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

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

  *Net revenues of $129.2 million and net income of $6.4 million, or $0.52
    per diluted share, for the three months ended March 31, 2013, compared to
    net revenues of $158.9 million and net income of $15.2 million, or $1.23
    per diluted share, for the same period of fiscal 2012.
  *In the second quarter of fiscal 2013, the Company invested $13.7 million
    in capital projects, which brings year-to-date capital investment to $22.7
    million.
  *Backlog was $207.0 million at March 31, 2013, a decrease of 2.2% from
    $211.7 million at December 31, 2012.
  *Regular quarterly cash dividend of $0.22 per outstanding share of the
    Company's common stock declared.

KOKOMO, Ind., May 2, 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 second 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 June 17, 2013 to stockholders of record as of June
3, 2013.

"In the second quarter of fiscal 2013, we experienced slowing demand in our
aerospace engine products market as the supply chain continued its cautious
buying and order entry pattern from the first quarter. We saw moderate
increases in demand in our land-based gas turbine market as our manufacturing
and distribution network enabled us to meet several quick-leadtime customer
requirements. We also experienced moderate increases in our chemical
processing market due to our technical group's ability to develop some new
application wins," said Mark Comerford, President and Chief Executive Officer.
"Market conditions remain extremely competitive, and market visibility in the
near-term is uncertain as to the direction of order entry and how quickly
pricing may solidify. Pricing, volumes per order, backlogs and leadtimes are
all under competitive pressures as we navigate through this challenging
economic environment. We're pleased with the responsiveness of our operations
to recent customer requirements, and we're focused on our ongoing operational
efficiency improvements and capacity growth initiatives. Longer term, we
believe we are well-positioned with our value-added products, proprietary
alloys and additional capacity to meet the anticipated long-term growth
requirements of our core target markets when the economy recovers."

Quarterly Results

Net Revenues. Net revenues were $129.2 million in the second quarter of fiscal
2013, a decrease of 18.7% from $158.9 million in the same period of fiscal
2012. Volume was 5.6 million pounds in the second quarter of fiscal 2013, a
decrease of 13.8% from 6.5 million pounds in the same period of fiscal 2012.
The aggregate average selling price was $23.15 per pound in the second quarter
of fiscal 2013, a decrease of 5.7% from $24.54 per pound in the same period of
fiscal 2012. Average selling price decreased due to lower raw material prices,
a lower-value product mix and reduced customer demand as a result of uncertain
economic times. The Company's consolidated backlog was $207.0 million at March
31, 2013, a decrease of 2.2% from $211.7 million at December 31, 2012. This
decrease reflects an 8.3% decrease in backlog average selling price partially
offset by a 6.6% increase in backlog pounds.

Gross Profit. As a result of the above factors, gross profit was $20.1 million
for the second quarter of fiscal 2013, a decrease of $14.5 million, or 41.8%,
from the same period of fiscal 2012. Gross profit as a percentage of net
revenue was 15.5% in the second quarter of fiscal 2013 as compared to 21.7% in
the same period of fiscal 2012.

Selling, General and Administrative Expense. Selling, general and
administrative expense was $9.4 million for the second quarter of fiscal 2013,
a decrease of $1.3 million, or 11.9%, from $10.7 million in the same period of
fiscal 2012 due to reduced costs for incentive compensation programs and
certain cost management initiatives. Selling, general and administrative
expenses as a percentage of net revenues increased to 7.3% for the second
quarter of fiscal 2013 compared to 6.7% for the same period of fiscal 2012
primarily due to decreased revenues.

Research and Technical Expense. Research and technical expense was $0.9
million, or 0.7% of revenue, for the second quarter of fiscal 2013. Research
and technical expense was $0.8 million, or 0.5% of revenue, for the second
quarter of fiscal 2012.

Operating Income. As a result of the above factors, operating income in the
second quarter of fiscal 2013 was $9.8 million, a decrease of 57.4% compared
to operating income of $23.0 million in the same period of fiscal 2012.

