EPS is $0.52 on Sales of $51.6 Million

Backlog of $69 Million is Highest in Two Years and Up 18% from End of 3Q10

BRIDGEVILLE, Pa., Jan. 26, 2011 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) reported today that sales for the fourth quarter of 2010 were $51.6 million compared with $26.7 million in the fourth quarter of 2009 and $51.9 million in the 2010 third quarter.

Net income for the fourth quarter of 2010 was $3.6 million, or $0.52 per diluted share, compared with $1.0 million, or $0.14 per diluted share, for the fourth quarter of 2009, and $4.1 million, or $0.60 per diluted share, for the third quarter of 2010.

The Company recorded negative cash flow from operations of $3.6 million in the fourth quarter of 2010 due to its investment in managed working capital to support increased sales activity and backlog. This compares with positive cash flow from operations of $2.3 million in the fourth quarter of 2009. For full year 2010, cash flow from operations was $1.3 million. Capital expenditures for the 2010 fourth quarter were $2.3 million. At December 31, 2010, the Company had cash of $34.9 million and total debt of $10.8 million.  

The Company noted that total shipment volume for the fourth quarter of 2010 was 3% lower than the third quarter of 2010, but 84% higher than the fourth quarter a year ago. Compared with the third quarter of 2010, volume shipped to the power generation market increased 22% and petrochemical volume rose 7%, while volumes shipped to the aerospace and service center plate markets were lower by 6% and 54%, respectively.

Chairman, President and CEO Dennis Oates commented: "Our fourth quarter sales were in line with the third quarter as expected and more heavily weighted towards lower margin semi-finished products. Some customers elected to delay December shipments until January as a part of their year-end inventory planning. Order entry from all markets continued to build positive momentum and backlog at the end of the year rose to a two-year high of $69 million."

Mr. Oates concluded: "We have entered 2011 fully focused on seizing the opportunities presented by our strengthening end markets while relentlessly pursing further operating improvements."

Segment Review

For the fourth quarter of 2010, the Universal Stainless & Alloy Products segment had sales of $46.1 million and operating income of $4.2 million, yielding an operating margin of 9.2% of sales. This compares with sales of $23.1 million and operating income of $0.5 million, or 2.2% of sales, in the fourth quarter of 2009. In the third quarter of 2010, sales were $46.2 million and operating income was $4.4 million, or 9.4% of sales.

Segment sales doubled from the fourth quarter of 2009 on a 91% increase in tons shipped mainly due to higher shipments to rerollers, forgers and service centers. Segment sales were level with the third quarter of 2010 on a 3% decrease in tons shipped with higher shipments to forgers and rerollers offset by lower shipments to service centers.

The Dunkirk Specialty Steel segment recorded sales of $17.1 million and operating income of $1.3 million for the fourth quarter of 2010, yielding an operating margin of 7.8% of sales. This compares with sales in the fourth quarter of 2009 of $8.1 million and operating income of $0.2 million, or 2.8% of sales. In the third quarter of 2010, sales were $16.1 million and operating income was $1.4 million or 8.4% of sales.

Dunkirk's sales increased 111% from the fourth quarter of 2009 on a 73% increase in tons shipped mainly due to a doubling of shipments to service centers and higher selling prices. Dunkirk's sales increased 6% from the third quarter of 2010 on a 4% increase in tons shipped, mainly due to higher shipments to forgers and OEMs and higher selling prices.  

Webcast

A simultaneous webcast of the Company's conference call discussing the fourth 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 first quarter of 2011. 

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. The Company's products are used in a variety of industries, including aerospace, power generation, petrochemical and heavy equipment manufacturing. 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 Year Ended
  December 31, December 31,
  2010 2009 2010 2009
Net Sales        
Stainless steel $42,009 $20,037  $142,302  $98,069
Tool steel  3,733  3,385  26,196  9,413
High-strength low alloy steel  2,734  1,560  10,310  9,235
High-temperature alloy steel  1,415  1,184  5,853  5,567
Conversion services  890  330  2,719  1,203
Other  802   176   2,043  1,420
 Total net sales 51,583 26,672  189,423  124,907
Cost of products sold 42,742 23,374  155,651  117,901
Selling and administrative expenses  3,388  2,562  13,349  11,663
 Operating income (loss)  5,453  736  20,423   (4,657) 
Interest expense  (118)  (19)  (452)   (89) 
Other income  72  559  92  695
 Income (loss) before taxes  5,407  1,276  20,063  (4,051)
Income tax provision (benefit)  1,838  320  6,821   (1,093) 
 Net income (loss)  $3,569  $956  $13,242   $ (2,958) 
         
Earnings (loss) per share – Basic  $0.53  $0.14  $1.95   $(0.44) 
Earnings (loss) per share – Diluted  $0.52  $0.14  $1.93   $(0.44) 
         
Weighted average shares of Common Stock outstanding        
Basic 6,796,561 6,769,130 6,782,576 6,755,560
Diluted 6,921,963 6,815,853 6,868,255 6,755,560
           
           
                 

 

 

