* Net revenues of $166.3 million for the third quarter of fiscal
2008, an increase of $25.3 million over the third quarter of
fiscal 2007.
* Net income of $17.6 million, or $1.46 per diluted share, for the
third quarter of fiscal 2008, compared to net income of $17.7
million, or $1.49 per diluted share, for the third quarter of
fiscal 2007.
* Net revenues of $476.2 million for the nine months ended June 30,
2008, an increase of $77.3 million over the same period of fiscal
2007.
* Net income of $46.5 million, or $3.87 per diluted share, for the
nine months ended June 30, 2008, compared to net income of $48.3
million, or $4.40 per diluted share, for the same period of fiscal
2007.
KOKOMO, Ind., Aug. 6, 2008 (GLOBE NEWSWIRE) -- Haynes International, Inc. (Nasdaq:HAYN) today reported net revenues of $166.3 million and net income of $17.6 million, or $1.46 per diluted share, for the three months ended June 30, 2008 and net revenues of $476.2 million and net income of $46.5 million, or $3.87 per diluted share, for the nine months ended June 30, 2008.
"I am very pleased with the operating results from the third quarter of fiscal 2008. We continue to improve results from quarter-to-quarter in a competitive environment. This improvement reflects the marketing and sales effort to diversify and expand our markets and the operating improvements gained by our capital upgrade program," said Francis Petro, Haynes' President and Chief Executive Officer.
Commenting on the outlook for the balance of the current fiscal year and forward, Mr. Petro said, "I expect the favorable demand trend for high-performance alloys to largely continue in our significant end markets. In addition, our capital upgrade program will increase our production capacity, allowing us to participate in the expected market growth, particularly in the later part of fiscal 2009. As we previously stated, we also expect a reduction in manufacturing costs and improvements in our working capital position."
Quarterly Results
Net revenues increased by $25.3 million, or 17.9%, to $166.3 million in the third quarter of fiscal 2008 from $141.1 million in the same period of fiscal 2007. Volume for all products increased by 6.3% to 6.2 million pounds in the third quarter of fiscal 2008 from 5.8 million pounds in the same period of fiscal 2007. Volume of high-performance alloys increased by 20.8% to 6.1 million pounds in the third quarter of fiscal 2008 from 5.0 million pounds in the same period of fiscal 2007. As a result of the Company's strategy to focus on the production and sale of high-performance alloy wire, volume of stainless steel wire decreased to 0.1 million pounds in the third quarter of fiscal 2008 from 0.8 million pounds in the same period of fiscal 2007. It is anticipated that there will continue to be a recurring amount of stainless steel wire produced and sold into certain specialty markets. The aggregate average selling price per pound increased by 10.9% to $26.75 per pound in the third quarter of fiscal 2008 from $24.12 per pound in the same period of fiscal 2007 because of changes in product mix (including market, form and alloy), an increased level of service center value-added business and changes in raw material prices. Although nickel prices were lower in the third quarter of fiscal 2008 than in the same period of fiscal 2007, the lower price of nickel was offset by increased prices for other raw materials that are significant in the manufacture of the Company's products, such as molybdenum, cobalt and chromium.
Cost of sales increased to $126.2 million, or 75.9% of net revenues, in the third quarter of fiscal 2008, compared to $104.1 million, or 73.8% of net revenues, in the same period of fiscal 2007. Cost of sales in the third quarter of fiscal 2008 grew as a result of increased volumes, increased manufacturing costs due to planned equipment outages and product mix due to an increase in the production and sale of higher-cost alloy and forms. In the third quarter of fiscal 2007, cost of sales was increased due to a one-time bonus accrual to union employees upon ratification of the collective bargaining agreement of $2.2 million (or 1.6% of net revenue), which did not repeat in the third quarter of fiscal 2008. This decrease was, however, partially offset by higher wage rates for union employees and increased fringe benefit costs.