Income Taxes. Income taxes were an expense of $3.4 million in the second
quarter of fiscal 2013, a decrease of $4.5 million from an expense of $7.9
million in the same period of fiscal 2012. The effective tax rate for the
second quarter of fiscal 2013 was 34.5%, compared to 34.2% in the same period
of fiscal 2012. The increased tax rate was primarily due to increased state
tax rates.

Net Income. As a result of the above factors, net income in the second quarter
of fiscal 2013 was $6.4 million, a decrease of $8.7 million, or 57.5%, from
net income of $15.2 million in the same period of fiscal 2012.

Six Months Results

Net Revenues. Net revenues were $243.5 million in the first six months of
fiscal 2013, a decrease of 15.4% from $287.7 million in the same period of
fiscal 2012 due to decreases in both volume and average selling price per
pound. Volume was 10.3 million pounds in the first six months of fiscal 2013,
a decrease of 11.5% from 11.6 million pounds in the same period of fiscal
2012. The aggregate average selling price was $23.72 per pound in the first
six months of fiscal 2013, a decrease of 4.3% from $24.79 per pound in the
same period of fiscal 2012. Average selling price decreased due to reduced
customer demand and lower-value product mix. The Company's consolidated
backlog was $207.0 million at March 31, 2013, a decrease of 7.1% from $222.9
million at September 30, 2012. The backlog average selling price declined by
13.4%, which was partially offset by an increase in backlog pounds of 7.2%.

Gross Profit. As a result of the above factors, gross profit was $38.9 million
for the first six months of fiscal 2013, a decrease of $19.2 million, or
33.0%, from the same period of fiscal 2012. Gross profit as a percentage of
net revenue was 16.0% in the first six months of fiscal 2013 as compared to
20.2% in the same period of fiscal 2012.

Selling, General and Administrative Expense. Selling, general and
administrative expense was $19.2 million for the first six months of fiscal
2013, a decrease of $1.3 million, or 6.2%, from $20.5 million in the same
period of fiscal 2012. Selling, general and administrative expense reductions
were due to reduced costs for incentive compensation programs and certain cost
management initiatives. Selling, general and administrative expenses as a
percentage of net revenues increased to 7.9% for the first six months of
fiscal 2013 compared to 7.1% for the same period of fiscal 2012 primarily due
to decreased revenues.

Research and Technical Expense. Research and technical expense was $1.7
million, or 0.7% of revenue, for the first six months of fiscal 2013. Research
and technical expense was $1.6million, or 0.5% of net revenues, in the same
period of fiscal 2012.

Operating Income. As a result of the above factors, operating income in the
first six months of fiscal 2013 was $17.9 million, a decrease of 50.1%
compared to operating income of $35.9 million in the same period of fiscal
2012.

Income Taxes. Income taxes were an expense of $5.7 million in the first six
months of fiscal 2013, a decrease of $6.7 million from $12.4 million in the
same period of fiscal 2012. The effective tax rate for the first six months of
fiscal 2013 was 31.6%, compared to 34.4% 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 2012, 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 six
months of fiscal 2013 was $12.3 million, a decrease of $11.3 million, or
48.0%, from net income of $23.6million in the same period of fiscal 2012.

Sequential Net Revenue and Gross Profit Margin Performance

The second quarter of fiscal 2013 achieved higher revenue and gross profit
than the first quarter of fiscal 2013; however, the gross profit margin
percentage declined to 15.5%. Average selling price per pound was negatively
impacted during the quarter by a lower value mix, lower metal prices and
increased competition.

For the second quarter of fiscal 2013, net revenues increased by $14.9 million
from the first quarter of fiscal 2013, volume increased by 0.9 million pounds
and net income increased by $0.6 million during this period.

