SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 20, 2005
Universal Stainless & Alloy Products, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 000-25032 25-1724540
---------------------------- ------------ ------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 Mayer Street, Bridgeville, Pennsylvania 15017
------------------------------------------------------- -------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (412) 257-7600
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2.):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On January 20, 2005, Universal Stainless and Alloy Products, Inc.
issued a press release regarding its earnings for the fourth quarter ended
December 31, 2004. A copy of the press release is attached hereto.
The information in this Current Report on Form 8-K, including the
attached press release, shall not be deemed "filed" for the purposes of Section
18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to
the liabilities of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, as amended, except as
shall be expressly set forth by specific reference in such a filing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
By: /s/ Richard M. Ubinger
----------------------------------
Vice President of Finance,
Chief Financial Officer and Treasurer
Dated: January 20, 2005
[GRAPHIC OMITTED]
Universal Stainless & Alloy Products, Inc.
600 Mayer Street o Bridgeville, Pennsylvania 15017
CONTACTS: Richard M. Ubinger
Vice President of Finance,
Chief Financial Officer and Treasurer
(412) 257-7606
FOR IMMEDIATE RELEASE
- ---------------------
Comm-Partners LLC
June Filingeri
(203) 972-0186
UNIVERSAL STAINLESS REPORTS RECORD QUARTER AND ANNUAL SALES
- Full year sales reach record $121 million, backlog continues to grow -
BRIDGEVILLE, PA, January 20, 2005 -- Universal Stainless & Alloy
Products, Inc. (Nasdaq: USAP) today reported fourth quarter 2004 record sales of
$37.0 million and net income of $2.6 million, or $0.40 per diluted share. For
the full year 2004, sales were a record $120.6 million. Net income was $7.1
million, or $1.12 per diluted share, and included a total of $1.1 million, or
$0.11 per diluted share, of other income from import duties received in 2004. Of
that amount, $507,000, or $0.05 per diluted share, was received in the fourth
quarter, as previously announced.
The 2004 fourth quarter results were in line with the Company's
forecast of sales of $32 to $37 million and EPS of $0.32 to $0.37 before
including the other income from import duties. In addition, fourth quarter
earnings were reduced by a bad debt charge of $282,000, equivalent to $0.03 per
diluted share, due to a financially distressed customer's inability to pay its
outstanding receivable balance.
In 2003, sales for the fourth quarter and full year were $18.8 million
and $69.0 million, respectively. The Company incurred a net loss of $273,000, or
$0.04 per diluted share, in the 2003 fourth quarter and a net loss of $1.4
million, or $0.23 per diluted share, for the full year.
Commenting on the results, President and CEO Mac McAninch stated: "Our
solid sales momentum allowed us to reach new company sales milestones in 2004.
In the fourth quarter, sales to the power generation market climbed 22% and tool
steel sales rose 38% compared with the prior quarter. Demand from all of our
markets remained strong."
USAP REPORTS RECORD SALES - Page 2 -
Mr. McAninch continued: "Our cost recovery pricing initiatives in the
fourth quarter helped to offset a 17% sequential increase in material costs and
substantially higher electricity prices. Our recently announced base price
increases are intended to offset higher energy and manufacturing costs, as well
as support our capital investment program aimed at increasing throughput and
efficiency."
Mr. McAninch added: "Our immediate priority is to increase our
shipment levels in response to the growth in customer demand that has raised our
backlog to a record $72 million. Our capital investments in 2004, which are in
place, have rectified production bottlenecks at Bridgeville. We are now turning
our attention to improved scheduling and have added a production planning
manager to take us to the next step."
Segment Review
- --------------
In the fourth quarter of 2004, the Universal Stainless & Alloy Products
segment had sales of $32.7 million and operating income of $2.3 million. This
compares with sales of $16.5 million and operating income of $226,000 in the
fourth quarter of 2003 and sales of $31.2 million and operating income of $2.9
million in the third quarter of 2004.
The 98% increase in sales compared with the 2003 fourth quarter
reflected substantial growth in all customer categories. Fourth quarter 2004
sales increased 5% over the prior quarter, but higher electricity costs and
increased S&A expenses caused by the bad debt charge resulted in a lower
operating income compared with the prior quarter.
