Universal Stainless & Alloy Products, Inc. reported sales for the first quarter of 2010 of $34.7 million, compared with $42.2 million in the first quarter of 2009 and $26.7 million in the fourth quarter of 2009.
Net income was $1.4 million ($0.21 per diluted share) vs. a net loss of $3.8 million ($0.57 per diluted share) for the first quarter of 2009, which included unusual charges. In the fourth quarter of 2009, net income was $956,000 ($0.14 per diluted share), including import duties received of $551,000, equivalent to $0.06 per diluted share.
The company recorded negative cash flow from operations of $2.8 million for the first quarter of 2010 compared with positive cash flows of $2.6 million a year ago and $2.5 million in Q4 2009. Cash flow decreased due to the investment in managed working capital necessary to support increased sales activity and growing backlogs. Capital expenditures were $1.1 million, including $629,000 for a melt shop upgrade project, which is expected to be completed in the third quarter.
At March 31, 2010, Universal had cash of $37.8 million and total debt of $12.9 million.
The company noted that its first-quarter shipment volume to service centers, forgers, and rerollers increased 59%, 29%, and 62%, respectively, over the previous quarter. Shipments to all end markets also demonstrated strong sequential increases, with tons shipped of aerospace products up 26%, power generation products up 11%, petrochemical products up 48%, and service center plate products up 94% compared with Q4 2009.
"Recovery continued in the first quarter and we saw a broad-based increase in our shipment volume amid further signs that de-stocking is ending and restocking is beginning in the supply chain,” said President and CEO Dennis Oates. “Restocking was most evident in the continued growth of our shipments of service center plate, as sharp recovery in auto production has caused service centers to further replenish their plate inventory after several quarters of heavy destocking.
"We saw strong growth in aerospace bar shipments sequentially, our power generation shipments benefited from higher maintenance spending in the first quarter, and our initiatives in the oil and gas market contributed to the increase in petrochemical volume,” Oates continued. “The increased volume in the first quarter combined with our continued progress in process and yield improvement, cost savings resulting from capital projects, and reduced cycle times resulted in strong improvement in our profitability as measured by our higher margins and lower operating costs per ton.
"Bookings gained momentum in the first quarter, and we ended the quarter with backlog of $53 million, an increase of 47% from the end of 2009. Based on the level of our backlog and indications from our customers that restocking is continuing, we expect our second-quarter results to demonstrate further sequential growth," he concluded.
For the first quarter of 2010, the Universal Stainless & Alloy Products segment had sales of $31.2 million and operating income of $1.9 million, yielding an operating margin of 6.2% of sales. This compares with sales of $36.7 million and an operating loss of $3.9 million, including $5.0 million of unusual charges, in the first quarter of 2009. In the fourth quarter of 2009, sales were $23.1 million and operating income was $509,000, or 2.2% of sales.
Segment sales declined 15% from the first quarter of 2009 on a 10% decrease in tons shipped. Lower shipments to rerollers, forgers, OEMs, and of bar products to service centers offset a 41% increase in shipments of plate products to service centers, especially tool steel, compared to the first quarter of 2009. Segment sales increased 35% from the prior quarter on a 39% increase in tons shipped, reflecting substantially higher shipments to service centers, forgers, and rerollers, including sales to the Dunkirk segment.
The Dunkirk Specialty Steel segment recorded sales of $10.4 million and operating income of $325,000, yielding an operating margin of 3.1% of sales, compared with sales in the first quarter of 2009 of $11.4 million and an operating loss of $2.5 million, including unusual charges of $1.0 million. In the fourth quarter of 2009, sales were $8.5 million and operating income was $227,000, or 2.7% of sales.
Dunkirk's sales declined 8% from a year ago on 13% fewer tons shipped due to lower shipments to all customer categories offset by a favorable product mix shift and higher selling prices. Sales increased 22% from the fourth quarter of 2009 on a 12% increase in tons shipped, reflecting higher shipments to service centers and higher surcharges.
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, OEMs, and wire redrawers.