Universal Stainless Posts Strong Second Quarter 2014 Results

• Net Sales of $52.3 Million Increase 12% Sequentially and 22% from 2013 Second Quarter
• Gross Margin Improves to 16% of Sales; Operating Income is $3.2 Million
• Net Income Totals $1.4 Million or $0.20 per Diluted Share
• Second Quarter Backlog Rises to $61.0 Million

BRIDGEVILLE, Pa., July 31, 2014 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) today reported that net sales for the second quarter of 2014 were $52.3 million, an increase of 12% from the first quarter of 2014 and 22% higher than the second quarter of 2013. Sales of premium alloy products rose to $4.3 million, an increase of 58% sequentially and more than double their level in the second quarter of 2013. Premium alloy products represented 8% of total net sales in the 2014 second quarter.

Compared with the first quarter of 2014, sales to the aerospace market increased 13%, power generation sales were up 21%, oil and gas market sales increased 27%, while heavy equipment market sales were lower by 7%. On a tons shipped basis, aerospace shipments increased 3% from the first quarter of 2014, power generation shipments were up 25%, shipments to the oil and gas market were level, and heavy equipment market shipments were lower by 9%. The Company's backlog (before surcharges) has increased 30% from the start of this year to $61.0 million at the end of the second quarter.

The Company's gross margin for the second quarter of 2014 continued to show strong improvement, reaching $8.4 million, or 16.1% of sales, compared with $6.1 million, or 13.0% of sales, in the first quarter of 2014, and $5.3 million, or 12.4% of sales, in the second quarter of 2013.

Operating income for the second quarter of 2014 was $3.2 million, which is more than double operating income of $1.4 million in the first quarter of 2014, and up more than seven-fold from operating income of $0.4 million in the second quarter of 2013.

The Company reported net income of $1.4 million, or $0.20 per diluted share, for the second quarter of 2014. That compares with a net loss of $0.5 million, or $0.07 per diluted share, in the first quarter of 2014, which included $0.12 of state tax charges, and net income of $0.5 million, or $0.06 per diluted share, in the second quarter of 2013, including $0.11 of tax benefits.

For the first six months of 2014, net sales increased 8% to $99.0 million compared with net sales of $92.0 million in the same period of 2013. Net income for the first six months of 2014 increased to $1.0 million, or $0.13 per diluted share, compared to net income of $0.5 million, or $0.06 per diluted share, in the first six months of 2013.

For the second quarter of 2014, the Company used $1.8 million in cash from operations for investment in working capital to support increased sales activity and operating levels. At June 30, 2014, total debt was $91.8 million, an increase of 4% from the end of the first quarter of 2014, largely as a result of the higher activity levels; however, total debt was lower by 11% from the second quarter of 2013. Debt to total capitalization was 31.5% at the end of the 2014 second quarter.   

Chairman, President and CEO Dennis Oates commented: "Increasing demand in the aerospace market, which represents nearly 60% of our sales, was the main driver of the continued improvement in our second quarter performance, which also benefited from increased sales to the power generation and oil and gas markets. Premium product sales reached 8% of total sales, as we continued to execute our plan to move toward more advanced alloys. The favorable shift in our product mix combined with solid manufacturing activity levels, improved yields, lower scrap rates, and better matching of surcharges to material costs, all contributed to the strong step-up in our gross margin for the quarter.

"With the recent approvals received from GE Aviation, which completed our certification by three of the world's largest aircraft engine manufacturers, we have entered the third quarter on a positive footing." 

Webcast

The Company has scheduled a conference call for today, July 31, at 10:00 a.m. (Eastern) to discuss second quarter 2014 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 third quarter of 2014.  

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, nickel alloys, tool steel and certain other alloyed steels. The Company's products are used in a variety of industries, including aerospace, power generation, oil and gas, 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. 

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