Universal Stainless Reports Third Quarter 2022 Results
Universal Stainless & Alloy Products (NASDAQ: USAP) reported Q3 2022 sales of $46.2 million, down 11.4% from Q2, but up 24.3% from Q3 2021. The gross margin was 6.4%, with a net loss of $1.3 million ($0.14 per diluted share), influenced by a $0.6 million AMJP grant and $2.0 million in costs from a prior liquid metal spill. Despite production setbacks, backlog reached a record $246.3 million, up 11% from Q2 and 97% year-over-year. The company anticipates a positive outlook due to recovery in the aerospace sector, which constitutes 69% of sales.
- Record backlog of $246.3 million, up 11% from Q2 2022 and 97% year-over-year.
- Sales for the first nine months of 2022 increased 29.5% to $145.9 million compared to 2021.
- Continued recovery in the aerospace market indicated by strong order entries.
- Q3 2022 sales decreased 11.4% from Q2 2022.
- Net loss of $1.3 million in Q3 2022, compared to a net income of $7.9 million in Q3 2021.
- Production disruptions due to labor and supply chain issues, reducing shipment volume by 20%.
- Q3 2022 Sales are
$46.2 million ,11.4% below Q2 2022, and up24.3% from Q3 2021 - Premium Alloys are
17.3% of Q3 2022 sales - Q3 2022 Gross margin is
6.4% of sales; Net loss is$1.3 million , or$0.14 per diluted share; both include AMJP grant benefit of$0.6 million and negative impacts of$2.0 million (pretax) from previous liquid metal spill - Q3 2022 EBITDA is
$3.1 million ; Adjusted EBITDA is$4.2 million - Quarter-end Backlog reaches new record of
$246.3 million , up11% from record Q2 2022, and up97% from Q3 2021 - Increased borrowing availability with targeted credit agreement amendment
BRIDGEVILLE, Pa., Oct. 26, 2022 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) today reported results for the third quarter of 2022 in line with its announcement of preliminary results on October 19.
Net sales for the third quarter of 2022 were
Sales of premium alloys in the third quarter of 2022 totaled
As previously reported, shipment volume in the 2022 third quarter was approximately
As a result, the Company reported a gross margin for the third quarter of 2022 of
The net loss for the third quarter of 2022 was
Separately, the Company reported that subsequent to the end of the third quarter it entered into an amendment of its credit facility that reduces borrowing restrictions through March 31, 2023 by increasing the sublimit on borrowing availability collateralized by inventory, and allowing access to additional inventory value for the purpose of calculating compliance with its minimum borrowing availability requirement.
Chairman, President and CEO, Dennis Oates commented, “The operational challenges in the third quarter were especially frustrating as they prevented us from reaching our production goals for the quarter at a time of substantial order entry and as our backlog reached a new record high of
“Adding to our optimism is continued recovery in the aerospace market, which has been the main driver of our sales and backlog growth over the past several quarters. While our aerospace sales were down
Mr. Oates concluded, “We are fully focused on getting back on track with our growth plan this quarter so we can better respond to our customers' needs and continue to take advantage of our market opportunities, especially in aerospace, even with the continuing economic uncertainty. Our ongoing confidence is based on the continuing hard work and commitment of our employees and the support of our customers.”
