SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): April 20, 2006
Universal Stainless & Alloy Products, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-25032 25-1724540
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 Mayer Street, Bridgeville, Pennsylvania 15017
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(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 April 20, 2006, Universal Stainless and Alloy Products, Inc. issued
a press release regarding its earnings for the first quarter ended March 31,
2006. 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
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Vice President of Finance,
Chief Financial Officer and Treasurer
Dated: April 20, 2006
[GRAPHIC OMITTED]
Universal Stainless & Alloy Products, Inc.
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 FIRST QUARTER 2006 RESULTS
- EPS reaches $0.59 on sales of $45 million -
- Backlog rises to $118 million -
BRIDGEVILLE, PA, April 20, 2006 -- Universal Stainless & Alloy Products,
Inc. (Nasdaq: USAP) reported today that net income for the first quarter of 2006
rose 33% to a record $3.9 million, or $0.59 per diluted share, on a 4% increase
in sales, which reached a record $44.9 million. This is in comparison to net
income of $2.9 million, or $0.45 per diluted share, and sales of $43.0 million
reported in the 2005 first quarter.
First quarter 2006 sales were at the high end of the Company's forecasted
range of $40 to $45 million and diluted EPS exceeded the expected range of $0.50
to $0.55.
President and CEO Mac McAninch commented: "Our record first quarter results
reflected the continued strength of our niche markets, particularly aerospace.
Our base price and surcharge initiatives enabled us to cope successfully with
volatile raw material costs. Process improvements and our strategic shift to
higher value products over the past year also contributed to our earnings
growth."
Mr. McAninch continued: "We expect our markets to remain strong, which
poses our greatest challenge - to meet the needs of our customers and respond to
developing market opportunities. To do so, we have added a sixth vacuum-arc
remelt (VAR) furnace that is now fully operational and announced plans to add a
seventh in September, as well as to expand further our production of the high
quality grades of steel required for aerospace and other applications. We also
added two milling machines in the first quarter to increase finished bar
production in Bridgeville. Installation of a plate flattener later in the
current quarter will increase our tool steel and stainless steel plate
production capability. In Dunkirk, we are adding employees to increase our
production of finished bar products.
Mr. McAninch concluded: "Beyond these improvements underway, we will
continue to review our manufacturing facilities to identify investments that
will increase our sales potential, lower our production costs and meet the needs
of our customers."
USAP REPORTS RECORD 2006 FIRST QUARTER RESULTS - Page 2 -
Segment Review
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In the first quarter of 2006, the Universal Stainless & Alloy Products
segment had sales of $39.1 million and operating income of $4.9 million,
yielding an operating margin of 13%. This compares with first quarter 2005 sales
of $38.4 million and operating income of $2.7 million, or 7% of sales, which
included a $342,000 write-off of fixed assets and a $110,000 reduction in the
bad debt reserve. In the 2005 fourth quarter, sales were $37.7 million and
operating income was $4.7 million, or 12% of sales.
The 2% increase in sales compared with the 2005 first quarter was achieved
despite a 23% reduction in tons shipped, although tons shipped were up 9% from
the 2005 fourth quarter. The sales increase over the prior year first quarter
was due to higher product prices and a continued favorable product mix,
including strong growth in shipments of bar products to service centers and OEMs
and of special shape products, which offset lower shipments to rerollers. The
addition of two milling machines also benefited the most recent quarter. First
quarter 2006 sales were 4% higher than the 2005 fourth quarter mainly due to
increased shipments to rerollers, forgers and service centers, which offset
lower OEM shipments. Operating income rose 85% from the 2005 first quarter and
was up 6% from the 2005 fourth quarter due to the improved pricing and mix of
products shipped.
The Dunkirk Specialty Steel segment reported first quarter 2006 sales of
$14.0 million and operating income of $1.5 million, resulting in an operating
margin of 10%. This compares with sales of $13.7 million and operating income of
$1.9 million, or 14% of sales, in the first quarter of 2005. In the 2005 fourth
quarter, sales were $13.0 million and operating income was $1.3 million, or 10%
of sales.
Dunkirk's sales increased 2% over the 2005 first quarter and 8% over the
2005 fourth quarter due to higher selling prices and increased shipments of bar
products to service centers and OEMs. Rod and wire product shipments were
substantially lower than 2005 levels as the Company determined that the market
pricing for certain rod and wire products did not meet its margin requirements.
Operating income declined 21% from the first quarter of 2005 due to the higher
cost of raw materials at the time of feedstock procurement. Operating income
increased 16% over the fourth quarter of 2005 due to the improved pricing and
product mix.
Business Outlook
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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 2006 sales will range from $43 to
$48 million and that diluted EPS will range from $0.60 to $0.65. This compares
with sales of $41.9 million and diluted EPS of $0.50 in the second quarter of
2005.
USAP REPORTS RECORD 2006 FIRST QUARTER RESULTS - Page 3 -
The following factors were considered in developing these estimates:
o The Company's total backlog at March 31, 2005 approximated $118 million
compared to $116 million at December 31, 2005, reflecting robust aerospace
demand and continued strong power generation, petrochemical and tool steel
markets.
o The second quarter is also expected to benefit from a full-quarter
contribution of the new vacuum-arc remelt furnace installed in December
2005, from the two additional milling machines and from a new plate
flattener to be added late in the current quarter.
o Sales from the Dunkirk Specialty Steel segment are expected to increase to
$15 million due to anticipated increases in bar shipments, partially offset
by lower rod and wire shipments.
