Universal Stainless Reports 2008 Third Quarter Results in Line With Revised Forecast

BRIDGEVILLE, Pa., Oct. 23, 2008 (GLOBE NEWSWIRE) -- Universal Stainless & Alloy
Products, Inc. (Nasdaq:USAP) reported today that sales for the third quarter of
2008 were $57.6 million compared with $62.0 million in the third quarter of
2007. Net income for the third quarter of 2008 was $2.7 million, or $0.40 per
diluted share, and included a charge of $586,000, equivalent to $0.06 per
diluted share, for the relocation of the Company's round bar finishing line from
its Bridgeville facility to its Dunkirk facility. In the third quarter of 2007,
net income was $5.5 million, or $0.81 per diluted share.

The results for the third quarter of 2008 were in line with the Company's
revised forecast of sales in the range of $57 to $58 million and diluted EPS in
the range of $0.35 to $0.40.

The Company's estimated annual effective income tax rate for 2008 was adjusted
to 32% at September 30 from 33% at June 30 as a result of current income
expectations for the year. The benefit of this rate change was equivalent to
$0.03 per diluted share in the 2008 third quarter.

For the first nine months of 2008, sales were $178.0 million while net income
was $12.7 million, or $1.87 per diluted share, compared with sales of $180.3
million and net income of $18.1 million, or $2.67 per diluted share, in the same
period of 2007.

Cash flow from operations was $6.9 million for the third quarter of 2008, a $2.2
million increase from the 2008 second quarter, as the Company continues to
manage working capital aggressively. Capital expenditures for the third quarter
of 2008 were $4.2 million, and included completion of a new high temperature
annealing facility as well as certain planned infrastructure investments and
equipment upgrades related to the round bar finishing line in Dunkirk.

President and CEO Dennis Oates commented: "As we previously reported, our third
quarter performance was impeded by reduced demand for aerospace grades of steel
due to the Boeing labor situation, by conservative service center purchasing in
anticipation of lower surcharges due to falling commodity prices, and by
production inefficiencies at our Bridgeville facility during labor negotiations.
The resulting lower shipment volume combined with a 20% decline in raw material
prices that decreased margins on finished products shipped reduced our third
quarter earnings. With our success in reaching a five-year collective bargaining
agreement with our Bridgeville hourly employees on October 8th, we are ready to
face the challenges that continue in the specialty steel supply chain as well as
new ones created by the recent shocks to our economy."

Mr. Oates continued: "The diversity of our end markets is an important asset
that will help us offset the issues in aerospace demand that are expected to
continue at least through the end of the year. Our backlog confirms that our
most immediate opportunities are in power generation and in tool steel where we
have a strong market position. We also plan to build upon the inroads we have
made into the oil and gas markets and on the international relationships we have
begun to establish."

Mr. Oates concluded: "In this time of heightened uncertainty, we will remain
fully focused on executing our plan, with our highest priority on improving
customer service levels and our operating efficiency."

Segment Review

For the third quarter of 2008, the Universal Stainless & Alloy Products segment
had sales of $52.2 million and operating income of $3.3 million, yielding an
operating margin of 6%. Favorable product mix shifts in inventory at September
30 more than offset further declines in nickel and other commodity prices in the
quarter and resulted in a net decrease in the lower of cost or market (LCM)
reserve of $300,000. In the third quarter of 2007, sales were $55.9 million and
operating income was $4.3 million, or 8% of sales. This included an increase to
the LCM reserve of $772,000. In the second quarter of 2008, sales were $53.1
million and operating income was $5.6 million, or 11% of sales, and included a
$1.2 million charge to the LCM reserve primarily related to the decline in
nickel prices at the end of the quarter.

Segment sales were down 7% from the third quarter of 2007 primarily due to a 6%
decline in tons shipped and lower surcharges. Higher shipments of tool steel
plate to service centers were offset by lower shipments of aerospace-related
vacuum-arc remelted (VAR) products to service centers and to Dunkirk. This mix
shift, as well as an increase in material costs as a percentage of sales,
reduced the operating margin compared with the 2007 third quarter.

Segment sales decreased 2% over the second quarter of 2008 even though tons
shipped were level. This was due to lower shipments of aerospace-related VAR
products and of tool steel plate to service centers offset by higher shipments
to forgers. The resulting shift in product mix and higher material costs as a
percentage of sales reduced the operating margin sequentially.

The Dunkirk Specialty Steel segment reported sales of $16.9 million and an
operating loss of $172,000 for the third quarter of 2008, including the $586,000
charge for the relocation of the round bar finishing line. Before giving effect
to the relocation charge, Dunkirk's operating income was $414,000 for the third
quarter of 2008, resulting in an operating margin of 2%. The operating results
for the quarter also include a $416,000 increase to the segment's LCM reserve.
In the third quarter of 2007, sales were $21.3 million and operating income was
$3.0 million, or 14% of sales, which included an increase to the LCM reserve of
$635,000, which was more than offset by an estimated FIFO benefit of $1.5
million from the timing of surcharges and the changing price of nickel. In the
second quarter of 2008, sales were $21.2 million and operating income of $2.1
million for the second quarter of 2008, or 10% of sales, and included a $259,000
charge to the LCM reserve.

