January 22, 2020 - 6:45 AM EST
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Universal Stainless Reports Fourth Quarter 2019 Results
  • 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

BRIDGEVILLE, Pa., Jan. 22, 2020 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) today reported that net sales for the fourth quarter of 2019 were $55.2 million, compared with $56.6 million in the third quarter of 2019, and $57.1 million in the fourth quarter of 2018.

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.”

Sales of premium alloys totaled $7.4 million, or 13.4% of sales, in the fourth quarter of 2019, compared with $8.0 million, or 14.2% of sales, in the third quarter of 2019, and $8.1 million, or 14.2% of sales in the fourth quarter of 2018.  Full year premium alloy sales were $37.6 million, or 15.5% of sales, for 2019.

For full year 2019, net sales totaled $243.0 million compared with $255.9 million in 2018. 

The Company's gross margin for the fourth quarter of 2019 was 10.6% of sales, compared with 9.4% of sales in the third quarter of 2019, and 11.3% of sales in the fourth quarter of 2018.  Gross margin for full year 2019 totaled $27.6 million, or 11.4% of sales.

Selling, general and administrative expenses were $5.3 million, or 9.5% of sales, in the fourth quarter of 2019, compared with $4.5 million, or 8.0% of sales, in the third quarter of 2019, and $5.6 million, or 9.7% of sales, in the fourth quarter of 2018.

Net income for the fourth quarter of 2019 was $0.2 million, or $0.02 per diluted share. 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 Dunkirk facility in September 2017. In the fourth quarter of 2018, net income was $0.6 million, or $0.07 per diluted share.

For full year 2019, net income was $4.3 million, or $0.48 per diluted share, compared with $10.7 million, or $1.28 per diluted share, in 2018.

The Company’s EBITDA for the fourth quarter of 2019 was $5.5 million, compared with $6.0 million in the third quarter of 2019, and $5.4 million in the fourth quarter of 2018. Full year 2019 EBITDA was $26.7 million compared with $35.6 million in 2018.

Managed working capital at December 31, 2019 totaled $142.1 million, compared with $144.9 million at September 30, 2019, and $123.0 million at the end of the fourth quarter of 2018. The reduction in managed working capital compared with the 2019 third quarter was driven mainly by favorable changes in accounts receivable and accounts payable. Inventory totaled $147.4 million at the end of the fourth quarter of 2019, versus $140.7 million at the end of the 2019 third quarter.

Backlog (before surcharges) at December 31, 2019 was $119.1 million, compared with $118.3 million at September 30, 2019, and $126.2 million at the end of the 2018 fourth quarter.

The Company’s total debt at December 31, 2019 was $64.3 million, compared with $66.1 million at September 30, 2019, and $46.7 million at the end of the fourth quarter of 2018.  Capital expenditures for the fourth quarter of 2019 totaled $4.0 million, compared with $3.9 million in the third quarter of 2019, and $2.2 million in the fourth quarter of 2018.  

The Company’s fourth quarter income tax benefit totaled $0.6 million versus tax benefits of $0.6 million in the third quarter of 2019 and $0.4 million in the fourth quarter of 2018. The 2019 fourth quarter tax benefit was primarily due to changes in state income tax items and increased research and development tax credits.

Conference Call and Webcast

The Company has scheduled a conference call for today, January 22, at 10:00 a.m. (Eastern) to discuss fourth quarter 2019 results. Those wishing to listen to the live conference call via telephone should dial 706-679-0668, passcode 9177978. 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 first quarter of 2020.  

