Universal Stainless Reports Strong First Quarter 2012 Results

- Sales Increase 25% to Record $74.6 Million

- EPS is $0.86, after Net Benefit of $0.04 for Nonrecurring Items

- Quarter-end Backlog Remains Strong at $101.3 Million

BRIDGEVILLE, Pa., April 26, 2012 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) reported today that sales for the first quarter of 2012 were a record $74.6 million, an increase of 25% from the first quarter of 2011 and 20% above the 2011 fourth quarter.

Operating income for the 2012 first quarter was $9.7 million, which was 39% higher than the first quarter of 2011 and up 38% from the fourth quarter of 2011. As a percentage of sales, operating income for the 2012 first quarter was 13.0% compared with 11.7% in the first quarter a year ago and 11.3% in the 2011 fourth quarter.

Net income for the first quarter of 2012 was $6.3 million, or $0.86 per diluted share. This included a benefit of $0.07 per diluted share due to state income tax adjustments. It also included an after-tax loss of $0.2 million, or $0.03 per diluted share, attributable to the ramp-up of the Company's North Jackson facility.  In the first quarter of 2011, net income was $4.4 million, or $0.64 per diluted share, including $0.04 per diluted share of acquisition expense for North Jackson.  Net income was $4.3 million, or $0.59 per diluted share, in the fourth quarter of 2011, including $0.13 per diluted share of North Jackson start-up expense.

For the first quarter of 2012, the Company recorded negative cash flow from operations of $3.8 million due to its investment in working capital to support increased sales activity and the ramp-up of its North Jackson operation. Capital expenditures were $9.7 million, including $7.4 million for the North Jackson operation. At March 31, 2012, the Company had total debt of $103.9 million, or 35.7% of total capitalization.

Shipment volume for the first quarter of 2012 increased 8% from the first quarter of 2011 and rose 19% from the 2011 fourth quarter. This reflected continued strong demand in the aerospace and petrochemical markets, ongoing maintenance spending in power generation, and recovering demand for tool steel plate. Volume shipped to all end markets increased compared to the fourth quarter of 2011, with aerospace up 22%, petrochemical up 20%, power generation up 9% and service center plate up 12%.

Chairman, President and CEO Dennis Oates commented: "End markets remained strong in the first quarter and our sales and gross margin dollars reached record levels, despite fluctuating nickel prices. 

"Our focus on higher value sales combined with company-wide cost reduction initiatives and pricing actions enabled us to achieve a consolidated operating margin of 14.2% of sales on our legacy Universal business, which was the highest level in five years.  

"The ramp-up plan for our North Jackson facility is progressing. Production on our new forge has increased each month since acquisition, the majority of the finishing operation is commissioned, and our two new vacuum arc remelt (VAR) furnaces are fully operational.  Our vacuum induction melting (VIM) furnace commissioning is continuing to move forward.  With strong customer interest in our North Jackson capabilities, we are focused on the next phase of our plan – obtaining customer approvals. Achieving AS 9100 certification of our forge in March validated its capabilities for the international aerospace market. We are working towards certification of our premier melt shop as a next step.

 "Business remains strong in the second quarter, reflected in continued strong order entry and our $100+ million backlog, even after record first quarter sales. We remain fully focused on executing our plan to achieve further profitable growth."

Segment Review

For the first quarter of 2012, the Universal Stainless & Alloy Products segment, including the North Jackson operation, had sales of $60.3 million and operating income of $5.8 million, yielding an operating margin of 9.6% of sales.  In the first quarter of 2011, sales were $55.2 million and operating income was $4.9 million, or 8.9% of sales. For the fourth quarter of 2011, segment sales, including the North Jackson operation, were $49.2 million and operating income was $4.0 million, or 8.2% of sales.

Segment sales rose 9% from the first quarter of 2011 on 1% higher tons shipped mainly due to increased shipments to service centers and forgers and of conversion pounds with the addition of North Jackson, offset by lower shipments to rerollers. Segment sales increased 23% from the 2011 fourth quarter on 24% higher volume mainly due to higher shipments to service centers, forgers and to the Dunkirk facility and increased conversion pounds.

Sales for the Dunkirk Specialty Steel segment were $30.5 million for the first quarter of 2012 and operating income was $3.4 million, yielding an operating margin of 11.0% of sales. This compares with sales in the first quarter of 2011 of $22.0 million and operating income of $2.3 million, or 10.6% of sales. In the fourth quarter of 2011, sales were $24.5 million and operating income was $2.5 million, or 10.1% of sales. 

Dunkirk's sales increased 39% from the first quarter of 2011 on a 29% increase in tons shipped, mainly due to increased shipments to service centers. Dunkirk's sales increased 25% from the fourth quarter of 2011 on 26% higher tons shipped, also due to increased shipments to service centers.   

Webcast

A simultaneous webcast of the Company's conference call discussing the first quarter of 2012, 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 2012. 

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 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.