- Sales of $51.3 Million are Up 48% From 1Q10 -

- EPS is $0.61 Versus $0.21 in 1Q10 -

- Backlog Totals $46 Million Versus $53 Million for 1Q10 -

BRIDGEVILLE, Pa., July 28, 2010 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) reported today that sales for the second quarter of 2010 were $51.3 million compared with $30.8 million in the second quarter of 2009 and $34.7 million in the 2010 first quarter.

Net income for the second quarter of 2010 was $4.2 million, or $0.61 per diluted share. For the second quarter of 2009, the Company reported a net loss of $0.4 million, or $0.06 per diluted share, which included a negative tax adjustment equivalent to $0.11 per share. In the first quarter of 2010, net income was $1.4 million, or $0.21 per diluted share. 

The Company recorded negative cash flow from operations of $0.8 million for the second quarter of 2010 after adjusting for a $4.1 million tax refund. This compares with positive cash flow of $12.7 million in the second quarter of 2009 and negative cash flow of $2.8 million for the first quarter of 2010. Cash flow has decreased in 2010 due to the Company's investment in managed working capital to support increased sales activity. Capital expenditures were $2.3 million, including $1.2 million for a melt shop upgrade project, which is expected to be completed in the current quarter. At June 30, 2010, the Company had cash of $34.7 million and total debt of $12.2 million.   

The Company noted that shipment volume continued to improve in the second quarter of 2010 and volume shipped to the end markets of aerospace, power generation, petrochemical and service center plate increased 48%, 48%, 38% and 27%, respectively, over the first quarter of 2010. 

President and CEO Dennis Oates commented: "Market demand continued to recover in the second quarter. Our strong on-time performance and improved lead times helped win additional business and we made more progress in penetrating new segments of our markets.  Sales rose to the highest level in 6 quarters and our company-wide operating margin reached 12.5% of sales, nearly double the level of the 2010 first quarter and the highest level in 11 quarters.  In addition to the higher volumes, our increased profitability was due to cost reductions from ongoing process improvements and recent capital investments. We intend to make further progress in improved quality and reduced costs.

"Due to the uncertainty in general economic activity and raw material pricing, our customers remain cautious, which is reflected in some moderation in backlog. While our backlog of $46 million is up significantly from last year, it is down from $53 million at the end of the first quarter. We currently expect sequential sales growth for the balance of the year to be modest."   

Segment Review

For the second quarter of 2010, the Universal Stainless & Alloy Products segment had sales of $49.7 million and operating income of $6.8 million, yielding an operating margin of 13.7% of sales. This compares with sales of $26.9 million and operating income of $0.9 million, or 3.5% of sales, in the second quarter of 2009. In the first quarter of 2010, sales were $31.2 million and operating income was $1.9 million, or 6.2% of sales.

Segment sales rose 85% from the second quarter of 2009 on a 72% increase in tons shipped mainly due to substantially higher shipments to rerollers and of plate products to service centers along with higher sales to forgers. Segment sales increased 59% from the first quarter of 2010 on a 46% increase in tons shipped also due to higher shipments to rerollers, including sales to the Dunkirk segment, service centers and forgers.

The Dunkirk Specialty Steel segment recorded sales of $13.9 million and operating income of $1.3 million for the second quarter of 2010, yielding an operating margin of 9.2% of sales. This compares with sales in the second quarter of 2009 of $10.2 million and an operating loss of $0.4 million. In the first quarter of 2010, sales were $10.4 million and operating income was $325,000, or 3.1% of sales.

Dunkirk's sales increased 36% from the second quarter of 2009 on approximately the same number of tons shipped due a favorable product mix shift and higher selling prices. Dunkirk's sales increased 33% from the first quarter of 2010 on a 12% increase in tons shipped, mainly due to higher shipments to service centers and higher selling prices.  

Webcast

A simultaneous webcast of the Company's conference call discussing the second quarter of 2010, 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 through the end of the third quarter of 2010. 

About Universal Stainless & Alloy Products, Inc.

Universal Stainless & Alloy Products, Inc., headquartered in Bridgeville, Pa., manufactures and markets semi-finished and finished specialty steels, including stainless steel, tool steel and certain other alloyed steels, in a wide variety of grades, widths and gauges to customer specifications. The Company's products are sold to rerollers, forgers, service centers, original equipment manufacturers and wire redrawers for use in a variety of industries, including aerospace, power generation, petrochemical and heavy equipment manufacturing. Our specialty bar facilities have one of the broadest and diverse size range and product capabilities in the industry. Established in 1994, our experience, technical expertise, and dedicated workforce stand committed to providing the best quality, delivery, and service possible. 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

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,
   2010  2009  2010  2009
Net Sales        
Stainless steel $36,715 $25,648  $60,747  $59,410
Tool steel  8,863  1,563  15,038  4,892
High-strength low alloy steel  2,985  2,367  4,997   5,110
High-temperature alloy steel  1,396  876  3,288  2,895
Conversion services 781 292 1,192 596
Other  551  17  708  46
 Total net sales 51,291 30,763  85,970  72,949
Cost of products sold 41,594 28,092  71,354  71,956
Selling and administrative expenses  3,291  2,106  5,951  6,843
 Operating income (loss)  6,406  565  8,665     (5,850) 
Interest expense  (112)  (27)  (208)   (51) 
Other income  1  35  1  65
 Income (loss) before taxes  6,295  573  8,458     (5,836) 
Income tax provision (benefit)  2,140  973  2,876  (1,610) 
 Net income (loss)  $4,155  $(400)  $5,582   $(4,226) 
         
