Universal Stainless Reports Continued Improvement in Fourth Quarter of 2009
Jan 27, 2010
Universal Stainless Reports Continued Improvement in Fourth Quarter of 2009
Universal Stainless Reports Continued Improvement in Fourth Quarter of 2009
Sales Increase 5.5% from 2009 Third Quarter to $26.7 Million 4Q09 EPS is $0.14, including $0.06 of Import Duties, vs. EPS of $0.05 in 3Q09 Backlog Resumes Growth
BRIDGEVILLE, Pa., Jan. 27, 2010 -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) reported today that sales for the fourth quarter of 2009 were $26.7 million compared with $57.1 million in the fourth quarter of 2008 and $25.3 million in the third quarter of 2009.Net income for the fourth quarter was $956,000 or $0.14 per diluted share compared with $1.2 million or $0.18 per diluted share in the fourth quarter of 2008 and $312,000 or $0.05 per diluted share in the third quarter of 2009. Import duties received in the 2009 and 2008 fourth quarters were $551,000 and $599,000, respectively, both amounts equivalent to $0.06 per diluted share.
Cash flow from operations for the fourth quarter of 2009 totaled $2.5 million compared with $5.8 million in the fourth quarter of 2008 and $10.0 million in the third quarter of 2009. Cash flow decreased in the quarter due to the slowing rate of reduction in managed working capital because of improving shipment volume and order entry. In addition, capital expenditures were $2.1 million including $1.8 million for a melt shop upgrade project, which remains on budget.
For the full year of 2009, sales were $124.9 million and the Company incurred a net loss of $3.0 million or $0.44 per share. The net loss included a negative tax adjustment in the second quarter of $742,000, equivalent to $0.11 per diluted share, and unusual charges related to economic conditions in the first quarter of $3.6 million, equivalent to $0.53 per diluted share after-tax. Before the tax adjustment and unusual charges, the Company's net income for 2009 was $1.4 million or $0.20 per diluted share. In 2008, the Company had record sales of $235.1 million and net income was $14.0 million, or $2.05 per diluted share.
President and CEO Dennis Oates commented: "The fourth quarter of 2009 was marked by early-stage recovery in demand. Our order entry improved each month in the quarter, and resulted in the first sequential increase in our backlog since the third quarter of 2008. In total, our year-end backlog was $36 million, an increase of 8% from September 30.
"The sequential growth in fourth quarter 2009 sales and tons shipped resulted from a 50% increase in our shipments to service centers, consistent with indications that service centers have generally finished inventory destocking. Sales of tool steel plate tripled and aerospace sales improved modestly.
"Our profitability improved over the third quarter of 2009 due to higher shipment volumes, cost savings being realized from recent capital projects and process improvements, and improved cycle times.
"There is widespread belief among our customers that 2010 will be better than 2009, but the level of caution accompanying their optimism is high. Therefore, we currently expect further recovery in market demand to be gradual."
Segment Review
For the fourth quarter of 2009, the Universal Stainless & Alloy Products segment had sales of $23.1 million and operating income of $509,000, yielding an operating margin of 2.2% of sales. This compares with sales of $53.1 million and operating income of $1.9 million, or 3.5% of sales, in the fourth quarter of 2008. In the third quarter of 2009, sales were $21.7 million and operating income was $60,000, or 0.3% of sales.
Segment sales declined 57% from the fourth quarter of 2008 primarily due to a 48% decrease in tons shipped. Shipments to rerollers, forgers and service centers declined substantially from the 2008 fourth quarter offsetting a strong increase in shipments to OEMs. Segment sales increased 7% from the third quarter of 2009 on 11% more tons shipped, reflecting higher shipments to service centers, especially of tool steel plate, and to forgers.
The Dunkirk Specialty Steel segment recorded sales of $8.5 million and operating income of $227,000 for the fourth quarter of 2009, yielding an operating margin of 2.7% of sales. This compares with sales in the fourth quarter of 2008 of $11.4 million and an operating loss of $1.3 million, which included a $248,000 charge for the relocation of the round bar finishing line to Dunkirk from Bridgeville and a $385,000 increase to the segment's LCM reserve. In the third quarter of 2009, sales were $8.5 million and operating income was $397,000, or 4.7% of sales.
Dunkirk's sales declined 25% from the fourth quarter of 2008 on 3% fewer tons shipped due to product mix and lower surcharges. Dunkirk's sales were level with the third quarter of 2009 on a 3% increase in tons shipped.
Webcast
A simultaneous webcast of the Company's conference call discussing the fourth quarter of 2009, 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 2010.
