Universal Stainless & Alloy Products' (USAP) CEO Dennis Oates on Q1 2016 Results - Earnings Call Transcript

| About: Universal Stainless (USAP)

Universal Stainless & Alloy Products, Inc. (NASDAQ:USAP)

Q1 2016 Earnings Conference Call

April 27, 2016 09:00 A.M. ET

Executives

June Filingeri - President, Comm-Partners LLC

Dennis M. Oates - Chairman of the Board, President, and CEO

Larry J. Pollock - EVP and Chief Manufacturing Officer

Christopher M. Zimmer - EVP and Chief Commercial Officer

Paul A. McGrath - VP, Administration, General Counsel and Secretary

Ross Cameron Wilkin - VP, Finance, CFO, and Treasurer

Analysts

Michael Gallo - C.L. King

Chris Olin - Rosenblatt Securities

Phil Gibbs - KeyBanc Capital Markets

Charlie Smith - Fort Pitt Capital Group

Operator

Good morning, ladies and gentlemen and welcome to the Universal Stainless First Quarter 2016 Conference Call and Webcast. At this time, all participants are in a listen-only mode. Later, we will have a question-and-answer session and instructions will be given at that time. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host for today's conference Ms. June Filingeri. Ma'am, you may begin.

June Filingeri

Thank you, Bridgette. Good morning, this is June Filingeri of Comm-Partners and I also would like to welcome you to the Universal Stainless conference call. We are here to discuss the company's first quarter 2016 results reported this morning.

With us from management are Denny Oates, Chairman, President and Chief Executive Officer; Larry Pollock, Executive Vice President and Chief Manufacturing Officer; Chris Zimmer, Executive Vice President and Chief Commercial Officer; Paul McGrath, Vice President of Administration and General Counsel; and Ross Wilkin, Vice President of Finance, Chief Financial Officer, and Treasurer.

Before I turn the call over to management, let me quickly review procedures. After the management has made formal remarks, we will take your questions. Bridgette will instruct you on procedures at that time. Also, please note that in this morning's call, management will make forward-looking statements. Under the Private Securities Litigation Reform Act of 1995, I would like to remind you of the risks related to these statements, which are more fully described in today's press release and in the company's filings with the Securities and Exchange Commission.

With these formalities complete, I would now like to turn the call over to Denny Oates. Denny, we are ready to begin.

Dennis M. Oates

Thanks June. Good morning everyone. Thanks for joining us today. After three quarters of deteriorating metal market conditions, the first quarter of 2016 brought some welcome improvement. Sales improved sequentially in three of our four end markets as destocking by service centers and forgers eased. Bookings also improved sequentially for the first time in a year. Commodity prices appear to be stabilizing and there is growing sentiment that the first quarter marked the bottom. Plant activity levels have improved substantially from the third and fourth quarter of 2015.

Let me hit some highlights for you. Our first quarter sales increased 25% sequentially to $39.6 million driven mainly by a 53% increase in aerospace sales, a 37% increase in heavy equipment sales, and a 17% increase in power generation sales. Premium product sales rose 4% from the first quarter. Sales to our service center partners represented 70% of sales and increased 44%, while sales to forgers increased 33% sequentially.

Order entry totaled $39.2 million before surcharges and 16.2 million pounds representing the highest booking rate in a year and a 21% sequential increase. Backlog on March 31, was $39.8 million up 4% from year-end 2015. Low lead times remained very short creating some relatively low backlog figures by historical standards. Plant activity levels are up sharply compared to the third and fourth quarters of 2015. Specifically as measured by pounds produced electric art melting doubled, re-melting was up over 50%, forging is up 65%, and all idle facilities are now operating. Our team did a great job managing the ramp posting impressive sequential productivity gains of 13% in pounds produced per man hour and tightly controlling variable spend per pound produced to a 26% improvement compared to the fourth quarter of 2015.

Commodity prices appear to be stabilized. Nickel was traded on average monthly basis between $3.77 a pound to $3.95 a pound for the past four months. Similarly Mali has traded between $5 and $5.41 per pound over the same period. Scrap has actually trended up moving from $0.06 per pound to $0.08 per pound. So far in April these key inputs to our product cost has been rising with nickel recently at $4.18 a pound, Mali at $6 a pound, and scrap pushing $0.12 a pound.

