UNIVERSAL STAINLESS & ALLOY PRODUCTS INC false 0000931584 0000931584 2022-01-26 2022-01-26 0000931584 us-gaap:CommonStockMember 2022-01-26 2022-01-26 0000931584 us-gaap:PreferredStockMember 2022-01-26 2022-01-26





Washington, D.C. 20549







Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 26, 2022



Universal Stainless & Alloy Products, Inc.

(Exact name of registrant as specified in its charter)




Delaware   001-39467   25-1724540

(State or other jurisdiction

of incorporation)



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))

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of Each Class





Name of Each Exchange

on Which Registered

Common Stock, par value $0.001 per share   USAP   The Nasdaq Stock Market, LLC
Preferred Stock Purchase Rights     The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02.

Results of Operations and Financial Condition.

On January 26, 2022, Universal Stainless & Alloy Products, Inc. (the “Company”) issued a press release regarding its results for the quarter ended December 31, 2021. A copy of the press release is attached hereto as Exhibit 99.1.

The information in Item 2.02 of this Current Report on Form 8-K, including the attached press release regarding the Company’s results for the quarter ended December 31, 2021, 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.





99.1    Press Release dated January 26, 2022.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).


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.



/s/ Dennis M. Oates

  Dennis M. Oates
  Chairman, President and
  Chief Executive Officer

Dated: January 26, 2022


Exhibit 99.1




CONTACTS:  Dennis M. Oates

      June Filingeri



President and CEO

      Comm-Partners LLC

(412) 257-7609

      (203) 972-0186




Q4 2021 Sales of $43.2 million up 16.3% sequentially and 38% year over year; Premium alloy sales are 16.3% of sales



Q4 2021 Gross margin improves to 8.7% of sales, highest reported since Q4 2019, versus 6.2% in Q3 2021



Q4 2021 Net loss is $1.6 million, or $0.18 per diluted share



Q4 2021 EBITDA is $4.1 million; Adjusted EBITDA is $4.0 million



Quarter-end Backlog is record $134.5 million, up 7.5% from Q3 2021, 180.5% above year-end 2020



Board approves two additional Vacuum-Arc Remelt (VAR) furnaces

BRIDGEVILLE, PA, January 26, 2022 – Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) today reported that net sales for the fourth quarter of 2021 were $43.2 million, an increase of 16.3% from $37.2 million in the third quarter of 2021, and 38.0% higher than net sales of $31.3 million in the fourth quarter of 2020.

Sales of premium alloys increased 18.6% in the fourth quarter of 2021 to $7.0 million, or 16.3% of sales, compared with $5.9 million, or 16.0% of sales, in the third quarter of 2021. In the fourth quarter of 2020 premium alloy sales were $6.0 million, or 19.1% of sales. The Company’s premium alloy products are primarily sold to the aerospace end market. More than 20% of total backlog at the end of the fourth quarter consisted of premium alloy products.

The Company’s gross margin increased to $3.7 million, or 8.7% of sales, in the fourth quarter compared with $2.3 million, or 6.2% of sales, in the third quarter of 2021, and a loss of $5.1 million, or (16.2%) of sales in the fourth quarter of 2020. The sequential increase in the 2021 fourth quarter gross margin reflects continued momentum in shipment levels.

Chairman, President and CEO Dennis Oates commented: “Recovery continued in the fourth quarter as measured by the sequential growth in both our topline and premium alloy sales, and in our backlog, all mainly driven by improving demand in the aerospace market. In fact, our backlog at the end of 2021 reached a record $134.5 million on continued solid order entry. Delivery of those products is scheduled throughout 2022.

“Profitability also advanced in the fourth quarter, with our gross margin increasing to 8.7% of sales compared to 6.2% of sales in the 2021 third quarter. The fourth quarter gross margin was the highest reported since the fourth quarter of 2019. Even so, continued supply chain bottlenecks along with labor shortages compounded by employee absences due to continuing COVID-related challenges restrained our progress in the fourth quarter, and production levels did not fully meet our targets.

“Growth in our aerospace sales picked up in the fourth quarter, increasing 15.7% sequentially versus sequential growth of 4% in the 2021 third quarter. Our aerospace sales improved 49.6% from the fourth quarter of 2020 and represented 60% of total fourth quarter 2021 sales. Supply chains have started to replenish inventories and



gear-up for planned commercial aircraft build-rate increases starting this year. Demand for new airplanes is driven by the recovery in air travel and increased demand for business jets and freighters, in addition to the economic advantages to airlines of new airplanes. Defense spending remains solid.

