Aerospace Demand Boosts Q4 Results for Universal Stainless & Alloy (USAP)

January 25, 2023

Universal Stainless & Alloy Products (USAP) recently announced its fourth quarter results for 2022, which showed strong growth in sales and premium alloy sales, despite facing challenges in the form of negative misalignment between surcharges and raw material costs and unplanned equipment outages, which negatively impacted the company’s gross margin. The company’s net sales for Q4 2022 were $56.2 million, an increase of 21.7% from Q3 2022 and 30% higher than Q4 2021. Premium alloy sales for Q4 2022 were $13.5 million, a 69% increase from Q3 2022. The company ended Q4 2022 with a new record backlog of $287.9 million, up 17% from the previous quarter. The company is optimistic about its growth prospects for the first quarter of 2023 and the full year despite the challenges faced in the last quarter.

Q4 2022 Earnings Highlights

  • Premium alloy sales for Universal Stainless & Alloy Products, Inc. were a highlight in the fourth quarter of 2022, with sales totaling $13.5 million, representing an increase of 69.3% from the third quarter of 2022 and 92% from the fourth quarter of 2021.

  • Premium alloy sales for the full year 2022 also saw significant growth, increasing by 48.3% to $39.2 million, or 19.4% of total sales, from $26.4 million, or 16.9% of total sales, in the previous year.

  • The company attributed this strong growth in premium alloy sales to increased demand from the aerospace market, with fourth quarter aerospace sales totaling $40.1 million, or 71.3% of total sales.

  • The company’s CEO, Dennis Oates, stated that the strong growth in premium alloy and aerospace sales delivered gross margin expansion, however, this was offset by negative misalignment between surcharges and raw material costs and unplanned equipment outages.

  • Despite these challenges, the company is optimistic about its growth prospects for the first quarter of 2023 and the full year, with a new record backlog of $287.9 million at the end of the fourth quarter of 2022.

  • The gross margin for Universal Stainless & Alloy Products, Inc. in the fourth quarter of 2022 was negatively impacted by a misalignment of surcharges and raw material costs, as well as unplanned equipment outages, resulting in a gross margin of $2.4 million, or 4.3% of sales.

  • This is a decline from the third quarter of 2022, where gross margin was $3.0 million, or 6.4% of sales, and the fourth quarter of 2021, where it was $3.7 million, or 8.7% of sales.

  • The company reported a net loss for the fourth quarter of 2022 of $3.7 million, or $0.41 per diluted share, compared to a net loss of $1.3 million, or $0.14 per diluted share, in the third quarter of 2022 and a net loss of $1.6 million, or $0.18 per diluted share, in the fourth quarter of 2021.

  • The company’s EBITDA for the fourth quarter of 2022 was $1.7 million and adjusted EBITDA was $2.1 million.

  • The company ended the fourth quarter of 2022 with a new record backlog of $287.9 million, up 17% from the previous quarter and 114% from the fourth quarter of 2021.

conclusion

In conclusion, Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) reported strong sales and premium alloy sales growth in the fourth quarter of 2022, driven by increased demand in the aerospace market. However, the company also faced challenges in the form of negative misalignment between surcharges and raw material costs and unplanned equipment outages, which negatively impacted gross margin. Despite these challenges, the company ended the quarter with a new record backlog and is optimistic about its growth prospects for the first quarter of 2023 and the full year. The company will continue to focus on mitigating the challenges it faced in the fourth quarter and capitalize on the strong demand in its key markets.

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