Core Viewpoint - Universal Stainless & Alloy Products, Inc. has completed its acquisition by Aperam S.A., with stockholders receiving $45.00 per share in an all-cash transaction [1][3]. Group 1: Acquisition Details - The acquisition was announced on October 17, 2024, and approved by Universal stockholders on January 15, 2025 [3]. - Following the acquisition, Universal has become a wholly-owned subsidiary of Aperam, and its shares have ceased trading on NASDAQ [3]. Group 2: Strategic Implications - The combination of Aperam and Universal aims to enhance innovation and deliver high-quality, sustainable solutions, particularly in aerospace and industrial applications [2][4]. - Aperam's CEO highlighted that this acquisition is a strategic step to decommoditize their product portfolio and create innovative, high-performance solutions [4]. Group 3: Company Profiles - Universal Stainless & Alloy Products, Inc. manufactures specialty steels, including stainless steel and nickel alloys, serving industries such as aerospace and energy [6]. - Aperam is a global leader in stainless, electrical, and specialty steel, with a production capacity of 2.5 million tonnes and operations in Brazil, Belgium, and France [7][8].

Company Overview - Universal Stainless & Alloy Products, Inc. manufactures and markets semi-finished and finished specialty steels, including stainless steel, nickel alloys, and tool steel, serving industries such as aerospace, energy, and heavy equipment manufacturing [4] - Aperam is a global player in stainless, electrical, specialty steel, and recycling, organized into four primary operating segments: Stainless & Electrical Steel, Services & Solutions, Alloys & Specialties, and Recycling & Renewables [5] Acquisition Details - Universal's stockholders voted approximately 99% in favor of the merger with Aperam, representing about 68% of the total outstanding shares as of November 22, 2024 [2] - Under the merger agreement, Universal stockholders will receive $45.00 per share in cash for each share of Universal common stock they own prior to the merger [1] - The transaction is expected to close in Q1 2025, assuming all remaining closing conditions are satisfied [2]

