto. Incorprr orated by refeff rence to Exhibit 4.26 to Registrant's Form 8-K fiff led with the Commission on December 4, 2018 (Commission File No. 0-23320). 4.28 Description of Securities 4.29 4.30 4.31 4.32 Joinder and Third Amendment to Third Amended and Restated Loan and Security Agreement, dated as of December 14, 2020, by and among Olympic Steel, Inc., Olympic Steel Lafaff yette, Inc., Olympic Steel Minneapa olis, Inc., Olympic Steel Iowa, Inc., Oly Steel NC, Inc., IS Acquisition, Inc., Chicago Tubu e and Iron Company, B Metals, Inc., MCI, Inc, and ACT Acquisition, Inc, tht e lenders frff om time to time party thereto and Bank of America, N.A. as Agent foff r the Lenders. Fourtht Amendment to Third Amended and Restated Loan and Security Agreement, dated as of June 16, 2021, among Olympic Steel, Inc., Olympic Steel Lafaff yette, Inc., Olympm ic Steel Minneapa olis, Inc., Olympic Steel Iowa, Inc., Oly Steel NC, Inc., IS Acquisition, Inc., Chicago Tubu e and Iron Company, B Metals, Inc., MCI, Inc., ACT Acquisition, Inc., the lenders frff om time to time partytt America, N.A. as Agent foff r the Lenders. thereto and Bank of Joinder and Fiftff h Amendment to Third Amended and Restated Loan and Security Agreement, dated as of October 1, 2021, among Olympm ic Steel, Inc., Olympm ic Steel Lafaff yette, Inc., Olympic Steel Minneapa olis, Inc., Olympic Steel Iowa, Inc., Oly Steel NC, Inc., IS Acquisition, Inc., Chicago Tubu e and Iron Compm any, B Metals, Inc., MCI, Inc., ACT Acquisition, Inc., SHAQ, Inc., the lenders frff om time to time partytt Lenders. thereto and Bank of America, N.A. as Agent foff r the Joinder and Sixth Amendment to Third Amended and Restated Loan and Security Agreement, dated as of Januaryr 2, 2023, among Olympm ic Steel, Inc., Olympm ic Steel Lafaff yette, Inc., Olympic Steel Minneapa olis, Inc., Olympic Steel Iowa, Inc., Oly Steel NC, In., IS Acquisition, Inc., Chicago Tube and Iron Compm any, B Metals, Inc., MCI, Inc., ACT Acquisition, Inc., SHAQ, Inc., OS Holdings, Inc., Metal-Faba , Inc., tht e lenders frff om time to time partytt thereto and Bank of America, N.A. as Agent foff r the Lenders. Incorprr orated by refeff rence to Exhibit 4.28 to Registrant's Form 10-K fiff led with the Commission on Februr ary 21, 2020 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 4.29 to Registrant's Form 8-K fiff led with the Commission on December 14, 2020 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 4.30 to Registrant’s Form 8-K fiff led with the Commission on June 21, 2021 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 4.31 to Registrant’s Form 10-K fiff led with the Commission on Februr ary 25, 2022 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 4.32 to the Registrant’s Form 8-K fiff led with the Commission on Januaryrr 3, 2023 (Commission File No. 0-23320). 78 Exhibit 10.8 * of Management Retention Agreement foff r Senior Formr Executive Offff iff cers of the Company Description Refeff rence 10.9 * of Management Retention Agreement foff r Other Formr Offff iff cers of the Company 10.14 * Olympic Steel, Inc. Executive Defeff rrr ed Compm ensation Plan dated December 15, 2004 10.15 * Formr of Non-Solicitation Agreements 10.16 * Formr of Management Retention Agreement 10.17 * Supu plemental Executive Retirement Plan Term Sheet Incorprr orated by refeff rence to Exhibit 10.8 to Registrant's Form 10-Q fiff led with the Commission on August 7, 2000 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 10.9 to Registrant's Form 10-Q fiff led with the Commission on August 7, 2000 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 10.14 to Registrant’s Form 10-K fiff led with the Commission on March 14, 2005 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 10.15 to Registrant’s Form 8-K fiff led with the Commission on March 4, 2005 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 10.16 to Registrant’s Form 10-Q fiff led with the Commission on August 8, 2005 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 99.1 to Registrant’s Form 8-K fiff led with the Commission on Januaryrr 5, 2006 (Commission File No. 0-23320). 