SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 20, 2005
Universal Stainless & Alloy Products, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-25032 25-1724540
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 Mayer Street, Bridgeville, Pennsylvania 15017
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (412) 257-7600
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2.):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On July 20, 2005, Universal Stainless and Alloy Products, Inc. issued
a press release regarding its earnings for the second quarter ended June 30,
2005. A copy of the press release is attached hereto.
The information in this Current Report on Form 8-K, including the
attached press release, shall not be deemed "filed" for the purposes of Section
18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to
the liabilities of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, as amended, except as
shall be expressly set forth by specific reference in such a filing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
By: /s/ Richard M. Ubinger
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Vice President of Finance,
Chief Financial Officer and Treasurer
Dated: July 20, 2005
[GRAPHIC OMITTED]
Universal Stainless & Alloy Products, Inc.
600 Mayer Street o Bridgeville, Pennsylvania 15017
CONTACTS: Richard M. Ubinger
Vice President of Finance,
Chief Financial Officer and Treasurer
(412) 257-7606
FOR IMMEDIATE RELEASE
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Comm-Partners LLC
June Filingeri
(203) 972-0186
UNIVERSAL STAINLESS REPORTS STRONG 2005 SECOND QUARTER
RESULTS
- Quarterly earnings per share reach $0.50 on sales of $42 million -
BRIDGEVILLE, PA, July 20, 2005 -- Universal Stainless & Alloy Products,
Inc. (Nasdaq: USAP) reported today that sales for the second quarter of 2005
rose 44% to $41.9 million compared with the same period of 2004. Second quarter
2005 net income more than doubled to $3.3 million, or $0.50 per diluted share,
versus $1.6 million, or $0.25 per diluted share, in the year-ago period.
The Company's second quarter 2005 sales were in line with its forecasted
range of $40 to $45 million and diluted EPS exceeded the projected range of
$0.40 to $0.45.
President and CEO Mac McAninch commented: "Our second quarter results
demonstrate the benefit of improved pricing and a favorable product mix due to
very strong demand in our aerospace, power generation and petrochemical markets.
In fact, sales to all end markets and customer categories increased
substantially over the 2004 second quarter. Capacity limitations on remelted
products prevented us from achieving even higher levels of sales. The scheduled
addition of a sixth vacuum arc remelt furnace later this year should enable us
to respond to the increased requirements of the aerospace and power generation
markets."
Mr. McAninch continued: "In contrast to the strength in our main markets,
the automotive market has weakened. While not a niche market that we focus on,
it reduced demand for our tool steel in the second quarter compared to the first
quarter of this year. However, heavy truck and industrial equipment production
remains high and our tool steel backlog is at more normal levels."
USAP REPORTS STRONG SECOND QUARTER - Page 2 -
Mr. McAninch added: "We are very pleased with the improvement in the
operating margin at both our Universal Stainless and Dunkirk segments, which led
to an overall company operating margin of 13% in the second quarter. We are
continuing to realize the payback from our 2004 capital investments, on-going
process improvement efforts and cost recovery pricing initiatives."
Mr. McAninch concluded: "We are entering the second half of 2005 with a
high level of confidence based on the outlook for our niche markets, and on the
size and quality of our backlog that extends into 2007. We remain committed to
reinvest in our company to meet the needs of our customers and realize further
value for our shareholders."
Segment Review
- --------------
In the second quarter of 2005, the Universal Stainless & Alloy Products
segment had sales of $37.2 million and operating income of $3.6 million,
yielding an operating margin of 10%, a level not achieved since the first
quarter of 2002. In the second quarter of 2004, sales were $25.5 million and
operating income was $1.9 million, or 7% of sales. In the first quarter of 2005,
sales were $38.4 million and operating income was $2.7 million, including a
write-off of $342,000 of fixed assets in Bridgeville. This resulted in an
operating margin of 7%.
The 46% increase in sales compared with the 2004 second quarter reflected
substantial growth in sales to all customer categories. Second quarter 2005
sales were slightly lower than the prior quarter, reflecting the lower shipments
of tool steel products to service centers, partially offset by increased bar
shipments to them. The increase in operating income compared to both prior
periods reflects stronger pricing and product mix.
