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8-K - FORM 8-K - UNIVERSAL STAINLESS & ALLOY PRODUCTS INCd473926d8k.htm

Exhibit 99.1

LOGO

 

CONTACTS:  

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

FOR IMMEDIATE RELEASE

UNIVERSAL STAINLESS REPORTS FOURTH QUARTER 2012 RESULTS IN LINE

WITH COMPANY GUIDANCE

- Sales are $47.2 Million; EPS is $0.16

- Quarter-end Backlog Totals $51.7 Million

BRIDGEVILLE, PA, January 29, 2013 – Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) today reported fourth quarter results in line with its recent guidance. Sales for the fourth quarter of 2012 were $47.2 million compared with $62.2 million in the fourth quarter of 2011.

Operating income for the fourth quarter of 2012 was $1.8 million, or 3.7% of sales, including $1.3 million of ramp-up expense for the Company’s North Jackson operation. This compares with operating income of $7.0 million, or 11.3% of sales, in the fourth quarter of 2011, which included $0.9 million of expense for the start-up of North Jackson acquired by the Company in August 2011. Excluding the effect of North Jackson in both periods, operating income was 6.8% of sales in the fourth quarter of 2012 and 12.8% of sales in the fourth quarter of 2011.

Net income for the fourth quarter of 2012 was $1.1 million, or $0.16 per diluted share. This included a benefit of $0.04 per diluted share due to state income tax adjustments. It also included $0.12 per diluted share of North Jackson ramp-up expense. In the fourth quarter of 2011, net income was $4.3 million, or $0.59 per diluted share, including $0.13 per diluted share of start-up expense related to North Jackson.

On January 18, 2013, the Company reported that it expected fourth quarter 2012 revenues to approximate $47 million and diluted earnings per share to approximate $0.15 to $0.17.

For full year 2012, sales were $251.0 million compared with $252.6 million in 2011. Net income for 2012 was $14.6 million, or $2.02 per diluted share, compared with $18.1 million, or $2.56 per diluted share, in 2011. Net income for 2012 included expense for the North Jackson ramp-up of $0.20 per diluted share compared to $0.51 per diluted share of expense in 2011 for the acquisition, financing and start-up of the North Jackson operation.

For the fourth quarter of 2012, the Company had positive cash flow from operations of $12.7 million, even after continued investment in the ramp-up of North Jackson. Capital expenditures in the fourth quarter of 2012 were $4.3 million, including $3.0 million for the North Jackson operation. At December 31, 2012, the Company had total debt of $106.7 million, or 35.0% of total capitalization.

Shipment volume for the fourth quarter of 2012 decreased 25% from the fourth quarter of 2011. This reflected a 19% increase in tons shipped to the service center plate market, offset by decreases of 20%, 41% and 53% in shipments to the aerospace, petrochemical and power generation markets, respectively.

Chairman, President and CEO Dennis Oates commented: “Our fourth quarter sales were consistent with low activity levels industry-wide. An expected pick-up in order entry at year end failed to materialize as economic uncertainty kept customers focused on inventory reduction. An exception was the solid demand for service center plate products in the quarter, which have applications in the automotive and heavy industrial markets.

 

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“We achieved further operational improvement company-wide in the fourth quarter, including commissioning of additional equipment and process modifications that will benefit quality and cycle time. However, lower shipment volume and the continued ramp-up of our North Jackson operation resulted in a consolidated operating margin of 3.7% for the quarter.

“We are successfully entering the final stages of the North Jackson ramp-up. The approval process with customers for our vacuum induction melting (VIM) products is proceeding with prime and first-tier OEMs in our major markets.

“Despite a slowdown in order activity that began for us in the second quarter of 2012, our full year sales approximated those of 2011, and our operating margin, even with North Jackson, approached 10% for 2012. We expect our North Jackson operation to begin making an increasingly positive contribution to our results as we go through 2013. In addition, there are early signs that some customers are returning to the market, although most are predicting a gradual recovery in meaningful demand. We are fully focused on further strengthening our position to respond to that demand as it returns.”

Segment Review

For the fourth quarter of 2012, the Universal Stainless & Alloy Products segment, which includes the North Jackson operation, had sales of $37.6 million and operating income of $0.2 million, including North Jackson ramp-up costs, yielding an operating margin of 0.6% of sales. In the fourth quarter of 2011, segment sales were $49.2 million, and operating income including North Jackson ramp-up costs was $4.0 million, or 8.2% of sales.

Segment sales decreased 24% from the fourth quarter of 2011 on 22% lower tons shipped mainly due to decreased shipments to all customer categories except service centers.

