Universal Stainless Reports 2007 Fourth Quarter, Full Year Results

Fourth Quarter Diluted EPS is $0.65 On Sales of $50 Million

Full Year Sales of $230 Million and EPS of $3.32
Set New Company Records

Cash Flow From Operations Reaches Record $33.6 Million
BRIDGEVILLE, Pa., Jan. 22, 2008 (PRIME NEWSWIRE) -- Universal Stainless & Alloy
Products, Inc. (Nasdaq:USAP) reported today that sales for the fourth quarter of
2007 were $49.6 million compared with $55.8 million in the fourth quarter of
2006. Net income for the 2007 fourth quarter was $4.4 million, or $0.65 per
diluted share, compared with $6.3 million, or $0.94 per diluted share, in the
fourth quarter of 2006. For the full year 2007, sales rose to a record $229.9
million and net income increased to a record $22.5 million, or $3.32 per diluted
share, compared to sales of $203.9 million and net income of $20.6 million, or
$3.11 per diluted share in 2006.

The Company had forecasted sales in the range of $45 to $50 million and diluted
EPS in the range of $0.60 to $0.65 for the fourth quarter of 2007.

Results for the fourth quarter of 2007 included $586,000 of other income,
equivalent to $0.06 per diluted share, from the receipt of import duties,
compared with $465,000, equivalent to $0.05 per diluted share, in the 2006
fourth quarter.

Nickel costs continued to decline in the fourth quarter of 2007. The impact from
the change in nickel costs on the Company's Dunkirk segment reduced gross
margins by an estimated $53,000 (FIFO charge) compared with an increase (FIFO
benefit) of $1.1 million, equivalent to $0.11 per diluted share, in the fourth
quarter of 2006. The swing in the FIFO effect combined with lower total shipment
volume reduced company-wide gross margin dollars in the fourth quarter of 2007
compared with the same period of 2006.

The Company's tax rate for 2007 was 32.7% compared to 35.2% in 2006 due to
adjustments to state income tax provisions. The impact of this rate change in
comparison to the 2006 fourth quarter and full year was equivalent to $0.05 and
$0.12 per diluted share, respectively. Net income for the 2006 fourth quarter
has been adjusted for the retrospective application of an accounting
pronouncement as detailed in the financial tables.

For the full-year 2007, cash flow from operations reached a record $33.6 million
and free cash flow (cash from operations minus capital expenditures) rose to
$24.8 million, equivalent to $3.67 per diluted share. This was due to lower
levels of receivables and inventories. The strong cash flow enabled the Company
to retire the $7.5 million outstanding balance on its PNC term loan.

President and CEO Dennis Oates commented: "Our fourth quarter sales reached the
high end of our forecast which recognized volatile raw material costs and
economic uncertainty as well as normal conservative year-end order patterns.
While we expected nickel to be the most volatile of our costs, the magnitude of
its decline in December impacted our profitability for the quarter. Nickel
prices have moved higher since then and we expect their volatility to continue.

"While there is caution in our marketplace due to ongoing concern about the U.S.
economy, the end markets we serve are global in scope and have solid backlogs
going out for several years. Although our direct customers will continue to make
periodic inventory adjustments, we expect to see improving trends through the
balance of the year. We also expect our cash flow to remain strong."

Mr. Oates added: "We have entered 2008 with a high level of optimism about our
prospects. To generate further growth, we are focused on quickly developing new
business opportunities. Additionally, we are accelerating efforts to eliminate
waste in our operations and enhance customer satisfaction."

Segment Review

In the fourth quarter of 2007, the Universal Stainless & Alloy Products segment
had sales of $43.4 million and operating income of $3.2 million, yielding an
operating margin of 7%. That compares with sales of $47.1 million and operating
income of $4.6 million, or 10% of sales, in the fourth quarter of 2006. In the
third quarter of 2007, sales were $55.9 million and operating income was $4.3
million, or 8% of sales, and included a charge of $772,000 to the LCM (Lower of
Cost or Market) reserve attributable to the segment.

Segment sales declined 8% compared with the fourth quarter of 2006 despite a 50%
increase in sales of tool steel plate to service centers and a 12% increase in
reroll product sales to the Dunkirk operation and other customers. These sales
increases did not fully offset a 43% decrease in sales to forgers and a 22%
decrease in sales of bar products to service centers, which continued to
restrain orders due in part to volatile nickel pricing and excess inventories.
Operating margins were lower due to a 15% decrease in shipment volume as well as
product mix.