MARKET SEGMENT INFORMATION
         
  For the Quarter Ended For the Year Ended
  December 31, December 31,
   2010  2009  2010  2009
Net Sales        
Service centers $22,351 $11,313  $88,948  $50,355
Forgers 10,149  8,652  41,793  39,821
Rerollers 12,403  2,270  36,515  12,174
Original equipment manufacturers  4,014  2,913  13,800  16,089
Wire redrawers  1,320  1,018  4,132  3,845
Conversion services  890  330  2,723  1,203
Other  456  176  1,512  1,420
 Total net sales $51,583 $26,672  $189,423  $124,907
Tons shipped 11,365  6,172  43,373  28,182
             

BUSINESS SEGMENT RESULTS
 
Universal Stainless & Alloy Products Segment  
         
  For the Quarter Ended For the Year Ended
  December 31, December 31,
  2010 2009 2010 2009
Net Sales        
Stainless steel $28,504 $14,318  $99,092  $71,670
Tool steel  3,522  3,311  25,325  9,146
High-strength low alloy steel  336  271  2,091  3,017
High-temperature alloy steel  700  347  2,427  1,988
Conversion services  725  217  2,110  763
Other  720  166  1,929  1,391
  34,507 18,630  132,974  87,975
Intersegment 11,628  4,456  40,320  20,344
 Total net sales 46,135 23,086  173,294  108,319
Material cost of sales 24,838  9,882  85,507  49,592
Operation cost of sales 14,751 11,005  61,428  52,656
Selling and administrative expenses  2,310  1,690  9,048  8,467
 Operating income (loss)  $4,236  $509  $17,311  $(2,396)
         
Dunkirk Specialty Steel Segment          
         
  For the Quarter Ended For the Year Ended
  December 31, December 31,
   2010  2009  2010  2009
Net Sales        
Stainless steel $13,505  $5,719  $43,211  $26,399
Tool steel  211  74  871  267
High-strength low alloy steel  2,398  1,289  8,219  6,218
High-temperature alloy steel  715  837  3,426  3,579
Conversion services  165  113  609   440
Other  82  10  114  29
  17,076  8,042  56,450  36,932
Intersegment  58  91  150  313
 Total net sales 17,134  8,133  56,600  37,245
Material cost of sales 10,475  4,520  33,003  23,221
Operation cost of sales  4,240  2,514  15,000  13,089
Selling and administrative expenses  1,075  872  4,301  3,196
 Operating income (loss)  $1,344  $227  $4,296  $(2,261)
 
CONSOLIDATED BALANCE SHEET
     
  December 31 December 3
   2010  2009
Assets    
Cash  $34,944  $42,349
Accounts receivable, net  29,273  17,028
Inventory, net  69,710  41,322
Other current assets  5,661  9,344
 Total current assets  139,588  110,043
Property, plant & equipment, net  71,581  70,085
Other assets  1,499  1,586
 Total assets   $212,668  $181,714
     
Liabilities and Stockholders' Equity    
Trade accounts payable  $20,022  $7,783
Outstanding checks in excess of bank balance  544  734
Accrued employment costs  5,488  1,178
Current portion of long-term debt  2,833   2,223
Other current liabilities  605  553
 Total current liabilities  29,492  12,471
Long-term debt  7,990  10,823
Deferred taxes  15,276  14,049
Other liabilities  287  145
 Total liabilities  53,045  37,488
Stockholders' equity  159,623  144,226
 Total liabilities and stockholders' equity  $212,668  $181,714

 

 

CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Year Ended December 31,
     
   2010  2009
Cash flows provided by operating activities:    
 Net income (loss)  $13,242  $(2,958)
 Adjustments to reconcile to net cash provided by operating activities:    
 Depreciation and amortization  5,486  4,859
 Loss on retirement/sale of fixed assets  17  84
 Deferred income tax  730  1,853
 Stock based compensation expense  1,819  1,058
 Tax benefit from share-based payment arrangements  (143)  (86)
 Changes in assets and liabilities:    
 Accounts receivable, net  (12,245)  16,029
 Inventory, net  (28,388)  21,900
 Trade accounts payable  12,239  (11,567)
 Outstanding checks in excess of bank balance  (190)  194
 Accrued employment costs  4,310  (2,617)
 Current income tax, net  4,175  (1,613)
 Other, net  243  764
 Net cash provided by operating activities   1,295  27,900
Cash flow used in investing activities:    
 Proceeds from sale of fixed assets  18  60
 Capital expenditures  (7,482)  (12,394)
 Net cash used in investing activities  (7,464)  (12,334)
Cash flows provided by financing activities:    
 Long-term debt issuance  ---   12,000 
 State grant funding purchase of new equipment  500  
  Long-term debt repayments  (2,222)  (403)
 Deferred financing costs  ---  (84)
 Proceeds from issuance of common stock  603  372
 Purchase of treasury stock  (260)  
 Tax benefit from share-based payment arrangements   143   86 
 Net cash (used in) provided by financing activities  (1,236)  11,971
 Net cash flow  $(7,405)  $27,537
CONTACT: Dennis Oates         Chairman, President and CEO         (412) 257-7609                  Douglas McSorley         VP Finance, CFO and Treasurer         (412) 257-7606                  June Filingeri         President         Comm-Partners LLC         (203) 972-0186

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