BRIDGEVILLE, Pa., July 31, 2013 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) today reported that net sales for the second quarter of 2013 were $42.9 million compared with $67.9 million in the second quarter of 2012 and $49.1 million in the first quarter of 2013, primarily due to lower shipment volumes.

Compared with the first quarter of 2013, tons shipped to the aerospace market remained level, while tons shipped to the power generation, oil and gas, and heavy equipment markets were lower by 8%, 19%, and 5%, respectively, reflecting weaker demand in those end markets.

Operating income for the second quarter of 2013 was $0.4 million compared with $7.3 million in the second quarter of 2012 and $0.2 million in the first quarter of 2013. The Company's second quarter 2013 operating income was negatively impacted by a severance charge of $0.4 million related to the departure of a senior executive.

Net income for the second quarter of 2013 was $0.5 million, or $0.06 per diluted share, compared with $4.5 million, or $0.62 per diluted share, in the second quarter of 2012, and $0.04 million, or $0.01 per diluted share, in the first quarter of 2013. The Company's first and second quarter 2013 results were favorably impacted by tax benefits of $0.6 million and $0.8 million, respectively, as a result of favorable state tax apportionment factors as well as research and development tax credits. The tax benefit in the second quarter of 2013 represented approximately $0.11 per diluted share, which favorably impacted the Company's second quarter net income.

For the first six months of 2013, net sales were $92.0 million and net income was $0.5 million, or $0.06 per diluted share. That compares with net sales of $142.5 million and net income of $10.8 million, or $1.48 per diluted share, in the first six months of 2012. Shipment volume for the first six months of 2013 decreased 33% from the first six months of 2012.

Chairman, President and CEO Dennis Oates commented: "Demand and volumes were lower than anticipated in the second quarter as supply channel destocking continued and declining nickel prices and short industry lead-times encouraged customers to delay new orders. While we saw a pick-up in order entry volume for the quarter and are encouraged that our backlog was up 5% from the end of the first quarter, normal channel demand has not yet returned, even adjusting for the slow summer months."

"Despite our lower shipment volume, our gross margin improved to 12.4% of sales in the second quarter from 9.5% of sales in the first quarter. With the lower volumes, management enacted aggressive cost control measures and flexed production levels to these market conditions.  The margin improvement also reflects the fact that some of the major start-up costs at our North Jackson facility are now behind us."

"The addition of our North Jackson operation two years ago launched our strategic plan to move to higher margin premium alloys. We made further progress in that plan in the second quarter by achieving required heat treat accreditation for the balance of our facilities. This is essential for reaching our next objective, which is to win approvals of our processes and products from leading OEMs in aerospace and oil and gas, which also progressed in the quarter."

"Although it is difficult to pinpoint when channel demand will fully recover, the longer-term outlook for our end markets remains strong and it is generally expected that demand will begin to gain traction in the fourth quarter. In the meantime, we are continuing to move forward with our plan to position Universal to capture broader and higher margin opportunities in our end markets."

Despite these market conditions, during the second quarter and first six months of 2013, the Company generated positive cash flow from operations of $5.3 million and $9.7 million, respectively, compared with a use of cash of $0.5 million and $4.3 million for the second quarter and first six months of 2012, respectively. Capital expenditures for the first six months of 2013 were $7.0 million compared to $20.1 million for the first six months of 2012. Backlog at June 30, 2013 was $49.2 million compared with $46.6 million at March 31, 2013 and $51.7 million at December 31, 2012. At June 30, 2013, the Company reduced its total debt by $1.3 million to $103.4 million from March 31, 2013.

Webcast

The Company has scheduled a conference call for today, July 31, at 10:00 a.m. (Eastern) to discuss second quarter 2013 results. A simultaneous webcast will be available on the Company's website at www.univstainless.com, and thereafter archived on the website through the end of the third quarter of 2013.  

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, oil and gas, 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. 

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CONTACT: Dennis M. Oates

         Chairman,

         President and CEO

         (412) 257-7609

         

         Michael D. Bornak

         VP Finance, CFO

         and Treasurer

         (412) 257-7606

         

         June Filingeri

         President

         Comm-Partners LLC

         (203) 972-0186