Universal Stainless & Alloy Products, Inc. (Nasdaq:
USAP) today reported record net sales of $82.8 million for
the second quarter of 2024, an increase of 7% from the first
quarter of 2024, and up 20% from the second quarter of 2023.
Year-to-date net sales of $160.4 million were up 19% from the same
period in 2023.
Second quarter premium alloy sales totaled $20.7 million, or
25.0% of sales, up 61% from $12.9 million, or 18.6% of sales in the
second quarter of 2023. Year-to-date premium alloy sales rose 34%
to $40.8 million, or 25.4% of sales.
Aerospace is the Company's largest market for premium alloy
products, and strong demand continues. Aerospace sales reached a
record $68.6 million, or 82.9% of sales, in the second quarter of
2024, an increase of 14% from the first quarter of 2024, and up 34%
from the second quarter of 2023. Year-to-date aerospace sales rose
29% compared to the same period in 2023 to $128.8 million, or 80.3%
of sales.
Profitability continued to increase in the second quarter of
2024 with gross profit dollars rising to a record $21.0 million, or
25.4% of sales. That compares with 18.9% of sales in the 2024 first
quarter and 14.3% of sales in the second quarter of 2023. Gross
margin in the most recent quarter continued to benefit from a rich
product mix, higher base selling prices, cost improvement efforts
and more stable commodity prices.
Second quarter 2024 operating income increased 77% to $12.8
million, or 15.5% of sales, from 9.3% of sales in the first quarter
of 2024, and 4.5% of sales in the second quarter of 2023.
Year-to-date operating income was up more than four-fold to $20.1
million, or 12.5% of sales, compared with the same period a year
ago.
Net income increased to $8.9 million, or $0.90 per diluted
share, in the 2024 second quarter, from $4.1 million in the 2024
first quarter and $0.9 million in the 2023 second
quarter.
Adjusted EBITDA increased 46% to $18.5 million, or 22.3% of
sales, in the 2024 second quarter, from $12.6 million, or 16.3% of
sales, in the 2024 first quarter, and was more than double the $7.9
million, or 11.5% of sales, reported in the second quarter of
2023.
Net cash generated by operating activities totaled $7.3 million
in the second quarter, which the Company used to fund capital
expenditures and reduce its net debt.
Christopher M. Zimmer, President and CEO, commented: “Our record
sales were driven by the continued robust commercial aerospace and
defense markets, with our record aerospace sales representing 82.9%
of sales in the quarter. Aerospace demand also drives our premium
alloy sales, which now represent one-quarter of our total
sales.
“Our margin expansion is the result of our strategic focus on
aerospace and defense products, including premium alloys, which has
delivered a broader base of customer approvals and increased our
mix of higher-priced products. Margins are also benefiting from
targeted and sustainable margin improvement projects and our
continuous cost management.
“We continue to invest capital in our premium alloy capacity and
efficiency and will add a second 18-ton furnace shell for the VIM
at our North Jackson facility in mid-2025, and a new box furnace to
support the forge the third quarter this year.
“We also remain focused on managing working capital and
generating positive cash flow to fund our strategic capital
expenditures and pay down debt, which was reduced by another $3
million in the second quarter.
“As we look to the balance of the year, we continue to see
opportunities to increase sales and to further expand gross
margins. We remain optimistic about our growth momentum and
strategy for 2025 and beyond.”
Financial Position
Managed working capital, defined as accounts receivable, plus
inventory, minus accounts payable, was $157.1 million at June 30,
2024, compared with $152.3 million at March 31, 2024, and $148.4
million at June 30, 2023. Inventory at the end of the second
quarter of 2024 was $149.1 million compared with $142.4 million at
the end of the 2024 first quarter, and $151.6 million at the end of
second quarter of 2023.
Backlog (before surcharges) at June 30, 2024 totaled $296.5
million compared with $325.1 million at the end of March and $355.0
million at the end of the 2023 second quarter. The average selling
price per pound in the backlog has increased 6% from the end of the
2024 first quarter and was up 18% from the second quarter of
2023.
Total debt was reduced by $3.0 million in the second quarter to
$78.3 million from the first quarter of 2024 and by $15.0 million
from the end of the 2023 second quarter. Second quarter 2024
interest expense of $1.9 million was down 7% both sequentially and
compared to the second quarter a year ago.
Second quarter capital expenditures of $5.5 million were level
with the 2024 first quarter. Full year 2024 capital expenditures
are expected to approximate $18 million.
