Dunkirk fire impacts Universal’s third quarter
BRIDGEVILLE, Pa. – Fires in Dunkirk and the home location had an impact on third-quarter results for Universal Stainless & Alloy Products, Inc.
Net sales for the third quarter of 2017 were $50.9 million, up 28.3 percent from the third quarter of 2016. The company’s gross margin for the third quarter of 2017 was $5.5 million, or 10.7 percent of sales, compared with $4.7 million, or 11.9 percent of sales, in the third quarter of 2016.
“The recovery that we experienced in the first half of 2017 continued in the third quarter resulting in strong revenues and year-over-year growth in all but one of our end markets,” said chairman, president and CEO Dennis Oates. “In addition, premium alloy sales have reached a new record of 14.5 percent of total sales. While we are encouraged by the strength in our top-line, we have more work to do on gross margin by controlling our business in a more cost efficient manner during a period of tight labor markets and higher maintenance activity.
“As we enter the fourth quarter, we are optimistic that our increased backlog will drive accelerated growth versus the prior year, and we expect improved gross margin with more efficient production, including more normal levels of maintenance spending and less outsourcing.”
Gross margin in the third quarter of 2017 was negatively impacted by unusual expenses for fires at its Dunkirk and Bridgeville facilities amounting to $300,000. In addition, the 2017 third quarter gross margin was adversely impacted by temporarily higher maintenance and outsourcing spend, as the company ramps up its business in response to continued strong levels of backlog at a time of a tightening labor market.
Universal incurred a net loss of $300,000, or $0.04 per diluted share, in the third quarter of 2017, which includes unusual charges related to the facility fires totaling $0.03 per diluted share, and $0.03 per diluted share of discrete tax expense items mainly related to the new stock compensation accounting guidance in 2017. Excluding these items, net income for the third quarter of 2017 was $0.02 per diluted share.