Advertisement
New Zealand markets closed
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NZD/USD

    0.5970
    -0.0005 (-0.09%)
     
  • NZD/EUR

    0.5536
    +0.0003 (+0.05%)
     
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD

    2,254.80
    +16.40 (+0.73%)
     
  • NASDAQ

    18,254.69
    -26.15 (-0.14%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • Dow Jones

    39,807.37
    +47.29 (+0.12%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     
  • NZD/JPY

    90.3340
    -0.0590 (-0.07%)
     

Haynes International, Inc. Reports First Quarter Fiscal 2023 Financial Results

Haynes International, Inc.
Haynes International, Inc.
  • Backlog continues to climb achieving company record $408.2 million as of December 31, 2022, up 9.2% from previous quarter and up 87.7% year-over-year.

  • Net revenue of $132.7 million, up 33.4% over same period last year, with sales into aerospace up 33.2%, chemical processing up 30.2% and industrial gas turbines up 78.3%.

  • Gross margin of 17.4% of net revenue, with a higher than expected raw material headwind compressing margins.  Excluding the estimated raw material impact, adjusted gross margin remained above 21%.

  • Net income of $7.7 million, up from last year’s first quarter of $4.6 million. Diluted earnings per share of $0.61 compared to last year’s first quarter of $0.37.

  • Revolver balance of $88.0 million, driven by strong backlog growth as continued investment in work-in-process inventory fuels revenue growth. Credit facility size of $160 million provides strong liquidity moving forward.

  • Capital investment in first quarter of fiscal year 2023 of $3.3 million. Total planned capital expenditures for fiscal 2023 remain at $20-$24 million.

  • Regular quarterly cash dividend of $0.22 per outstanding share of the Company’s common stock declared.

KOKOMO, Ind., Feb. 02, 2023 (GLOBE NEWSWIRE) -- Haynes International, Inc. (NASDAQ GM: HAYN) (the “Company”), a leading developer, manufacturer and marketer of technologically advanced high-performance alloys, today reported financial results for its first fiscal quarter ended December 31, 2022. In addition, the Company announced that its Board of Directors has authorized a regular quarterly cash dividend of $0.22 per outstanding share.

“Year-on-year revenue growth was 30% or higher in each of our major markets in the first quarter of fiscal 2023 with total revenue up 33.4%.  Our aerospace business continues to increase rapidly, and was 48.6% of our first quarter revenue, driven by strong single-aisle demand, along with the first signs of double-aisle demand beginning to return.  In addition, our backlog has increased for 21 consecutive months and now is at a record $408 million”, said Michael L. Shor, President and Chief Executive Officer. “Raw material headwinds in the quarter were higher than we originally estimated primarily due to declining cobalt prices.  Excluding the estimated raw material impact, our adjusted gross margin remained above 21% as we continue to successfully offset inflation with our high-value differentiated products and services, our innovative alloy and application development, and our variable cost improvement initiatives.”

ADVERTISEMENT

1st Quarter Results

Net Revenues.   Net revenues were $132.7 million in the first quarter of fiscal 2023, an increase of 33.4% from the same period of fiscal 2022 due to increases in volume in key markets, combined with increases in average selling price per pound in all markets. The increase in pounds sold is due to strong sales in the aerospace market, as well as the industrial gas turbine market, compared to the first quarter of fiscal 2022. The increase in product average selling price per pound largely reflects price increases and other sales factors, which increased the average selling price per pound by approximately $4.19, and higher market prices of raw materials, which increased average selling price per pound by approximately $1.07, partially offset by a change in product mix, which decreased average selling price per pound by approximately $1.64.

Cost of Sales. Cost of sales was $109.6 million, or 82.6% of net revenues, in the first quarter of fiscal 2023 compared to $81.7 million, or 82.1% of net revenues, in the same period of fiscal 2022. The 0.5% increase in cost of sales as a percentage of revenues was primarily attributable to higher raw material costs flowing through cost of goods sold, partially offset by variable cost saving measures.