Conference Call and Webcast
The Company has scheduled a conference call for today
July 31st, at 10:00 a.m. (Eastern) to discuss second
quarter 2024 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 third 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, energy, 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, 2023, 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 |
|
|
Six months ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
82,759 |
|
|
$ |
69,015 |
|
|
$ |
160,396 |
|
|
$ |
134,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold |
|
|
61,746 |
|
|
|
59,167 |
|
|
|
124,716 |
|
|
|
117,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
21,013 |
|
|
|
9,848 |
|
|
|
35,680 |
|
|
|
17,572 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
|
8,164 |
|
|
|
6,755 |
|
|
|
15,573 |
|
|
|
13,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
12,849 |
|
|
|
3,093 |
|
|
|
20,107 |
|
|
|
4,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
1,902 |
|
|
|
2,045 |
|
|
|
3,951 |
|
|
|
4,077 |
|
Other expense (income),
net |
|
|
22 |
|
|
|
5 |
|
|
|
36 |
|
|
|
(37 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
10,925 |
|
|
|
1,043 |
|
|
|
16,120 |
|
|
|
502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
|
2,060 |
|
|
|
148 |
|
|
|
3,118 |
|
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
8,865 |
|
|
$ |
895 |
|
|
$ |
13,002 |
|
|
$ |
383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share -
Basic |
|
$ |
0.96 |
|
|
$ |
0.10 |
|
|
$ |
1.41 |
|
|
$ |
0.04 |
|
Net income per common share -
Diluted |
|
$ |
0.90 |
|
|
$ |
0.10 |
|
|
$ |
1.33 |
|
|
$ |
0.04 |
|
MARKET
SEGMENT INFORMATION |
|
(Dollars in thousands;
unaudited) |
|
Three months ended |
|
|
Six months ended |
|
|
|
June 30, |
|
|
June 30, |
|
Net
Sales |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service centers |
|
$ |
61,589 |
|
|
$ |
53,837 |
|
|
$ |
119,860 |
|
|
$ |
103,160 |
|
Original equipment
manufacturers |
|
|
6,778 |
|
|
|
3,868 |
|
|
|
13,632 |
|
|
|
8,076 |
|
Rerollers |
|
|
2,866 |
|
|
|
3,682 |
|
|
|
6,243 |
|
|
|
10,327 |
|
Forgers |
|
|
11,065 |
|
|
|
6,426 |
|
|
|
18,911 |
|
|
|
11,455 |
|
Conversion services and
other |
|
|
461 |
|
|
|
1,202 |
|
|
|
1,750 |
|
|
|
1,862 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
82,759 |
|
|
$ |
69,015 |
|
|
$ |
160,396 |
|
|
$ |
134,880 |
|
MELT TYPE
INFORMATION |
|
(Dollars in thousands;
unaudited) |
|
Three months ended |
|
|
Six months ended |
|
|
|
June 30, |
|
|
June 30, |
|
Net
Sales |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty alloys |
|
$ |
61,583 |
|
|
$ |
54,947 |
|
|
$ |
117,838 |
|
|
$ |
102,496 |
|
Premium alloys * |
|
|
20,715 |
|
|
|
12,866 |
|
|
|
40,808 |
|
|
|
30,522 |
|
Conversion services and other
sales |
|
|
461 |
|
|
|
1,202 |
|
|
|
1,750 |
|
|
|
1,862 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
82,759 |
|
|
$ |
69,015 |
|
|
$ |
160,396 |
|
|
$ |
134,880 |
|
END
MARKET INFORMATION ** |
|
(Dollars in thousands;
unaudited) |
|
Three months ended |
|
|
Six months ended |
|
|
|
June 30, |
|
|
June 30, |
|
Net
Sales |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace |
|
$ |
68,628 |
|
|
$ |
51,262 |
|
|
$ |
128,836 |
|
|
$ |
100,220 |
|
Energy |
|
|
5,143 |
|
|
|
4,384 |
|
|
|
11,156 |
|
|
|
10,222 |
|
Heavy equipment |
|
|
5,202 |
|
|
|
8,928 |
|
|
|
11,050 |
|
|
|
15,859 |
|
General industrial, conversion
services and other |
|
|
3,786 |
|
|
|
4,441 |
|
|
|
9,354 |
|
|
|
8,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
82,759 |
|
|
$ |
69,015 |
|
|
$ |
160,396 |
|
|
$ |
134,880 |
|
* |
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
customers. 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 |
|
(Dollars in thousands;
unaudited) |
|
June 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
1 |
|
|
$ |
394 |
|
Accounts receivable, net |
