Haynes International, Inc. Reports First Quarter Fiscal 2013 Financial Results

Haynes International, Inc. Reports First Quarter Fiscal 2013 Financial Results

  *Net revenues of $114.3 million and net income of $5.8 million, or $0.47
    per diluted share, for the three months ended December 31, 2012, compared
    to net revenues of $128.9 million and net income of $8.4 million, or $0.68
    per diluted share, for the same period of fiscal 2012.
  *In the first quarter of fiscal 2013, the Company spent $9.0 million on
    capital projects and the anticipated full year spending is expected to be
    $70.0 million.
  *Backlog was $211.7 million at December 31, 2012, a decrease of 5.0% from
    $222.9 million at September 30, 2012.
  *Regular quarterly cash dividend of $0.22 per outstanding share of the
    Company's common stock declared.

KOKOMO, Ind., Jan. 31, 2013 (GLOBE NEWSWIRE) -- 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 2013. The Company also announced that
its Board of Directors declared a quarterly cash dividend of $0.22 per
outstanding share payable March 15, 2013 to stockholders of record as of March
1, 2013.

"As previously announced, first quarter results were negatively impacted by
lower demand as customers exercised increased caution in making purchases,
which we attribute to ongoing uncertain economic conditions. Customers
continued to manage their inventories aggressively, and as a result our
transactional business slowed significantly in our first quarter," said Mark
Comerford, President and Chief Executive Officer. "Business conditions in
January are still soft, similar to first quarter. However, looking beyond
these near-term headwinds, commercial aircraft manufacturers and engine
manufacturers continue to report strong conditions and excellent long term
growth projections. We also expect our land-based gas turbine and chemical
processing markets to gain strength when global economic concerns abate. We
continue to focus on the implementation of our capital spending projects in
line with our plans to meet the expected long-term growth requirements of
those target markets."

Quarterly Results

Net Revenues.  Net revenues were $114.3 million in the first quarter of fiscal
2013, a decrease of 11.3% from $128.9 million in the same period of fiscal
2012. Volume was 4.7 million pounds in the first quarter of fiscal 2013, a
decrease of 8.7% from 5.1 million pounds in the same period of fiscal
2012.The aggregate average selling price was $24.40 per pound in the first
quarter of fiscal 2013, a decrease of 2.8% from $25.11 per pound in the same
period of fiscal 2012.Average selling price decreased due to lower raw
material prices and increased competition especially in the commodity alloys,
while volume decreased due to declining customer demand during uncertain
economic conditions. The Company's consolidated backlog was $211.7 million at
December 31, 2012, a decrease of 5.0% from $222.9 million at September30,
2012.This decrease reflects a 5.5% decrease in backlog average selling price,
slightly offset by a 0.6% increase in backlog pounds.

Cost of Sales.  Cost of sales was $95.5 million, or 83.6% of net revenues, in
the first quarter of fiscal 2013 compared to $105.4 million, or 81.8% of net
revenues, in the same period of fiscal 2012. Cost of sales in the first
quarter of fiscal 2013 decreased by $9.8 million as compared to the same
period of fiscal 2012 primarily due to lower volumes, partially offset by an
increase of approximately $0.3 million (including payroll taxes) due to the
upfront payment related to the ratification of the union agreement in Arcadia,
Louisiana.

Gross Profit.As a result of the above factors, gross profit was $18.8
million for the first quarter of fiscal 2013, a decrease of $4.7 million from
the same period of fiscal 2012. Gross margin as a percentage of net revenue
decreased to 16.4% in the first quarter of fiscal 2013 as compared to 18.2% in
the same period of fiscal 2012.

Selling, General and Administrative Expense.  Selling, general and
administrative expense was $9.8 million for the first quarter of fiscal 2013,
flat from the same period of fiscal 2012.Selling, general and administrative
expenses as a percentage of net revenues increased to 8.6% for the first
quarter of fiscal 2013 compared to 7.6% for the same period of fiscal 2012 due
to decreased revenues.

Research and Technical Expense.  Research and technical expense was $0.9
million, or 0.8% of revenue, for the first quarter of fiscal 2013, compared to
$0.8 million, or 0.6% of revenue, in the same period of fiscal 2012.

Operating Income. As a result of the above factors, operating income in the
first quarter of fiscal 2013 was $8.1 million compared to operating income of
$12.9 million in the same period of fiscal 2012.