Gross Profit.   As a result of the above factors, gross profit was $23.0 million for the first quarter of fiscal 2023, an increase of $5.3 million from the same period of fiscal 2022. Gross profit as a percentage of net revenue decreased to 17.4% in the first quarter of fiscal 2023 as compared to 17.9% in the same period of fiscal 2022. The first quarter of fiscal 2023 was adversely affected by increasing raw material prices included in cost of sales relative to the impact of raw material prices in selling prices which lowered gross margin.  Partially offsetting the compression of margins due to raw material price changes was increased gross profit generated from variable cost saving measures and a higher utilization of fixed costs driven from greater volumes shipped.

Selling, General and Administrative Expense.   Selling, general and administrative expense was $11.0 million for the first quarter of fiscal 2023, a decrease of $0.4 million, or 3.6%, from the same period of fiscal 2022. The 3.1% decrease in selling, general and administrative expense as a percentage of net revenues was largely driven by higher net revenues and the benefit of lower expenses in fiscal 2023. Additionally, exchange rate losses of $(0.6) million recorded in first quarter of fiscal 2022 also contributed to the decrease in expenses from the first quarter of fiscal 2022 to the first quarter of fiscal 2023.

Research and Technical Expense. Research and technical expense was $1.0 million, or 0.7% of net revenue, for the first quarter of fiscal 2023, compared to $0.9 million, or 0.9% of net revenue, in the same period of fiscal 2022.

Operating Income/(Loss). As a result of the above factors, including increased sales volume, higher pricing as well as continued cost reductions leading to improved gross profit, operating income in the first quarter of fiscal 2023 was $11.1 million compared to $5.5 million in the same period of fiscal 2022.

Nonoperating retirement benefit expense.   Nonoperating retirement benefit expense was a benefit of $0.4 million in the first quarter of fiscal 2023 compared to a benefit of $1.1 million in the same period of fiscal 2022. The lower benefit recorded in nonoperating retirement benefit was primarily driven by an increase in the discount rate used in the actuarial valuation of the U.S. pension plan liability as of September 30, 2022 which resulted in a higher interest cost component of nonoperating retirement benefit expense (income) in the first quarter of fiscal 2023 when compared to the first quarter of fiscal 2022. Partially offsetting the higher interest cost was the amortization of the actuarial gains of the U.S. pension plan liability in the first quarter of fiscal 2023.

Income Taxes.   Income tax expense was $2.2 million during the first quarter of fiscal 2023, a difference of $0.6 million from expense of $1.6 million in the same period of fiscal 2022, driven primarily by a difference in income before income taxes of $3.7 million.  The effective tax rate in the first quarter of fiscal 2023 was 22.5% as compared to 26.1% during the same period of fiscal 2022.

Net Income. As a result of the above factors, net income in the first quarter of fiscal 2023 was $7.7 million, compared to $4.7 million in the same period of fiscal 2022.

Volumes and Pricing

Volume shipped in the first quarter of fiscal 2023 was 4.6 million pounds. First quarter volume is typically impacted by holidays, planned maintenance outages and customers managing their calendar year-end balance sheets. As a result, volume dropped sequentially by 6.8% in the first quarter of fiscal 2023 compared to the fourth quarter of fiscal 2022, however compared to the same quarter in the prior fiscal year, volume increased 17.4%. Aerospace volume increased 17.3% along with a 13.5% increase in aerospace average selling price resulting in a 33.2% or $16.1 million aerospace revenue increase compared to the prior year. The volume increase is primarily driven by the single-aisle aircraft recovery. Volumes in the chemical processing industry (CPI) decreased by 1.0%, however CPI average selling price increased 31.5% resulting in a 30.2% or $5.2 million CPI revenue increase compared to the prior year. Industrial gas turbine (IGT) volumes were up 61.3% along with a 10.5% increase in the IGT average selling price resulting in a 78.3% or $11.4 million IGT revenue increase compared to the prior year. Other markets revenue increased 1.6%, and other revenue increased by 5.7%. Overall, volumes are expected to increase with the high level of backlog.