The Dunkirk Specialty Steel segment reported sales of $12.4 million and
operating income of $1.8 million, resulting in a record operating margin of 15%.
These results compare with sales of $8.0 million and operating income of
$651,000, or 8% of sales, in the second quarter of 2004. In the first quarter of
2005, sales were $13.7 million and operating income was $1.9 million, or 14% of
sales, and included a $184,000 asset write-off.
Dunkirk's sales increased 54% over the 2004 second quarter due to
substantial growth in shipments to all customer categories. Operating income
increased 182% over the second quarter of 2004 on improvements in pricing,
efficiency from higher volume and product mix. Dunkirk's sales were 9% lower
than the 2005 first quarter mainly because of management's decision to allocate
shipments of remelted feedstock from Bridgeville. Operating income was 2% lower
than the prior quarter of 2005 due to the lower volume.
USAP REPORTS STRONG SECOND QUARTER - Page 3 -
Business Outlook
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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 2005 sales will range from $40 to
$45 million and that diluted EPS will range from $0.45 to $0.50. This compares
with sales of $33.3 million and diluted EPS of $0.43 in the third quarter of
2004.
The following factors were considered in developing these estimates:
o The Company's total backlog at June 30, 2005 approximated $105 million
compared to $88 million at March 31, 2005, reflecting strong aerospace,
power generation and petrochemical markets. The Company noted that a
portion of the backlog is for shipments scheduled in 2006 and 2007, as
customers take into account future needs and current remelt capacity
constraints industry-wide.
o Tool steel sales are expected to remain at 2005 second quarter levels for
the balance of the year as continued strength in the industrial
manufacturing sector is offset by lower automotive requirements.
o Sales from the Dunkirk Specialty Steel segment are expected to approximate
$13 million.
Webcast
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A simultaneous Webcast of the Company's conference call discussing the
second quarter of 2005 and the third quarter 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 and continuing through July 27th. It can be accessed by dialing
706-645-9291, passcode 7308195. This is a toll call.
About Universal Stainless & Alloy Products, Inc.
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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.
USAP REPORTS STRONG SECOND QUARTER - Page 4 -
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 and regulatory
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.
- FINANCIAL TABLES FOLLOW -
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,
2005 2004 2005 2004
---- ---- ---- ----
Net Sales
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Stainless steel $ 34,205 $ 22,889 $ 67,824 $ 39,057
Tool steel 4,359 3,742 10,376 6,908
High-strength low alloy steel 1,642 1,064 2,764 1,925
High-temperature alloy steel 711 613 1,736 1,322
Conversion services 850 596 1,964 928
Other 96 122 218 193
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Total net sales 41,863 29,026 84,882 50,333
Cost of products sold 34,197 24,531 70,607 43,875
Selling and administrative expenses 2,385 1,947 4,292 3,475
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Operating income 5,281 2,548 9,983 2,983
Interest expense (200) (106) (372) (194)
Other income 3 3 63 11
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Income before taxes 5,084 2,445 9,674 2,800
Income tax provision 1,831 879 3,483 1,007
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Net income $ 3,253 $ 1,566 $ 6,191 $ 1,793
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Earnings per share - Basic $ 0.51 $ 0.25 $ 0.97 $ 0.28
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Earnings per share - Diluted $ 0.50 $ 0.25 $ 0.96 $ 0.28
======== ======== ======== ========
Weighted average shares of
Common Stock outstanding
Basic 6,363,831 6,299,579 6,357,189 6,297,816
Diluted 6,451,326 6,355,148 6,459,901 6,345,591
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MARKET SEGMENT INFORMATION
For the Quarter Ended For the Six-Months Ended
June 30, June 30,
2005 2004 2005 2004
---- ---- ---- ----
Net Sales
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Service centers $ 17,050 $ 12,267 $ 35,357 $ 22,173
Rerollers 11,250 8,187 23,278 12,257
Forgers 7,907 5,133 14,170 8,949