Sales for the Dunkirk Specialty Steel segment were $19.4 million for the fourth quarter of 2012, and operating income was $1.0 million, yielding an operating margin of 5.1% of sales. This compares with sales in the fourth quarter of 2011 of $24.5 million and operating income of $2.5 million, or 10.1% of sales.

Dunkirk’s sales decreased 21% from the fourth quarter of 2011 on a 26% decrease in tons shipped mainly due to decreased shipments to all customer categories except OEM.

Webcast

The Company has scheduled a conference call for today, January 29, at 10:00 a.m. (Eastern) to discuss fourth quarter results. 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 2013.

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, the Company, with its experience, technical expertise, and dedicated workforce, stands 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, the concentrated nature of the Company’s customer base to date and the Company’s dependence on its significant customers; the receipt, pricing and timing of future customer orders; changes

 

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in product mix; the limited number of raw material and energy suppliers and significant fluctuations that may occur in raw material and energy prices; risks related to property, plant and equipment, including the Company’s reliance on the continuing operation of critical manufacturing equipment; risks associated with labor matters; 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 and matters; risks related to acquisitions that the Company may make; 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 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.

- TABLES FOLLOW -

 

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UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.

FINANCIAL HIGHLIGHTS

(Dollars in thousands, except share and per share information)

(Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

     For the Quarter Ended
December 31,
    For the Year Ended
December 31,
 
     2012     2011     2012     2011*  

Net Sales

        

Stainless steel

   $ 34,471      $ 52,203      $ 195,315      $ 202,000   

Tool steel

     4,782        3,587        20,420        21,963   

High-strength low alloy steel

     4,938        3,607        21,897        17,532   

High-temperature alloy steel

     1,688        1,772        7,787        6,809   

Conversion services

     1,037        960        4,868        3,905   

Scrap sales and other

     234        39        703        387   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales

     47,150        62,168        250,990        252,596   

Cost of products sold

     41,183        50,264        209,841        205,148   

Selling and administrative expenses

     4,215        4,891        17,746        17,761   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     1,752        7,013        23,403        29,687   

Interest expense

     (668     (569     (2,592     (1,421

Other income

     51        24        140        212   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     1,135        6,468        20,951        28,478   

Income tax provision

     54        2,212        6,334        10,356   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 1,081      $ 4,256      $ 14,617      $ 18,122   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share – Basic

   $ 0.16      $ 0.62      $ 2.13      $ 2.65   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share – Diluted

   $ 0.16      $ 0.59      $ 2.02      $ 2.56   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares of Common Stock outstanding

        

Basic

     6,907,744        6,839,979        6,874,669        6,826,490   

Diluted

     7,455,809        7,418,002        7,454,030        7,138,824   

MARKET SEGMENT INFORMATION

 

     For the Quarter Ended      For the Year Ended  
     December 31,      December 31,  
     2012      2011      2012      2011*  

Net Sales

           

Service centers

   $ 30,943       $ 33,624       $ 151,034       $ 131,624   

Forgers

     5,754         11,640         36,678         48,432   

Rerollers

     5,492         11,131         37,343         47,114   

Original equipment manufacturers

     3,181         3,583         15,874         16,427   

Wire redrawers

     509         1,191         4,490         4,707   

Conversion services

     1,037         960         4,868         3,905   

Scrap sales and other

     234         39         703         387   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total net sales

   $ 47,150       $ 62,168       $ 250,990       $ 252,596   
  

 

 

    

 

 

    

 

 

    

 

 

 

Tons Shipped

     8,877         11,820         47,802         50,164   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

* Consolidated results include the North Jackson operation from its acquisition date of August 18, 2011.

 

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BUSINESS SEGMENT RESULTS

Universal Stainless & Alloy Products Segment 

 

     For the Quarter Ended
December 31,
     For the Year Ended
December 31,
 
     2012      2011      2012      2011*  

Net Sales

           

Stainless steel

   $ 21,145       $ 31,899       $ 120,071       $ 125,936   

Tool steel

     4,024         3,064         17,584         20,248   

High-strength low alloy steel

     969         1,210         6,062         3,026   

High-temperature alloy steel

     522         741         2,647         2,791   

Conversion services

     963         782         4,439         2,985   

Scrap sales and other

     116         42         481         401   
  

 

 

    

 

 

    

 

 

    

 

 

 
     27,739         37,738         151,284         155,387   

Intersegment

     9,815         11,434         61,618         69,946   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total net sales

     37,554         49,172         212,902         225,333   

Material cost of sales

     20,192         24,621         107,042         116,959   

Operation cost of sales

     14,455         17,203         82,980         76,014   

Selling and administrative expenses

     2,684         3,312         11,332         12,184   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

   $ 223       $ 4,036       $ 11,548       $ 20,176   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

* The Universal Stainless & Alloy Products segment includes the North Jackson operation from its acquisition date of August 18, 2011.

