Universal Stainless Reports Fourth Quarter 2021 Results
Universal Stainless & Alloy Products (Nasdaq: USAP) reported Q4 2021 sales of $43.2 million, reflecting a 38% increase year-over-year and a 16.3% sequential growth. The gross margin improved to 8.7% from 6.2% in Q3 2021, marking the highest since Q4 2019. Despite a net loss of $1.6 million or $0.18 per diluted share, record backlog reached $134.5 million, up 7.5% from the previous quarter. The company is expanding capacity by acquiring two additional Vacuum-Arc Remelt furnaces to support growth, particularly in the aerospace sector.
- Q4 2021 sales increased by 38% year-over-year.
- Gross margin improved to 8.7%, highest since Q4 2019.
- Record backlog of $134.5 million, up 180.5% from Q4 2020.
- Aerospace sales grew by 49.6% year-over-year.
- Net loss of $1.6 million reported for Q4 2021.
- Sales for 2021 decreased to $155.9 million from $179.7 million in 2020.
- Operating challenges due to supply chain bottlenecks and labor shortages.
- Q4 2021 Sales of
$43.2 million up16.3% sequentially and38% year over year; Premium alloy sales are16.3% of sales - Q4 2021 Gross margin improves to
8.7% of sales, highest reported since Q4 2019, versus6.2% in Q3 2021 - Q4 2021 Net loss is
$1.6 million , or$0.18 per diluted share - Q4 2021 EBITDA is
$4.1 million ; Adjusted EBITDA is$4.0 million - Quarter-end Backlog is record
$134.5 million , up7.5% from Q3 2021,180.5% above year-end 2020 - Board approves two additional Vacuum-Arc Remelt (VAR) furnaces
BRIDGEVILLE, Pa., Jan. 26, 2022 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) today reported that net sales for the fourth quarter of 2021 were
Sales of premium alloys increased
The Company's gross margin increased to
Chairman, President and CEO Dennis Oates commented: “Recovery continued in the fourth quarter as measured by the sequential growth in both our topline and premium alloy sales, and in our backlog, all mainly driven by improving demand in the aerospace market. In fact, our backlog at the end of 2021 reached a record
“Profitability also advanced in the fourth quarter, with our gross margin increasing to
“Growth in our aerospace sales picked up in the fourth quarter, increasing
“Heavy equipment market sales resumed growth in the fourth quarter, increasing
“Our sales to the oil & gas market remained level with the third quarter but rose
“Our operating leverage continued to improve in the fourth quarter with a rise in our activity levels, including a
“We remain focused on restoring our profitability and controlling working capital in 2022, even as we ramp up operations to meet our record backlog. Through our capital investment in 2021, we successfully added a new vacuum arc re-melting (VAR) furnace in our North Jackson facility, which has been installed, commissioned, and integrated into our operations. We have also added an 18-ton vacuum induction melting (VIM) crucible, which expands our vacuum induction melting capacity to support the growth of premium alloy products, and improves the efficiency of our melt operations. The VIM crucible is in the final stage of commissioning.
“As part of our strategic plan for 2022, we are pleased to announce that our Board has now authorized the acquisition of two additional VAR furnaces to further support our growth and efficiency, and expand our product applications.”
Mr. Oates concluded: “As 2021 came to a close and 2022 begins, we see our markets coming back and, through our operational initiatives, we are in a much stronger position than one year ago. While supply chain and other issues will continue to present challenges, we remain determined to make further progress in the coming year and take full advantage of our recovering markets, especially aerospace. Our plan is to achieve sequential improvement in each quarter of 2022. The tireless efforts of our team, the support of our customers and our focus on providing critical products to our markets give us confidence in our future.”
Quarterly and Full Year Results of Operations
For full year 2021, net sales totaled
The net loss for the fourth quarter of 2021 was
The Company’s EBITDA for the fourth quarter of 2021 was
Managed working capital was
Backlog (before surcharges) increased
The Company’s total debt at December 31, 2021 was
Capital expenditures for the fourth quarter of 2021 totaled
Conference Call and Webcast
The Company has scheduled a conference call for today, January 26th, at 10:00 a.m. (Eastern) to discuss fourth quarter and full year 2021 results. Those wishing to listen to the live conference call via telephone should dial 706-679-0668, passcode 3819539. 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 first quarter of 2022.
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, power generation, oil and gas, and heavy equipment manufacturing. More information is available at www.univstainless.com.
Forward-Looking Information Safe Harbor
Except 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 segments; 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 our 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 uncertain impact on our facilities and operations and our customers and suppliers and the effectiveness of the Company’s actions taken in response to these risks; 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, 2020, copies of which are available from the SEC or may be obtained upon request from the Company.