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 rerollers, forgers, service centers, original equipment manufacturers and wire redrawers. 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,
2009 2008 2009 2008
---- ---- ---- ----
Net Sales
Stainless steel $ 20,037 $ 44,340 $ 98,069 $ 172,222
Tool steel 3,385 7,887 9,413 39,046
High-strength low alloy
steel 1,560 2,427 9,235 11,936
High-temperature alloy
steel 1,184 1,678 5,567 7,931
Conversion services 330 427 1,203 1,941
Other 176 381 1,420 2,030
--------- --------- --------- ---------
Total net sales 26,672 57,140 124,907 235,106
Cost of products sold 23,374 54,092 117,901 204,929
Selling and administrative
expenses 2,562 2,524 11,663 11,085
--------- --------- --------- ---------
Operating income (loss) 736 524 (4,657) 19,092
Interest expense (19) (24) (89) (105)
Other income 559 694 695 911
--------- --------- --------- ---------
Income (loss) before taxes 1,276 1,194 (4,051) 19,898
Income tax provision
(benefit) 320 (37) (1,093) 5,948
--------- --------- --------- ---------
Net income (loss) $ 956 $ 1,231 $ (2,958) $ 13,950
========= ========= ========= =========
Earnings (loss) per share
- Basic $ 0.14 $ 0.18 $ (0.44) $ 2.08
========= ========= ========= =========
Earnings (loss) per share
- Diluted $ 0.14 $ 0.18 $ (0.44) $ 2.05
========= ========= ========= =========
Weighted average shares of
Common Stock outstanding
Basic 6,769,130 6,727,727 6,755,560 6,706,535
Diluted 6,815,853 6,781,712 6,755,560 6,801,203
MARKET SEGMENT INFORMATION
For the Quarter Ended For the Year Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Net Sales
Service centers $ 11,313 $ 20,979 $ 50,355 $110,889
Forgers 8,652 18,092 39,821 52,551
Rerollers 2,270 11,649 12,174 41,660
Original equipment
manufacturers 2,913 3,968 16,089 18,955
Wire redrawers 1,018 1,662 3,845 7,129
Conversion services 330 427 1,203 1,941
Other 176 363 1,420 1,981
-------- -------- -------- --------
Total net sales $ 26,672 $ 57,140 $124,907 $235,106
======== ======== ======== ========
Tons shipped 6,172 11,681 28,182 45,679
======== ======== ======== ========
BUSINESS SEGMENT RESULTS
Universal Stainless & Alloy Products Segment
For the Quarter Ended For the Year Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Net Sales
Stainless steel $ 14,318 $ 36,233 $ 71,670 $121,612
Tool steel 3,311 7,768 9,146 37,631
High-strength low alloy steel 271 925 3,017 3,881
High-temperature alloy steel 347 661 1,988 2,977
Conversion services 217 296 763 1,278
Other 166 351 1,391 1,875
-------- -------- -------- --------
18,630 46,234 87,975 169,254
Intersegment 4,456 6,880 20,344 37,384
-------- -------- -------- --------
Total net sales 23,086 53,114 108,319 206,638
Material cost of sales 9,882 32,215 49,592 114,930
Operation cost of sales 11,005 17,375 52,656 68,415
Selling and administrative
expenses 1,690 1,673 8,467 7,613
-------- -------- -------- --------
Operating income (loss) $ 509 $ 1,851 $ (2,396) $ 15,680
======== ======== ======== ========
Dunkirk Specialty Steel Segment
For the Quarter Ended For the Year Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Net Sales
Stainless steel $ 5,719 $ 8,107 $ 26,399 $ 50,610
Tool steel 74 119 267 1,415
High-strength low alloy steel 1,289 1,502 6,218 8,055
High-temperature alloy steel 837 1,017 3,579 4,954
Conversion services 113 131 440 663
Other 10 30 29 155
-------- -------- -------- --------
8,042 10,906 36,932 65,852
Intersegment 475 492 1,659 3,712
-------- -------- -------- --------
Total net sales 8,517 11,398 38,591 69,564
Material cost of sales 4,904 8,031 24,567 44,215
Operation cost of sales 2,514 3,843 13,089 18,465
Selling and administrative
expenses 872 851 3,196 3,472
-------- -------- -------- --------
Operating income (loss) $ 227 $ (1,327) $ (2,261) $ 3,412
======== ======== ======== ========
CONSOLIDATED BALANCE SHEET
December 31, December 31,
2009 2008
---- ----
Assets
Cash $ 42,349 $ 14,812
Accounts receivable, net 17,028 33,057
Inventory, net 41,322 63,222
Other current assets 9,344 8,239
------------ ------------
Total current assets 110,043 119,330
Property, plant & equipment, net 70,085 62,626
Other assets 1,586 988
------------ ------------
Total assets $ 181,714 $ 182,944
============ ============
Liabilities and Stockholders' Equity
Trade accounts payable $ 7,783 $ 19,350
Outstanding checks in excess of bank
balance 734 540
Accrued employment costs 1,178 3,795
Current portion of long-term debt 2,223 403
Other current liabilities 553 421
------------ ------------
Total current liabilities 12,471 24,509
Long-term debt 10,823 1,046
Deferred taxes 14,049 11,689
Other liabilities 145 --
------------ ------------
Total liabilities 37,488 37,244
Stockholders' equity 144,226 145,700
------------ ------------
Total liabilities and stockholders'
equity $ 181,714 $ 182,944
============ ============
`
CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Year Ended December 31,
2009 2008
---- ----
Cash flows provided by operating activities:
Net income (loss) $ (2,958) $ 13,950
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation and amortization 4,859 4,167
Loss on retirement of fixed assets 84 402
Deferred income tax 1,853 558
Stock based compensation expense 1,058 838
Tax benefit from share-based payment
arrangements (86) (529)
Changes in assets and liabilities:
Accounts receivable, net 16,029 (5,556)
Inventory, net 21,900 2,350
Trade accounts payable (11,567) 5,367
Accrued employment costs (2,617) (1,512)
Current income tax, net (1,613) (1,491)
Other, net 764 (874)
-------- --------
Cash flow provided by operating activities 27,706 17,670
-------- --------
Cash flow used in investing activities:
Proceeds from sale of fixed assets 60 --
Capital expenditures (12,394) (12,905)
-------- --------
Cash flow used in investing activities (12,334) (12,905)
-------- --------
Cash flows provided by financing activities:
Long-term debt issuance 12,000 --
Long-term debt repayments (403) (387)
Net change in outstanding checks in excess of bank
balance 194 (1,524)
Deferred financing costs (84) --
Proceeds from issuance of common stock 372 781
Tax benefit from share-based payment arrangements 86 529
-------- --------
Cash flow provided by (used in) financing
activities 12,165 (601)
-------- --------
Net cash flow $ 27,537 $ 4,164
======== ========
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, President
(203) 972-0186
