BRIDGEVILLE, Pa., Jan. 25, 2023 (GLOBE NEWSWIRE) — Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) today reported results for the fourth quarter of 2022 in line with its announcement of preliminary results on January 19.
Net sales for the fourth quarter of 2022 were $56.2 million, an increase of 21.7% from $46.2 million in the third quarter of 2022, and 30.0% higher than net sales of $43.2 million in the fourth quarter of 2021. Fourth quarter 2022 net sales reached the highest level since the first quarter of 2020. Full year 2022 net sales increased 29.6% to $202.1 million from $155.9 million recorded for full year 2021.
Sales of premium alloys in the fourth quarter of 2022 totaled $13.5 million, or 24.1% of sales. That represents an increase of 69.3% from $8.0 million, or 17.3% of sales, in the third quarter of 2022, and an increase of 92.0% from $7.0 million, or 16.3% of sales, in the fourth quarter of 2021. Premium alloy sales for full year 2022 increased 48.3% to $39.2 million, or 19.4% of sales, from $26.4 million, or 16.9% of sales, for full year 2021.
The Company’s premium alloy sales are mainly driven by aerospace demand. Fourth quarter 2022 aerospace sales increased to $40.1 million, or 71.3% of sales, up 26.5% from the 2022 third quarter and up 55.5% from the fourth quarter of 2021. Full year 2022 aerospace market sales rose 50.2% to $137.5 million from $91.5 million in 2021.
The Company noted that its higher premium product and aerospace sales delivered gross margin expansion, but as previously reported, this was more than offset by two primary factors having a negative impact on the Company’s gross margin in the fourth quarter of 2022: negative misalignment between surcharges and raw material costs of approximately $2.4 million and a negative impact from unplanned equipment outages of $0.7 million. In addition, lingering impacts of the previous liquid metal spill at its Bridgeville location had an estimated $0.3 million negative impact. As a result, gross margin for the 2022 fourth quarter was $2.4 million, or 4.3% of sales, compared with $3.0 million, or 6.4% of sales, in the third quarter of 2022. In the fourth quarter of 2021, gross margin was $3.7 million, or 8.7% of sales.
The net loss for the fourth quarter of 2022 was $3.7 million, or $0.41 per diluted share, compared with a net loss of $1.3 million, or $0.14 per diluted share, in the third quarter of 2022, and a net loss of $1.6 million, or $0.18 per diluted share, in the fourth quarter of 2021. For full year 2022, the net loss was $8.1 million, or $0.90 per diluted share, versus a net loss of $0.8 million, or $0.09 per diluted share, for full year 2021, which included a gain of $10 million ($1.12 per diluted share) due to forgiveness of a term note from the Paycheck Protection Program (PPP) in July 2021.
The Company’s EBITDA for the fourth quarter of 2022 was $1.7 million, while adjusted EBITDA was $2.1 million.
Dennis Oates, Chairman, President and CEO, commented: “We achieved top-line growth in the fourth quarter in our strategic categories of premium alloys and aerospace, as sales rebounded from the third quarter. Robust aerospace demand also drove our backlog to a new record of $288 million, an increase of 17% from the record level achieved in the third quarter and more than double the fourth quarter of 2021.
“However, surcharges were at the lowest level of the year in the fourth quarter due to a drop in commodity prices at a time that we were shipping products with higher materials cost produced earlier in the year, resulting in a $2.4 million negative misalignment of surcharges to material costs. The outages were also impactful as they occurred at key work centers, caused by equipment breakdowns and freezing weather conditions in December. Although improving, inflation, supply chain and labor issues are lingering challenges.
“Going forward, we expect reduced surcharge misalignment in the current quarter based on recent increases in some commodity prices including nickel. Equipment outages to date have all been resolved. Supply chain and labor issues continue to improve and we are moving forward quickly to train new employees.
“Based on those factors combined with our record backlog, we are optimistic about our sales and margin growth prospects for 2023 and beyond, especially in aerospace. It is because of the ongoing efforts and commitment of our employees that we will continue to face and overcome unexpected challenges and seize the substantial opportunity before us.”
Financial Position
Managed working capital was $145.9 million at December 31, 2022 compared with $147.4 million at September 30, 2022, and $136.9 million at year-end 2021. Inventory at the end of the 2022 fourth quarter was $154.2 million, compared with $158.9 million at the end of the third quarter of 2022, and $140.7 million at year-end 2021. The decrease in inventory in the most recent quarter reflects easing price pressure on raw material and lower raw material on-hand, as supply chain issues have lessened allowing us to reduce our raw material stock levels.
Backlog (before surcharges) increased 17% to a new record of $287.9 million at December 31, 2022 from $246.3 million at September 30, 2022, and increased 114% from $134.5 million at the end of the fourth quarter of 2021.
The Company’s total debt at December 31, 2022 was $98.4 million, compared with $86.6 million at September 30, 2022, and $69.2 million at December 31, 2021.
Capital expenditures for the fourth quarter of 2022 totaled $1.1 million, compared with $5.5 million for the third quarter of 2022, and $4.5 million in the fourth quarter of 2021. Full year 2022 capital expenditures totaled $12.1 million and are mainly related to the premium product remelt expansion in North Jackson.
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.
