Universal Stainless Reports Fourth Quarter 2022 Results
Universal Stainless & Alloy Products (USAP) reported Q4 2022 sales of $56.2 million, reflecting a 21.7% increase from Q3 2022 and a 30% rise from Q4 2021, marking the highest quarterly sales since Q1 2020. Premium Alloy sales reached $13.5 million, up 69% sequentially. However, gross margin fell to 4.3% due to negative raw material cost misalignment of $2.4 million and equipment outages costing $0.7 million. The net loss for the quarter was $3.7 million, or $0.41 per diluted share. Notably, the backlog surged to a record $287.9 million, up 17% from Q3 and 114% year-over-year.
- Q4 2022 sales increased by 21.7% from Q3 and 30% from Q4 2021.
- Record quarterly backlog reached $287.9 million, up 17% from Q3 2022.
- Premium alloy sales grew significantly to $13.5 million, reflecting strong aerospace demand.
- Gross margin declined to 4.3%, primarily due to $2.4 million in raw material cost misalignment.
- Net loss increased to $3.7 million compared to $1.3 million in the previous quarter.
- Q4 2022 Sales are
$56.2 million , up21.7% from Q3 2022, up30% from Q4 2021, highest since Q1 2020 - Record quarterly Premium Alloy sales of
$13.5 million up69% sequentially - Q4 2022 Gross margin declines to
$2.4 million , or4.3% of sales, due to negative surcharge/raw material cost misalignment of approximately$2.4 million and negative impact of unplanned equipment outages due in part to extreme weather of approximately$0.7 million - Net loss is
$3.7 million , or$0.41 per diluted share - Q4 2022 EBITDA is
$1.7 million ; Adjusted EBITDA is$2.1 million - Quarter-end Backlog reaches new record of
$287.9 million , up17% from record Q3 2022, and up114% from Q4 2021
BRIDGEVILLE, Pa., Jan. 25, 2023 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) today reported results for the fourth quarter of 2022 in line with its announcement of preliminary results on January 19.
Net sales for the fourth quarter of 2022 were
Sales of premium alloys in the fourth quarter of 2022 totaled
The Company's premium alloy sales are mainly driven by aerospace demand. Fourth quarter 2022 aerospace sales increased to
The Company noted that its higher premium product and aerospace sales delivered gross margin expansion, but as previously reported, this was more than offset by two primary factors having a negative impact on the Company’s gross margin in the fourth quarter of 2022: negative misalignment between surcharges and raw material costs of approximately
The net loss for the fourth quarter of 2022 was
The Company’s EBITDA for the fourth quarter of 2022 was
Dennis Oates, Chairman, President and CEO, commented: “We achieved top-line growth in the fourth quarter in our strategic categories of premium alloys and aerospace, as sales rebounded from the third quarter. Robust aerospace demand also drove our backlog to a new record of
“However, surcharges were at the lowest level of the year in the fourth quarter due to a drop in commodity prices at a time that we were shipping products with higher materials cost produced earlier in the year, resulting in a
“Going forward, we expect reduced surcharge misalignment in the current quarter based on recent increases in some commodity prices including nickel. Equipment outages to date have all been resolved. Supply chain and labor issues continue to improve and we are moving forward quickly to train new employees.
“Based on those factors combined with our record backlog, we are optimistic about our sales and margin growth prospects for 2023 and beyond, especially in aerospace. It is because of the ongoing efforts and commitment of our employees that we will continue to face and overcome unexpected challenges and seize the substantial opportunity before us.”
Financial Position
Managed working capital was
Backlog (before surcharges) increased
The Company’s total debt at December 31, 2022 was
Capital expenditures for the fourth quarter of 2022 totaled
Conference Call and Webcast
The Company has scheduled a conference call for today, January 25th, at 10:00 a.m. (Eastern) to discuss fourth quarter 2022 results. Those wishing to listen to the live conference call via telephone please Click Here to register for the conference call and obtain your dial-in number and personal PIN number. 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 2023.