The Company has an ongoing strategy of increasing margins, recognizing the high-value, differentiated products and services it offers. The Company implemented multiple price increases for contract and non-contract business as market conditions improved and in response to higher inflation. Customer long-term agreements typically have adjustors for specific raw material prices and for changes in the producer price index to help cover general inflationary items. The product average selling price per pound in the first quarter of fiscal 2023 was $28.12, which increased 14.8% year-over-year primarily due to the noted price increases and raw material adjustors.

Gross Profit Margin Trend Performance

Gross profit margin was 17.4% in the first quarter of fiscal 2023 compared to 17.9% in the same period last year and 22.2% in fourth quarter of fiscal 2022. Volatility of raw materials, specifically nickel and cobalt, have impacted gross margins. During fiscal 2022 this impact was favorable due to rising raw material prices which increased gross margins, however in the first quarter of fiscal 2023 this impact was unfavorable due to decreasing raw material prices which lowered gross margins. Excluding this raw material impact, gross margin percentages in the past three quarters (including this quarter) remained above 21% as compared to the first and second quarters of fiscal 2022 where gross margin percentages excluding the raw material impact were 16-18%.

A significant strategic effort to improve gross margins has occurred over the past few years. As a result of this strategy, the Company reduced the volume breakeven point by over 25%. The Company previously struggled to be profitable at roughly 5.0 million pounds. With the current product mix, the Company can generate profits at lower volumes as first demonstrated in the third quarter of fiscal 2021, producing a positive net income at only 3.7 million pounds shipped. As volumes continue to rise, margin leverage is expected to continue with gross margins (excluding raw material impacts) of over 20% even with the inflation headwind.

Backlog

The Company experienced continued high levels of order entry over the past quarter. Backlog was a record $408.2 million at December 31, 2022, an increase of $34.4 million, or 9.2% from the fourth quarter of fiscal 2022 and an increase of $190.7 million, or 87.7% from the first quarter of fiscal 2022. In addition, the backlog has increased for 21 consecutive months. Backlog pounds increased 6.6% during the first quarter to approximately 13.6 million pounds.  The increases were predominately in the aerospace and industrial gas turbine markets. The average selling price of products in the Company’s backlog increased by 2.5% in the first quarter of fiscal 2023 from the fourth quarter of fiscal 2022.

Capital Spending

During the first quarter of fiscal 2023, capital investment was $3.3 million, and total planned capital expenditures for fiscal 2023 are expected to be between $20.0 million and $24.0 million.

Working Capital

Controllable working capital, which includes accounts receivable, inventory, accounts payable and accrued expenses, was $402.0 million at December 31, 2022, an increase of $23.7 million, or 6.3%, from $378.3 million at September 30, 2022. The increase resulted primarily from inventory increasing by $33.0 million during the first three months of fiscal 2023, partially offset by accounts payable and accrued expenses increasing by $6.3 million and accounts receivable decreasing by $2.9 million during the same period.

Liquidity

The Company had cash and cash equivalents of $11.5 million at December 31, 2022 compared to $8.4 million at September 30, 2022.  Additionally, the Company had $88.0 million of borrowings against the $160.0 million line of credit outstanding with remaining capacity available of $72.0 million as of December 31, 2022, putting total liquidity at $83.5 million.

Net cash used in operating activities in the first three months of fiscal 2023 was $7.0 million compared to net cash used in operating activities of $23.8 million in the first three months of fiscal 2022. The decrease in cash used in operating activities in the first three months of fiscal 2023 was driven by an increase in accounts payable and accrued expenses of $4.6 million as compared to a decrease of $13.3 million during the same period of fiscal 2022, a difference of $17.8 million, and higher net income of $7.7 million the first three months of fiscal 2023 as compared to net income of $4.7 million during the same period of fiscal 2022. This was partially offset by an increase in inventory of $29.2 million during the first three months of fiscal 2023 as compared to an increase in inventory of $22.7 million during the same period of fiscal 2022.