The Dunkirk Specialty Steel segment reported record sales of $10.5
million and operating income of $1.2 million. This compares with sales of $4.5
million and an operating loss of $428,000 in the fourth quarter of 2003 and
sales of $9.5 million and operating income of $1.2 million in the prior quarter.
Dunkirk's sales rose 134% over the fourth quarter of 2003, as it
continued its ramp-up in 2004. The 10% increase in fourth quarter sales over the
prior quarter is primarily due to increased selling prices and surcharges to
offset higher material costs. The operating income only improved slightly over
the prior quarter due to a 22% increase in raw material costs.
USAP REPORTS RECORD SALES - Page 3 -
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 first quarter 2005 sales will range from $35
to $40 million and that diluted EPS will range from $0.35 to $0.40. This
compares with sales of $21.3 million and diluted EPS of $0.04 in the first
quarter of 2004.
The following factors were considered in developing these estimates:
o The Company's total backlog at December 31, 2004 approximated $72 million
compared to $60 million at September 30, 2004 reflecting continued strength
in all of the Company's markets.
o The implementation of recent price increases will allow the Company to
offset continuing manufacturing cost increases as well as support future
capital improvements designed to increase production levels and efficiency.
o Sales from the Dunkirk Specialty Steel segment are expected to approximate
$12 million as service center demand remains very strong.
Mr. McAninch concluded: "We are entering 2005 with a high level of
optimism. Recovery in the aerospace market continues, demand for our power
generation products is increasing rapidly, and the petrochemical market remains
firm. At the same time, tool steel demand continues to be strong, which should
bode well for the economy in the coming year."
Webcast
- -------
A simultaneous Webcast of the Company's conference call discussing the
2004 fourth quarter and the first quarter 2005 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 January 27th. It can be accessed by
dialing 706-645-9291, passcode 3197137. 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.
USAP REPORTS RECORD SALES - Page 4 -
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.
- FINANCIAL TABLES FOLLOW -
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,
2004 2003 2004 2003
---- ---- ---- ----
Net Sales
- ---------
Stainless steel $ 28,944 $ 14,482 $ 94,530 $ 52,546
Tool steel 5,890 2,345 17,075 9,673
High-strength low alloy steel 597 911 3,682 2,869
High-temperature alloy steel 673 732 2,468 2,482
Conversion services 751 234 2,386 1,079
Other 157 123 501 340
-------- --------- -------- ---------
Total net sales 37,012 18,827 120,642 68,989
Cost of products sold 31,396 17,617 102,972 65,534
Selling and administrative expenses 2,053 1,412 7,401 5,837
-------- --------- -------- ---------
Operating income (loss) 3,563 (202) 10,269 (2,382)
Interest expense (120) (94) (422) (383)
Other income 542 54 1,119 128
-------- --------- -------- ---------
Income (loss) before taxes 3,985 (242) 10,966 (2,637)
Income tax provision (benefit) 1,392 31 3,835 (1,220)
-------- --------- -------- ---------
Net income (loss) $ 2,593 $ (273) $ 7,131 $ (1,417)
======== ========= ======== =========
Earnings (loss) per share - Basic $ 0.41 $ (0.04) $ 1.13 $ (0.23)
======== ========= ======== =========
Earnings (loss) per share - Diluted $ 0.40 $ (0.04) $ 1.12 $ (0.23)
======== ========= ======== =========
Weighted average shares of
Common Stock outstanding
Basic 6,318,951 6,289,538 6,304,909 6,287,088
Diluted 6,427,348 6,289,538 6,379,579 6,287,088
- ---------------------------------------------------------------------------------------------------------------
MARKET SEGMENT INFORMATION
For the Quarter Ended For the Year Ended
December 31, December 31,
2004 2003 2004 2003
---- ---- ---- ----
Net Sales
- ---------
Service centers $ 16,645 $ 6,817 $ 52,261 $ 29,150
Rerollers 8,735 6,955 30,200 20,240
Forgers 6,827 2,719 22,008 9,773
Original equipment manufacturers 2,248 1,280 8,349 5,124
Wire redrawers 1,662 713 5,008 3,328
Conversion services 751 234 2,386 1,079
