EX-99 2 exhibit_991.txt EXHIBIT 99.1 [GRAPHIC OMITTED] CONTACTS: Richard M. Ubinger June Filingeri Vice President of Finance, President Chief Financial Officer and Treasurer Comm-Partners LLC (412) 257-7606 (203) 972-0186 FOR IMMEDIATE RELEASE UNIVERSAL STAINLESS REPORTS SECOND QUARTER 2009 RESULTS - Company Generates Operating Income - - Sales Are $30.8 Million on 40% Fewer Tons Shipped - - Net Loss of $0.06 per Share Includes $0.11 per Share Negative Tax Adjustment - - Cash Flow from Operations Increases to $12.7 Million in 2Q 09 - - Cash on Hand Increased to $34.4 Million vs. Total Debt of 13.3 Million - - Melt Shop Project Continues On-Time and On-Budget - BRIDGEVILLE, PA, July 29, 2009 - Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) reported today that sales for the second quarter of 2009 were $30.8 million, a decline of 52% from the record $63.5 million reported in the second quarter of 2008. Tons shipped declined 40% from the prior year period. The Company reported a net loss of $400,000 or $0.06 per share in the second quarter of 2009 that included a tax adjustment of $742,000, equivalent to $0.11 per share, for the reconciliation of tax balances to the 2008 federal and state income tax returns to be filed in the third quarter of 2009. Without this adjustment, net income in the second quarter of 2009 would have been $342,000, or $0.05 per diluted share. This compares with net income of $5.3 million, or $0.77 per diluted share, in the second quarter of 2008. For the second quarter of 2009, cash flow from operations totaled $12.7 million, an increase of 168% from the second quarter of 2008. Capital expenditures were $3.9 million including expenditures of $3.2 million for the melt shop upgrade project. At June 30, 2009, cash was $34.4 million, working capital was $97.4 million, and long-term debt was $12.2 million. For the first six months of 2009, sales were $72.9 million and the Company incurred a net loss of $4.2 million or $0.63 per share, including the tax adjustment in the second quarter and unusual charges recognized in the 2009 first quarter of $3.6 million equivalent to $0.53 per share, after-tax. In the first half of 2008, sales were $120.3 million and net income was $10.0 million, or $1.47 per diluted share. President and CEO Dennis Oates commented: "During the first quarter, we implemented an aggressive plan to reduce costs, generate cash and adjust our operating levels in the face of difficult economic and credit conditions and significant de-stocking in the specialty steel supply channel. As a result, we were able to report operating income in the second quarter despite 27% lower sales and 29% fewer tons shipped than in the first quarter. Our cost control and working capital management, which included a 19% sequential reduction in WIP inventory, also yielded a nearly four-fold increase in operating cash flow compared to the first quarter and enabled us to increase our net cash position by $8.7 million to $21.1 million. 1 "Our melt shop upgrade project remains on time and on budget. While not scheduled for completion until mid-2010, the upgrades placed into service have already produced better product quality and improved material yields. The resulting improvement in our on-time delivery and shortened lead times have enabled us to capture additional orders from our customers. We also recently achieved AS9100 certification for our Bridgeville and Dunkirk facilities, which better positions us to serve the international aerospace market. "In a sign that business is starting to return, total order entry has improved each month since April. However, bookings are well below normal levels and our backlog has dropped to $38 million at June 30 as our end markets remain challenged and inventory restocking has not resumed in the supply channel. Our lean operations, low fixed costs and continued aggressive working capital management should allow us to generate positive cash flow and maintain our strong financial position in the third quarter in spite of the current low volume environment." Segment Review -------------- For the second quarter of 2009, the Universal Stainless & Alloy Products segment