Universal Stainless Reports First Quarter 2005 EPS of $0.45 on Record Sales of $43 Million
Apr 21, 2005
Universal Stainless Reports First Quarter 2005 EPS of $0.45 on Record Sales of $43 Million
Universal Stainless Reports First Quarter 2005 EPS of $0.45 on Record Sales of $43 Million -- Backlog continues to grow --
BRIDGEVILLE, Pa., April 21, 2005 -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) today reported record sales of $43.0 million for the first quarter of 2005 and net income of $2.9 million, or $0.45 per diluted share. This compares with sales of $21.3 million and net income of $227,000 or $0.04 per diluted share reported in the first quarter of 2004.
The 2005 first quarter results exceeded the Company's forecast of sales in the range of $35 to $40 million and diluted EPS of $0.35 to $0.40.
Commenting on the results, President and CEO Mac McAninch stated: "Our record first quarter sales were driven by the strength of our niche markets and by our investment in manufacturing capacity to respond to the continuing needs of our customers. Sales to our aerospace, power generation, petrochemical, and tool steel markets rose 20%, 5%, 56% and 2%, respectively, over the strong fourth quarter. Demand from those markets remains strong as reflected in our backlog, which has reached a record $88 million, and is comprised mainly of the remelted steel grades used by those markets. With our new capital equipment fully operational and improved process scheduling in place, we achieved an 11% increase in tons shipped over the prior quarter."
Mr. McAninch continued: "Sales at our Dunkirk facility reached a record $13.7 million and generated a record 14% operating margin. Capacity and process improvements in our Bridgeville and Titusville facilities enabled us to significantly increase the production of reroll billet feedstock shipped to Dunkirk, which is essential to Dunkirk's growth. Our customers have rewarded our progress in Dunkirk by placing a record $16 million in new orders during the 2005 first quarter."
Mr. McAninch added: "The increased first quarter volume company-wide, combined with the continuation of our cost recovery pricing initiatives, led to a 32% sequential improvement in operating income. Although some raw material costs have moderated, they remain volatile. Our surcharge pricing mechanism is in place to protect both our company and our customers as the year progresses. In 2005, we plan to judiciously implement additional base price increases necessary to offset higher manufacturing and energy costs and to support our capital investment program as we continue to focus on improving customer satisfaction."
Mr. McAninch concluded: "We had a very good start to 2005 due to strong market demand, hard-earned improvements in our operating processes, and the payback from our capital investment and price recovery initiatives. Our niche markets of aerospace, power generation and petrochemical, upon which we have built this Company, are showing positive growth trends for the balance of this year and beyond. We will continue to focus on better serving our customers during this period of high demand, while remaining focused on improving our efficiency."
Segment Review
In the first quarter of 2005, the Universal Stainless & Alloy Products segment had sales of $38.4 million and operating income of $2.7 million. First quarter results include the write-off of $342,000 of fixed assets in Bridgeville mainly for flat bar processing equipment resulting from the Company's decision to move all of its small flat bar production to the Dunkirk facility. This compares with sales of $18.8 million and operating income of $401,000 in the first quarter of 2004 and sales of $32.7 million and operating income of $2.3 million in the fourth quarter of 2004.
The doubling in sales compared with the 2004 first quarter reflected continued substantial growth in all customer categories. First quarter 2005 sales increased 17% over the prior quarter and operating income increased 17%, although a bad debt charge of $282,000 in the prior quarter lowered operating income for that period. A total of $110,000 of that debt was repaid in the first quarter and the reserve for it was reduced accordingly.
The Dunkirk Specialty Steel segment reported sales of $13.7 million and operating income of $1.9 million, which included a $184,000 write-off of an office building that was part of the original purchase of the Dunkirk assets from New York JDA. Efforts to sell the building have not materialized and there are no prospective buyers pursuing a purchase at this time. These results compare with sales of $6.7 million and operating income of $34,000 in the first quarter of 2004 and sales of $10.5 million and operating income of $1.2 million in the prior quarter.