Non-GAAP Financial Measures
This 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 | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net sales | 43,225 | 31,324 | 155,934 | 179,731 | |||||||||||
Cost of products sold | 39,478 | 36,399 | 147,963 | 182,387 | |||||||||||
Gross margin | 3,747 | (5,075 | ) | 7,971 | (2,656 | ) | |||||||||
Selling, general and administrative expenses | 4,851 | 4,203 | 20,243 | 19,752 | |||||||||||
Operating loss | (1,104 | ) | (9,278 | ) | (12,272 | ) | (22,408 | ) | |||||||
Interest expense | 577 | 552 | 1,989 | 2,784 | |||||||||||
Deferred financing amortization | 56 | 56 | 225 | 225 | |||||||||||
Gain on extinguishment of debt | - | - | (10,000 | ) | - | ||||||||||
Other (income), net | (478 | ) | (730 | ) | (445 | ) | (1,123 | ) | |||||||
Loss before income taxes | (1,259 | ) | (9,156 | ) | (4,041 | ) | (24,294 | ) | |||||||
Income taxes | 367 | (1,851 | ) | (3,283 | ) | (5,247 | ) | ||||||||
Net loss | $ | (1,626 | ) | $ | (7,305 | ) | $ | (758 | ) | $ | (19,047 | ) | |||
Net loss per common share - Basic | $ | (0.18 | ) | $ | (0.83 | ) | $ | (0.09 | ) | $ | (2.16 | ) | |||
Net loss per common share - Diluted | $ | (0.18 | ) | $ | (0.83 | ) | $ | (0.09 | ) | $ | (2.16 | ) | |||
Weighted average shares of common | |||||||||||||||
stock outstanding | |||||||||||||||
Basic | 8,924,003 | 8,834,146 | 8,907,908 | 8,818,974 | |||||||||||
Diluted | 8,924,003 | 8,834,146 | 8,907,908 | 8,818,974 |
MARKET SEGMENT INFORMATION | |||||||||||||||
Three Months Ended | Year ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
Net Sales | 2021 | 2020 | 2021 | 2020 | |||||||||||
Service centers | $ | 30,219 | $ | 22,245 | $ | 110,404 | $ | 126,122 | |||||||
Original equipment manufacturers | 4,094 | 4,159 | 15,011 | 20,783 | |||||||||||
Rerollers | 3,429 | 2,316 | 17,058 | 15,928 | |||||||||||
Forgers | 4,823 | 2,217 | 11,835 | 14,244 | |||||||||||
Conversion services and other sales | 660 | 387 | 1,626 | 2,654 | |||||||||||
Total net sales | $ | 43,225 | $ | 31,324 | $ | 155,934 | $ | 179,731 | |||||||
Tons shipped | 6,883 | 5,669 | 27,343 | 30,821 | |||||||||||
MELT TYPE INFORMATION | |||||||||||||||
Three Months Ended | Year ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
Net Sales | 2021 | 2020 | 2021 | 2020 | |||||||||||
Specialty alloys | $ | 35,525 | $ | 24,969 | $ | 127,885 | $ | 141,838 | |||||||
Premium alloys * | 7,040 | 5,968 | 26,423 | 35,239 | |||||||||||
Conversion services and other sales | 660 | 387 | 1,626 | 2,654 | |||||||||||
Total net sales | $ | 43,225 | $ | 31,324 | $ | 155,934 | $ | 179,731 | |||||||
END MARKET INFORMATION ** | |||||||||||||||
Three Months Ended | Year ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
Net Sales | 2021 | 2020 | 2021 | 2020 | |||||||||||
Aerospace | $ | 25,748 | $ | 17,214 | $ | 91,546 | $ | 121,900 | |||||||
Power generation | 1,181 | 956 | 4,634 | 6,879 | |||||||||||
Oil & gas | 4,061 | 2,287 | 15,106 | 13,065 | |||||||||||
Heavy equipment | 9,043 | 6,036 | 34,010 | 22,400 | |||||||||||
General industrial, conversion services and other sales | 3,192 | 4,831 | 10,637 | 15,487 | |||||||||||
Total net sales | $ | 43,225 | $ | 31,324 | $ | 155,934 | $ | 179,731 | |||||||
* 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 customer. 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 | |||||||
December 31, | |||||||
2021 | 2020 | ||||||
Assets | |||||||
Cash | $ | 118 | $ | 164 | |||
Accounts receivable, net | 21,192 | 18,101 | |||||
Inventory, net | 140,684 | 111,380 | |||||
Other current assets | 8,567 | 7,471 | |||||
Total current assets | 170,561 | 137,116 | |||||
