Universal Stainless & Alloy Products, Inc.

and thank you for standing by. Welcome to the Universal Stainless and Alloy Products second quarter 2023 conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To remove yourself from the queue, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to June Fillingeri. Please go ahead.

Thank you. Good morning. This is June Fillingeri of ComPartners, and I'd also like to welcome you to the Universal Stainless call and webcast. We are here to discuss the company's second quarter 2023 results reported this morning. With us for management are Denny Oates, Chairman, President and Chief Executive Officer, Chris Zimmer, Executive Vice President and Chief Operating Officer, John Arminas, Vice President and General Counsel, and Steve DiTomaso, Vice President and Chief Financial Officer. Before I turn the call over to management, let me quickly review procedures. After management has made formal remarks, we will take your questions. The conference operator, Norma, We'll take your questions. 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 the formalities complete, I would now like to turn the call over to Denny Oates. Denny, we are ready to begin.

Okay, June, thank you. Good morning, everyone. Thanks for joining us today. The main highlight of our second quarter performance is improving profitability, a product of the positive momentum we described in our last call. More specifically, Gross profit margin reached 14.3% of sales, despite an across-the-board drop in commodity metal prices that resulted in negative surcharge misalignment of about a half a million dollars. First quarter gross margin was 11.7%. The margin improvement in the most recent quarter led to a more than doubling of operating income to $3.1 million. We turned the corner on bottom line profitability with net income reaching $900,000 or 10 cents per diluted share. The main drivers of second quarter profitability were higher shipment volume, both sequentially and year-over-year, increased production, improved productivity at key operations, and higher base selling prices. We announced two additional price increases in the second quarter on bar and plate products. Adjusted EBITDA of almost $8 million in the second quarter was the highest achieved since the second quarter of 2019 and increased 17% from last quarter. Looking at our top line, net sales remained strong at $69 million, an increase of 5% sequentially, and up 32% year over year. That's the highest level since the second quarter of 2019. Year-to-date sales reached $135 million, an increase of 35% over last year. The second quarter sales included premium alloy sales of $12.9 million, which is 27% lower than the record first quarter. but 46% higher than the second quarter of 2022. Year-to-date premium alloy sales are up 72% to 30.5 million, or 23% of sales. We expect premium product sales to be above Q1's record levels during the second half of the year. Our premium alloy sales are for aerospace applications. Aerospace sales increased 5% to a record $51 million in the second quarter, up 44% year-over-year,