SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 20, 2005
Universal Stainless & Alloy Products, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-25032 25-1724540
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 Mayer Street, Bridgeville, Pennsylvania 15017
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (412) 257-7600
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2.):
/ / Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
/ / Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
/ / Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
/ / Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On October 20, 2005, Universal Stainless and Alloy Products, Inc.
issued a press release regarding its earnings for the third quarter ended
September 30, 2005. A copy of the press release is attached hereto.
The information in this Current Report on Form 8-K, including the
attached press release, shall not be deemed "filed" for the purposes of Section
18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to
the liabilities of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, as amended, except as
shall be expressly set forth by specific reference in such a filing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
By: /s/ Richard M. Ubinger
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Vice President of Finance,
Chief Financial Officer and Treasurer
Dated: October 20, 2005
[GRAPHIC OMITTED][GRAPHIC OMITTED]
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
600 Mayer Street o Bridgeville, Pennsylvania 15017
CONTACTS: Richard M. Ubinger
Vice President of Finance,
Chief Financial Officer and Treasurer
(412) 257-7606
FOR IMMEDIATE RELEASE
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Comm-Partners LLC
June Filingeri
(203) 972-0186
UNIVERSAL STAINLESS REPORTS STRONG 2005 THIRD QUARTER RESULTS
QUARTERLY EARNINGS PER SHARE REACH $0.51 ON SALES OF $43 MILLION
FULL YEAR SALES TO REACH NEW COMPANY RECORD
BRIDGEVILLE, PA, October 20, 2005 -- Universal Stainless & Alloy
Products, Inc. (Nasdaq: USAP) reported today that sales for the third quarter of
2005 rose 29% to $43.1 million compared with $33.3 million in the same period of
2004. Third quarter 2005 net income rose 20% to $3.3 million, or $0.51 per
diluted share. This compares with $2.7 million, or $0.43 per diluted share,
reported in the third quarter of 2004, which included other income of $565,000,
or $0.06 per diluted share related to the delayed receipt of prior year import
duties. Third quarter 2005 net income rose 38% from the 2004 third quarter
before including the other income in that quarter.
The Company's third quarter 2005 results were in line with its forecast
of sales in the range of $40 to $45 million and exceeded the diluted EPS
forecasted range of $0.45 to $0.50.
President and CEO Mac McAninch commented: "We are very pleased with our
continued progress which brought year-to-date sales to $128 million, 6% ahead of
total sales for all of 2004, which was a record year for our Company. This
progress has been driven by strong demand in our aerospace, power generation,
petrochemical and tool steel markets. Customer acceptance of our pricing
initiatives, which has been necessary in the current cost environment, has
allowed us to maintain our margins. As a result, the operating income we have
achieved year to date is 49% ahead of the total operating income we realized for
full year 2004."
Mr. McAninch continued: "We are progressing with our current capital
investment commitments. The new vacuum arc remelt (VAR) furnace in our
Bridgeville, PA facility should be operational in November."
USAP REPORTS STRONG THIRD QUARTER - PAGE 2 -
SEGMENT REVIEW
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In the third quarter of 2005, the Universal Stainless & Alloy Products
segment had sales of $40.0 million and operating income of $4.0 million,
yielding an operating margin of 10%. This included a write-off of $363,000
mainly for the retirement of fixed assets replaced or being replaced. The
operating margin is in line with the level achieved in the 2005 second quarter
when sales were $37.2 million and operating income was $3.6 million. In the
third quarter of 2004, sales were $31.2 million and operating income was $2.9
million, or 9% of sales.
The 28% increase in sales compared with the 2004 third quarter
reflects higher product prices, offset by lower shipments of low margin products
to rerollers and lower revenues generated from conversion services. Third
quarter 2005 sales were 8% higher than the prior quarter. The increase in
operating income compared to both prior periods reflects the improved mix of
product shipped. The Dunkirk Specialty Steel segment reported record sales of
$14.0 million. Operating income was $1.8 million, resulting in an operating
margin of 13%. These results compare with sales of $9.5 million and operating
income of $1.2 million, or 12% of sales, in the third quarter of 2004. In the
second quarter of 2005, sales were $12.4 million and operating income was $1.8
million, or 15% of sales. Dunkirk's sales, which increased 48% over the 2004
third quarter, also benefited from higher selling prices on a 9% increase in
shipments. Operating income increased 51% over the third quarter of 2004 on
increased shipments, improvements in pricing and the elimination of products and
product lines that did not meet the Company's profitability criteria. Dunkirk's
sales were 13% higher than the 2005 second quarter mainly due to higher selling
prices resulting from higher material costs. Operating income was 4% lower than
the prior quarter of 2005 due to the mix of products shipped.
BUSINESS OUTLOOK
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The following statements are based on the Company's current expectations. These
statements are forward-looking, and actual results may differ materially.
The Company estimates that fourth quarter 2005 sales will range from
$33 to $38 million and that diluted EPS will range from $0.37 to $0.42. This
compares with sales of $37.0 million and diluted EPS of $0.40 in the fourth
quarter of 2004, which included other income of $0.05 per diluted share from
2004 import duties and a bad debt charge equivalent to $0.03 per diluted share.