“Heavy equipment market sales resumed growth in the fourth quarter, increasing 18.8% sequentially aided by recovery in industrial businesses as well as model changeovers to electric vehicles in the automotive market. Heavy equipment remained our second largest market at 21% of sales. Sales to the power generation and general industrial markets also showed strong sequential improvement in the fourth quarter, rising 39.4% and 17.6%, respectively.

“Our sales to the oil & gas market remained level with the third quarter but rose 77.6% from the fourth quarter of 2020. Drilling activity continues to point to further recovery in market demand with oil prices remaining at a seven-year high and natural gas prices up 25% in the fourth quarter alone.

“Our operating leverage continued to improve in the fourth quarter with a rise in our activity levels, including a 12% sequential increase in our shipments. In addition, our surcharges and base price increases are offsetting increases in raw material costs and general inflationary trends.

“We remain focused on restoring our profitability and controlling working capital in 2022, even as we ramp up operations to meet our record backlog. Through our capital investment in 2021, we successfully added a new vacuum arc re-melting (VAR) furnace in our North Jackson facility, which has been installed, commissioned, and integrated into our operations. We have also added an 18-ton vacuum induction melting (VIM) crucible, which expands our vacuum induction melting capacity to support the growth of premium alloy products, and improves the efficiency of our melt operations. The VIM crucible is in the final stage of commissioning.

“As part of our strategic plan for 2022, we are pleased to announce that our Board has now authorized the acquisition of two additional VAR furnaces to further support our growth and efficiency, and expand our product applications.”

Mr. Oates concluded: “As 2021 came to a close and 2022 begins, we see our markets coming back and, through our operational initiatives, we are in a much stronger position than one year ago. While supply chain and other issues will continue to present challenges, we remain determined to make further progress in the coming year and take full advantage of our recovering markets, especially aerospace. Our plan is to achieve sequential improvement in each quarter of 2022. The tireless efforts of our team, the support of our customers and our focus on providing critical products to our markets give us confidence in our future.”

Quarterly and Full Year Results of Operations

For full year 2021, net sales totaled $155.9 million compared with $179.7 million in 2020. Sales of premium alloys were $26.4 million, or 16.9% of sales, in 2021, compared with $35.2 million, or 19.6% of sales, in 2020.

The net loss for the fourth quarter of 2021 was $1.6 million, or $0.18 per diluted share. In the third quarter of 2021, the Company recorded net income of $7.9 million, or $0.87 per diluted share, which included a gain of $10 million due to forgiveness of a term note from the Paycheck Protection Program (PPP). Before the PPP gain, the net loss for the third quarter of 2021 was $2.1 million. In the fourth quarter of 2020, the net loss was $7.3 million, or $0.83 per diluted share. Results included pretax fixed cost absorption charges of $1.5 million in the third quarter of 2021 and $3.8 million in the fourth quarter of 2020. There were no pretax fixed cost absorption charges in the fourth quarter of 2021.

The Company’s EBITDA for the fourth quarter of 2021 was $4.1 million while adjusted EBITDA was $4.0 million.

Managed working capital was $136.9 million at December 31, 2021 compared with $124.4 million at September 30, 2021, and $114.1 million at the end of the fourth quarter of 2020. Inventory was $140.7 million at the end of the fourth quarter of 2021, compared with $135.6 million at the end of the third quarter of 2021, and $111.4 million at the end of the 2020 fourth quarter. The increase in inventory in the most recent quarter reflects increased work in process to support backlog growth and higher raw material prices.



Backlog (before surcharges) increased 7.5% to $134.5 million at December 31, 2021 from $125.1 million at September 30, 2021, and increased 180.5% from $48.0 million at the end of the fourth quarter of 2020.

The Company’s total debt at December 31, 2021 was $69.2 million, compared with $51.5 million at September 30, 2021, and $50.2 million at December 31, 2020.

Capital expenditures for the fourth quarter of 2021 totaled $4.6 million, compared with $2.0 million for the third quarter of 2021, and $0.7 million in the fourth quarter of 2020. Full year 2021 capital expenditures totaled $11.1 million, which is in line with the Company’s projection for the year and supportive of its strategic growth objectives.

Conference Call and Webcast

The Company has scheduled a conference call for today, January 26th, at 10:00 a.m. (Eastern) to discuss fourth quarter and full year 2021 results. Those wishing to listen to the live conference call via telephone should dial 706-679-0668, passcode 3819539. A simultaneous webcast 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 2022.

About Universal Stainless & Alloy Products, Inc.