The Dunkirk Specialty Steel segment reported sales of $18.7 million and
operating income of $2.2 million for the fourth quarter of 2007, resulting in an
operating margin of 12%, which included the FIFO charge of $53,000. That
compares with sales of $20.3 million and operating income of $3.9 million, or
19% of sales, in the fourth quarter of 2006, which included the estimated FIFO
benefit of $1.1 million. In the third quarter of 2007, sales were $21.3 million
and operating income was $3.0 million or 14% of sales and included a charge of
$635,000 to the LCM reserve attributable to the segment, offset by an estimated
$1.5 million FIFO benefit due to the timing of surcharges and the changing price
of nickel.

The 8% decline in Dunkirk's sales over the 2006 fourth quarter reflected a 46%
decrease in sales of rod and wire products, which was partially offset by a 9%
increase in sales of bar products to OEMs and service centers. The decline in
the operating margin over the fourth quarter of 2006 mainly reflected a 15%
decrease in shipment volume and the swing in the FIFO effect resulting from the
impact of nickel price changes in the applicable periods.

Business Outlook

The following statements are based on the Company's current expectations. These
statements are forward-looking, and actual results may differ materially.

The Company estimates that first quarter 2008 sales will range from $50 to $55
million and that diluted EPS will range from $0.60 to $0.65. This compares with
sales of $56.2 million and diluted EPS of $1.00, in the first quarter of 2007,
which included a FIFO benefit estimated at approximately $1.2 million,
equivalent to $0.12 per diluted share.

The following factors were considered in developing these estimates:

* The Company's total backlog at December 31, 2007 was approximately
$85 million compared to $88 million at September 30, 2007. The
Company experienced improvement in order entry for its electro-slag
remelt products for the power generation market and for its tool
steel products, which are used in heavy equipment manufacturing.

* Sales from the Dunkirk Specialty Steel segment are expected to
approximate $19 million in the first quarter of 2008, with volume
growth limited by high temperature annealing capacity constraints.
The Company expects its new high temperature annealing equipment to
be operational in the 2008 second quarter.

* The first quarter 2008 earnings forecast assumes that there will be
no FIFO benefit at the Dunkirk operation. It also assumes lower
interest expense due to the pay down of the PNC term loan. The
estimated tax rate for 2008 is 34%.
Webcast

A simultaneous Webcast of the Company's conference call discussing the fourth
quarter of 2007 and the first quarter outlook, scheduled at 10:00 a.m. (Eastern)
today, will be available on the Company's website at www.univstainless.com, and
thereafter archived on the website. A telephone replay of the conference call
will be available beginning at 12:00 noon (Eastern) today and continuing through
January 29th. It can be accessed by dialing 706-645-9291, passcode 30027258.
This is a toll call.

About Universal Stainless & Alloy Products, Inc.

Universal Stainless & Alloy Products, Inc., headquartered in Bridgeville, Pa.,
manufactures and markets a broad line of semi-finished and finished specialty
steels, including stainless steel, tool steel and certain other alloyed steels.
The Company's products are sold to rerollers, forgers, service centers, original
equipment manufacturers and wire redrawers. More information is available at
www.univstainless.com.

Forward-Looking Information Safe Harbor

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
materially from forecasted results. Those risks include, among others, risks
associated with the receipt, pricing and timing of future customer orders, risks
associated with significant fluctuations that may occur in raw material and
energy prices, risks associated with the manufacturing process, labor and
production yields, risks related to property, plant and equipment, and risks
related to the ultimate outcome of the Company's current and future litigation
and regulatory matters. Certain of these risks and other risks are described in
the Company's filings with the Securities and Exchange Commission (SEC) over the
last 12 months, copies of which are available from the SEC or may be obtained
upon request from the Company.

UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share information)
(Unaudited)

CONSOLIDATED STATEMENT OF OPERATIONS

For the Quarter Ended For the Year Ended
December 31, December 31,
2007 2006 2007 2006
---------- ---------- ---------- ----------
Net Sales
Stainless steel $ 34,020 $ 41,474 $ 164,228 $ 151,633
Tool steel 7,297 4,744 28,119 23,389
High-strength
low alloy steel 6,080 6,145 25,892 16,467
High-temperature
alloy steel 1,580 2,792 9,317 9,837
Conversion
services 584 443 2,011 2,137
Other 72 209 369 410
---------- ---------- ---------- ----------
Total net
sales 49,633 55,807 229,936 203,873
Cost of
products sold 41,154 44,001 184,491 160,722
Selling and
administrative
expenses 3,087 2,619 12,038 10,792
---------- ---------- ---------- ----------
Operating
income 5,392 9,187 33,407 32,359
Interest expense (128) (296) (731) (1,106)
Other income 740 516 776 522
---------- ---------- ---------- ----------
Income before
taxes 6,004 9,407 33,452 31,775
Income tax
provision 1,616 3,133 10,948 11,185
---------- ---------- ---------- ----------
Net income $ 4,388 $ 6,274 $ 22,504 $ 20,590
========== ========== ========== ==========

Earnings per
share - Basic $ 0.66 $ 0.96 $ 3.39 $ 3.19
========== ========== ========== ==========
Earnings per
share - Diluted $ 0.65 $ 0.94 $ 3.32 $ 3.11
========== ========== ========== ==========

Weighted average
shares of
Common Stock
outstanding
Basic 6,656,783 6,516,880 6,644,374 6,451,037
Diluted 6,780,808 6,658,566 6,774,924 6,612,530
---------------------------------------------------------------------

Note: 2006 results have been adjusted to reflect the retrospective
application of the January 1, 2007 change in accounting for major
maintenance expenses from the accrue-in-advance method to the
deferral method in accordance with the FASB Staff Position entitled
"Accounting for Planned Major Maintenance Activities," issued in
September 2006. The effect of the change in accounting is summarized
below:

For the Quarter Ended For the Year Ended
December 31, 2006 December 31, 2006
As Reported As Adjusted As Reported As Adjusted
---------- ---------- ---------- ----------
Operating income:
Universal
Stainless &
Alloy
Products
Segment $ 4,850 $ 4,645 $ 19,690 $ 19,674
Dunkirk
Specialty
Steel Segment 3,961 3,923 11,496 11,472
Intersegment
elimination 619 619 1,213 1,213
---------- ---------- ---------- ----------
$ 9,430 $ 9,187 $ 32,399 $ 32,359
========== ========== ========== ==========

Net income $ 6,428 $ 6,274 $ 20,614 $ 20,590
========== ========== ========== ==========

Diluted earnings
per share $ 0.97 $ 0.94 $ 3.12 $ 3.11
========== ========== ========== ==========

BUSINESS SEGMENT RESULTS

Universal Stainless & Alloy Products Segment

For the Quarter Ended For the Year Ended
December 31, December 31,
2007 2006 2007 2006
---------- ---------- ---------- ----------
Net Sales
Stainless steel $ 21,524 $ 28,019 $ 108,535 $ 102,372
Tool steel 6,620 4,281 25,638 21,747
High-strength
low alloy steel 2,382 3,141 12,764 8,177
High-temperature
alloy steel 714 1,097 4,067 3,787
Conversion
services 448 287 1,405 1,530
Other 66 174 295 325
---------- ---------- ---------- ----------
31,754 36,999 152,704 137,938
Intersegment 11,614 10,143 49,858 41,232
---------- ---------- ---------- ----------
Total net
sales 43,368 47,142 202,562 179,170
Material cost
of sales 23,386 23,489 106,456 85,298
Operation cost
of sales 14,730 17,295 67,286 66,806
Selling and
administrative
expenses 2,034 1,713 8,345 7,392
---------- ---------- ---------- ----------
Operating
income $ 3,218 $ 4,645 $ 20,475 $ 19,674
========== ========== ========== ==========

Dunkirk Specialty Steel Segment

For the Quarter Ended For the Year Ended
December 31, December 31,
2007 2006 2007 2006
---------- ---------- ---------- ----------
Net Sales
Stainless steel $ 12,496 $ 13,455 $ 55,693 $ 49,261
Tool steel 677 463 2,481 1,642
High-strength
low alloy steel 3,698 3,004 13,128 8,290
High-temperature
alloy steel 866 1,695 5,250 6,050
Conversion
services 136 156 606 607
Other 6 35 74 85
---------- ---------- ---------- ----------
17,879 18,808 77,232 65,935
Intersegment 817 1,446 4,493 4,320
---------- ---------- ---------- ----------
Total net
sales 18,696 20,254 81,725 70,255
Material cost
of sales 11,531 10,949 47,905 38,705
Operation cost
of sales 3,953 4,476 17,404 16,678
Selling and
administrative
expenses 1,053 906 3,693 3,400
---------- ---------- ---------- ----------
Operating
income $ 2,159 $ 3,923 $ 12,723 $ 11,472
========== ========== ========== ==========

