Universal Stainless & Alloy Products (USAP) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 net sales of $82.8 million, up 20% year-over-year and 7% sequentially, driven by strong aerospace demand and premium alloy sales.

• Gross margin reached a record 25.4% of sales ($21.0 million), reflecting cost improvements and favorable product mix.

• Net income for Q2 2024 was $8.9 million ($0.90 per diluted share), more than doubling from Q1 2024 and up from $0.9 million in Q2 2023.

• Aerospace market sales reached $68.6 million, 82.9% of total sales, up 34% year-over-year; premium alloys accounted for 25% of sales and rose 61% year-over-year.

• Backlog at June 30, 2024 was $296.5 million, supported by sustained high demand, with ongoing investments in capacity and efficiency, including new furnaces and modernization projects.

Financial highlights

• Q2 2024 net sales: $82.8 million (+19.9% year-over-year, +7% sequentially); YTD net sales: $160.4 million (+19% YoY).

• Q2 2024 gross margin: $21.0 million (25.4% of sales), up from $9.8 million (14.3%) in Q2 2023.

• Operating income for Q2 2024: $12.8 million (15.5% margin), a company record, up from $3.1 million (4.5%) in Q2 2023.

• Adjusted EBITDA for Q2 2024: $18.5 million (22.3% margin), up 46% sequentially and 135% year-over-year.

• Net cash from operating activities in Q2: $7.3 million; debt reduced by $3 million in Q2 and $15 million over the past four quarters.

Outlook and guidance

• Management expects continued profitable growth and further gross margin expansion in the second half of 2024, with optimism for 2025.

• SG&A expected to be ~$8.5 million per quarter for the rest of 2024.

• Full-year 2024 capital expenditures projected at $18 million.

• Premium alloy sales expected to continue growing, supported by robust aerospace and defense demand.

• Management believes cash flows and available credit are sufficient for foreseeable needs.