updated 4/27/2011 7:16:14 AM ET 2011-04-27T11:16:14

EPS is $0.64 on Sales of $59.8 Million
Backlog of $92 Million is Up 33% from End of 4Q10

BRIDGEVILLE, Pa., April 27, 2011 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) reported today that sales for the first quarter of 2011 were $59.8 million, an increase of 72% from the first quarter of 2010 and up 16% from the 2010 fourth quarter.

Net income for the first quarter of 2011 was $4.4 million, or $0.64 per diluted share, which was more than triple the level of the first quarter of 2010 and up 25% from the fourth quarter of 2010. Business development expenses of $0.4 million pre-tax, equivalent to $0.04 per fully diluted share, were included in the first quarter 2011 results.

The Company recorded negative cash flow from operations of $1.7 million due to continuing investment in managed working capital to support increased sales activity and backlog. Capital expenditures for the first quarter of 2011 were $2.2 million. At March 31, 2011, the Company had cash of $30.5 million and total debt of $10.1 million.

The Company noted that total shipment volume for the first quarter of 2011 increased 54% from the first quarter of 2010 and 15% from the fourth quarter of 2010. Compared with the fourth quarter of 2010, volume shipped to the aerospace market increased 26%, service center plate shipments increased 71% and petrochemical volume rose 7%, while shipments to the power generation market were 6% lower than the record level in the fourth quarter.

Chairman, President and CEO Dennis Oates commented: "Robust business activity across all end markets led to strong first quarter growth including record consolidated bookings and record Dunkirk segment shipments. Activity levels reflected increasing confidence and higher build rates in aerospace, continued strong repair and maintenance spending in power generation, additional oil and gas exploration, and recovery in supply channel demand for tool steel. Our focus remains on driving profitable growth through further operational improvement and seizing market opportunities."

Segment Review

For the first quarter of 2011, the Universal Stainless & Alloy Products segment had sales of $55.2 million and operating income of $4.9 million, yielding an operating margin of 8.9% of sales. This compares with sales of $31.2 million and operating income of $1.9 million, or 6.2% of sales, in the first quarter of 2010. In the fourth quarter of 2010, sales were $46.1 million and operating income was $4.2 million, or 9.2% of sales.

Segment sales rose 77% from the first quarter of 2010 on a 65% increase in tons shipped mainly due to higher shipments to rerollers, destined mostly for the aerospace market. Segment sales rose 20% from the fourth quarter of 2010 on a 20% increase in tons shipped due to higher shipments to service centers and forgers.

Sales for the Dunkirk Specialty Steel segment reached a record $22.0 million for the first quarter of 2011 and operating income was $2.3 million, yielding an operating margin of 10.6% of sales. This compares with sales in the first quarter of 2010 of $10.1 million and operating income of $0.3 million, or 3.2% of sales. In the fourth quarter of 2010, sales were $17.1 million and operating income was $1.3 million, or 7.8% of sales.

Dunkirk's sales increased 118% from the first quarter of 2010 on a 96% increase in tons shipped mainly due to a more than doubling of shipments to service centers. Dunkirk's sales increased 28% from the fourth quarter of 2010 on a 30% increase in tons shipped, also mainly due to higher shipments to service centers.

Webcast

A simultaneous webcast of the Company's conference call discussing the first quarter of 2011, 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 second 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

 
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share information)
(Unaudited)
 
CONSOLIDATED STATEMENT OF OPERATIONS
   
   For the Quarter Ended
   March 31,
   2011  2010
Net Sales    
     
Stainless steel $ 46,798 $ 24,049
Tool steel  5,491  6,175
High-strength low alloy steel  4,714  2,012
High-temperature alloy steel  1,680  1,892
Conversion and other  1,128  551
Total net sales 59,811 34,679
Cost of products sold 49,013 29,760
Selling and administrative expenses  3,830  2,660
Operating income  6,968  2,259
Interest expense  (125)   (96)
Income before taxes  6,843  2,163
Income tax provision  2,395  736
Net income  $ 4,448  $ 1,427
     
Earnings per share – Basic  $ 0.65  $ 0.21
Earnings per share – Diluted  $ 0.64  $ 0.21
     
Weighted average shares of Common Stock outstanding    
Basic 6,813,020 6,773,337
Diluted 6,952,162 6,840,783
 
