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): January 19, 2006
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 January 19, 2006, Universal Stainless and Alloy Products, Inc.
issued a press release regarding its earnings for the fourth quarter ended
December 31, 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
-------------------------------------
Vice President of Finance,
Chief Financial Officer and Treasurer
Dated: January 19, 2006
[GRAPHIC OMITTED][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
Comm-Partners LLC
June Filingeri
(203) 972-0186
UNIVERSAL STAINLESS REPORTS FOURTH QUARTER EPS OF $0.55
CAPPING RECORD 2005
- FULL YEAR EPS REACHES $2.02 ON SALES OF $170 MILLION -
- BACKLOG GROWTH CONTINUES -
BRIDGEVILLE, PA, January 19, 2006 -- Universal Stainless & Alloy
Products, Inc. (Nasdaq: USAP) reported today that sales for the fourth quarter
of 2005 rose 14% to $42.0 million compared with $37.0 million in the same period
of 2004. Fourth quarter 2005 net income rose 38% to $3.6 million, or $0.55 per
diluted share, and included $358,000 of other income from the receipt of 2005
import duties, equivalent to $0.04 per diluted share. This compares with net
income of $2.6 million, or $0.40 per diluted share, reported in the fourth
quarter of 2004, which included 2004 import duties of $507,000, equivalent to
$0.05 per diluted share
The Company's fourth quarter 2005 results exceeded its forecast of
sales in the range of $33 to $38 million and diluted EPS in the range of $0.37
to $0.42, before including the benefit of import duties.
For the full year 2005, sales rose 41% to a record $170.0 million
compared with $120.6 million in 2004. Net income for 2005 increased 83% to a
record $13.1 million, or $2.02 per diluted share, including the import duties
received in the 2005 fourth quarter. Full year 2004 net income was $7.1 million,
or $1.12 per diluted share, and included a total of $1.1 million of other
income from import duties, equivalent to $0.11 per diluted share, reflecting the
receipt of a substantial portion of the 2003 and 2004 import duties awarded to
the Company. Before including import duties in both periods, full year 2005 net
income was double that of 2004.
President and CEO Mac McAninch commented: "Our very strong fourth
quarter capped a record year for our Company. Our niche markets of aerospace,
power generation, petrochemical and tool steel were robust all year and current
indications are they will remain strong in 2006. Our cost recovery pricing
strategy continued to be both effective for us and fair to our customers given
the ongoing volatility of raw material costs and high energy prices."
USAP REPORTS 2005 FOURTH QUARTER RESULTS - PAGE 2 -
Mr. McAninch continued: "We also committed to further reinvest in
our operations to increase throughput and efficiency at a time of acute customer
need for our products, and to expand our capabilities to produce higher
value-added products. We delivered on that promise with more than $8 million in
capital improvements in 2005, including the addition of a vacuum-arc remelt
furnace that became operational in December. In addition, we focused on process
improvements throughout the year, especially at our Bridgeville and Titusville
facilities which comprise the Universal Stainless and Alloy Products segment of
our business. As a result, that segment achieved sales of $153 million in 2005,
surpassing the company-wide record we achieved in 2004."
SEGMENT REVIEW
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In the fourth quarter of 2005, the Universal Stainless & Alloy Products
segment had sales of $37.7 million and operating income of $4.7 million,
yielding an operating margin of 12%. This compares with sales of $32.7 million
and operating income of $2.3 million, or 7% of sales, in the fourth quarter of
2004, which included a bad debt charge of $282,000. In the 2005 third quarter,
sales in this segment were $40.0 million and operating income was $4.0 million,
or 10% of sales, including a write-off of $363,000 mainly for the retirement of
fixed assets replaced.
The 15% increase in sales compared with the 2004 fourth quarter
reflects higher product prices and a favorable product mix, including strong
growth in shipments of bar and special shape products. This more than offset the
Company's continued reduction in shipments to rerollers. Fourth quarter 2005
sales were 6% lower than the prior quarter mainly due to lower sales to
rerollers and forgers. Operating income was more than double that of the 2004
fourth quarter and up 17% from the 2005 third quarter due to the improved
pricing, production processes and mix of products shipped.
The Dunkirk Specialty Steel segment reported fourth quarter 2005 sales
of $13.0 million and operating income of $1.3 million, resulting in an operating
margin of 10%. This compares with sales of $10.5 million and operating income of
$1.2 million, or 12% of sales, in the fourth quarter of 2004. In the third
quarter of 2005, sales were $14.0 million and operating income was $1.8 million,
or 13% of sales.
