Universal Stainless & Alloy Products, Inc. (Nasdaq:
USAP) today reported financial results for the fourth
quarter and the full year of 2023. Net sales were up 12% to a
record $79.8 million in the 2023 fourth quarter compared with the
third quarter of 2023. Full year 2023 net sales increased
42%, to a record $285.9 million from $202.1 million in 2022.
Sales of premium alloys increased 28% to a record $21.1 million,
or 26.5% of sales, in the fourth quarter of 2023, versus $16.5
million, or 23.1% of sales, in the third quarter of 2023.
Full year 2023 premium alloy sales increased 74% to a record $68.1
million, or 23.8% of sales, from $39.2 million, or 19.4% of sales,
in 2022. Premium alloys represent approximately 36% of the
Company's current backlog, which totaled $318.2 million at year-end
2023.
Aerospace sales continue to be driven by strong market demand
and premium alloy share gains. Fourth quarter 2023 aerospace
sales increased 15% sequentially to a record $61.9 million, or
77.6% of sales, compared with $54.0 million, or 75.7% of sales, in
the third quarter of 2023. Full year 2023 aerospace sales
reached a record $216.1 million, or 75.6% of sales, an increase of
57% from 2022.
The Company’s gross margin continued to strengthen in the fourth
quarter of 2023 to $13.1 million, or 16.4% of sales, from 15.2% of
sales in the third quarter of 2023 and 4.3% of sales in the 2022
fourth quarter. The gross margin in the most recent quarter
was the highest since the second quarter of 2018 and benefited from
a richer product mix and higher selling prices, despite $1.6
million of raw materials headwinds.
Operating income rose 9% to $4.8 million in the fourth quarter
of 2023 from $4.4 million in the 2023 third quarter. It
included higher SG&A expense due to higher employee-related
costs and increased insurance costs.
The Company’s fourth quarter net income increased 35% to $2.6
million, or $0.27 per diluted share, compared with $1.9 million, or
$0.20 per diluted share, in the third quarter of 2023. Full
year 2023 net income totaled $4.9 million, or $0.53 per diluted
share, versus a loss of $8.1 million, or $0.91 per diluted share,
in 2022.
EBITDA for the fourth quarter of 2023 increased to $9.6 million
from $9.2 million in the 2023 third quarter. Fourth quarter
2023 adjusted EBITDA increased 5% to $10.0 million from $9.5
million in the third quarter of 2023.
Christopher M. Zimmer, President and CEO, commented: “The fourth
quarter capped a year of increasing momentum for Universal, with
sales up 42% for the year to a record $286 million, and gross
margin improving steadily each quarter in 2024 to reach 16.4% of
sales in the fourth quarter.
“Our strategic focus on higher margin premium and specialty
alloys is gaining full traction enabling us to meet robust and
sustainable demand in the aerospace market -- evidenced by the 74%
increase in our premium alloy sales in 2023 and 57% higher
aerospace sales for the year.
“To increase our capabilities and capacity in premium and
specialty alloys, we have added two Vacuum-Arc Remelt (VAR)
furnaces at our North Jackson facility, which have been qualified
and released into production. Their addition supports our
premium alloy growth strategy, expanding our portfolio with added
applications in the aerospace market, including defense.
“The main drivers of our improving profitability in 2023 were a
richer product mix and the benefit of price increases
implemented over the past three years, which were partially offset
by negative surcharge misalignment due to falling commodity
prices. The misalignment is expected to lessen by the end of
the second quarter of 2024.
“We have entered 2024 with a strong book of business, with
premium alloys representing more than a third of our backlog, and
with robust demand continuing unabated in aerospace. We
remain firmly on-track with our strategic plan and growth
trajectory for 2024 and beyond.”
Financial Position
Managed working capital, defined as accounts receivable, plus
inventory, minus accounts payable, minus other current liabilities,
was $148.1 million at December 31, 2023, which is down from $151.6
million at September 30, 2023 and compares with $145.9 million at
December 31, 2022. Inventory at the end of the fourth quarter
of 2023 was $144.7 million, which is down 4% from $150.8 million at
the end of the 2023 third quarter, and down 6% from $154.2 million
at the end of 2022.
