Universal Stainless & Alloy (USAP) Misses Q4 EPS by 11c, Revenues Miss

Universal Stainless & Alloy (NASDAQ: USAP) reported Q4 EPS of $0.02, $0.11 worse than the analyst estimate of $0.13. Revenue for the quarter came in at $55.2 million versus the consensus estimate of $59.51 million.

• Q4 2019 Sales total $55.2 million; Aerospace sales reach record $170.4 million for 2019
• Q4 2019 Net Income of $0.2 million, or $0.02 per diluted share
• EBITDA totals $5.5 million in Q4 2019
• Quarter-end Backlog of $119.1 million, versus $118.3 million at end of Q3 2019

Chairman, President and CEO Dennis Oates commented: “Aerospace sales remained solid in the fourth quarter at $37.6 million, or 68.2% of total sales, increasing 7.2% from the fourth quarter of 2018, but down 8.0% sequentially. Our full year 2019 aerospace sales were up 14.5% from 2018 and reached a record $170.4 million, or 70.1% of 2019 total sales. Sales to our remaining targeted end markets all increased sequentially in the fourth quarter of 2019.

“Fourth quarter gross margin totaled 10.6% of sales, compared with 9.4% of sales in the third quarter of 2019, but did not match 11.3% of sales in the fourth quarter of 2018. Fourth quarter gross margin improved sequentially, as operational improvements favorably impacted results, and our material cost of sales was more closely aligned with selling prices. However, on a year over year basis, gross margins were negatively impacted by a less favorable product mix.

“We were pleased to see favorable operating activity at our North Jackson hydraulic forge, as significant production efficiencies were implemented following the second quarter fire. The hydraulic forge fire caused downtime that resulted in delayed shipments, estimated at $6.0 million of sales in 2019. Hydraulic forge production reached record levels in the fourth quarter, driven by improved uptime leading to significant production gains. We expect the improved forge production activity to continue as we proceed through 2020.

“We continue to see operating cost savings from our mid-size bar cell in our Dunkirk facility. The bar cell is fully operational and delivering the favorable results we expected. We are encouraged to see the full year benefits of this capital project in 2020.

“We are also seeing favorable improvements in our melting operations. Our Vacuum Induction Melt activities have steadily reduced costs and improved production levels in the second half of 2019. Our Bridgeville melt operations have consistently improved output during 2019. These favorable melt activities are expected to continue in 2020.

“On the commercial side, we have seen favorable developments in tool steel order entry and anticipate that tool steel sales volumes in 2020 will increase over 2019 levels. Additionally, our premium alloy backlog continues to grow as we continue to execute on our strategy to grow these products.

“We expect improved material cost alignment in 2020 compared to 2019, as the steady raw material price declines that negatively impacted 2019 margins have made their way into our material costs, and as a result, our melt costs are more closely aligned to surcharges.

“Lastly, we are continuing to assess the Boeing 737 Max production outlook and the potential impact on order entry activity.”

For earnings history and earnings-related data on Universal Stainless & Alloy (USAP) click here.

You May Also Be Interested In

• Burry doubles down on Nebius short after stock surges 34% on earnings
• Cingulate posts wider Q2 loss as SG&A spending more than doubles
• Ondas Holdings Inc. (ONDS) Misses Q2 EPS by 9c