The 2005 fourth quarter EPS estimate does not include any income from import
duties that may be received by the Company related to the Continued Dumping and
Subsidy Act of 2000 for the current year.
USAP REPORTS STRONG THIRD QUARTER - PAGE 3 -
The following factors were considered in developing these estimates:
o The Company's total backlog at September 30, 2005 approximated $106 million
compared to $105 million at June 30, 2005, reflecting continued strong
aerospace, power generation, petrochemical and tool steel markets. The
Company noted that this continued high backlog level is mainly comprised of
electro-slag and vacuum-arc remelted products scheduled for shipment beyond
2005, as customers take into account future needs and current remelt
capacity constraints industry-wide.
o The Company expects that shipments to its reroller customers in the 2005
fourth quarter will continue to decline, as anticipated, due to the
Company's expanded focus on supplying value-added products.
o The Company expects fourth quarter 2005 sales of special shape products to
be slightly lower than normal due to the previously announced hourly
employee work stoppage at its Titusville, PA facility. Salaried employees
have restored partial operation of the facility, including the five
vacuum-arc remelt (VAR) furnaces located there. The interrupted operation
of the VAR furnaces is not expected to have a material effect on 2005
fourth quarter results.
o Sales from the Dunkirk Specialty Steel segment are expected to approximate
$13 to $14 million. Additional sales are dependent upon the level of
inventory management initiatives implemented by the service center industry
near the end of the year.
Mr. McAninch concluded: "We have made substantial progress this year
in meeting our commitments to customers, employees and shareholders, and are
committed to continuing that progress."
WEBCAST
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A simultaneous Webcast of the Company's conference call discussing the
third quarter of 2005 and the fourth quarter outlook, scheduled at 10:00 a.m.
(Eastern) today, will be available on the Company's website at
www.univstainless.com, and thereafter archived on the website. A telephone
replay of the conference call will be available beginning at 12:00 noon
(Eastern) today and continuing through October 27th. It can be accessed by
dialing 706-645-9291, passcode 1153927. This is a toll call.
ABOUT UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
------------------------------------------------
Universal Stainless & Alloy Products, Inc., headquartered in
Bridgeville, Pa., 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.
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, RISKS
ASSOCIATED WITH THE RESOLUTION OF THE LABOR ISSUES AT THE TITUSVILLE, PA
FACILITY, RISKS ASSOCIATED WITH THE RECEIPT, PRICING AND TIMING OF FUTURE
CUSTOMER ORDERS, RISKS ASSOCIATED WITH SIGNIFICANT FLUCTUATIONS THAT MAY OCCUR
IN RAW MATERIAL AND ENERGY PRICES, RISKS ASSOCIATED WITH THE MANUFACTURING
PROCESS AND PRODUCTION YIELDS, RISKS RELATED TO PROPERTY, PLANT AND EQUIPMENT
AND RISKS RELATED TO THE ULTIMATE OUTCOME OF THE COMPANY'S CURRENT AND FUTURE
LITIGATION AND REGULATORY MATTERS. CERTAIN OF THESE RISKS AND OTHER RISKS ARE
DESCRIBED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION
(SEC) OVER THE LAST 12 MONTHS, COPIES OF WHICH ARE AVAILABLE FROM THE SEC OR MAY
BE OBTAINED UPON REQUEST FROM THE COMPANY.
- FINANCIAL TABLES FOLLOW -
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share information)
(Unaudited)
CONSOLIDATED STATEMENT OF OPERATIONS
For the Quarter Ended For the Nine-Months Ended
September 30, September 30,
2005 2004 2005 2004
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NET SALES
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Stainless steel $ 35,573 $ 26,529 $ 103,397 $ 65,586
Tool steel 4,805 4,277 15,181 11,185
High-strength low alloy steel 1,506 1,160 4,270 3,085
High-temperature alloy steel 587 473 2,323 1,795
Conversion services 569 707 2,533 1,635
Other 57 151 275 344
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Total net sales 43,097 33,297 127,979 83,630
Cost of products sold 35,692 27,701 106,299 71,576
Selling and administrative expenses 2,043 1,873 6,335 5,348
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Operating income 5,362 3,723 15,345 6,706
Interest expense (223) ( 108) (595) (302)
Other income - 566 63 577
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Income before taxes 5,139 4,181 14,813 6,981
Income tax provision 1,850 1,436 5,333 2,443
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Net income $ 3,289 $ 2,745 $ 9,480 $ 4,538
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Earnings per share - Basic $ 0.52 $ 0.44 $ 1.49 $ 0.72
======= ======= ========== ==========
Earnings per share - Diluted $ 0.51 $ 0.43 $ 1.47 $ 0.71
======= ======= ========== ==========
Weighted average shares of
Common Stock outstanding
Basic 6,383,464 6,305,456 6,365,947 6,300,229
Diluted 6,490,056 6,400,188 6,469,953 6,363,656
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MARKET SEGMENT INFORMATION
For the Quarter Ended For the Nine-Months Ended
September 30, September 30,