Selling, general and administrative expenses increased $0.1 million or 1.3% to $11.0 million in the third quarter of fiscal 2008 from $10.9 million in the same period of fiscal 2007 primarily due to higher business activity causing commissions and sales expenses to increase. Selling, general and administrative expenses as a percentage of net revenues decreased to 6.6% in the third quarter of fiscal 2008 compared to 7.7% for the same period of fiscal 2007 due primarily to increased revenues.
Research and technical expense increased 9.6% to $0.82 million in the third quarter of fiscal 2008 from $0.75 million in the same period of fiscal 2007 due to normal inflationary increases and increased staff levels required to support the transition of retiring employees.
Operating income in the third quarter of fiscal 2008 was $28.3 million compared to $25.3 million in the same period of fiscal 2007.
Interest expense decreased 91.6% to $0.02 million in the third quarter of fiscal 2008 from $0.3 million in the same period of fiscal 2007. The decrease is from a lower average debt balance outstanding and a lower borrowing rate of interest.
Income tax expense increased to $10.7 million in the third quarter of fiscal 2008 from $7.3 million in the same period of fiscal 2007 primarily due to higher pretax income and a higher effective tax rate. The effective tax rate for the third quarter of fiscal 2008 was 37.9% compared to 29.2% in the same period of fiscal 2007. The low effective tax rate last year in the third quarter of fiscal 2007 was a result of the filing of amended tax returns during the quarter to claim favorable items from extraterritorial income exclusion and foreign tax credits, which approximated $2.9 million.
Net income decreased by $0.1 million to $17.6 million in the third quarter of fiscal 2008 from $17.7 million in the same period of fiscal 2007.
Results for nine months ended June 30, 2008
Net revenues increased by $77.3 million, or 19.4%, to $476.2 million for the first nine months of fiscal 2008 from $398.9 million in the same period of fiscal 2007. Volume for all products increased by 2.8% to 17.5 million pounds for the first nine months of fiscal 2008 from 17.0 million pounds in the same period of fiscal 2007. Volume of high-performance alloys increased by 14.2% to 17.1 million pounds for the first nine months of fiscal 2008 from 15.0 million pounds in the same period of fiscal 2007. As a result of the Company's strategy to reduce production of stainless steel wire and increase production of high-performance alloy wire, volume of stainless steel wire decreased to 0.4 million pounds for the nine months of fiscal 2008 from 2.0 million pounds in the same period of fiscal 2007. It is anticipated that there will continue to be a recurring amount of stainless steel wire produced and sold into certain specialty markets. The aggregate average selling price per pound increased by 16.1% to $27.20 per pound for the nine months of fiscal 2008 from $23.42 per pound in the same period of fiscal 2007 because of changes in product mix (including market, form and alloy), an increased level of service center value-added business, and changes in raw material prices. Although nickel prices were lower for the nine months of fiscal 2008 than in the same period of fiscal 2007, the lower price of nickel was offset by increased prices for other raw materials which are significant in the manufacture of the Company's products, such as molybdenum, cobalt and chromium.
Cost of sales increased to $365.9 million, or 76.8% of net revenues, for the first nine months of fiscal 2008, compared to $288.0 million, or 75.3% of net revenues, in the same period of fiscal 2007. Cost of sales increased as a result of increased volumes, increased manufacturing costs due to equipment outages, and changes in product mix due to an increase in the production and sale of higher-cost alloy and forms. In the third quarter of fiscal 2007 cost of sales was increased due to a one-time bonus accrual to union employees upon ratification of the collective bargaining agreement of $2.2 million (or 0.6% of net revenue), which did not repeat in the first nine months of fiscal 2008. This decrease was however, partially offset by higher wage rates for union employees and increased fringe benefit costs in fiscal 2008. Cost of sales in the first nine months of fiscal 2008 was also decreased by a $3.7 million (0.8% of net revenue) pension curtailment gain, which was recorded due to an amendment to freeze future pension benefit accruals for non-union employees in the U.S.