Other 144 109 430 295
-------- --------- -------- ---------
Total net sales $ 37,012 $ 18,827 $ 120,642 $ 68,989
======== ========= ======== =========
Tons shipped 13,662 9,468 48,350 35,126
======== ========= ======== =========
BUSINESS SEGMENT RESULTS
Universal Stainless & Alloy Products Segment
For the Quarter Ended For the Year Ended
December 31, December 31,
2004 2003 2004 2003
---- ---- ---- ----
Net Sales
- ---------
Stainless steel $ 19,739 $ 11,081 $ 65,208 $ 35,946
Tool steel 5,770 2,173 16,672 9,097
High-strength low alloy steel 189 488 1,576 1,672
High-temperature alloy steel 656 502 2,182 1,965
Conversion services 605 210 1,961 926
Other 129 100 427 302
-------- --------- -------- ---------
27,088 14,554 88,026 49,908
Intersegment 5,620 1,963 20,208 9,677
-------- --------- -------- ---------
Total net sales 32,708 16,517 108,234 59,585
Material cost of sales 16,044 7,095 49,967 22,982
Operation cost of sales 12,788 8,201 45,521 32,934
Selling and administrative expenses 1,581 995 5,253 3,918
-------- --------- -------- ---------
Operating income (loss) $ 2,295 $ 226 $ 7,493 $ (249)
======== ========= ======== =========
Dunkirk Specialty Steel Segment
For the Quarter Ended For the Year Ended
December 31, December 31,
2004 2003 2004 2003
---- ---- ---- ----
Net Sales
- ---------
Stainless steel $ 9,205 $ 3,401 $ 29,322 $ 16,600
Tool steel 120 172 403 576
High-strength low alloy steel 408 423 2,106 1,197
High-temperature alloy steel 17 230 286 517
Conversion services 146 24 425 153
Other 28 23 74 38
-------- --------- -------- ---------
9,924 4,273 32,616 19,081
Intersegment 535 198 2,107 794
-------- --------- -------- ---------
Total net sales 10,459 4,471 34,723 19,875
Material cost of sales 5,739 2,357 17,834 11,080
Operation cost of sales 3,008 2,125 11,653 9,009
Selling and administrative expenses 472 417 2,148 1,919
--------- ---------- -------- ---------
Operating income (loss) $ 1,240 $ (428) $ 3,088 $ (2,133)
========= ========== ======== =========
CONSOLIDATED BALANCE SHEET
December 31, December 31,
2004 2003
---- ----
Assets
- ------
Cash $ 241 $ 4,735
Accounts receivable, net 24,562 12,690
Inventory 38,318 22,281
Other current assets 3,418 4,285
---------- -----------
Total current assets 66,538 43,991
Property, plant & equipment, net 40,716 40,176
Other assets 586 758
---------- -----------
Total assets $ 107,840 $ 84,925
========== ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable $ 11,666 $ 6,685
Bank overdrafts 2,638 813
Accrued employment costs 1,830 833
Current portion of long-term debt 2,044 1,944
Other current liabilities 442 302
---------- -----------
Total current liabilities 18,620 10,577
Bank revolver 8,635 -
Long-term debt 3,555 5,599
Deferred taxes 10,093 9,313
---------- -----------
Total liabilities 40,903 25,489
Stockholders' equity 66,937 59,436
---------- -----------
Total liabilities and stockholders' equity $ 107,840 $ 84,925
========== ===========
CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Year Ended December 31,
2004 2003
---- ----
Cash flows from operating activities:
Net income (loss) $ 7,131 $ (1,417)
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 3,061 3,093
Deferred taxes 724 996
Tax benefit from exercise of stock options 51 -
Changes in assets and liabilities:
Accounts receivable, net (11,872) (1,140)
Inventory (16,037) 436
Trade accounts payable 4,981 2,561
Accrued employment costs 997 (186)
Refundable taxes 1,443 (729)
Other, net (196) 164
---------- -----------
Cash flow from (due to) operating activities (9,717) 3,778
---------- -----------
Cash flow from investing activities:
Capital expenditures (3,586) (1,193)
---------- -----------
Cash flow due to investing activities (3,586) (1,193)
---------- -----------
Cash flows from financing activities:
Net borrowings under revolving line of credit 8,635 -
Deferred financing costs (26) -
Proceeds from deferred loan agreement - 200
Repayments of long-term debt (1,944) (1,948)
Net change in bank overdrafts 1,825 538
Proceeds from issuance of common stock 319 52
---------- -----------
Cash flow from (due to) financing activities 8,809 (1,158)
---------- -----------
Net cash flow $ (4,494) $ 1,427
========== ===========