Exhibit 99.1
[GRAPHIC OMITTED][GRAPHIC OMITTED]
CONTACTS: Richard M. Ubinger June Filingeri
Vice President of Finance, President
Chief Financial Officer and Treasurer Comm-Partners LLC
(412) 257-7606 (203) 972-0186
FOR IMMEDIATE RELEASE
- ---------------------
UNIVERSAL STAINLESS REPORTS 2008 FOURTH QUARTER AND YEAR RESULTS
- FOURTH QUARTER DILUTED EPS IS $0.18 ON SALES OF $57.1 MILLION -
- FULL YEAR SALES ARE RECORD $235.1 MILLION WITH DILUTED EPS OF $2.05 -
- OPERATING CASH FLOW WAS $5.8 MILLION FOR FOURTH QUARTER
AND $17.7 MILLION FOR 2008 -
BRIDGEVILLE, PA, JANUARY 29, 2009 - UNIVERSAL STAINLESS & ALLOY PRODUCTS,
INC. (NASDAQ: USAP) reported today that sales for the fourth quarter of 2008
rose 15% to $57.1 million compared with $49.6 million in the fourth quarter of
2007. Net income for the fourth quarter of 2008 was $1.2 million, or $0.18 per
diluted share, compared with $4.4 million, or $0.65 per diluted share in the
fourth quarter of 2007.
Sales for the 2008 fourth quarter exceeded the Company's forecast of $45 to
$55 million while EPS was in line with recent Company guidance of breakeven to
$0.15, excluding import duties. For full year 2008, sales were a record $235.1
million while net income was $13.9 million, or $2.05 per diluted share, compared
with sales of $229.9 million and net income of $22.5 million, or $3.32 per
diluted share, in 2007. Import duties received in the 2008 and 2007 fourth
quarters were $599,000 and $586,000, respectively.
Nickel and other commodity prices declined substantially in the fourth
quarter of 2008 resulting in a charge related to an increase in inventory
reserves of $807,000 (equivalent to $0.08 per dilute share) with $422,000
attributable to the Universal Stainless segment and $385,000 to the Dunkirk
segment. The Company's tax rate for 2008 was 29.9% compared to 32.7% in 2007 due
to the impact of lower income levels on the Company's permanent tax deductions
and favorable adjustments to state income tax provisions. The benefit of this
rate change in comparison to the 2007 fourth quarter and full year was
equivalent to $0.05 and $0.08 per diluted share, respectively.
Cash flow from operations was $5.8 million for the 2008 fourth quarter and
$17.7 million for the full year. Capital expenditures were $3.3 million and
$12.9 million for those periods, respectively. The 2008 capital expenditures
included the completion of a new high temperature annealing facility in Dunkirk,
the addition of annealing and finishing equipment in Bridgeville and the
relocation of the Company's round bar facility to Dunkirk, for which the
remaining expense of $248,000 was recognized in the 2008 fourth quarter. At
December 31, 2008, the Company had cash of $14.8 million, working capital of
$94.8 million and long-term debt of $1.0 million. Accounts receivable at the end
of the 2008 fourth quarter remained in line with the 2008 third quarter while
inventories were down $7.2 million from the previous quarter.
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President and CEO Dennis Oates commented: "Our 15% increase in sales over
the fourth quarter of 2007 on a 19% increase in tons shipped was fueled by a
136% increase in shipments to forgers destined for the global power generation
markets. With the exception of aerospace, our sales increased to all end markets
compared to the 2007 fourth quarter. Our aerospace sales declined 5% as service
centers sharply reduced buying activity amid falling commodity prices, the
lingering effect of the Boeing work stoppage, and deteriorating economic and
credit conditions. In total, our sales to service centers declined 21% from the
2007 fourth quarter, with the greatest impact on our Dunkirk segment, where
service centers are the main customer group."
Mr. Oates continued: "Sales and gross profit margins were adversely
affected by the rapid, unprecedented decline in raw material prices and the
resulting timing imbalance between surcharges and raw material costs incurred."