Dunkirk's sales declined 20% while tons shipped decreased 16% compared with the
third quarter of 2007 mainly due to lower shipments of aerospace-related VAR
finished bar products to service centers and lower surcharges. The lower
shipment volume, shift in product mix and the effect of the inventory charge led
to the operating margin decline in the third quarter of 2008.

Dunkirk's sales decreased 20% and tons shipped decreased 21% compared with the
second quarter of 2008 due to lower shipments of aerospace-related VAR finished
bar products to both service centers and OEMs.

Business Outlook

The Company currently estimates that sales for the fourth quarter of 2008 will
range from $45 to $55 million and that diluted EPS will range from $0.20 to
$0.35, which includes the remaining expense, equivalent to $0.02 per diluted
share, for the relocation of the round bar finishing facility. In the fourth
quarter of 2007, sales were $49.6 million and diluted EPS was $0.65, and
included other income from the receipt of import duties equivalent to $0.06 per
diluted share.

The following factors were considered in developing the estimates for the fourth
quarter of 2008:

* The Company's total backlog at September 30, 2008 was $101
million compared with $97 million at June 30, 2008. The
increased backlog is primarily attributable to tool steel
plate and electro-slag remelted products.

* The Company's forecast is based on average September raw
material costs. The Company noted that raw material costs
have continued to decline since the end of the third quarter.
The forecast also does not include any receipts from import
duties for 2008, which the Company is seeking.

* Sales from the Dunkirk Specialty Steel segment are expected
to approximate $10 to 12 million in the fourth quarter of
2008 on lower pounds shipped compared with the fourth quarter
of 2007 due to the effect of the Boeing labor situation on
demand for aerospace products and very conservative buying
patterns of service centers. At the forecasted sales levels,
Dunkirk is expected to be breakeven for the quarter after
including the remaining expense related to the relocation
of the round bar finishing line.

* The Company reached a new five-year collective bargaining
agreement with its hourly employees at its Bridgeville
facility on October 8. The Company is fully focused on
resuming production levels, which were adversely affected
during labor negotiations, to meet its customer commitments.
Webcast

A simultaneous Webcast of the Company's conference call discussing the third
quarter of 2008 and the fourth 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.

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. The Company's actual results in future periods also may
be impacted by various economic and market risk and uncertainties, many of which
are beyond the Company's control. 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 For the Nine-
Quarter Ended Months Ended
September 30, September 30,
2008 2007 2008 2007
------- ------- -------- --------
Net Sales

Stainless steel $42,095 $45,510 $127,883 $130,208
Tool steel 10,393 7,281 31,159 20,822
High-strength
low alloy steel 2,564 6,006 9,509 19,812
High-temperature
alloy steel 1,763 2,637 6,253 7,737
Conversion
services 541 446 1,514 1,427
Other 283 128 1,648 297
------- ------- -------- --------
Total net sales 57,639 62,008 177,966 180,303
Cost of products
sold 51,040 50,875 150,837 143,337
Selling and
administrative
expenses 2,852 2,990 8,561 8,951
------- ------- -------- --------
Operating income 3,747 8,143 18,568 28,015
Interest expense (26) (181) (81) (603)
Other income 68 26 217 36
------- ------- -------- --------
Income before
taxes 3,789 7,988 18,704 27,448
Income tax
provision 1,063 2,521 5,985 9,332
------- ------- -------- --------
Net income $ 2,726 $ 5,467 $ 12,719 $ 18,116
======= ======= ======== ========
Earnings per
share - Basic $ 0.41 $ 0.82 $ 1.90 $ 2.73
======= ======= ======== ========
Earnings per
share - Diluted $ 0.40 $ 0.81 $ 1.87 $ 2.67
======= ======= ======== ========

Weighted average
shares of
Common Stock
outstanding
Basic 6,727,677 6,656,753 6,699,471 6,640,238
Diluted 6,832,070 6,783,147 6,807,699 6,772,963

MARKET SEGMENT INFORMATION

For the Quarter Ended For the Nine-Months Ended
September 30, September 30,
2008 2007 2008 2007
-------- -------- --------- ---------
Net Sales

Service centers $ 26,826 $ 31,451 $ 89,910 $ 93,154
Forgers 14,299 13,852 34,459 40,170
Rerollers 9,532 10,199 30,011 26,049
Original equipment
manufacturers 3,751 4,452 14,987 13,869
Wire redrawers 2,406 1,424 5,467 5,337
Conversion services 541 446 1,514 1,427
Other 284 184 1,618 297
-------- -------- --------- ---------
Total net sales $ 57,639 $ 62,008 $ 177,966 $ 180,303
======== ======== ========= =========
Tons shipped 10,808 11,372 33,998 33,856
======== ======== ========= =========