Dunkirk's sales also doubled and its operating income dramatically improved over the first quarter of 2004. The 31% increase in first quarter sales over the prior quarter reflects a 24% increase in sales to services centers and a 73% increase in sales to wire redrawers. Operating income improved 50% over the prior quarter due to the higher sales volume and the benefit of increased selling prices and surcharges to offset higher material costs.
Business Outlook
The following statements are based on the Company's current expectations. These statements are forward-looking, and actual results may differ materially.
The Company estimates that second quarter 2005 sales will range from $40 to $45 million and that diluted EPS will range from $0.40 to $0.45. This compares with sales of $29.0 million and diluted EPS of $0.25 in the second quarter of 2004.
The following factors were considered in developing these estimates:
A simultaneous Webcast of the Company's conference call discussing the first quarter of 2005 and the second quarter 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. A telephone replay of the conference call will be available beginning at 12:00 noon (Eastern) today and continuing through April 28th. It can be accessed by dialing 706-645-9291, passcode 5386838. This is a toll call.
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 original equipment manufacturers, service centers, forgers, rerollers and wire redrawers.
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 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. 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 Reports First Quarter 2005 EPS of $0.45 on Record Sales of $43 Million
-- Backlog continues to grow --
-- Dunkirk registers another record quarter --
BRIDGEVILLE, Pa., April 21, 2005 -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) today reported record sales of $43.0 million for the first quarter of 2005 and net income of $2.9 million, or $0.45 per diluted share. This compares with sales of $21.3 million and net income of $227,000 or $0.04 per diluted share reported in the first quarter of 2004. The 2005 first quarter results exceeded the Company's forecast of sales in the range of $35 to $40 million and diluted EPS of $0.35 to $0.40.
Commenting on the results, President and CEO Mac McAninch stated: "Our record first quarter sales were driven by the strength of our niche markets and by our investment in manufacturing capacity to respond to the continuing needs of our customers. Sales to our aerospace, power generation, petrochemical, and tool steel markets rose 20%, 5%, 56% and 2%, respectively, over the strong fourth quarter. Demand from those markets remains strong as reflected in our backlog, which has reached a record $88 million, and is comprised mainly of the remelted steel grades used by those markets. With our new capital equipment fully operational and improved process scheduling in place, we achieved an 11% increase in tons shipped over the prior quarter."
Mr. McAninch continued: "Sales at our Dunkirk facility reached a record $13.7 million and generated a record 14% operating margin. Capacity and process improvements in our Bridgeville and Titusville facilities enabled us to significantly increase the production of reroll billet feedstock shipped to Dunkirk, which is essential to Dunkirk's growth. Our customers have rewarded our progress in Dunkirk by placing a record $16 million in new orders during the 2005 first quarter."
Mr. McAninch added: "The increased first quarter volume company-wide, combined with the continuation of our cost recovery pricing initiatives, led to a 32% sequential improvement in operating income. Although some raw material costs have moderated, they remain volatile. Our surcharge pricing mechanism is in place to protect both our company and our customers as the year progresses. In 2005, we plan to judiciously implement additional base price increases necessary to offset higher manufacturing and energy costs and to support our capital investment program as we continue to focus on improving customer satisfaction."
Mr. McAninch concluded: "We had a very good start to 2005 due to strong market demand, hard-earned improvements in our operating processes, and the payback from our capital investment and price recovery initiatives. Our niche markets of aerospace, power generation and petrochemical, upon which we have built this Company, are showing positive growth trends for the balance of this year and beyond. We will continue to focus on better serving our customers during this period of high demand, while remaining focused on improving our efficiency."
Segment Review
In the first quarter of 2005, the Universal Stainless & Alloy Products segment had sales of $38.4 million and operating income of $2.7 million. First quarter results include the write-off of $342,000 of fixed assets in Bridgeville mainly for flat bar processing equipment resulting from the Company's decision to move all of its small flat bar production to the Dunkirk facility. This compares with sales of $18.8 million and operating income of $401,000 in the first quarter of 2004 and sales of $32.7 million and operating income of $2.3 million in the fourth quarter of 2004.