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 its 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 its 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, 2021, 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, | |||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||
| Net sales | $ | 56,200 | $ | 43,225 | $ | 202,114 | $ | 155,934 | ||||||||||||
| Cost of products sold | 53,783 | 39,478 | 187,927 | 147,963 | ||||||||||||||||
| Gross margin | 2,417 | 3,747 | 14,187 | 7,971 | ||||||||||||||||
| Selling, general and administrative expenses | 5,575 | 4,851 | 21,180 | 20,243 | ||||||||||||||||
| Operating loss | (3,158 | ) | (1,104 | ) | (6,993 | ) | (12,272 | ) | ||||||||||||
| Interest expense | 1,532 | 577 | 4,163 | 1,989 | ||||||||||||||||
| Deferred financing amortization | 56 | 56 | 225 | 225 | ||||||||||||||||
| Gain on extinguishment of debt | - | - | (10,000 | ) | ||||||||||||||||
| Other (income), net | (59 | ) | (478 | ) | (684 | ) | (445 | ) | ||||||||||||
| Loss before income taxes | (4,687 | ) | (1,259 | ) | (10,697 | ) | (4,041 | ) | ||||||||||||
| Income taxes | (963 | ) | 367 | (2,624 | ) | (3,283 | ) | |||||||||||||
| Net loss | $ | (3,724 | ) | $ | (1,626 | ) | $ | (8,073 | ) | $ | (758 | ) | ||||||||
| Net loss per common share - Basic | $ | (0.41 | ) | $ | (0.18 | ) | $ | (0.90 | ) | $ | (0.09 | ) | ||||||||
| Net loss per common share - Diluted | $ | (0.41 | ) | $ | (0.18 | ) | $ | (0.90 | ) | $ | (0.09 | ) | ||||||||
| Weighted average shares of common stock outstanding | ||||||||||||||||||||
| Basic | 8,981,382 | 8,924,003 | 8,960,830 | 8,907,908 | ||||||||||||||||
| Diluted | 8,981,382 | 8,924,003 | 8,960,830 | 8,907,908 | ||||||||||||||||
| MARKET SEGMENT INFORMATION | ||||||||||||||||||||
| Three Months Ended | Year ended | |||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||
| Net Sales | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
| Service centers | $ | 41,380 | $ | 30,219 | $ | 144,955 | $ | 110,404 | ||||||||||||
| Original equipment manufacturers | 4,358 | 4,094 | 17,230 | 15,011 | ||||||||||||||||
| Rerollers | 5,041 | 3,429 | 19,824 | 17,058 | ||||||||||||||||
| Forgers | 4,739 | 4,823 | 17,568 | 11,835 | ||||||||||||||||
| Conversion services and other sales | 682 | 660 | 2,537 | 1,626 | ||||||||||||||||
| Total net sales | $ | 56,200 | $ | 43,225 | $ | 202,114 | $ | 155,934 | ||||||||||||
| Tons shipped | 6,500 | 6,883 | 26,571 | 27,343 | ||||||||||||||||
| MELT TYPE INFORMATION | ||||||||||||||||||||
| Three Months Ended | Year ended | |||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||
| Net Sales | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
| Specialty alloys | $ | 42,000 | $ | 35,525 | $ | 160,352 | $ | 127,885 | ||||||||||||
| Premium alloys * | 13,518 | 7,040 | 39,225 | 26,423 | ||||||||||||||||
| Conversion services and other sales | 682 | 660 | 2,537 | 1,626 | ||||||||||||||||
| Total net sales | $ | 56,200 | $ | 43,225 | $ | 202,114 | $ | 155,934 | ||||||||||||
| END MARKET INFORMATION ** | ||||||||||||||||||||
| Three Months Ended | Year ended | |||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||
| Net Sales | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
| Aerospace | $ | 40,050 | $ | 25,748 | $ | 137,489 | $ | 91,546 | ||||||||||||
| Power generation | 1,043 | 1,181 | 6,117 | 4,634 | ||||||||||||||||
| Oil & gas | 5,256 | 4,061 | 17,981 | 15,107 | ||||||||||||||||
| Heavy equipment | 5,634 | 9,043 | 27,138 | 34,010 | ||||||||||||||||
| General industrial, conversion services and other sales | 4,217 | 3,192 | 13,389 | 10,637 | ||||||||||||||||
| Total net sales | $ | 56,200 | $ | 43,225 | $ | 202,114 | $ | 155,934 | ||||||||||||
| * 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, | ||||||||||
| 2022 | 2021 | |||||||||
| Assets | ||||||||||
| Cash | $ | 2,019 | $ | 118 | ||||||
| Accounts receivable, net | 30,960 | 21,192 | ||||||||
| Inventory, net | 154,193 | 140,684 | ||||||||
| Other current assets | 10,392 | 8,567 | ||||||||
| Total current assets | 197,564 | 170,561 | ||||||||
| Property, plant and equipment, net | 163,490 | 159,162 | ||||||||
| Deferred income taxes | 143 | - | ||||||||
| Other long-term assets | 2,137 | 909 | ||||||||