Income Taxes.  Income taxes were an expense of $2.3 million in the first
quarter of fiscal 2013, a decrease of $2.2 million from an expense of $4.5
million in the same period of fiscal 2012.The effective tax rate for the
first quarter of fiscal 2013 was 28.1%, compared to 34.8% in the same period
of fiscal 2012.The decrease in the effective tax rate was due to a change in
the California tax law that took effect in November, which increased the
deferred tax asset and lowered tax expense for the first quarter of fiscal
2013 by $0.6 million.

Net Income. As a result of the above factors, net income in the first quarter
of fiscal 2013 was $5.8 million, a decrease of $2.6 million from net income of
$8.4million in the same period of fiscal 2012.

Gross Profit Margin Performance

In the first quarter of each fiscal year, the Company's gross profit margin
percentage is typically lower than the preceding quarter due to lower
absorption of fixed manufacturing costs that do not decrease in proportion
with decreased production levels.Production levels decrease in the first
quarter due to the Company's observance of seasonal holidays and planned
equipment downtime for capital upgrades and maintenance projects.

For the first quarter of fiscal 2013, gross profit and net income were lower
than anticipated primarily due to lower than anticipated net sales.The lower
net sales were a result of customers exercising increased caution in making
purchases, which the Company attributes to ongoing uncertain economic
conditions.Gross profit margins and gross profit margin percentages declined
in the first quarter of fiscal 2013 compared to the fourth quarter of fiscal
2012 due to a combination of lower volumes across all markets and weaker
pricing primarily in the commodity alloys.In addition, from the fourth
quarter of fiscal 2012 through the first quarter of fiscal 2013, service
center transactional business volumes and prices declined due to increased
competition and customers reducing inventory levels throughout the supply
chain.

Backlog

Backlog was $211.7 million at December 31, 2012, a decrease of approximately
$11.1 million, or 5.0%, from $222.9 million at September 30, 2012.The backlog
dollars declined during the first quarter of fiscal 2013 due to a 5.5%
decrease in backlog average selling price for the quarter, slightly offset by
a small increase in backlog pounds.The reduction in the backlog during the
first quarter resulted from reduced order entry pricing and a slightly
lower-valued mix of products in the backlog.Order entry volumes were
comparable to sales volumes in the first quarter, causing only a slight
increase in backlog pounds.The level of transactional business declined in
the first quarter of fiscal 2013, after remaining relatively consistent
through fiscal 2012.Intermediate and large size, project-based orders
continued at relatively low levels in the first quarter of fiscal 2013, as
experienced in fiscal 2012.

Management believes that the reduced level of both transactional and
project-based orders has resulted from customers exercising caution in making
purchases due to the current uncertain economic conditions associated with
slow economic growth. The backlog for the aerospace and land-based gas turbine
markets declined in the first quarter of fiscal 2013. Management believes the
reduction is a result of customers adjusting their inventory levels within the
supply chain.In addition, backlog decreased in the "Other Markets" category
as projects for flue-gas desulphurization were lower than anticipated due to
economic and regulatory concerns, and in the oil and gas market, the company
has not received additional orders for a specific project that is in
production testing along with other materials.

Capital Spending

Management continues to believe in the long-term growth potential of the
aerospace, land-based gas turbine and chemical processing markets. Therefore,
the Company is continuing to implement the previously announced capital
spending projects in line with plans to meet the expected long-term growth
requirements of those target markets.Capital spending in the first quarter of
fiscal 2013 was approximately $9.0 million and the forecasts for capital
spending in fiscal 2013 and fiscal 2014 are approximately $70.0 million and
$39.0 million, respectively.

The actual and planned capital investments of approximately $135 million over
the three year-period of fiscal 2012 through 2014 are expected to allow the
Company to increase capacity, enhance product quality, reduce costs and
improve working capital management. The Company anticipates that these
significant investments will help the Company improve efficiency and meet
expected long-term increasing customer demand for volume and quality
improvements.

Liquidity

During the first quarter of fiscal 2013, the Company's primary sources of
liquidity were cash on-hand and cash from operations, as detailed below.At
December 31, 2012, the Company had cash and cash equivalents of $65.5 million
compared to cash and cash equivalents of $46.7 million at September 30, 2012.

