Universal Stainless Reports Third Quarter 2012 Results

Universal Stainless Reports Third Quarter 2012 Results

                   - Sales are $62.3 Million; EPS is $0.45

                  - Quarter-end Backlog Totals $68.3 Million

BRIDGEVILLE, Pa., Oct. 24, 2012 (GLOBE NEWSWIRE) -- Universal Stainless &
Alloy Products, Inc. (Nasdaq:USAP) reported today that sales for the third
quarter of 2012 were $62.3 million, which was 7% below the third quarter of
2011. The Company previously reported that lower order entry would impact 2012
third quarter sales.

Operating income for the third quarter of 2012 was $5.5 million, or 8.8% of
sales, including $0.6 million of ramp-up expense for the Company's North
Jackson operation due primarily to a production outage necessary to make
modifications to its vacuum induction melting furnace ("VIM"). This compares
with operating income of $7.2 million, or 10.7% of sales in the third quarter
of 2011, which included $1.7 million of expense for the acquisition and
start-up of North Jackson acquired by the Company in August 2011. Excluding
the effect of North Jackson in both periods, operating income was 10.1% of
sales in the third quarter of 2012 and 13.2% of sales in the third quarter of
2011.

Net income for the third quarter of 2012 was $3.3 million, or $0.45 per
diluted share, including $0.06 per diluted share of North Jackson ramp-up
expense. In the third quarter of 2011, net income was $3.9 million, or $0.55
per diluted share, including $0.14 per diluted share of after-tax acquisition
and start-up expense related to North Jackson.

For the first nine months of 2012, sales increased 8% to $204.8 million from
the same period of 2011. Net income for the first nine months of 2012 was
$14.1 million, or $1.93 per diluted share, compared with $13.9 million, or
$1.97 per diluted share, reported for the prior year period. Net income for
the first nine months of 2012 included after-tax operating expense for the
North Jackson ramp-up of $0.07 per diluted share compared to $0.22 per diluted
share of North Jackson-related expense in the first nine months of 2011.

For the third quarter of 2012, the Company had positive cash flow from
operations of $12.4 million despite continued investment in the ramp-up of
North Jackson, including $3.5 million of increased inventory to support VIM
product and equipment development. Capital expenditures were $10.7 million in
the third quarter of 2012, including $6.8 million for the North Jackson
operation. At September 30, 2012, the Company had total debt of $113.4
million, or 36.6% of total capitalization.

Shipment volume for the third quarter of 2012 decreased 9% from the third
quarter of 2011. This reflected a 13% increase in tons shipped to the
aerospace market, offset by decreases of 16%, 30% and 7% in shipments to the
petrochemical, power generation and service center plate markets,
respectively.

Chairman, President and CEO Dennis Oates commented:"Our third quarter results
were in line with continued inventory adjustment by service centers, our
largest customer category.While we are encouraged by the continued expansion
of our aerospace-related business fueled by the North Jackson investment,
other industries have been moving cautiously through the second half of the
year because of global economic conditions and uncertainty.This is evidenced
in our sales as well as in our lower order entry and backlog.Declining nickel
prices and shorter lead times also had a depressing effect on customer
purchasing patterns.

"The reduction in our shipment volume in the third quarter continued to
restrain our consolidated operating margin.So did our ongoing investment in
the ramp-up of our North Jackson facility, where we are only in the early
stages of realizing its full benefits.Most recently, the two newly installed
vacuum-arc remelt furnaces were commissioned.As a result, we have increased
our internal VAR capacity to 11 furnaces and by 60% this year in support of
our aerospace customers.

"Both the current usage or 'chew-up' rate of specialty metals and the growth
prospects for our end markets remain strong.Therefore, channel demand is
expected to return to more normal levels as we move through 2013.During the
course of 2013, we also expect to complete the ramp-up of North Jackson as
well as achieve many of the product certifications and approvals from
customers that we have been working towards.The certifications and approvals
will position us to capture more market opportunity in new higher-margin
product categories while improving our operating profitability – in line with
our strategic plan."

Segment Review

For the third quarter of 2012, the Universal Stainless & Alloy Products
segment, which includes the North Jackson operation, had sales of $54.2
million and operating income of $2.0 million, yielding an operating margin of
3.7% of sales. In the third quarter of 2011, sales were $60.6 million and
operating income was $4.8 million, or 7.9% of sales, including start-up and
acquisition-related costs for North Jackson.

Segment sales decreased 10% from the third quarter of 2011 on 3% lower tons
shipped mainly due to decreased shipments to service centers as well as to
forgers and rerollers of products mainly destined for service centers.

Sales for the Dunkirk Specialty Steel segment were $24.8 million for the third
quarter of 2012 and operating income was $2.3 million, yielding an operating
margin of 9.4% of sales.This compares with sales in the third quarter of 2011
of $25.3 million and operating income of $2.5 million, or 9.9% of sales.

