Universal Stainless & Alloy (USAP) Prelim. Q1 EPS Misses Views

Universal Stainless & Alloy (NASDAQ: USAP) announced today that, based on preliminary results, it expects net sales for the first quarter of 2015 to approximate $56 million, representing a 20% increase from the first quarter of 2014 and up 6% sequentially.

*** The Street sees Q1 revenue of $55 million.

Despite this strong top-line performance, the Company's gross margin and operating income were negatively impacted by a misalignment of surcharges and raw material costs due to a further decline in nickel and other commodities including a sudden drop in the price of iron scrap. As a result, the Company expects to report net income for the first quarter of 2015 of approximately $0.01 to $0.02 per diluted share.

*** The Street was looking for Q1 EPS of $0.21.

Chairman, President and CEO Dennis Oates commented: "We achieved continued sales growth in the first quarter, even with lower surcharges. In fact, net sales increased to all our targeted end markets compared with the first quarter of 2014, with aerospace sales up 26%, power generation sales up 35%, oil & gas sales up 44%, and heavy equipment sales up 1%. We also achieved further growth in our sales of premium products, which reached a record 9% of sales.

"Despite this progress, the substantial drop in commodity prices and resulting misalignment of surcharges took a sharp toll on our gross margin, which is expected to approximate 10% of net sales. While soft commodity prices and the effect of the drop in the price of oil are likely to continue to pose challenges for the next few months, our current order entry and backlog are solid and stable."

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