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

Except for historical information contained herein, the statements in this release are forward-looking statements that are made pursuant to the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. Those risks include, among others, the Company’s ability to maintain its relationships with its significant customers and market segments; the Company’s response to competitive factors in its industry that may adversely affect the market for finished products manufactured by the Company or its customers; uncertainty regarding the return to service of the Boeing 737 MAX aircraft; the Company’s ability to compete successfully with domestic and foreign producers of specialty steel products and products fashioned from alternative materials; the demand for the Company’s products and the prices at which the Company is able to sell its products in the aerospace industry, from which a substantial amount of our sales is derived; the Company’s ability to develop, commercialize, market and sell new applications and new products; the receipt, pricing and timing of future customer orders; the impact of changes in the Company’s product mix on the Company’s profitability; the Company’s ability to maintain the availability of raw materials and operating supplies with acceptable pricing; the availability and pricing of electricity, natural gas and other sources of energy that the Company needs for the manufacturing of its products; risks related to property, plant and equipment, including the Company’s reliance on the continuing operation of critical manufacturing equipment; the Company’s success in timely concluding collective bargaining agreements and avoiding strikes or work stoppages; the Company’s ability to attract and retain key personnel; the Company’s ongoing requirement for continued compliance with laws and regulations, including applicable safety and environmental regulations; the ultimate outcome of the Company’s current and future litigation matters; the Company’s ability to meet its debt service requirements and to comply with applicable financial covenants; risks associated with conducting business with suppliers and customers in foreign countries; risks related to acquisitions that the Company may make; the Company’s ability to protect its information technology infrastructure against service interruptions, data corruption, cyber-based attacks or network security breaches; the impact on the Company’s effective tax rates from changes in tax rules, regulations and interpretations in the United States and other countries where it does business; and the impact of various economic, credit and market risk uncertainties. Many of these factors are not within the Company’s control and involve known and unknown risks and uncertainties that may cause the Company’s actual results in future periods to be materially different from any future performance suggested herein. Any unfavorable change in the foregoing or other factors could have a material adverse effect on the Company’s business, financial condition and results of operations. Further, the Company operates in an industry sector where securities values may be volatile and may be influenced by economic and other factors beyond the Company’s control. Certain of these risks and other risks are described in the Company's filings with the Securities and Exchange Commission (SEC) over the last 12 months, copies of which are available from the SEC or may be obtained upon request from the Company

Non-GAAP Financial Measures

This press release includes discussions of financial measures that have not been determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP). These measures include earnings (loss) before interest, income taxes, depreciation and amortization (EBITDA) and Adjusted EBITDA. We include these measurements to enhance the understanding of our operating performance. We believe that EBITDA, considered along with net earnings (loss), is a relevant indicator of trends relating to cash generating activity of our operations. Adjusted EBITDA excludes the effect of share-based compensation expense and other non-cash generating activity such as impairments and the write-off of deferred financing costs. We believe that excluding these costs provides a consistent comparison of the cash generating activity of our operations. We believe that EBITDA and Adjusted EBITDA are useful to investors as they facilitate a comparison of our operating performance to other companies who also use EBITDA and Adjusted EBITDA as supplemental operating measures. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measures. These non-GAAP measures may not be entirely comparable to similarly titled measures used by other companies due to potential differences among calculation methodologies. A reconciliation of these non-GAAP financial measures to their most directly comparable financial measure prepared in accordance with GAAP is included in the tables that follow.

[TABLES FOLLOW]


UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in Thousands, Except Per Share Information)
(Unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS 
                 
  Three Months Ended  Year Ended 
  December 31,  December 31, 
  2019  2018  2019  2018 
Net Sales                
Stainless steel $41,377  $38,163  $177,934  $174,743 
High-strength low alloy steel  7,129   7,490   34,164   23,829 
Tool steel  4,547   8,771   22,303   40,308 
High-temperature alloy steel  947   1,840   4,337   11,467 
Conversion services and other sales  1,171   799   4,269   5,580 
                 
Total net sales  55,171   57,063   243,007   255,927 
                 
Cost of products sold  49,317   50,639   215,369   218,111 
                 
Gross margin  5,854   6,424   27,638   37,816 
                 
Selling, general and administrative expenses  5,252   5,559   20,347   21,746 
                 
Operating income  602   865   7,291   16,070 
                 
Interest expense  956   802   3,765   4,047 
Deferred financing amortization  56   60   227   255 
Other (income), net  (53)  (139)  (474)  (829)
                 