Universal Stainless & Alloy Products, Inc., established in 1994 and headquartered in Bridgeville, PA, manufactures and markets semi-finished and finished specialty steels, including stainless steel, nickel alloys, tool steel and certain other alloyed steels. The Company’s products are used in a variety of industries, including aerospace, power generation, oil and gas, and heavy equipment manufacturing. 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 Company’s ability to maintain its relationships with its significant customers and market segments; the Company’s response to competitive factors in its industry that may adversely affect the market for finished products manufactured by the Company or its customers; the Company’s ability to compete successfully with domestic and foreign producers of specialty steel products and products fashioned from alternative materials; changes in overall demand for the Company’s products and the prices at which the Company is able to sell its products in the aerospace industry, from which a substantial amount of our sales is derived; the Company’s ability to develop, commercialize, market and sell new applications and new products; the receipt, pricing and timing of future customer orders; the impact of changes in the Company’s product mix on the Company’s profitability; the Company’s ability to maintain the availability of raw materials and operating supplies with acceptable pricing; the availability and pricing of electricity, natural gas and other sources of energy that the Company needs for the manufacturing of its products; risks related to property, plant and equipment, including the Company’s reliance on the continuing operation of critical manufacturing equipment; the Company’s success in timely concluding collective bargaining agreements and avoiding strikes or work stoppages; the Company’s ability to attract and retain key personnel; 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 matters; the Company’s ability to meet its debt service requirements and to comply with applicable financial covenants; risks associated with conducting business with suppliers and customers in foreign countries; public health issues, including COVID-19 and its uncertain impact on our facilities and operations and our customers and suppliers and the effectiveness of the Company’s actions taken in response to these risks; risks related to acquisitions that the Company may make; the Company’s ability to protect its information technology infrastructure against service interruptions, data corruption, cyber-based attacks or network security breaches; the



impact on the Company’s effective tax rates from changes in tax rules, regulations and interpretations in the United States and other countries where it does business; 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 SEC, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, copies of which are available from the SEC or may be obtained upon request from the Company.

Non-GAAP Financial Measures

This press release includes discussions of financial measures that have not been determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP). These measures include earnings (loss) before interest, income taxes, depreciation and amortization (EBITDA) and Adjusted EBITDA. We include these measurements to enhance the understanding of our operating performance. We believe that EBITDA, considered along with net earnings (loss), is a relevant indicator of trends relating to cash generating activity of our operations. Adjusted EBITDA excludes the effect of share-based compensation expense and noted special items such as impairments and costs or income related to special events such as periods of low activity or insurance claims. We believe that excluding these costs provides a consistent comparison of the cash generating activity of our operations. We believe that EBITDA and Adjusted EBITDA are useful to investors as they facilitate a comparison of our operating performance to other companies who also use EBITDA and Adjusted EBITDA as supplemental operating measures. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measures. These non-GAAP measures may not be entirely comparable to similarly titled measures used by other companies due to potential differences among calculation methodologies. A reconciliation of these non-GAAP financial measures to their most directly comparable financial measure prepared in accordance with GAAP is included in the tables that follow.






(Dollars in Thousands, Except Per Share Information)




     Three Months Ended
December 31,
    Year Ended
December 31,
     2021     2020     2021     2020  

Net sales

     43,225       31,324       155,934       179,731  

Cost of products sold

     39,478       36,399       147,963       182,387  













Gross margin

     3,747       (5,075     7,971       (2,656

Selling, general and administrative expenses

     4,851       4,203       20,243       19,752  













Operating loss

     (1,104     (9,278     (12,272     (22,408

Interest expense

     577       552       1,989       2,784  

Deferred financing amortization

     56       56       225       225  

Gain on extinguishment of debt

     —         —         (10,000     —    

Other (income), net

     (478     (730     (445     (1,123













Loss before income taxes

     (1,259     (9,156     (4,041     (24,294

Income taxes

     367       (1,851     (3,283     (5,247













Net loss

   $ (1,626   $ (7,305   $ (758   $ (19,047













Net loss per common share - Basic

   $ (0.18   $ (0.83   $ (0.09   $ (2.16













Net loss per common share - Diluted

   $ (0.18   $ (0.83   $ (0.09   $ (2.16













Weighted average shares of common stock outstanding



     8,924,003       8,834,146       8,907,908       8,818,974  


     8,924,003       8,834,146       8,907,908       8,818,974  





     Three Months Ended
December 31,
     Year ended
December 31,
Net Sales    2021      2020      2021      2020  

Service centers

   $ 30,219      $ 22,245      $ 110,404      $ 126,122  

Original equipment manufacturers

     4,094        4,159        15,011        20,783  


     3,429        2,316        17,058        15,928  


     4,823        2,217        11,835        14,244  

Conversion services and other sales

     660        387        1,626        2,654  













Total net sales

   $ 43,225      $ 31,324      $ 155,934      $ 179,731  













Tons shipped

     6,883        5,669        27,343        30,821  















     Three Months Ended
December 31,
     Year ended
December 31,
Net Sales    2021      2020      2021      2020  