|
|
44,919 |
|
|
|
39,034 |
|
Inventory |
|
|
149,093 |
|
|
|
144,700 |
|
Other current assets |
|
|
13,316 |
|
|
|
11,693 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
207,329 |
|
|
|
195,821 |
|
Property, plant and equipment,
net |
|
|
158,882 |
|
|
|
159,636 |
|
Other long-term assets |
|
|
1,825 |
|
|
|
1,233 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
368,036 |
|
|
$ |
356,690 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
36,916 |
|
|
$ |
34,855 |
|
Accrued employment costs |
|
|
4,707 |
|
|
|
6,492 |
|
Current portion of long-term
debt |
|
|
3,810 |
|
|
|
3,733 |
|
Other current liabilities |
|
|
2,096 |
|
|
|
829 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
47,529 |
|
|
|
45,909 |
|
Long-term debt, net |
|
|
74,480 |
|
|
|
81,846 |
|
Deferred income taxes |
|
|
2,675 |
|
|
|
2 |
|
Other long-term liabilities,
net |
|
|
2,867 |
|
|
|
2,891 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
127,551 |
|
|
|
130,648 |
|
Stockholders’ equity |
|
|
240,485 |
|
|
|
226,042 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
368,036 |
|
|
$ |
356,690 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOW |
|
(Dollars in thousands;
unaudited) |
|
Six months ended |
|
|
|
June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
Operating
activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
13,002 |
|
|
$ |
383 |
|
Adjustments for non-cash items: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
10,180 |
|
|
|
9,643 |
|
Deferred income tax |
|
|
2,667 |
|
|
|
(19 |
) |
Share-based compensation expense |
|
|
974 |
|
|
|
672 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
(5,885 |
) |
|
|
(335 |
) |
Inventory, net |
|
|
(5,291 |
) |
|
|
1,716 |
|
Accounts payable |
|
|
3,692 |
|
|
|
(1,633 |
) |
Accrued employment costs |
|
|
(1,785 |
) |
|
|
819 |
|
Other, net |
|
|
(21 |
) |
|
|
(69 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities |
|
|
17,533 |
|
|
|
11,177 |
|
|
|
|
|
|
|
|
|
|
Investing
activity: |
|
|
|
|
|
|
|
|
Payments for property, plant and equipment |
|
|
(10,926 |
) |
|
|
(6,932 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in investing
activity |
|
|
(10,926 |
) |
|
|
(6,932 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
|
Net repayment of borrowings under revolving credit facility |
|
|
(5,576 |
) |
|
|
(4,542 |
) |
Proceeds from stock issued under share-based plans |
|
|
420 |
|
|
|
75 |
|
Repayments of term loan facility and finance leases |
|
|
(1,844 |
) |
|
|
(1,753 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in financing
activities |
|
|
(7,000 |
) |
|
|
(6,220 |
) |
|
|
|
|
|
|
|
|
|
Net decrease in cash |
|
|
(393 |
) |
|
|
(1,975 |
) |
Cash at beginning of
period |
|
|
394 |
|
|
|
2,019 |
|
Cash at end of period |
|
$ |
1 |
|
|
$ |
44 |
|
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED
EBITDA |
|
(Dollars in thousands;
unaudited) |
|
Three months ended |
|
|
Six months ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
8,865 |
|
|
$ |
895 |
|
|
$ |
13,002 |
|
|
$ |
383 |
|
Interest expense |
|
|
1,837 |
|
|
|
1,979 |
|
|
|
3,821 |
|
|
|
3,947 |
|
Income taxes |
|
|
2,060 |
|
|
|
148 |
|
|
|
3,118 |
|
|
|
119 |
|
Depreciation and amortization |
|
|
5,175 |
|
|
|
4,611 |
|
|
|
10,180 |
|
|
|
9,643 |
|
EBITDA |
|
|
17,937 |
|
|
|
7,633 |
|
|
|
30,121 |
|
|
|
14,092 |
|
Share-based compensation expense |
|
|
520 |
|
|
|
311 |
|
|
|
974 |
|
|
|
672 |
|
Adjusted EBITDA |
|
$ |
18,457 |
|
|
$ |
7,944 |
|
|
$ |
31,095 |
|
|
$ |
14,764 |
|
CONTACTS: |
Christopher M. ZimmerPresident andChief Executive Officer(412)
257-7604 |
Steven V. DiTommasoVice President andChief Financial Officer(412)
257-7661 |
June FilingeriPresidentComm-Partners LLC(203) 972-0186 |
|
|
|
|
Unversal Stainless and A... (NASDAQ:USAP)
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