Backlog (before surcharges) at December 31, 2023 remained strong
at $318.2 million versus $344.8 million at September 30, 2023 and
$287.9 million at December 31, 2022. The average selling
price per pound in the backlog increased 32% from the end of
2022.
The Company reduced total debt by $4.0 million to $85.6 million
at year-end 2023 from $89.5 million at September 30, 2023, and by
$12.9 million from $98.4 million at the end of 2022. Fourth
quarter 2023 interest expense was $2.1 million, flat to the 2023
third quarter but up 39% from $1.6 million in the fourth quarter of
2022, mainly due to higher interest rates on the Company’s variable
debt.
Capital expenditures for the fourth quarter of 2023 totaled $3.4
million versus $2.7 million in the 2023 third quarter and $1.1
million in the fourth quarter of 2022. Full year 2023 capital
expenditures of $13.0 million mainly reflect the addition of two
new Vacuum Arc Remelt furnaces at the Company's North Jackson
facility.
Conference Call and Webcast
The Company has scheduled a conference call for today, March
28th, at 10:00 a.m. (Eastern) to discuss final fourth quarter 2023
results. If you wish to listen to the live conference call via
telephone, please Click Here to register for the call and
obtain your dial-in number and personal PIN number. 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 second quarter of 2024.
About Universal Stainless & Alloy Products,
Inc.
Universal Stainless & Alloy Products, Inc., established in
1994 and 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. More information is available at
www.univstainless.com.
Forward-Looking Information Safe
HarborExcept 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 Company’s ability to maintain its
relationships with its significant customers and market channels;
the Company’s response to competitive factors in its industry that
may adversely affect the market for finished products manufactured
by the Company or its customers; the Company’s ability to compete
successfully with domestic and foreign producers of specialty steel
products and products fashioned from alternative materials; changes
in overall demand for the Company’s products and the prices at
which the Company is able to sell its products in the aerospace
industry, from which a substantial amount of its sales is derived;
the Company’s ability to develop, commercialize, market and sell
new applications and new products; the receipt, pricing and timing
of future customer orders; the impact of changes in the Company’s
product mix on the Company’s profitability; the Company’s ability
to maintain the availability of raw materials and operating
supplies with acceptable pricing; the availability and pricing of
electricity, natural gas and other sources of energy that the
Company needs for the manufacturing of its products; risks related
to property, plant and equipment, including the Company’s reliance
on the continuing operation of critical manufacturing equipment;
the Company’s success in timely concluding collective bargaining
agreements and avoiding strikes or work stoppages; the Company’s
ability to attract and retain key personnel; 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
matters; the Company’s ability to meet its debt service
requirements and to comply with applicable financial covenants;
risks associated with conducting business with suppliers and
customers in foreign countries; public health issues, including
COVID-19 and its impact on the Company and our customers and
suppliers; risks related to acquisitions that the Company may make;
the Company’s ability to protect its information technology
infrastructure against service interruptions, data corruption,
cyber-based attacks or network security breaches; the impact on the
Company’s effective tax rates from changes in tax rules,
regulations and interpretations in the United States and other
countries where it does business; 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 SEC, including the Company’s Annual Report on Form 10-K
for the year ended December 31, 2022, copies of which are available
from the SEC or may be obtained upon request from the
Company.
Non-GAAP Financial MeasuresThis press
release includes discussions of financial measures that have not
been determined in accordance with U.S. Generally Accepted
Accounting Principles (GAAP). These measures include earnings
(loss) before interest, income taxes, depreciation and amortization
(EBITDA) and adjusted EBITDA. We include these measurements to
enhance the understanding of our operating performance. We believe
that EBITDA, considered along with net earnings (loss), is a
relevant indicator of trends relating to cash generating activity
of our operations. adjusted EBITDA excludes the effect of
share-based compensation expense and noted special items such as
impairments and costs or income related to special events such as
periods of low activity or insurance claims. We believe that
excluding these costs provides a consistent comparison of the cash
generating activity of our operations. We believe that EBITDA and
adjusted EBITDA are useful to investors as they facilitate a
comparison of our operating performance to other companies who also
use EBITDA and adjusted EBITDA as supplemental operating measures.