Dunkirk's sales increased 24% over the 2004 fourth quarter due to
higher selling prices and increased shipments of bar products to service centers
and OEMs and of rod and wire products to redrawers and OEMs. They were 7% lower
than the 2005 third quarter due to lower sales to redrawers and normal seasonal
factors. Operating income rose just 2% over the fourth quarter of 2004 and was
28% lower than the prior quarter due to the high cost of raw materials at the
time of feedstock procurement and manufacturing delays resulting from the mix of
products in production.
USAP REPORTS 2005 FOURTH QUARTER RESULTS - 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 first quarter 2006 sales will range from $40
to $45 million and that diluted EPS will range from $0.50 to $0.55. This
compares with sales of $43.0 million and diluted EPS of $0.45 in the first
quarter of 2005.
The following factors were considered in developing these estimates:
O The Company's total backlog at December 31, 2005 approximated $116 million
compared to $106 million at September 30, 2005, reflecting continued strong
aerospace, power generation, petrochemical and tool steel markets.
O Production at the Bridgeville facility is expected to benefit from the
recent addition of a milling machine, the improvements achieved in bar
manufacturing and the initial contribution of the newly installed
vacuum-arc remelt furnace.
O Sales from the Dunkirk Specialty Steel segment are expected to remain at
the $13 to $14 million level because of the expectation that the
manufacturing delays will not be resolved until the end of the quarter.
Mr. McAninch concluded: "Our goal in 2006 is to take further advantage
of our strong marketplace through additional improvements in production
processes and investment in our facilities, as we continue to focus on building
value for our shareholders, customers and employees."
WEBCAST
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A simultaneous Webcast of the Company's conference call discussing the
fourth quarter of 2005 and the first quarter 2006 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 January 25th. It can be accessed by
dialing 706-645-9291, passcode 4039267. This is a toll call.
USAP REPORTS 2005 FOURTH QUARTER RESULTS - PAGE 4 -
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 rerollers, forgers,
service centers, original equipment manufacturers 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 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 Year Ended
December 31, December 31,
2005 2004 2005 2004
---- ---- ---- ----
NET SALES
Stainless steel $ 32,191 $ 28,944 $ 135,588 $ 94,530
Tool steel 5,556 5,890 20,737 17,075
High-strength low alloy steel 2,336 597 6,606 3,682
High-temperature alloy steel 1,371 673 3,694 2,468
Conversion services 497 751 3,030 2,386
Other 92 157 367 501
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Total net sales 42,043 37,012 170,022 120,642
Cost of products sold 34,653 31,396 140,952 102,972
Selling and administrative expenses 2,106 2,053 8,441 7,401
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Operating income 5,284 3,563 20,629 10,269
Interest expense (256) (120) (851) (422)
Other income 374 542 437 1,119
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Income before taxes 5,402 3,985 20,215 10,966
Income tax provision 1,826 1,392 7,159 3,835
------- ------- ---------- ----------
Net income $ 3,576 $ 2,593 $ 13,056 $ 7,131
======= ======= ========== ==========
Earnings per share - Basic $ 0.56 $ 0.41 $ 2.05 $ 1.13
======= ====== ========== ==========
Earnings per share - Diluted $ 0.55 $ 0.40 $ 2.02 $ 1.12
======= ====== ========== ==========
Weighted average shares of
Common Stock outstanding
Basic 6,403,185 6,318,951 6,375,257 6,304,909
Diluted 6,506,596 6,427,348 6,479,114 6,379,579
- ----------------------------------------------------------------------------------------------------------
MARKET SEGMENT INFORMATION
For the Quarter Ended For the Year Ended
December 31, December 31,
2005 2004 2005 2004
---- ---- ---- ----
NET SALES
Service centers $ 19,817 $ 16,645 $ 73,213 $ 52,261
Rerollers 6,214 8,735 39,254 30,200
Forgers 7,172 6,827 29,914 22,008
Original equipment manufacturers 5,922 2,248 13,992 8,349
Wire redrawers 2,329 1,662 10,263 5,008
Conversion services 497 751 3,030 2,386
Other 92 144 356 430
------ ------- ---------- ----------
Total net sales $ 42,043 $ 37,012 $ 170,022 $ 120,642
