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Haynes International, Inc. Reports First Quarter Fiscal 2010
Financial Results
GlobeNewswire
2010-02-08
KOKOMO, Ind., Feb. 8, 2010 (GLOBE NEWSWIRE) --
-- Net revenues of $81.0 million and net loss of $(1.3) million, or $(0.11)
per diluted share, for the three months ended December 31, 2009,
compared to net revenues of $134.3 million and net income of $4.5
million, or $0.38 per diluted share, for the same period of fiscal 2009.
-- Regular quarterly cash dividend of $0.20 per outstanding share of the
Company's common stock declared.
Haynes International, Inc. (Nasdaq:HAYN) a leading developer,
manufacturer and marketer of technologically advanced high-performance
alloys, today reported financial results for the first quarter of
fiscal 2010. The Company also announced that its Board of Directors
declared a regular quarterly cash dividend of $0.20 per outstanding
share payable March 15, 2010 to stockholders of record as of March 1,
2010.
"We are encouraged by the increased activity we are seeing in the
market place, and are also pleased that our backlog is slowly
improving," said Mark Comerford, President and Chief Executive Officer.
"However, we still believe that our core markets will continue to
operate at low levels through the next two quarters. Most of the
increased activity we are seeing is transactional in nature which
underscores our customers' reluctance to commit to larger production
runs and inventory levels."
Quarterly Results
Net Revenues. Net revenues were $81.0 million in the first quarter of
fiscal 2010, a decrease of 39.7% from $134.3 million in the same period
of fiscal 2009. Volume was 3.9 million pounds in the first quarter of
fiscal 2010, a decrease of 18.2% from 4.8 million pounds in the same
period of fiscal 2009. The aggregate average selling price was $20.63
per pound in the first quarter of fiscal 2010, a decrease of 26.3% from
$27.99 per pound in the same period of fiscal 2009.
Cost of Sales. Cost of sales was $74.2 million, or 91.6% of net
revenues, in the first quarter of fiscal 2010 compared to $115.6
million, or 86.0% of net revenues, in the same period of fiscal 2009.
Cost of sales in the first quarter of fiscal 2010 decreased by $41.4
million as compared to the same period of fiscal 2009 due to lower
volume, lower material costs, reduced spending and workforce
reductions. This decrease was partially offset by reduced absorption of
fixed manufacturing costs caused by lower production volumes,
particularly that of sheet product. Cost of sales as a percentage of
net revenues increased in the first quarter of fiscal 2010 as compared
to the same period of fiscal 2009 due to increased price competition
and weaker demand, which reduced net revenues.
Selling, General and Administrative Expense. Selling, general and
administrative expense was $8.2 million for the first quarter of fiscal
2010, a decrease of $2.4 million, or 22.7%, from $10.6 million in the
same period of fiscal 2009 due primarily to: (i) lower business
activity causing commissions and sales expenses to decline, and (ii)
significant workforce reductions in the second and fourth quarters of
fiscal 2009. Selling, general and administrative expenses as a
percentage of net revenues increased to 10.1% for the first quarter of
fiscal 2010 compared to 7.9% for the same period of fiscal 2009 due
primarily to reduced revenues.
Research and Technical Expense. Research and technical expense was $0.6
million, or 0.8% of revenue, for the first quarter of fiscal 2010, a
decrease of $0.2 million from $0.8 million, or 0.6% of net revenues, in
the same period of fiscal 2009, due to the reduction in workforce
during the second and fourth quarters of fiscal 2009.
Operating Income (Loss). As a result of the above factors, operating
loss in the first quarter of fiscal 2010 was $(2.0) million compared to
operating income of $7.3 million in the same period of fiscal 2009.
Income Taxes. Income taxes were a benefit of $0.7 million in the first
quarter of fiscal 2010, a decrease of $3.2 million from an expense of
$2.5 million in the same period of fiscal 2009, due to a pretax loss.
The effective tax rate for the first quarter of fiscal 2010 was 35.5%,
compared to 35.4% in the same period of fiscal 2009.
Net Income (Loss). As a result of the above factors, net loss in the
first quarter of fiscal 2010 was $(1.3) million, a decrease of $5.8
million from net income of $4.5 million in the same period of fiscal
2009.
Backlog
Slightly improving order entry activity in the first quarter of fiscal
2010 contributed to a slight improvement in backlog at December 31,
2009 as compared to September 30, 2009. Backlog dollars were $110.4
million at December 31, 2009, an increase of approximately 3.5% from
$106.7 million at September 30, 2009. This increase is the result of an
8.2% increase in backlog pounds, which was partially offset by a 4.3%
decline in backlog average selling price. Management expects the
backlog to improve modestly through the second and third quarters of
fiscal 2010. The improvement in backlog may begin to positively impact
net revenues in the fourth quarter of fiscal 2010.