Mr. Oates concluded: "There is no doubt that current business conditions
are very challenging. We are focused on moving forward despite current
conditions. Providing unparalleled customer service levels is crucial in this
environment and we are increasing the intensity of our efforts to do so by
making significant investments in our facilities, including the $13 million melt
shop upgrade we announced separately today. We are optimistic about our
long-term potential, while prudently planning for the contingencies and
opportunities that may present themselves in the shorter term."
SEGMENT REVIEW
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For the fourth quarter of 2008, the UNIVERSAL STAINLESS & ALLOY PRODUCTS
SEGMENT had sales of $53.1 million and operating income of $1.9 million,
yielding an operating margin of 3%. In the fourth quarter of 2007, sales were
$43.4 million and operating income was $3.2 million, or 7% of sales. In the
third quarter of 2008, sales were $52.2 million and operating income was $3.3
million, or 6% of sales.
Segment sales rose 22% from the fourth quarter of 2007 primarily due to a
17% increase in tons shipped and the effect of base sales price increases
announced earlier in 2008. Increased shipments to forgers, which more than
doubled over the fourth quarter of 2007 due to strong demand for semi-finished
power generation products, were partially offset by declines in all other
customer categories.
Segment sales increased 2% over the third quarter of 2008 while tons
shipped increased 8%. Higher shipments to forgers, rerollers and of bar products
to service centers offset lower shipments of tool steel plate to service
centers.
The DUNKIRK SPECIALTY STEEL SEGMENT reported sales of $11.4 million and an
operating loss of $1.3 million for the fourth quarter of 2008. This included a
$248,000 charge related to the relocation of the round bar finishing line to
Dunkirk from Bridgeville. In the fourth quarter of 2007, sales were $18.7
million and operating income was $2.2 million, or 12% of sales. In the third
quarter of 2008, sales were $16.9 million while Dunkirk incurred an operating
loss of $172,000, which included a $586,000 charge for the round bar finishing
line relocation project. Before giving effect to the relocation charge,
Dunkirk's operating income was $414,000 for the third quarter of 2008, resulting
in an operating margin of 2%.
Dunkirk's sales declined 39% while tons shipped decreased 35% compared with
the fourth quarter of 2007 reflecting lower shipments to service centers and
OEMs and lower surcharges on products shipped. The lower shipment volume and
lower surcharges combined with high raw material costs due to the timing of
procurement as well as the effect of the inventory charge led to the operating
loss in the fourth quarter of 2008.
Dunkirk's sales decreased 33% and tons shipped decreased 28% compared with
the third quarter of 2008 mainly due to lower shipments of service centers and
lower surcharges.
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BUSINESS OUTLOOK
- ----------------
The Company currently estimates that sales for the first quarter of 2009
will range from $32 to $42 million and that diluted EPS will range from
breakeven to $0.10. In the first quarter of 2008, sales were $56.8 million and
diluted EPS was $0.70. Approximately $6-8 million of the decline in sales from
the 2008 first quarter is a result of lower surcharges anticipated in the first
quarter of 2009.
The following factors were considered in developing the estimates for the
first quarter of 2009:
o The Company's total backlog at December 31, 2008 was $75 million compared
with $101 million at September 30, 2008. The Company's current backlog
mainly consists of semi-finished products for rerollers and forgers and
tool steel plate for service centers.
o The Company's forecast is based on average December raw material costs.
o A two-week melt shop outage planned for March 2009 to install certain
equipment is not expected to have a material impact on first quarter
shipments. The Company's outlook includes approximately $300,000 of
expenses related to the outage.
WEBCAST
- -------
A simultaneous Webcast of the Company's conference call discussing the
fourth quarter of 2008 and the first quarter 2009 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.
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 rerollers, forgers, service
centers, original equipment manufacturers and wire redrawers. More information
is available at www.univstainless.com.
