Universal Stainless Reports EPS of $0.25 for 2004 Second Quarter
Jul 21, 2004
Universal Stainless Reports EPS of $0.25 for 2004 Second Quarter
Universal Stainless Reports EPS of $0.25 for 2004 Second Quarter
Dunkirk operation attains operating income of $651,000 on $8.0 million in sales
BRIDGEVILLE, Pa., July 21, 2004 -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) today reported second quarter 2004 sales of $29.0 million and net income of $1.6 million, or $0.25 per diluted share. These results represent sales at a near record level and EPS ahead of the projected range of $0.15 to $0.20. Sales increased 72% from the second quarter of 2003 and 36% from the first quarter of 2004. Second quarter 2004 net income showed a strong turnaround from the net loss of $440,000, or $0.07 per diluted share, in the year ago period and was greatly improved from the net income of $227,000 or $0.04 per diluted share reported in the 2004 first quarter.Commenting on the results, President and CEO Mac McAninch stated: "Business is good across all the markets we serve. Our sales to service centers, rerollers and forgers in the 2004 second quarter demonstrated substantial growth over the prior quarter and year over year. Our strong financial performance resulted from greater demand for our higher value-added niche products. This was reflected in higher shipments of aerospace, power generation, petrochemical and tool steel products, which were up 42%, 56%, 63% and 18%, respectively, over the first quarter of 2004 and even more substantially over the prior year."
Mr. McAninch added: "The improvement in our profitability company-wide in the second quarter was also due to the price increases we have implemented to offset unprecedented raw material cost increases as well as higher energy and manufacturing supply costs. In addition, the improvement in the second quarter was due to the efforts of our employees at each operating location to respond to customer needs in a time of high demand."
Segment Review
In the second quarter of 2004, the Universal Stainless & Alloy Products segment had sales of $25.1 million and operating income of $1.9 million. This compares with sales of $14.5 million and an operating loss of $255,000 in the second quarter of 2003 and sales of $18.8 million and operating income of $401,000 in the first quarter of 2004. The strong growth reflected increased sales to all customer categories, including sales of reroll product to Dunkirk, both year over year and sequentially. Increased shipments, combined with improved pricing, led to greater profitability.
The Dunkirk Specialty Steel segment reported record sales of $8.0 million and operating income of $651,000. This compares with sales of $5.4 million and an operating loss of $374,000 in the second quarter of 2003 and sales of $6.7 million and operating income of $34,000 in the prior quarter. Dunkirk's top line growth mainly reflected increased sales to service centers while its total sales volume allowed further reductions in the manufacturing cost of products sold, leading to the substantial improvement in its profitability.
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 third quarter 2004 sales will range from $30 to $35 million and that diluted EPS will range from $0.30 to $0.35. In the third quarter of 2003, sales were $18.6 million and the Company incurred a net loss per diluted share of $0.02.
The following factors were considered in developing these estimates:
- The Company's total backlog at June 30, 2004 approximated $49 million compared to $37 million at March 31, 2004, reflecting strength in all of the Company's niche markets.
- The third quarter results are expected to benefit from capital improvements implemented in the second quarter, including the addition of annealing furnaces for ingot, billet and bar products. The addition of a reheat furnace is scheduled to be completed in August and is expected to increase the throughput of the Bridgeville blooming mill with its full benefit expected in the 2004 fourth quarter.
- Sales from the Dunkirk Specialty Steel segment are expected to approximate $9 million due to strong customer demand. Further sales growth is expected when additional reroll product is available from the Bridgeville operation.
Mr. McAninch concluded: "The recent capital investments we have made will enable us to respond more quickly to customer needs which we expect will remain strong through the balance of the year."
Webcast
A simultaneous Webcast of the Company's conference call discussing the 2004 second quarter and the third quarter 2004 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, continuing through July 28th. It can be accessed by dialing 706-645-9291, passcode 8565498. 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 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 For the Six-Months Ended
June 30, June 30,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Net Sales
Stainless steel $ 22,889 $ 12,612 $ 39,057 $ 23,849
Tool steel 3,743 2,599 6,908 4,500
High-strength low
alloy steel 1,064 668 1,925 1,339
High-temperature
alloy steel 612 625 1,322 1,142
Conversion services 596 265 928 598
Other 122 68 193 109
---------- ---------- ---------- ----------
Total net sales 29,026 16,837 50,333 31,537
Cost of products sold 24,531 15,941 43,875 30,621
Selling and
