- Fourth Quarter Sales are $62.2 Million; Full Year Sales are Record $252.6 Million
BRIDGEVILLE, Pa., Jan. 27, 2012 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) reported today that sales for the fourth quarter of 2011 were $62.2 million, an increase of 21% from sales of $51.6 million in the fourth quarter of 2010, but below the record of $67.3 million reached in the 2011 third quarter.
Operating income for the 2011 fourth quarter was $7.0 million and included $0.9 million of operating expense related to the start-up of the North Jackson operation acquired by the Company in August 2011. Operating income was $5.5 million in the fourth quarter of 2010, and $7.2 million in the 2011 third quarter, which included $1.7 million of operating expense related to the acquisition and start-up of the North Jackson operation.
Net income for the fourth quarter of 2011 was $4.3 million, or $0.59 per diluted share, including an after-tax loss attributable to the North Jackson operation of $0.7 million, which reduced EPS by $0.13 per diluted share. Excluding these North Jackson-related costs, net income for the 2011 fourth quarter was $5.0 million or $0.72 per diluted share. Net income for the fourth quarter of 2010 was $3.6 million, or $0.52 per diluted share. In the third quarter of 2011, net income was $3.9 million, or $0.55 per diluted share, including North Jackson-related acquisition and start-up expenses of $1.9 million, or $0.28 per diluted share.
For full year 2011, sales increased 33% to a record $252.6 million compared with $189.4 million for 2010, while net income rose 37% to $18.1 million, or $2.56 per diluted share, including after-tax expense of $3.2 million, or $0.51 per diluted share, related to the acquisition, financing and start-up of the North Jackson operation.
For the fourth quarter of 2011, cash flow from operations reached $9.6 million. Capital expenditures were $16.6 million for the fourth quarter, including $14.4 million for the North Jackson operation. At December 31, 2011, the Company had cash of $0.3 million and total debt of $94.7 million, or 34.4% of total capitalization.
Shipment volume for the fourth quarter of 2011 increased 4% from the fourth quarter of 2010 but was 8% lower than the 2011 third quarter. Compared with the fourth quarter of 2010, volume shipped to the aerospace and service center plate markets increased 31% and 13%, respectively, while volume shipped to the petrochemical and power generation markets was lower by 1% and 15%, respectively. Compared with the third quarter of 2011, volume shipped to the aerospace market increased 3%, while volume shipped to both the petrochemical and power generation market was down 8% and service center plate volume was down 27%.
Chairman, President and CEO Dennis Oates commented: "End market trends remained favorable and our sales were strong in the fourth quarter, although they did not match the third quarter mainly due to customer receiving schedules shifting from December into the first quarter of 2012. Record order entry in the fourth quarter contributed to a new peak in our backlog of $102.6 million at quarter-end, including $14.0 million for our new North Jackson facility.
"Driving profitable growth remained a main focus in the quarter through higher value sales mix, cost reduction and pricing actions. As a result, we achieved a consolidated operating margin on our legacy Universal business (before including North Jackson) of 12.8%, which was among the highest in the past four years, despite a continued decline in nickel prices.
"The accelerated start-up of North Jackson is on schedule. In December, our team completed first heats on our vacuum induction melting (VIM) furnace and on two newly installed vacuum arc remelting (VAR) furnaces.
"We have entered 2012 with positive market momentum, record backlog and a full focus on accelerating the ramp-up of our North Jackson operation to achieve further profitable growth." Segment Review
For the fourth quarter of 2011, the Universal Stainless & Alloy Products segment, including the North Jackson operation, had sales of $49.2 million and operating income of $4.0 million, yielding an operating margin of 8.2% of sales. Before including the North Jackson operation, segment sales were $48.6 million and operating income was $4.9 million, or 10.1% of sales. In the fourth quarter of 2010, sales were $46.1 million and operating income was $4.2 million, or 9.2% of sales. For the third quarter of 2011, segment sales, including the North Jackson operation, were $60.6 million and operating income was $4.8 million, or 7.9% of sales. Before including North Jackson, segment operating income was $6.5 million, or 10.7% of sales.
Segment sales rose 7% from the fourth quarter of 2010 on 2% lower tons shipped mainly due to increased shipments to service centers. Segment sales were 19% lower than the 2011 third quarter on 14% lower volume mainly due to lower shipments to service centers and forgers.
