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Universal Stainless & Alloy Products Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2012 05:49PM
Universal Stainless & Alloy Products Inc (USAP) filed Quarterly Report for the period ended 2012-03-31.
Highlight of Business Operations:Our net sales increased from $59.8 million for the three months ended March 31, 2011 to a record $74.6 million for the current quarter. This $14.8 million, or 25%, increase is largely due to increased volume recognized in the current quarter and price increases. Tons shipped increased by 8% in the current quarter when compared to the prior year first quarter. Our net sales for the current quarter were also favorably affected by product mix. Our stainless steel and high-strength low alloy steel shipments as a percentage of total shipments increased from 75% and 5%, respectively, during the first quarter of 2011 to 77% and 6%, respectively, in the current quarter, while our tool steel shipments as a percentage of total shipments decreased from 11% for the three months ended March 31, 2011 to 8% in the current quarter. Our stainless steel and high-strength low alloy steel products have a higher content of nickel and typically have a higher selling price per pound than our tool steel products.
Net sales for the three months ended March 31, 2012 increased $14.8 million, or 25%, as compared to the similar period in 2011. The increase reflects an 8% increase in consolidated shipments, pricing increases and a change in product mix. Our shipments of aerospace products, petrochemical products, conversion services, and general industrial products increased by 26%, 11%, 12% and 13%, respectively, in the quarter ended March 31, 2012 over the first quarter of 2011. These increases were partially offset by decreases in first quarter 2012 shipments of service center plate and power generation products of 26% and 2%, respectively, when compared to the same period in 2011.
Net sales for the three months ended March 31, 2012 increased $5.1 million, or 9.3%, as compared to the similar period in 2011. The increase reflects a 1.3% increase in shipments, pricing increases and a change in product mix. Increases in shipments of aerospace products and conversion services of 17% and 30%, respectively, were partially offset by decreases in service center plate, general industrial, power generation, and petrochemical products of 24%, 10%, 6% and 6%, respectively.
We have financed our operating activities through cash on hand at the beginning of the period, cash provided by operations and cash provided through our credit facilities. Working capital increased $12.4 million to $126.4 million at March 31, 2012 from $114.0 million at December 31, 2011. Our accounts receivable balance increased $10.7 million as a result of the 20.0% increase in sales for the three months ended March 31, 2012 in comparison to the three months ended December 31, 2011. The $8.6 million increase in inventory is primarily due to a 9% increase in our work-in-process inventory as a result of a build in inventory to satisfy our current backlog. Our backlog primarily remained level at $101.3 million at March 31, 2012 as compared to $102.6 million at December 31, 2011, despite record sales during the quarter. Excluding the current portion of long-term debt, our current liabilities increased by $3.5 million, or 9%, primarily related to the increase in production levels.
Cash received from sales of $63.9 million and $53.3 million represent the primary source of cash from operations for the three months ended March 31, 2012 and 2011, respectively. The primary uses of cash for the quarter ended March 31, 2012 were raw material purchases of $31.3 million, employment costs of $16.3 million, capital expenditures of $5.0 million and utilities of $3.6 million. For the same period in 2011, primary uses of cash were raw material purchases of $28.8 million, employment costs of $13.3 million, utilities of $4.1 million and capital expenditures of $1.2 million. Our other uses of cash, the largest of which is cash for production supplies, plant maintenance, outside conversion services, insurance, taxes and freight, increase or decrease in relation to production volume. Prior to the North Jackson acquisition, we paid federal estimated taxes of $4.5 million for 2011. As a result of the North Jackson acquisition and the significant amount of machinery and equipment that was placed in service in 2011, we will claim the 100% bonus depreciation deduction on such equipment and, as a result, will generate a NOL for the 2011 federal income tax return. We recorded refundable income taxes in the amount of $4.8 million as of December 31, 2011, which mostly represented the amount paid in federal taxes during 2011. In February 2012, we received a federal tax refund of $4.5 million. At December 31, 2011, we had a deferred tax asset of $15.1 million related to NOL carry forwards. We are currently evaluating whether to carry back a portion of this NOL to 2010 to obtain a refund of the $5.4 million paid for federal income taxes for the 2010 tax year.