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Universal Stainless Reports 2010 Q3 Results

11/01/2010 - Universal Stainless & Alloy Products, Inc. reported $51.9 million in sales for the third quarter of 2010 compared with $25.3 million in the third quarter of 2009 and $51.3 million in the 2010 second quarter. Net income for Q3 was $4.1 million, or $0.60 per diluted share, compared with $0.3 million, or $0.05 per diluted share, for the same period last year.

Universal Stainless & Alloy Products, Inc. reported $51.9 million in sales for the third quarter of 2010 compared with $25.3 million in the third quarter of 2009 and $51.3 million in the 2010 second quarter.
 
Net income for the third quarter was $4.1 million, or $0.60 per diluted share, compared with $0.3 million, or $0.05 per diluted share, for the same period last year, and $4.2 million, or $0.61 per diluted share, for the previous quarter.
 
The company recorded positive cash flow from operations of $8.8 million in the third quarter of 2010 compared with $10.5 million in the third quarter of 2009. Cash flow from operations totaled $4.9 million year to date. Capital expenditures for the 2010 third quarter were $1.7 million. At September 30, 2010, the company had cash of $41.2 million and total debt of $11.5 million.
 
Universal Stainless noted that total shipment volume for the third quarter of 2010 remained level sequentially, while it was double the volume of the same quarter a year ago. Compared with the second quarter of 2010, volume shipped to the aerospace market increased 24%, while petrochemical volume was level, and volumes shipped to the power generation and service center plate markets were down 6% and 12%, respectively.
 
President and CEO Dennis Oates said: "Third-quarter results were consistent with our expectation, with sales very modestly ahead of the strong second quarter. Our consolidated operating margin remained strong at 12.2% of sales, despite the rise in nickel prices. The operational improvements achieved are continuing to drive lower operating costs, higher yields, and improved inventory turns.
 
"Our third-quarter sales benefited from continued positive aerospace market momentum and steady oil and gas volume. Power generation demand remained low as reflected in our sales to forgers with recovery still expected in 2011. The restocking phase that drove substantial growth in service center plate in the first half of the year has been completed, although demand is expected to remain stable.
 
"Our backlog grew 27% in the third quarter, totaling $59 million compared with $46 million at the end of the second quarter of 2010, with delivery dates extending into 2011,” Oates continued. “Current shipment schedules for the fourth quarter point towards a sales level in line with the third quarter."
 
Segment Review – For the third quarter of 2010, the Universal Stainless & Alloy Products segment had sales of $46.2 million and operating income of $4.4 million, yielding an operating margin of 9.4% of sales. This compares with sales of $21.7 million and operating income of $0.1 million, or 0.3% of sales, in the third quarter of 2009. In the second quarter of 2010, sales were $49.7 million and operating income was $6.8 million, or 13.7% of sales.
 
Segment sales rose 113% from the third quarter of 2009 on a 119% increase in tons shipped mainly due to substantially higher shipments to rerollers and service centers. Segment sales decreased 7% from the second quarter of 2010 on a 3% decrease in tons shipped with higher shipments to rerollers and OEMs offset by lower shipments to forgers and service centers.
 
The Dunkirk Specialty Steel segment recorded sales of $16.8 million and operating income of $1.4 million for the third quarter of 2010, yielding an operating margin of 8.0% of sales. This compares with sales in the third quarter of 2009 of $8.5 million and operating income of $0.4 million, or 4.7% of sales. In the second quarter of 2010, sales were $13.9 million and operating income was $1.3 million, or 9.2% of sales.
 
Dunkirk's sales increased 98% from the third quarter of 2009 on a 31% increase in tons shipped due to a doubling of shipments to service centers and higher selling prices. Dunkirk's sales increased 21% from the second quarter of 2010 on a 2% increase in tons shipped, mainly due to higher shipments to service centers and redrawers and higher selling prices.
 
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, in a variety of grades, widths, and gauges to customer specifications.