While these commodity prices are well below 2014 and early 2015 levels, the moldable month’s stability is correcting the misalignment between surcharges and melting cost which challenged profitability throughout 2015. The stabilization is also getting to unlock some market demand from customers who are holding back purchases to assess the potential of further commodity price deterioration.

With higher activity levels in our plants and stabilizing commodity prices, our gross margin returned from the black in the first quarter albeit at a historically low 3.4% of sales. It’s important to underscore three things; first, we are not yet back to normal plant activity levels; second, the commodity driven misalignment between surcharges and material cost is easing but still adversely impacting Q1 margins; and third, Q1 margins were still penalized by fixed cost absorption originating with the low plant activity levels of the second half of 2015, as we sold through product melted last year.

It’s interesting to note that 55% of our work in process at March 31st, was melted in the first quarter with the lower stabilizing material cost. Additionally, the average total cost per pound of work in process declined about 20% between December 31st and March 31st of this year as a direct result of the material cost trends, higher activity levels, controlled spending, and productivity improvements. All of which improves the outlook for second quarter cost and margin performance.

Our net loss for the first quarter was $0.27 per diluted share excluding a non-cash rate of $0.07 per share related to our $95 million bank facility which we announced in January. We continue to maintain positive cash flow in the first quarter which totaled $1.5 million. We also continued to reduce total debt which amounts to $74.7 million at March 31st, excluding $2 million in capital leases we entered into during the quarter. That compares to total debt of $75.9 million at year-end 2015. The new capital leases also reduced the amount of capital spending we are reporting for the first quarter to $800,000. Ross will discuss the capital leases in his remarks.

As to the current demand environment with the exception of oil and gas it has improved considerably from 2015 and there was a cautious optimism as customers get comfortable with their inventory levels, digest the recent trends in commodity prices, place no buys consistent with their selling demand. Nonetheless there is also a lingering uncertainty which has made them hesitant to get ahead of themselves in placing forward orders especially with short lead times readily available.

As noted in today's release, many customers are pointing to the second half of 2016 as the stronger half of the year unlike the typical seasonal pattern. For our part we are staying close to our customers as we continue to focus on capturing market opportunities despite highly competitive conditions. At the same time we are developing new products and getting new approvals to expand the range in depth of our offerings with an emphasis on higher value alloys. And operationally we remained focused on increasing productivity, faster cycle times, and delivery performance.

Let me talk about the markets for a moment. Starting with aerospace our sales to the aerospace market represented 64% of first quarter 2016 sales versus 52% of sales in the fourth quarter of 2015, and 60% of sales in the 2015 first quarter. Aerospace sales totaled $25.4 million in the first quarter of 2016, up 53% sequentially on 60% higher volume. They were 25% lower than the first quarter of 2015 on 23% lower shipments.

With last year’s destocking in the aerospace channel now largely behind us, we're seeing an increase in our order book, although it’s modest thus far. Regarding the discussion we've all heard about the pace of the transition from legacy to next-generation airplanes, we do not see a negative impact on our growing portfolio of mill products, especially when considering our after market presence and new product opportunities.

The news on the air passenger traffic remains very strong with February air traffic up 8.6% year-over-year, which can only be positive for the aftermarket. General Electric, Honeywell, and several other aftermarket suppliers reported increase in spares business and expectation of continued mid-single digit growth for the next few quarters.

As for the airplane manufacturers, both Boeing and Airbus have adjusted their build rates since last fall. In the plus column Boeing added another rung to their production ladder for the 737, announcing a move to 57 airplanes per month in 2019. That rate is now 42 per month, going to 47 per month in 2017 and 52 per month in 2018. And it was mentioned in the media last week that Boeing may also offer a larger version of the 737 Max to help in its battle with the Airbus A320.

Airbus also plans to step up the build rate on A320 to 50 per month in early 2017 and 60 per month in 2019. At the same time there have been some down revisions to build rates for larger airplanes with Boeing announcing a rate reduction on the 747-8 while Airbus is reducing production of the A380. For a perspective it’s estimated that 76% of Boeing’s backlog is for the 737 and 81% of Airbus’s is for the A320. Our customers is continue to focus on the material needs for the current build rates and the size and duration of both company’s total backlogs, which now exceed about a year’s. We continue to remain very positive about the aerospace market.