Sales for the Dunkirk Specialty Steel segment were $24.5 million for the fourth quarter of 2011 and operating income was $2.5 million, yielding an operating margin of 10.1% of sales. This compares with sales in the fourth quarter of 2010 of $17.1 million and operating income of $1.3 million, or 7.8% of sales. In the third quarter of 2011, sales were $25.3 million and operating income was $2.5 million, or 9.9% of sales.
Dunkirk's sales increased 43% from the fourth quarter of 2010 on a 34% increase in tons shipped, mainly due to increased shipments to service centers. Dunkirk's sales decreased 3% from the third quarter of 2011 on 5% lower tons shipped, mainly due to lower shipments to service centers and lower conversion pounds. Webcast
A simultaneous webcast of the Company's conference call discussing the fourth quarter of 2011, scheduled at 9:00 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 2012. 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, the Company, with its experience, technical expertise, and dedicated workforce, stands 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, the concentrated nature of the Company's customer base to date and the Company's dependence on its significant customers; the receipt, pricing and timing of future customer orders; changes in product mix; the limited number of raw material and energy suppliers and significant fluctuations that may occur in raw material and energy prices; risks related to property, plant and equipment, including the Company's reliance on the continuing operation
of critical manufacturing equipment; risks associated with labor matters; the Company's ongoing requirement for continued compliance with laws and regulations, including applicable safety and environmental regulations; the ultimate outcome of the Company's current and future litigation and matters; risks related to acquisitions that the Company may make; and the impact of various economic, credit and market risk uncertainties. Many of these factors are not within the Company's control and involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to be materially different from any future performance suggested herein. Any unfavorable change in the foregoing or other factors could have a material adverse effect on the Company's business, financial condition and results of operations. Further, the Company operates in an industry sector
where securities values may be volatile and may be influenced by economic and other factors 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.
- TABLES FOLLOW -
- Fourth Quarter EPS is $0.59, including $0.13 of Expense for Newly-Acquired North Jackson Operation
- Full Year 2011 EPS is $2.56, including $0.51 of North Jackson-Related Expense
- Backlog Reaches Record $102.6 Million at Quarter-EndUNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share information)
(Unaudited) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarter Ended
December 31,For the Year Ended
December 31,
2011 2010 2011 2010 Net Sales
Stainless steel
$ 52,203
$ 42,009
$ 202,000
$ 142,302
Tool steel
3,587
3,733
21,963
26,196
High-strength low alloy steel
3,607
2,734
17,532
10,310
High-temperature alloy steel
1,772
1,415
6,809
5,853
Conversion services
960
890
3,905
2,719
Scrap sales and other
39
802
387
2,043
Total net sales
62,168
51,583
252,596
189,423
Cost of products sold
50,264
42,742
205,148
155,651
Selling and administrative expenses
4,891
3,388
17,761
13,349
Operating income
7,013
5,453
29,687
20,423
Interest expense
(569)
(118)
(1,421)
(452)
Other income
24
72
212
92
Income before income taxes
6,468
5,407
28,478
20,063
Income tax provision
2,212
1,838
10,356
6,821
Net income
$ 4,256
$ 3,569
$ 18,122
$ 13,242
Earnings per common share — Basic
$ 0.62
$ 0.53
$ 2.65
$ 1.95
Earnings per common share — Diluted *
$ 0.59
$ 0.52
$ 2.56
$ 1.93
Weighted average shares of Common Stock outstanding
Basic
6,839,979
6,796,561
6,826,490
6,782,576
Diluted
7,418,002
6,921,963
7,138,824
6,868,255
* 2011 diluted earnings per share have been adjusted for interest expense on convertible notes.
MARKET SEGMENT INFORMATION
For the Quarter Ended
December 31,For the Year Ended
December 31,
2011 2010 2011 2010 Net Sales
Service centers
$ 33,624
$ 22,351
$ 131,624
$ 88,421
Forgers
11,640
10,149
48,432
41,793
Rerollers
11,131
12,403
47,114
36,515
Original equipment manufacturers
3,583
4,014
16,427
13,800
Wire redrawers
1,191
1,320
4,707
4,132
Conversion services
960
890
3,905
2,719
Scrap sales and other
39
456
387
2,043
Total net sales
$ 62,168
$ 51,583
$ 252,596
$ 189,423
Tons Shipped
11,820
11,365
50,164
43,373
BUSINESS SEGMENT RESULTS
Universal Stainless & Alloy Products Segment
For the Quarter Ended
December 31,For the Year Ended
December 31,
2011* 2010 2011* 2010 Net Sales
Stainless steel
$ 31,899
$ 28,504
$ 125,936
$ 99,092
Tool steel
3,064
3,522
20,248
25,325
High-strength low alloy steel
1,210
336
3,026
2,091
High-temperature alloy steel
741
700
2,791
2,427
Conversion services
782
725
2,985
2,110
Scrap sales and other
42
720
401
1,928
37,738
34,507
155,387
132,973
Intersegment
11,434
11,628
69,946
40,321
Total net sales
49,172
46,135
225,333
173,294
Material cost of sales
24,621
24,838
116,959
85,507
Operation cost of sales
17,203
14,751
76,014
61,428
Selling and administrative expenses
3,312
2,310
12,184
9,048
Operating income
$ 4,036
$ 4,236
$ 20,176
$ 17,311
* The Universal Stainless & Alloy Products segment includes the results of the North Jackson operation from the August 18, 2011 acquisition date.