2005 2004 2005 2004
---- ---- ---- ----
NET SALES
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Service centers $ 18,039 $ 13,443 $ 53,396 $ 35,616
Rerollers 9,762 9,208 33,040 21,465
Forgers 8,572 6,232 22,742 15,181
Original equipment manufacturers 3,149 2,263 8,070 6,101
Wire redrawers 2,949 1,307 7,934 3,346
Conversion services 568 707 2,533 1,635
Other 58 137 264 286
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Total net sales $ 43,097 $ 33,297 $ 127,979 $ 83,630
======= ======= ========== =========
Tons shipped 11,952 13,470 40,565 34,667
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BUSINESS SEGMENT RESULTS
UNIVERSAL STAINLESS & ALLOY PRODUCTS SEGMENT
For the Quarter Ended For the Nine-Months Ended
September 30, September 30,
2005 2004 2005 2004
---- ---- ---- ----
NET SALES
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Stainless steel $ 23,551 $ 18,373 $ 68,864 $ 45,469
Tool steel 4,569 4,155 14,723 10,902
High-strength low alloy steel 574 575 1,887 1,387
High-temperature alloy steel 507 451 2,235 1,526
Conversion services 466 632 2,122 1,356
Other 57 146 217 298
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29,724 24,332 90,048 60,938
Intersegment 10,248 6,867 25,506 14,588
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Total net sales 39,972 31,199 115,554 75,526
Material cost of sales 20,876 14,999 59,156 33,923
Operation cost of sales 13,651 11,990 41,734 32,733
Selling and administrative expenses 1,428 1,310 4,324 3,672
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Operating income $ 4,017 $ 2,900 $ 10,340 $ 5,198
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DUNKIRK SPECIALTY STEEL SEGMENT
For the Quarter Ended For the Nine-Months Ended
September 30, September 30,
2005 2004 2005 2004
---- ---- ---- ----
NET SALES
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Stainless steel $ 12,022 $ 8,156 $ 34,533 $ 20,117
Tool steel 236 122 458 283
High-strength low alloy steel 932 585 2,383 1,698
High-temperature alloy steel 80 22 88 269
Conversion services 103 75 411 279
Other - 5 58 46
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13,373 8,965 37,931 22,692
Intersegment 617 519 2,098 1,572
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Total net sales 13,990 9,484 40,029 24,264
Material cost of sales 8,190 4,716 21,746 12,095
Operation cost of sales 3,428 3,042 10,817 8,645
Selling and administrative expenses 615 563 2,011 1,676
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Operating income $ 1,757 $ 1,163 $ 5,455 $ 1,848
======= ======== ========== ==========
CONSOLIDATED BALANCE SHEET
September 30, December 31,
2005 2004
---- ----
ASSETS
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Cash $ 1,520 $ 241
Accounts receivable, net 29,092 24,562
Inventory 51,207 38,318
Other current assets 2,374 3,418
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Total current assets 84,193 66,539
Property, plant & equipment, net 42,960 40,716
Other assets 618 585
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Total assets $ 127,771 $ 107,840
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Accounts payable $ 11,634 $ 11,666
Bank overdrafts 2,886 2,638
Accrued employment costs 3,296 1,830
Current portion of long-term debt 1,555 2,044
Other current liabilities 1,411 442
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Total current liabilities 20,782 18,620
Bank revolver 8,438 8,635
Long-term debt 11,339 3,555
Deferred taxes 10,068 10,093
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Total liabilities 50,627 40,903
Stockholders' equity 77,144 66,937
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Total liabilities and stockholders' equity $ 127,771 $ 107,840
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CONSOLIDATED STATEMENT OF CASH FLOW DATA
For the Nine-Months Ended September 30,
2005 2004
---- ----
Cash flows from operating activities:
Net income $ 9,480 $ 4,538
Adjustments to reconcile to net cash
used in operating activities:
Depreciation and amortization 2,301 2,336
Loss on retirement of fixed assets 705 -
Deferred taxes 193 480
Tax benefit from exercise of stock options 173 8
Changes in assets and liabilities:
Accounts receivable, net (4,530) (9,939)
Inventory (12,889) (11,527)
Trade accounts payable (32) 4,995
Accrued employment costs 1,466 1,985
Other, net 1,793 1,958
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Cash flow used in operating activities (1,340) (5,166)
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Cash flow from investing activities:
Capital expenditures (5,233) (2,377)
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Cash flow used in investing activities (5,233) (2,377)
------------ -------------
Cash flows from financing activities:
Deferred financing costs (48) -
Net borrowings under revolving line of credit (197) 4,597
Proceeds from long-term debt 8,050 -
Repayments of long-term debt (755) (1,462)
Net change in bank overdrafts 248 126
Proceeds from issuance of common stock 554 96
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Cash flow provided by financing activities 7,852 3,357
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Net cash flow $ 1,279 $ (4,186)
============ =============