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Universal Stainless Reports Correction to Previously Reported Third Quarter 2012 Results

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BRIDGEVILLE, Pa., Nov. 5, 2012 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) reported today that it is correcting the results for the third quarter of 2012 previously reported on October 24, 2012. This was necessitated by the discovery of an incorrect customer invoice, for which a credit memo has now been issued.

The effect of this correction is that previously reported sales for the third quarter of 2012 were reduced by $0.9 million to $61.4 million from the $62.3 million originally reported. Accordingly, corrected operating income for the third quarter of 2012 is $4.7 million and corrected net income is $2.7 million or $0.38 per diluted share.

Related adjustments also have been made in the segment report for the Company's Universal Stainless & Alloy Products segment as well as in accounts receivable and other items on the balance sheet and cash flow statements.

The corrected financial tables for the third quarter of 2012 accompany this announcement. Investors are also advised to refer to the Quarterly Report on Form 10-Q for the period, which the Company expects to file on November 9, 2012.

Chairman, President and CEO Dennis Oates stated: "We are disappointed that this adjustment was necessary and we have taken immediate action to prevent this from happening again."

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

- CORRECTED TABLES FOLLOW -

UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share information)
(Unaudited)
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
         
  For the Quarter Ended For the Nine-Months Ended
  September 30, September 30,
  2012 2011 2012 2011
Net Sales        
Stainless steel   $ 48,432  $ 54,746  $ 160,844  $ 149,797
Tool steel   4,768  5,407  15,638  18,376
High-strength low alloy steel   4,880  4,440  16,959  13,925
High-temperature alloy steel   1,930  1,579  6,099  5,037
Conversion services   967  935  3,831  2,945
Scrap sales and other  383  192  469  348
Total net sales   61,360  67,299  203,840  190,428
Cost of products sold   52,023  54,725  168,658  154,884
Selling and administrative expenses   4,685  5,343  13,531  12,870
Operating income   4,652  7,231  21,651  22,674
Interest expense   (602)  (609)  (1,924)  (852)
Other income   28  45  89  188
Income before income taxes   4,078  6,667  19,816  22,010
Income tax provision   1,333  2,774  6,280  8,144
Net income   $ 2,745  $ 3,893  $ 13,536  $ 13,866
         
Earnings per common share – Basic   $ 0.40  $ 0.57  $ 1.97  $ 2.03
Earnings per common share – Diluted *  $ 0.38  $ 0.55  $ 1.86  $ 1.97
         
Weighted average shares of Common Stock outstanding        
Basic   6,877,915  6,831,048  6,863,564  6,821,944
Diluted   7,433,922  7,202,386  7,446,836  7,050,781
         
MARKET SEGMENT INFORMATION
         
  For the Quarter Ended For the Nine-Months Ended
  September 30, September 30,
  2012 2011 2012 2011
Net Sales        
Service centers   $ 36,631  $ 35,067  $ 120,091  $ 98,000
Forgers   8,056  12,997  30,924  36,792
Rerollers   10,429  12,506  31,851  35,983
Original equipment manufacturers   4,148  4,518  12,693  12,844
Wire redrawers   746  1,084  3,981  3,516
Conversion services  967  935  3,831  2,945
Scrap sales and other  383  192  469  348
Total net sales   $ 61,360  $ 67,299  $ 203,840  $ 190,428
         
Tons Shipped   11,614  12,813  38,925  38,345
         
Consolidated results include the results of the North Jackson operation, which was acquired on August 18, 2011.
         
* Diluted earnings per common share have been adjusted for interest expense on convertible notes, subsequent to the August 18, 2011 acquisition of the North Jackson operation.
         
BUSINESS SEGMENT RESULTS
         
Universal Stainless & Alloy Products Segment       
         
  For the Quarter Ended For the Nine-Months Ended
  September 30, September 30,
  2012 2011 2012 2011
Net Sales        
Stainless steel   $ 30,138  $ 34,803  $ 98,926  $ 94,037
Tool steel   3,703  5,047  13,560  17,184
High-strength low alloy steel   1,106  662  5,093  1,816
High-temperature alloy steel   637  623  2,125  2,050
Conversion services  866  641  3,476  2,203
Scrap sales and other  267  230  365  359
   36,717  42,006  123,545  117,649
Intersegment   16,556  18,554  51,803  58,512
         
Total net sales   53,273  60,560  175,348  176,161
Material cost of sales   27,548  31,265  87,527  92,338
Operation cost of sales   21,534  20,511  67,730  58,811
Selling and administrative expenses   2,996  4,004  8,648  8,872
         
Operating income   $ 1,195  $ 4,780  $ 11,443  $ 16,140
         
The Universal Stainless & Alloy Products segment includes the results of the North Jackson operation from the August 18, 2011 acquisition date.
         