(Loss) income before income taxes  (357)  142   3,773   12,597 
                 
(Benefit) provision for income taxes  (557)  (441)  (502)  1,935 
                 
Net income $200  $583  $4,275  $10,662 
                 
Net income per common share - Basic $0.02  $0.07  $0.49  $1.31 
Net income per common share - Diluted $0.02  $0.07  $0.48  $1.28 
                 
Weighted average shares of common                
stock outstanding                
Basic  8,788,380   8,728,631   8,778,753   8,132,632 
Diluted  8,867,040   8,864,592   8,873,719   8,347,692 
                 


                 
MARKET SEGMENT INFORMATION 
                 
  Three Months Ended  Year ended 
  December 31,  December 31, 
  2019  2018  2019  2018 
Net Sales                
Service centers $36,331  $41,013  $166,327  $180,165 
Original equipment manufacturers  5,413   5,350   24,731   20,582 
Rerollers  7,220   6,149   27,236   29,337 
Forgers  5,036   3,752   20,444   20,263 
Conversion services and other sales  1,171   799   4,269   5,580 
                 
Total net sales $55,171  $57,063  $243,007  $255,927 
                 
Tons shipped  9,805   9,873   41,462   44,554 
                 
MELT TYPE INFORMATION 
                 
  Three Months Ended  Year ended 
  December 31,  December 31, 
  2019  2018  2019  2018 
Net Sales                
Specialty alloys $46,609  $48,155  $201,120  $209,203 
Premium alloys *  7,391   8,109   37,618   41,144 
Conversion services and other sales  1,171   799   4,269   5,580 
                 
Total net sales $55,171  $57,063  $243,007  $255,927 
                 
END MARKET INFORMATION ** 
                 
  Three Months Ended  Year ended 
  December 31,  December 31, 
  2019  2018  2019  2018 
Net Sales                
Aerospace $37,627  $35,108  $170,445  $148,850 
Power generation  2,942   1,941   11,530   9,278 
Oil & gas  6,256   6,282   25,023   31,493 
Heavy equipment  4,752   9,117   22,725   41,623 
General industrial, conversion services and other sales  3,595   4,615   13,285   24,683 
                 
Total net sales $55,171  $57,063  $243,007  $255,927 
                 
* Premium alloys represent all vacuum induction melted (VIM) products. 
                 
** The majority of our products are sold to service centers rather than the ultimate end market customer.  The end market information in this press release is our estimate based upon our knowledge of our customers and the grade of material sold to them, which they will in-turn sell to the ultimate end market customer. 
  


  
CONDENSED CONSOLIDATED BALANCE SHEETS 
         
  December 31, 
  2019  2018 
Assets        
         
Cash $170   $3,696 
Accounts receivable, net  35,595   32,618 
Inventory, net  147,402   134,738 
Other current assets  8,300   3,756 
         
Total current assets  191,467   174,808 
Property, plant and equipment, net  176,061   177,844 
Other long-term assets  871   668 
         
Total assets $368,399  $353,320 
         
Liabilities and Stockholders' Equity        
         
Accounts payable $40,912  $44,379 
Accrued employment costs  4,449   7,939 
Current portion of long-term debt  3,934   3,907 
Other current liabilities  830   2,929 
         
Total current liabilities  50,125   59,154 
Long-term debt, net  60,411   42,839 
Deferred income taxes  11,458   11,481 
Other long-term liabilities, net  3,269   2,835 
         
Total liabilities  125,263   116,309 
Stockholders’ equity  243,136   237,011 
         
Total liabilities and stockholders’ equity $368,399   $353,320 
         


         
CONSOLIDATED STATEMENTS OF CASH FLOW 
         
  Year Ended 
  December 31, 
  2019  2018 
Operating activities:        
Net income $4,275   $10,662 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:        
Depreciation and amortization  19,133   18,918 
Deferred income tax  (21)  1,850 
Share-based compensation expense  1,390   1,442 
Changes in assets and liabilities:        
Accounts receivable, net  (2,977)  (7,628)
Inventory, net  (14,965)  (20,373)
Accounts payable  (1,412)  5,293 
Accrued employment costs  (3,490)  3,865 
Income taxes  84   (246)
Other, net  (6,426)  2,824 
         
