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): January 26, 2011

 

 

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 January 26, 2011, Universal Stainless and Alloy Products, Inc. issued a press release regarding its earnings for the fourth quarter and year ended December 31, 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 fourth quarter and year ended December 31, 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 January 26, 2011

---

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.

 

Dated: January 26, 2011

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 2010 FOURTH QUARTER RESULTS

- EPS is $0.52 on Sales of $51.6 Million -

- Backlog of $69 Million is Highest in Two Years and Up 18% from End of 3Q10 -

BRIDGEVILLE, PA, January 26, 2011 – Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) reported today that sales for the fourth quarter of 2010 were $51.6 million compared with $26.7 million in the fourth quarter of 2009 and $51.9 million in the 2010 third quarter.

Net income for the fourth quarter of 2010 was $3.6 million, or $0.52 per diluted share, compared with $1.0 million, or $0.14 per diluted share, for the fourth quarter of 2009, and $4.1 million, or $0.60 per diluted share, for the third quarter of 2010.

The Company recorded negative cash flow from operations of $3.6 million in the fourth quarter of 2010 due to its investment in managed working capital to support increased sales activity and backlog. This compares with positive cash flow from operations of $2.3 million in the fourth quarter of 2009. For full year 2010, cash flow from operations was $1.3 million. Capital expenditures for the 2010 fourth quarter were $2.3 million. At December 31, 2010, the Company had cash of $34.9 million and total debt of $10.8 million.

The Company noted that total shipment volume for the fourth quarter of 2010 was 3% lower than the third quarter of 2010, but 84% higher than the fourth quarter a year ago. Compared with the third quarter of 2010, volume shipped to the power generation market increased 22% and petrochemical volume rose 7%, while volumes shipped to the aerospace and service center plate markets were lower by 6% and 54%, respectively.

Chairman, President and CEO Dennis Oates commented: “Our fourth quarter sales were in line with the third quarter as expected and more heavily weighted towards lower margin semi-finished products. Some customers elected to delay December shipments until January as a part of their year-end inventory planning. Order entry from all markets continued to build positive momentum and backlog at the end of the year rose to a two-year high of $69 million.”

Mr. Oates concluded: “We have entered 2011 fully focused on seizing the opportunities presented by our strengthening end markets while relentlessly pursing further operating improvements.”

Segment Review

For the fourth quarter of 2010, the Universal Stainless & Alloy Products segment had sales of $46.1 million and operating income of $4.2 million, yielding an operating margin of 9.2% of sales. This compares with sales of $23.1 million and operating income of $0.5 million, or 2.2% of sales, in the fourth quarter of 2009. In the third quarter of 2010, sales were $46.2 million and operating income was $4.4 million, or 9.4% of sales

Segment sales doubled from the fourth quarter of 2009 on a 91% increase in tons shipped mainly due to higher shipments to rerollers, forgers and service centers. Segment sales were level with the third quarter of 2010 on a 3% decrease in tons shipped with higher shipments to forgers and rerollers offset by lower shipments to service centers.

 

1

---

The Dunkirk Specialty Steel segment recorded sales of $17.1 million and operating income of $1.3 million for the fourth quarter of 2010, yielding an operating margin of 7.8% of sales. This compares with sales in the fourth quarter of 2009 of $8.1 million and operating income of $0.2 million, or 2.8% of sales. In the third quarter of 2010, sales were $16.1 million and operating income was $1.4 million or 8.4% of sales.

Dunkirk’s sales increased 111% from the fourth quarter of 2009 on a 73% increase in tons shipped mainly due to a doubling of shipments to service centers and higher selling prices. Dunkirk’s sales increased 6% from the third quarter of 2010 on a 4% increase in tons shipped, mainly due to higher shipments to forgers and OEMs and higher selling prices.

Webcast

A simultaneous webcast of the Company’s conference call discussing the fourth 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 first 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, 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 December 31,								For the Year Ended December 31,
		2010				2009				2010				2009
Net Sales
Stainless steel		$	42,009			$	20,037			$	142,302			$	98,069
Tool steel			3,733				3,385				26,196				9,413
High-strength low alloy steel			2,734				1,560				10,310				9,235
High-temperature alloy steel			1,415				1,184				5,853				5,567
Conversion services			890				330				2,719				1,203
Other			802				176				2,043				1,420
Total net sales			51,583				26,672				189,423				124,907
Cost of products sold			42,742				23,374				155,651				117,901
Selling and administrative expenses			3,388				2,562				13,349				11,663
Operating income (loss)			5,453				736				20,423				(4,657	)
Interest expense			(118	)			(19	)			(452	)			(89	)
Other income			72				559				92				695
Income (loss) before taxes			5,407				1,276				20,063				(4,051	)
Income tax provision (benefit)			1,838				320				6,821				(1,093	)
Net income (loss)		$	3,569			$	956			$	13,242			$	(2,958	)
Earnings (loss) per share – Basic		$	0.53			$	0.14			$	1.95			$	(0.44	)
Earnings (loss) per share – Diluted		$	0.52			$	0.14			$	1.93			$	(0.44	)
Weighted average shares of Common Stock outstanding
Basic			6,796,561				6,769,130				6,782,576				6,755,560
Diluted			6,921,963				6,815,853				6,868,255				6,755,560

