Universal Stainless Earnings Boosted by Increasing Demand from Aerospace
08/05/2014 - Universal Stainless & Alloy Products Inc. reported that net sales for the second quarter of 2014 were US$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 US$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 US$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 US$8.4 million, or 16.1% of sales, compared with US$6.1 million, or 13.0% of sales, in the first quarter of 2014, and US$5.3 million, or 12.4% of sales, in the second quarter of 2013.
Operating income for the second quarter of 2014 was US$3.2 million, which is more than double operating income of US$1.4 million in the first quarter of 2014, and up more than seven-fold from operating income of US$0.4 million in the second quarter of 2013.
The company reported net income of US$1.4 million, or US$0.20 per diluted share, for the second quarter of 2014. That compares with a net loss of US$0.5 million, or US$0.07 per diluted share, in the first quarter of 2014, which included US$0.12 of state tax charges, and net income of US$0.5 million, or US$0.06 per diluted share, in the second quarter of 2013, including US$0.11 of tax benefits.
For the first six months of 2014, net sales increased 8% to US$99.0 million compared with net sales of US$92.0 million in the same period of 2013. Net income for the first six months of 2014 increased to US$1.0 million, or US$0.13 per diluted share, compared to net income of US$0.5 million, or US$0.06 per diluted share, in the first six months of 2013.
For the second quarter of 2014, the company used US$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 US$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."
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.
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 US$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 US$8.4 million, or 16.1% of sales, compared with US$6.1 million, or 13.0% of sales, in the first quarter of 2014, and US$5.3 million, or 12.4% of sales, in the second quarter of 2013.
Operating income for the second quarter of 2014 was US$3.2 million, which is more than double operating income of US$1.4 million in the first quarter of 2014, and up more than seven-fold from operating income of US$0.4 million in the second quarter of 2013.
The company reported net income of US$1.4 million, or US$0.20 per diluted share, for the second quarter of 2014. That compares with a net loss of US$0.5 million, or US$0.07 per diluted share, in the first quarter of 2014, which included US$0.12 of state tax charges, and net income of US$0.5 million, or US$0.06 per diluted share, in the second quarter of 2013, including US$0.11 of tax benefits.
For the first six months of 2014, net sales increased 8% to US$99.0 million compared with net sales of US$92.0 million in the same period of 2013. Net income for the first six months of 2014 increased to US$1.0 million, or US$0.13 per diluted share, compared to net income of US$0.5 million, or US$0.06 per diluted share, in the first six months of 2013.
For the second quarter of 2014, the company used US$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 US$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."
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.