Net cash (used in) provided by operating activities  (4,409)  16,607 
         
Investing activities:        
Capital expenditures  (17,354)  (15,388)
Proceeds from sale of property, plant and equipment  -   10 
         
Net cash used in investing activities  (17,354)  (15,378)
         
Financing activities:        
Borrowings under revolving credit facility  174,907   368,910 
Payments on revolving credit facility  (153,632)  (388,728)
Proceeds under New Markets Tax Credit financing, net  -   2,835 
Payments on term loan facility, capital leases, and notes  (3,904)  (12,364)
Payments of financing costs  -   (1,109)
Proceeds from public offering, net of cash expenses  -   32,246 
Proceeds from the exercise of stock options  471   865 
         
Net cash provided by financing activities  17,842   2,655 
         
Net (decrease) increase in cash and restricted cash  (3,921)  3,884 
Cash and restricted cash at beginning of period  4,091   207 
Cash and restricted cash at end of period $170   $4,091 
         


  
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA 
                 
  Three Months ended  Twelve Months Ended 
  December 31,  December 31, 
  2019  2018  2019  2018 
                 
Net income $200  $583  $4,275  $10,662 
Interest expense  956   802   3,765   4,047 
(Benefit) provision for income taxes  (557)  (441)  (502)  1,935 
Depreciation and amortization  4,898   4,458   19,133   18,918 
EBITDA  5,497   5,402   26,671   35,562 
Share-based compensation expense  290   396   1,390   1,442 
Adjusted EBITDA $5,787  $5,798  $28,061  $37,004 
                 


    
CONTACTS:Dennis M. Oates
Chairman,
President and CEO
(412) 257-7609
Christopher T. Scanlon
VP Finance, CFO
and Treasurer
(412) 257-7662 
June Filingeri
President
Comm-Partners LLC
(203) 972-0186

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Source: GlobeNewswire (January 22, 2020 - 6:45 AM EST)

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Even during the lean years of the last oil bust in 2015 and 2016, Black Stone steadily hiked investor payments from an initial 16.2 cents per unit in 2015.

“We are taking a proactive approach to strengthen our balance sheet and enhance our financial flexibility with the expectation that 2020 may be a challenging year in terms of commodity prices and overall drilling activity,” said Black Stone CEO Thomas Carter Jr.

“Given the current environment, the board believes that reducing the distribution benefits unitholders by providing additional cash flow for, first, the repayment of debt, and for other such uses as unit repurchases and acquisitions.,” Carter added.

February 4, 2020

CNBC


Energy giant BP reported better-than-expected full-year net profit on Tuesday, outperforming analyst expectations despite lower oil and gas prices.

BP full-year net profit falls 21% on weak oil and gas prices- oil and gas 360

Source: Reuters

The U.K.-based oil and gas company posted full-year underlying replacement cost profit, used as a proxy for net profit, of $10 billion in 2019. That compared with $12.7 billion full-year net profit in 2018, reflecting a year-on-year fall of 21%.

Analysts had expected full-year net profit to come in at $9.7 billion in 2019, according to data from Refinitiv.

Shares of BP were up more than 4%.

“BP is performing well, with safe and reliable operations, continued strategic progress and strong cash delivery,” Bob Dudley, CEO of BP, said in a statement.

“After almost ten years, this is now my last quarter as CEO. In that time, we have achieved a huge amount together and I am proud to be handing over a safer and stronger BP to Bernard and his team.”

“I am confident that under their leadership, BP will continue to successfully navigate the rapidly-changing energy landscape,” Dudley said.

Bernard Looney, who has run BP’s upstream business since April 2016 and has been a member of the firm’s executive management team since November 2010, is now set to take the reins from the outgoing chief executive.

In October, Dudley announced he would step down as CEO on Feb. 4., having held the position for almost a decade. The 64-year-old plans to retire on March 31, thus bringing an end to his 40-year career with BP.

