EPS is $0.79 on Sales of $63.3 Million

Backlog Was $90 Million at Quarter-End

Pending Patriot Special Metals Acquisition Receives Early Termination of HSR Waiting Period

BRIDGEVILLE, Pa., July 29, 2011 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) reported today that sales for the second quarter of 2011 were $63.3 million, an increase of 23% from the second quarter of 2010 and up 6% from the 2011 first quarter.

Operating income for the second quarter of 2011 was $8.5 million, an increase of 32% from the second quarter of 2010 and 22% higher than the first quarter of 2011. Operating income as a percentage of sales, reached 13.4% for the 2011 second quarter. The Company noted that this operating margin is the highest achieved since 2007.

Net income for the second quarter of 2011 was $5.5 million, or $0.79 per diluted share, an increase of 33% from the second quarter of 2010 and 24% from the first quarter of 2011.

Net income for the first and second quarters of 2011 included pre-tax expenses of $0.4 million and $0.5 million, equivalent to $0.03 and $0.04 per diluted share, respectively, related to the Company's previously announced agreement to acquire the assets of Patriot Special Metals. The Company has received early termination of the Hart-Scott-Rodino Act waiting period for the acquisition and expects to close the transaction in the current third quarter.

Cash flow from operations for the second quarter of 2011 was $1.1 million while the Company continued to invest in working capital. Capital expenditures were $2.4 million for the quarter. At June 30, 2011, the Company had cash of $28.0 million and total debt of $9.4 million. 

Total shipment volume for the second quarter of 2011 increased 7% from the second quarter of 2010 but was 3% lower than the first quarter of 2011. Compared with the first quarter of 2011, volume shipped to the petrochemical market increased 3%, while volumes shipped to the aerospace, power generation and service center plate markets were down 6%, 14% and 4%, respectively. 

Chairman, President and CEO Dennis Oates commented: "Business continued at healthy levels in the second quarter despite some order entry slowing in June amidst declining nickel prices and lower surcharges. Backlog remained strong at $90 million, in line with both the first quarter and with the favorable outlook for our end markets, especially aerospace and petrochemical. Our consolidated operating margin continued to improve through a higher value sales mix and further cost reductions. Our investment in working capital and capital improvements also continued in the second quarter.

"We are proceeding towards the closing of the Patriot Special Metals acquisition, with early regulatory approval received and with financing as well as construction and installation of equipment on track. This acquisition is a major growth initiative for Universal that will broaden our production capabilities, expand our range in higher value products and enhance our ability to enter into attractive new market niches. We expect the acquisition to significantly strengthen our industry position and enable us to better serve clients and to capture substantial new market opportunity."

Segment Review

For the second quarter of 2011, the Universal Stainless & Alloy Products segment had sales of $60.5 million and operating income of $6.4 million, yielding an operating margin of 10.7% of sales. This compares with sales of $49.7 million and operating income of $6.8 million, or 13.7% of sales, in the second quarter of 2010. In the first quarter of 2011, sales were $55.2 million and operating income was $4.9 million, or 8.9% of sales.

Segment sales rose 22% from the second quarter of 2010 on a 13% increase in tons shipped mainly due to higher shipments to Dunkirk for finished product production. Segment sales rose 10% from the first quarter of 2011 on equivalent volume due to higher shipments to Dunkirk and service centers offset by lower shipments to rerollers.

Sales for the Dunkirk Specialty Steel segment reached a record $25.6 million for the second quarter of 2011 and operating income was $3.0 million, yielding an operating margin of 11.6% of sales. This compares with sales in the second quarter of 2010 of $13.3 million and operating income of $1.3 million, or 9.6% of sales. In the first quarter of 2011, sales were $22.0 million and operating income was $2.3 million, or 10.6% of sales.

Dunkirk's sales increased 93% from the second quarter of 2010 on a 67% increase in tons shipped mainly due to an 86% increase in shipments to service centers. Dunkirk's sales increased 16% from their previous record level in the first quarter of 2011 on an 11% increase in tons shipped, also mainly due to higher shipments to service centers.   

Webcast

A simultaneous webcast of the Company's conference call discussing the second quarter of 2011, 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 third quarter of 2011. 

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. 

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