Quarterly and Year-to-Date Results of Operations
For the first nine months of 2022, the net loss was
The Company’s EBITDA for the third quarter of 2022 was
Managed working capital was
Backlog (before surcharges) increased
The Company’s total debt at September 30, 2022 was
Capital expenditures for the third quarter of 2022 totaled
Conference Call and Webcast
The Company has scheduled a conference call for today, October 26th, at 10:00 a.m. (Eastern) to discuss third quarter 2022 results. Those wishing to listen to the live conference call via telephone must click here to pre-register for the call and obtain a 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 fourth 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 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 | Nine months ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||
| Net sales | $ | 46,196 | $ | 37,169 | $ | 145,914 | $ | 112,709 | ||||||||||||
| Cost of products sold | 43,218 | 34,862 | 134,144 | 108,486 | ||||||||||||||||
| Gross margin | 2,978 | 2,307 | 11,770 | 4,223 | ||||||||||||||||
| Selling, general and administrative expenses | 5,279 | 5,010 | 15,605 | 15,392 | ||||||||||||||||
| Operating loss | (2,301 | ) | (2,703 | ) | (3,835 | ) | (11,169 | ) | ||||||||||||
| Interest expense | 1,165 | 483 | 2,632 | 1,413 | ||||||||||||||||
| Deferred financing amortization | 56 | 56 | 168 | 168 | ||||||||||||||||
| Gain on extinguishment of debt | - | (10,000 | ) | - | (10,000 | ) | ||||||||||||||
| Other (income) expense, net | (599 | ) | 9 | (625 | ) | 32 | ||||||||||||||
| Loss (income) before income taxes | (2,923 | ) | 6,749 | (6,010 | ) | (2,782 | ) | |||||||||||||
| Income taxes | (1,626 | ) | (1,141 | ) | (1,661 | ) | (3,650 | ) | ||||||||||||
| Net loss (income) | $ | (1,297 | ) | $ | 7,890 | $ | (4,349 | ) | $ | 868 | ||||||||||
| Net loss (income) per common share - Basic | $ | (0.14 | ) | $ | 0.88 | $ | (0.49 | ) | $ | 0.10 | ||||||||||
| Net loss (income) per common share - Diluted | $ | (0.14 | ) | $ | 0.87 | $ | (0.49 | ) | $ | 0.10 | ||||||||||
| Weighted average shares of common stock outstanding: | ||||||||||||||||||||
| Basic | 8,975,331 | 8,917,858 | 8,960,830 | 8,902,484 | ||||||||||||||||
| Diluted | 8,975,331 | 9,082,371 | 8,960,830 | 9,050,847 | ||||||||||||||||
| MARKET SEGMENT INFORMATION | ||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| Net Sales | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
| Service centers | $ | 33,382 | $ | 26,333 | $ | 103,575 | $ | 80,185 | ||||||||||||
| Original equipment manufacturers | 3,986 | 3,336 | 12,872 | 10,916 | ||||||||||||||||
| Rerollers | 3,386 | 4,722 | 14,783 | 13,629 | ||||||||||||||||
| Forgers | 4,540 | 2,518 | 12,829 | 7,012 | ||||||||||||||||
| Conversion services and other | 902 | 260 | 1,855 | 967 | ||||||||||||||||
| Total net sales | $ | 46,196 | $ | 37,169 | $ | 145,914 | $ | 112,709 | ||||||||||||
| Tons shipped | 5,926 | 6,144 | 20,071 | 20,460 | ||||||||||||||||
| MELT TYPE INFORMATION | ||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| Net Sales | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
| Specialty alloys | $ | 37,308 | $ | 30,973 | $ | 118,352 | $ | 92,359 | ||||||||||||
| Premium alloys * | 7,986 | 5,936 | 25,707 | 19,383 | ||||||||||||||||
| Conversion services and other sales | 902 | 260 | 1,855 | 967 | ||||||||||||||||
| Total net sales | $ | 46,196 | $ | 37,169 | $ | 145,914 | $ | 112,709 | ||||||||||||
| END MARKET INFORMATION ** | ||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| Net Sales | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
| Aerospace | $ | 31,664 | $ | 22,253 | $ | 97,439 | $ | 65,798 | ||||||||||||
| Power generation | 1,553 | 847 | 5,074 | 3,453 | ||||||||||||||||
| Oil & gas | 3,706 | 4,041 | 12,725 | 11,045 | ||||||||||||||||
| Heavy equipment | 6,225 | 7,614 | 21,504 | 24,967 | ||||||||||||||||
| General industrial, conversion services and other | 3,048 | 2,414 | 9,172 | 7,446 | ||||||||||||||||
| Total net sales | $ | 46,196 | $ | 37,169 | $ | 145,914 | $ | 112,709 | ||||||||||||
| * 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 customers. 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 | ||||||||||
| September 30, | December 31, | |||||||||