Net cash provided by operating activities was $29.5 million in the first
quarter of fiscal 2013 compared to net cash provided by operating activities
of $3.1 million in the same period of fiscal 2012.Items contributing to the
difference include cash provided by lower accounts receivable of $28.3 million
which was $19.7 million higher than cash provided by accounts receivable in
the same period of fiscal 2012, and cash used from inventory balances (net of
foreign currency fluctuation) of $12.1 million was $7.5 million lower than
cash used from inventory balances in the same period of fiscal 2012. Cash
provided by operations was unfavorably impacted by net income of $5.8 million,
compared to $8.4 million in the same period of fiscal 2012. Net cash used in
investing activities was $9.0 million in the first quarter of fiscal 2013
compared to $7.4 million in the first quarter of fiscal 2012 as a result of
higher capital expenditures.Net cash used in financing activities in the
first quarter of fiscal 2013 included a $2.7 million dividend payment,
consistent with the first quarter of fiscal 2012.

Future sources of liquidity

The Company's sources of liquidity for fiscal 2013 are expected to consist
primarily of cash generated from operations, cash on-hand and, if needed,
borrowings under the U.S. revolving credit facility.The U.S. revolving credit
facility provides for borrowings in a maximum amount of $120.0 million,
subject to a borrowing base formula and certain reserves. At December 31,
2012, the Company had cash of $65.5 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.

Dividend Declared

Today, 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, 2013 to stockholders of record at the
close of business on March 1, 2013.

Quarterly Performance

For the first quarter of fiscal 2013, net revenues decreased by $36.0 million
from the fourth quarter of fiscal 2012, volume declined by 1.4 million pounds
and net income decreased by $7.0 million during this period. Although a
decline was anticipated in each of these categories from the fourth quarter of
fiscal 2012 to the first quarter of fiscal 2013, each category declined more
than anticipated. The decline in earnings for the first quarter of fiscal 2013
from the fourth quarter of fiscal 2012 was greater than previously expected
due to lower than anticipated volume of pounds shipped combined with lower
average selling prices per pound.

The Company is experiencing increased price competition in the marketplace
relative to fiscal 2012, particularly in commodity type alloys in mill-direct
project business, from competitors that have the ability to produce both
high-performance alloys and stainless steel flat products. This competition
continues to require the Company to aggressively price project business orders
in these markets, which has unfavorably impacted the Company's gross profit
margin and net income.As mill-direct lead times are decreasing, downward
pressure on prices for service center transactional business is also
occurring.

Guidance

Net income for the second quarter of fiscal 2013 is expected to exceed the net
income of the first quarter of fiscal 2013, but is expected to continue to be
unfavorably impacted by the lower volumes and weaker pricing similar to that
experienced during the first quarter. Due to the continued uncertainty of the
economic environment, lack of visibility and continued lower level of order
entry, management does not anticipate a recovery in the second quarter.
However, certain macroeconomic trends may suggest a potential improvement in
the second half of 2013.

Management expects net income for fiscal 2013 to be below net income of fiscal
2012. Due to the continued uncertainty of the economic environment, the amount
of the decrease continues to be uncertain.

Earnings Conference Call

The Company will host a conference call on Friday, February 1, 2013 to discuss
its results for the quarter ended December 31, 2012.Mark Comerford, 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 1, Dial-In Numbers: 877-407-8033(Domestic)
            2013
Time:     9:00 a.m. Eastern                    201-689-8033(International)
            Time
         8:00a.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 Friday,
February 1, 2013 at 11:00 a.m. ET, through 11:59 p.m. ET on Thursday, February
28, 2013. To listen to the replay, please dial:

Domestic:       877-660-6853
International:  201-612-7415
                  
Replay Access:    Conference:407052

A replay of the Webcast will also be available at www.haynesintl.com until
January 31, 2014.

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. All statements other than statements of
historical fact, including statements regarding market and industry 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 outlook for fiscal year 2013 and beyond, overall
volume and pricing trends, cost reduction strategies and their anticipated
results, capital expenditures 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, 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, 2012, 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.

