EXHIBIT 99.1
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Universal Stainless & Alloy Products, Inc.
600 Mayer Street o Bridgeville, Pennsylvania 15017
CONTACTS: Richard M. Ubinger
Vice President of Finance,
Chief Financial Officer and Treasurer
(412) 257-7606
FOR IMMEDIATE RELEASE
Comm-Partners LLC
June Filingeri
(203) 972-0186
UNIVERSAL STAINLESS REPORTS FOURTH QUARTER RESULTS
BRIDGEVILLE, PA, January 22, 2003 -- Universal Stainless & Alloy
Products, Inc. (Nasdaq:USAP) today reported sales of $15.9 million for the
fourth quarter ended December 31, 2002 and a net loss of $82,000, or $0.01 per
diluted share. This compares with sales of $21.8 million and net income of $1.9
million, or $0.31 per diluted share, in the year ago fourth quarter.
The 2002 fourth quarter includes other income of $310,000, or $0.03
per diluted share, relating to the receipt of import duties in accordance with
the "Continued Dumping and Subsidy Offset Act of 2000" from the U.S. Customs
Service. This act provides for payment of the duties collected by the U.S.
Treasury to domestic companies injured by unfair foreign trade practices.
Additionally, the annual effective income tax rate for 2002 was reduced in the
fourth quarter from 33.0% to 30.8% resulting in a net income benefit of $65,000,
or $0.01 per diluted share.
For the full year 2002, Universal Stainless had sales of $70.9 million
and net income of $2.1 million, or $0.34 per diluted share, compared with sales
of $90.7 million and net income of $7.6 million, or $1.25 per diluted share in
2001.
Commenting on these results, President and CEO Mac McAninch stated,
"The Company's Bridgeville and Titusville facilities continued to operate
profitably in the fourth quarter, a result we have achieved in every quarter
since 1994. While our acquisition of Dunkirk Specialty Steel was completed on
very favorable terms, difficult market conditions have prevented that operation
from reaching its profitability threshold this year."
<page>
USAP REPORTS FOURTH QUARTER RESULTS - Page 2 -
Segment Review
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The Company's Universal Stainless & Alloy Products segment, consisting
of its Bridgeville and Titusville facilities, had sales of $16.4 million and
operating income of $351,000 for the fourth quarter of 2002. This compares with
sales of $21.8 million and operating income of $2.9 million in the same period
of 2001.
The decrease reflects lower demand for power generation and aerospace
products, partially offset by an increase in demand for tool steel products and
for commodity reroller products, including shipments to the Dunkirk Specialty
Steel segment. Sales of aerospace and power generation products were down 52%
and 71%, respectively, from the fourth quarter of 2001. Sales of tool steel and
commodity reroll products rose 84% and 49%, respectively, over the 2001 fourth
quarter.
The Company's Dunkirk Specialty Steel segment, which was acquired
February 14, 2002, reported 2002 fourth quarter sales of $4.1 million and an
operating loss of $817,000. In the third quarter of 2002, Dunkirk's sales were
$4.0 million and the operating loss was $291,000. The Dunkirk facility continues
to move from its start-up phase toward an efficient operation. The increase in
the operating loss in the fourth quarter over the third quarter is a result of
the shipment of products that incurred high costs during the company's start-up
period and the establishment of an inventory reserve arising from higher
start-up manufacturing costs included in the year-end inventory balance.
Mr. McAninch continued, "Universal Stainless remained profitable and
made important progress in 2002, despite depressed market conditions. The
start-up of our Dunkirk operation was successful and we have made substantial
progress in positioning Dunkirk to become profitable as market conditions
normalize. We remain as confident as ever that Dunkirk will make significant
contributions to the Company's future earnings growth. We were successful in
reducing our selling and administrative expenses for the year by $900,000, or
15%, before adding the direct expenses of the Dunkirk operation. In addition, we
signed a new six-year labor agreement with our Bridgeville employees that
provides the stability and flexibility to help us meet the challenges we expect
through the first half of 2003."
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USAP REPORTS FOURTH QUARTER RESULTS - Page 3 -
Business Outlook
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The following statements are based on the Company's current expectations. These
statements are forward-looking, and actual results may differ materially.
The Company estimates that first quarter 2003 sales will range from
$11 to $15 million and that it will incur a net loss per diluted share ranging
from $0.05 to $0.10. In the first quarter of 2002, sales were $17.6 million and
diluted earnings per share were $0.20. The following factors were considered in
developing these estimates:
o The Company's total backlog approximated $14 million on December 31, 2002,
as compared to $18 million at September 30, 2002.
o Demand for aerospace and power generation products is not expected to
improve during the 2003 first quarter.
o Sales from Dunkirk are expected to approximate $4 million in the first
quarter of 2003, below its projected break-even threshold of $6 million per
quarter.
The Company noted that if the 2003 first quarter loss exceeds $0.05 per
diluted share or if net income for the first six-month results does not reach
$0.08 per diluted share, it may be in technical violation of certain financial
covenants with PNC Bank. The Company has initiated discussions with PNC Bank and
expects to adjust the covenant restrictions in order to maintain compliance.
Mr. McAninch concluded, "The economic recovery has been slow, but the
inquiries and orders received during the first few weeks of the new year and the
weakened U.S. dollar indicate potential signs of improvement beyond the first
quarter. Our Bridgeville, Titusville and Dunkirk teams are actively developing
the manufacturing processes necessary to participate competitively in each new
sales opportunity identified. We are also taking vigorous measures to address
current market conditions and to maximize our control of costs. We are working
on projects to improve the productivity of each operating unit to reduce the
manufacturing cycle of our finished products. Finally, we are scheduling our
operations to match market demand while maintaining our on-time deliveries. Our
strong balance sheet provides us the opportunity to have semi-finished inventory
available to respond quickly to our customers at this crucial time."