 
MARKET SEGMENT INFORMATION  
   
   For the Quarter Ended
   March 31,
   2011  2010
Net Sales    
     
Service centers $ 28,628 $ 17,231
Forgers 11,870  9,984
Rerollers 12,805  3,660
Original equipment manufacturers  4,121  2,430
Wire redrawers  1,259  823
Conversion and other  1,128  551
Total net sales $ 59,811 $ 34,679
     
Tons shipped 13,013  8,456
 
 
BUSINESS SEGMENT RESULTS
 
Universal Stainless & Alloy Products Segment
 
   For the Quarter Ended
   March 31,
   2011  2010
Net Sales    
Stainless steel $ 30,577 $ 17,256
Tool steel  5,045  5,928
High-strength low alloy steel  466  449
High-temperature alloy steel  858  591
Conversion and other  898  424
  37,844 24,648
Intersegment 17,306  6,595
     
Total net sales 55,150 31,243
Material cost of sales 29,086 14,157
Operation cost of sales 18,591 13,374
Selling and administrative expenses  2,559  1,778
     
Operating income  $ 4,914  $ 1,934
 
Dunkirk Specialty Steel Segment
   
   For the Quarter Ended
   March 31,
   2011  2010
Net Sales    
     
Stainless steel $ 16,221  $ 6,793
Tool steel  446  247
High-strength low alloy steel  4,248  1,563
High-temperature alloy steel  822  1,301
Conversion and other   230   127
  21,967 10,031
Intersegment  14   31
     
Total net sales 21,981 10,062
Material cost of sales 13,344  5,586
Operation cost of sales  5,041  3,269
Selling and administrative expenses  1,271  882
     
Operating income  $ 2,325  $ 325
 
 
CONSOLIDATED BALANCE SHEET
 
   March 31,  December 31,
   2011  2010
Assets    
     
Cash  $ 30,535  $ 34,944
Accounts receivable, net  35,856  29,273
Inventory  80,010   69,710
Other current assets  7,198   5,661
     
Total current assets  153,599  139,588
Property, plant & equipment, net  72,291  71,581
Other assets  1,464  1,499
     
Total assets  $ 227,354  $ 212,668
     
Liabilities and Stockholders' Equity    
     
Trade accounts payable  $ 28,640  $ 20,022
Outstanding checks in excess of bank balance  754  544
Accrued employment costs  3,916  5,488
Current portion of long-term debt  2,794   2,833 
Accrued income tax  2,537  47
Other current liabilities  713  558
     
Total current liabilities  39,354  29,492
Long-term debt  7,320  7,990
Deferred taxes   15,770  15,276
Other liabilities  235  287
     
Total liabilities  62,679  53,045
Stockholders' equity  164,675  159,623
     
Total liabilities and stockholders' equity  $ 227,354  $ 212,668
 
 
CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Three-Month Period Ended March 31,
 
   2011  2010
Cash flows provided by operating activities:    
Net income  $ 4,448  $ 1,427
Adjustments to reconcile to net cash provided by operating activities:    
Depreciation and amortization  1,461  1,329
Loss on retirement of fixed assets  --  17
Deferred tax (decrease) increase  (512)   31
Stock based compensation expense  400  286
Tax benefit from share-based payment arrangements  (72)  (8)
Changes in assets and liabilities:    
Accounts receivable, net  (6,583)  (6,598)
Inventory, net  (10,300)  (12,877)
Trade accounts payable  8,618  11,123
Net change in outstanding checks in excess of bank balance  210 (600)
Accrued employment costs  (1,572)  1,204
Accrued income tax  2,664  695
Other, net  (466)   614
Cash flow used in operating activities  (1,704)  (3,357)
Cash flow used in investing activities:    
Proceeds from sale of fixed assets  --   17
Capital expenditures  (2,167)  (1,090)
Cash flow used in investing activities  (2,167)  (1,073)
Cash flows used in financing activities:    
Long-term debt repayments  (709)  (103)
Proceeds from issuance of common stock  99   10
Tax benefit from share-based payment arrangements  72   8
Cash flow used in financing activities  (538)  (85)
     
Net cash flow  $ (4,409)  $ (4,515)
CONTACT: Dennis Oates
         Chairman,
         President and CEO
         (412) 257-7609
         
         Douglas McSorley
         VP Finance, CFO
         and Treasurer
         (412) 257-7606
         
         June Filingeri
         President
         Comm-Partners LLC
         (203) 972-0186

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