Earnings (loss) per share – Basic  0.61  (0.06)   0.82   (0.63) 
Earnings (loss) per share – Diluted  0.61  (0.06)  0.82   (0.63) 
         
Weighted average shares of Common Stock outstanding        
Basic 6,774,653 6,751,739  6,773,995 6,742,012
Diluted 6,853,372 6,751,739 6,847,078  6,742,012

MARKET SEGMENT INFORMATION
  For the Quarter Ended For the Six-Months Ended
  June 30, June 30,
   2010  2009  2010  2009
Net Sales        
Service centers $23,774 $13,117  $41,005  $30,649
Forgers 13,127 10,420  23,111  23,391
Rerollers  8,892  1,960  12,552  7,964
Original equipment manufacturers  3,568  3,797  5,998  8,196
Wire redrawers  598  1,160  1,421  2,107
Conversion services  781  292  1,192  596
Other  551  17  691  46
 Total net sales $51,291 $30,763   $85,970  $72,949
Tons shipped 11,795  6,855  20,250  16,448

BUSINESS SEGMENT RESULTS

Universal Stainless & Alloy Products Segment
  For the Quarter Ended For the Six-Months Ended
  June 30, June 30,
   2010  2009  2010  2009
Net Sales        
Stainless steel $26,701 $18,234  $43,940  $44,229
Tool steel  8,716  1,531  14,644  4,739
High-strength low alloy steel  935  647  1,384  1,662
High-temperature alloy steel  629  393  1,220  1,127
Conversion services  556  206  843  394
Other  510  11  664  40
  38,047 21,022  62,695   52,191
Intersegment 11,660  5,857  18,255  11,373
 Total net sales 49,707 26,879  80,950  63,564
Material cost of sales 23,732 10,445  37,889  30,711
Operation cost of sales 16,937 14,131  30,311  30,591
Selling and administrative expenses  2,252  1,354  4,030  5,227
 Operating income (loss)  $6,786  $949  $8,720  $(2,965)

Dunkirk Specialty Steel Segment
  For the Quarter Ended For the Six-Months Ended
   June 30, June 30,
   2010  2009  2010  2009
Net Sales        
Stainless steel $10,014  $7,414  $16,807  $15,181
Tool steel  147  32  394  153
High-strength low alloy steel  2,050  1,720  3,613  3,448
High-temperature alloy steel  767  483  2,068  1,768
Conversion services  225  86  349  202
Other  42  6   45  6
  13,245  9,741  23,276  20,758
Intersegment  671  465  1,071  830
 Total net sales 13,916 10,206  24,347  21,588
Material cost of sales  7,857  6,345  13,812  15,139
Operation cost of sales  3,741  3,493  7,010  7,718
Selling and administrative expenses  1,040  752  1,922  1,616
 Operating income (loss)  $1,278  $(384)  $1,603  $(2,885)

CONSOLIDATED BALANCE SHEET
  June 30, December 31
   2010  2009
Assets    
Cash  34,743  42,349
Accounts receivable, net  30,393  17,028
Inventory, net  55,648  41,322
Other current assets  5,244  9,344
 Total current assets  126,028  110,043
Property, plant & equipment, net  70,332  70,085
Other assets  1,450  1,586
 Total assets  197,810  181,714
     
Liabilities and Stockholders' Equity    
Trade accounts payable  14,407  7,783
Outstanding checks in excess of bank balance   367  734
Accrued employment costs  4,541  1,178
Current portion of long-term debt  2,834   2,223 
Other current liabilities  1,530  553
 Total current liabilities   23,679  12,471
Long-term debt  9,403  10,823
Deferred taxes  14,125  14,049
Other liabilities  316  145
 Total liabilities  47,523  37,488
Stockholders' equity  150,287  144,226
 Total liabilities and stockholders' equity  197,810  181,714

CONSOLIDATED STATEMENT OF CASH FLOW DATA For the Six-month Period Ended June 30,
   2010  2009
Cash flows provided by operating activities:    
 Net income (loss)  $5,582  $(4,226)
 Adjustments to reconcile to net cash    
 provided by operating activities:    
 Depreciation and amortization  2,666  2,338
 Deferred tax increase (decrease)  171  (262)
 Stock based compensation expense   569  499
 Tax benefit from share-based payment arrangements  (8)  (86)
 Changes in assets and liabilities:    
 Accounts receivable, net  (13,365)  13,166
 Inventory   (14,326)  18,047
 Trade accounts payable  6,624  (11,850)
 Accrued employment costs  3,363  (1,286)
 Accrued income taxes  5,211  (241)
 Other, net  (92)  (807)
Cash flow (used in) provided by operating activities  (3,605)  15,292
Cash flow used in investing activities:    
 Proceeds from sale of fixed assets  17  
 Capital expenditures   (3,421)  (7,645)
Cash flow used in investing activities  (3,404)  (7,645)
Cash flows provided by financing activities:    
 Long-term debt issuance  --   12,000 
 State grant funding purchase of new equipment  500  -- 
 Long-term debt repayments  (808)  (199)
 Net change in outstanding checks in excess of bank balance  (367)  (176)
 Deferred financing costs  --  (84)
 Proceeds from issuance of common stock  70  313
 Tax benefit from share-based payment arrangements   8   86 
Cash flow (used in) provided by financing activities  (597)  11,940
Net cash flow  $(7,606)  $19,587
CONTACT:  Universal Stainless & Alloy Products, Inc.          Dennis Oates, Chairman, President and CEO            (412) 257-7609          Douglas McSorley, VP Finance, CFO and Treasurer            (412) 257-7606          Comm-Partners LLC          June Filingeri, President           (203) 972-0186

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