Power generation market was our second largest market in the first quarter of 2016 representing 9% of sales, which is in line with the fourth quarter of 2015 and compares with 13% of sales in the first quarter of 2015. Sales were up 17% sequentially on a 21% increase in volume, although down 52% from the first quarter of 2015 on a similar decline in pounds shipped. The sequential increase in our power generation sales reflects the improved inventory balance in the channel and steady growth in maintenance requirements.

It’s worth knowing that GE was especially upbeat about the power market on their first quarter call which may point to some promise for the new build market. In addition to seeing early market place benefits from the addition of Oustem [ph], GE’s first quarter equipment orders in power were up 57% with 25 new orders for gas turbines versus 21 a year ago. Ultimately all this news is positive for our forger customers and through them for Universal Stainless.

In contrast, the news in the oil & gas market turned even more negative in the first quarter despite the increase in oil prices during the quarter. With comparatively strong fourth quarter our sales for the oil & gas market decreased 18% sequentially even with 4% higher shipments. Sales were down 45% from the first quarter of 2015 on a matching decline in volume. In total, our oil & gas sales represented 8% of total sales in the first quarter versus 13% in the fourth quarter and 11% in the first quarter of 2015.

Schlumberger did not mince words about the first quarter last week when they reported and I quote, “the decline in global activity and the rate of activity disruptions reach unprecedented levels as the industry has displayed clear signs of operating in a full scale cash crisis.” They noted that E&P spending fell again in the quarter and expect that to continue in the current quarter. There also has been an 80% drop in the land rig count in North America from its peak in October of 2014. However, despite recent surveys point to sizable reductions in global oil & gas spending in 2016, the remaining growth forecasts are remaining steady. At Universal we're staying close to the changing dynamics in oil & gas but we do not anticipate meaningful improvements in 2016. That said we expect to have some successes even in this very challenging market based on our new products and production improvements.

Heavy equipment market sales rose 10% -- rose to 10% of total sales in the first quarter from 9% of sales in the 2015 fourth quarter and 7% of sales in the first quarter of 2015. Heavy equipment market sales were up 37% sequentially on 51% higher volume and up 1% from the first quarter of 2015 on 25% higher volume. We said on our last call that we expected a solid year in automotive production and a gradual improvement in the plate business as we move through the year. Our first quarter prove to be on back with that comment and was supported by continued strength in the automotive market. We are hearing more chatter about an increasing cadence in model change hours which is a especially beneficial for tool steel demand.

Let me now turn the call over to our Chief Financial officer Ross Wilkin for his report. Ross?

Ross Cameron Wilkin

Thank you Denny. Encouragingly and as Denny noted our first quarter sales of $39.6 million delivered 25% sequential growth driven mainly by an increase in sales to the aerospace end market. Even with the first quarter increase sales were substantially lower than the first quarter of 2015, when sales were $56 million as market demand has only begun to recover after three quarters of channel destocking. From a gross margin standpoint, our first quarter gross margin of $1.3 million or 3.4% of net sales was modestly improved compared to the fourth quarter gross margin which was a negative $900,000 or negative 2.8% of net sales. The fourth quarter included idle plant charges of $1.9 million.

Despite the first quarter gross margin improvement, the results continued to be negatively impacted by the ongoing misalignment of surcharges and melt costs. Misalignment is the net result of material costs that are calculated at the time of melt and surcharges that are calculated at the time of shipment on a two month lag. Only 17% of our first quarter sales were actually melted in the first quarter, 32% were melted in the fourth quarter, 24% in the third quarter, and 27% were melted in the first half of 2015 or earlier.

In addition to that misalignment our first quarter gross margin was impacted by the adverse effect of reduced fixed cost leverage on lower than normal sales volumes as well as the sell through of product produced during the inefficient second half of 2015. While we are beginning to see the early evidence of gross margin recovery as demonstrated in month by month improvement in our gross margin in the first quarter, more meaningful alignment of surcharges and melt cost will take at least another quarter assuming continued stability of commodity cost, mainly nickel, mali, and scrap.

Also included in our first quarter gross margin was a benefit of net gains on sales of fixed assets totaling $389,000 or 1% of net sales as you can see reflected on our consolidated statement of cash flow. Assets sold were those that have been unused in production for several years. To accelerate the recovery in our gross margin we have continued to execute all areas of operational savings with an emphasis on manufacturing productivity, supplier negotiation, and workforce optimization.

