SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 28, 2010
Universal Stainless & Alloy Products, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 000-25032 | 25-1724540 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 600 Mayer Street, Bridgeville, Pennsylvania | 15017 | |||
| (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 28, 2010, Universal Stainless and Alloy Products, Inc. issued a press release regarding its earnings for the second quarter ended June 30, 2010. A copy of the press release is attached hereto as Exhibit 99.1.
The information in this Current Report on Form 8-K, including the attached press release regarding the Company’s earnings for the second quarter ended June 30, 2010, 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.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits |
| 99.1 | Press Release dated July 28, 2010 |
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/ DOUGLAS M. MCSORLEY | |
| Vice President of Finance, | ||
| Chief Financial Officer and Treasurer | ||
Dated: July 28, 2010
Exhibit 99.1
| CONTACTS: | Dennis Oates | Douglas McSorley | June Filingeri | |||
| Chairman, | VP Finance, CFO | President | ||||
| President and CEO | and Treasurer | Comm-Partners LLC | ||||
| (412) 257-7609 | (412) 257-7606 | (203) 972-0186 |
FOR IMMEDIATE RELEASE
UNIVERSAL STAINLESS REPORTS STRONG 2010 SECOND QUARTER RESULTS
- Sales of $51.3 Million Are Up 48% from 1Q10 -
- EPS is $0.61 versus $0.21 in 1Q10 -
- Backlog Totals $46 Million versus $53 Million for 1Q10 -
BRIDGEVILLE, PA, July 28, 2010 – Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) reported today that sales for the second quarter of 2010 were $51.3 million compared with $30.8 million in the second quarter of 2009 and $34.7 million in the 2010 first quarter.
Net income for the second quarter of 2010 was $4.2 million, or $0.61 per diluted share. For the second quarter of 2009, the Company reported a net loss of $0.4 million, or $0.06 per diluted share, which included a negative tax adjustment equivalent to $0.11 per share. In the first quarter of 2010, net income was $1.4 million, or $0.21 per diluted share.
The Company recorded negative cash flow from operations of $0.8 million for the second quarter of 2010 after adjusting for a $4.1 million tax refund. This compares with positive cash flow of $12.7 million in the second quarter of 2009 and negative cash flow of $2.8 million for the first quarter of 2010. Cash flow has decreased in 2010 due to the Company’s investment in managed working capital to support increased sales activity. Capital expenditures were $2.3 million, including $1.2 million for a melt shop upgrade project, which is expected to be completed in the current quarter. At June 30, 2010, the Company had cash of $34.7 million and total debt of $12.2 million.
The Company noted that shipment volume continued to improve in the second quarter of 2010 and volume shipped to the end markets of aerospace, power generation, petrochemical and service center plate increased 48%, 48%, 38% and 27%, respectively, over the first quarter of 2010.
President and CEO Dennis Oates commented: “Market demand continued to recover in the second quarter. Our strong on-time performance and improved lead times helped win additional business and we made more progress in penetrating new segments of our markets. Sales rose to the highest level in 6 quarters and our company-wide operating margin reached 12.5% of sales, nearly double the level of the 2010 first quarter and the highest level in 11 quarters. In addition to the higher volumes, our increased profitability was due to cost reductions from ongoing process improvements and recent capital investments. We intend to make further progress in improved quality and reduced costs.
“Due to the uncertainty in general economic activity and raw material pricing, our customers remain cautious, which is reflected in some moderation in backlog. While our backlog of $46 million is up significantly from last year, it is down from $53 million at the end of the first quarter. We currently expect sequential sales growth for the balance of the year to be modest.”
1
Segment Review
For the second quarter of 2010, the Universal Stainless & Alloy Products segment had sales of $49.7 million and operating income of $6.8 million, yielding an operating margin of 13.7% of sales. This compares with sales of $26.9 million and operating income of $0.9 million, or 3.5% of sales, in the second quarter of 2009. In the first quarter of 2010, sales were $31.2 million and operating income was $1.9 million, or 6.2% of sales.