Selling, general and administrative expenses increased $1.9 million to $31.1 million for the first nine months of fiscal 2008 from $29.2 million for the same period of fiscal 2007 due to: (i) higher business activity causing commissions and sales expenses to increase $2.4 million, and (ii) the fiscal 2007 reduction in allowance for doubtful accounts of $0.6 million compared to the first nine months of fiscal 2008 to reflect the favorable write-off history. These increases were partially offset by a decrease in stock compensation expense of $1.1 million. Selling, general and administrative expenses as a percentage of net revenues decreased to 6.5% for the first nine months of fiscal 2008 compared to 7.1% for the same period of fiscal 2007 due primarily to increased revenues.
Research and technical expense increased $0.3 million to $2.6 million for the first nine months of fiscal 2008 from $2.2 million in the same period of fiscal 2007 due to normal inflationary increases and increased staff levels required to support the transition of retiring employees.
Operating income for the first nine months of fiscal 2008 was $76.6 million compared to $79.5 million in the same period of fiscal 2007.
Interest expense decreased to $0.8 million for the first nine months of fiscal 2008 from $3.3 million for the same period of fiscal 2007. The decrease is due to a lower average debt balance outstanding resulting from: (i) the Company's application of proceeds from the equity offering that occurred near the end of the second quarter of fiscal 2007, (ii) cash generated from operations, and (iii) proceeds from the exercise of stock options which were used to reduce the outstanding debt balance.
Income tax expense increased to $29.3 million for the first nine months of fiscal 2008 from $27.8 million in the same period of fiscal 2007 primarily due to a higher effective tax rate. The effective tax rate for the first nine months of fiscal 2008 was 38.7% compared to 36.6% in the same period of fiscal 2007. The lower effective tax rate last year in the third quarter of fiscal 2007 was a result of the filing of amended tax returns during the quarter to claim favorable items from extraterritorial income exclusion and foreign tax credits, which approximated $2.9 million. It is expected that the effective tax rate for fiscal 2008 will be between 38.0% and 39.0%.
Net income decreased by $1.9 million, or 3.8% to $46.5 million for the first nine months of fiscal 2008 from $48.3 million in the same period of fiscal 2007.
Comparative Cash Flow Analysis
During the first nine months of fiscal 2008, the Company's primary sources of cash were cash from operations, borrowings under its U.S. revolving credit facility and proceeds from the exercise of stock options (including related tax benefits). At June 30, 2008, Haynes had cash and cash equivalents of approximately $9.9 million compared to cash and cash equivalents of approximately $5.7 million at September 30, 2007.
Net cash provided by operating activities was $30.5 million for the first nine months of fiscal 2008 compared to $22.5 million in the same period of fiscal 2007. Several items contributed to the difference. First, cash provided by operating activities for the first nine months of fiscal 2007 included the proceeds of the $50.0 million up-front payment received from Titanium Metals Corporation as a result of the Conversion Services Agreement entered into in that period. Second, inventory balances (net of foreign currency adjustments) at June 30, 2008 were $33.6 million higher than at September 30, 2007, as a result of both planned outages and increased levels of inventory required to support an increased sales level for the first nine months of fiscal 2008 as compared to an increase of $102.5 million for the first nine months of fiscal 2007. Third, cash generated from a decrease in accounts receivable was $11.6 million for the first nine months of fiscal 2008 as compared to a use of cash of $4.4 million for the first nine months of fiscal 2007. Net cash used in investing activities was $17.9 million (which consist primarily of cash paid for capital expenditures of $15.0 million and the Asian distribution expansion and acquisition of $3.0 million) for the first nine months of fiscal 2008 compared to $11.0 for the first nine months of fiscal 2007, primarily as a result of the ongoing capital expenditure program. Net cash used by financing activities included a reduction in borrowings on the revolving credit facility of $13.2 million as a result of cash generated from operations and proceeds from the exercise of stock options (including excess tax benefits) of $4.8 million.