Net cash used in investing activities was $3.3 million in the first three months of fiscal 2023, which was comparable to investing activities of $3.3 million during the same period of fiscal 2022 due to a similar level of additions to property, plant and equipment.

Net cash provided by financing activities was $12.7 million in the first three months of fiscal 2023, a difference of $19.1 million from cash used in financing activities of $6.4 million during the first three months of fiscal 2022. This difference was primarily driven by a net borrowing of $13.3 million against the revolving line of credit during the first three months of fiscal 2023 compared to a net borrowing of $3.0 million during the same period of fiscal 2022 and proceeds from the exercise of stock options of $3.4 million during the first three months of fiscal 2023 as compared to proceeds from exercise of stock options of $0.1 million during the same period of fiscal 2022 and lower share repurchases of $0.8 million in the first three months of fiscal 2023 as compared to $6.6 million during the same period of fiscal 2022. Dividends paid of $2.8 million during the first three months of fiscal 2023 were comparable to same period of fiscal 2022.

Dividend Declared

On February 2, 2023, the Company announced that the Board of Directors declared a regular quarterly cash dividend of $0.22 per outstanding share of the Company’s common stock. The dividend is payable March 15, 2023 to stockholders of record at the close of business on March 1, 2023. Any future dividends will be at the discretion of the Board of Directors.

Guidance

Given the strength of the Company’s record backlog, along with the manpower and work-in-process inventory being put in place, the Company expects revenue and earnings in the second quarter of fiscal 2023 to be higher than both the first quarter of fiscal 2023 as well as the second quarter of last year.  Further, the Company expects the full year fiscal 2023 to be 15-20% higher than fiscal 2022 for both revenue and earnings.

Earnings Conference Call

The Company will host a conference call on Friday, February 3, 2023 to discuss its results for the first quarter of fiscal 2023. Michael Shor, President and Chief Executive Officer, and Daniel Maudlin, Vice President of Finance and Chief Financial Officer, 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:

Friday, February 3, 2023

Dial-In Numbers:

888-506-0062 (Domestic)

Time:

9:00 a.m. Eastern Time

 

973-528-0011 (International)

 

 

Access Code:

347392

A live Webcast of the conference call will be available at www.haynesintl.com.

For those unable to participate, a teleconference replay will be available from Friday, February 3rd at 11:00 a.m. ET, through 11:59 p.m. ET on Sunday, March 5, 2023. To listen to the replay, please dial:

Replay:

877-481-4010 (Domestic)

 

919-882-2331 (International)

Replay Passcode:

47431

A replay of the Webcast will also be available for one year at www.haynesintl.com.

Non-GAAP Financial Measures

This press release includes financial measures, including Adjusted EBITDA for the fiscal quarters ended December 31, 2021 and 2022 and Adjusted gross profit margin – excluding estimated impact of nickel and cobalt fluctuations for the fiscal quarters ended December 31, 2021 through December 31, 2022 that have not been calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP).

The Company believes that these non-GAAP measures provide useful information to investors. Among other things, they may help investors evaluate the Company’s ongoing operations. They can assist in making meaningful period-over-period comparisons and in identifying operating trends that would otherwise be masked or distorted by the items subject to the adjustments. Management uses these non-GAAP measures internally to evaluate the performance of the business, including to allocate resources. Investors should consider these non-GAAP measures as supplemental and in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP.

