Universal Stainless Reports Bridgeville Labor Agreement, 3Q Guidance Revision
10/13/2008 - Universal Stainless & Alloy Products’ announcement of a new 5-year collective bargaining agreement at its Bridgeville facility is tempered by the concurrent announcement of a downward revision in third quarter earnings guidance.
Universal Stainless & Alloy Products, Inc. reached a new 5-year collective bargaining agreement last week with the hourly employees at its Bridgeville facility represented by Local 9531 of the United Steelworkers. The new contract maintains the flexible work rule terms and profit sharing incentives contained in the prior agreement
The company also reported that it now expects third quarter 2008 sales to be approximately $57 to $58 million and diluted earnings per share to be approximately $0.35 to $0.40. Results will include a $586,000 charge ($0.06 per diluted share) for relocation of the round bar finishing facility from Bridgeville to Dunkirk; the total cost for this project is estimated at $800,000 ($0.08 per diluted share).
Initially, the company had projected sales for the quarter to range from $60 to $65 million and diluted earnings per share to range from $0.70 and $0.75, after including the estimated relocation charge, as reported on July 23, 2008.
"Sales for the third quarter will not meet the low end of our initial projection,” commented President and CEO Dennis Oates. “Sales from our Dunkirk facility were $2 million lower than anticipated due to lower shipments of aerospace products to service centers as a result of the Boeing labor situation and conservative service center buying patterns. In addition, shipments from our Bridgeville facility were below forecast in September due to production inefficiencies coinciding with labor negotiations. The reduced earnings forecast reflects the impact of lower shipments and a 20% decline in raw material prices. Lower raw material prices reduced margins on finished products shipped and generated higher inventory reserves at September 30."
"While we are disappointed that we will not meet our initial expectations for the third quarter,” continued Oates, “we are pleased that we have a new contract with the Bridgeville employees that is beneficial to them and is in the best interests of our customers and shareholders. In addition, our backlog has increased from $97 million at June 30 to $101 million at September 30.
“The strength of our order entry remains in power generation and tool steel plate products," concluded Oates.
The company expects to report final third quarter results on October 23.
Headquartered in Bridgeville, Pa., Universal Stainless & Alloy Products manufactures and markets a broad line of semi-finished and finished specialty steels, including stainless steel, tool steel and certain other alloyed steels. The Company's products are sold to rerollers, forgers, service centers, original equipment manufacturers and wire redrawers.
