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Universal Stainless & Alloy Products, Inc. (USAP) today reported financial results for the second quarter of 2016 showing broad improvements over the first quarter of 2016.
Net sales for the second quarter of 2016 were $41.0 million, up 3.6% sequentially from the first quarter of 2016, with the increase driven primarily by sales to the Aerospace end market. In the second quarter of 2015, net sales were $49.6 million. For the first six months of 2016, net sales were $80.6 million, compared with $105.6 million in the same period of 2015.
The Company’s gross margin for the second quarter of 2016 improved to $4.3 million, or 10.6% of sales, compared with $1.3 million, or 3.4% of sales, in the first quarter of 2016. The improvement reflects the benefit of productivity enhancements, as well as better alignment of customer surcharges and input commodity costs. In the second quarter of 2015, gross margin was $5.2 million, or 10.5% of sales.
For the second quarter of 2016, the Company generated cash flow from operating activities of $5.2 million, primarily through improved operating results and lower working capital. Capital expenditures for the second quarter were $0.9 million, and total debt was reduced by $5.1 million.
The Company''s net loss for the second quarter of 2016 was $0.8 million, or $0.11 per diluted share, improved from a net loss of $2.4 million, or $0.34 per diluted share, in the first quarter of 2016. In the second quarter of 2015, the Company had a net loss of $0.4 million, or $0.05 per diluted share.
Backlog (before surcharges) at June 30, 2016 was $38.5 million, down 3.3% from $39.8 million at the end of the 2016 first quarter. Shorter customer lead times have continued to keep the Company’s backlog lower than normal.
Sales of premium alloys in the second quarter of 2016 totaled $3.8 million, or 9.2% of sales, compared with $4.2 million, or 8.6% of sales, in the second quarter of 2015. Premium alloy sales in the first six months of 2016 were $7.8 million, or 9.7% of total sales, compared with $9.3 million, or 8.8% of total sales, in the same period of 2015.
Chairman, President and CEO Dennis Oates commented: “The return to double-digit gross profit margin was a key driver to our sequential profitability improvement and the generation of $5.2 million of cash flow from operations in second quarter. Improved operational productivity and better alignment of input commodity costs and surcharges have positioned us to have healthy incremental margins when demand further improves.
“As expected, 2016 continues to be a transition year and is evolving with modest improvements in market demand. However, demand is currently tempered by lingering economic uncertainty and short industry lead-times.
“As we start the second half of 2016, we remain fully focused on capturing opportunities in this recovering marketplace while continuing to advance the transformation of Universal Stainless through our move to higher value, higher margin premium alloys.”
-The 18th China(Guangzhou)Int''l Stainless Steel Industry Exhibition
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