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 RECEIPT, PRICING AND TIMING OF FUTURE CUSTOMER ORDERS, RISKS
ASSOCIATED WITH SIGNIFICANT FLUCTUATIONS THAT MAY OCCUR IN RAW MATERIAL AND
ENERGY PRICES, RISKS ASSOCIATED WITH THE MANUFACTURING PROCESS, LABOR AND
PRODUCTION YIELDS, RISKS RELATED TO PROPERTY, PLANT AND EQUIPMENT, AND RISKS
RELATED TO THE ULTIMATE OUTCOME OF THE COMPANY'S CURRENT AND FUTURE LITIGATION
AND REGULATORY MATTERS. THE COMPANY'S ACTUAL RESULTS IN FUTURE PERIODS ALSO MAY
BE IMPACTED BY VARIOUS ECONOMIC AND MARKET RISK AND UNCERTAINTIES, MANY OF WHICH
ARE BEYOND THE COMPANY'S CONTROL. 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.
- TABLES FOLLOW -
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UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share information)
(Unaudited)
CONSOLIDATED STATEMENT OF OPERATIONS
For the Quarter Ended For the Year Ended
December 31, December 31,
2008 2007 2008 2007
---- ---- ---- ----
NET SALES
Stainless steel $ 44,339 $ 34,020 $ 172,222 $ 164,228
Tool steel 7,887 7,297 39,046 28,119
High-strength low alloy steel 2,427 6,080 11,936 25,892
High-temperature alloy steel 1,678 1,580 7,931 9,317
Conversion services 427 584 1,941 2,011
Other 382 72 2,030 369
------- ------- -------- --------
Total net sales 57,140 49,633 235,106 229,936
Cost of products sold 54,092 41,154 204,929 184,491
Selling and administrative expenses 2,524 3,087 11,085 12,038
------- ------- -------- --------
Operating income 524 5,392 19,092 33,407
Interest expense (24) (128) (105) (731)
Other income 694 740 911 776
------- ------- -------- --------
Income before taxes 1,194 6,004 19,898 33,452
Income tax (benefit) provision (37) 1,616 5,948 10,948
------- ------- -------- --------
Net income $ 1,231 $ 4,388 $ 13,950 $ 22,504
======= ======= ======== ========
Earnings per share - Basic $ 0.18 $ 0.66 $ 2.08 $ 3.39
======= ======= ======== ========
Earnings per share - Diluted $ 0.18 $ 0.65 $ 2.05 $ 3.32
======= ======= ======== ========
Weighted average shares of
Common Stock outstanding
Basic 6,727,727 6,656,783 6,706,535 6,644,374
Diluted 6,781,712 6,780,808 6,801,203 6,774,924
MARKET SEGMENT INFORMATION
For the Quarter Ended For the Year Ended
December 31, December 31,
2008 2007 2008 2007
---- ---- ---- ----
NET SALES
Service centers $ 20,979 $ 26,582 $ 110,889 $ 119,736
Forgers 18,092 7,541 52,551 47,711
Rerollers 11,649 8,957 41,660 35,006
Original equipment manufacturers 3,968 4,418 18,955 18,287
Wire redrawers 1,662 1,506 7,129 6,843
Conversion services 427 584 1,941 2,011
Other 363 45 1,981 342
------- ------- -------- --------
Total net sales $ 57,140 $ 49,633 $ 235,106 $ 229,936
======= ======= ======== ========
Tons shipped 11,681 9,788 45,679 43,644
======= ======= ======== ========
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BUSINESS SEGMENT RESULTS
UNIVERSAL STAINLESS & ALLOY PRODUCTS SEGMENT
For the Quarter Ended For the Year Ended
December 31, December 31,
2008 2007 2008 2007
---- ---- ---- ----
NET SALES
Stainless steel $ 36,233 $ 21,524 $ 121,612 $ 108,535
Tool steel 7,768 6,620 37,631 25,638
High-strength low alloy steel 925 2,382 3,881 12,764
High-temperature alloy steel 661 714 2,977 4,067
Conversion services 296 448 1,278 1,405
Other 351 66 1,875 295
------- ------- -------- --------
46,234 31,754 169,254 152,704
Intersegment 6,880 11,614 37,384 49,858
------- ------- -------- --------
Total net sales 53,114 43,368 206,638 202,562
