October 20, 2021 06:45 ET | Source: Global Stainless Steel and Alloy Products Corporation. Universal Stainless Steel and Alloy Products Company.
Bridgeville, Pennsylvania, October 20, 2021 (GLOBE NEWSWIRE) - Global Stainless Steel and Alloy Products (NASDAQ: USAP) today reported that net sales for the third quarter of 2021 were 3720 US$38.5 million, 3.5% lower than US$38.5 million. In the second quarter of 2021, it is the same as the US$37.4 million in the third quarter of 2020.
Sales of premium alloys in the third quarter of 2021 were US$5.9 million, accounting for 16.0% of sales, compared to US$5.9 million in the second quarter of 2021, accounting for 15.3% of sales, and US$9.2 million in the second quarter of 2021. Accounted for 24.5% of sales. The third quarter of 2020. The company's high-quality alloy products are mainly sold to the aerospace terminal market. More than 20% of the total backlog at the end of the third quarter was high-quality alloy products.
The company’s gross profit margin in the third quarter increased from US$2.2 million or 5.6% of sales in the second quarter of 2021 to US$2.3 million, or 6.2% of sales, and a loss of US$4.4 million, or 11.8% of sales. third quater. The quarter-on-quarter increase in gross profit margin in the third quarter of 2021 reflects higher production levels and correspondingly lower fixed expenses. The gross profit margin includes fixed cost absorption expenses of US$1.5 million, US$2.1 million and US$4.3 million for each period.
Chairman, President and CEO Dennis Oates commented: “Due to continued strong orders, our $125.1 million backlog of orders reached the highest level since the first quarter of 2019. We booked in the third quarter. We received $58 million in new orders, following the booking record of the previous quarter. Profitability as measured by gross margin expansion continues to improve. Like many industrial companies, we face supply chain challenges and labor shortages, which slowed down sales this quarter increase.
"Despite these unfavorable factors, our largest terminal market, the aerospace market, continues to recover, driven by further improvements in commercial air travel and continued defense spending. Our aerospace sales in the third quarter increased by 4.4% quarter-on-quarter, accounting for total 60% of sales. Aerospace is also the main driver of our booking growth in the third quarter. The delivery of these products is scheduled to begin in the fourth quarter and will continue through the first half of 2022 and beyond. It is expected that the aircraft construction rate will increase next year, Continued growth in travel and reasonable defense spending will accelerate the pull of metals in the supply chain.
"Our sales to the oil and gas market also increased by 2.6% over the second quarter, accounting for 11% of sales. In the third quarter alone, oil prices were at a seven-year high, and natural gas prices rose by about 50%. Drilling Activities are expected to recover further. On October 8, Baker Hughes reported that the United States had added 264 rigs in the past year, while the number of international rigs had increased by 85.
"The growth in aerospace and oil and gas sales was offset by our end market balances and the decline in sales in the second quarter. Sales in the heavy equipment market fell by 18% from the previous quarter, but were 63% higher than in the third quarter of last year, because despite the industrial business The recovery continued, but sheet demand showed typical volatility. Heavy equipment is still our second largest market. After a strong quarter-on-quarter improvement in the second quarter, sales in the power generation and general industrial markets also declined.
"As the level of activity rises, we continue to benefit from active operating leverage. Our surcharges and basic price increases offset the sharp increase in raw material costs and the overall inflation trend of major inputs.
"As operations increase to meet our rapidly growing backlog of demand, we are focused on restoring profitability and controlling working capital. The results of the third quarter further demonstrate the progress of this effort. We are also commissioning a new vacuum arc remelting furnace. We will also install expanded vacuum induction melting capabilities to support the growth of high-quality products and continuously improve the efficiency of our melting operations. Our balance sheet remains strong and can support our strategic initiatives."
Mr. Oates concluded: "Although current supply chain challenges may persist, we are still determined to make further progress in the fourth quarter and make the most of our recovering markets, especially aerospace, as we enter 2022. We We will continue to rely on the commitment of our team, the support of our customers, and our focus on providing key products for our market to do this."
Quarterly and year-to-date operating results
In the first nine months of 2021, net sales totaled 112.7 million U.S. dollars, compared to 148.4 million U.S. dollars in the same period in 2020. High-quality alloy sales in the first nine months of 2021 were US$19.4 million, accounting for 17.2% of sales, while it was US$29.3 million before 2021, or 19.7% of sales in the same period in 2020.
As previously reported, net income for the third quarter of 2021 was US$7.9 million, or diluted earnings per share of US$0.87, including US$10 million in gains from the July Payroll Protection Program (PPP) exemption from term notes. Before PPP earnings, the net loss in the third quarter of 2021 was US$2.1 million, or diluted earnings per share of US$0.23, while the net loss in the second quarter of 2021 was US$2.5 million, or diluted earnings per share of US$0.28, and net The loss for the third quarter of 2020 is $7 million, or $0.79 in diluted earnings per share. The fixed-cost absorption expenses for each period were US$1.5 million, US$2.1 million, and US$4.3 million. In the first nine months of 2021, net income was US$900,000, or diluted earnings per share of US$0.10, including PPP earnings. In the first nine months of 2020, the net loss was US$11.7 million, or a diluted loss of US$1.33 per share.
The company's EBITDA for the third quarter of 2021 was US$12.1 million, including PPP earnings of US$10 million; adjusted EBITDA was US$3.8 million.