Dunkirk Specialty Steel Segment 

 

     For the Quarter Ended
December 31,
    For the Year Ended
December 31,
 
     2012      2011     2012      2011  

Net Sales

          

Stainless steel

   $ 13,326       $ 20,304      $ 75,244       $ 76,064   

Tool steel

     758         523        2,836         1,715   

High-strength low alloy steel

     3,969         2,397        15,835         14,506   

High-temperature alloy steel

     1,166         1,031        5,140         4,018   

Conversion services

     74         178        429         920   

Scrap sales and other

     118         (3     222         (14
  

 

 

    

 

 

   

 

 

    

 

 

 
     19,411         24,430        99,706         97,209   

Intersegment

     36         43        350         169   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total net sales

     19,447         24,473        100,056         97,378   

Material cost of sales

     11,512         14,971        58,642         59,835   

Operation cost of sales

     5,421         5,459        25,616         21,689   

Selling and administrative expenses

     1,531         1,579        6,414         5,577   
  

 

 

    

 

 

   

 

 

    

 

 

 

Operating income

   $ 983       $ 2,464      $ 9,384       $ 10,277   
  

 

 

    

 

 

   

 

 

    

 

 

 

 

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CONDENSED CONSOLIDATED BALANCE SHEETS

 

     December 31,
2012
     December 31,
2011
 

Assets

     

Cash

   $ 321       $ 274   

Accounts receivable, net

     24,287         34,554   

Inventory, net

     95,749         85,088   

Deferred income taxes

     22,739         28,438   

Refundable income taxes

     1,594         4,844   

Other current assets

     2,740         2,198   
  

 

 

    

 

 

 

Total current assets

     147,430         155,396   

Property, plant and equipment, net

     206,150         183,148   

Goodwill

     20,268         20,479   

Other long-term assets

     2,418         2,649   
  

 

 

    

 

 

 

Total assets

   $ 376,266       $ 361,672   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Accounts payable

   $ 10,610       $ 29,912   

Accrued employment costs

     4,671         7,547   

Current portion of long-term debt

     1,500         3,000   

Other current liabilities

     735         966   
  

 

 

    

 

 

 

Total current liabilities

     17,516         41,425   

Long-term debt

     105,242         91,650   

Deferred income taxes

     55,227         48,291   
  

 

 

    

 

 

 

Total liabilities

     177,985         181,366   

Stockholders’ equity

     198,281         180,306   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 376,266       $ 361,672   
  

 

 

    

 

 

 

 

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

 

     For the Year Ended
December 31,
 
     2012     2011*  

Operating Activities:

    

Net income

   $ 14,617      $ 18,122   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     12,627        7,271   

Gain on sale of property, plant and equipment

     (12     (20

Deferred income tax

     12,635        10,072   

Share-based compensation expense, net

     1,314        1,408   

Changes in assets and liabilities:

    

Accounts receivable, net

     10,267        (5,281

Inventory, net

     (10,661     (15,378

Accounts payable

     (20,130     (5

Accrued employment costs

     (2,876     2,057   

Income taxes

     3,208        (4,672

Other, net

     (180     (2,887
  

 

 

   

 

 

 

Net cash provided by operating activities

     20,809        10,687   
  

 

 

   

 

 

 

Investing Activities:

    

Capital expenditures, net of amount included in current liabilities

     (34,229     (16,790

Business acquisition, net of convertible notes assumed

     —          (91,298

Proceeds from sale of property, plant and equipment

     14        20   
  

 

 

   

 

 

 

Net cash used in investing activities

     (34,215     (108,068
  

 

 

   

 

 

 

Financing Activities:

    

Borrowings under revolving credit facility, net

     32,092        34,650   

Payment on term loan facility

     (20,000     —     

Borrowings under term loan facility

     —          40,000   

Debt repayments

     —          (10,823

Proceeds from the issuance of Common Stock

     1,608        627   

Payment of deferred financing costs

     (348     (1,371

Tax benefit from share-based payment arrangements

     335        172   

Purchase of Treasury Stock

     (234     —     
  

 

 

   

 

 

 

Net cash provided by financing activities

     13,453        63,255   

Net increase (decrease) in cash and cash equivalents

     47        (34,126

Cash at beginning of period

     274        34,400   
  

 

 

   

 

 

 

Cash at end of period

   $ 321      $ 274   
  

 

 

   

 

 

 

Supplemental Non-Cash Investing and Financing Activities:

    

Capital expenditures included in current liabilities

   $ 828      $ 7,690   

Convertible notes issued as acquisition consideration

   $ —        $ 20,000   

 

* Consolidated results include the North Jackson operation from its acquisition date of August 18, 2011.

 

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