Universal Stainless Reports Record Sales and Profitability in Second Quarter of 2024

• Q2 2024 Net Sales are record $82.8 million
• Gross Margin hits new record high of 25.4% of sales in Q2 2024
• Q2 2024 Net Income more than doubles from Q1 2024 to record $8.9 million, or $0.90 per diluted share
• Adjusted EBITDA in Q2 2024 increases to record $18.5 million, or 22% of sales

BRIDGEVILLE, Pa., July 31, 2024 (GLOBE NEWSWIRE) — Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) today reported record net sales of $82.8 million for the second quarter of 2024, an increase of 7% from the first quarter of 2024, and up 20% from the second quarter of 2023. Year-to-date net sales of $160.4 million were up 19% from the same period in 2023.

Second quarter premium alloy sales totaled $20.7 million, or 25.0% of sales, up 61% from $12.9 million, or 18.6% of sales in the second quarter of 2023. Year-to-date premium alloy sales rose 34% to $40.8 million, or 25.4% of sales.

Aerospace is the Company’s largest market for premium alloy products, and strong demand continues. Aerospace sales reached a record $68.6 million, or 82.9% of sales, in the second quarter of 2024, an increase of 14% from the first quarter of 2024, and up 34% from the second quarter of 2023. Year-to-date aerospace sales rose 29% compared to the same period in 2023 to $128.8 million, or 80.3% of sales.

Profitability continued to increase in the second quarter of 2024 with gross profit dollars rising to a record $21.0 million, or 25.4% of sales. That compares with 18.9% of sales in the 2024 first quarter and 14.3% of sales in the second quarter of 2023. Gross margin in the most recent quarter continued to benefit from a rich product mix, higher base selling prices, cost improvement efforts and more stable commodity prices.

Second quarter 2024 operating income increased 77% to $12.8 million, or 15.5% of sales, from 9.3% of sales in the first quarter of 2024, and 4.5% of sales in the second quarter of 2023. Year-to-date operating income was up more than four-fold to $20.1 million, or 12.5% of sales, compared with the same period a year ago.

Net income increased to $8.9 million, or $0.90 per diluted share, in the 2024 second quarter, from $4.1 million in the 2024 first quarter and $0.9 million in the 2023 second quarter. 

Adjusted EBITDA increased 46% to $18.5 million, or 22.3% of sales, in the 2024 second quarter, from $12.6 million, or 16.3% of sales, in the 2024 first quarter, and was more than double the $7.9 million, or 11.5% of sales, reported in the second quarter of 2023. 

Net cash generated by operating activities totaled $7.3 million in the second quarter, which the Company used to fund capital expenditures and reduce its net debt.

Christopher M. Zimmer, President and CEO, commented: “Our record sales were driven by the continued robust commercial aerospace and defense markets, with our record aerospace sales representing 82.9% of sales in the quarter. Aerospace demand also drives our premium alloy sales, which now represent one-quarter of our total sales.

“Our margin expansion is the result of our strategic focus on aerospace and defense products, including premium alloys, which has delivered a broader base of customer approvals and increased our mix of higher-priced products. Margins are also benefiting from targeted and sustainable margin improvement projects and our continuous cost management.

“We continue to invest capital in our premium alloy capacity and efficiency and will add a second 18-ton furnace shell for the VIM at our North Jackson facility in mid-2025, and a new box furnace to support the forge the third quarter this year.

“We also remain focused on managing working capital and generating positive cash flow to fund our strategic capital expenditures and pay down debt, which was reduced by another $3 million in the second quarter.

“As we look to the balance of the year, we continue to see opportunities to increase sales and to further expand gross margins. We remain optimistic about our growth momentum and strategy for 2025 and beyond.”

Financial Position

Managed working capital, defined as accounts receivable, plus inventory, minus accounts payable, was $157.1 million at June 30, 2024, compared with $152.3 million at March 31, 2024, and $148.4 million at June 30, 2023. Inventory at the end of the second quarter of 2024 was $149.1 million compared with $142.4 million at the end of the 2024 first quarter, and $151.6 million at the end of second quarter of 2023.

Backlog (before surcharges) at June 30, 2024 totaled $296.5 million compared with $325.1 million at the end of March and $355.0 million at the end of the 2023 second quarter. The average selling price per pound in the backlog has increased 6% from the end of the 2024 first quarter and was up 18% from the second quarter of 2023. 

Total debt was reduced by $3.0 million in the second quarter to $78.3 million from the first quarter of 2024 and by $15.0 million from the end of the 2023 second quarter. Second quarter 2024 interest expense of $1.9 million was down 7% both sequentially and compared to the second quarter a year ago.

Second quarter capital expenditures of $5.5 million were level with the 2024 first quarter. Full year 2024 capital expenditures are expected to approximate $18 million.

Conference Call and Webcast

The Company has scheduled a conference call for today July 31st, at 10:00 a.m. (Eastern) to discuss second quarter 2024 results. If you wish to listen to the live conference call via telephone, please Click Here to register for the 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 third quarter of 2024.

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, energy, 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 channels; 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 impact on the Company and our customers and suppliers; 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, 2023, 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.

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