MARKET SEGMENT INFORMATION

 

		For the Quarter Ended December 31,								For the Year Ended December 31,
		2010				2009				2010				2009
Net Sales
Service centers		$	22,351			$	11,313			$	88,948			$	50,355
Forgers			10,149				8,652				41,793				39,821
Rerollers			12,403				2,270				36,515				12,174
Original equipment manufacturers			4,014				2,913				13,800				16,089
Wire redrawers			1,320				1,018				4,132				3,845
Conversion services			890				330				2,723				1,203
Other			456				176				1,512				1,420
Total net sales		$	51,583			$	26,672			$	189,423			$	124,907
Tons shipped			11,365				6,172				43,373				28,182

 

3

---

BUSINESS SEGMENT RESULTS

Universal Stainless & Alloy Products Segment

 

		For the Quarter Ended December 31,								For the Year Ended December 31,
		2010				2009				2010				2009
Net Sales
Stainless steel		$	28,504			$	14,318			$	99,092			$	71,670
Tool steel			3,522				3,311				25,325				9,146
High-strength low alloy steel			336				271				2,091				3,017
High-temperature alloy steel			700				347				2,427				1,988
Conversion services			725				217				2,110				763
Other			720				166				1,929				1,391
			34,507				18,630				132,974				87,975
Intersegment			11,628				4,456				40,320				20,344
Total net sales			46,135				23,086				173,294				108,319
Material cost of sales			24,838				9,882				85,507				49,592
Operation cost of sales			14,751				11,005				61,428				52,656
Selling and administrative expenses			2,310				1,690				9,048				8,467
Operating income (loss)		$	4,236			$	5099			$	17,311			$	(2,396	)

Dunkirk Specialty Steel Segment

 

		For the Quarter Ended December 31,								For the Year Ended December 31,
		2010				2009				2010				2009
Net Sales
Stainless steel		$	13,505			$	5,719			$	43,211			$	26,399
Tool steel			211				74				871				267
High-strength low alloy steel			2,398				1,289				8,219				6,218
High-temperature alloy steel			715				837				3,426				3,579
Conversion services			165				113				609				440
Other			82				10				114				29
			17,076				8,042				56,450				36,932
Intersegment			58				91				150				313
Total net sales			17,134				8,133				56,600				37,245
Material cost of sales			10,475				4,520				33,003				23,221
Operation cost of sales			4,240				2,514				15,000				13,089
Selling and administrative expenses			1,075				872				4,301				3,196
Operating income (loss)		$	1,344			$	227			$	4,296			$	(2,261	)

 

4

---

CONSOLIDATED BALANCE SHEET

 

		December 31, 2010				December 31, 2009
Assets
Cash		$	34,944			$	42,349
Accounts receivable, net			29,273				17,028
Inventory, net			69,710				41,322
Other current assets			5,661				9,344
Total current assets			139,588				110,043
Property, plant & equipment, net			71,581				70,085
Other assets			1,499				1,586
Total assets		$	212,668			$	181,714
Liabilities and Stockholders’ Equity
Trade accounts payable		$	20,022			$	7,783
Outstanding checks in excess of bank balance			544				734
Accrued employment costs			5,488				1,178
Current portion of long-term debt			2,833				2,223
Other current liabilities			605				553
Total current liabilities			29,492				12,471
Long-term debt			7,990				10,823
Deferred taxes			15,276				14,049
Other liabilities			287				145
Total liabilities			53,045				37,488
Stockholders’ equity			159,623				144,226
Total liabilities and stockholders’ equity		$	212,668			$	181,714

 

5

---

CONSOLIDATED STATEMENT OF CASH FLOW DATA

For the Year Ended December 31,

 

		2010				2009
Cash flows provided by operating activities:
Net income (loss)		$	13,242			$	(2,958	)
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization			5,486				4,859
Loss on retirement/sale of fixed assets			17				84
Deferred income tax			730				1,853
Stock based compensation expense			1,819				1,058
Tax benefit from share-based payment arrangements			(143	)			(86	)
Changes in assets and liabilities:
Accounts receivable, net			(12,245	)			16,029
Inventory, net			(28,388	)			21,900
Trade accounts payable			12,239				(11,567	)
Outstanding checks in excess of bank balance			(190	)			194
Accrued employment costs			4,310				(2,617	)
Current income tax, net			4,175				(1,613	)
Other, net			243				764
Net cash provided by operating activities			1,295				27,900
Cash flow used in investing activities:
Proceeds from sale of fixed assets			18				60
Capital expenditures			(7,482	)			(12,394	)
Net cash used in investing activities			(7,464	)			(12,334	)
Cash flows provided by financing activities:
Long-term debt issuance			—				12,000
State grant funding purchase of new equipment			500
Long-term debt repayments			(2,222	)			(403	)
Deferred financing costs			—				(84	)
Proceeds from issuance of common stock			603				372
Purchase of treasury stock			(260	)
Tax benefit from share-based payment arrangements			143				86
Net cash (used in) provided by financing activities			(1,236	)			11,971
Net cash flow		$	(7,405	)		$	27,537

 

6