<page>
USAP REPORTS FOURTH QUARTER RESULTS - Page 4 -
Webcast
- -------
A simultaneous Webcast of the Company's conference call discussing the
2002 fourth quarter and full year results and the first quarter outlook,
scheduled at 10:00 a.m. (Eastern) today, will be available on the Company's
website at www.univstainless.com, and thereafter archived on the website. A
telephone replay of the conference call will be available beginning at 12:00
noon (Eastern) today, continuing through January 29th. It can be accessed by
dialing 706-645-9291, passcode 7468256. This is a toll call.
About Universal Stainless & Alloy Products, Inc.
- ------------------------------------------------
Universal Stainless & Alloy Products, Inc., headquartered in
Bridgeville, Pa., manufactures and markets a broad line of semi-finished and
finished specialty steels, including stainless steel, tool steel and certain
other alloyed steels. The Company's products are sold to original equipment
manufacturers, service centers, forgers, rerollers and wire redrawers.
Forward-Looking Information Safe Harbor
- ---------------------------------------
Except for historical information contained herein, the statements in
this release are forward-looking statements that are made pursuant to the "safe
harbor" provision of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties
that may cause the Company's actual results in future periods to differ
materially from forecasted results. Those risks include, among others, risks
associated with the limited operating history of Dunkirk Specialty Steel LLC,
risks associated with the Company's ability to meet its current loan covenants,
risks associated with the receipt, pricing and timing of future customer orders,
risks related to the financial viability of customers, risks associated with the
manufacturing process and production yields, and risks related to property,
plant and equipment. Certain of these risks and other risks are described in the
Company's filings with the Securities and Exchange Commission (SEC) over the
last 12 months, copies of which are available from the SEC or may be obtained
upon request from the Company.
- FINANCIAL TABLES FOLLOW -
<page>
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share information)
(Unaudited)
CONSOLIDATED STATEMENT OF OPERATIONS
<table>
<caption>
For the Quarter Ended For the Year Ended
December 31, December 31,
------------ ------------
<s>
2002 2001 2002 2001
---- ---- ---- ----
Net sales $15,940 $21,822 $70,877 $90,658
Cost of products sold 14,972 17,395 61,971 71,915
Selling and administrative expenses 1,432 1,524 5,883 6,199
-------- -------- -------- ---------
Operating income (loss) (464) 2,903 3,023 12,544
Interest expense (111) (97) (455) (576)
Other income 356 20 457 57
-------- -------- -------- ---------
Income (loss) before taxes (219) 2,826 3,025 12,025
Income taxes (137) 937 933 4,386
-------- -------- -------- ---------
Net income (loss) $ (82) $ 1,889 $ 2,092 $ 7,639
========= ======== ======== ===-=====
Earnings (loss) per share - Basic $ (0.01) $ 0.31 $ 0.34 $ 1.26
======== ======== ======== =========
Earnings (loss) per share - Diluted $ (0.01) $ 0.31 $ 0.34 $ 1.25
======== ======== ======== =========
Weighted average shares of
Common Stock outstanding
Basic 6,280,581 6,073,447 6,203,800 6,080,045
========= ========= ========== =========
Diluted 6,280,664 6,084,421 6,235,848 6,097,424
========= ========= ========== =========
Tons shipped 8,772 11,499 38,397 46,755
===== ====== ====== ======
EBITDA $ 712 $ 3,665 $ 6,610 $15,365
======== ======= ======= =======
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BUSINESS SEGMENT INFORMATION
Net sales
Universal Stainless & Alloy Products $ 16,389 $ 21,822 $ 70,120 $ 90,658
Dunkirk Specialty Steel 4,121 -- 10,483 --
Intersegment (4,570) -- (9,726) --
---------- -------- -------- --------
Consolidated net sales $ 15,940 $ 21,822 $ 70,877 $ 90,658
--------- -------- -------- --------
Operating income (loss)
Universal Stainless & Alloy Products 351 2,920 5,033 12,618
Dunkirk Specialty Steel (817) -- (1,990) --
Corporate costs 2 (17) (20) (74)
---------- -------- -------- --------
Total operating income (loss) $ (464) $ 2,903 $ 3,023 $ 12,544
========= ======== ======== ========
</table>
<page>
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<table>
<caption>
<s>
December 31, December 31,
2002 2001
---- ----
Cash $ 3,308 $ 5,454
Accounts receivable, net 11,550 13,257
Inventory 22,717 17,900
Deferred taxes 1,127 1,022
Other current assets 2,454 460
--------- ---------
Current assets 41,156 38,093
Property, plant & equipment, net 42,246 41,202
Other assets 642 151
--------- ---------
$ 84,044 $ 79,446
========= =========
Accounts payable $ 4,190 $ 4,597
Bank overdrafts 275 857
Accrued employment costs 1,019 1,562
Current portion of long-term debt 1,971 1,832
Other current liabilities 163 590
--------- ---------
Current liabilities 7,618 9,438
Long-term debt 7,502 6,490
Deferred taxes 8,123 7,146
--------- ---------
Total liabilities 23,243 23,074
--------- ---------
Stockholders' equity 60,801 56,372
--------- ---------
$ 84,044 $ 79,446
========= =========
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CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Year Ended December 31,
2002 2001
---- ----
Cash flow from operating activities $ 3,824 $ 11,905
Cash flow due to investing activities (5,477) (5,253)
Cash flow due to financing activities (493) (2,307)
--------- --------
Net cash flow $ (2,146) $ 4,345
========= ========
# # #
</table>