Universal Stainless announces solid result for Q3 2014
Universal Stainless & Alloy Products, Inc announced that net sales for the Q3 of 2014 were USD 53.6 million, an increase of 3% from the Q2 of 2014, and 11% higher than the Q3 of 2013. For the first nine months of 2014, net sales increased 9% to USD 152.6 million compared with net sales of USD 140.5 million in the same period of 2013, with premium alloy products accounting for 7% of total net sales.
Q3 2014 net sales were led by the aerospace market which grew by 6% sequentially over the Q2 of 2014 and by 11% over the Q3 of 2013. Aerospace represented 60% of total net sales. Compared to the Q3 of 2013, the Company's sales increased to all of its end markets with the exception of power generation. With a strong pick up in order entry in September, the Company's backlog (before surcharges) was USD 61 million at the end of the Q3 of 2014, remaining level with the end of the 2014 Q2 but 52% higher than at the end of the Q3 of 2013.
The Company's gross margin for the Q3 of 2014 was USD 8.6 million, or 16.1% of sales, which is essentially the same as the Q2 of 2014, but substantially higher than the Q3 of 2013 when the gross margin was USD 2.4 million, or 5.0% of net sales. The improvement in the Company's Q3 2014 gross margin compared to the same prior year period is primarily attributable to an improved product mix, management's initiatives to improve yields and lower scrap rates and higher manufacturing activity.
Operating income for the Q3 of 2014 was USD 3.1 million, or almost equal with the Q2 of 2014. In the Q3 of 2013, the Company posted an operating loss of USD 2.0 million. Q3 2014 operating income included approximately USD 0.2 million in selling, general and administrative expenses related to placement fees as management continues to strengthen the organization for future growth.
The Company reported net income of USD 1.4 million, or USD 0.20 per diluted share, for the Q3 of 2014, which matches the USD 1.4 million, or USD 0.20 per diluted share, reported in the Q2 of 2014. In the Q3 of 2013, the Company recorded a net loss of USD 1.7 million, or USD 0.25 per diluted share.
Net income for the first nine months of 2014 increased to USD 2.3 million, or USD 0.33 per diluted share compared to a net loss of USD 1.2 million, or USD 0.17 per diluted share, in the first nine months of 2013. Included in the results for the first nine months of 2014 were state tax charges, which were primarily non cash, of approximately USD 0.9 million that negatively impacted earnings per share by USD 0.12.
For the Q3 of 2014, the Company generated cash from operations of USD 3.8 million. At September 30th 2014, total debt was USD 91.1 million, or approximately the same level as the end of the Q2 of 2014. Debt to total capitalization was 31.2% at the end of the Q3 2014.
Mr Dennis Oates Chairman, President and CEO of Universal Stainless & Alloy said that "Q3 sales increased 3% sequentially reaching their highest level in two years and overcoming normal seasonal slowness. Our initiatives to manage product mix and improve yields were major positive contributors in maintaining a two year high gross profit margin of 16.1%. Overall order entry remains solid with September marking the second highest monthly level since early 2012.”
Mr Oates said that "Overall, market conditions have been stronger this year than in 2013 and we are well positioned to participate in future growth. We are monitoring any short-term impacts from recent volatile global issues and the decline in commodity prices, although the outlook for the end markets we target, especially aerospace, continues to be positive. Additionally, our latest discussions with customers indicate that their optimism for further improvement in 2015 remains unchanged."
Source – Strategic Research Institute