Segment sales rose 85% from the second quarter of 2009 on a 72% increase in tons shipped mainly due to substantially higher shipments to rerollers and of plate products to service centers along with higher sales to forgers. Segment sales increased 59% from the first quarter of 2010 on a 46% increase in tons shipped also due to higher shipments to rerollers, including sales to the Dunkirk segment, service centers and forgers.
The Dunkirk Specialty Steel segment recorded sales of $13.9 million and operating income of $1.3 million for the second quarter of 2010, yielding an operating margin of 9.2% of sales. This compares with sales in the second quarter of 2009 of $10.2 million and an operating loss of $0.4 million. In the first quarter of 2010, sales were $10.4 million and operating income was $325,000, or 3.1% of sales.
Dunkirk’s sales increased 36% from the second quarter of 2009 on approximately the same number of tons shipped due a favorable product mix shift and higher selling prices. Dunkirk’s sales increased 33% from the first quarter of 2010 on a 12% increase in tons shipped, mainly due to higher shipments to service centers and higher selling prices.
Webcast
A simultaneous webcast of the Company’s conference call discussing the second quarter of 2010, 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 2010.
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, in a wide variety of grades, widths and gauges to customer specifications. The Company’s products are sold to rerollers, forgers, service centers, original equipment manufacturers and wire redrawers for use in a variety of industries, including aerospace, power generation, petrochemical and heavy equipment manufacturing. Our specialty bar facilities have one of the broadest and diverse size range and product capabilities in the industry. Established in 1994, our experience, technical expertise, and dedicated workforce stand 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, 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, labor 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. The Company’s actual results in future periods also may be impacted by various economic and market risk and uncertainties, many of which are 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.
- TABLES FOLLOW -
2
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share information)
(Unaudited)
CONSOLIDATED STATEMENT OF OPERATIONS
| For the Quarter Ended June 30, |
For the Six-Months Ended June 30, |
|||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Net Sales |
||||||||||||||||
| Stainless steel |
$ | 36,715 | $ | 25,648 | $ | 60,747 | $ | 59,410 | ||||||||
| Tool steel |
8,863 | 1,563 | 15,038 | 4,892 | ||||||||||||
| High-strength low alloy steel |
2,985 | 2,367 | 4,997 | 5,110 | ||||||||||||
| High-temperature alloy steel |
1,396 | 876 | 3,288 | 2,895 | ||||||||||||
| Conversion services |
781 | 292 | 1,192 | 596 | ||||||||||||
| Other |
551 | 17 | 708 | 46 | ||||||||||||
| Total net sales |
51,291 | 30,763 | 85,970 | 72,949 | ||||||||||||
| Cost of products sold |
41,594 | 28,092 | 71,354 | 71,956 | ||||||||||||
| Selling and administrative expenses |
3,291 | 2,106 | 5,951 | 6,843 | ||||||||||||
| Operating income (loss) |
6,406 | 565 | 8,665 | (5,850 | ) | |||||||||||
| Interest expense |