The doubling in sales compared with the 2004 first quarter reflected continued substantial growth in all customer categories. First quarter 2005 sales increased 17% over the prior quarter and operating income increased 17%, although a bad debt charge of $282,000 in the prior quarter lowered operating income for that period. A total of $110,000 of that debt was repaid in the first quarter and the reserve for it was reduced accordingly.
The Dunkirk Specialty Steel segment reported sales of $13.7 million and operating income of $1.9 million, which included a $184,000 write-off of an office building that was part of the original purchase of the Dunkirk assets from New York JDA. Efforts to sell the building have not materialized and there are no prospective buyers pursuing a purchase at this time. These results compare with sales of $6.7 million and operating income of $34,000 in the first quarter of 2004 and sales of $10.5 million and operating income of $1.2 million in the prior quarter.
Dunkirk's sales also doubled and its operating income dramatically improved over the first quarter of 2004. The 31% increase in first quarter sales over the prior quarter reflects a 24% increase in sales to services centers and a 73% increase in sales to wire redrawers. Operating income improved 50% over the prior quarter due to the higher sales volume and the benefit of increased selling prices and surcharges to offset higher material costs.
Business Outlook
The following statements are based on the Company's current expectations. These statements are forward-looking, and actual results may differ materially.
The Company estimates that second quarter 2005 sales will range from $40 to $45 million and that diluted EPS will range from $0.40 to $0.45. This compares with sales of $29.0 million and diluted EPS of $0.25 in the second quarter of 2004.
The following factors were considered in developing these estimates:
-- The Company's total backlog at March 31, 2005 approximated $88
million compared to $72 million at December 31, 2004 reflecting
continued strength of the Company's niche markets - namely
aerospace, power generation and petrochemical. However, the
increase in backlog is substantially comprised of remelted steel
products that will not ship until the 2005 third quarter and
beyond due to remelt requirements.
-- Tool steel sales are expected to remain ahead of last year as
continued strength in the industrial manufacturing sector is
expected to partially offset lower automotive production.
-- The implementation of recent price increases was designed to
allow the Company to offset continuing manufacturing cost
increases as well as support future capital improvements designed
to increase production levels and efficiency.
-- Sales from the Dunkirk Specialty Steel segment are expected to
approximate $14 million as service center demand remains strong
and the Company expects to continue to add redrawer and end user
customers.
Webcast A simultaneous Webcast of the Company's conference call discussing the first quarter of 2005 and the second quarter 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. A telephone replay of the conference call will be available beginning at 12:00 noon (Eastern) today and continuing through April 28th. It can be accessed by dialing 706-645-9291, passcode 5386838. This is a toll call.
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 original equipment manufacturers, service centers, forgers, rerollers and wire redrawers.