Looking at selling, general, and administrative cost for the first quarter SG&A was $3.8 million favorable by $700,000 compared to the fourth quarter of 2015 and favorable by $1.2 million compared to the first quarter of 2015. Tight spending controls reduced headcount levels and reduced variable compensation to contribute to the reduction. Our effective tax rate was 44% in the first quarter of 2016 compared to 34.9 in the first quarter of 2015, the higher tax rate in 2016 reflects the inclusion of a current year R&D tax credit as a result of the recent actions by Congress which made the R&D tax credit permanent effective the fourth quarter of 2015.

From a cash tax standpoint we received $269,000 refund in the first quarter and do not expect to incur any cash tax payments in 2016. The net loss for the first quarter was $2.4 million or $0.34 per diluted share including a onetime non cash after tax charge of $495,000 or $0.07 per diluted share for the write off of unamortized deferred financing costs associated with our previous bank facility. Going forward it remains the central focus of the management team to return our business to profitability as quickly as possible.

Turning our attention to the balance sheet, for the first quarter our managed working capital was reduced by $2.3 million to $87 million. The key driver for the improvement was increased accounts payable reflecting the positive effect of sequentially higher first quarter production levels combined with an improved supplier payment terms which more than offset increased accounts receivable. In addition inventory was reduced by $1 million to $82.3 million.

Capital expenditures in the first quarter were $818,000. In addition we entered into capital leases for a total of $2 million, $1.1 million of which resulted in a cash refund of capital expenditures incurred in 2015. Adjusting for the net effect of first quarter capital leases, our first quarter CAPEX would have been $1.7 million compared to $1.2 million in the fourth quarter of 2015 and $3 million in the first quarter of 2015. It remains a key priority of ours to invest in our mills thus ensuring we maintain our infrastructure, expand our capability, and deliver productivity improvements.

From a cash flow standpoint we generated $1.5 million of cash flow from operating activities in the first quarter, primarily through the reduction of managed working capital. This is the fourth consecutive quarter of generating positive cash flow from operating activities. In addition we received proceeds totaling $1.6 million from the sale of assets of which $1.1 million was from the capital lease transaction noted earlier. Net cash debt of $75.8 million is flat with year-end 2015 as principle reductions in convertible notes and bank debt combined with increased cash offset the addition of the $2 million capital lease.

In January we announced the completion of our bank refinancing, putting in place a new five-year $95 million ABL Bank facility and extending the maturity of the $20 million convertible notes by up to 3.5 years. The refinancing was effective January 21, 2016. For a detailed description of the refinancing I refer you to disclosures made as part of the 8K filing on January 25, 2016, also our fourth quarter press release and conference call on January 27, 2016 and the subsequent event note disclosure in our 2015 10-K.

Importantly we are in compliance with all covenants as of the end of the first quarter and anticipate being able to remain in compliance going forward. In addition we were fully compliant with all covenants under the previous bank facility. The new bank facility improved our liquidity and financial flexibility and has a $25 million increase option subject to bank approval, which we expect to use to help fund our future growth. That concludes my financial report. Denny, I will turn the call back to you.

Dennis M. Oates

Thanks, Ross. In summary then there was some welcome recovery in market conditions in the first quarter as customers shifted from a destocking mode in 2015 to purchasing at levels closer to their demand. Commodity prices also have stabilized. Aided by the improved market conditions, our sales increased 25% sequentially, driven mainly by 53% higher aerospace sales and our gross margin return turned positive due to higher activity levels in our plants and a narrower gap between commodity prices and surcharges. However, neither is back to normal yet and competition remains intense.

Another positive sign in the first quarter was a 21% increase in our order entry, although orders were quickly converted into sales due to short lead times. As a result our backlog at the end of the quarter was up a modest 4%. We remained cash flow positive in the quarter, further reduced our debt, and were successful in increasing our financial flexibility with our new credit agreement. While uncertainty continues in the marketplace further improvement is expected in the current quarter with the exception of the oil & gas market. The general belief for the balance of our markets is for a stronger second half of 2016.

Despite the challenges we have faced over the past year our team has remained steadfast in executing our plan of transformation and growth, their commitment and accomplishments has strengthened our market position and put us in the best position ever to seize on new opportunities, especially in premium alloys as our markets recover. I want to thank everybody for their attention this morning and operator, let’s turn it over for some questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions]. Our first question is from Michael Gallo with C.L. King. Your line is open.