Management has chosen to provide this supplemental information to investors, analysts, and other interested parties to enable them to perform additional analyses of our results and to illustrate our results giving effect to the non-GAAP adjustments. Management strongly encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

Reconciliations of Adjusted EBITDA and Adjusted gross profit margin – excluding estimate impact of nickel and cobalt fluctuations to their most directly comparable financial measure prepared in accordance with GAAP, accompanied by reasons why the Company believes the non-GAAP measures are important, are included in the attached schedules.

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, industrial gas turbine and chemical processing industries.

Cautionary Note Regarding Forward-Looking Statements

This press 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 Exchange Act of 1934, each as amended. All statements other than statements of historical fact, including statements regarding market and industry trends and prospects and future results of operations or financial position, made in this press release are forward-looking. In many cases, you can identify forward-looking statements by terminology, such as “may”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. The forward-looking information may include, among other information, statements concerning the Company’s guidance and outlook for fiscal 2023 and beyond, overall volume and pricing trends, cost reduction strategies and their anticipated impact on our results, gross margin and gross margin trends, capital expenditures, demand for our products and operations and dividends.  There may also be other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.  Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors, many of which are beyond the Company’s control.

The Company has based these forward-looking statements on its current expectations and projections about future events.  Although the Company believes that the assumptions on which the forward-looking statements contained herein are based are reasonable, any of those assumptions could prove to be inaccurate. As a result, the forward-looking statements based upon those assumptions also could be incorrect.  Risks and uncertainties may affect the accuracy of forward-looking statements. Some, but not all, of these risks are described in Item 1A. of Part 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022.

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.


Schedule 1

HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(unaudited) 
(in thousands, except per share data)

 

 

Three Months Ended December 31, 

 

    

2021

 

    

2022

 

Net revenues

 

$

99,430

 

 

$

132,673

 

Cost of sales

 

 

81,653

 

 

 

109,635

 

Gross profit

 

 

17,777

 

 

 

23,038

 

Selling, general and administrative expense

 

 

11,362

 

 

 

10,952

 

Research and technical expense

 

 

905

 

 

 

973

 

Operating income (loss)

 

 

5,510

 

 

 

11,113

 

Nonoperating retirement benefit expense (income)

 

 

(1,088

)

 

 

(366

)

Interest income

 

 

(8

)

 

 

(6

)

Interest expense

 

 

300

 

 

 

1,501

 

Income (loss) before income taxes

 

 

6,306

 

 

 

9,984

 

Provision for (benefit from) income taxes

 

 

1,647

 

 

 

2,245

 

Net income (loss)

 

$

4,659

 

 

$

7,739

 

Net income (loss) per share:

 

 

 

 

 

 

Basic

 

$

0.37

 

 

$

0.62

 

Diluted

 

$

0.37

 

 

$

0.61

 

Weighted Average Common Shares Outstanding

 

 

 

 

 

 

Basic

 

 

12,369

 

 

 

12,455

 

Diluted

 

 

12,587

 

 

 

12,699

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.22

 

 

$

0.22

 

        

Schedule 2

HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share data)

 

    

September 30, 

    

December 31, 

 

 

2022

 

 

2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,440

 

 

$

11,527

 

Accounts receivable, less allowance for credit losses of $428 and $476 at September 30, 2022 and December 31, 2022, respectively

 

 

94,912

 

 

 

91,967

 

Inventories

 

 

357,556

 

 

 

390,535

 

Income taxes receivable

 

 

 

 

 

172

 

Other current assets

 

 

3,514

 

 

 

4,328

 

Total current assets

 

 

464,422

 

 

 

498,529

 

Property, plant and equipment, net

 

 

142,772

 

 

 

142,210

 

Deferred income taxes

 

 

5,680

 

 

 

5,632

 

Other assets

 

 

9,723

 

 

 

9,614

 

Goodwill

 

 

4,789

 

 

 

4,789

 

Other intangible assets, net

 

 

4,909

 

 

 

5,028

 

Total assets

 

$

632,295

 

 

$

665,802

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

54,886

 

 

$

63,255

 

