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Universal Stainless Seeing Strong Market Demand
05/05/2014 - Universal Stainless & Alloy Products Inc. reported net sales for the first quarter of 2014 of US$46.7 million, an increase of 16% from the fourth quarter of 2013.
Compared with the fourth quarter of 2013, tons shipped to the aerospace market increased 8%, power generation shipments were up 7%, and shipments to the oil and gas market rose 11%, while heavy equipment market shipments were lower by 10%. Backlog (before surcharges) increased 26% sequentially in the first quarter of 2014 to US$58.8 million, the highest level since the third quarter of 2012.
The company's gross margin for the first quarter of 2014 was US$6.1 million, or 13.0% of sales, compared with US$1.5 million, or 3.7% of sales, in the fourth quarter of 2013, and US$4.6 million, or 9.5% of sales, in the first quarter of 2013. The strong improvement was due to higher shipments and production levels as compared with the fourth quarter of 2013, in addition to a better matching of surcharges to raw material costs with the rise in nickel pricing compared to the second half of 2013. Included in the company's first quarter 2014 results were expenses related to severe weather conditions that approximated US$0.6 million pre-tax.
Operating income in the first quarter of 2014 rose to US$1.4 million, compared with an operating loss of US$2.6 million in the fourth quarter of 2013, and operating income of US$0.2 million in the first quarter of 2013.
The company reported a net loss of US$0.5 million, or US$0.07 per diluted share, for the first quarter of 2014, which included two state tax charges that were primarily non-cash, and which reduced EPS by approximately US$0.9 million, or US$0.12 per diluted share. Excluding the impact of the tax charges, net income in the first quarter of 2014 would have been US$0.4 million, or US$0.05 per diluted share. Net income was US$0.04 million, or US$0.01 per diluted share, in the first quarter of 2013.
The company generated positive cash from operations of US$2.2 million in the first quarter of 2014, while at the same time it increased its investment in working capital to support higher operating activity levels. The company also repaid an additional US$1.7 million of its debt in the quarter. Total debt has been reduced by 16% since the first quarter of 2013 to US$88.1 million.
Chairman, president and CEO Dennis Oates commented: "Improved market demand led by the aerospace market, and progress in gaining customer approvals, drove a more than double digit increase in our bookings and backlog in the first quarter. Our production levels were higher company-wide, increasing our efficiency and contributing to the improvement of our gross margin. Our profitability was also aided by the better alignment of raw material costs and surcharges."
"Market demand is remaining strong thus far in the second quarter and we have increased our inventory levels since the end of the year, especially in aerospace products, as we believe that most aerospace destocking has been completed. We expect that the other end markets we serve will gradually recover as the year progresses."
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.
The company's gross margin for the first quarter of 2014 was US$6.1 million, or 13.0% of sales, compared with US$1.5 million, or 3.7% of sales, in the fourth quarter of 2013, and US$4.6 million, or 9.5% of sales, in the first quarter of 2013. The strong improvement was due to higher shipments and production levels as compared with the fourth quarter of 2013, in addition to a better matching of surcharges to raw material costs with the rise in nickel pricing compared to the second half of 2013. Included in the company's first quarter 2014 results were expenses related to severe weather conditions that approximated US$0.6 million pre-tax.
Operating income in the first quarter of 2014 rose to US$1.4 million, compared with an operating loss of US$2.6 million in the fourth quarter of 2013, and operating income of US$0.2 million in the first quarter of 2013.
The company reported a net loss of US$0.5 million, or US$0.07 per diluted share, for the first quarter of 2014, which included two state tax charges that were primarily non-cash, and which reduced EPS by approximately US$0.9 million, or US$0.12 per diluted share. Excluding the impact of the tax charges, net income in the first quarter of 2014 would have been US$0.4 million, or US$0.05 per diluted share. Net income was US$0.04 million, or US$0.01 per diluted share, in the first quarter of 2013.
The company generated positive cash from operations of US$2.2 million in the first quarter of 2014, while at the same time it increased its investment in working capital to support higher operating activity levels. The company also repaid an additional US$1.7 million of its debt in the quarter. Total debt has been reduced by 16% since the first quarter of 2013 to US$88.1 million.
Chairman, president and CEO Dennis Oates commented: "Improved market demand led by the aerospace market, and progress in gaining customer approvals, drove a more than double digit increase in our bookings and backlog in the first quarter. Our production levels were higher company-wide, increasing our efficiency and contributing to the improvement of our gross margin. Our profitability was also aided by the better alignment of raw material costs and surcharges."
"Market demand is remaining strong thus far in the second quarter and we have increased our inventory levels since the end of the year, especially in aerospace products, as we believe that most aerospace destocking has been completed. We expect that the other end markets we serve will gradually recover as the year progresses."
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.