BUSINESS SEGMENT RESULTS

Universal Stainless & Alloy Products Segment

For the For the Nine-
Quarter Ended Months Ended
September 30, September 30,
2008 2007 2008 2007
-------- -------- --------- ---------
Net Sales

Stainless steel $ 29,168 $ 31,211 $ 85,379 $ 87,011
Tool steel 10,161 6,748 29,863 19,018
High-strength low
alloy steel 729 2,560 2,956 10,382
High-temperature
alloy steel 818 1,207 2,316 3,353
Conversion services 329 305 982 957
Other 252 107 1,524 229
-------- -------- --------- ---------
41,457 42,138 123,020 120,950
Intersegment 10,777 13,797 30,504 38,244
-------- -------- --------- ---------
Total net sales 52,234 55,935 153,524 159,194
Material cost of
sales 30,722 32,170 82,715 83,085
Operation cost of
sales 16,314 17,506 51,040 52,556
Selling and
administrative
expenses 1,933 2,022 5,940 6,311
-------- -------- --------- ---------
Operating income $ 3,265 $ 4,237 $ 13,829 $ 17,242
======== ======== ========= =========

Dunkirk Specialty Steel Segment

For the For the
Quarter Ended Nine-Months Ended
September 30, September 30,
2008 2007 2008 2007
-------- -------- -------- --------

Net Sales

Stainless steel $ 12,926 $ 14,299 $ 42,503 $ 43,197
Tool steel 232 533 1,296 1,804
High-strength low
alloy steel 1,835 3,446 6,553 9,430
High-temperature
alloy steel 945 1,430 3,937 4,384
Conversion services 212 141 532 470
Other 32 21 125 68
-------- -------- -------- --------
16,182 19,870 54,946 59,353
Intersegment 758 1,398 3,220 3,676
-------- -------- -------- --------
Total net sales 16,940 21,268 58,166 63,029
Material cost of
sales 11,219 13,130 36,184 36,374
Operation cost of
sales 4,974 4,145 14,622 13,451
Selling and
administrative
expenses 919 968 2,621 2,640
-------- -------- -------- --------
Operating income
(loss) $ (172) $ 3,025 $ 4,739 $ 10,564
======== ======== ======== ========

CONSOLIDATED BALANCE SHEET

September 30, December 31,
2008 2007
--------- ---------
Assets

Cash $ 13,598 $ 10,648
Accounts receivable, net 33,867 27,501
Inventory 70,424 65,572
Other current assets 6,008 5,537
--------- ---------
Total current assets 123,897 109,258
Property, plant & equipment, net 60,503 54,271
Other assets 980 767
--------- ---------
Total assets $ 185,380 $ 164,296
========= =========

Liabilities and Stockholders' Equity

Trade accounts payable $ 21,881 $ 13,983
Outstanding checks in excess of
bank balance 1,785 2,064
Accrued employment costs 4,964 5,307
Current portion of long-term debt 400 383
Other current liabilities 423 1,600
--------- ---------
Total current liabilities 29,453 23,337
Long-term debt 1,146 1,453
Deferred taxes 10,612 9,904
--------- ---------
Total liabilities 41,211 34,694
Stockholders' equity 144,169 129,602
--------- ---------
Total liabilities and
stockholders' equity $ 185,380 $ 164,296
========= =========

CONSOLIDATED STATEMENT OF CASH FLOW DATA

For the Nine-month Period Ended September 30,

2008 2007
-------- --------
Cash flows provided by operating activities:
Net income $ 12,719 $ 18,116
Adjustments to reconcile to net
cash provided by operating activities:
Depreciation and amortization 3,030 2,764
Deferred tax decrease 191 (448)
Stock based compensation expense 591 332
Tax benefit from share-based
payment arrangements (534) (976)
Changes in assets and liabilities:
Accounts receivable, net (6,366) (5,977)
Inventory (4,852) 3,070
Trade accounts payable 7,898 552
Accrued employment costs (343) 1,772
Other, net (487) 293
-------- --------
Cash flow provided by operating
activities 11,847 19,498
-------- --------
Cash flow used in investing activities:
Capital expenditures (9,585) (6,429)
-------- --------
Cash flow used in investing activities (9,585) (6,429)
-------- --------
Cash flows used in financing activities:
Revolving credit net repayments -- (8,392)
Long-term debt repayments (290) (1,771)
Net change in outstanding checks in
excess of bank balance (279) 364
Proceeds from issuance of common stock 723 975
Tax benefit from share-based payment
arrangements 534 976
-------- --------
Cash flow (used in) provided by financing
activities 688 (7,848)
-------- --------
Net cash flow $ 2,950 $ 5,221
======== ========
-0-
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