Universal Stainless rebounds in 2023

Universal Stainless & Alloy Products Inc., Bridgeville, Pennsylvania, is reporting record net sales for both the fourth quarter and full year of 2023.

The metals producer also says its gross margin continued to strengthen in the fourth quarter of 2023 to $13.1 million, or 16.4 percent of sales, rising from 15.2 percent of sales in the third quarter of 2023 and 4.3 percent of sales in the fourth quarter of 2022.

Universal's fourth-quarter net income increased 35 percent to $2.6 million, or 27 cents per diluted share, compared with $1.9 million, or 20 cents per diluted share, in the prior quarter. The firm’s full-year 2023 net income totaled $4.9 million, or 53 cents per diluted share, which compares with a loss of $8.1 million, or 91 cents per diluted share, in 2022.

In the first half of 2022, Universal reported a noninjury hot liquid metal spill at its Bridgeville electric arc furnace (EAF) melt shop.

The incident put the EAF melt shop out of commission for about two months. Along with nickel pricing volatility that affected the stainless market throughout 2022, the accident contributed to Universal reporting a net loss of more than $8 million that year.

As of this spring, Universal has better results to report, including a gross margin in late 2023 that was the highest since the second quarter of 2018 and that benefited from a richer product mix and higher selling prices, despite $1.6 million of raw materials headwinds.

Universal's sales of its premium alloys increased 28 percent to a record $21.1 million, or 26.5 percent of sales, in last year’s fourth quarter. That compares with $16.5 million in premium alloys sales, or 23.1 percent of its mix, in the prior quarter.

“The fourth quarter capped a year of increasing momentum for Universal, with sales up 42 percent for the year to a record $286 million and gross margin improving steadily each quarter in 2024 to reach 16.4 percent of sales in the fourth quarter,” Universal President and CEO Christopher M. Zimmer says.

“Our strategic focus on higher margin premium and specialty alloys is gaining full traction, enabling us to meet robust and sustainable demand in the aerospace market—evidenced by the 74 percent increase in our premium alloy sales in 2023 and 57 percent higher aerospace sales for the year.

“To increase our capabilities and capacity in premium and specialty alloys, we have added two vacuum-arc remelt (VAR) furnaces at our North Jackson, Ohio, facility, which have been qualified and released into production. Their addition supports our premium alloy growth strategy, expanding our portfolio with added applications in the aerospace market, including defense.

“We have entered 2024 with a strong book of business, with premium alloys representing more than a third of our backlog, and with robust demand continuing unabated in aerospace. We remain firmly on track with our strategic plan and growth trajectory for 2024 and beyond.”

The company says its backlog (before surcharges) at the end of 2023 is strong at $318.2 million. That compares with a backlog of  $287.9 million at the end of 2022. The average selling price per pound in the backlog increased 32 percent from the end of 2022.

The company says its 2023 capital expenditures of $13 million mainly reflect the addition of two new VAR furnaces at its Ohio facility.