NEW YORK Universal Stainless & Alloy Products Inc. saw sales drop sharply in the first quarter as customers continued to manage inventory levels and purchase material on a "hand-to-mouth" basis.
The company eked out a profit of $40,000 for the three months ended March 31 vs. net income of nearly $6.29 million in the same period last year on sales that fell 34.1 percent to $49.14 million from $74.61 million in the same comparison.
The figures were largely in line with the forecast provided by the Bridgeville, Pa.-based company last week (amm.com, April 25).
While first-quarter sales, shipment volumes and order entry improved from the fourth quarter of 2012, they were well below levels seen in the first three months of last year, Universal chairman, president and chief executive officer Dennis Oates said in a conference call with analysts.
"The market is giving us better opportunities than the second half of last year, but its not where we were a year ago," he said. "Customers are very hand-to-mouththeyre controlling inventory very carefully. Lead times are at record lows, so theres not much incentive to book ahead. It is getting more price-competitive out there; all the mills are hungry, every order is a battle."
April orders were $15 million to $16 million, similar to the monthly average in the first quarter of 2013, with "continued, gradual improvement in supply channel demand" expected over the remainder of the year, Oates said.
Universal Stainless had stayed on track with its plan to move more into higher-margin premium alloys produced with vacuum-induction melting, with the company aiming for a 25- to 30-percent market share by 2015, he said.
"These efforts have increased costs to achieve industry and customer approvals, including maintaining our staffing levels at North Jackson despite low shipment volume and production activity levels," Oates said.