Dunkirk's sales decreased 2% from the third quarter of 2011 on a 4% decrease
in tons shipped.Tons shipped to service centers were up 2% from the third
quarter of 2011.

Webcast

The Company has scheduled a conference call for today, October 24, at 10:00
a.m. (Eastern) to discuss third quarter results.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 2012.

About Universal Stainless & Alloy Products, Inc.

Universal Stainless & Alloy Products, Inc., headquartered in Bridgeville, PA,
manufactures and markets semi-finished and finished specialty steels,
including stainless steel, tool steel and certain other alloyed steels. The
Company's products are used in a variety of industries, including aerospace,
power generation, petrochemical and heavy equipment manufacturing. Established
in 1994, the Company, with its experience, technical expertise, and dedicated
workforce, stands committed to providing the best quality, delivery, and
service possible. 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 concentrated nature of the Company's customer base to date and the
Company's dependence on its significant customers; the receipt, pricing and
timing of future customer orders; changes in product mix; the limited number
of raw material and energy suppliers and significant fluctuations that may
occur in raw material and energy prices; risks related to property, plant and
equipment, including the Company's reliance on the continuing operation of
critical manufacturing equipment; risks associated with labor matters; 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 and matters;
risks related to acquisitions that the Company may make; 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.

                              - TABLES FOLLOW -

UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share information)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                             
                       For the Quarter Ended     For the Nine-MonthsEnded
                       September 30,             September 30,
                       2012         2011         2012           2011
Net Sales                                                     
Stainless steel        $49,371    $54,746    $161,783     $149,797
Tool steel             4,768       5,407       15,638        18,376
High-strength low alloy 4,880       4,440       16,959        13,925
steel
High-temperature alloy  1,930       1,579       6,099         5,037
steel
Conversion services    967         935         3,831         2,945
Scrap sales and other   383         192         469           348
Total net sales        62,299      67,299      204,779       190,428
Cost of products sold  52,140      54,725      168,775       154,884
Selling and
administrative          4,685       5,343       13,531        12,870
expenses
Operating income       5,474       7,231       22,473        22,674
Interest expense       (602)       (609)       (1,924)       (852)
Other income           28          45          89            188
Income before income    4,900       6,667       20,638        22,010
taxes
Income tax provision   1,631       2,774       6,578         8,144
Net income             $3,269     $3,893     $14,060      $13,866
                                                             
Earnings per common     $0.48      $0.57      $2.05        $2.03
share – Basic
Earnings per common     $0.45      $0.55      $1.93        $1.97
share – Diluted *
                                                             
Weighted average shares                                       
of Common
Stock outstanding                                             
Basic                  6,877,915   6,831,048   6,863,564     6,821,944
Diluted                7,433,922   7,202,386   7,446,836     7,050,781
                                                             
MARKET SEGMENT INFORMATION
                                                             
                       For the Quarter Ended     For the Nine-MonthsEnded
                       September 30,             September 30,
                       2012         2011         2012           2011
Net Sales                                                     
Service centers        $37,570    $35,067    $121,030     $98,000
Forgers                8,056       12,997      30,924        36,792
Rerollers              10,429      12,506      31,851        35,983
Original equipment      4,148       4,518       12,693        12,844
manufacturers
Wire redrawers         746         1,084       3,981         3,516
Conversion services     967         935         3,831         2,945
Scrap sales and other   383         192         469           348
Total net sales        $62,299    $67,299    $204,779     $190,428
                                                             
Tons Shipped           11,614      12,813      38,925        38,345
                                                             
Consolidated results include the results of the North Jackson operation, which
was acquired on August 18, 2011.
* Diluted earnings per common share have been adjusted for interest expense on
convertible notes, subsequent to the August 18, 2011 acquisition of the North
Jackson operation.


BUSINESS SEGMENT RESULTS
                                                              
Universal Stainless& Alloy Products                            
Segment
                                                              
                            For the Quarter Ended   For the Nine-MonthsEnded
                            September 30,           September 30,
                            2012         2011       2012         2011
Net Sales                                                      
Stainless steel             $31,077    $34,803  $99,865    $94,037
Tool steel                  3,703       5,047     13,560      17,184
High-strength low alloy      1,106       662       5,093       1,816
steel
High-temperature alloy       637         623       2,125       2,050
steel
Conversion services          866         641       3,476       2,203
Scrap sales and other        267         230       365         359
                            37,656      42,006    124,484     117,649
Intersegment                16,556      18,554    51,803      58,512
                                                              
Total net sales             54,212      60,560    176,287     176,161
Material cost of sales      27,548      31,265    87,527      92,338
Operation cost of sales     21,651      20,511    67,847      58,811
Selling and administrative   2,996       4,004     8,648       8,872
expenses
                                                              
