[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 SECOND QUARTER 2009 RESULTS
- Company Generates Operating Income -
- Sales Are $30.8 Million on 40% Fewer Tons Shipped -
- - Net Loss of $0.06 per Share Includes $0.11 per Share Negative Tax Adjustment -
- Cash Flow from Operations Increases to $12.7 Million in 2Q 09 -
- Cash on Hand Increased to $34.4 Million vs.
Total Debt of 13.3 Million - - Melt Shop
Project Continues On-Time and On-Budget -
BRIDGEVILLE, PA, July 29, 2009 - Universal Stainless & Alloy Products, Inc.
(Nasdaq: USAP) reported today that sales for the second quarter of 2009 were
$30.8 million, a decline of 52% from the record $63.5 million reported in the
second quarter of 2008. Tons shipped declined 40% from the prior year period.
The Company reported a net loss of $400,000 or $0.06 per share in the
second quarter of 2009 that included a tax adjustment of $742,000, equivalent to
$0.11 per share, for the reconciliation of tax balances to the 2008 federal and
state income tax returns to be filed in the third quarter of 2009. Without this
adjustment, net income in the second quarter of 2009 would have been $342,000,
or $0.05 per diluted share. This compares with net income of $5.3 million, or
$0.77 per diluted share, in the second quarter of 2008.
For the second quarter of 2009, cash flow from operations totaled $12.7
million, an increase of 168% from the second quarter of 2008. Capital
expenditures were $3.9 million including expenditures of $3.2 million for the
melt shop upgrade project. At June 30, 2009, cash was $34.4 million, working
capital was $97.4 million, and long-term debt was $12.2 million.
For the first six months of 2009, sales were $72.9 million and the Company
incurred a net loss of $4.2 million or $0.63 per share, including the tax
adjustment in the second quarter and unusual charges recognized in the 2009
first quarter of $3.6 million equivalent to $0.53 per share, after-tax. In the
first half of 2008, sales were $120.3 million and net income was $10.0 million,
or $1.47 per diluted share.
President and CEO Dennis Oates commented: "During the first quarter, we
implemented an aggressive plan to reduce costs, generate cash and adjust our
operating levels in the face of difficult economic and credit conditions and
significant de-stocking in the specialty steel supply channel. As a result, we
were able to report operating income in the second quarter despite 27% lower
sales and 29% fewer tons shipped than in the first quarter. Our cost control and
working capital management, which included a 19% sequential reduction in WIP
inventory, also yielded a nearly four-fold increase in operating cash flow
compared to the first quarter and enabled us to increase our net cash position
by $8.7 million to $21.1 million.
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"Our melt shop upgrade project remains on time and on budget. While not
scheduled for completion until mid-2010, the upgrades placed into service have
already produced better product quality and improved material yields. The
resulting improvement in our on-time delivery and shortened lead times have
enabled us to capture additional orders from our customers. We also recently
achieved AS9100 certification for our Bridgeville and Dunkirk facilities, which
better positions us to serve the international aerospace market.
"In a sign that business is starting to return, total order entry has
improved each month since April. However, bookings are well below normal levels
and our backlog has dropped to $38 million at June 30 as our end markets remain
challenged and inventory restocking has not resumed in the supply channel. Our
lean operations, low fixed costs and continued aggressive working capital
management should allow us to generate positive cash flow and maintain our
strong financial position in the third quarter in spite of the current low
volume environment."
Segment Review
- --------------
For the second quarter of 2009, the Universal Stainless & Alloy Products segment
had sales of $26.9 million and operating income of $949,000, yielding an
operating margin of 4% of sales. This compares with sales of $53.1 million and
operating income of $5.6 million, or 11% of sales, in the second quarter of
2008. In the first quarter of 2009, sales were $36.7 million and there was an
operating loss of $3.9 million, including $5.0 million of unusual charges.
Segment sales declined 49% from the second quarter of 2008 primarily due to a
33% decrease in tons shipped and lower surcharges. Increased shipments to
forgers and OEMs, mainly of power generation products, were offset by
substantially lower shipments to rerollers and to service centers, mainly of
tool steel plate. Segment sales decreased 27% from the first quarter of 2009 on
24% fewer tons shipped.
The Dunkirk Specialty Steel segment recorded sales of $10.2 million and an
operating loss of $384,000 for the second quarter of 2009. This compares with
sales of $21.2 million and operating income of $2.1 million, or 10% of sales, in
the second quarter of 2008. In the first quarter of 2009, sales were $11.4
million and the operating loss was $2.5 million, including unusual charges of
$1.0 million.
Dunkirk's sales declined 52% from the second quarter of 2008 while tons shipped
decreased 31% due to lower shipments to all customer categories and lower
surcharges. Dunkirk's sales were 10% lower than in the first quarter of 2009 on
a 2% decrease in tons shipped.
Webcast
- -------
A simultaneous Webcast of the Company's conference call discussing the second
quarter of 2009, 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.