These non-GAAP financial measures supplement our GAAP disclosures
and should not be considered an alternative to the GAAP measures.
These non-GAAP measures may not be entirely comparable to similarly
titled measures used by other companies due to potential
differences among calculation methodologies. A reconciliation of
these non-GAAP financial measures to their most directly comparable
financial measure prepared in accordance with GAAP is included in
the tables that follow.
[TABLES FOLLOW]
UNIVERSAL STAINLESS & ALLOY
PRODUCTS, INC. |
FINANCIAL HIGHLIGHTS |
(Dollars in Thousands, Except Per Share Information) |
(Unaudited) |
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net sales |
|
$ |
79,780 |
|
|
$ |
56,200 |
|
|
$ |
285,943 |
|
|
$ |
202,114 |
|
Cost of products sold |
|
|
66,672 |
|
|
|
53,784 |
|
|
|
244,404 |
|
|
|
187,927 |
|
Gross margin |
|
|
13,108 |
|
|
|
2,416 |
|
|
|
41,539 |
|
|
|
14,187 |
|
Selling, general and
administrative expenses |
|
|
8,304 |
|
|
|
5,575 |
|
|
|
27,783 |
|
|
|
21,180 |
|
Operating income (loss) |
|
|
4,804 |
|
|
|
(3,159 |
) |
|
|
13,756 |
|
|
|
(6,993 |
) |
Interest expense |
|
|
2,134 |
|
|
|
1,532 |
|
|
|
8,155 |
|
|
|
4,163 |
|
Deferred financing
amortization |
|
|
65 |
|
|
|
56 |
|
|
|
259 |
|
|
|
225 |
|
Other expense (income),
net |
|
|
29 |
|
|
|
(60 |
) |
|
|
34 |
|
|
|
(684 |
) |
Income (loss) before income
taxes |
|
|
2,576 |
|
|
|
(4,687 |
) |
|
|
5,308 |
|
|
|
(10,697 |
) |
Income taxes |
|
|
(21 |
) |
|
|
(963 |
) |
|
|
398 |
|
|
|
(2,624 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
2,597 |
|
|
$ |
(3,724 |
) |
|
$ |
4,910 |
|
|
$ |
(8,073 |
) |
Net income (loss) per common
share - Basic |
|
$ |
0.28 |
|
|
$ |
(0.41 |
) |
|
$ |
0.54 |
|
|
$ |
(0.90 |
) |
Net income (loss) loss per
common share - Diluted |
|
$ |
0.27 |
|
|
$ |
(0.41 |
) |
|
$ |
0.53 |
|
|
$ |
(0.90 |
) |
Weighted average shares of
common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
9,133,716 |
|
|
|
9,007,001 |
|
|
|
9,086,004 |
|
|
|
8,972,468 |
|
Diluted |
|
|
9,445,132 |
|
|
|
9,007,001 |
|
|
|
9,278,569 |
|
|
|
8,972,468 |
|
MARKET CHANNEL INFORMATION |
|
|
|
Three Months Ended |
|
|
Year ended |
|
|
|
December 31, |
|
|
December 31, |
|
Net
Sales |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Service centers |
|
$ |
61,763 |
|
|
$ |
41,380 |
|
|
$ |
221,691 |
|
|
$ |
144,955 |
|
Original equipment
manufacturers |
|
|
5,895 |
|
|
|
4,358 |
|
|
|
19,113 |
|
|
|
17,230 |
|
Rerollers |
|
|
2,935 |
|
|
|
5,041 |
|
|
|
15,635 |
|
|
|
19,824 |
|
Forgers |
|
|
8,002 |
|
|
|
4,739 |
|
|
|
24,742 |
|
|
|
17,568 |
|
Conversion services and other
sales |
|
|
1,185 |
|
|
|
682 |
|
|
|
4,762 |
|
|
|
2,537 |
|
Total net sales |
|
$ |
79,780 |
|
|
$ |
56,200 |
|
|
$ |
285,943 |
|
|
$ |
202,114 |
|
Tons shipped |
|
|
8,124 |
|
|
|
6,500 |
|
|
|
32,058 |
|
|
|
26,571 |
|
MELT TYPE INFORMATION |
|
|
|
Three Months Ended |
|
|
Year ended |
|
|
|
December 31, |
|
