Universal Stainless reports on adverse 2022

Bridgeville, Pennsylvania-based Universal Stainless & Alloy Products Inc. has reported a net loss of more than $3.7 million in the final quarter of 2022, resulting in a full-year loss of more than $8 million.

The company, which operates a scrap-fed melt shop in Bridgeville and remelt facility in North Jackson, Ohio, says its net sales for the fourth quarter of last year were $56.2 million, which it calls an increase of 21.7 percent from the prior quarter.

Universal Stainless says its full year 2022 aerospace market sales rose by slightly more than 50 percent compared with 2021, boosting demand for its premium alloys product line.

The company points to two primary factors having a negative impact on its profit margin in the fourth quarter of 2022: “negative misalignment between surcharges and raw material costs of approximately $2.4 million and a negative impact from unplanned equipment outages of $700,000.” The equipment outage surcharge pertained in part to “lingering impacts of the previous liquid metal spill at [the] Bridgeville location.”

Despite the net losses, Universal says its earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter of 2022 checked in at $1.7 million.

“We achieved top-line growth in the fourth quarter in our strategic categories of premium alloys and aerospace as sales rebounded from the third quarter,” Universal Stainless President and CEO Dennis Oates says. “Robust aerospace demand also drove our backlog to a new record of $288 million, an increase of 17 percent from the record level achieved in the third quarter and more than double the fourth quarter of 2021.”

Oates cites commodity pricing volatility, which was especially present in the nickel-stainless market in 2022, as continuing to produce negative effects for the stainless alloys producer. “Surcharges were at the lowest level of the year in the fourth quarter due to a drop in commodity prices at a time that we were shipping products with higher materials cost produced earlier in the year, resulting in a $2.4 million negative misalignment of surcharges to material costs," he says.

Oates continues, “Going forward, we expect reduced surcharge misalignment in the current quarter based on recent increases in some commodity prices, including nickel. Equipment outages to date have all been resolved. Supply chain and labor issues continue to improve and we are moving forward quickly to train new employees. Based on those factors combined with our record backlog, we are optimistic about our sales and margin growth prospects for 2023 and beyond, especially in aerospace.”