The operating capital under management at September 30, 2021 was US$124.4 million, as of June 30, 2021, it was US$116 million, and at the end of the third quarter of 2020, it was US$133.3 million. Inventories at the end of the third quarter of 2021 were USD 135.6 million. At the end of the second quarter of 2021, it was USD 120.8 million, and at the end of the third quarter of 2020, it was USD 120.9 million. The inventory increase in the most recent quarter reflects rising raw material prices, strong raw material purchases to ease supply disruptions, and increased work in progress to support backlog growth.
The backlog (excluding surcharges) increased by 26.5% from USD 98.9 million on June 30, 2021 to USD 125.1 million on September 30, 2021, an increase of 128.2% from USD 54.8 million at the end of the third quarter of 2020.
The company's total debt as of September 30, 2021 was US$51.5 million, compared with US$53 million on June 30, 2021 and US$60.6 million on September 30, 2020.
The total capital expenditure in the third quarter of 2021 was US$2 million, compared with US$1.8 million in the second quarter of 2021 and US$1.3 million in the third quarter of 2020. All ongoing capital projects generally continue to be on time and within budget. The company continues to expect capital expenditures of approximately US$11 million in 2021 to support its strategic growth plan.
The company has scheduled a conference call today (October 20) at 10 AM (Eastern Time) to discuss the results of the third quarter of 2021. Those who wish to listen to the live conference call over the phone, please dial 706-679-0668, password 9394716. The company's website www.univstainless.com will provide a synchronized webcast, which will be archived on the website until the end of the conference in the fourth quarter of 2021.
About Universal Stainless Steel and Alloy Products Company
Universal Stainless Steel and Alloy Products was founded in 1994 and is headquartered in Bridgeville, Pennsylvania. It produces and sells semi-finished and finished specialty steels, including stainless steel, nickel alloys, tool steels and certain other alloy steels. The company's products are used in multiple industries, including aerospace, power generation, oil and gas, and heavy equipment manufacturing. For more information, please visit www.univstainless.com.
Except for the historical information contained herein, the statements in this press release are forward-looking statements made pursuant to the "safe harbor" provisions 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 the future period to be materially different from predicted results. These risks include, among other things, the company’s ability to maintain relationships with its important 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 with domestic Competition between manufacturers of foreign special steel products and products made of alternative materials; changes in the overall demand for the company’s products and changes in the price at which the company can sell its products in the aerospace industry. Our sales come from the aerospace industry; company development , Commercialization, marketing and sales of new applications and new products; the reception, pricing and timing of future customer orders; the impact of changes in the company’s product structure on the company’s profitability; the company’s ability to maintain raw materials and operational supplies at acceptable prices Availability; the supply and pricing of electricity, natural gas and other energy required by the company’s products; risks associated with real estate, plant and equipment, including the company’s reliance on the continuous operation of key manufacturing equipment; the company’s successful and timely signing of collective bargaining agreements to avoid Strikes or shutdowns; the company’s ability to attract and retain key talent; the company’s ongoing requirements for continued compliance with laws and regulations, including applicable safety and environmental regulations; the final outcome of the company’s current and future litigation; the company’s meeting its debt repayment requirements and compliance The ability to apply financial contracts; risks associated with conducting business with foreign suppliers and customers; public health issues, including COVID-19 and its uncertain impact on our facilities and operations, as well as our customers and suppliers, and the company’s The effectiveness of actions taken in response to these risks; the risks associated with the company's possible acquisitions; the company's ability to protect its information technology infrastructure from service interruptions, data corruption, network-based attacks, or cybersecurity breaches; the United States and others The impact of changes in the tax rules, regulations, and interpretations of the country/region where the business is conducted on the company’s effective tax rate; and the impact of various economic, credit, and market risk uncertainties. Many of these factors are not within the control of the company and involve known and unknown risks and uncertainties, which may cause the actual results of the company in future periods to be materially different from any future performance suggested here. Any adverse changes in the above or other factors may have a material adverse effect on the company's business, financial conditions and operating results. In addition, the value of securities in the company's industry may fluctuate and may be affected by economic and other factors beyond the company's control. Some of these and other risks are described in the company’s filings with the US Securities and Exchange Commission, including the company’s annual report on Form 10-K for the year ended December 31, 2020, a copy of which may be obtained from the US Securities and Exchange Commission or may be available. Obtained from our company upon request.
This press release includes a discussion of financial measures that have not yet been determined in accordance with US Generally Accepted Accounting Principles (GAAP). These measures include earnings (losses) before interest, income tax, depreciation and amortization, and adjusted EBITDA. We include these metrics to deepen our understanding of our operating performance. We believe that EBITDA, considered together with net income (loss), is a relevant indicator of trends related to the cash-generating activities of our business. Adjusted EBITDA excludes share-based compensation expenses and the effects of special items noted, such as impairment and costs, or income related to special events (such as periods of low activity or insurance claims). We believe that excluding these costs allows a consistent comparison of the cash-generating activities of our business. We believe that EBITDA and adjusted EBITDA are useful to investors because they help compare our operating performance with other companies that also use EBITDA and adjusted EBITDA as supplementary operating measures. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered as a substitute for GAAP measures. Due to potential differences in calculation methods, these non-GAAP measures may not be fully comparable to similar headline measures used by other companies. The following table lists the reconciliation of these non-GAAP financial measures with the most directly comparable financial measures prepared under GAAP.
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC. Financial summary (in thousands of U.S. dollars, except per share information) (unaudited)