Financial Performance - Sales in Q3 2024 reached $87.3 million, the highest in company history, a 22% increase from $71.3 million in Q3 2023[75] - Gross margin for Q3 2024 was $22.0 million, or 25.2% of net sales, compared to 15.2% in Q3 2023, driven by cost improvements and higher base prices[77] - Operating income increased to $13.2 million in Q3 2024, up from $4.4 million in Q3 2023, representing a 195.4% increase[77] - Net income for Q3 2024 was $11.2 million, or $1.12 per diluted share, compared to $1.9 million, or $0.20 per diluted share in Q3 2023[90] - Net sales for the nine months ended September 30, 2024, increased by $41.5 million, or 20.1%, compared to the same period in the prior year, reaching $247.6 million[96] - Gross margin for the nine months ended September 30, 2024, was 23.3%, up from 13.8% in the prior year, driven by higher base selling prices and productivity gains[97] - Operating income increased to $33.1 million for the nine months ended September 30, 2024, a 270.1% increase from $9.0 million in the prior year[1] - Net income for the nine months ended September 30, 2024, was $24.1 million, or $2.45 per diluted share, compared to $2.3 million, or $0.25 per diluted share, for the same period in 2023[104] Market Segmentation - Aerospace market accounted for $71.3 million, or 82% of total sales, reflecting strong demand for premium alloys[75] - Premium alloy product sales reached a record $23.7 million in Q3 2024, a 43.7% increase from $16.5 million in Q3 2023[76] - The aerospace market segment accounted for 80.8% of total net sales, with sales of $200.2 million, an increase of 29.8% compared to the prior year[95] Expenses and Financial Management - Selling, general and administrative expenses increased by $2.5 million in Q3 2024, primarily due to higher insurance costs and nonrecurring transaction costs[85] - Selling, general and administrative expenses increased by $5.1 million, totaling $24.5 million, representing 9.9% of net sales for the nine months ended September 30, 2024[98] - Interest expense decreased to approximately $1.8 million in Q3 2024 from $2.1 million in Q3 2023, due to lower debt levels[86] - Interest expense decreased to approximately $5.7 million in the first nine months of 2024, down from $6.2 million in the same period in 2023[99] Cash Flow and Financial Position - Cash generated from operating activities was $29.4 million for the nine months ended September 30, 2024, compared to $17.8 million in the prior year[107] - The company maintained approximately $50.3 million of remaining availability under its revolving credit facility as of September 30, 2024[105] Merger and Acquisition Activity - The company entered into a definitive Merger Agreement with Aperam S.A., expected to close in Q1 2025, pending regulatory approval[74] - The Merger Agreement includes a $14.8 million termination fee payable under certain circumstances, which may discourage potential acquirers[145] - The Company is currently undergoing a Merger with a wholly owned indirect subsidiary of Aperam, which may disrupt business operations and relationships with customers and suppliers[134] - Significant management resources are being allocated towards the completion of the Merger, potentially affecting the Company's business and results of operations[134] - The Merger Agreement imposes restrictions on the Company's ability to acquire other businesses or make significant changes to its operations prior to the Merger's completion[135] - The completion of the Merger is contingent upon obtaining various regulatory approvals and the affirmative vote of a majority of the Company's stockholders[139][141] - If the Merger is not completed, the Company may incur substantial expenses without realizing the anticipated benefits, adversely affecting its financial condition[142] - The Merger Agreement includes "no shop" covenants that may deter other potential acquirers and includes a termination fee of $14.8 million under certain circumstances[145] - Following the Merger, holders of the Company's common stock will have no ownership or voting interest in the combined company[146] - Stockholder litigation could delay or prevent the completion of the Merger, negatively impacting the Company's operations[148][149] Internal Controls and Compliance - The Company has taken steps to remediate material weaknesses in internal control over financial reporting, including enhancing risk assessment and expanding the internal audit team[126] - There were no changes in the Company's internal control over financial reporting that materially affected the controls during the fiscal quarter ended September 30, 2024[128] - The Company is subject to restrictions on business conduct prior to the consummation of the Merger, which may affect its ability to respond to competitive pressures[135] Debt and Financing - The Company maintained a fixed charge coverage ratio (FCCR) greater than 1.1 for two consecutive quarters, achieving this for the period ending December 31, 2023[121] - The Company is required to maintain undrawn availability under the Credit Agreement of at least $11.0 million until the FCCR requirement is met[121] - Interest rates for the majority of the debt under the Facilities were approximately 7.0% for the Revolving Credit Facility and 7.5% for the Term Loan for the nine months ended September 30, 2024[123] - The Company pays a commitment fee of 0.25% based on the daily unused portion of the Revolving Credit Facility[122] - As of September 30, 2024, the total net deferred financing costs related to the Credit Agreement were approximately $0.4 million[118] - The Company amortized approximately $0.2 million of deferred financing costs for the nine months ended September 30, 2024[118]

Financial Performance - Q3 2024 net sales reached a record $87.3 million, up 5% from Q2 2024 and 22% from Q3 2023, with year-to-date sales of $247.6 million, a 20% increase from the same period in 2023[1] - Q3 2024 net income increased to a record $11.1 million, or $1.11 per diluted share, compared to $8.9 million, or $0.90 per diluted share in Q2 2024, and $1.9 million, or $0.20 per diluted share in Q3 2023[5] - Year-to-date net income reached $24.1 million, or $2.45 per diluted share[5] Sales and Revenue Breakdown - Year-to-date aerospace sales reached $200.2 million, up 30% from the same period in 2023, representing 80.8% of total sales[3] - Premium alloy sales in Q3 2024 were a record $23.7 million, or 27.1% of sales, up 14% from Q2 2024 and 44% from Q3 2023[2] Profitability Metrics - Gross margin for Q3 2024 was strong at 25.2% of sales, compared to 25.4% in Q2 2024 and 15.2% in Q3 2023[4] - Adjusted EBITDA for Q3 2024 was $19.3 million, or 22.1% of sales, up from $18.5 million, or 22.3% of sales in Q2 2024, and double the $9.3 million, or 13.1% of sales in Q3 2023[7] - Operating income for Q3 2024 was $13.0 million, nearly triple the operating income from Q3 2023[4] Cash Flow and Expenses - Net cash generated by operating activities in Q3 2024 totaled $11.9 million, which was used to fund capital expenditures and reduce net debt by $9.0 million sequentially[8] - The third quarter included approximately $0.6 million in costs related to the pending transaction with Aperam, impacting net income by approximately $1.4 million, or $0.14 per diluted share[6]