| Total assets | $ | 363,334 | $ | 330,632 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Accounts payable | $ | 38,179 | $ | 24,000 | ||||||
| Accrued employment costs | 2,790 | 4,303 | ||||||||
| Current portion of long-term debt | 3,419 | 2,392 | ||||||||
| Other current liabilities | 1,112 | 943 | ||||||||
| Total current liabilities | 45,500 | 31,638 | ||||||||
| Long-term debt, net | 95,015 | 66,852 | ||||||||
| Deferred income taxes | - | 2,461 | ||||||||
| Other long-term liabilities, net | 3,066 | 3,360 | ||||||||
| Total liabilities | 143,581 | 104,311 | ||||||||
| Stockholders’ equity | 219,753 | 226,321 | ||||||||
| Total liabilities and stockholders’ equity | $ | 363,334 | $ | 330,632 | ||||||
| CONSOLIDATED STATEMENTS OF CASH FLOW | ||||||||||
| Year Ended | ||||||||||
| December 31, | ||||||||||
| 2022 | 2021 | |||||||||
| Operating activities: | ||||||||||
| Net loss | $ | (8,073 | ) | $ | (758 | ) | ||||
| Adjustments for non-cash items: | ||||||||||
| Depreciation and amortization | 19,378 | 19,300 | ||||||||
| Gain on extinguishment of debt | - | (10,000 | ) | |||||||
| Deferred income tax | (2,695 | ) | (3,238 | ) | ||||||
| Share-based compensation expense | 1,289 | 1,121 | ||||||||
| Changes in assets and liabilities: | ||||||||||
| Accounts receivable, net | (9,768 | ) | (3,091 | ) | ||||||
| Inventory, net | (15,078 | ) | (30,986 | ) | ||||||
| Accounts payable | 10,507 | 10,938 | ||||||||
| Accrued employment costs | (1,513 | ) | 2,477 | |||||||
| Income taxes | 3 | (3 | ) | |||||||
| Other, net | (2,986 | ) | (3,729 | ) | ||||||
| Net cash used in operating activities | (8,936 | ) | (17,969 | ) | ||||||
| Investing activity: | ||||||||||
| Capital expenditures | (12,096 | ) | (11,105 | ) | ||||||
| Net cash used in investing activity | (12,096 | ) | (11,105 | ) | ||||||
| Financing activities: | ||||||||||
| Borrowings under revolving credit facility | 147,921 | 134,120 | ||||||||
| Payments on revolving credit facility | (124,373 | ) | (96,602 | ) | ||||||
| Proceeds from term loan facility | - | 8,571 | ||||||||
| Proceeds from other financing transactions, net | 1,804 | - | ||||||||
| Payments on term loan facility, capital leases, and notes | (2,412 | ) | (16,715 | ) | ||||||
| Issuance of common stock under share-based plans | 123 | 193 | ||||||||
| Payments of financing costs | (130 | ) | (539 | ) | ||||||
| Net cash provided by financing activities | 22,933 | 29,028 | ||||||||
| Net increase (decrease) in cash | 1,901 | (46 | ) | |||||||
| Cash at beginning of period | 118 | 164 | ||||||||
| Cash at end of period | $ | 2,019 | $ | 118 | ||||||
| RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA | |||||||||||||||||||||
| Three Months ended | Twelve Months Ended | ||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||
| Net loss | $ | (3,724 | ) | $ | (1,626 | ) | $ | (8,073 | ) | $ | (758 | ) | |||||||||
| Interest expense | 1,526 | 577 | 4,158 | 1,989 | |||||||||||||||||
| Income taxes | (963 | ) | 367 | (2,624 | ) | (3,283 | ) | ||||||||||||||
| Depreciation and amortization | 4,858 | 4,821 | 19,378 | 19,300 | |||||||||||||||||
| EBITDA | 1,697 | 4,139 | 12,839 | 17,248 | |||||||||||||||||
| Share-based compensation expense | 288 | 289 | 1,289 | 1,121 | |||||||||||||||||
| Fixed cost absorption direct charge | - | - | 1,300 | 6,144 | |||||||||||||||||
| Spill costs in addition to absorption charge, net | 300 | - | 4,060 | - | |||||||||||||||||
| AMJP benefit | (139 | ) | - | (3,589 | ) | - | |||||||||||||||
| Gain on extinguishment of debt | - | - | - | (10,000 | ) | ||||||||||||||||
| Insurance-related benefit | - | (462 | ) | - | (462 | ) | |||||||||||||||
| Adjusted EBITDA | $ | 2,146 | $ | 3,966 | $ | 15,899 | $ | 14,051 | |||||||||||||
| CONTACTS: | Dennis M. Oates | Steven V. DiTommaso | June Filingeri | |||
| Chairman, | Vice President and | President | ||||
| President and CEO | Chief Financial Officer | Comm-Partners LLC | ||||
| (412) 257-7609 | (412) 257-7661 | (203) 972-0186 | ||||
FAQ
What were Universal Stainless's Q4 2022 sales figures?
How much did the backlog grow in Q4 2022 for USAP?
What caused the decline in gross margin for USAP in Q4 2022?
What was the net loss reported by USAP for Q4 2022?
How did the premium alloy sales perform in Q4 2022?