Operating income            $2,017     $4,780   $12,265    $16,140
                                                              
The Universal Stainless & Alloy Products segment includes the results of the
North Jackson operation from the August 18, 2011 acquisition date.
                                                              
Dunkirk Specialty Steel                                        
Segment
                                                              
                            For the Quarter Ended   For the Nine-MonthsEnded
                            September 30,           September 30,
                            2012         2011       2012         2011
Net Sales                                                      
Stainless steel             $18,294    $19,943  $61,918    $55,760
Tool steel                  1,065       360       2,078       1,192
High-strength low alloy      3,774       3,778     11,866      12,109
steel
High-temperature alloy       1,293       956       3,974       2,987
steel
Conversion services         101         294       355         742
Scrap sales and other        116         (38)      104         (11)
                            24,643      25,293    80,295      72,779
Intersegment                135         34        314         126
                                                              
Total net sales             24,778      25,327    80,609      72,905
Material cost of sales      14,269      15,847    47,130      44,864
Operation cost of sales     6,499       5,628     20,195      16,230
Selling and administrative   1,689       1,339     4,883       3,998
expenses
                                                              
Operating income            $2,321     $2,513   $8,401     $7,813


CONDENSED CONSOLIDATED BALANCE SHEETS
                                                        
                                           September30, December31,
                                           2012          2011
Assets                                                   
                                                        
Cash                                        $250        $274
Accounts receivable, net                    34,655       34,554
Inventory, net                             101,580      85,088
Deferred income taxes                       19,622       28,438
Refundable income taxes                     1,443        4,844
Other current assets                       2,368        2,198
                                                        
Total current assets                       159,918      155,396
Property, plant and equipment, net         205,005      183,148
Goodwill                                    20,268       20,479
Other long-term assets                     2,563        2,649
                                                        
Total assets                               $387,754    $361,672
                                                        
Liabilities and Stockholders' Equity                     
                                                        
Accounts payable                           $18,473     $29,912
Accrued employment costs                   6,063        7,547
Current portion of long-term debt          750          3,000
Other current liabilities                  1,367        966
                                                        
Total current liabilities                  26,653       41,425
Long-term debt                             112,691      91,650
Deferred income taxes                      51,711       48,291
Other long-term liabilities                172          --
                                                        
Total liabilities                          191,227      181,366
Stockholders' equity                       196,527      180,306
                                                        
Total liabilities and stockholders' equity $387,754    $361,672


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                                                                
                                                    For the Nine-MonthsEnded
                                                    September 30,
                                                    2012         2011
                                                    
Operating activities:                                            
Net income                                          $14,060    $13,866
Adjustments to reconcile net income to net cash                  
provided by (used in) operating activities:
Depreciation and amortization                       9,312       4,801
Loss on retirement of property, plant and equipment --          (20)
Deferred income taxes                                12,236      13,536
Share-based compensation expense, net               979         1,154
Changes in assets and liabilities:                              
Accounts receivable, net                            (101)       (10,262)
Inventory, net                                      (16,492)    (9,563)
Accounts payable                                    (14,661)    (6,657)
Accrued employment costs                            (1,484)     1,806
Income taxes                                        3,676       (10,244)
Other, net                                          571         (286)
                                                                
Net cash provided by (used in) operating activities 8,096       (1,869)
                                                                
Investing activities:                                            
Capital expenditures, net of amount included in      (27,517)    (4,855)
accounts payable
Business acquisition, net of convertible notes       --          (91,298)
assumed
Proceeds from sale of fixed assets                  --          20
                                                                
Net cash used in investing activities               (27,517)    (96,133)
                                                                
Financing activities:                                            
Borrowings under revolving credit facility           100,752     44,200
Payments on revolving credit facility                (61,961)    (8,600)
Payment on term loan facility                        (20,000)    --
Borrowings under term loan facility                  --          40,000
Debt repayments                                     --          (10,823)
Proceeds from the issuance of Common Stock          960         415
Payment of deferred financing costs                  (348)       (1,370)
Purchase of Treasury Stock                           (234)       --
Tax benefit from share-based payment arrangements   228         75
                                                                
Net cash provided by financing activities           19,397      63,897
                                                                
Net decrease in cash                                (24)        (34,105)
Cash at beginning of period                         274         34,400
                                                                
Cash at end of period                               $250       $295
                                                                
Supplemental Non-Cash Investing and Financing                    
Activities:
Capital expenditures included in accounts payable    $3,222     $2,998
Convertible notes issued as acquisition              $--        $20,000
consideration
                                                                
Consolidated results include the results of the North Jackson operation, which
was acquired on August 18, 2011.

CONTACT: Dennis Oates
         Chairman,
         President and CEO
         (412) 257-7609
        
         Douglas McSorley
         VP Finance, CFO
         and Treasurer
         (412) 257-7606
        
         June Filingeri
         President
         Comm-Partners LLC
         (203) 972-0186

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