                                                     
HAYNES INTERNATIONAL,INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share data)
                                                     
                                                     
                                                     
                                            Three Months Ended
                                             December 31,
                                            2011      2012
                                                     
Net revenues                                $128,851  $114,300
Cost of sales                               105,360   95,526
Gross profit                                23,491    18,774
Selling, general and administrative expense 9,816     9,811
Research and technical expense              765       858
Operating income                           12,910    8,105
Interest income                              (62)      (29)
Interest expense                            26        17
Income before income taxes                  12,946    8,117
Provision for income taxes                  4,503     2,282
Net income                                 $8,443    $5,835
Net income per share:                                 
Basic                                      $0.69     $0.47
Diluted                                    $0.68     $0.47
                                                     
Dividend declared per common share          $0.22     $0.22

                                                                

HAYNES INTERNATIONAL,INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share data)
                                                                
                                                   September30, December 31,
                                                   2012          2012
ASSETS                                                           
Current assets:                                                  
Cash and cash equivalents                          $46,740       $65,463
Accounts receivable, less allowance for doubtful    100,631       72,581
accounts of $1,249 and $1,269, respectively
Inventories                                        263,236       275,705
Income taxes receivable                            4,153         2,349
Deferred income taxes                              9,933         9,989
Other current assets                               1,532         2,349
Total current assets                               426,225       428,436
Property, plant and equipment, net                 124,652       133,295
Deferred income taxes—long term portion            68,255        68,216
Prepayments and deferred charges                   1,777         2,055
Intangible assets, net                             6,017         5,912
Total assets                                       $626,926      $637,914
LIABILITIES AND STOCKHOLDERS' EQUITY                             
Current liabilities:                                             
Accounts payable                                   $37,471       $46,248
Accrued expenses                                   15,157        14,315
Revolving credit facility                          ––            ––
Accrued pension and postretirement benefits        21,065        21,065
Deferred revenue—current portion                   2,500         2,500
Total current liabilities                          76,193        84,128
Long-term obligations (less current portion)       980           980
Deferred revenue (less current portion)            32,829        32,204
Non-current income taxes payable                   339           339
Accrued pension and postretirement benefits        215,487       214,365
Total liabilities                                  325,828       332,016
Commitments and contingencies                      ––            ––
Stockholders' equity:                                            
Common stock, $0.001 par value (40,000,000 shares
authorized, 12,287,790 and 12,342,985 shares issued 12            12
and outstanding at September30, 2012 and December
31, 2012,respectively)
Preferred stock, $0.001 par value (20,000,000
shares authorized, 0 shares issued and              ––            ––
outstanding)
Additional paid-in capital                         236,751       237,762
Accumulated earnings                               163,426       166,551
Accumulated other comprehensive loss               (99,091)      (98,427)
Total stockholders' equity                         301,098       305,898
Total liabilities and stockholders' equity         $626,926      $637,914

                                                                    

HAYNES INTERNATIONAL,INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
                                                                    
                                                                    
                                                                    
                                                           Three Months Ended
                                                            December 31,
                                                           2011      2012
Cash flows from operating activities:                                
Net income                                                 $8,443    $5,835
Adjustments to reconcile net income to net cash provided by          
(used in) operating activities:
Depreciation                                              2,982     3,131
Amortization                                              112       105
Stock compensation expense                                460       218
Excess tax benefit from option exercises                   (616)     (195)
Deferred revenue                                          (625)     (625)
Deferred income taxes                                     638       (147)
Loss on disposal of property                              10        3
Change in assets and liabilities:                                   
Accounts receivable                                       8,653     28,342
Inventories                                               (19,612)  (12,095)
Other assets                                              (713)     (1,087)
Accounts payable and accrued expenses                     1,497     5,038
Income taxes                                              3,183     2,127
Accrued pension and postretirement benefits               (1,315)   (1,122)
Net cash provided by operating activities                  3,097     29,528
                                                                    
Cash flows from investing activities:                                
Additions to property, plant and equipment                (7,350)   (8,982)
Net cash used in investing activities                     (7,350)   (8,982)
                                                                    
Cash flows from financing activities:                                
Dividends paid                                             (2,691)   (2,710)
Proceeds from exercise of stock options                    821       598
Excess tax benefit from option exercises                   616       195
Net cash used in financing activities                      (1,254)   (1,917)
                                                                    
Effect of exchange rates on cash                           (192)     94
Increase (decrease) in cash and cash equivalents           (5,699)   18,723
                                                                    
Cash and cash equivalents, beginning of period             60,062    46,740
Cash and cash equivalents, end of period                   $54,363   $65,463
                                                                    

CONTACT: Daniel Maudlin
         Vice President of Finance and Chief Financial Officer
         Haynes International, Inc.
         765-456-6102

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