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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 FIRST QUARTER 2003 RESULTS
BRIDGEVILLE, PA, April 23, 2003 -- Universal Stainless & Alloy
Products, Inc. (Nasdaq:USAP) today reported first quarter 2003 sales of $14.7
million and a net loss of $583,000, or $0.09 per diluted share. The net loss was
less than the Company projected on March 19 due to a recalculation of its
estimated annual effective income tax rate after taking into account its first
quarter results and second quarter forecast. This had the effect of reducing the
2003 first quarter net loss by $411,000, or $0.07 per diluted share. In the
first quarter of 2002, the Company recorded sales of $17.6 million and net
income of $1.2 million, or $0.20 per diluted share.
Commenting on the results, President and CEO Mac McAninch stated, "Our
first quarter performance reflected continued weak demand for aerospace and
power generation products, as well as higher raw material, labor and energy
costs. However, we are encouraged that the level of orders entered improved
month by month. In addition, 2003 first quarter sales to the service center and
OEM markets exceeded 50% of total sales for the first time in our history. We
expect this transition to continue because of the increased range of finished
products we can offer as a result of the addition of our Dunkirk operation."
The Company noted that while aerospace sales declined 20% from the
2002 first quarter and power generation sales were down 55% from the prior year
period, they increased 30% and 5%, respectively, from the 2002 fourth quarter,
aided in part by Dunkirk's contribution. Petrochemical product sales rose 7% and
tool steel product sales increased 9% from the fourth quarter of 2002. These
products were up even more dramatically from the first quarter of 2002, rising
74% and 30%, respectively. While commodity product sales were higher than the
2002 first quarter, they declined 40% from the 2002 fourth quarter as pricing
pressures due to the economy and imports caused the Company to limit sales in
this category.
USAP REPORTS FIRST QUARTER RESULTS - Page 2 -
Segment Review
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The Company's Universal Stainless & Alloy Products segment had sales
of $12.4 million and an operating loss of $774,000 for the first quarter of
2003. This compares with sales of $17.6 million and operating income of $2.5
million in the same period of 2002. The decrease reflects lower demand for power
generation and aerospace products, partially offset by an increase in demand for
tool steel products and reroll products shipped to the Dunkirk Specialty Steel
segment.
The Company's Dunkirk Specialty Steel segment, acquired on February
14, 2002, reported 2003 first quarter sales of $4.8 million and an operating
loss of $599,000. In the fourth quarter of 2002, Dunkirk's sales were $4.1
million and the operating loss was $817,000. The Dunkirk facility continues to
move forward from its start-up phase, with positive operating income expected
once the monthly revenue run-rate exceeds $2 million. The improvement over the
fourth quarter of 2002 reflects increased sales of rod and wire products and
finished bar to service centers.
Business Outlook
- ----------------
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 second quarter 2003 sales will range from
$15 to $19 million and that it will incur a net loss per diluted share ranging
from $0.07 to $0.12. In the second quarter of 2002, sales were $21.4 million and
diluted earnings per share were $0.12. The following factors were considered in
developing these estimates:
o The Company's total backlog approximated $14.6 million on March 31, 2003,
as compared to $14 million at December 31, 2002.
o Demand for reroll and forging semi-finished products from the Universal
Stainless & Alloy Products segment is expected to increase in anticipation
of improving economic conditions.
o Sales from the Dunkirk Specialty Steel segment are expected to exceed the
$5 million level in the 2003 second quarter.
o The projected net loss for the 2003 second quarter was determined utilizing
an estimated effective income tax rate of 37%.
USAP REPORTS FIRST QUARTER RESULTS - Page 3 -
The Company noted that it will be in technical violation of certain
financial covenants with PNC Bank in the second quarter as a result of the loss
recognized for the 2003 first quarter and the loss anticipated for the 2003
second quarter. The Company has initiated discussions with PNC Bank and expects
to either adjust the covenant restrictions in order to maintain compliance or
obtain the necessary waivers until market conditions improve. The Company was
successful previously in such discussions with PNC Bank.
Mr. McAninch concluded, "We see growing evidence that demand across
most customer groups is starting to improve and we expect it to slowly recover
during the balance of the year. While it is too early to call the precise date
of a turnaround, we are hopeful that we will return to profitability beginning
in the second half of the year based on what we are hearing in the marketplace
today."
Webcast
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A simultaneous Webcast of the Company's conference call discussing the
2003 first quarter and the second 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 April 30th. It can be accessed by dialing
706-645-9291, passcode 9602050. 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 -
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share information)
(Unaudited)
CONSOLIDATED STATEMENT OF OPERATIONS
For the Quarter Ended
March 31,
---------
2003 2002
---- ----
Net sales $ 14,700 $17,596
Cost of products sold 14,680 14,245
Selling and administrative expenses 1,393 1,373
-------- --------
Operating income (loss) (1,373) 1,978
Interest expense (95) (110)
Other income 27 31
-------- --------
Income (loss) before taxes (1,441) 1,899
Income tax expense (benefit) (858) 693
-------- - --------
Net income (loss) $(583) $ 1,206
======== ========
Earnings (loss) per share - Basic $ (0.09) $ 0.20
======== ========
Earnings (loss) per share - Diluted $ (0.09) $ 0.20
======== ========
Weighted average shares of
Common Stock outstanding
Basic 6,284,638 6,077,272
========= =========
Diluted 6,285,619 6,112,587
========= =========
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BUSINESS SEGMENT AND OTHER INFORMATION
Net sales:
Universal Stainless & Alloy Products $ 12,401 $ 17,636
Dunkirk Specialty Steel 4,784 207
Intersegment (2,485) (247)
-------- ---------
Consolidated net sales $ 14,700 $ 17,596
======== =========
Operating income (loss):
Universal Stainless & Alloy Products $ (774) $ 2,484
Dunkirk Specialty Steel (599) (506)
-------- ---------
Total operating income (loss) (1,373) 1,978
Depreciation and amortization of fixed assets 806 750
Other income 27 31
-------- ---------
EBITDA $ (540) $ 2,759
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Tons shipped 7,413 8,347
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CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
March 31, December 31,
2003 2002
---- ----
Cash $ 6,347 $ 3,308
Accounts receivable, net 11,300 11,550
Inventory 21,667 22,717
Deferred taxes 1,152 1,127
Other current assets 2,194 2,454
--------- ---------
Current assets 42,660 41,156
Property, plant & equipment, net 41,315 42,246
Other assets 637 642
--------- ---------
$ 84,612 $ 84,044
========= =========
Accounts payable $ 4,842 $ 4,190
Bank overdrafts 691 275
Accrued employment costs 1,053 1,019
Current portion of long-term debt 1,985 1,971
Other current liabilities 444 163
--------- ---------
Current liabilities 9,015 7,618
Long-term debt 7,046 7,502
Deferred taxes 8,333 8,123
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Total liabilities 24,394 23,243
--------- ---------
Stockholders' equity 60,218 60,801
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$ 84,612 $ 84,044
========= =========
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CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Quarter Ended March 31,
2003 2002
---- ----
Cash flow from operating activities $ 2,962 $ 4,088
Cash flow due to investing activities (79) (1,623)
Cash flow due to financing activities 156 (98)
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Net cash flow $ 3,039 $ 2,367
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