Accrued expenses

 

 

19,294

 

 

 

17,213

 

Income taxes payable

 

 

828

 

 

 

2,580

 

Accrued pension and postretirement benefits

 

 

3,371

 

 

 

3,371

 

Deferred revenue—current portion

 

 

2,500

 

 

 

2,500

 

Total current liabilities

 

 

80,879

 

 

 

88,919

 

Revolving credit facilities - Long-term

 

 

74,721

 

 

 

88,025

 

Long-term obligations (less current portion)

 

 

7,848

 

 

 

7,777

 

Deferred revenue (less current portion)

 

 

7,829

 

 

 

7,204

 

Deferred income taxes

 

 

3,103

 

 

 

3,263

 

Operating lease liabilities

 

 

576

 

 

 

570

 

Accrued pension benefits (less current portion)

 

 

21,090

 

 

 

19,585

 

Accrued postretirement benefits (less current portion)

 

 

60,761

 

 

 

61,315

 

Total liabilities

 

 

256,807

 

 

 

276,658

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.001 par value (40,000,000 shares authorized, 12,854,773 and 12,988,622 shares issued and 12,479,741 and 12,597,607 shares outstanding at September 30, 2022 and December 31, 2022, respectively)

 

 

13

 

 

 

13

 

Preferred stock, $0.001 par value (20,000,000 shares authorized, 0 shares issued and outstanding)

 

 

 

 

 

 

Additional paid-in capital

 

 

266,193

 

 

 

270,340

 

Accumulated earnings

 

 

135,040

 

 

 

139,976

 

Treasury stock, 375,032 shares at September 30, 2022 and 391,015 shares at December 31, 2022

 

 

(14,666

)

 

 

(15,504

)

Accumulated other comprehensive loss

 

 

(11,092

)

 

 

(5,681

)

Total stockholders’ equity

 

 

375,488

 

 

 

389,144

 

Total liabilities and stockholders’ equity

 

$

632,295

 

 

$

665,802

 


Schedule 3

HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)

 

 

Three Months Ended December 31,

 

 

2021

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

4,659

 

 

$

7,739

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation

 

 

4,636

 

 

 

4,447

 

Amortization

 

 

118

 

 

 

126

 

Pension and post-retirement expense - U.S. and U.K.

 

 

550

 

 

 

653

 

Change in long-term obligations

 

 

(9

)

 

 

(28

)

Stock compensation expense

 

 

954

 

 

 

770

 

Deferred revenue

 

 

(625

)

 

 

(625

)

Deferred income taxes

 

 

1,678

 

 

 

322

 

Loss on disposition of property

 

 

 

 

 

34

 

Change in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

1,176

 

 

 

5,223

 

Inventories

 

 

(22,655

)

 

 

(29,202

)

Other assets

 

 

1,429

 

 

 

(596

)

Accounts payable and accrued expenses

 

 

(13,220

)

 

 

4,585

 

Income taxes

 

 

(323

)

 

 

1,568

 

Accrued pension and postretirement benefits

 

 

(2,202

)

 

 

(2,115

)

Net cash provided by (used in) operating activities

 

 

(23,834

)

 

 

(7,099

)

Cash flows from investing activities:

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(3,335

)

 

 

(3,320

)

Net cash used in investing activities

 

 

(3,335

)

 

 

(3,320

)

Cash flows from financing activities:

 

 

 

 

 

 

Revolving credit facility borrowings

 

 

8,000

 

 

 

39,674

 

Revolving credit facility repayments

 

 

(5,000

)

 

 

(26,370

)

Dividends paid

 

 

(2,811

)

 

 

(2,796

)

Proceeds from exercise of stock options

 

 

115

 

 

 

3,377

 

Payment for purchase of treasury stock

 

 

(6,600

)

 

 

(838

)

Payment for debt issuance cost

 

 

 

 

 

(245

)

Payments on long-term obligations

 