Backlog dollars at December 31, 2009 declined by approximately 45% from
backlog dollars of $199.7 million at December 31, 2008. Backlog pounds
declined by approximately 33% and backlog average selling price
declined by approximately 17% during the same period, primarily due to
decreased activity in the Company's end markets and continued price
competition.
Liquidity
During the first quarter of fiscal 2010, the Company's primary sources
of cash were cash from operations and cash on-hand. At December 31,
2009, the Company had cash and cash equivalents of approximately $97.5
million compared to cash and cash equivalents of approximately $105.1
million at September 30, 2009.
Net cash used in operating activities was $0.1 million in the first
quarter of fiscal 2010 compared to net cash provided by operating
activities of $13.9 million in the same period of fiscal 2009. Several
items contributed to the difference. Cash used from increased accounts
receivable of $0.2 million was $18.5 million higher than cash provided
by accounts receivable in the same period of fiscal 2009. Cash used
from increased inventory balances (net of foreign currency fluctuation)
of $3.6 million was $13.0 million higher than cash provided by
decreased inventory balances in the same period of fiscal 2009.
Offsetting the above items, cash generated from income taxes of $6.9
million was $19.6 million higher than cash used by income taxes in the
same period of fiscal 2009. Net cash used in capital expenditures was
$5.1 million in the first quarter of fiscal 2010 compared to $2.7
million in the first quarter of fiscal 2009 primarily as a result of
higher capital expenditures. Net cash used in financing activities in
the first quarter of fiscal 2010 included a $2.4 million dividend
payment.
The Company's sources of cash for fiscal 2010 are expected to consist
primarily of cash generated from operations, cash-on hand, and
borrowings under the U.S. revolving credit facility. The U.S. revolving
credit facility provides borrowings in a maximum amount of $120.0
million, subject to a borrowing base formula and certain reserves. At
December 31, 2009, the Company had cash of approximately $97.5 million,
an outstanding balance of zero on the U.S. revolving credit facility
and access to a total of approximately $120.0 million under the U.S.
revolving credit facility, subject to borrowing base and certain
reserves. Management believes that the resources described above will
be sufficient to fund planned capital expenditures and working capital
requirements over the next twelve months.
The Company's primary uses of cash over the next twelve months are
expected to consist of expenditures related to:
-- funding operations;
-- pension plan funding;
-- capital spending; and
-- dividends to stockholders.
Dividend Declared
Today the Company also announced that the Board of Directors declared a
regular quarterly cash dividend of $0.20 per outstanding share of the
Company's common stock. The dividend is payable March 15, 2010 to
stockholders of record at the close of business on March 1, 2010. The
dividend cash pay-out based on current shares outstanding will be
approximately $2.4 million this quarter, or approximately $9.6 million
on an annualized basis.
Outlook
It appears that demand has stabilized, but it continues to be at low
levels and it does not appear demand will significantly improve in the
next two quarters. The Company expects that net revenues for the second
and third quarters of fiscal 2010 will be similar to the amount
recorded in the first quarter of fiscal 2010. Management believes that
the Company's net income will range from break-even to a small loss in
the second quarter and from break-even to a small profit in the third
quarter. Results for fiscal 2010 will continue to be unfavorably
impacted by both reduced absorption of fixed manufacturing costs, which
translates into increased cost of goods sold per pound, and by the
competitive environment, which places downward pressure on prices. A
portion of this reduced absorption will continue to be offset by lower
spending from the cost saving initiatives undertaken in fiscal 2009.
Stockholder Meeting
The Annual Meeting of Stockholders will be held on Monday, February 22,
2010 at 2:00 p.m. (EST) at the Conrad Indianapolis, located at 50 West
Washington Street, Indianapolis, Indiana 46204.
Earnings Conference Call
The Company will host a conference call on Tuesday, February 9, 2010 to
discuss its results for the first quarter of fiscal 2010 ended December
31, 2009. Mark Comerford, 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: Tuesday, February 9, 2010 Dial-In Numbers: 877-407-8033 (Domestic)
Time: 9:00 a.m. Eastern Time 201-689-8033 (International)
8:00 a.m. Central Time
7:00 a.m. Mountain Time
6:00 a.m. Pacific Time
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
Tuesday, February 9th at 11:00 a.m. ET, through 11:59 p.m. ET on
Tuesday, February 23, 2010. To listen to the replay, please dial:
Domestic: 877-660-6853
International: 201-612-7415
Replay Access: Account: 286 Conference ID: 343626
A replay of the Webcast will also be available at www.haynesintl.com
until February 9, 2011.
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, land-based gas turbine and chemical
processing industries.
The Haynes International, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4319
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. Those statements
appear in a number of places in this Press Release and may include, but
are not limited to, statements regarding the intent, belief or current
expectations of the Company or its management with respect to strategic
plans; revenues; financial results; backlog balance; trends in the
industries that consume the Company's products; global economic and
political conditions; production levels at the Company's Kokomo,
Indiana facility; commercialization of the Company's production
capacity; and the Company's ability to develop new products. 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, some of which are discussed in Item 1A. of Part 1 to
the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 2009, may affect the accuracy of forward looking
statements.