had sales of $26.9 million and operating income of $949,000, yielding an operating margin of 4% of sales. This compares with sales of $53.1 million and operating income of $5.6 million, or 11% of sales, in the second quarter of 2008. In the first quarter of 2009, sales were $36.7 million and there was an operating loss of $3.9 million, including $5.0 million of unusual charges. Segment sales declined 49% from the second quarter of 2008 primarily due to a 33% decrease in tons shipped and lower surcharges. Increased shipments to forgers and OEMs, mainly of power generation products, were offset by substantially lower shipments to rerollers and to service centers, mainly of tool steel plate. Segment sales decreased 27% from the first quarter of 2009 on 24% fewer tons shipped. The Dunkirk Specialty Steel segment recorded sales of $10.2 million and an operating loss of $384,000 for the second quarter of 2009. This compares with sales of $21.2 million and operating income of $2.1 million, or 10% of sales, in the second quarter of 2008. In the first quarter of 2009, sales were $11.4 million and the operating loss was $2.5 million, including unusual charges of $1.0 million. Dunkirk's sales declined 52% from the second quarter of 2008 while tons shipped decreased 31% due to lower shipments to all customer categories and lower surcharges. Dunkirk's sales were 10% lower than in the first quarter of 2009 on a 2% decrease in tons shipped. Webcast ------- A simultaneous Webcast of the Company's conference call discussing the second quarter of 2009, 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. 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 rerollers, forgers, service centers, original equipment manufacturers and wire redrawers. More information is available at www.univstainless.com. 2 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, labor 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. The Company's actual results in future periods also may be impacted by various economic and market risk and uncertainties, many of which are 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- 3 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 Six-Months Ended June 30, June 30, 2009 2008 2009 2008 ---- ---- ---- ---- Net Sales Stainless steel $ 25,648 $ 43,760 $ 59,410 $ 85,788 Tool steel 1,563 11,659 4,892 20,766 High-strength low alloy steel 2,367 2,934 5,110 6,945 High-temperature alloy steel 876 3,344 2,895 4,490 Conversion services 292 448 596 973 Other 17 1,337 46 1,365 ------- -------- ---------- ---------- Total net sales 30,763 63,482 72,949 120,327 Cost of products sold 28,092 53,018 71,956 99,797 Selling and administrative expenses 2,106 2,634 6,843 5,709 ------- -------- ---------- ---------- Operating income 565 7,830 (5,850) 14,821 Interest expense (27) (27) (51) (55) Other income 35 62 65 149 ------- -------- ---------- ---------- Income (loss) before taxes 573 7,865 (5,836) 14,915 Income tax provision (benefit) 973 2,595 (1,610) 4,922 ------- -------- ---------- ---------- Net income (loss) $ (400) $ 5,270 (4,226) 9,993 ======= ======== ========== ========== Earnings per share - Basic $ (0.06) $ 0.79 $ (0.63) $ 1.49 ======= ======== ========== ========== Earnings per share - Diluted $ (0.06) $ 0.77 $ (0.63) 1.47 ======= ======== ========== ========== Weighted average shares of Common Stock outstanding Basic 6,751,739 6,707,523 6,742,012 6,685,368 Diluted 6,751,739 6,819,546 6,742,012 6,795,514 MARKET SEGMENT INFORMATION For the Quarter Ended For the Six-Months Ended June 30, June 30, 2009 2008 2009 2008 ---- ---- ---- ---- Net Sales Service centers $ 13,117 $ 33,850 $ 30,649 $ 63,084 Forgers 10,420 11,142 23,391 20,160 Rerollers 1,960 9,240 7,964 20,479 Original equipment manufacturers 3,797 5,795 8,196 11,236 Wire redrawers 1,160 1,692 2,107 3,061 Conversion services 292 448 596 973 Other 17 1,315 46 1,334 ------- -------- ---------- ---------- Total net sales $ 30,763 $ 63,482 $ 72,949 $ 120,327 ======= ======== ========== ========== Tons shipped 6,855 11,423 16,448 23,190 ======= ======== ========== ==========