10.20 * Olympm ic Steel, Inc. Supu plemental Executive Retirement Plan Incorprr orated by refeff rence to Exhibit 10.20 to 10.21 * Olympm ic Steel, Inc. Amended and Restated Olympic Steel, Inc. 2007 Omnibus Incentive Plan as Amended Effff eff ctive May 7, 2021 10.22 * Olympm ic Steel, Inc. C-Suite Long-Term Incentive Plan 10.23 * Form of C-Suite Long-Term Incentive Agreement foff r participants. 10.30 * Olympm ic Steel, Inc. Senior Manager Compm ensation Plan 10.33 * Richard T. Marabito Empm loyment Agreement effff eff ctive as of December 21, 2018 Registrant’s Form 8-K fiff led with the Commission on April 28, 2006 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 10.1 to Registrant’s Form 10-Q fiff led with the Commission on August 6, 2021 (Commission File No-0-23320). Incorprr orated by refeff rence to Exhibit 10.22 to Registrant’s Form 10-K fiff led with the Commission on Februr ary 25, 2022 (Commission File No-0-23320). Incorprr orated by refeff rence to Exhibit 10.23 to Registrant’s Form 10-K fiff led with the Commission on Februr ary 25, 2021 (Commission File No-0-23320). Incorprr orated by refeff rence to Exhibit 10.30 to Registrant’s Form 10-Q fiff led with the Commission on May 6, 2011 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 10.13 to Registrant’s Form 8-K fiff led with the Commission on December 21, 2018 (Commission File No. 0-23320). 79 Description Refeff rence of RSU Agreements foff r Messrs. Maraba ito, Greiffff and Formr Manson. Exhibit 10.34 * 10.37 * Amendment to Form of Management Retention Agreement foff r Senior Executive Offff iff cers of the Compm any 10.41 * Employment Agreement, dated as of Januaryrr 1, 2020, between Olympm ic Steel, Inc. and Andrew S. Greiffff 10.42 * Richard A. Manson Empm loyment Agreement effff eff ctive as of Januaryrr 1, 2022 Incorprr orated by refeff rence to Exhibit 10.34 to Registrant’s Form 10-K fiff led with the Commission on Februr ary 23, 2012 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 10.1 to Registrant’s Form 10-Q fiff led with the Commission on May 1, 2015 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 10.41 to Registrant’s Form 8-K fiff led with the Commission on December 27, 2019 (Commission File No. 0-23320). Incorprr orated by refeff rence to Exhibit 10.40 to Registrant’s Form 8-K fiff led with the Commission on November 26, 2021 (Commission File No. 0-23320). 21 23.1 24 31.1 31.2 32.1 32.2 101 Filed herewith Filed herewith Filed herewith Filed herewith Filed herewith Furnrr ished herewith Furnrr ished herewith List of Subu sidiaries Consent of Grant Thornton, LLP, Independent Registered Pubu lic Accounting Firm Directors and Offff iff cers Powers of Attornrr ey Certififf cation of the Principal Executive Offff iff cer of tht e Compm any, as adopted pursuant to Section 302 of the Sarbar nes-Oxley Act of 2002 Certififf cation of the Principal Financial Offff iff cer of tht e Compm any, as adopted pursuant to Section 302 of the Sarbar nes-Oxley Act of 2002 Written Statement of Richard T. Maraba ito, Chairman and Chief Executive Offff iff cer of the Compm any pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbr anes-Oxley Act of 2002 Written Statement of Richard A. Manson, Chief Financial Offff iff cer of the Compm any pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbr anes-Oxley Act of 2002 The foff llowing materials frff om Olympic Steel’s Annual Report 10-K foff r the year ended December 31, 2022, on Formr foff rmatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) tht e Consolidated Statements of Comprehensive Income (Loss), (iii) the Consolidated Statements of Cash Flows, (iv) tht e Supu plemental Disclosures of Cash Flow Infoff rmation, (v) tht e Consolidated Statements of Shareholders’ Equity, (vi) Notes to Unaudited Consolidated Financial Statements and (vii) document and entitytt infoff rmation. 104 Cover Pager Interactive Data File (embedded with the Inline XBRL document). * This exhibit is a management contract or compm ensatoryrr plan or arrrr angement. 