MARKET SEGMENT INFORMATION

For the Quarter Ended For the Year Ended
December 31, December 31,
2007 2006 2007 2006
---------- ---------- ---------- ----------
Net Sales
Service centers $ 26,582 $ 25,760 $ 119,736 $ 101,510
Forgers 7,541 13,504 47,711 38,539
Rerollers 8,957 8,193 35,006 33,273
Original
equipment
manufacturers 4,418 4,392 18,287 18,368
Wire redrawers 1,506 3,330 6,843 9,660
Conversion
services 584 443 2,011 2,137
Other 45 185 342 386
---------- ---------- ---------- ----------
Total net
sales $ 49,633 $ 55,807 $ 229,936 $ 203,873
========== ========== ========== ==========
Tons shipped 9,788 12,064 43,644 50,485
========== ========== ========== ==========

CONSOLIDATED BALANCE SHEET

December 31, December 31,
2007 2006
---------- ----------
Assets
Cash $ 10,648 $ 2,909
Accounts receivable, net 27,501 33,308
Inventory 65,572 66,019
Deferred taxes 2,574 1,544
Other current assets 2,853 1,606
---------- ----------
Total current assets 109,148 105,386
Property, plant & equipment,
net 54,271 49,251
Other assets 767 584
---------- ----------
Total assets $ 164,186 $ 155,221
========== ==========

Liabilities and Stockholders'
Equity
Trade accounts payable $ 13,983 $ 13,123
Outstanding checks in excess
of bank balance 2,064 3,427
Accrued employment costs 5,307 4,121
Current portion of long-term
debt 383 2,364
Other current liabilities 1,490 1,902
---------- ----------
Total current liabilities 23,227 24,937
Bank revolver -- 8,392
Long-term debt 1,453 8,836
Deferred taxes 9,904 8,402
---------- ----------
Total liabilities 34,584 50,567
Stockholders' equity 129,602 104,654
---------- ----------
Total liabilities and
stockholders' equity $ 164,186 $ 155,221
========== ==========

CONSOLIDATED STATEMENT OF CASH FLOW DATA

For the Year Ended December 31,
2007 2006
---------- ----------
Cash flows provided by
operating activities:
Net income $ 22,504 $ 20,590
Adjustments to reconcile to
net cash provided by
operating activities:
Depreciation and
amortization 3,731 3,337
Loss on retirement of
fixed assets 40 911
Deferred tax increase
(decrease) 252 (1,852)
Stock based compensation
expense 427 273
Tax benefit from
share-based payment
arrangements (958) (1,073)
Changes in assets and
liabilities:
Accounts receivable, net 5,807 (5,345)
Inventory 447 (14,621)
Trade accounts payable 860 544
Accrued employment costs 1,186 1,163
Other, net (673) 2,374
---------- ----------
Cash flow provided by
operating activities 33,623 6,301
---------- ----------
Cash flow used in investing
activities:
Capital expenditures (8,782) (7,716)
---------- ----------
Cash flow used in investing
activities (8,782) (7,716)
---------- ----------
Cash flows used in financing
activities:
Revolving credit net
repayments (8,392) 2,275
Long-term debt repayments (9,364) (1,555)
Net change in outstanding
checks in excess of bank
balance (1,363) 326

Proceeds from issuance of
common stock 1,059 1,585
Tax benefit from
share-based payment
arrangements 958 1,073
---------- ----------
Cash flow (used in) provided
by financing activities (17,102) 3,704
---------- ----------
Net cash flow $ 7,739 $ 2,289
========== ==========
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CONTACT: Universal Stainless & Alloy Products, Inc.
Richard M. Ubinger, Vice President of Finance,
Chief Financial Officer and Treasurer
(412) 257-7606

Comm-Partners LLC
June Filingeri, President
(203) 972-0186