| 2022 | 2021 | |||||||||
| Assets | ||||||||||
| Cash | $ | 66 | $ | 118 | ||||||
| Accounts receivable, net | 23,130 | 21,192 | ||||||||
| Inventory, net | 158,867 | 140,684 | ||||||||
| Other current assets | 10,231 | 8,567 | ||||||||
| Total current assets | 192,294 | 170,561 | ||||||||
| Property, plant and equipment, net | 159,519 | 159,162 | ||||||||
| Other long-term assets | 860 | 909 | ||||||||
| Total assets | $ | 352,673 | $ | 330,632 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Accounts payable | $ | 33,334 | $ | 24,000 | ||||||
| Accrued employment costs | 3,968 | 4,303 | ||||||||
| Current portion of long-term debt | 2,392 | 2,392 | ||||||||
| Other current liabilities | 1,219 | 943 | ||||||||
| Total current liabilities | 40,913 | 31,638 | ||||||||
| Long-term debt, net | 84,193 | 66,852 | ||||||||
| Deferred income taxes | 911 | 2,461 | ||||||||
| Other long-term liabilities, net | 3,206 | 3,360 | ||||||||
| Total liabilities | 129,223 | 104,311 | ||||||||
| Stockholders’ equity | 223,450 | 226,321 | ||||||||
| Total liabilities and stockholders’ equity | $ | 352,673 | $ | 330,632 | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW | ||||||||||
| Nine months ended | ||||||||||
| September 30, | ||||||||||
| 2022 | 2021 | |||||||||
| Operating activities: | ||||||||||
| Net (loss) income | $ | (4,349 | ) | $ | 868 | |||||
| Adjustments for non-cash items: | ||||||||||
| Depreciation and amortization | 14,520 | 14,419 | ||||||||
| Gain on extinguishment of debt | - | (10,000 | ) | |||||||
| Deferred income tax | (1,675 | ) | (3,646 | ) | ||||||
| Share-based compensation expense | 1,001 | 833 | ||||||||
| Changes in assets and liabilities: | ||||||||||
| Accounts receivable, net | (1,938 | ) | (1,611 | ) | ||||||
| Inventory, net | (19,342 | ) | (25,500 | ) | ||||||
| Accounts payable | 7,255 | 16,525 | ||||||||
| Accrued employment costs | (335 | ) | 2,955 | |||||||
| Income taxes | 21 | 5 | ||||||||
| Other | (1,470 | ) | 281 | |||||||
| Net cash used in operating activities | (6,312 | ) | (4,871 | ) | ||||||
| Investing activity: | ||||||||||
| Capital expenditures | (10,974 | ) | (6,514 | ) | ||||||
| Net cash used in investing activity | (10,974 | ) | (6,514 | ) | ||||||
| Financing activities: | ||||||||||
| Borrowings under revolving credit facility | 102,098 | 89,070 | ||||||||
| Payments on revolving credit facility | (83,260 | ) | (69,804 | ) | ||||||
| Proceeds from term loan facility | - | 8,571 | ||||||||
| Payments on term loan facility, finance leases, and notes | (1,666 | ) | (16,116 | ) | ||||||
| Issuance of common stock under share-based plans | 62 | 118 | ||||||||
| Payments of financing costs | - | (539 | ) | |||||||
| Net cash provided by financing activities | 17,234 | 11,300 | ||||||||
| Net decrease in cash | (52 | ) | (85 | ) | ||||||
| Cash at beginning of period | 118 | 164 | ||||||||
| Cash at end of period | $ | 66 | $ | 79 | ||||||
| RECONCILIATION OF NET (LOSS) INCOME TO EBITDA AND ADJUSTED EBITDA | ||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||
| Net (loss) income | $ | (1,297 | ) | $ | 7,890 | $ | (4,349 | ) | $ | 868 | ||||||||||
| Interest expense | 1,165 | 483 | 2,632 | 1,413 | ||||||||||||||||
| Income taxes | (1,626 | ) | (1,141 | ) | (1,661 | ) | (3,650 | ) | ||||||||||||
| Depreciation and amortization | 4,826 | 4,841 | 14,520 | 14,419 | ||||||||||||||||
| EBITDA | 3,068 | 12,073 | 11,142 | 13,050 | ||||||||||||||||
| Share-based compensation expense | 306 | 252 | 1,001 | 833 | ||||||||||||||||
| Fixed cost absorption direct charge | - | 1,491 | 1,300 | 6,144 | ||||||||||||||||
| Spill costs in addition to absorption charge, net | 1,490 | - | 3,760 | - | ||||||||||||||||
| AMJP benefit | (632 | ) | - | (3,450 | ) | - | ||||||||||||||
| Gain on extinguishment of debt | - | (10,000 | ) | - | (10,000 | ) | ||||||||||||||
| Adjusted EBITDA | $ | 4,232 | $ | 3,816 | $ | 13,753 | $ | 10,027 | ||||||||||||
| CONTACTS: Dennis M. Oates Chairman, President and CEO (412) 257-7609 | Steven V. DiTommaso Vice President and Chief Financial Officer (412) 257-7661 | June Filingeri President Comm-Partners LLC (203) 972-0186 |
FAQ
What were Universal Stainless' Q3 2022 net sales?
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