 

(58

)

 

 

(67

)

Net cash used in financing activities

 

 

(6,354

)

 

 

12,735

 

Effect of exchange rates on cash

 

 

59

 

 

 

771

 

Increase (decrease) in cash and cash equivalents:

 

 

(33,464

)

 

 

3,087

 

Cash and cash equivalents:

 

 

 

 

 

 

Beginning of period

 

 

47,726

 

 

 

8,440

 

End of period

 

$

14,262

 

 

$

11,527

 


Schedule 4

Quarterly Data

The unaudited quarterly results of operations of the Company for the most recent five quarters are as follows.

 

 

Quarter Ended

 

 

 

December 31,

 

March 31,

 

June 30,

 

September 30,

 

December 31,

 

(dollars in thousands)

 

2021

 

2022

 

2022

 

2022

 

2022

 

Net revenues

 

$

 

99,430

 

$

 

117,056

 

$

 

130,165

 

$

 

143,810

 

$

 

132,673

 

Gross profit margin

 

 

 

17,777

 

 

 

23,413

 

 

 

33,222

 

 

 

31,921

 

 

 

23,038

 

Gross profit margin %

 

 

 

17.9

%

 

 

20.0

%

 

 

25.5

%

 

 

22.2

%

 

 

17.4

%

Adjusted gross profit margin(1)

 

 

 

16,077

 

 

 

20,813

 

 

 

29,122

 

 

 

30,921

 

 

 

28,638

 

Adjusted gross profit margin %(1)

 

 

 

16.2

%

 

 

17.8

%

 

 

22.4

%

 

 

21.5

%

 

 

21.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

4,659

 

 

 

8,484

 

 

 

15,608

 

 

 

16,336

 

 

 

7,739

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$0.37

 

 

$0.68

 

 

$1.25

 

 

$1.31

 

 

$0.62

 

Diluted

 

 

$0.37

 

 

$0.67

 

 

$1.24

 

 

$1.30

 

 

$0.61

 

(1)   Adjusted gross profit margin and adjusted gross profit margin percentage exclude estimated impact of nickel and cobalt fluctuations (See Schedule 6 for reconciliation to Gross profit margin).

Schedule 5

Sales by Market

The unaudited revenues, pounds shipped and average selling price per pound of the Company for the most recent five quarters are as follows.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

December 31, 

 

March 31, 

 

June 30, 

 

September 30, 

 

December 31, 

 

 

2021

 

2022

    

2022

    

2022

    

2022

Net revenues (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace

 

$

48,455

 

$

52,918

 

$

60,981

 

$

67,647

 

$

64,518

Chemical processing

 

 

17,450

 

 

22,850

 

 

24,180

 

 

27,185

 

 

22,715

Industrial gas turbines

 

 

14,598

 

 

24,788

 

 

23,991

 

 

28,501

 

 

26,025

Other markets

 

 

14,487

 

 

9,755

 

 

14,518

 

 

14,946

 

 

14,722

Total product revenue

 

 

94,990

 

 

110,311

 

 

123,670

 

 

138,279

 

 

127,980

Other revenue

 

 

4,440

 

 

6,745

 

 

6,495

 

 

5,531

 

 

4,693

Net revenues

 

$

99,430

 

$

117,056

 

$

130,165

 

$

143,810

 

$

132,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shipments by markets (in thousands of pounds)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace

 

 

1,864

 

 

1,808

 

 

2,142

 

 

2,402

 

 

2,187

Chemical processing

 

 

794

 

 

870

 

 

882

 

 

921

 

 

786

Industrial gas turbines

 

 

799

 

 

1,416

 

 

1,090

 

 

1,242

 

 

1,289

Other markets

 

 

420

 

 

244

 

 

427

 

 

318

 

 

290

Total shipments

 

 

3,877

 

 

4,338

 

 

4,541

 

 

4,883

 

 

4,552

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average selling price per pound