4 BUSINESS SEGMENT RESULTS Universal Stainless & Alloy Products Segment For the Quarter Ended For the Six-Months Ended June 30, June 30, 2009 2008 2009 2008 ---- ---- ---- ---- Net Sales Stainless steel $ 18,234 $ 28,901 $ 44,229 $ 56,211 Tool steel 1,531 11,278 4,739 19,702 High-strength low alloy steel 647 1,114 1,662 2,227 High-temperature alloy steel 393 929 1,127 1,498 Conversion services 206 296 394 653 Other 11 1,262 40 1,272 ------- -------- ---------- ---------- 21,022 43,780 52,191 81,563 Intersegment 5,857 9,312 11,373 19,727 ------- -------- ---------- ---------- Total net sales 26,879 53,092 63,564 101,290 Material cost of sales 10,445 28,654 30,711 51,993 Operation cost of sales 14,131 16,936 30,591 34,726 Selling and administrative expenses 1,354 1,869 5,227 4,007 ------- -------- ---------- ---------- Operating income (loss) $ 949 $ 5,633 $ (2,965) $ 10,564 ======= ======== ========== ========== Dunkirk Specialty Steel Segment For the Quarter Ended For the Six-Months Ended June 30, June 30, 2009 2008 2009 2008 ---- ---- ---- ---- Net Sales Stainless steel $ 7,414 $ 14,859 $ 15,181 $ 29,577 Tool steel 32 381 153 1,064 High-strength low alloy steel 1,720 1,820 3,448 4,718 High-temperature alloy steel 483 2,415 1,768 2,992 Conversion services 86 152 202 320 Other 6 75 6 93 ------- -------- ---------- ---------- 9,741 19,702 20,758 38,764 Intersegment 465 1,474 830 2,462 ------- -------- ---------- ---------- Total net sales 10,206 21,176 21,588 41,226 Material cost of sales 6,345 13,126 15,139 24,965 Operation cost of sales 3,493 5,159 7,718 9,648 Selling and administrative expenses 752 765 1,616 1,702 ------- -------- ---------- ---------- Operating income (loss) $ (384) $ 2,126 $ (2,885) $ 4,911 ======= ======== ========== ==========
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CONSOLIDATED BALANCE SHEET June 30, December 31, 2009 2008 ---- ---- ASSETS Cash $ 34,399 $ 14,812 Accounts receivable, net 19,891 33,057 Inventory 45,175 63,222 Other current assets 9,726 8,239 ------------ ------------- Total current assets 109,191 119,330 Property, plant & equipment, net 67,937 62,626 Other assets 1,309 988 ------------ ------------- Total assets $ 178,437 $ 182,944 ============ ============= LIABILITIES AND STOCKHOLDERS' EQUITY Trade accounts payable $ 7,500 $ 19,350 Outstanding checks in excess of bank balance 364 540 Accrued employment costs 2,509 3,795 Current portion of long-term debt 1,015 403 Other current liabilities 410 421 ------------ ------------- Total current liabilities 11,798 24,509 Long-term debt 12,235 1,046 Deferred taxes 12,000 11,689 Other liabilities 87 - ------------ ------------- Total liabilities 36,120 37,244 Stockholders' equity 142,317 145,700 ------------ ------------- Total liabilities and stockholders' equity $ 178,437 $ 182,944 ============ =============
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CONSOLIDATED STATEMENT OF CASH FLOW DATA For the Six-month Period Ended June 30, 2009 2008 ---- ---- Cash flows provided by operating activities: Net income (loss) $ (4,226) $ 9,993 Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization 2,338 2,008 Deferred tax increase (decrease) (262) 304 Stock based compensation expense 499 413 Tax benefit from share-based payment arrangements (86) (511) Changes in assets and liabilities: Accounts receivable, net 13,166 (7,133) Inventory 18,047 (6,827) Trade accounts payable (11,850) 6,836 Accrued employment costs (1,286) (366) Other, net (1,048) 216 ----------- ---------- Cash flow provided by operating activities 15,292 4,933 ----------- ---------- Cash flow used in investing activities: Capital expenditures (7,645) (5,401) ----------- ---------- Cash flow used in investing activities (7,645) (5,401) ----------- ---------- Cash flows provided by financing activities: Long-term debt issuance 12,000 - Long-term debt repayments (199) (194) Net change in outstanding checks in excess of bank balance (176) 1,848 Deferred financing costs (84) - Proceeds from issuance of common stock 313 722 Tax benefit from share-based payment arrangements 86 511 ----------- ---------- Cash flow provided by financing activities 11,940 2,887 ----------- ---------- Net cash flow $ 19,587 $ 2,419 =========== ========== 7