Specialty alloys

   $ 35,525      $ 24,969      $ 127,885      $ 141,838  

Premium alloys *

     7,040        5,968        26,423        35,239  

Conversion services and other sales

     660        387        1,626        2,654  













Total net sales

   $ 43,225      $ 31,324      $ 155,934      $ 179,731  















     Three Months Ended
December 31,
     Year ended
December 31,
Net Sales    2021      2020      2021      2020  


   $ 25,748      $ 17,214      $ 91,546      $ 121,900  

Power generation

     1,181        956        4,634        6,879  

Oil & gas

     4,061        2,287        15,106        13,065  

Heavy equipment

     9,043        6,036        34,010        22,400  

General industrial, conversion services and other sales

     3,192        4,831        10,637        15,487  













Total net sales

   $ 43,225      $ 31,324      $ 155,934      $ 179,731  















Premium alloys represent all vacuum induction melted (VIM) products.    


The majority of our products are sold to service centers rather than the ultimate end market customer. The end market information in this press release is our estimate based upon our knowledge of our customers and the grade of material sold to them, which they will in-turn sell to the ultimate end market customer.    





     December 31,  
     2021      2020  




   $ 118      $ 164  

Accounts receivable, net

     21,192        18,101  

Inventory, net

     140,684        111,380  

Other current assets

     8,567        7,471  







Total current assets

     170,561        137,116  

Property, plant and equipment, net

     159,162        164,983  

Other long-term assets

     909        947  







Total assets

   $ 330,632      $ 303,046  







Liabilities and Stockholders’ Equity


Accounts payable

   $ 24,000      $ 12,632  

Accrued employment costs

     4,303        1,826  

Current portion of long-term debt

     2,392        16,713  

Other current liabilities

     943        2,722  







Total current liabilities

     31,638        33,893  

Long-term debt, net

     66,852        33,471  

Deferred income taxes

     2,461        5,725  

Other long-term liabilities, net

     3,360        4,277  







Total liabilities

     104,311        77,366  

Stockholders’ equity

     226,321        225,680  







Total liabilities and stockholders’ equity

   $ 330,632      $ 303,046  











     Year Ended  
     December 31,  
     2021     2020  

Operating activities:


Net loss

   $ (758   $ (19,047

Adjustments for non-cash items:


Depreciation and amortization

     19,300       19,449  

Gain on extinguishment of debt

     (10,000     —    

Deferred income tax

     (3,238     (5,231

Share-based compensation expense

     1,121       1,455  

Changes in assets and liabilities:


Accounts receivable, net

     (3,091     17,494  

Inventory, net

     (30,986     34,326  

Accounts payable

     10,938       (25,282

Accrued employment costs

     2,477       (1,983

Income taxes

     (3     243  


     (3,729     2,387  







Net cash (used in) provided by operating activities

     (17,969     23,811  

Investing activity:


Capital expenditures

     (11,105     (9,157







Net cash used in investing activity

     (11,105     (9,157

Financing activities:


Borrowings under revolving credit facility

     134,120       115,876  

Payments on revolving credit facility

     (96,602     (136,877

Proceeds from term loan facility

     8,571       —    

Proceeds from Paycheck Protection Program Note

     —         10,000  

Payments on term loan facility, capital leases, and notes

     (16,715     (3,809

Payments of financing costs

     (539     —    

Issuance of common stock under share-based plans

     193       150  







Net cash provided by (used in) financing activities

     29,028       (14,660







Net decrease in cash

     (46     (6

Cash at beginning of period

     164       170  







Cash at end of period

   $ 118     $ 164  











     Three Months ended
December 31,
     Twelve Months Ended
December 31,
     2021      2020      2021      2020  

Net loss

   $ (1,626    $ (7,305    $ (758    $ (19,047

Interest expense

     577        552        1,989        2,784  

Income taxes

     367        (1,851      (3,283      (5,247

Depreciation and amortization

     4,821        4,728        19,300        19,449  














     4,139        (3,876      17,248        (2,061

Share-based compensation expense

     289        326        1,121        1,455  

Loss on sale of excess scrap

     —          300        —          654  

Fixed cost absorption direct charge

     —          3,819        6,144        8,284  

Employee severance costs

     —          —          —          620  

Gain on extinguishment of debt

     —          —          (10,000      —    

Insurance-related (benefit)

     (462      (740      (462      (1,047













Adjusted EBITDA

   $ 3,966      $ (171    $ 14,051      $ 7,905