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Universal Stainless reports preliminary Q3 results-The 17th China(Guangzhou)Int'l Stainless Steel Industry Exhibition
10/20/2015 Stainless Steel Industry expo |
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Universal Stainless & Alloy Products Inc has announced that, based on preliminary results, it expects to report net sales for the third quarter of 2015 of approximately $43.4 million. Further, the Company expects to report a loss of approximately $2.40 to $2.45 per diluted share, which includes after-tax non-cash intangible write-off charges of $13.2 million, or $1.87 per diluted share, primarily for goodwill impairment. It also includes after-tax charges of $2.3 million, or $0.32 per diluted share, associated with temporarily idling plant capacity, non-cash inventory write-downs, reducing hourly and salary workforce, and damages caused by the unauthorized substitution by a vendor of a critical supply part for the melting process. Before including the above charges, which collectively total $2.19 per diluted share, the loss for the third quarter of 2015 is expected to be $0.21 to $0.26 per diluted share.
The stock price decline since June, 2015 has caused the Company''s market capitalization to fall sufficiently below book value, which necessitated an interim goodwill impairment review under generally accepted accounting principles. The impairment charge fully eliminates goodwill from the balance sheet.
The Company noted that while the non-cash goodwill impairment charge will negatively impact reported earnings for the third quarter of 2015, it does not affect the Company''s cash balances, liquidity position, cash flow from operations, or tangible book value, which totaled approximately $187 million, or $26 per diluted share at September 30, 2015. In addition, during the quarter ended September 30, 2015, the Company significantly reduced working capital enabling the repayment of approximately $10 million of outstanding debt.
The Company''s stock price and recent operating performance reflect very challenging conditions in the specialty steel industry in 2015. The sharp and prolonged decline in the oil and gas market has led many customers to destock inventory. Customers have also delayed purchases due to the continued decline in nickel and other commodity prices in order to capture lower future prices. Additionally, downward trends in commodity prices have temporarily reduced margins because of the misalignment of surcharges with material costs of products shipped.
Chairman, President and CEO Dennis Oates commented: “We took strong action in the third quarter to offset the significant challenges facing our Company and industry, with a special focus on generating positive cash flow through adjusting mill output, rigorous working capital management and debt reduction. In fact, we were successful in reducing inventories by approximately $10 million in the quarter. It is also important to note that the strength of our tangible assets remains intact despite the impairment of goodwill in the quarter.
“Even though current industry conditions remain difficult, we have started to see signs of a pick-up in demand for our products, including our premium alloys, with order entry in September up 64% from the prior two month average. While the recovery may be uneven going through the balance of the year, customers continue to point to 2016 as a year of improvement.”
不銹鋼展-2016第十七屆廣州國際不銹鋼工業展-效果最好的不銹鋼展會-stainless-steel-The 17th China(Guangzhou)Int''l Stainless
Steel Industry Exhibition
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