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 share and per share data)
Three Months Ended
December 31,
----------------------
2008 2009
---------- ----------
Net revenues $134,304 $81,008
Cost of sales 115,554 74,163
---------- ----------
Gross profit 18,750 6,845
Selling, general and
administrative expense 10,590 8,186
Research and technical
expense 825 649
---------- ----------
Operating income (loss) 7,335 (1,990)
Interest income (20) (45)
Interest expense 356 48
---------- ----------
Income (loss) before income
taxes 6,999 (1,993)
Provision for (benefit from)
income taxes 2,475 (707)
---------- ----------
Net income (loss) $4,524 ($1,286)
========== ==========
Net income (loss) per share:
Basic $0.38 ($0.11)
========== ==========
Diluted $0.38 ($0.11)
========== ==========
Weighted average shares
outstanding:
Basic 11,984,623 12,049,779
Diluted 12,044,999 12,049,779
Schedule
2
HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share data)
September December
30, 31,
2009 2009
--------- --------
ASSETS
Current assets:
Cash and cash equivalents $105,095 $97,510
Restricted cash -- current portion 110 110
Accounts receivable, less allowance
for doubtful accounts of
$1,310 and $1,316 respectively 47,473 47,647
Inventories 182,771 186,463
Income taxes receivable 24,348 17,416
Deferred income taxes 9,035 9,252
Other current assets 645 1,721
--------- --------
Total current assets 369,477 360,119
Property, plant and equipment, net 105,820 107,767
Deferred income taxes -- long term
portion 58,843 59,800
Prepayments and deferred charges 2,670 2,815
Restricted cash -- long term portion 110 --
Intangible assets, net 7,230 7,090
--------- --------
Total assets $544,150 $537,591
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $29,249 $29,829
Accrued expenses 10,312 9,363
Accrued pension and postretirement
benefits 20,215 19,305
Revolving credit facilities -- --
Deferred revenue -- current portion 2,500 2,500
Current maturities of long-term
obligations 110 103
--------- --------
Total current liabilities 62,386 61,100
Long-term obligations (less current
portion) 1,482 1,382
Deferred revenue (less current
portion) 40,329 39,704
Non-current income taxes payable 292 292
Accrued pension and postretirement
benefits 160,862 159,527
--------- --------
Total liabilities 265,351 262,005
--------- --------
Commitments and contingencies -- --
Stockholders' equity:
Common stock, $0.001 par value
(40,000,000 shares
authorized, 12,101,829 shares
issued and outstanding at
September 30, 2009 and December
31, 2009, respectively) 12 12
Preferred stock, $0.001 par value
(20,000,000 shares
authorized, 0 shares issued and
outstanding) -- --
Additional paid-in capital 227,734 228,095
Accumulated earnings 103,509 99,803
Accumulated other comprehensive loss (52,456) (52,324)
--------- --------
Total stockholders' equity 278,799 275,586
--------- --------
Total liabilities and
stockholders' equity $544,150 $537,591
========= ========
Schedule 3
HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months Ended
December 31,
------------------
2008 2009
-------- --------
Cash flows from operating activities:
Net income (loss) $4,524 $(1,286)
Adjustments to reconcile net income to
net cash provided by (used
in) operating activities:
Depreciation 2,454 2,645
Amortization 291 140
Stock compensation expense 454 361
Deferred revenue (625) (625)
Deferred income taxes 792 (1,169)
Loss on disposal of property 29 --
Change in assets and liabilities:
Accounts receivable 18,333 (178)
Inventories 9,304 (3,648)
Other assets (916) (1,236)
Accounts payable and accrued expenses (5,055) 238
Income taxes (12,653) 6,899
Accrued pension and postretirement
benefits (3,005) (2,268)
-------- --------
Net cash provided by (used in) operating
activities 13,927 (127)
-------- --------
Cash flows from investing activities:
Additions to property, plant and
equipment (2,796) (5,070)
Change in restricted cash 110 110
-------- --------
Net cash used in investing activities (2,686) (4,960)
-------- --------
Cash flows from financing activities:
Dividends paid -- (2,420)
Net decrease in revolving credit
facility (11,812) --
Payment for debt issuance costs (306) --
Changes in long-term obligations (1,315) (107)
-------- --------
Net cash used in financing activities (13,433) (2,527)
-------- --------
Effect of exchange rates on cash (13) 29
-------- --------
Decrease in cash and cash equivalents (2,205) (7,585)
Cash and cash equivalents, beginning of
period 7,058 105,095
-------- --------
Cash and cash equivalents, end of period $4,853 $97,510
======== ========
Supplemental disclosures of cash flow
information:
Cash paid during period for: Interest
(net of capitalized interest) $304 $21
======== ========
Income taxes $15,787 $296
======== ========
CONTACT: Haynes International, Inc.
Marcel Martin, Chief Financial Officer and
Vice President of Finance
765-456-6129
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