Original equipment manufacturers 2,597 1,904 4,921 3,838
Wire redrawers 2,113 843 4,985 2,039
Conversion services 851 596 1,965 928
Other 95 96 206 149
-------- -------- -------- --------
Total net sales $ 41,863 $ 29,026 $ 84,882 $ 50,333
======== ========= ======== ========
Tons shipped 13,383 12,131 28,613 21,197
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BUSINESS SEGMENT RESULTS
Universal Stainless & Alloy Products Segment
For the Quarter Ended For the Six-Months Ended
June 30, June 30,
2005 2004 2005 2004
---- ---- ---- ----
Net Sales
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Stainless steel $ 23,536 $ 16,376 $ 45,313 $ 27,096
Tool steel 4,247 3,667 10,154 6,747
High-strength low alloy steel 920 399 1,313 812
High-temperature alloy steel 703 526 1,728 1,075
Conversion services 705 475 1,656 724
Other 43 106 160 152
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30,154 21,549 60,324 36,606
Intersegment 7,003 3,933 15,258 7,721
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Total net sales 37,157 25,482 75,582 44,327
Material cost of sales 18,454 11,322 38,280 18,924
Operation cost of sales 13,304 10,932 28,083 20,743
Selling and administrative expenses 1,755 1,331 2,896 2,362
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Operating income $ 3,644 $ 1,897 $ 6,323 $ 2,298
========= ========= ========= =========
Dunkirk Specialty Steel Segment
For the Quarter Ended For the Six-Months Ended
June 30, June 30,
2005 2004 2005 2004
---- ---- ---- ----
Net Sales
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Stainless steel $ 10,669 $ 6,513 $ 22,511 $ 11,961
Tool steel 112 75 222 161
High-strength low alloy steel 722 665 1,451 1,113
High-temperature alloy steel 8 87 8 247
Conversion services 145 121 308 204
Other 53 16 58 41
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11,709 7,477 24,558 13,727
Intersegment 663 558 1,481 1,053
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Total net sales 12,372 8,035 26,039 14,780
Material cost of sales 6,442 3,902 13,556 7,379
Operation cost of sales 3,465 2,866 7,389 5,603
Selling and administrative expenses 630 616 1,396 1,113
--------- -------- --------- ---------
Operating income $ 1,835 $ 651 $ 3,698 $ 685
========= ======== ========= =========
CONSOLIDATED BALANCE SHEET
June 30, December 31,
2005 2004
---- ----
Assets
- ------
Cash $ 1,158 $ 241
Accounts receivable, net 27,669 24,562
Inventory 48,273 38,318
Other current assets 2,589 3,418
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Total current assets 79,689 66,539
Property, plant & equipment, net 41,786 40,716
Other assets 568 585
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Total assets $ 122,043 $ 107,840
========= =========
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable $ 16,397 $ 11,666
Bank overdrafts 452 2,638
Accrued employment costs 2,875 1,830
Current portion of long-term debt 1,053 2,044
Other current liabilities 923 442
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Total current liabilities 21,700 18,620
Bank revolver 4,578 8,635
Long-term debt 11,978 3,555
Deferred taxes 10,232 10,093
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Total liabilities 48,488 40,903
Stockholders' equity 73,555 66,937
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Total liabilities and stockholders' equity $ 122,043 $ 107,840
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CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Six-Months Ended June 30,
2005 2004
---- ----
Cash flows from operating activities:
Net income $ 6,191 $ 1,793
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 1,532 1,571
Deferred taxes 412 84
Tax benefit from exercise of stock options 115 3
Changes in assets and liabilities:
Accounts receivable, net (3,107) (6,858)
Inventory (9,955) (8,297)
Trade accounts payable 4,731 4,147
Accrued employment costs 1,045 907
Other, net 1,383 1,720
--------- --------
Cash flow from (due to) operating activities 2,347 (4,930)
--------- --------
Cash flow from investing activities:
Capital expenditures (2,931) (1,195)
--------- --------
Cash flow due to investing activities (2,931) (1,195)
--------- --------
Cash flows from financing activities:
Net borrowings under revolving line of credit (4,057) 3,167
Proceeds from long-term debt 8,050 -
Repayments of long-term debt (61) (983)
Net change in bank overdrafts (2,186) (508)
Proceeds from issuance of common stock 312 83
--------- --------
Cash flow from financing activities 1,501 1,759
--------- --------
Net cash flow $ 917 $ (4,366)
========= ========