Backlog
The Company's consolidated backlog increased by $16.3 million, or 6.9%, to $252.6 million at June 30, 2008 from $236.3 million at September 30, 2007.
Completion of Key Capital Projects
Beginning in fiscal 2006, the Company began making significant investments in order to increase capacity in its sheet finishing operations, including upgrades to its cold rolling mill and one of two annealing lines, which were completed in fiscal 2007. The first phase of upgrades to the second annealing line was completed in the second quarter of fiscal 2008, and the second phase of these upgrades was completed in the third quarter of fiscal 2008, with final testing and survey of the equipment in the fourth quarter. These upgrades to the sheet finishing operations have increased the production capacity for high-performance alloys in sheet form from 9.0 million pounds per year to 14.0 million pounds per year. The Company's objective is to produce and sell 23.5 million pounds of high-performance alloys by no later than fiscal 2010 and possibly as early as fiscal 2009. With the completion of the upgrades to sheet finishing capacity and along with other capital upgrades since fiscal 2005, management is in the process of evaluating the positive impact of all these upgrades on total high-performance alloy production and capacity across all product forms. It is believed that the upgrades will allow the Company to produce high-performance alloy volume in excess of the original estimate of 23.5 million pounds.
Outlook
Management believes that growth in high-performance alloy volumes from fiscal 2007 to fiscal 2008 will approximate between 10.0% to 11.0%. In addition to increasing capacity, management also believes that the completion of its current capital projects and the related improvements in reliability and performance of the equipment will have a positive long-term effect on profitability and working capital management. Gross profit as a percentage of revenue is expected to be approximately 24.4% to 25.0% in the fourth quarter of fiscal 2008 as a result of the anticipated operating improvements from the capital spending projects.
Although the current order entry activity for the Company continues to be strong, a slowdown in overall global economic growth, an economic downturn or recession could materially reduce the demand for the Company's products and materially and adversely affect its business.
Earnings Conference Call
The Company will host a conference call on Thursday, August 7, 2008 to discuss its third quarter financial results for the periods ended June 30, 2008. The Company's Third Quarter 10-Q will be filed on Wednesday, August 6, 2008. Francis Petro, President and Chief Executive Officer, and Marcel Martin, Chief Financial Officer and Vice President of Finance, will host the call and be available to answer questions.
To participate, please dial the teleconferencing number shown below five minutes prior to the scheduled conference time.
Date: Thursday, August 7, 2008
Time: 9:00 a.m. Eastern Time
8:00 a.m. Central Time
7:00 a.m. Mountain Time
6:00 a.m. Pacific Time
Dial-In Numbers: 877-407-8033 (Domestic)
201-689-8033 (International)
A live Webcast of the conference call will be available at www.haynesintl.com.
For those unable to participate a replay will be available from Thursday, August 7th at 11:00 a.m. Eastern Time, through 11:59 p.m. Eastern Time on Friday, August 15, 2008. To listen to the replay, please dial:
Domestic: 877-660-6853
International: 201-612-7415
Replay Access: Account: 286 Conference: 292291
A replay of the Webcast will also be available at www.haynesintl.com.
About Haynes International
Haynes International, Inc. is a leading developer, manufacturer and marketer of technologically advanced, high performance alloys, primarily for use in the aerospace, chemical processing and land-based bas turbine industries.
The Haynes International, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4319
Cautionary Note Regarding Forward-Looking Statements
This news release contains statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934, particularly under the "Outlook" section above. When used in this news release, the words "believes," "anticipates," "expects," "plans" and similar expressions are intended to identify forward-looking statements. Although the Company believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, such forward-looking statements are subject to a number of risks and uncertainties, and the Company can provide no assurances that such plans, intentions or expectations will be achieved. Many of these risks are discussed in detail in the Company's filings with the Securities and Exchange Commission, in particular in its Form 10-K for the fiscal year ended September 30, 2007 and its Form 10-Q for the fiscal quarter ended March 31, 2008. You should carefully read these risk factors.
