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

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

Accounts receivable are presented net of allowances for doubtful accountscredit losses and unissued credits of $3.2$4.7 million and $2.4$4.3 million as of September 30, 2017March 31, 2023 and December 31, 2016,2022, respectively. The allowance for doubtful accountscredit losses is maintained at a level considered appropriate based on historical experience, and specific customer collection issues that have been identified.identified, current market conditions and estimates for supportable forecasts when appropriate. Estimations are based upon a calculated percentage of accounts receivable, which remains fairly level from year to year, and judgments about the probable effects of economic conditions on certain customers, which can fluctuate significantly from year to year. The Company cannot guarantee that the rate of future credit losses will be similar to past experience. The Company considers all available information when assessing the adequacy of its allowance for doubtful accountscredit losses and unissued credits each quarter.credits.

Inventories consisted of the following:

The Company values certain of its tubular and pipe products inventory at the last-in, first-out (LIFO) method. At September 30, 2017March 31, 2023 and December 31, 2016,2022, approximately $50.5$44.1 million, or 18.0%10.8% of consolidated inventory, and $43.4$46.3 million, or 17.1%11.1% of consolidated inventory, respectively, was reported under the LIFO method of accounting. The cost of the remainder of the tubular and pipe products inventory is determined using a weighted average rolling first-in, first-out (FIFO) method.

The Company did not record any LIFO expense or income for the three months ended March 31, 2023 as current inventory price and volume projections anticipate no material change to the LIFO reserve by December 31, 2023. The Company did not record any LIFO expense or income for the three months ended March 31, 2022.

The Company’s intangible assets were recorded in connection with its acquisitions of Shaw Stainless & Alloy, Inc. (Shaw) in 2021, Action Stainless & Alloys (Action Stainless) in 2020 and Berlin Metals, LLC in 2018 for the specialty metals flat products segment and Metal-Fab in 2023 and EZ Dumper® and McCullough Industries in 2019 for the carbon flat products segment.  The intangible assets were evaluated on the premise of highest and best use to a market participant, primarily utilizing the income approach valuation methodology. 

During

Goodwill, by reportable unit, was as follows as of March 31, 2023 and December 31, 2022, respectively. The goodwill is deductible for tax purposes.

Intangible assets, net, consisted of the threefollowing as of March 31, 2023 and nine months ended September 30, 2017, theDecember 31, 2022, respectively:

The Company recorded $0.7estimates that amortization expense for its intangible assets subject to amortization will be approximately $3.3 million and $1.5 million of LIFO expense, respectively, as the current projections anticipate increased pricing and volume of LIFO inventoryper year for the remainder ofnext three years, $2.8 million the year. Duringfollowing year and then $2.0 million for the three and nine months ended September 30, 2016, the Company recorded $0.7 million of LIFO income.next year after.

If the FIFO method had been in use, inventories would have been $6.6 million lower than reported at September 30, 2017 and $8.0 million lower than reported at December 31, 2016.

During the second quarterThe components of 2017, the Company began actively marketing for sale certain property at the flat product segment’s Siler City, North Carolina facility. As a result of that decision, the Company reclassified $0.8 million of net book valuelease expense were as follows:

Finance lease right-of-use assets are included within “Property and equipment, as assets held for sale inat cost” and “Accumulated depreciation” on the Consolidated Balance Sheets.  The salecurrent portion of those assets is expected to be completedfinance lease liabilities are included within “Other accrued liabilities” and the next twelve months andlong-term portion of finance lease liabilities are presented as current. Basedincluded within “Other long-term liabilities” on the present real estate market and discussions with the Company’s real estate adviser, no impairment of the recorded amounts has occurred as of September 30, 2017.Consolidated Balance Sheets, respectively.

Maturities of lease liabilities were as follows:

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

On January 3, 2023, the Company entered into a Sixth Amendment to Third Amended and Restated Loan and Security Agreement, which amended the Company’s existing ABL Credit Facility. The amendment increased the Credit Facility by $150 million from $475 million to $625 million. The $625 million ABL Credit Facility consists of: (i) a revolving credit facility of up to $595 million, including a $20 million sub-limit for letters of credit, and (ii) a first in, last out revolving credit facility of up to $30 million. Under the terms of the ABL Credit Facility, the Company may, subject to the satisfaction of certain conditions, request additional commitments under the revolving credit facility in the aggregate principal amount of up to $200 million to the extent that existing or new lenders agree to provide such additional commitments, and add real estate as collateral at the Company’s discretion. The ABL Credit Facility matures on June 16, 2026.