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace

 

$

26.00

 

$

29.27

 

$

28.47

 

$

28.16

 

$

29.50

Chemical processing

 

 

21.98

 

 

26.26

 

 

27.41

 

 

29.52

 

 

28.90

Industrial gas turbines

 

 

18.27

 

 

17.51

 

 

22.01

 

 

22.95

 

 

20.19

Other markets

 

 

34.49

 

 

39.98

 

 

34.00

 

 

47.00

 

 

50.77

Total product (product only; excluding other revenue)

 

 

24.50

 

 

25.43

 

 

27.23

 

 

28.32

 

 

28.12

Total average selling price (including other revenue)

 

$

25.65

 

$

26.98

 

$

28.66

 

$

29.45

 

$

29.15


Schedule 6

HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES - ADJUSTED EBITDA AND ADJUSTED GROSS PROFIT MARGIN – EXCLUDING ESTIMATED IMPACTS OF NICKEL AND COBALT FLUCTUATIONS
(Unaudited)
(in thousands, except share data)

Adjusted EBITDA

Adjusted EBITDA as reported herein refers to a financial measure that excludes from consolidated operating income (loss) non-cash charges for depreciation, amortization and stock compensation expense. Management believes that Adjusted EBITDA provides a relevant indicator of the Company’s value by eliminating the impact of financing and other non-cash impacts of past investments. Management uses its results excluding these non-cash amounts to evaluate its operating performance.

 

 

Three Months Ended December 31,

 

 

2021

 

2022

Operating income (loss)

 

$

5,510

 

$

11,113

Depreciation

 

 

4,636

 

 

4,447

Amortization (excluding debt issuance costs recorded in interest expense)

 

 

34

 

 

33

Stock compensation expense

 

 

954

 

 

770

Adjusted EBITDA

 

$

11,134

 

$

16,363

Adjusted Gross Profit Margin – Excluding estimated impact of nickel and cobalt fluctuations

Management believes that Gross profit margin – Excluding estimated impact of nickel and cobalt fluctuations provides a relevant indicator of the Company’s profitability by eliminating the impact of fluctuating impacts of nickel and cobalt prices which can compress or expand gross profit margin. The estimated gross margin impact from nickel and cobalt price fluctuations is derived from a model developed by the Company to measure how the price changes flow through net revenues and cost of sales.  This model incorporates flow across each different type of pricing mechanism and the timing of how cost of nickel and cobalt flow to cost of sales including the impacts of the commodity price exposure of our scrap cycle. Management uses its results excluding these nickel and cobalt impacts to evaluate its operating performance.

 

 

Quarter Ended

 

 

 

December 31,

 

March 31,

 

June 30,

 

September 30,

 

December 31,

 

(dollars in thousands)

 

2021

 

 

2022

 

 

2022

 

 

2022

 

 

2022

 

Gross profit margin

 

$

17,777

 

 

$

23,413

 

 

$

33,222

 

 

$

31,921

 

 

$

23,038

 

Gross profit margin %

 

 

17.9

 

%

 

20.0

 

%

 

25.5

 

%

 

22.2

 

%

 

17.4

%

Estimated impact of nickel and cobalt fluctuations

 

 

(1,700

)

 

 

(2,600

)

 

 

(4,100

)

 

 

(1,000

)

 

 

5,600

 

Adjusted gross profit margin - excluding estimated impact of nickel and cobalt fluctuations

 

$

16,077

 

 

$

20,813

 

 

$

29,122

 

 

$

30,921

 

 

$

28,638

 

Adjusted gross profit margin % - excluding estimated impact of nickel and cobalt fluctuations

 

 

16.2

 

%

 

17.8

 

%

 

22.4

 

%

 

21.5

 

%

 

21.6

%


Contact:

Daniel Maudlin

 

Vice President of Finance and Chief Financial Officer

 

Haynes International, Inc.

 

765-456-6102