|
December 31, |
|
Net
Sales |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Specialty alloys |
|
$ |
57,489 |
|
|
$ |
42,000 |
|
|
$ |
213,077 |
|
|
$ |
160,352 |
|
Premium alloys * |
|
|
21,106 |
|
|
|
13,518 |
|
|
|
68,104 |
|
|
|
39,225 |
|
Conversion services and other
sales |
|
|
1,185 |
|
|
|
682 |
|
|
|
4,762 |
|
|
|
2,537 |
|
Total net sales |
|
$ |
79,780 |
|
|
$ |
56,200 |
|
|
$ |
285,943 |
|
|
$ |
202,114 |
|
END MARKET INFORMATION ** |
|
|
|
Three Months Ended |
|
|
Year ended |
|
|
|
December 31, |
|
|
December 31, |
|
Net
Sales |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Aerospace |
|
$ |
61,895 |
|
|
$ |
40,050 |
|
|
$ |
216,093 |
|
|
$ |
137,489 |
|
Power generation |
|
|
1,077 |
|
|
|
1,043 |
|
|
|
4,208 |
|
|
|
6,117 |
|
Oil & gas |
|
|
3,580 |
|
|
|
5,256 |
|
|
|
13,978 |
|
|
|
17,981 |
|
Heavy equipment |
|
|
6,413 |
|
|
|
5,634 |
|
|
|
31,212 |
|
|
|
27,138 |
|
General industrial, conversion
services and other sales |
|
|
6,815 |
|
|
|
4,217 |
|
|
|
20,452 |
|
|
|
13,389 |
|
Total net sales |
|
$ |
79,780 |
|
|
$ |
56,200 |
|
|
$ |
285,943 |
|
|
$ |
202,114 |
|
* |
Premium alloys represent all vacuum induction melted (VIM)
products. |
** |
The majority of our products are sold to service centers rather
than the ultimate end market customer. The end market information
in this press release is our estimate based upon our knowledge of
our customers and the grade of material sold to them, which they
will in-turn sell to the ultimate end market customer. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
Assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
394 |
|
|
$ |
2,019 |
|
Accounts receivable, net |
|
|
39,034 |
|
|
|
30,960 |
|
Inventory, net |
|
|
144,700 |
|
|
|
154,193 |
|
Other current assets |
|
|
11,121 |
|
|
|
10,392 |
|
Total current assets |
|
|
195,249 |
|
|
|
197,564 |
|
Property, plant and equipment,
net |
|
|
159,636 |
|
|
|
163,490 |
|
Deferred income taxes |
|
|
- |
|
|
|
143 |
|
Other long-term assets |
|
|
1,233 |
|
|
|
2,137 |
|
Total assets |
|
$ |
356,118 |
|
|
$ |
363,334 |
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
34,855 |
|
|
$ |
38,179 |
|
Accrued employment costs |
|
|
5,920 |
|
|
|
2,790 |
|
Current portion of long-term
debt |
|
|
3,733 |
|
|
|
3,419 |
|
Other current liabilities |
|
|
829 |
|
|
|
1,112 |
|
Total current liabilities |
|
|
45,337 |
|
|
|
45,500 |
|
Long-term debt, net |
|
|
81,846 |
|
|
|
95,015 |
|
Deferred income taxes |
|
|
2 |
|
|
|
- |
|
Other long-term liabilities,
net |
|
|
2,891 |
|
|
|
3,066 |
|
Total liabilities |
|
|
130,076 |
|
|
|
143,581 |
|
Stockholders’ equity |
|
|
226,042 |
|
|
|
219,753 |
|
Total liabilities and
stockholders’ equity |
|
$ |
356,118 |
|
|
$ |
363,334 |
|
CONSOLIDATED STATEMENTS OF CASH FLOW |
|
|
|
Year Ended |
|
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
Operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
4,910 |
|
|
$ |
(8,073 |
) |