The Company’s asset-based credit facility (theCompany’s the ABL Credit Facility)Facility is collateralized by the Company’s accounts receivable, inventory, personal property and inventory.certain real estate. The ABL Credit Facility consistscontains customary representations and warranties and certain covenants that limit the ability of a revolving credit line of $365 million. Revolver borrowings are limitedthe Company to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt; (iii) make investments; (iv) sell assets; (v) enter into agreements that restrict distributions or other payments from restricted subsidiaries to the lesserCompany; (vi) incur liens securing indebtedness; (vii) consolidate, merge or transfer all or substantially all of a borrowing base, comprised of eligible receivablesthe Company’s assets; and inventories, or $365 million(viii) engage in transactions with affiliates. In addition, the aggregate. The ABL Credit Facility matures on June 30, 2019.

The ABL Credit Facilitycontains a financial covenant which requires the Company to comply with various covenants, the most significant of which include: (i) until maturity of the ABL Credit Facility, if any commitments or obligations are outstanding and the Company’sCompany’s availability is less than the greater of $30 million or 10.0% of the aggregate amount of revolver commitments ($36.562.5 million at September 30, 2017)March 31, 2023) or 10.0% of the aggregate borrowing base ($61.9 million at March 31, 2023), then the Company must maintain a ratio of EBITDAEarnings before Interest, Taxes, Depreciation and Amortization (EBITDA) minus certain capital expenditures and cash taxes paid to fixed charges of at least 1.00 to 1.00 for the most recent twelve fiscal month period; (ii) limitations on dividend payments and common stock repurchases; and (iii) restrictions on additional indebtedness. period.

The Company has the option to borrow under its revolver based on the agent’s base rate plus a premium ranging from 0.00% to 0.25% or the London Interbank OfferedSecured Overnight Financing Rate (LIBOR)(SOFR) plus a premium ranging from 1.25% to 3.00%2.75%.

On January 10, 2019, the Company entered into a five-year forward starting fixed rate interest rate hedge in order to eliminate the variability of cash interest payments on $75 million of the outstanding LIBOR based borrowings under the ABL Credit Facility. On January 3, 2023, the Company amended the interest rate hedge agreement to use SOFR as the reference rate and updated the fixed rate to 2.42% from 2.57%. Although the Company is exposed to credit loss in the event of nonperformance by the other party to the interest rate hedge agreement, the Company anticipates performance by the counterparty.

As of September 30, 2017,March 31, 2023, the Company was in compliance with its covenants and had approximately $110$355 million of availability under the ABL Credit Facility.

As of September 30, 2017, $1.4March 31, 2023, and December 31, 2022, $2.0 million and $1.2 million, respectively, of bank financing fees were included in “Prepaid expenses and other” and “Other long-term assets” on the accompanying Consolidated Balance Sheets. The financing fees are being amortized over the five-yearfive-year term of the ABL Credit facilityFacility and are included in “Interest and other expense on debt” on the accompanying Consolidated Statements of Comprehensive Income.

As part of the CTI acquisition in July 2011, the Company assumed approximately $5.9 million of Industrial Revenue Bond (IRB) indebtedness issued through the Stanly County, North Carolina Industrial Revenue and Pollution Control Authority. The bond matures in April 2018, with the option to provide principal payments annually in April. On April 3, 2017, the Company paid an optional principal payment of $0.9 million. The remaining balance of the IRB is included in “Current portion of long-term debt” on the accompanying Consolidated Balance Sheets as the payment is due in April 2018. Interest is payable monthly, with a variable rate that resets weekly. As a security for payment of the bonds, the Company obtained a direct pay letter of credit issued by JPMorgan Chase Bank, N.A. The letter of credit reduces annually by the principal reduction amount. The interest rate at September 30, 2017 was 0.9% for the IRB debt.

CTI entered into an interest rate swap agreement to reduce the impact of changes in interest rates on the IRB. At September 30, 2017, the effect of the swap agreement on the bond was to fix the rate at 3.46%. The swap agreement matures in April 2018, and is reduced annually by the amount of the optional principal payments on the bond. The Company is exposed to credit loss in the event of nonperformance by the other parties to the interest rate swap agreement. However, the Company does not anticipate nonperformance by the counterparties.

Metals swaps and embedded customer derivatives

During 20172023 and 2016,2022, the Company entered into nickel swaps indexed to the London Metal Exchange (LME) price of nickel with third-party brokers. The nickel swaps are accounted for as derivatives for accounting purposes. The Company entered into them to mitigate its customers’customers’ risk of volatility in the price of metals. The outstanding nickel swaps mature in 2017 and 2018.2023. The swaps are settled with the brokers at maturity. The economic benefit or loss arising from the changes in fair value of the swaps is contractually passed through to the customer. The primary risk associated with the metals swaps is the ability of customers or third-party brokers to honor their agreements with the Company related to derivative instruments. If the customer or third-party brokers are unable to honor their agreements, the Company’s risk of loss is the fair value of the metals swaps.

