Universal Stainless 2004 Third Quarter EPS Exceeds Forecast

Backlog Reaches $60 million


BRIDGEVILLE, Pa., Oct. 20, 2004 (PRIMEZONE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) today reported third quarter 2004 sales of $33.3 million and net income of $2.7 million, or $0.43 per diluted share. This includes other income of $565,000, or $0.06 per diluted share, related to the delayed receipt of the remaining 2003 import duties awarded the Company under the "Continued Dumping and Subsidy Act of 2000" resulting from a favorable ruling on a lawsuit challenging the distribution method of the import duties.

Sales for the 2004 third quarter were in line with the Company's forecast and EPS was ahead of the projected range of $0.30 to $0.35, before including the other income from import duties.

In the third quarter of 2003, sales were $18.6 million and the Company incurred a net loss of $121,000 or $0.02 per diluted share.

Commenting on the results, President and CEO Mac McAninch stated: "I am pleased with our performance in all of our markets and by the confidence our customers have demonstrated in us. In a period of very high market demand, we have worked diligently to respond to our customers' needs by investing rapidly to increase throughput and by maintaining a fair and transparent pricing policy in the face of volatile, rising costs."

Mr. McAninch continued: "Our third quarter sales rose 79% from last year, which was a difficult period for the economy and our industry. More importantly, end market sales improved 15% over stronger 2004 second quarter levels, with sales of aerospace, power generation, petrochemical and tool steel products up 17%, 2%, 11% and 14%, respectively."

Mr. McAninch added: "We continued to improve our profitability in the third quarter by focusing on higher value-added products and by taking necessary pricing action for cost recovery. I am especially pleased with the enthusiasm and dedication of our employees at Dunkirk Specialty Steel. They have done an excellent job of penetrating attractive niche markets and improving their product mix. Their improved operating results begin to show the facility's true potential to the Company. I also want to acknowledge the efforts of our employees at Bridgeville and Titusville, who increased shipments by 17% from the prior quarter. As our backlog continues to rise, we must continue to increase our productivity and remain focused on quality improvement and cost reduction initiatives."

Segment Review

In the third quarter of 2004, the Universal Stainless & Alloy Products segment had sales of $31.2 million and operating income of $2.9 million. This compares with sales of $16.2 million and operating income of $554,000 in the third quarter of 2003 and sales of $25.1 million and operating income of $1.9 million in the second quarter of 2004.

The strong growth reflected increased sales to all customer categories, including sales of reroll product to Dunkirk, in the year-over-year period and sequentially. Higher shipments, improved mix and price recovery initiatives led to greater profitability.

The Dunkirk Specialty Steel segment reported record sales of $9.5 million and operating income of $1.2 million. This compares with sales of $5.2 million and an operating loss of $732,000 in the third quarter of 2003 and sales of $8.0 million and operating income of $651,000 in the prior quarter.

Dunkirk's top line growth mainly reflected improved product mix and increased sales to service centers, while its total sales volume allowed further reductions in the manufacturing cost of products sold, leading to the continued improvement in its profitability.

Business Outlook

The following statements are based on the Company's current expectations. These statements are forward-looking, and actual results may differ materially.

The Company estimates that fourth quarter 2004 sales will range from $32 to $37 million and that diluted EPS will range from $0.32 to $0.37. In the fourth quarter of 2003, sales were $18.8 million and the Company incurred a net loss per diluted share of $0.04. The 2004 fourth quarter EPS estimate does not include any monies that may be received by the Company related to the Continued Dumping and Subsidy Act of 2000 for the current year.

The following factors were considered in developing these estimates:



 -- The Company's total backlog at September 30, 2004 approximated $60
    million compared to $49 million at June 30, 2004, reflecting
    continued strength in all of the Company's markets.

 -- Capital improvements implemented in the second and third quarters,
    including the addition of a reheat furnace to increase throughput
    at the Bridgeville blooming mill, should fully benefit the fourth
    quarter.

 -- Sales from the Dunkirk Specialty Steel segment are expected to
    approximate the 2004 third quarter sales of  $9.5 million.
    Additional sales are dependent upon the level of inventory
    management initiatives implemented by the service center industry
    near the end of the year.

 -- The Company expects raw material costs to remain volatile for the
    balance of the year.  Its electricity costs will increase by
    $200,000 per month in the fourth quarter due to a recent Public
    Utility Commission ruling that has reduced the number of off-peak
    power hours available to conduct its melting operations at the
    Bridgeville facility.  The Company has retained a consultant to
    recommend energy-saving initiatives and is currently negotiating
    its 2005 energy contract.