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 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. 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
March 31,
2005 2004
----------- -----------
Net Sales
Stainless steel $ 33,619 16,168
Tool steel 6,017 3,166
High-strength low alloy steel 1,122 861
High-temperature alloy steel 1,025 709
Conversion services 1,114 332
Other 122 71
----------- -----------
Total net sales 43,019 21,307
Cost of products sold 36,410 19,344
Selling and administrative expenses 1,907 1,528
----------- -----------
Operating income 4,702 435
Interest expense (172) (88)
Other income 60 8
----------- -----------
Income before taxes 4,590 355
Income tax provision 1,652 128
----------- -----------
Net income $ 2,938 227
=========== ===========
Earnings per share - Basic $ 0.46 0.04
=========== ===========
Earnings per share - Diluted $ 0.45 0.04
=========== ===========
Weighted average shares of
Common Stock outstanding
Basic 6,350,547 6,296,053
Diluted 6,468,475 6,336,034
----------------------------------------------------------------
MARKET SEGMENT INFORMATION
For the Quarter Ended
March 31,
2005 2004
----------- -----------
Net Sales
Service centers $ 18,307 $ 9,906
Rerollers 12,028 4,070
Forgers 6,263 3,816
Wire redrawers 2,872 1,196
Original equipment manufacturers 2,324 1,934
Conversion services 1,114 332
Other 111 53
----------- -----------
Total net sales $ 43,019 $ 21,307
=========== ===========
Tons shipped 15,230 9,087
=========== ===========
BUSINESS SEGMENT RESULTS
Universal Stainless & Alloy Products Segment
For the Quarter Ended
March 31,
2005 2004
------- -------
Net Sales
Stainless steel $21,777 $10,720
Tool steel 5,907 3,080
High-strength low alloy steel 393 413
High-temperature alloy steel 1,025 549
Conversion services 951 249
Other 117 46
------- -------
30,170 15,057
Intersegment 8,255 3,788
------- -------
Total net sales 38,425 18,845
Material cost of sales 19,826 7,602
Operation cost of sales 14,779 9,811
Selling and administrative expenses 1,141 1,031
------- -------
Operating income $ 2,679 $ 401
======= =======
Dunkirk Specialty Steel Segment
For the Quarter Ended
March 31,
2005 2004
------- -------
Net Sales
Stainless steel $11,842 $5,448
Tool steel 110 86
High-strength low alloy steel 729 448
High-temperature alloy steel -- 160
Conversion services 163 83
Other 5 25
------- -------
12,849 6,250
Intersegment 818 495
------- -------
Total net sales 13,667 6,745
Material cost of sales 7,114 3,477
Operation cost of sales 3,924 2,737
Selling and administrative expenses 766 497
------- -------
Operating income $ 1,863 $ 34
======= =======
CONSOLIDATED BALANCE SHEET
March 31, December 31,
2005 2004
-------- --------
Assets
Cash $ 833 $ 241
Accounts receivable, net 29,352 24,562
Inventory 43,722 38,318
Other current assets 2,527 3,417
-------- --------
Total current assets 76,434 66,538
Property, plant & equipment, net 40,195 40,716
Other assets 578 586
-------- --------
Total assets $117,207 $107,840
======== ========
Liabilities and Stockholders' Equity
Accounts payable $ 16,210 $ 11,666
Bank overdrafts 954 2,638
Accrued employment costs 1,977 1,830
Current portion of long-term debt 2,099 2,044
Other current liabilities 2,023 442
-------- --------
Total current liabilities 23,263 18,620
Bank revolver 10,442 8,635
Long-term debt 3,016 3,555
Deferred taxes 10,232 10,093
-------- --------
Total liabilities 46,953 40,903
Stockholders' equity 70,254 66,937
-------- --------
Total liabilities and stockholders' equity $117,207 $107,840
======== ========
CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Three-month Period Ended March 31,
2005 2004
------- -------
Cash flows from operating activities:
Net income $ 2,938 $ 227
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 769 786
Deferred taxes 539 21
Tax benefit from exercise of stock options 115 3
Changes in assets and liabilities:
Accounts receivable, net (4,790) (2,535)
Inventory (5,404) (6,279)
Trade accounts payable 4,544 2,658
Accrued employment costs 147 703
Other, net 2,415 427
------- -------
Cash flow from (due to) operating activities 1,273 (3,989)
------- -------
Cash flow from investing activities:
Capital expenditures (584) (174)
------- -------
Cash flow due to investing activities (584) (174)
------- -------
Cash flows from financing activities:
Net borrowings under revolving line of credit 1,807 668
Repayments of long-term debt (484) (498)
Net change in bank overdrafts (1,684) (272)
Proceeds from issuance of common stock 264 42
------- -------
Cash flow from (due to) financing activities (97) (60)
------- -------
Net cash flow $ 592 $(4,223)
======= =======
CONTACT: Universal Stainless & Alloy Products, Inc. Richard M. Ubinger, Vice President of Finance, Chief Financial Officer and Treasurer (412) 257-7606 Comm-Partners LLC June Filingeri (203) 972-0186