While theseThese derivatives are intended to help the Company manage risk, they have not been designated as hedging instruments. The periodic changes in fair value of the metals and embedded customer derivative instruments are included in “Cost of materials sold” in the Consolidated Statements of Comprehensive Income.  The Company recognizes derivative positions with both the customer and the third party for the derivatives and classifies cash settlement amounts associated with them as part of “Cost of materials sold” in the Consolidated Statements of Comprehensive Income.  The cumulative change in fair value of the metals swaps that havehad not yet been settled as of March 31, 2023, are included in “Other accrued liabilities” and the embedded customer derivatives are included in “Other accrued liabilities”, and “Accounts receivable, net” on the Consolidated Balance Sheets at September 30, 2017 and Decemberas of March 31, 2016.2023. 

Fixed rate interest rate hedge

Interest rate swap

CTIOn January 10, 2019, the Company entered into ana five-year forward starting fixed rate interest rate swaphedge in order to reduceeliminate the impactvariability of changes incash interest ratespayments on its IRB. The swap$75 million of the outstanding LIBOR based borrowings under the ABL Credit Facility. On January 3, 2023, the Company amended the interest rate hedge agreement matures in April 2018, the same timeto use SOFR as the IRB,reference rate and updated the fixed rate to 2.42% from 2.57%. The interest rate hedge is reduced annually by the amount of the optional principal paymentsincluded in “Prepaid expenses and other” on the IRB. TheConsolidated Balance Sheets as of March 31, 2023. Although the Company is exposed to credit loss in the event of nonperformance by the other partiesparty to the interest rate swap agreement. However,hedge agreement, the Company does not anticipate nonperformanceanticipates performance by the counterparties. The interest rate swap is not treated as a hedge for accounting purposes.counterparty.

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

Fixed rate interest rate hedge

In June 2012, the Company entered into a forward starting fixed rate interest rate hedge commencing June 2013 in order to eliminate the variability of cash interest payments on $53.2 million of the then outstanding LIBOR-based borrowings under the ABL Credit Facility. The hedge, which matured on June 1, 2016, fixed the rate at 1.21% plus a premium ranging from 1.25% to 1.75%. The fixed rate interest rate hedge was accounted for as a cash flow hedging instrument for accounting purposes.

There was no net impact from the nickel swaps or embedded customer derivative agreements to the Company’s Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016. The table below shows the total impact to the Company’s Consolidated Statements of Comprehensive Income through net income of the derivatives for the three and nine months ended September 30, 2017March 31, 2023 and 2016.2022, respectively.

During the three months ended September 30, 2017,March 31, 2023, there were no transfers of financial assets between Levels 1, 2 or 3 fair value measurements. There have been no changes in the methodologies used at September 30, 2017March 31, 2023 since December 31, 2016. Following is a description of the valuation methodologies used for assets and liabilities measured at fair value as of September 30, 2017 and December 31, 2016:2022.

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

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

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

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

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

The faircarrying value of the IRB is determined using Level 1 inputs. The carrying value and the fair value of the IRB that qualify as financial instrumentsABL Credit Facility was $0.9$258.8 million and $1.8$165.7 million at September 30, 2017March 31, 2023 and December 31, 2016,2022, respectively. Management believes that the ABL Credit Facility’s carrying value approximates its fair value due to the variable interest rate on the ABL Credit Facility.

On January 10, 2019, the Company entered into a five-year forward starting fixed rate interest rate hedge in order to eliminate the variability of cash interest payments on $75 million of the outstanding LIBOR based borrowings under the ABL Credit Facility. On January 3, 2023, the Company amended the interest rate hedge agreement to use SOFR as the reference rate and updated the fixed rate to 2.42% from 2.57%. The fair value of the revolverinterest rate hedge of $1.3 million, net of tax of $0.3 million is determined using Level 2 inputs.included in “Accumulated other comprehensive loss” on the Consolidated Balance Sheets at March 31, 2023. The Level 2 fair value of the Company's long-term debtinterest rate hedge was estimated using prevailing market interest rates on debt with similar credit worthiness, terms and maturities.$1.7 million, net of tax of $0.4 million at December 31, 2022.

Restricted Stock Units and Performance Share Units

Pursuant to the Amended and Restated Olympic Steel 2007 Omnibus Incentive Plan (the(the Incentive Plan), the Company may grant stock options, stock appreciation rights, restricted shares, restricted share units (RSUs), performance shares, and other stock- and cash-based awards to employees and Directorsdirectors of, and consultants to, the Company and its affiliates. UnderSince adoption of the Incentive Plan, 1,000,0001,400,000 shares of common stock are availablehave been authorized for equity grants.