Michael Gallo

Hi, good morning.

Dennis M. Oates

Hey, Mike. How are you today?

Michael Gallo

Good. How are you? Couple of questions. Denny, how much was the impact from misalignment of surcharges in the quarter and how much do you expect it to be in Q2 assuming nickel prices don’t change from here?

Dennis M. Oates

Its – it was about $1.8 million in terms of dollars and about 5% to 5.5% in terms of gross profit margin difference in the first quarter. If everything plays out as its currently trending, we should be getting back into alignment basically by the beginning of the third quarter, end of the second quarter.

Michael Gallo

Okay, so in terms of the second quarter you’d expect it will be less than the 5.50, still be -- there still be some?

Dennis M. Oates

Yes, every month we are seeing improvement in that misalignment as we sell through the older material, begin selling the materials melted at lower prices, and surcharges are remaining relatively stable.

Michael Gallo

Alright, and I guess if I take out the 1% benefit that you got from the gain on sale which I think helped gross margins you read about call it 2.4%, I mean I guess do you think you can get back to a high single-digit gross margin in Q2 given the dynamics or do you expect the gross margins are still going to be quite challenged in Q2 given where your levels are?

Dennis M. Oates

You will improvement in the numbers you are quoting or not out of the realm of possibilities. The positives are you’ve got more of our product will have been melted at the lower material cost. Surcharges I anticipate will be relatively stable so they are positives. We have got higher plant activity levels also which is exactly part of the misalignment but it is contributing to our margin pressure. The negative is its very competitive out there. So that will be the puts and takes but my expectation will be see stronger gross profit margins and the number you quoted are not out of the realm of possibility.

Michael Gallo

Would you expect sales to be relatively level sequentially?

Dennis M. Oates

We expect to see 4 in front of it. Bookings were $39 million. That’s before surcharges for example and with lead times I think that was over the $40 million mark.

Michael Gallo

How are the levels at this point of inventory and sort of the various supply chains, it seems like we are through the destock but I mean is there -- have you started to see any signs of restock or pretty much people still just ordering to demand?

Dennis M. Oates

I would characterize it as ordering to demand. I don’t know of anybody who is running them up talking about really recharging their inventories at this point in time. I think people as I tried to say in my comments here they are digesting what's happening in the commodity markets and what their end use demand is. Typical customer will say something to us like we are very comfortable with inventory levels where they are at now. We are keeping our cards close to divest so to speak as we look at how the year plays out and what commodity price is doing so forth.

Michael Gallo

Okay and then just final question, will you be able to take little more on how to manage working capital this quarter. Obviously the sales numbers are expected to go up on a sequential basis, would you expect at this point sort of going forward that working capital be in that use or is there more you can do from a turn perspective? Thanks.

Ross Cameron Wilkin

It is going to be biased a little bit upward going forward but not a lot. So flat to up a bit.

Michael Gallo

Thank you.

Dennis M. Oates

You’re welcome Mike.

Operator

Thank you and our next question is from Chris Olin with Rosenblatt Securities. Your line is open.

Chris Olin

Hi, thanks for taking my call or questions.

Dennis M. Oates

Hello Chris, how are you doing.

Chris Olin

Good. Can you give me an idea as to what percentage of your aerospace sales would be characterized as aftermarket right now?

Dennis M. Oates

It’s very challenging for me to give you that because we sell so much through distributors and we don’t have a good math as the word goes after that. But I would say somewhere in the range of 70%, we probably be getting into the aftermarket world.

Chris Olin

That’s interesting. I guess I wanted to go back to your original comments you were talking about aftermarket demand and I think you referred to like a mid-single growth potential for 2006 and I guess just from everything I was hearing this had been a lagging area perhaps running closer to a low single-digit range with all these aftermarket parts out there kind of representing a headwind. From your business are you seeing an uptick in that activity or has something changed over the past few months?

Dennis M. Oates

I won’t say anything has really changed over the last few months other than destocking has stopped. So just like definition when destocking stops we’re going to see higher order levels. So that’s what we are seeing. As far as the numbers I quoted, the numbers I am quoting we basically take a look at some of the major players there, some of the big guys like GE. They are talking about mid single-digits for the next couple of quarters, not for the whole year but if you look at their numbers that they released, they are basically in that ballpark. When we talk to our direct customers, the service centers, that is kind of the level of numbers they’re talking about, 5% to 6% range.

