EPS is $0.60 on Sales of $51.9 Million Cash Flow From Operations in 3Q10 is $8.8 Million Backlog is up 27% to $59 Million From End of 2Q10

BRIDGEVILLE, Pa., Oct. 27, 2010 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) reported today that sales for the third quarter of 2010 were $51.9 million compared with $25.3 million in the third quarter of 2009 and $51.3 million in the 2010 second quarter.

Net income for the third quarter of 2010 was $4.1 million, or $0.60 per diluted share, compared with $0.3 million, or $0.05 per diluted share, for the third quarter of 2009, and $4.2 million, or $0.61 per diluted share, for the second quarter of 2010.

The Company recorded positive cash flow from operations of $8.8 million in the third quarter of 2010 compared with $10.5 million in the third quarter of 2009. Cash flow from operations in 2010 totaled $4.9 million year to date. Capital expenditures for the 2010 third quarter were $1.7 million. At September 30, 2010, the Company had cash of $41.2 million and total debt of $11.5 million.

The Company noted that total shipment volume for the third quarter of 2010 remained level sequentially, while it was double the volume of the same quarter a year ago.   Compared with the second quarter of 2010, volume shipped to the aerospace market increased 24%, while petrochemical volume was level, and volumes shipped to the power generation and service center plate markets were down 6% and 12%, respectively.

President and CEO Dennis Oates commented: "Third quarter results were consistent with our expectation, with sales very modestly ahead of the strong second quarter. Our consolidated operating margin remained strong at 12.2% of sales, despite the rise in nickel prices. The operational improvements achieved are continuing to drive lower operating costs, higher yields and improved inventory turns.

"Our third quarter sales benefited from continued positive aerospace market momentum and steady oil and gas volume. Power generation demand remained low as reflected in our sales to forgers with recovery still expected in 2011. The restocking phase that drove substantial growth in service center plate in the first half of the year has been completed, although demand is expected to remain stable."

Mr. Oates concluded: "Our backlog grew 27% in the third quarter, totaling $59 million compared with $46 million at the end of the second quarter of 2010, with delivery dates extending into 2011. Current shipment schedules for the fourth quarter point towards a sales level in line with the third quarter."

Segment Review

For the third quarter of 2010, the Universal Stainless & Alloy Products segment had sales of $46.2 million and operating income of $4.4 million, yielding an operating margin of 9.4% of sales. This compares with sales of $21.7 million and operating income of $0.1 million, or 0.3% of sales, in the third quarter of 2009. In the second quarter of 2010, sales were $49.7 million and operating income was $6.8 million, or 13.7% of sales.

Segment sales rose 113% from the third quarter of 2009 on a 119% increase in tons shipped mainly due to substantially higher shipments to rerollers and service centers. Segment sales decreased 7% from the second quarter of 2010 on a 3% decrease in tons shipped with higher shipments to rerollers and OEMs offset by lower shipments to forgers and service centers.

The Dunkirk Specialty Steel segment recorded sales of $16.8 million and operating income of $1.4 million for the third quarter of 2010, yielding an operating margin of 8.0% of sales. This compares with sales in the third quarter of 2009 of $8.5 million and operating income of $0.4 million, or 4.7% of sales. In the second quarter of 2010, sales were $13.9 million and operating income was $1.3 million, or 9.2% of sales.

Dunkirk's sales increased 98% from the third quarter of 2009 on a 31% increase in tons shipped due to a doubling of shipments to service centers and higher selling prices. Dunkirk's sales increased 21% from the second quarter of 2010 on a 2% increase in tons shipped, mainly due to higher shipments to service centers and redrawers and higher selling prices.  

Webcast

A simultaneous webcast of the Company's conference call discussing the third 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 fourth 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 Nine-Months Ended
   September 30,   September 30,
   2010  2009  2010  2009
Net Sales        
         
Stainless steel $ 39,546 $ 18,622  $ 100,293  $ 78,032
Tool steel  7,425  1,136  22,463  6,028
High-strength low alloy steel  2,579  2,565  7,576  7,675
High-temperature alloy steel  1,150  1,488  4,438  4,383
Conversion services  637  277  1,829  873
Other  533  1,198  1,241  1,244
Total net sales 51,870 25,286  137,840  98,235
Cost of products sold 41,555 22,571  112,909  94,527
Selling and administrative expenses  4,001  2,258  9,952  9,101
Operating income (loss)  6,314  457  14,979   (5,393
Interest expense  (126)  (19)  (334)  (70)
Other income  10  71  11  136
Income (loss) before taxes  6,198  509  14,656  (5,327)
Income tax provision (benefit)  2,107  197  4,983  (1,413)
Net income (loss)  $ 4,091  $ 312  $ 9,673  $ (3,914)
         
Earnings (loss) per share – Basic  $ 0.60  $ 0.05  $ 1.43  $ (0.58)
Earnings (loss) per share – Diluted  $ 0.60  $ 0.05  $ 1.41  $ (0.58)
         
Weighted average shares of Common Stock outstanding        
Basic  6,785,753  6,769,086  6,777,915  6,751,036
Diluted  6,856,951  6,818,040  6,850,369  6,751,036
 