Dunkirk Specialty Steel Segment
For the Quarter Ended
December 31,For the Year Ended
December 31,
2011 2010 2011 2010 Net Sales
Stainless steel
$ 20,304
$ 13,505
$ 76,064
$ 43,211
Tool steel
523
211
1,715
871
High-strength low alloy steel
2,397
2,398
14,506
8,219
High-temperature alloy steel
1,031
715
4,018
3,426
Conversion services
178
165
920
609
Scrap sales and other
(3)
82
(14)
114
24,430
17,076
97,209
56,450
Intersegment
43
58
169
150
Total net sales
24,473
17,134
97,378
56,600
Material cost of sales
14,971
10,475
59,835
33,003
Operation cost of sales
5,459
4,240
21,689
15,000
Selling and administrative expenses
1,579
1,075
5,577
4,301
Operating income
$ 2,464
$ 1,344
$ 10,277
$ 4,296
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31,
2011 2010 Assets
Cash and cash equivalents
$ 274
$ 34,400
Accounts receivable, net
34,554
29,273
Inventory, net
85,088
69,710
Deferred income taxes
28,676
4,326
Refundable income taxes
4,844
137
Other current assets
2,198
1,198
Total current assets
155,634
139,044
Property, plant and equipment, net
183,148
71,581
Goodwill
20,479
--
Other assets
7,147
1,499
Total assets
$ 366,408
$ 212,124
Liabilities and Stockholders' Equity
Accounts payable
$ 29,912
$ 20,022
Accrued employment costs
7,547
5,488
Current portion of long-term debt
3,000
2,833
Other current liabilities
1,204
605
Total current liabilities
41,663
28,948
Long-term debt
91,650
7,990
Deferred taxes
52,789
15,276
Other long-term liabilities
--
287
Total liabilities
186,102
52,501
Stockholders' equity
180,306
159,623
Total liabilities and stockholders' equity
$ 366,408
$ 212,124
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
For the Year Ended
December 31,
2011 2010
Cash Flows from Operating Activities:
Net income
$ 18,122
$ 13,242
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
7,271
5,486
Loss (gain) on sale of property, plant and equipment
(20)
17
Deferred income tax
10,072
730
Stock-based compensation expense, net
1,408
1,676
Changes in assets and liabilities:
Accounts receivable, net
(5,281)
(12,245)
Inventory, net
(15,378)
(28,388)
Accounts payable
(5)
11,661
Accrued employment costs
2,057
4,310
Income taxes
(4,672)
4,175
Other, net
(2,887)
243
Net cash provided by operating activities
10,687
907
Investing Activities:
Business acquisition, net of convertible notes assumed
(91,298)
--
Capital expenditures, net of amount included in current liabilities
(16,790)
(6,903)
Proceeds from sale of property, plant and equipment
20
18
Net cash used in investing activities
(108,068)
(6,885)
Financing Activities:
Borrowings under term loan facility
40,000
--
Borrowings under revolving credit facility
65,925
--
Payments on revolving credit facility
(31,275)
--
Debt repayments
(10,823)
(2,223)
Proceeds from the issuance of Common Stock
627
603
Payment of deferred financing costs
(1,371)
--
Tax benefit from stock-based payment arrangements
172
143
State grant funding the purchase of new equipment
--
500
Purchase of treasury stock
--
(260)
Net cash provided by (used in) financing activities
63,255
(1,237)
Net decrease in cash and cash equivalents
(34,126)
(7,215)
Cash and cash equivalents at beginning of period
34,400
41,615
Cash and cash equivalents at end of period
$ 274
$ 34,400
Supplemental Non-Cash Investing and Financing Activities:
Convertible notes issued as acquisition consideration
$ 20,000
$ --
Capital expenditures included in current liabilities
$ 7,690
$ 578 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