(112 | ) | (27 | ) | (208 | ) | (51 | ) | ||||||||
| Other income |
1 | 35 | 1 | 65 | ||||||||||||
| Income (loss) before taxes |
6,295 | 573 | 8,458 | (5,836 | ) | |||||||||||
| Income tax provision (benefit) |
2,140 | 973 | 2,876 | (1,610 | ) | |||||||||||
| Net income (loss) |
$ | 4,155 | $ | (400 | ) | 5,582 | (4,226 | ) | ||||||||
| Earnings (loss) per share – Basic |
$ | 0.61 | $ | (0.06 | ) | $ | 0.82 | $ | (0.63 | ) | ||||||
| Earnings (loss) per share – Diluted |
$ | 0.61 | $ | (0.06 | ) | $ | 0.82 | (0.63 | ) | |||||||
| Weighted average shares of Common Stock outstanding |
||||||||||||||||
| Basic |
6,774,653 | 6,751,739 | 6,773,995 | 6,742,012 | ||||||||||||
| Diluted |
6,853,372 | 6,751,739 | 6,847,078 | 6,742,012 | ||||||||||||
| MARKET SEGMENT INFORMATION | ||||||||||||||||
| For the Quarter Ended June 30, |
For the Six-Months
Ended June 30, |
|||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Net Sales |
||||||||||||||||
| Service centers |
$ | 23,774 | $ | 13,117 | $ | 41,005 | $ | 30,649 | ||||||||
| Forgers |
13,127 | 10,420 | 23,111 | 23,391 | ||||||||||||
| Rerollers |
8,892 | 1,960 | 12,552 | 7,964 | ||||||||||||
| Original equipment manufacturers |
3,568 | 3,797 | 5,998 | 8,196 | ||||||||||||
| Wire redrawers |
598 | 1,160 | 1,421 | 2,107 | ||||||||||||
| Conversion services |
781 | 292 | 1,192 | 596 | ||||||||||||
| Other |
551 | 17 | 691 | 46 | ||||||||||||
| Total net sales |
$ | 51,291 | $ | 30,763 | $ | 85,970 | $ | 72,949 | ||||||||
| Tons shipped |
11,795 | 6,855 | 20,250 | 16,448 | ||||||||||||
3
BUSINESS SEGMENT RESULTS
Universal Stainless & Alloy Products Segment
| For the Quarter Ended June 30, |
For the Six-Months Ended June 30, |
||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||
| Net Sales |
|||||||||||||
| Stainless steel |
$ | 26,701 | $ | 18,234 | $ | 43,940 | $ | 44,229 | |||||
| Tool steel |
8,716 | 1,531 | 14,644 | 4,739 | |||||||||
| High-strength low alloy steel |
935 | 647 | 1,384 | 1,662 | |||||||||
| High-temperature alloy steel |
629 | 393 | 1,220 | 1,127 | |||||||||
| Conversion services |
556 | 206 | 843 | 394 | |||||||||
| Other |
510 | 11 | 664 | 40 | |||||||||
| 38,047 | 21,022 | 62,695 | 52,191 | ||||||||||
| Intersegment |
11,660 | 5,857 | 18,255 | 11,373 | |||||||||
| Total net sales |
49,707 | 26,879 | 80,950 | 63,564 | |||||||||
| Material cost of sales |
23,732 | 10,445 | 37,889 | 30,711 | |||||||||
| Operation cost of sales |
16,937 | 14,131 | 30,311 | 30,591 | |||||||||
| Selling and administrative expenses |
2,252 | 1,354 | 4,030 | 5,227 | |||||||||
| Operating income (loss) |
$ | 6,786 | $ | 949 | $ | 8,720 | $ | (2,965 | ) | ||||
Dunkirk Specialty Steel Segment
| For the Quarter Ended June 30, |
For the Six-Months Ended June 30, |
|||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||
| Net Sales |
||||||||||||||
| Stainless steel |
$ | 10,014 | $ | 7,414 | $ | 16,807 | $ | 15,181 | ||||||
| Tool steel |
147 | 32 | 394 | 153 | ||||||||||
| High-strength low alloy steel |
2,050 | 1,720 | 3,613 | 3,448 | ||||||||||
| High-temperature alloy steel |
767 | 483 | 2,068 | 1,768 | ||||||||||
| Conversion services |
225 | 86 | 349 | 202 | ||||||||||
| Other |
42 | 6 | 45 | 6 | ||||||||||
| 13,245 | 9,741 | 23,276 | 20,758 | |||||||||||
| Intersegment |
671 | 465 | 1,071 | 830 | ||||||||||
| Total net sales |