Mr. McAninch concluded: "Our Company and our industry have realized substantial improvement this year. Based on our own assessment of the marketplace and what we are currently hearing from our customers, we expect continued strength in our business at least through the first half of 2005."

Webcast

A simultaneous Webcast of the Company's conference call discussing the 2004 third quarter and the fourth quarter 2004 outlook, scheduled at 10:30 a.m. (Eastern) today, will be available on the Company's website at www.univstainless.com, and thereafter archived on the website. A telephone replay of the conference call will be available beginning at 1:00 p.m. (Eastern) today and continuing through October 27th. It can be accessed by dialing 706-645-9291, passcode 1371941. 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 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 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. 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  For the Nine-Months Ended
                          September 30,            September 30,
                         2004       2003          2004        2003
                      ----------  ----------   ----------  ----------
      Net Sales

 Stainless steel      $   26,529  $   14,215   $   65,586  $   38,064
 Tool steel                4,277       2,828       11,185       7,328
 High-strength low
  alloy steel              1,160         619        3,085       1,958
 High-temperature
  alloy steel                473         608        1,795       1,750
 Conversion services         707         247        1,635         845
 Other                       151         108          344         217
                      ----------  ----------   ----------  ----------
 Total net sales          33,297      18,625       83,630      50,162
 Cost of products sold    27,701      17,296       71,576      47,917
 Selling and
  administrative
  expenses                 1,873       1,507        5,348       4,425
                      ----------  ----------   ----------  ----------
 Operating income
  (loss)                   3,723        (178)       6,706      (2,180)
 Interest expense           (108)       (100)        (302)       (289)
 Other income                566          24          577          74
                      ----------  ----------   ----------  ----------
 Income (loss) before
  taxes                    4,181        (254)       6,981      (2,395)
 Income tax provision
  (benefit)                1,436        (133)       2,443      (1,251)
                      ----------  ----------   ----------  ----------
 Net income (loss)    $    2,745  $     (121)  $    4,538  $   (1,144)
                      ==========  ==========   ==========  ==========

 Earnings (loss) per
  share - Basic       $     0.44  $    (0.02)  $     0.72  $    (0.18)
                      ==========  ==========   ==========  ==========
 Earnings (loss) per
  share - Diluted     $     0.43  $    (0.02)  $     0.71  $    (0.18)
                      ==========  ==========   ==========  ==========

 Weighted average
  shares of Common
  Stock outstanding
   Basic               6,305,456   6,289,485    6,300,229   6,286,271
   Diluted             6,400,188   6,289,485    6,363,656   6,286,271


                      MARKET SEGMENT INFORMATION

                      For the Quarter Ended  For the Nine-Months Ended
                          September 30,            September 30,
                         2004       2003          2004        2003
                      ----------  ----------   ----------  ----------
      Net Sales

 Service centers      $   13,443  $    7,478   $   35,616  $   22,333
 Rerollers                 9,208       5,246       21,465      13,285
 Forgers                   6,232       3,052       15,181       7,054
 Original equipment
  manufacturers            2,263       1,423        6,101       3,844
 Wire redrawers            1,307       1,095        3,346       2,615
 Conversion services         707         246        1,635         844
 Other                       137          85          286         187
                      ----------  ----------   ----------  ----------
 Total net sales      $   33,297  $   18,625   $   83,630  $   50,162
                      ==========  ==========   ==========  ==========
 Tons shipped             13,470      9,600        34,667      25,658
                      ==========  ==========   ==========  ==========

                        BUSINESS SEGMENT RESULTS

 Universal Stainless & Alloy Products Segment

                                For the Quarter   For the Nine-Months
                                      Ended              Ended
                                  September 30,      September 30,
                                  2004     2003      2004      2003
                                -------   -------   -------   -------
      Net Sales

 Stainless steel                $18,373   $ 9,805   $45,469   $24,865
 Tool steel                       4,155     2,744    10,902     6,924
 High-strength low alloy steel      575       313     1,387     1,184
 High-temperature alloy steel       451       438     1,526     1,463
 Conversion services                632       208     1,356       716
 Other                              146       108       298       202
                                -------   -------   -------   -------
                                 24,332    13,616    60,938    35,354
 Intersegment                     6,867     2,552    14,588     7,714
                                -------   -------   -------   -------