Universal Stainless & Alloy Products, Inc. (NASDAQ:USAP) M&A Conference Call October 17, 2024 9:00 AM ET Company Participants June Filingeri - President, Comm-Partners LLC Christopher Zimmer - President and Chief Executive Officer Conference Call Participants Philip Gibbs - KeyBanc Capital Markets Inc. Operator Good day and thank you for standing by. Welcome to the Universal Stainless Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation there will be a b ...

Key Points Company and Industry 1. **Company Acquisition**: Universal Stainless & Alloy Products, Inc. (NASDAQ:USAP) has signed a definitive agreement to be acquired by Aperam, a global leader in stainless, specialty steel solutions, and recycling. [7] 2. **Industry**: The company operates in the stainless steel and specialty steel industry. [7] Core Views and Arguments 1. **Premium Offer**: Aperam will acquire all outstanding shares of Universal Stainless for $45 per share in cash, representing a premium of about 19% to the three-month volume weighted average share price and a 10.6x trailing 12-month adjusted EBITDA as of June 30, 2024. [8] 2. **Strategic Fit**: The transaction is considered a classic complementary fit with no overlap in products, customers, or markets. [17] 3. **Benefits for Stakeholders**: The acquisition is expected to deliver liquidity and a premium return to shareholders, benefit employees by providing access to larger markets and career opportunities, enhance customer value through operational excellence, and contribute to community growth through job creation. [9-10] Other Important Content 1. **Transaction Timeline**: The transaction is expected to close in the first quarter of 2025. [8] 2. **Strategic Process**: The acquisition follows a six-month effort to identify strategic options to accelerate growth. [9] 3. **Investment Bank**: TD Cowen served as the company's investment bank in the process. [9] 4. **Regulatory Approval**: The transaction will go through standard regulatory processes, with the proxy vote by shareholders as the final hurdle. [19]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission File Number 001-39467 UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC. (Exact name of Registrant as specified in its charter) DELAWARE 25-1724540 ...

Aerospace is the Company's largest market for premium alloy products, and strong demand continues. Aerospace sales reached a record $68.6 million, or 82.9% of sales, in the second quarter of 2024, an increase of 14% from the first quarter of 2024, and up 34% from the second quarter of 2023. Year-to-date aerospace sales rose 29% compared to the same period in 2023 to $128.8 million, or 80.3% of sales. Net cash generated by operating activities totaled $7.3 million in the second quarter, which the Company use ...

About Universal Stainless & Alloy Products, Inc. CONTACTS: Christopher M. Zimmer Steven V. DiTommaso June Filingeri President and Vice President and President Chief Executive Officer Chief Financial Officer Comm-Partners LLC (412) 257-7604 (412) 257-7661 (203) 972-0186 Universal Stainless & Alloy Products, Inc., established in 1994 and headquartered in Bridgeville, PA, manufactures and markets semi-finished and finished specialty steels, including stainless steel, nickel alloys, tool steel and certain other ...

Please Click Here to register for the conference call and obtain your dial-in number and personal PIN number in advance of the call. Except for historical information contained herein, the statements in this release are forward-looking statements that are made pursuant to the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ mater ...