Q3 2019 Sales total $56.6 million; Aerospace reaches 72.3% of salesQ3 2019 Net Income of $0.8 million, or $0.09 per diluted shareEBITDA totals $6.0 million in Q3 2019Order entry up 5% sequentially; Quarter-end Backlog of $118.3 million, up from $116.9 million at end of Q2 2019           BRIDGEVILLE, Pa., Oct. 23, 2019 (GLOBE NEWSWIRE) — Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) today reported that net sales for the third quarter of 2019 were $56.6 million, compared with $69.1 million in the third quarter of 2018, and $71.0 million in the second quarter of 2019. Third quarter operations were negatively impacted by increased downtime and production delays in key production units. The resulting delayed shipments were primarily driven by unplanned downtime associated with repair activity at the North Jackson hydraulic forge relating to the fire, which occurred in the second quarter, with estimated third quarter delayed shipments approximating 2.0 million pounds or $6.0 million of net sales. At the close of the third quarter, the Company substantially completed the hydraulic forge fire-related repair activity.Chairman, President and CEO Dennis Oates commented: “Aerospace sales remained strong in the quarter and accounted for 72.3% of total sales. Year-to-date sales to aerospace, by far our largest end market, were up 16.8% from the same period of 2018.  While sales to all end markets were lower sequentially, demand remained solid, and order entry was up 5%. We were also encouraged by the continued successful ramp-up of our mid-size bar cell unit at our Dunkirk facility as well as the melt cost reduction activity at our vacuum induction melt shop at our North Jackson facility.“We did experience unplanned downtime on the North Jackson hydraulic forge in the third quarter, following the second quarter fire at the forge, which led to lower-than-expected shipments and sales for the period.  While overall total production efficiency and shipment volume picked up markedly in September, it was not sufficient to overcome our increased downtime.“Significant progress has been made on our hydraulic forge, and production levels have improved in the fourth quarter. Additionally, as we proceed through the fourth quarter, we expect production levels to exceed those achieved prior to the second quarter fire.”Sales of premium alloys totaled $8.0 million, or 14.2% of sales, in the third quarter of 2019, compared with a record $12.8 million, or 18.0% of sales, in the 2019 second quarter, and $9.2 million, or 13.3% of sales, in the third quarter of 2018.For the first nine months of 2019, sales totaled $187.8 million compared with $198.9 million in the same period of 2018.  Sales of premium alloys in the first nine months of 2019 were $30.2 million, or 16.1% of sales, compared with $33.0 million, or 16.6% of sales, in the same period of 2018.The Company’s gross margin for the third quarter of 2019 was 9.4% of sales, compared with 12.8% of sales in the second quarter of 2019, and 15.1% of sales in the third quarter of 2018.  Lower volume, product mix and surcharge misalignment as well as equipment downtime time negatively impacted the third quarter 2019 gross margin.Selling, general and administrative expenses were $4.5 million, or 8.0% of sales, in the third quarter of 2019, compared with $5.6 million, or 7.9% of sales, in the 2019 second quarter, and $5.1 million, or 7.4% of sales, in the third quarter of 2018.Net income for the third quarter of 2019 totaled $0.8 million, or $0.09 per diluted share, and included a $0.04 insurance recovery related to a fire in the pickling area of the Dunkirk facility in September 2017. Net income for the second quarter of 2019 was $2.1 million, or $0.24 per diluted share, and included charges of $0.03 per diluted share related to a fire in June 2019 associated with the hydraulic forge at the North Jackson facility. In the third quarter of 2018, net income totaled $3.9 million, or $0.44 per diluted share.For the first nine months of 2019, net income was $4.1 million, or $0.46 per diluted share, compared with $10.1 million, or $1.23 per diluted share, in the first nine months of 2018.The Company’s EBITDA for the third quarter of 2019 was $6.0 million, compared with $8.2 million for the second quarter of 2019, and $10.1 million in the third quarter of 2018.Managed working capital at September 30, 2019 totaled $144.9 million, compared with $147.8 million at June 30, 2019, and $136.9 million at the end of the third quarter of 2018. The reduction in managed working capital compared with the 2019 second quarter was driven mainly by an 11.2% decrease in accounts receivable. Inventory totaled $140.7 million at the end of the 2019 third quarter, in line with the 2019 second quarter.Backlog (before surcharges) at September 30, 2019 was $118.3 million, compared with $116.9 million at June 30, 2019, and $111.4 million at the end of the 2018 third quarter.The Company’s total debt at September 30, 2019 was $66.1 million, compared with $68.2 million at June 30, 2019, and $62.5 million at the end of the third quarter of 2018.  Capital expenditures for the third quarter of 2019 totaled $3.9 million, compared with $3.8 million in the second quarter of 2019, and $6.6 million in the third quarter of 2018.The Company’s third quarter income tax benefit totaled $0.6 million and was favorably impacted by discrete items, primarily increased research and development tax credits.Conference Call and WebcastThe Company has scheduled a conference call for today, October 23, 2019, at 10:00 a.m. (Eastern) to discuss third quarter 2019 results. Those wishing to listen to the live conference call via telephone should dial 706-679-0668, passcode 7459879. 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 fourth quarter of 2019.  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, power generation, oil and gas, and heavy equipment manufacturing. More information is available at www.univstainless.com.Forward-Looking Information Safe Harbor
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