13,916 | 10,206 | 24,347 | 21,588 | ||||||||||
| Material cost of sales |
7,857 | 6,345 | 13,812 | 15,139 | ||||||||||
| Operation cost of sales |
3,741 | 3,493 | 7,010 | 7,718 | ||||||||||
| Selling and administrative expenses |
1,040 | 752 | 1,922 | 1,616 | ||||||||||
| Operating income (loss) |
$ | 1,278 | $ | (384 | ) | $ | 1,603 | $ | (2,885 | ) | ||||
4
CONSOLIDATED BALANCE SHEET
| June 30, 2010 |
December
31, 2009 | |||||
| Assets |
||||||
| Cash |
$ | 34,743 | $ | 42,349 | ||
| Accounts receivable, net |
30,393 | 17,028 | ||||
| Inventory, net |
55,648 | 41,322 | ||||
| Other current assets |
5,244 | 9,344 | ||||
| Total current assets |
126,028 | 110,043 | ||||
| Property, plant & equipment, net |
70,332 | 70,085 | ||||
| Other assets |
1,450 | 1,586 | ||||
| Total assets |
$ | 197,810 | $ | 181,714 | ||
| Liabilities and Stockholders’ Equity |
||||||
| Trade accounts payable |
$ | 14,407 | $ | 7,783 | ||
| Outstanding checks in excess of bank balance |
367 | 734 | ||||
| Accrued employment costs |
4,541 | 1,178 | ||||
| Current portion of long-term debt |
2,834 | 2,223 | ||||
| Other current liabilities |
1,530 | 553 | ||||
| Total current liabilities |
23,679 | 12,471 | ||||
| Long-term debt |
9,403 | 10,823 | ||||
| Deferred taxes |
14,125 | 14,049 | ||||
| Other liabilities |
316 | 145 | ||||
| Total liabilities |
47,523 | 37,488 | ||||
| Stockholders’ equity |
150,287 | 144,226 | ||||
| Total liabilities and stockholders’ equity |
$ | 197,810 | $ | 181,714 | ||
5
CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Six-month Period Ended June 30,
| 2010 | 2009 | |||||||
| Cash flows provided by operating activities: |
||||||||
| Net income (loss) |
$ | $5,582 | $ | (4,226 | ) | |||
| Adjustments to reconcile to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
2,666 | 2,338 | ||||||
| Deferred tax increase (decrease) |
171 | (262 | ) | |||||
| Stock based compensation expense |
569 | 499 | ||||||
| Tax benefit from share-based payment arrangements |
(8 | ) | (86 | ) | ||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable, net |
(13,365 | ) | 13,166 | |||||
| Inventory |
(14,326 | ) | 18,047 | |||||
| Trade accounts payable |
6,624 | (11,850 | ) | |||||
| Accrued employment costs |
3,363 | (1,286 | ) | |||||
| Accrued income taxes |
5,211 | (241 | ) | |||||
| Other, net |
(92 | ) | (807 | ) | ||||
| Cash flow (used in) provided by operating activities |
(3,605 | ) | 15,292 | |||||
| Cash flow used in investing activities: |
||||||||
| Proceeds from sale of fixed assets |
17 | |||||||
| Capital expenditures |
(3,421 | ) | (7,645 | ) | ||||
| Cash flow used in investing activities |
(3,404 | ) | (7,645 | ) | ||||
| Cash flows provided by financing activities: |
||||||||
| Long-term debt issuance |
— | 12,000 | ||||||
| State grant funding purchase of new equipment |
500 | — | ||||||
| Long-term debt repayments |
(808 | ) | (199 | ) | ||||
| Net change in outstanding checks in excess of bank balance |
(367 | ) | (176 | ) | ||||
| Deferred financing costs |
— | (84 | ) | |||||
| Proceeds from issuance of common stock |
70 | 313 | ||||||
| Tax benefit from share-based payment arrangements |
8 | 86 | ||||||
| Cash flow (used in) provided by financing activities |
(597 | ) | 11,940 | |||||
| Net cash flow |
$ | (7,606 | ) | $ | 19,587 | |||
6