All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. All forward-looking statements speak only to the respective dates on which such statements are made and the Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
It is not possible to anticipate and list all risks and uncertainties that may affect the future operations or financial performance of the company; however, they include, but are not limited to, the following:
* Commercialization of new production capacity;
* Any significant decrease in customer demand for our products or in
demand for our customers' products;
* Our dependence on production levels at our Kokomo facility and our
ability to make capital improvements at that facility;
* Rapid increases in the cost of nickel, energy and other raw
materials;
* Our ability to continue to develop new commercially viable
applications and products;
* Our ability to recruit and retain key employees;
* Our ability to comply, and the costs of compliance, with
applicable environmental laws and regulations; and
* Economic and market risks associated with foreign operations and
U.S. and world economic and political conditions.
Schedule I
HAYNES INTERNATIONAL, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per share data)
Three Months Ended Nine Months Ended
June 30, June 30,
2007 2008 2007 2008
---------- ---------- ---------- ----------
Net revenues $ 141,087 $ 166,340 $ 398,886 $ 476,188
Cost of sales 104,148 126,223 287,993 365,946
---------- ---------- ---------- ----------
Gross profit 36,939 40,117 110,893 110,242
Selling, general and
administrative expense 10,871 11,007 29,152 31,059
Research and technical
expense 747 819 2,225 2,566
---------- ---------- ---------- ----------
Operating income 25,321 28,291 79,516 76,617
Interest expense, net 263 22 3,338 802
---------- ---------- ---------- ----------
Income before income
taxes 25,058 28,269 76,178 75,815
Provision for income
taxes 7,317 10,705 27,849 29,345
---------- ---------- ---------- ----------
Net income $ 17,741 17,564 $ 48,329 46,470
========== ========== ========== ==========
Net income per share:
Basic $ 1.52 $ 1.47 $ 4.55 $ 3.91
========== ========== ========== ==========
Diluted $ 1.49 $ 1.46 $ 4.40 $ 3.87
========== ========== ========== ==========
Weighted average shares
outstanding:
Basic 11,650,000 11,921,541 10,616,484 11,882,929
Diluted 11,913,310 12,045,253 10,981,509 12,013,792
Schedule II
HAYNES INTERNATIONAL, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share data)
Sept. 30, June 30,
ASSETS 2007 2008
--------- ---------
Current assets:
Cash and cash equivalents $ 5,717 $ 9,857
Restricted cash - current portion 110 110
Accounts receivable, less allowance for doubtful
accounts of $1,339 and $1,481, respectively 106,414 95,557
Inventories, net 286,302 321,946
Income taxes receivable 1,760 2,060
Deferred income taxes 10,801 10,039
Other current assets 1,457 3,368
--------- ---------
Total current assets 412,561 442,937
--------- ---------
Property, plant and equipment (at cost) 117,181 133,404
Accumulated depreciation (19,321) (26,194)
--------- ---------
Net property, plant and equipment 97,860 107,210
--------- ---------
Deferred income taxes - long term portion 22,738 19,358
Prepayments and deferred charges, net 3,702 2,864
Restricted cash - long term portion 330 220
Goodwill 41,252 43,737
Other intangible assets 8,526 8,202
--------- ---------
Total assets $ 586,969 $ 624,528
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 60,443 $ 71,139
Accrued pension and postretirement benefits 14,647 20,518
Revolving credit facilities 35,549 22,347
Deferred revenue - current portion 2,500 2,500
Current maturities of long-term obligations 110 110
--------- ---------
Total current liabilities 113,249 116,614
--------- ---------
Long-term obligations (less current portion) 3,074 3,123