 
MARKET SEGMENT INFORMATION
 
   For the Quarter Ended  For the Nine-Months Ended
   September 30,  September 30,
   2010  2009  2010  2009
Net Sales        
         
Service centers $ 25,592  $ 8,393  $ 66,597  $ 39,042
Forgers  8,533  7,778  31,644  31,169
Rerollers 11,560  1,940  24,112  9,904
Original equipment manufacturers  3,788  4,980   9,786  13,176
Wire redrawers  1,391  720  2,812  2,827
Conversion services  641  277  1,833  873
Other  365  1,198  1,056  1,244
Total net sales $ 51,870 $ 25,286  $ 137,840  $ 98,235
         
Tons shipped 11,758  5,562  32,008  22,010
 
 
BUSINESS SEGMENT RESULTS
 
Universal Stainless & Alloy Products Segment
 
   For the Quarter Ended  For the Nine-Months Ended
   September 30,  September 30,
   2010  2009  2010  2009
Net Sales        
         
Stainless steel $ 26,647 $ 13,123  $ 70,588  $ 57,352
Tool steel  7,159  1,096  21,803  5,835
High-strength low alloy steel  371  1,084  1,755  2,746
High-temperature alloy steel  507  514  1,727  1,641
Conversion services  542  152  1,385  546
Other  546  1,185  1,209  1,225
  35,772 17,154  98,467  69,345
Intersegment 10,438  4,515  28,693  15,888
         
Total net sales 46,210 21,669  127,160  85,233
Material cost of sales 22,778  8,999  60,667  39,710
Operation cost of sales 16,366 11,060  46,677  41,651
Selling and administrative expenses  2,701  1,550  6,731  6,777
         
Operating income (loss)  $ 4,365  $ 60  $ 13,085  $ (2,905)
 
Dunkirk Specialty Steel Segment
   For the Quarter Ended  For the Nine-Months Ended
   September 30,  September 30,
   2010  2009  2010  2009
Net Sales        
         
Stainless steel $ 12,899 $ 5,499  $ 29,706  $ 20,680
Tool steel  266  40  660  193
High-strength low alloy steel  2,208  1,481  5,821  4,929
High-temperature alloy steel  643  974  2,711  2,742
Conversion services  95  125  444  327
Other  (14)  13  31  19
  16,097  8,132  39,373  28,890
Intersegment  736  354  1,807  1,184
         
Total net sales 16,833  8,486  41,180  30,074
Material cost of sales 10,430  4,524  24,242  19,663
Operation cost of sales  3,750  2,857  10,760  10,575
Selling and administrative expenses  1,300  708  3,222  2,324
         
Operating income (loss)  $ 1,353  $ 397  $ 2,956  $ (2,488)
 
 
CONSOLIDATED BALANCE SHEET
 
  September 30,  December 31,
   2010  2009
Assets    
Cash $ 41,153 $ 42,349
Accounts receivable, net  29,798   17,028
Inventory, net  57,885    41,322
Other current assets  5,496  9,344
Total current assets  134,332  110,043
Property, plant & equipment, net  70,674  70,085
Other assets  1,494  1,586
Total assets $ 206,500  $ 181,714
     
Liabilities and Stockholders' Equity    
Trade accounts payable $ 14,943  $ 7,783
Outstanding checks in excess of bank balance  4,059  734
Accrued employment costs  5,097  1,178
Current portion of long-term debt  2,834  2,223
Other current liabilities  269  553
Total current liabilities  27,202  12,471
Long-term debt  8,697  10,823
Deferred taxes  14,975  14,049
Other liabilities  373  145
Total liabilities  51,247  37,488
Stockholders' equity  155,253  144,226
Total liabilities and stockholders' equity  $ 206,500  $ 181,714
 
 
CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Nine-month Period Ended September 30,
 
   2010  2009
Cash flows provided by operating activities:    
Net income (loss) $ 9,673 $ (3,914)
Adjustments to reconcile to net cash provided by operating activities:    
Depreciation and amortization  4,055  3,583
Deferred income tax  945  1,015
Share-based compensation expense  1,476  766
Tax benefit from share-based payment arrangements  (99)  (86)
Changes in assets and liabilities:    
Accounts receivable, net  (12,770)  17,152
Inventory, net   (16,563)  20,678
Trade accounts payable  7,160  (12,518)
Net change in outstanding checks in excess of bank balance  3,325  345
Accrued employment costs  3,919  (1,492)
Accrued income taxes  3,730  
Other, net  16  60
Cash flow provided by operating activities  4,867  25,589
Cash flow used in investing activities:    
Proceeds from sale of fixed assets  17  60
Capital expenditures  (5,148)  (10,304)
Cash flow used in investing activities  (5,131)  (10,244)
Cash flows provided by financing activities:    
Long-term debt issuance  --   12,000 
State grant funding purchase of new equipment  500  
Long-term debt repayments  (1,515)  (300)
Deferred financing costs  --   (84)
Proceeds from issuance of common stock  244  313
Purchase of treasury stock  (260)  --
Tax benefit from share-based payment arrangements   99  86
Cash flow (used) provided by financing activities  (932)  12,015
Net cash flow $ (1,196)  $ 27,360
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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