Property, plant and equipment, net | 159,162 | 164,983 | |||||
Other long-term assets | 909 | 947 | |||||
Total assets | $ | 330,632 | $ | 303,046 | |||
Liabilities and Stockholders' Equity | |||||||
Accounts payable | $ | 24,000 | $ | 12,632 | |||
Accrued employment costs | 4,303 | 1,826 | |||||
Current portion of long-term debt | 2,392 | 16,713 | |||||
Other current liabilities | 943 | 2,722 | |||||
Total current liabilities | 31,638 | 33,893 | |||||
Long-term debt, net | 66,852 | 33,471 | |||||
Deferred income taxes | 2,461 | 5,725 | |||||
Other long-term liabilities, net | 3,360 | 4,277 | |||||
Total liabilities | 104,311 | 77,366 | |||||
Stockholders’ equity | 226,321 | 225,680 | |||||
Total liabilities and stockholders’ equity | $ | 330,632 | $ | 303,046 |
CONSOLIDATED STATEMENTS OF CASH FLOW | |||||||
Year Ended | |||||||
December 31, | |||||||
2021 | 2020 | ||||||
Operating activities: | |||||||
Net loss | $ | (758 | ) | $ | (19,047 | ) | |
Adjustments for non-cash items: | |||||||
Depreciation and amortization | 19,300 | 19,449 | |||||
Gain on extinguishment of debt | (10,000 | ) | - | ||||
Deferred income tax | (3,238 | ) | (5,231 | ) | |||
Share-based compensation expense | 1,121 | 1,455 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable, net | (3,091 | ) | 17,494 | ||||
Inventory, net | (30,986 | ) | 34,326 | ||||
Accounts payable | 10,938 | (25,282 | ) | ||||
Accrued employment costs | 2,477 | (1,983 | ) | ||||
Income taxes | (3 | ) | 243 | ||||
Other | (3,729 | ) | 2,387 | ||||
Net cash (used in) provided by operating activities | (17,969 | ) | 23,811 | ||||
Investing activity: | |||||||
Capital expenditures | (11,105 | ) | (9,157 | ) | |||
Net cash used in investing activity | (11,105 | ) | (9,157 | ) | |||
Financing activities: | |||||||
Borrowings under revolving credit facility | 134,120 | 115,876 | |||||
Payments on revolving credit facility | (96,602 | ) | (136,877 | ) | |||
Proceeds from term loan facility | 8,571 | - | |||||
Proceeds from Paycheck Protection Program Note | - | 10,000 | |||||
Payments on term loan facility, capital leases, and notes | (16,715 | ) | (3,809 | ) | |||
Payments of financing costs | (539 | ) | - | ||||
Issuance of common stock under share-based plans | 193 | 150 | |||||
Net cash provided by (used in) financing activities | 29,028 | (14,660 | ) | ||||
Net decrease in cash | (46 | ) | (6 | ) | |||
Cash at beginning of period | 164 | 170 | |||||
Cash at end of period | $ | 118 | $ | 164 |
RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA | |||||||||||||||
Three Months ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net loss | $ | (1,626 | ) | $ | (7,305 | ) | $ | (758 | ) | $ | (19,047 | ) | |||
Interest expense | 577 | 552 | 1,989 | 2,784 | |||||||||||
Income taxes | 367 | (1,851 | ) | (3,283 | ) | (5,247 | ) | ||||||||
Depreciation and amortization | 4,821 | 4,728 | 19,300 | 19,449 | |||||||||||
EBITDA | 4,139 | (3,876 | ) | 17,248 | (2,061 | ) | |||||||||
Share-based compensation expense | 289 | 326 | 1,121 | 1,455 | |||||||||||
Loss on sale of excess scrap | - | 300 | - | 654 | |||||||||||
Fixed cost absorption direct charge | - | 3,819 | 6,144 | 8,284 | |||||||||||
Employee severance costs | - | - | - | 620 | |||||||||||
Gain on extinguishment of debt | - | - | (10,000 | ) | - | ||||||||||
Insurance-related (benefit) | (462 | ) | (740 | ) | (462 | ) | (1,047 | ) | |||||||
Adjusted EBITDA | $ | 3,966 | $ | (171 | ) | $ | 14,051 | $ | 7,905 |
CONTACTS: | Dennis M. Oates | June Filingeri |
Chairman, | President | |
President and CEO | Comm-Partners LLC | |
(412) 257-7609 | (203) 972-0186 |
FAQ
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