 Total net sales                 31,199    16,168    75,526    43,068
 Material cost of sales          14,999     6,247    33,923    15,887
 Operation cost of sales         11,990     8,362    32,733    24,733
 Selling and administrative
  expenses                        1,310     1,005     3,672     2,923
                                -------   -------   -------   -------
 Operating income (loss)        $ 2,900   $   554   $ 5,198   $  (475)
                                =======   =======   =======   =======


 Dunkirk Specialty Steel Segment

                                For the Quarter   For the Nine-Months
                                      Ended              Ended
                                  September 30,      September 30,
                                  2004     2003      2004      2003
                                -------   -------   -------   -------
      Net Sales

 Stainless steel                $ 8,156   $ 4,410   $20,117   $13,199
 Tool steel                         122        84       283       404
 High-strength low alloy steel      585       306     1,698       774
 High-temperature alloy steel        22       170       269       287
 Conversion services                 75        39       279       129
 Other                                5      --          46        15
                                -------   -------   -------   -------
                                  8,965     5,009    22,692    14,808
 Intersegment                       519       216     1,572       596
                                -------   -------   -------   -------

 Total net sales                  9,484     5,225    24,264    15,404
 Material cost of sales           4,716     3,170    12,095     8,723
 Operation cost of sales          3,042     2,285     8,645     6,884
 Selling and administrative
  expenses                          563       502     1,676     1,502
                                -------   -------   -------   -------
 Operating income (loss)        $ 1,163   $  (732)  $ 1,848   $(1,705)
                                =======   =======   =======   =======

                      CONSOLIDATED BALANCE SHEET

                                           September 30,  December 31,
                                                2004           2003
                                              --------       --------
              Assets

 Cash                                         $    549       $  4,735
 Accounts receivable, net                       22,629         12,690
 Inventory                                      33,808         22,281
 Other current assets                            3,098          4,285
                                              --------       --------

 Total current assets                           60,084         43,991
 Property, plant & equipment, net               40,225         40,176
 Other assets                                      472            758
                                              --------       --------
 Total assets                                 $100,781       $ 84,925
                                              ========       ========

    Liabilities and Stockholders' Equity

 Accounts payable                             $ 11,787       $  6,792
 Bank overdrafts                                   939            813
 Accrued employment costs                        2,818            833
 Current portion of long-term debt               1,931          1,944
 Other current liabilities                       1,030            195
                                              --------       --------

 Total current liabilities                      18,505         10,577
 Bank revolver                                   4,597           --
 Long-term debt                                  4,150          5,599
 Deferred taxes                                  9,451          9,313
                                              --------       --------

 Total liabilities                              36,703         25,489
 Stockholders' equity                           64,078         59,436
                                              --------       --------
 Total liabilities and stockholders' equity   $100,781       $ 84,925
                                              ========       ========

               CONSOLIDATED STATEMENT OF CASH FLOW DATA

                For the Nine-Months Ended September 30,

                                                   2004        2003
                                                 --------    --------
 Cash flows from operating activities:

   Net income (loss)                             $  4,538    $ (1,144)
   Adjustments to reconcile to net cash
     provided by operating activities:
       Depreciation and amortization                2,336       2,319
       Deferred taxes                                 480         670
       Tax benefit from exercise of stock options       8        --
   Changes in assets and liabilities:
       Accounts receivable, net                    (9,939)     (2,167)
       Inventory                                  (11,527)       (188)
       Trade accounts payable                       4,995       2,559
       Accrued employment costs                     1,985         243
       Refundable taxes                             1,405        (930)
       Other, net                                     553         227
                                                 --------    --------
 Cash flow from (due to) operating activities      (5,166)      1,589
                                                 --------    --------
 Cash flow from investing activities:

   Capital expenditures                            (2,377)       (713)
                                                 --------    --------
 Cash flow due to investing activities             (2,377)       (713)
                                                 --------    --------
 Cash flows from financing activities:

   Net borrowings under revolving line of credit    4,597        --
   Proceeds from deferred loan agreement             --           200
   Repayments of long-term debt                    (1,462)     (1,451)
   Net change in bank overdrafts                      126         235
   Proceeds from issuance of common stock              96          25
                                                 --------    --------
 Cash flow from (due to) financing activities       3,357        (991)
                                                 --------    --------
     Net cash flow                               $ (4,186)   $   (115)
                                                 ========    ========


            

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