Dunkirk Specialty Steel Segment         
         
  For the Quarter Ended For the Nine-Months Ended
  September 30, September 30,
  2012 2011 2012 2011
Net Sales        
Stainless steel   $ 18,294  $ 19,943  $ 61,918  $ 55,760
Tool steel   1,065  360  2,078  1,192
High-strength low alloy steel   3,774  3,778  11,866  12,109
High-temperature alloy steel   1,293  956  3,974  2,987
Conversion services   101  294  355  742
Scrap sales and other  116  (38)  104  (11)
   24,643  25,293  80,295  72,779
Intersegment   135  34  314  126
         
Total net sales   24,778  25,327  80,609  72,905
Material cost of sales   14,269  15,847  47,130  44,864
Operation cost of sales   6,499  5,628  20,195  16,230
Selling and administrative expenses   1,689  1,339  4,883  3,998
         
Operating income   $ 2,321  $ 2,513  $ 8,401  $ 7,813
         
 CONDENSED CONSOLIDATED BALANCE SHEETS
     
  September 30, December 31,
  2012 2011
Assets    
     
Cash  $ 250  $ 274
Accounts receivable, net  33,716  34,554
Inventory, net   101,580  85,088
Deferred income taxes  19,622  28,438
Refundable income taxes  1,597  4,844
Other current assets   2,368  2,198
     
Total current assets   159,133  155,396
Property, plant and equipment, net   205,005  183,148
Goodwill  20,268  20,479
Other long-term assets   2,563  2,649
     
Total assets   $ 386,969  $ 361,672
     
Liabilities and Stockholders' Equity    
     
Accounts payable   $ 18,473  $ 29,912
Accrued employment costs   5,946  7,547
Current portion of long-term debt   750  3,000
Other current liabilities   1,223  966
     
Total current liabilities   26,392  41,425
Long-term debt   112,691  91,650
Deferred income taxes   51,711  48,291
Other long-term liabilities   172  -- 
     
Total liabilities   190,966  181,366
Stockholders' equity   196,003  180,306
     
Total liabilities and stockholders' equity   $ 386,969  $ 361,672
     
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
     
  For the Nine-Months Ended
  September 30,
  2012 2011
   
Operating activities:    
Net income   $ 13,536  $ 13,866
Adjustments to reconcile net income to net cash provided by (used in) operating activities:     
Depreciation and amortization   9,312  4,801
Loss on retirement of property, plant and equipment   --   (20)
Deferred income taxes  12,236  13,536
Share-based compensation expense, net   979  1,154
Changes in assets and liabilities:     
Accounts receivable, net   838  (10,262)
Inventory, net   (16,492)  (9,563)
Accounts payable   (14,661)  (6,657)
Accrued employment costs   (1,601)  1,806
Income taxes   3,378  (10,244)
Other, net   571  (286)
     
Net cash provided by (used in) operating activities   8,096  (1,869)
     
Investing activities:    
Capital expenditures, net of amount included in accounts payable   (27,517)  (4,855)
Business acquisition, net of convertible notes assumed  --   (91,298)
Proceeds from sale of fixed assets   --   20
     
Net cash used in investing activities   (27,517)  (96,133)
     
Financing activities:    
Borrowings under revolving credit facility  100,752  44,200
Payments on revolving credit facility  (61,961)  (8,600)
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   960  415
Payment of deferred financing costs  (348)  (1,370)
Purchase of Treasury Stock  (234)  -- 
Tax benefit from share-based payment arrangements   228  75
     
Net cash provided by financing activities   19,397  63,897
     
Net decrease in cash   (24)  (34,105)
Cash at beginning of period   274  34,400
     
Cash at end of period   $ 250  $ 295
     
Supplemental Non-Cash Investing and Financing Activities:    
Capital expenditures included in accounts payable  $ 3,222  $ 2,998
Convertible notes issued as acquisition consideration  $ --   $ 20,000
     
Consolidated results include the results of the North Jackson operation, which was acquired on August 18, 2011.  
     
CONTACT: 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

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