administrative
expenses 1,947 1,525 3,475 2,918
---------- ---------- ---------- ----------
Operating income
(loss) 2,548 (629) 2,983 (2,002)
Interest expense (106) (94) (194) (189)
Other income 3 23 11 50
---------- ---------- ---------- ----------
Income (loss) before
taxes 2,445 (700) 2,800 (2,141)
Income tax provision
(benefit) 879 (260) 1,007 (1,118)
---------- ---------- ---------- ----------
Net income (loss) $ 1,566 $ (440) $ 1,793 $ (1,023)
========== ========== ========== ==========
Earnings (loss) per
share
- Basic $ 0.25 $ (0.07) $ 0.28 $ (0.16)
========== ========== ========== ==========
Earnings (loss) per
share
- Diluted $ 0.25 $ (0.07) $ 0.28 $ (0.16)
========== ========== ========== ==========
Weighted average
shares of Common
Stock outstanding
Basic 6,299,579 6,284,691 6,297,816 6,284,665
Diluted 6,355,148 6,284,691 6,345,591 6,284,665
MARKET SEGMENT INFORMATION
For the For the
Quarter Ended Six-Months Ended
June 30, June 30,
2004 2003 2004 2003
------- ------- ------- -------
Net Sales
Service centers $12,267 $ 7,905 $22,173 $14,855
Rerollers 8,187 4,240 12,257 8,039
Forgers 5,133 2,355 8,949 4,002
Original equipment
manufacturers 1,904 1,372 3,838 2,421
Wire redrawers 843 640 2,039 1,520
Conversion services 596 265 928 598
Other 96 60 149 102
------- ------- ------- -------
Total net sales $29,026 $16,837 $50,333 $31,537
======= ======= ======= =======
Tons shipped 12,131 8,645 21,197 16,058
======= ======= ======= =======
BUSINESS SEGMENT RESULTS
Universal Stainless & Alloy Products Segment
For the For the
Quarter Ended Six-Months Ended
June 30, June 30,
2004 2003 2004 2003
------- ------- ------- -------
Net Sales
Stainless steel $16,376 $ 7,949 $27,096 $15,060
Tool steel 3,668 2,413 6,747 4,180
High-strength low alloy steel 399 464 812 871
High-temperature alloy steel 525 547 1,075 1,025
Conversion services 475 198 724 508
Other 106 61 152 94
------- ------- ------- -------
21,549 11,632 36,606 21,738
Intersegment 3,515 2,867 7,721 5,162
------- ------- ------- -------
Total net sales 25,064 14,499 44,327 26,900
Material cost of sales 8,390 5,244 18,924 9,640
Operation cost of sales 13,446 8,512 20,743 16,371
Selling and
administrative expenses 1,331 998 2,362 1,918
------- ------- ------- -------
Operating income (loss) $ 1,897 $ (255) $ 2,298 $(1,029)
======= ======= ======= =======
Dunkirk Specialty Steel Segment
For the For the
Quarter Ended Six-Months Ended
June 30, June 30,
2004 2003 2004 2003
------- ------- ------- -------
Net Sales
Stainless steel $ 6,513 $ 4,663 $11,961 $ 8,789
Tool steel 75 186 161 320
High-strength low alloy steel 665 204 1,113 468
High-temperature alloy steel 87 78 247 117
Conversion services 121 67 204 90
Other 16 7 41 15
------- ------- ------- -------
7,477 5,205 13,727 9,799
Intersegment 558 190 1,053 380
------- ------- ------- -------
Total net sales 8,035 5,395 14,780 10,179
Material cost of sales 3,902 2,941 7,379 5,553
Operation cost of sales 2,866 2,301 5,603 4,599
Selling and
administrative expenses 616 527 1,113 1,000
------- ------- ------- -------
Operating income (loss) $ 651 $ (374) $ 685 $ (973)
======= ======= ======= =======
CONSOLIDATED BALANCE SHEET
June 30, December 31,
2004 2003
------- -------
Assets
Cash $ 369 $ 4,735
Accounts receivable, net 19,548 12,690
Inventory 30,578 22,281
Other current assets 3,941 4,285
------- -------
Total current assets 54,436 43,991
Property, plant & equipment, net 39,805 40,176
Other assets 732 758
------- -------
Total assets $94,973 $84,925
======= =======
Liabilities and
Stockholders' Equity
Accounts payable $10,939 $ 6,792
Bank overdrafts 305 813
Accrued employment costs 1,740 833
Current portion of long-term debt 1,928 1,944
Other current liabilities 1,550 195
------- -------
Total current liabilities 16,462 10,577
Bank revolver 3,167 --
Long-term debt 4,632 5,599
Deferred taxes 9,397 9,313
------- -------
Total liabilities 33,658 25,489
Stockholders' equity 61,315 59,436
------- -------
Total liabilities and
stockholders' equity $94,973 $84,925
======= =======
CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Six-Months Ended June 30,
2004 2003
------- -------
Cash flows from operating activities:
Net income (loss) $ 1,793 $(1,023)
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 1,571 1,571
Deferred taxes 84 145
Tax benefit from exercise of stock options 3 --
Changes in assets and liabilities:
Accounts receivable, net (6,858) (797)
Inventory (8,297) 780
Trade accounts payable 4,147 1,776
Accrued employment costs 907 (13)
Refundable taxes -- (265)
Other, net 1,720 839
------- -------
Cash flow from (due to) operating activities (4,930) 3,013
------- -------
Cash flow from investing activities:
Capital expenditures (1,195) (191)
------- -------
Cash flow due to investing activities (1,195) (191)
------- -------
Cash flows from financing activities:
Net borrowings under revolving line of credit 3,167 --
Proceeds from deferred loan agreement -- 200
Repayments of long-term debt (983) (959)
Net change in bank overdrafts (508) 641
Proceeds from issuance of common stock 83 25
------- -------
Cash flow from (due to) financing activities 1,759 (93)
------- -------
Net cash flow $(4,366) $ 2,729
======= =======
CONTACTS: Richard M. Ubinger
Vice President of Finance, Chief Financial Officer
and Treasurer
(412) 257-7606
Comm-Partners LLC
June Filingeri
(203) 972-0186
