Universal Stainless & Alloy Products, Inc.

Second-quarter sales were $82.8 million, up 14% from the first quarter and up 34% from the second quarter of 2023. Gross margin was 25.4% of sales versus 18.9% last quarter and 14.3% in the first quarter of last year. Net income was $8.9 million, or $0.90 per diluted share, and adjusted EBITDA was $18.5 million, or 22% of sales; management said adjusted EBITDA was up 47% sequentially and 135% year over year. Aerospace sales were a record $68.6 million, and backlog ended the quarter at $297 million versus $325 million at the end of Q1. For the balance of the year, management expects SG&A to approximate $8.5 million per quarter, full-year capital expenditures to total approximately $18 million, and debt paydown to continue each quarter; no formal revenue or EPS guidance was given.

Chris Zimmer framed the quarter as evidence of a structural shift in the business, saying the company’s aerospace and premium-alloy strategy, plus margin-improvement projects, has created a higher and sustainable earnings level. He emphasized that customer approvals, capacity investments, and a stronger aerospace market position are expanding the company’s opportunity set. His tone was upbeat but measured, with confidence in 2025 and beyond while acknowledging that non-aerospace markets are still muted.

Steve DiTommaso highlighted that record profitability came from lower costs, better yields, richer aerospace mix, and higher base prices. He said SG&A was $8.2 million in Q2 and expects about $8.5 million per quarter in the second half; interest expense fell to $1.9 million due to lower debt and a 25 bps spread reduction, with another 25 bps reduction expected to help Q4. He also noted $5.5 million of capex in Q2, about $11 million year-to-date, full-year capex of approximately $18 million, and about $3 million of debt paydown in the quarter.

Analysts focused on capex priorities, bottlenecks, working capital, raw-material misalignment, backlog duration, and whether M&A interest is increasing. Management said 2024 capex will be about $18 million, with more than half on sustainability, about $4 million on modernization, and $5 million to $6 million on growth/ROI projects such as furnace capacity and finishing throughput. On operations, they said VIM primary melt and small-diameter finishing are the main bottlenecks, inventories should come back down by the end of Q3, and raw-material misalignment was only about $500,000 to $600,000 in Q2 and should not be an issue in Q3. They also said premium-alloy lead times have come down from the mid-70 weeks to about 45 to 50 weeks, and while consolidation is possible, their focus is execution.