====== ======= ========== ==========
Tons shipped 10,668 13,662 51,233 48,350
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BUSINESS SEGMENT RESULTS
UNIVERSAL STAINLESS & ALLOY PRODUCTS SEGMENT
For the Quarter Ended For the Year Ended
December 31, December 31,
2005 2004 2005 2004
---- ---- ---- ----
NET SALES
Stainless steel $ 21,666 $ 19,739 $ 90,530 $ 65,208
Tool steel 5,324 5,770 20,047 16,672
High-strength low alloy steel 1,312 189 3,199 1,576
High-temperature alloy steel 1,019 656 3,254 2,182
Conversion services 412 605 2,534 1,961
Other 78 129 295 427
------ ------- ---------- ----------
29,811 27,088 119,859 88,026
Intersegment 7,893 5,620 33,399 20,208
------ ------- ---------- ----------
Total net sales 37,704 32,708 153,258 108,234
Material cost of sales 16,412 16,044 75,568 49,967
Operation cost of sales 15,151 12,788 56,885 45,521
Selling and administrative expenses 1,467 1,581 5,791 5,253
------ ------- ---------- ----------
Operating income $ 4,674 $ 2,295 $ 15,014 $ 7,493
====== ======= ========== ==========
DUNKIRK SPECIALTY STEEL SEGMENT
For the Quarter Ended For the Year Ended
December 31, December 31,
2005 2004 2005 2004
---- ---- ---- ----
NET SALES
Stainless steel $ 10,525 $ 9,205 $ 45,058 $ 29,322
Tool steel 232 120 690 403
High-strength low alloy steel 1,024 408 3,407 2,106
High-temperature alloy steel 352 17 440 286
Conversion services 85 146 496 425
Other 14 28 72 74
------ -------- ---------- ----------
12,232 9,924 50,163 32,616
Intersegment 750 535 2,848 2,107
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Total net sales 12,982 10,459 53,011 34,723
Material cost of sales 7,750 5,739 29,496 17,834
Operation cost of sales 3,324 3,008 14,141 11,653
Selling and administrative expenses 639 472 2,650 2,148
------ -------- ---------- ----------
Operating income $ 1,269 $ 1,240 $ 6,724 $ 3,088
====== ======== ========== ==========
CONSOLIDATED BALANCE SHEET
December 31, December 31,
2005 2004
---- ----
ASSETS
Cash $ 620 $ 241
Accounts receivable, net 27,963 24,562
Inventory 51,398 38,318
Other current assets 2,790 3,418
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Total current assets 82,771 66,539
Property, plant & equipment, net 45,761 40,716
Other assets 495 585
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Total assets $ 129,027 $ 107,840
=========== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 12,579 $ 11,666
Outstanding checks in excess of bank balance 3,101 2,638
Accrued employment costs 2,958 1,830
Current portion of long-term debt 1,555 2,044
Other current liabilities 914 442
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Total current liabilities 21,107 18,620
Bank revolver 6,117 8,635
Long-term debt 11,200 3,555
Deferred taxes 9,600 10,093
----------- --------------
Total liabilities 48,024 40,903
Stockholders' equity 81,003 66,937
----------- --------------
Total liabilities and stockholders' equity $ 129,027 $ 107,840
=========== ==============
CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Year Ended December 31,
2005 2004
---- ----
Cash flows from operating activities:
Net income $ 13,056 $ 7,131
Adjustments to reconcile to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,085 3,061
Loss on retirement of fixed assets 705 -
Deferred taxes (90) 724
Tax benefit from exercise of stock options 207 51
Changes in assets and liabilities:
Accounts receivable, net (3,401) (11,872)
Inventory (13,080) (16,037)
Trade accounts payable 913 4,981
Accrued employment costs 1,128 997
Other, net 808 1,247
------------ ----------
Cash flow provided by (used in) operating activities 3,331 (9,717)
------------ ----------
Cash flow from investing activities:
Acquisition of real property through
purchase agreements (344) -
Capital expenditures (8,464) (3,586)
------------ ----------
Cash flow used in investing activities (8,808) (3,586)
------------ ----------
Cash flows from financing activities:
Proceeds from long-term debt 8,050 -
Repayments of long-term debt (894) (1,944)
Borrowings under revolving line of credit (2,518) 8,635
Increase in outstanding checks in excess of
bank balance 463 1,825
Deferred financing costs (48) (26)
Proceeds from issuance of common stock 803 319
------------ ----------
Cash flow provided by financing activities 5,856 8,809
------------ ----------
Net cash flow $ 379 $ (4,494)
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