Material cost of sales 32,215 23,386 114,930 106,456
Operation cost of sales 17,375 14,730 68,415 67,286
Selling and administrative expenses 1,673 2,034 7,613 8,345
------- ------- -------- --------
Operating income $ 1,851 $ 3,218 $ 15,680 $ 20,475
======= ======= ======== ========
DUNKIRK SPECIALTY STEEL SEGMENT
For the Quarter Ended For the Year Ended
December 31, December 31,
2008 2007 2008 2007
---- ---- ---- ----
NET SALES
Stainless steel $ 8,107 $ 12,496 $ 50,610 $ 55,693
Tool steel 119 677 1,415 2,481
High-strength low alloy steel 1,502 3,698 8,055 13,128
High-temperature alloy steel 1,017 866 4,954 5,250
Conversion services 131 136 663 606
Other 30 6 155 74
------- ------- -------- --------
10,906 17,879 65,852 77,232
Intersegment 492 817 3,712 4,493
------- ------- -------- --------
Total net sales 11,398 18,696 69,564 81,725
Material cost of sales 8,031 11,531 44,215 47,905
Operation cost of sales 3,843 3,953 18,465 17,404
Selling and administrative expenses 851 1,053 3,472 3,693
------- ------- -------- --------
Operating (loss) income $ (1,327) $ 2,159 $ 3,412 $ 12,723
======= ======= ======== ========
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CONSOLIDATED BALANCE SHEET
December 31, December 31,
2008 2007
---- ----
ASSETS
Cash $ 14,812 $ 10,648
Accounts receivable, net 33,057 27,501
Inventory 63,222 65,572
Other current assets 8,239 5,537
--------- --------
Total current assets 119,330 109,258
Property, plant & equipment, net 62,626 54,271
Other assets 988 767
--------- --------
Total assets $ 182,944 $ 164,296
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable $ 19,350 $ 13,983
Outstanding checks in excess of bank balance 540 2,064
Accrued employment costs 3,795 5,307
Current portion of long-term debt 403 383
Other current liabilities 421 1,600
--------- --------
Total current liabilities 24,509 23,337
Long-term debt 1,046 1,453
Deferred taxes 11,689 9,904
--------- --------
Total liabilities 37,244 34,694
Stockholders' equity 145,700 129,602
--------- --------
Total liabilities and stockholders' equity $ 182,944 $ 164,296
========= ========
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CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Year Ended December 31,
2008 2007
---- ----
Cash flows provided by operating activities:
Net income $ 13,950 $ 22,504
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 4,167 3,731
Loss on retirement of fixed assets 402 40
Deferred tax increase 558 253
Stock based compensation expense 838 427
Tax benefit from share-based payment
arrangements (529) (958)
Changes in assets and liabilities:
Accounts receivable, net (5,556) 5,807
Inventory 2,350 447
Trade accounts payable 5,367 860
Accrued employment costs (1,512) 1,186
Other, net (2,365) (674)
-------- -------
Cash flow provided by operating activities 17,670 33,623
-------- -------
Cash flow used in investing activities:
Capital expenditures (12,905) (8,782)
-------- -------
Cash flow used in investing activities (12,905) (8,782)
-------- -------
Cash flows used in financing activities:
Revolving credit net repayments - (8,392)
Long-term debt repayments (387) (9,364)
Net change in outstanding checks in excess
of bank balance (1,524) (1,363)
Proceeds from issuance of common stock 781 1,059
Tax benefit from share-based payment
arrangements 529 958
-------- -------
Cash flow used in financing activities (601) (17,102)
-------- -------
Net cash flow $ 4,164 $ 7,739
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