Here are the key highlights:

  • Underlying replacement cost profit for the fourth quarter and full-year 2019 was $2.6 billion and $10.0 billion respectively, compared to $3.5 billion and $12.7 billion for the same periods a year earlier.
  • Gulf of Mexico oil spill payments for the year totaled $2.4 billion on a post-tax basis, and are expected to be less than $1 billion in 2020.
  • A dividend of 10.5 cents per share was announced for the quarter, an increase of 2.4% on a year earlier.

The energy giant’s full-year results follow disappointing earnings from oil and gas companies on both sides of the Atlantic.

Anglo-Dutch energy giant Royal Dutch Shell reported a sharp fall in full-year net profit late last week, while U.S. rivals Chevron and Exxon Mobil both missed analyst expectations on Friday.

France’s Total is scheduled to report its latest quarterly earnings on Feb. 6.

All roads lead to OPEC decision

International benchmark Brent crude traded at $54.74 Tuesday lunchtime, up more than 0.5%, while U.S. West Texas Intermediate (WTI) stood at $50.75, around 1.2% higher.

Both crude benchmarks have each fallen around 20% since climbing to a peak in early January, dragged lower by concern over demand in China after the coronavirus outbreak.

Brian Gilvary, chief financial officer at BP, told CNBC’s “Squawk Box Europe” on Tuesday that the coronavirus outbreak could wipe out as much as 300,000 to 500,000 barrels per day (bpd) of oil demand in 2020.

The International Energy Agency (IEA) has previously said it expects oil demand to grow by 1.2 million bpd this year, so a reduction of up to 500,000 bpd would leave demand growth “healthy” at 700,000 to 800,000 bpd, Gilvary said.

“I think, in terms of price direction, all roads will then lead to what OPEC will do in terms of trying to rebalance the system to get back to something around $60 to $65 a barrel,” he added.

OPEC and its allies are considering cutting their oil output by a further 500,000 bpd this year, two OPEC sources and a third industry source familiar with discussions told Reuters on Monday.

A ministerial meeting currently scheduled for early March could be brought forward to mid-February, one of the OPEC sources said, with February 14-15 touted as possible dates.

Houston Chronicle


ConocoPhillips’ fourth-quarter profit declined by more than 60 percent, to $720 million from $1.9 billion in the same period last year, amid weaker oil prices and production outputs.

ConocoPhillips' fourth-quarter profit plunges by 60%-oil and gas 360

Source: Houston Chronicle

Revenue during the quarter dropped by more than 20 percent to $8.1 billion.

For the full year, net earnings jumped 15 percent to $7.2 billion compared with $6.3 billion in 2018.

The Houston oil and gas producer still won over many on Wall Street late last year by hiking dividend payments to shareholders and with the release of a 10-year outlook that would rein in spending throughout the new decade.

“Strong 2019 performance capped off a highly successful three-year period in which we transformed our business model and significantly improved our underlying performance drivers across the company,” said Ryan Lance, chairman and chief executive officer. “We’ve positioned ConocoPhillips to deliver sustained value through price cycles due to our strong balance sheet, focus on free cash flow generation, compelling returns of and returns on capital and our commitment to environmental, social and governance leadership.”

Essentially, ConocoPhillips is focused on bringing in stronger profits and paying out more to investors while operating with flatter spending and smaller overall scale.

The company’s production output is expected to dip a little in 2020 because of some recent asset sales.

Last year, ConocoPhillips’ oil and gas production volumes grew by 5 percent despite a small decline in the fourth quarter.

The company’s shale production jumped by 22 percent last year. Shale volumes account for 30 percent of the company’s global production, led by South Texas’ Eagle Ford Shale. ConocoPhillips’ rising outputs in West Texas’ Permian Basin are on track to soon surpass its volumes in North Dakota’s Bakken shale.

Still, ConocoPhillips’ Asian, Australian, North Sea and Alaskan business units are more profitable than its U.S. shale output.

The company’s 2020 capital spending budget is projected to be $6.5 billion to $6.7 billion, on par with the $6.6 billion in 2019. However, that 2019 capital spending budget increased throughout the year from an initial budget of $6.1 billion, a revised midyear budget at $6.3 billion, and final spending for the year of $6.6 billion.

 


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