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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 Six-Months Ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
Net Sales
Stainless steel $ 25,648 $ 43,760 $ 59,410 $ 85,788
Tool steel 1,563 11,659 4,892 20,766
High-strength low alloy steel 2,367 2,934 5,110 6,945
High-temperature alloy steel 876 3,344 2,895 4,490
Conversion services 292 448 596 973
Other 17 1,337 46 1,365
------- -------- ---------- ----------
Total net sales 30,763 63,482 72,949 120,327
Cost of products sold 28,092 53,018 71,956 99,797
Selling and administrative expenses 2,106 2,634 6,843 5,709
------- -------- ---------- ----------
Operating income 565 7,830 (5,850) 14,821
Interest expense (27) (27) (51) (55)
Other income 35 62 65 149
------- -------- ---------- ----------
Income (loss) before taxes 573 7,865 (5,836) 14,915
Income tax provision (benefit) 973 2,595 (1,610) 4,922
------- -------- ---------- ----------
Net income (loss) $ (400) $ 5,270 (4,226) 9,993
======= ======== ========== ==========
Earnings per share - Basic $ (0.06) $ 0.79 $ (0.63) $ 1.49
======= ======== ========== ==========
Earnings per share - Diluted $ (0.06) $ 0.77 $ (0.63) 1.47
======= ======== ========== ==========
Weighted average shares of
Common Stock outstanding
Basic 6,751,739 6,707,523 6,742,012 6,685,368
Diluted 6,751,739 6,819,546 6,742,012 6,795,514
MARKET SEGMENT INFORMATION
For the Quarter Ended For the Six-Months Ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
Net Sales
Service centers $ 13,117 $ 33,850 $ 30,649 $ 63,084
Forgers 10,420 11,142 23,391 20,160
Rerollers 1,960 9,240 7,964 20,479
Original equipment manufacturers 3,797 5,795 8,196 11,236
Wire redrawers 1,160 1,692 2,107 3,061
Conversion services 292 448 596 973
Other 17 1,315 46 1,334
------- -------- ---------- ----------
Total net sales $ 30,763 $ 63,482 $ 72,949 $ 120,327
======= ======== ========== ==========
Tons shipped 6,855 11,423 16,448 23,190
======= ======== ========== ==========
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BUSINESS SEGMENT RESULTS
Universal Stainless & Alloy Products Segment
For the Quarter Ended For the Six-Months Ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
Net Sales
Stainless steel $ 18,234 $ 28,901 $ 44,229 $ 56,211
Tool steel 1,531 11,278 4,739 19,702
High-strength low alloy steel 647 1,114 1,662 2,227
High-temperature alloy steel 393 929 1,127 1,498
Conversion services 206 296 394 653
Other 11 1,262 40 1,272
------- -------- ---------- ----------
21,022 43,780 52,191 81,563
Intersegment 5,857 9,312 11,373 19,727
------- -------- ---------- ----------
Total net sales 26,879 53,092 63,564 101,290
Material cost of sales 10,445 28,654 30,711 51,993
Operation cost of sales 14,131 16,936 30,591 34,726
Selling and administrative expenses 1,354 1,869 5,227 4,007
------- -------- ---------- ----------
Operating income (loss) $ 949 $ 5,633 $ (2,965) $ 10,564
======= ======== ========== ==========
Dunkirk Specialty Steel Segment
For the Quarter Ended For the Six-Months Ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
Net Sales
Stainless steel $ 7,414 $ 14,859 $ 15,181 $ 29,577
Tool steel 32 381 153 1,064
High-strength low alloy steel 1,720 1,820 3,448 4,718
High-temperature alloy steel 483 2,415 1,768 2,992
Conversion services 86 152 202 320
Other 6 75 6 93
------- -------- ---------- ----------
9,741 19,702 20,758 38,764
Intersegment 465 1,474 830 2,462
------- -------- ---------- ----------
Total net sales 10,206 21,176 21,588 41,226
Material cost of sales 6,345 13,126 15,139 24,965
Operation cost of sales 3,493 5,159 7,718 9,648
Selling and administrative expenses 752 765 1,616 1,702
------- -------- ---------- ----------
Operating income (loss) $ (384) $ 2,126 $ (2,885) $ 4,911
======= ======== ========== ==========
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CONSOLIDATED BALANCE SHEET
June 30, December 31,
2009 2008
---- ----
ASSETS
Cash $ 34,399 $ 14,812
Accounts receivable, net 19,891 33,057
Inventory 45,175 63,222
Other current assets 9,726 8,239
------------ -------------
Total current assets 109,191 119,330
Property, plant & equipment, net 67,937 62,626
Other assets 1,309 988
------------ -------------
Total assets $ 178,437 $ 182,944
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable $ 7,500 $ 19,350
Outstanding checks in excess of bank balance 364 540
Accrued employment costs 2,509 3,795
Current portion of long-term debt 1,015 403
Other current liabilities 410 421
------------ -------------
Total current liabilities 11,798 24,509
Long-term debt 12,235 1,046
Deferred taxes 12,000 11,689
Other liabilities 87 -
------------ -------------
Total liabilities 36,120 37,244
Stockholders' equity 142,317 145,700
------------ -------------
Total liabilities and stockholders' equity $ 178,437 $ 182,944
============ =============
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CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Six-month Period Ended June 30,
2009 2008
---- ----
Cash flows provided by operating activities:
Net income (loss) $ (4,226) $ 9,993
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 2,338 2,008
Deferred tax increase (decrease) (262) 304
Stock based compensation expense 499 413
Tax benefit from share-based
payment arrangements (86) (511)
Changes in assets and liabilities:
Accounts receivable, net 13,166 (7,133)
Inventory 18,047 (6,827)
Trade accounts payable (11,850) 6,836
Accrued employment costs (1,286) (366)
Other, net (1,048) 216
----------- ----------
Cash flow provided by operating activities 15,292 4,933
----------- ----------
Cash flow used in investing activities:
Capital expenditures (7,645) (5,401)
----------- ----------
Cash flow used in investing activities (7,645) (5,401)
----------- ----------
Cash flows provided by financing activities:
Long-term debt issuance 12,000 -
Long-term debt repayments (199) (194)
Net change in outstanding checks in excess
of bank balance (176) 1,848
Deferred financing costs (84) -
Proceeds from issuance of common stock 313 722
Tax benefit from share-based
payment arrangements 86 511
----------- ----------
Cash flow provided by financing activities 11,940 2,887
----------- ----------
Net cash flow $ 19,587 $ 2,419
=========== ==========
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