Chris Olin

Okay. Interesting, thanks.

Operator

[Operator Instructions]. Our next question is from Tyler Kenyon with KeyBanc Capital. Your line is open.

Phil Gibbs

Hey, it’s Phil Gibbs. How are you Denny?

Dennis M. Oates

You're sounding like Tyler, Phil.

Phil Gibbs

Well, you spend a lot of time in the office and that’s what happens right?

Dennis M. Oates

What can we do for you this morning?

Phil Gibbs

Got a question on the backlog right now as it stands maybe relative to the quarter, again end of the quarter in the high 3s you eluded with a 4 in the second quarter. Shall we suppose that the backlog right now is a bit higher than it was at the end of March?

Ross Cameron Wilkin

A touch higher, but not materially. But what we're seeing is very quick lead times, alright? We’ve got our cycle times, things are moving through the plants quickly. So we've got a fair amount of what we efficiently have called quick turn business, where things are coming and going out, not really residing in the backlog all that long. In times like this we can anticipate some of our business so we can get a leg up on it. So that’s what we're seeing right now. I don’t want to mislead you that we've had some big increase in backlog in the last three weeks.

Phil Gibbs

Okay. And in terms of North Jackson and the VIM, I see your premium alloy sales were $5 million in Q1. Is that the rate that we should expect for the year or you're anticipating something higher as we progress and then maybe additionally to that how are you thinking about how some of the longer-term contracts there are progressing?

Ross Cameron Wilkin

I think you’ll see increases in VIM sales over the course of the year so I would not take the first quarter and multiply times four. Really confident looking at the backlog now, you’ll see double-digit 15%-ish type increases, maybe even 20% in VIM sales in the second quarter relative to the first. As far as the operations at North Jackson, the forgers’ quality increased in activity there. As far as vacuum induction melding we continue to run a campaign basically a month. We continue to peel away different approvals. We've had approvals in the last quarter with people like Bombardier and Toshiba. We don’t make a big deal out of that but we continue to crank through there and you’ll start to see some sales from that -– from those things here as we go through the rest of the year.

Phil Gibbs

Perfect. And then with regards to your inventory right now, how is that set up in terms of cadence as we move through the year?

Dennis M. Oates

I think we have some -– we got some room to improve it which is going to fight against the higher activity levels we anticipate. So to Ross’s comment a few minutes ago I would expect things to be relatively flat with an upwards bias, not -– we're not looking at any significant increase in work-in-process inventories at this point.

Phil Gibbs

I think that takes care of my questions right now. I appreciate it. Thanks so much.

Dennis M. Oates

Alright, Phil. Thanks.

Operator

Thank you, and our next question is from Charlie Smith with Fort Pitt Capital. Your line is open.

Charlie Smith

Yes, good morning, guys. Thanks for taking my call. Quick, I want to get some color on the equipment sale on the lease. Was that a sale leaseback, what sort of equipment was involved, and do you anticipate doing that sort of thing in the future?

Dennis M. Oates

Well, the majority of it was related to the capital lease, so we had not taken delivery of a large piece of equipment and we rolled it all into a lease and the prepayment effectively of that lease was refunded to us and was part of those proceeds.

Charlie Smith

Okay, and…

Dennis M. Oates

The balance of it was for miscellaneous equipment that haven’t been used in years in production, so…

Charlie Smith

Okay. Do you look to be doing that sort of transaction in the future as well or is it one off?

Dennis M. Oates

That was more of a one off. Yes, and that was -- quite frankly, that was timed, if you were to go back and look at our late January announcement of refinancing all that was -– that capital lease and everything was wrapped into part of the moving pieces around our refinancing.

Charlie Smith

Okay, great. Thanks a lot.

Dennis M. Oates

You are welcome.

Operator

[Operator Instructions]. I am not showing any further questions. I will now turn the call back over to Mr. Oates for closing remarks.

Dennis M. Oates

Thank you. Thanks again for joining us today and for your interest in and support of Universal Stainless. We look forward to updating you on what we feel will be further improvements to our business on our next call in July. Have a good day.

Operator

Ladies and gentlemen this does conclude the program and you may all disconnect. Everyone have a great day.

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