Webcast
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A simultaneous Webcast of the Company's conference call discussing the
first quarter of 2006 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 27th. It can be accessed by dialing
706-645-9291, passcode 7518654. This is a toll call.
About Universal Stainless & Alloy Products, Inc.
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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 rerollers, forgers, service
centers, original equipment manufacturers 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.
- 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
March 31,
2006 2005
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Net Sales
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Stainless steel $ 33,418 $ 33,619
Tool steel 5,827 6,017
High-strength low alloy steel 2,552 1,122
High-temperature alloy steel 2,369 1,025
Conversion services 729 1,114
Other 42 122
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Total net sales 44,937 43,019
Cost of products sold 36,320 36,410
Selling and administrative expenses 2,256 1,907
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Operating income 6,361 4,702
Interest expense (266) (172)
Other income 2 60
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Income before taxes 6,097 4,590
Income tax provision 2,195 1,652
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Net income $ 3,902 $ 2,938
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Earnings per share - Basic $ 0.61 $ 0.46
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Earnings per share - Diluted $ 0.59 $ 0.45
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Weighted average shares of
Common Stock outstanding
Basic 6,417,323 6,350,547
Diluted 6,559,491 6,468,475
MARKET SEGMENT INFORMATION
For the Quarter Ended
March 31,
2006 2005
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Net Sales
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Service centers $ 23,038 $ 18,307
Rerollers 7,847 12,028
Forgers 7,564 6,263
Original equipment manufacturers 4,599 2,324
Wire redrawers 1,144 2,872
Conversion services 729 1,114
Other 16 111
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Total net sales $ 44,937 $ 43,019
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Tons shipped 12,045 15,230
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BUSINESS SEGMENT RESULTS
Universal Stainless & Alloy Products Segment
For the Quarter Ended
March 31,
2006 2005
---- ----
Net Sales
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Stainless steel $ 23,567 $ 21,777
Tool steel 5,360 5,907
High-strength low alloy steel 1,239 393
High-temperature alloy steel 1,041 1,025
Conversion services 538 951
Other 40 117
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31,785 30,170
Intersegment 7,352 8,255
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Total net sales 39,137 38,425
Material cost of sales 17,408 19,826
Operation cost of sales 15,251 14,779
Selling and administrative expenses 1,529 1,141
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Operating income $ 4,949 $ 2,679
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Dunkirk Specialty Steel Segment
For the Quarter Ended
March 31,
2006 2005
---- ----
Net Sales
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Stainless steel $ 9,851 $ 11,842
Tool steel 467 110
High-strength low alloy steel 1,313 729
High-temperature alloy steel 1,328 -
Conversion services 191 163
Other 2 5
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13,152 12,849
Intersegment 835 818
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Total net sales 13,987 13,667
Material cost of sales 7,971 7,114
Operation cost of sales 3,822 3,924
Selling and administrative expenses 727 766
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Operating income $ 1,467 $ 1,863
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CONSOLIDATED BALANCE SHEET
March 31, December 31,
2006 2005
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Assets
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Cash $ 487 $ 620
Accounts receivable, net 29,844 27,963
Inventory 55,693 51,398
Deferred taxes 1,247 1,084
Other current assets 1,380 1,706
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Total current assets 88,651 82,771
Property, plant & equipment, net 47,190 45,761
Other assets 491 495
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Total assets $ 136,332 $ 129,027
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Liabilities and Stockholders' Equity
- ------------------------------------
Trade accounts payable $ 14,075 $ 12,579
Deferred revenue 3,871 384
Outstanding checks in excess of bank balance 2,896 3,101
Accrued income tax 2,732 368
Accrued employment costs 2,347 2,958
Current portion of long-term debt 2,005 1,555
Other current liabilities 483 162
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Total current liabilities 28,409 21,107
Bank revolver 2,821 6,117
Long-term debt 10,609 11,200
Deferred taxes 9,518 9,600
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Total liabilities 51,357 48,024
Stockholders' equity 84,975 81,003
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Total liabilities and stockholders' equity $ 136,332 $ 129,027
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CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Three-month Period Ended March 31,
2006 2005
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Cash flows provided by operating activities:
Net income $ 3,902 $ 2,938
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 795 769
Loss on retirement of fixed assets - 342
Deferred tax (decrease) increase (238) 539
Stock based compensation expense 41 -
Tax benefit from exercise of stock options - 115
Excess tax benefits from share-based
payment arrangements (6) -
Changes in assets and liabilities:
Accounts receivable, net (1,881) (4,790)
Inventory (4,295) (5,404)
Trade accounts payable 1,496 4,544
Deferred revenue 3,487 646
Accrued income tax payable 2,370 520
Accrued employment costs (611) 147
Other, net 656 907
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Cash flow provided by operating activities 5,716 1,273
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Cash flow used in investing activities:
Capital expenditures (2,216) (584)
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Cash flow used in investing activities (2,216) (584)
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Cash flows used in financing activities:
Revolving credit net (repayments) borrowings (3,296) 1,807
Long-term debt repayments (141) (484)
Net change in outstanding checks in excess
of bank balance (205) (1,684)
Proceeds from issuance of common stock 3 264
Excess tax benefits from share-based payment
arrangements 6 -
-------- --------
Cash flow used in financing activities (3,633) (97)
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Net cash flow $ (133) $ 592
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