On March 13, 2017 and May 1, 2016,an annual basis, the Compensation Committeecompensation committee of the Company’sCompany’s Board of Directors approved the grant of 3,501 and 3,094 restricted stock units (RSUs), respectively,awards RSUs to each non-employee Director.director as part of their annual compensation. The annual awards for 2023 and 2022 per director were $80,000. Subject to the terms of the Incentive Plan and the RSU agreement, the RSUs vest after one year of service (from the date of grant). The RSUs are not converted into shares of common stock until the director either resigns or is terminated from the Boardboard of Directors.directors.

In January 2022, the Company adopted a new C-Suite Long-Term Incentive Plan (the C-Suite Plan) that operates under the Senior Manager Stock Incentive Plan. Under the C-Suite Plan, the Chief Executive Officer, the Chief Financial Officer and the President and Chief Operating Officer are eligible for participation. In each calendar year, the Committee may award eligible participants a long-term incentive of both a RSU grant and a performance stock unit (PSU) grant. Additionally, the Committee may offer a long-term cash incentive (split equally between service and performance-based portions) to supplement both the RSU and PSU grants in order to arrive at the total long-term award target. The fair value of eachtotal long-term award target is $1.1 million for the Chief Executive Officer, $0.3 million for the Chief Financial Officer and $0.6 million for the President and Chief Operating Officer. The PSUs will vest if the return on net assets, calculated as EBITDA divided by Average Accounts Receivable, Inventory and Property and Equipment, exceeds five percent. Each RSU was estimated to be the closing price of the Company’s common stock on the date ofand service-based cash incentive vests three years after the grant which was $19.99 and $22.62 on March 31, 2017 and May 1, 2016, respectively.

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

Prior to July 1, 2016, the Company’s Senior Management Compensation Program included an equity component in order to encourage more ownership of common stock by the senior management (the Old Plan). The Old Plan imposed stock ownership requirements upon the participants. Each participant was required to own at least 750 shares of common stock for each year that the participant participated in the Old Plan. Any participant that failed to meet the stock ownership requirements would be ineligible to receive any equity awards under the Company’s equity compensation plans, including the Plan, until the participant satisfied the ownership requirements. To assist participants in meeting the stock ownership requirements, on an annual basis, if a participant purchased 500 shares of common stock on the open market, the Company awarded that participant 250 sharesone share of common stock. During 2016,2023, a total of 20,000 RSUs and 20,000 PSUs were granted to the Company matched 2,500 shares. Additionally, any participant who continuedparticipants under the C-Suite Plan, and $0.3 million and $0.3 million, respectively, were granted in service-based and performance-based cash awards. During 2022, a total of 20,000 RSUs and 20,000 PSUs were granted to comply with the stock ownership requirements asparticipants under the C-Suite Plan, and $0.5 million and $0.5 million, respectively, were granted in service-based and performance-based cash awards. If the return on net assets falls below 5 percent, no performance-based incentive will be awarded. The maximum performance-based award is achieved if return on net assets exceeds ten percent, and is capped at 150% of the five-year, 10-year, 15-year, 20-year and 25-year anniversaries of the participant’s participation in the Senior Management Compensation Program would receive a restricted stock unit award with a dollar value of $25 thousand, $50 thousand, $75 thousand, $100 thousand and $100 thousand, respectively. Restricted stock unit awards would convert into the right to receive shares of common stock upon a participant’s retirement, or earlier upon the participant’s death or disability or upon a change in control of the Company. The carbon and specialty metals flat products segments terminated this plan on July 1, 2016 and the tubular and pipe products segment terminated the plan on January 1, 2017.

As part of the termination of the Old Plan and the transition to the New Plan, participants were paid the RSU grants that were earned to date, or a pro-rata amount of the RSUs earned, depending on the participants’ length of time they participated in the plan. After the payment of the RSUs noted above, the remaining liability of approximately $1.0 million was reversed during 2016 in accordance with ASC No. 718.

During the third quarter of 2016, the Company adopted a formal RSU award program for employees who are promoted to an executive level position. During the third quarter of 2016, Andrew Greiff received 10,573 RSUs upon his promotion to Executive Vice President and Chief Operating Officer. These RSUs vest on the fifth anniversary of his promotion.grant.

Stock-based compensation expense or income recognized on RSUs for the three and nine months ended September 30, 2017March 31, 2023 and 2016,2022, respectively, is summarized in the following table:

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

The following table summarizes the activity related to RSUs for the ninethree months ended September 30, 2017:March 31, 2023 and 2022, respectively: