BRIDGEVILLE, Pa., July 23, 2002 (PRIMEZONE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) today reported net income for the second quarter ended June 30, 2002 of $777,000, or $0.12 per diluted share, on sales of $21.4 million. This compares with net income of $1.9 million, or $0.31 per diluted share, and sales of $24.2 million in the year ago second quarter.
On June 25, the Company reduced its forecast for second quarter 2002 sales to approximately $20 million and diluted earnings per share to a range of $0.10 to $0.12.
Commenting on the quarter, President and CEO Mac McAninch stated: "Despite solid sales performance in the second quarter, our gross margin and overall profitability were reduced by a shift in product mix due to a fall-off in demand for power generation products and a slow recovery in aerospace product sales. In fact, sales rose 22% over the 2002 first quarter, reflecting a 75% increase in reroll product sales, a 48% increase in tool steel sales and a $2.2 million sales contribution from Dunkirk Specialty Steel, which became operational in mid-March. However, this growth was not sufficient to overcome the decline in the higher margin sales to OEMs and forgers originally anticipated, nor the shift in reroll sales to commodity products from higher margin non-commodity reroll products."
Mr. McAninch continued: "The balance of the year will continue to be challenging, with no immediate sign of improvement in power generation or commercial aircraft demand. Our focus will remain on reaching additional customers and new niche markets by capitalizing on the potential of our new Dunkirk subsidiary. We are expanding our sales team to help us achieve this objective and have hired an experienced specialty steel salesman for the Chicago area, the heart of our marketplace. In addition, we are reviewing our operating cost structure for opportunities to further reduce costs and are delaying the start of less essential capital expenditure projects planned for 2002 until market conditions improve."
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 third quarter 2002 results will be in line with those of the 2002 second quarter, with sales of approximately $18 to $22 million and diluted earnings per share of $0.09 to $0.14. In the third quarter of 2001, sales were $23.3 million and diluted earnings per share were $0.38. The following factors were considered in developing these estimates:
-- The Company's total backlog approximated $21 million on June 30,
2002, as compared to $23 million at March 31, 2002.
-- Sales to the Company's reroller customers are expected to remain
strong, with commodity products again dominating the mix. Sales
to the OEM and forger markets are expected to be lower than in the
prior year period as a result of reduced demand from the power
generation and aerospace industries. Service center sales are
expected to rise, primarily resulting from the growth expected at
Dunkirk Specialty Steel.
-- Sales from Dunkirk are expected to reach approximately $5 million
in the third quarter, compared with $2.2 million in the second
quarter and $206,000 in the first quarter of 2002. Dunkirk is
expected to reduce its level of operating losses during the third
quarter as it approaches its profitability threshold of $2 million
in monthly sales.
-- The Company is continuing negotiations of a new labor agreement
with its hourly employees at the Bridgeville facility to replace
the existing agreement that expires August 31, 2002.
Mr. McAninch concluded: "Universal Stainless remains a company of substantial financial strength and operating discipline. With the timely addition and progress of Dunkirk Specialty Steel, we are well equipped to achieve solid performance in a period of difficult conditions in our traditional markets."
Webcast
A simultaneous Webcast of the Company's conference call discussing the 2002 second quarter results and the third quarter outlook, scheduled at 10:00 a.m. (EDT) 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 12:00 noon (EDT) today, continuing through July 30. It can be accessed by dialing 706-645-9291, passcode 4891556. 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, risks associated with the negotiation of a new collective bargaining agreement with the hourly employees at the Bridgeville facility, 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.
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share information)
(Unaudited)
CONSOLIDATED STATEMENT OF OPERATIONS
For the For the
Quarter Ended Six-months Ended
June 30, June 30,
----------------------- -----------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Net sales $ 21,422 $ 24,233 $ 39,018 $ 45,492
Cost of products
sold 18,574 19,207 32,819 36,328
Selling and
administrative
expenses 1,537 1,816 2,910 3,374
---------- ---------- ---------- ----------
Operating income 1,311 3,210 3,289 5,790
Interest expense (118) (160) (228) (341)
Other income
(expense) 31 2 62 22
---------- ---------- ---------- ----------
Income before
taxes 1,224 3,052 3,123 5,471
Income taxes 447 1,144 1,140 2,051
---------- ---------- ---------- ----------
Net income $ 777 $ 1,908 $ 1,983 $ 3,420
========== ========== ========== ==========
Earnings per
share - Basic: $ 0.13 $ 0.31 $ 0.32 $ 0.56
========== ========== ========== ==========
Earnings per
share - Diluted: $ 0.12 $ 0.31 $ 0.32 $ 0.56
========== ========== ========== ==========
Weighted average
shares of Common
Stock outstanding
Basic 6,176,813 6,081,274 6,127,043 6,081,251
========== ========== ========== ==========
Diluted 6,294,737 6,103,713 6,214,655 6,097,304
========== ========== ========== ==========
Tons shipped 12,642 12,258 20,988 23,324
========== ========== ========== ==========
EBITDA $ 2,092 $ 3,875 $ 4,851 $ 7,112
========== ========== ========== ==========
BUSINESS SEGMENT INFORMATION
Net sales
Universal
Stainless &
Alloy Products $ 20,882 $ 24,233 $ 38,520 $ 45,492
Dunkirk Specialty
Steel 2,173 -- 2,379 --
Intersegment (1,633) -- (1,881) --
---------- ---------- ---------- ----------
Consolidated
net sales $ 21,422 $ 24,233 $ 39,018 $ 45,492
---------- ---------- ---------- ----------
Operating income
(loss)
Universal
Stainless
& Alloy Products 1,699 3,229 4,192 5,824
Dunkirk Specialty
Steel (376) -- (882) --
Corporate costs (12) (19) (21) (34)
---------- ---------- ---------- ----------
Total operating
income $ 1,311 $ 3,210 $ 3,289 $ 5,790
========== ========== ========== ==========
CONSOLIDATED BALANCE SHEET DATA
(Dollars in thousands)
June 30, December 31,
2002 2001
------- -------
Current assets $46,626 $38,093
Property, plant & equipment, net 41,492 41,202
Other assets 177 151
------- -------
$88,295 $79,446
======= =======
Current liabilities $11,588 $ 9,438
Long-term debt 8,440 6,490
Deferred taxes 7,609 7,146
------- -------
Total liabilities 27,637 23,074
------- -------
Stockholders' equity 60,658 56,372
------- -------
$88,295 $79,446
======= =======