80 ITEM 16. FORM 10-K SUMMARYRR None. 81 Pursuant to the requirements of Section 13 or 15(d) 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. SIGNATURES Februrr aryr 24, 2023 OLYMPIC STEEL, INC. By: /s/ Richard A. Manson Richard A. Manson, Chief Financial Offff iff cer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the foff llowing persons in the capacities indicated and on the dates indicated. Februr aryrr 24, 2023 /s/ Richard T. Maraba ito * Richard T. Maraba ito, Chief Executive Offff iff cer (Principal Executive Offff iff cer) Februr aryrr 24, 2023 /s/ Richard A. Manson * Richard A. Manson, Chief Financial Offff iff cer (Principal Financial and Accounting Offff iff cer) Februrr aryr 24, 2023 /s/ Michael D. Siegal * Michael D. Siegal, Executive Chairman of the Board Februrr aryrr 24, 2023 Februrr aryrr 24, 2023 Februrr aryrr 24, 2023 Februrr aryrr 24, 2023 Februrr aryrr 24, 2023 Februrr aryrr 24, 2023 Februrr aryrr 24, 2023 /s/ Arthur F. Anton * Artht ur F. Anton, Lead Director /s/ Dirk A. Kempthorne * Dirkr A. Kempm tht ornrr e, Director /s/ Idalene F. Kesner * Idalene F. Kesner, Director /s/ Michael G. Rippey * Michael G. Rippey, Director /s/ Richard P. Stovskykk * Richard P. Stovskykk , Director /s/ Vanessa Whiting * Vanessa Whiting, Director /s/ David A. Wolfoff rt * David A. Wolfoff rt, Director * The undersigned, by signing his name hereto, does sign and execute this Annual Report on Form 10-K pursuant to the the Securities and Powers of Attornr ey executed by the aba ove-named offff iff cers and directors of tht e Compm any and fiff led witht Exchange Commission on behalf of such offff iff cers and directors. By: /s/ Richard A. Manson Richard A. Manson, Attornr ey-in-Fact Februrr ary 24, 2023 82 This pagea intentionallyl lefte blank This pagea intentionallyl lefte blank This pagea intentionallyl lefte blank This pagea intentionallyl lefte blank CORPORATAA E OFFICERS Michael D. Siegal Executive Chairman of the Board Richard T.TT Marabito Chief Executive Offiff cer Andrew S. Greiffff President and Chief Operating Offiff cer Richard A. Manson Chief Financial Offiff cer Lisa K. Christen Vice President and Treasurer Christopher M. Kelly Secretary, Olympic Steel Partner, Jones Day Directors & Offiff cers BOARD OF DIRECTORS Michael D. Siegal, 70 Executive Chairman of the Board, Olympic Steel Richard T.TT Marabito, 59 Chief Executive Offiff cer, Olympic Steel David A. Wolfort, 70 Senior Advisor, Olympic Steel Arthur F. Anton, 65 Lead Independent Director The Honorable Dirk A. Kempthorne, 71 President, The Kempthorne Group Idalene F. Kesner,r Ph.D., 65 Dean Emerita, Indiana University Kelley School of Business Michael G. Rippey,y 65 Chief Executive Offiff cer, SunCoke Energy, Inc. Richard P.PP Stovsky,y 65 Retired Vice Chairman, PricewaterhouseCoopers LLP VaVV nessa L. Whiting, 63 President, A.E.S. Management Shareholder Information Corporate Headquarters Olympic Steel, Inc. 22901 Millcreek Boulevard, Suite 650 Highland Hills, OH 44122 Phone: (216) 292-3800 Fax: (216) 292-3974 www.olysteel.com Stock Listing The Company’s common stock trades on the NASDAQ Global Select Stock Market under the symbol “ZEUS.” Transfer Agent and Registrar Computershare P.O. Box 30170 College Station, TX 77842-3170 (800) 446-2617 2023 Annual Meeting The annual meeting of shareholders will be held in a virtual fof rmat on Friday, May 5, 2023 at 11:00 a.m. EDT. For more infof rmation on how to attend and participate, please see our 2023 Proxy Statement, available at olysty eel.com/investor-relations/. Independent Auditors Grant Thornton LLP 1375 E. 9th Street, Suite 1500 Cleveland, OH 44114 Legal Counsel Jones Day North Point 901 Lakeside AveAA nue Cleveland, OH 44114 Investor Information Shareholders and prospective investors are welcome to call or write with questions or requests foff r additional infof rmation. Inquiries should be directed to: Richard A. Manson Chief Financial Offiff cer Phone: (216) 672-0522 Email: ir@olysteel.com www.olysty eel.com Form 10-K Shareholders who wish to obtain, without charge, a copy of Olympic Steel’s annual report on Form 10-K, filed with the Securities and Exchange Commission foff r the fiscal year ended Dec. 31, 2022, may do so by writing to Investor Relations at the Company’s Corporate Headquarters (address indicated above). This product is made from recycled paper