Adjustments for non-cash
items: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
19,433 |
|
|
|
19,378 |
|
Deferred income tax |
|
|
215 |
|
|
|
(2,695 |
) |
Share-based compensation expense |
|
|
1,336 |
|
|
|
1,188 |
|
Changes in assets and
liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
(8,074 |
) |
|
|
(9,768 |
) |
Inventory, net |
|
|
7,785 |
|
|
|
(15,078 |
) |
Accounts payable |
|
|
(2,900 |
) |
|
|
10,507 |
|
Accrued employment costs |
|
|
3,130 |
|
|
|
(1,513 |
) |
Income taxes |
|
|
181 |
|
|
|
3 |
|
Other, net |
|
|
(785 |
) |
|
|
(2,986 |
) |
Net cash used in operating
activities |
|
|
25,231 |
|
|
|
(9,037 |
) |
Investing
activity: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(13,026 |
) |
|
|
(12,096 |
) |
Net cash used in investing
activity |
|
|
(13,026 |
) |
|
|
(12,096 |
) |
Financing
activities: |
|
|
|
|
|
|
|
|
Net (payments on) borrowings under revolving credit facility |
|
|
(10,561 |
) |
|
|
23,548 |
|
Proceeds from other financing transactions, net |
|
|
- |
|
|
|
1,804 |
|
Payments on term loan facility, capital leases, and notes |
|
|
(3,568 |
) |
|
|
(2,412 |
) |
Issuance of common stock under share-based plans |
|
|
299 |
|
|
|
224 |
|
Payments of financing costs |
|
|
- |
|
|
|
(130 |
) |
Net cash provided by financing
activities |
|
|
(13,830 |
) |
|
|
23,034 |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in
cash |
|
|
(1,625 |
) |
|
|
1,901 |
|
Cash at beginning of
period |
|
|
2,019 |
|
|
|
118 |
|
Cash at end of period |
|
$ |
394 |
|
|
$ |
2,019 |
|
RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED
EBITDA |
|
|
|
Three Months ended |
|
|
Twelve Months Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
2,597 |
|
|
$ |
(3,724 |
) |
|
$ |
4,910 |
|
|
$ |
(8,073 |
) |
Interest expense |
|
|
2,134 |
|
|
|
1,526 |
|
|
|
8,155 |
|
|
|
4,158 |
|
Income taxes |
|
|
(21 |
) |
|
|
(963 |
) |
|
|
398 |
|
|
|
(2,624 |
) |
Depreciation and amortization |
|
|
4,921 |
|
|
|
4,858 |
|
|
|
19,446 |
|
|
|
19,378 |
|
EBITDA |
|
|
9,631 |
|
|
|
1,697 |
|
|
|
32,909 |
|
|
|
12,839 |
|
Share-based compensation expense |
|
|
328 |
|
|
|
288 |
|
|
|
1,336 |
|
|
|
1,289 |
|
Fixed cost absorption direct charge |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,300 |
|
Spill costs in addition to absorption charge, net |
|
|
- |
|
|
|
300 |
|
|
|
- |
|
|
|
4,060 |
|
AMJP benefit |
|
|
- |
|
|
|
(139 |
) |
|
|
- |
|
|
|
(3,589 |
) |
Adjusted EBITDA |
|
$ |
9,959 |
|
|
$ |
2,146 |
|
|
$ |
34,245 |
|
|
$ |
15,899 |
|
CONTACTS: |
|
Christopher M.
Zimmer |
|
Steven V.
DiTommaso |
|
June
Filingeri |
|
|
President and |
|
Vice President and |
|
President |
|
|
Chief Executive Officer |
|
Chief Financial Officer |
|
Comm-Partners LLC |
|
|
(412) 257-7604 |
|
(412) 257-7661 |
|
(203) 972-0186 |
Unversal Stainless and A... (NASDAQ:USAP)
Historical Stock Chart
From Apr 2024 to May 2024
Unversal Stainless and A... (NASDAQ:USAP)
Historical Stock Chart
From May 2023 to May 2024