Deferred revenue (less current portion) 45,329 43,454
Non-current income taxes payable -- 2,591
Accrued pension and postretirement benefits 108,940 85,959
--------- ---------
Total liabilities 270,592 251,741
--------- ---------
Stockholders' equity:
Common stock, $0.001 par value (40,000,000
shares authorized, 11,807,237 and 11,953,766
issued and outstanding at September 30, 2007
and June 30, 2008, respectively) 12 12
Preferred stock, $0.001 par value (20,000,000
shares authorized, 0 shares issued and
outstanding) -- --
Additional paid-in capital 218,504 224,501
Accumulated earnings 93,880 139,523
Accumulated other comprehensive income 3,981 8,751
--------- ---------
Total stockholders' equity 316,377 372,787
--------- ---------
Total liabilities and stockholders' equity $ 586,969 $ 624,528
========= =========
Schedule III
HAYNES INTERNATIONAL, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
June 30,
--------------------
2007 2008
Cash flows from operating activities:
Net income $ 48,329 $ 46,470
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 5,474 6,561
Amortization 843 824
Stock compensation expense 2,359 1,216
Excess tax benefit from option exercises (7,888) (2,842)
Deferred revenue 50,000 --
Deferred revenue - portion recognized (1,546) (1,875)
Deferred income taxes 2,775 1,767
Loss on disposal of property 51 223
Change in assets and liabilities:
Accounts receivable (4,412) 11,587
Inventories (102,540) (33,595)
Other assets (2,695) (934)
Accounts payable and accrued expenses 33,693 8,953
Income taxes 1,727 4,715
Accrued pension and postretirement benefits (3,242) (12,578)
--------- ---------
Net cash provided by operating activities 22,473 30,492
--------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment (11,132) (15,041)
Asian distribution expansion and acquisition -- (3,000)
Change in restricted cash 110 110
--------- ---------
Net cash used in investing activities (11,022) (17,931)
--------- ---------
Cash flows from financing activities:
Net decrease in revolving credit facility (99,032) (13,202)
Proceeds from equity offering, net 72,753 --
Proceeds from exercise of stock options 6,083 1,939
Excess tax benefit from option exercises 7,888 2,842
Payments on long-term obligations (123) (139)
--------- ---------
Net cash used in financing activities (12,431) (8,560)
--------- ---------
Effect of exchange rates on cash 224 139
--------- ---------
Increase (decrease) in cash and cash equivalents (756) 4,140
Cash and cash equivalents, beginning of period 6,182 5,717
--------- ---------
Cash and cash equivalents, end of period $ 5,426 $ 9,857
========= =========
Supplemental disclosures of cash flow
information:
Cash paid during period for: Interest (net of
capitalized
interest) $ 3,198 $ 972
========= =========
Income taxes $ 23,818 $ 23,414
========= =========
CONTACT: Haynes International, Inc.
Marcel Martin, Chief Financial Officer and Vice President
of Finance
765-456-6129
|
Haynes International, Inc. Reports Third Quarter Fiscal 2009 Financial Results and Announces Further Cost Reduction Measures - Aug 6, 2009
| Haynes International, Inc. to Host Third Quarter Conference Call - Aug 4, 2009
| Haynes International, Inc. Reports Second Quarter Fiscal 2009 Financial Results - May 7, 2009
| Haynes International, Inc. to Host Second Quarter Conference Call - May 5, 2009
| Haynes International, Inc. Announces 2009 Non-Cash Goodwill Impairment Charge and Date for Second Fiscal Quarter 2009 Earnings Release - Apr 24, 2009
| | More >>
| Symbol: |
HAYN |
| Last Trade: |
26.91
(11/20/2009 ET)
|
| Change: |
+0.40
(+1.50%)
|
| Day's Range: |
26.00 -
27.040 |
| Open: |
26.16 |
| Previous Close: |
26.51 |
| TSO: |
12,097,000 |
| Market Cap: |
325.53M |
| Day's Volume: |
75,233 |
|
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