BRIDGEVILLE, Pa., June 25, 2002 (PRIMEZONE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) today announced that it expects second quarter 2002 sales to be approximately $20 million and diluted earnings per share to be in the range of $0.10 to $0.12. Although sales will approach the Company's April 23, 2002 projection of $21 to $25 million, diluted earnings per share are expected to be well below the $0.20 to $0.25 range projected at the time. In the prior year second quarter, the Company reported sales of $24 million and diluted earnings per share of $0.31. The Company expects to report final second quarter results on July 23.
Mac McAninch, President and Chief Executive Officer, commented: "Two major factors account for the shortfall from our earlier earnings projection: an abrupt drop-off in power generation demand and a pronounced shift to commodity products in our sales to rerollers. While we projected weakening power generation sales going into the quarter, the decline was more substantial than we expected. More than half of a $1 million reduction in our projected gross margin is due to existing orders placed on hold and a sharp decline in anticipated orders from OEM and forger customers serving the power generation market. The balance of the margin reduction is due to the shift in reroll product mix partially caused by a slow recovery in aerospace demand for the higher margin, non-commodity reroll products. On a more positive note, commodity reroll product sales are more than double our original expectation due to reduced imports resulting from the ITTC Section 201 ruling. In addition, our Dunkirk operation will reach its financial targets for the quarter and tool steel sales will be more than double those of last year and up strongly from last quarter."
Mr. McAninch continued: "Our decision in February to acquire the assets of Empire Specialty Steel, now Dunkirk Specialty Steel, reflected our desire to further diversify the niche markets we serve. That will be increasingly important given the negative outlook for power generation demand, at least for the balance of the year, and the slow pace of recovery in aerospace. Unless there is a pick up in aerospace demand, we do not expect our earnings in the second half of 2002 to match those of the first half, although our sales level should remain stable."
Mr. McAninch concluded: "We are disappointed by our second quarter earnings, but we are not sitting still. We are fully focused on realizing the earnings potential of our new Dunkirk facility and working diligently to win back the former Empire customers and to build the backlog at the facility. We also plan to expand our sales force to capture a larger share of the existing business in all our niche markets. In 2001, we proved our ability to compete very successfully in attractive niche markets. After a record year, we are prepared to meet the market challenges of 2002 with determination and discipline."
Webcast
A conference call discussing the Company's revised second quarter outlook is scheduled at 9:00 a.m. (EDT) today. It will be webcast simultaneously on the Company's web site for all interested parties at www.univstainless.com, and thereafter archived on the web site. A telephone replay of the conference call will be available beginning at approximately 11:00 a.m. (EDT) today, continuing through July 1. It can be accessed by dialing 706-645-9291, passcode 4698010. This is a toll call.
About Universal Stainless & Alloy Products, Inc.
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 original equipment manufacturers, service centers, forgers, rerollers 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 acquisition of the Empire Specialty Steel assets and the successful start-up of Dunkirk Specialty Steel LLC, risks associated with the receipt, pricing and timing of future customer orders, risks related to the financial viability of customers, risks associated with the manufacturing process and production yields, and risks related to property, plant and equipment. 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.