Backlog

Backlog was $207.0 million at March 31, 2013, a decrease of approximately $4.7
million, or 2.2%, from $211.7 million at December 31, 2012.The backlog
dollars declined during the second quarter of fiscal 2013 due to an 8.3%
decrease in backlog average selling price for the quarter, largely offset by a
6.6% increase in backlog pounds. The reduction in the backlog during the
second quarter resulted from reduced order entry pricing and a lower-valued
mix of products in the backlog.

Management believes that customers continue to exercise caution in making
purchases due to the current uncertain economic conditions associated with
slow economic growth and due to the decreasing cost of nickel. The backlog for
the aerospace and chemical processing markets declined in the second quarter
of fiscal 2013. Management believes the reduction is a result of customers
adjusting their inventory levels within the supply chain and an overall lack
of large project orders. The backlog for the land-based gas turbine market
increased in the second quarter of fiscal 2013 due to stronger order entry
levels.

Subsequent Event

On April 19, 2013 the Company's research and administrative facilities in
Kokomo, Indiana were affected by a flood. Manufacturing operations in Kokomo
are conducted in separate facilities and were not interrupted by the flood.
The Company is working closely with flood mitigation experts to repair the
damage to its research and administrative facilities as quickly as possible.

The Company anticipates that the damage caused by the flood will have a
minimal impact on its ability to complete quality control testing in order to
allow shipment of finished product to customers in a timely manner. The
Company has insurance which includes coverage for flood risks, however, the
amount of recovery of insurance proceeds has not yet been determined. In
addition, the Company cannot be certain that any insurance recovery would be
recorded in the same quarter in which flood-related expenses are recognized.

Capital Investment

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
investment projects in line with plans to meet the expected long-term growth
requirements of those target markets. Capital investment in the second quarter
of fiscal 2013 was approximately $13.7 million, which brings capital
investment to approximately $22.7 million for the first half of fiscal 2013.
The forecasts for capital investment in fiscal 2013 and fiscal 2014 are
approximately $70.0 million and $39.0 million, respectively. Capital
investment in fiscal 2012 was $25.9 million.

The actual and planned capital investments of approximately $135.0 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 customer demand for volume and quality improvements.

Liquidity

During the first six months of fiscal 2013, the Company's primary sources of
liquidity were cash on-hand and cash from operations, as detailed below. At
March 31, 2013, the Company had cash and cash equivalents of $48.0 million
compared to cash and cash equivalents of $46.7 million at September 30, 2012.

Net cash provided by operating activities was $29.1 million in the first six
months of fiscal 2013 compared to net cash provided by operating activities of
$6.6 million in the same period of fiscal 2012. Items contributing to the
difference include cash provided by lower accounts receivable of $12.9 million
versus $4.6 million of cash used by accounts receivable in the same period of
fiscal 2012. Additionally, cash used from inventory balances (net of foreign
currency fluctuation) of $1.7 million was $21.5 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 $12.3 million, compared
to $23.6 million in the same period of fiscal 2012. Net cash used in investing
activities was $22.7 million in the first six months of fiscal 2013 compared
to $12.7 million in the first six months of fiscal 2012 as a result of higher
capital expenditures. Net cash used in financing activities in the first six
months of fiscal 2013 included dividend payments of $5.4 million consistent
with the first six months of fiscal 2012.

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 March 31, 2013,
the Company had cash of $48.0 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 a borrowing base
formula 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.

Working Capital

Controllable working capital, which includes accounts receivable, inventory,
accounts payable and accrued expenses, was $296.8 million at March 31, 2013, a
decrease of $14.4 million or 4.6% from $311.2 million at September 30, 2012.
This decrease of $14.4 million resulted primarily from accounts receivable
decreasing from the end of the fourth quarter of fiscal 2012. Working capital
as a percentage of net revenues improved with a decrease from the end of
fiscal 2012 due to slightly reduced inventory levels while net revenues
increased. Continued improvement is expected throughout fiscal 2013.

Competition and Pricing

The Company is experiencing increased price competition in the marketplace
relative to fiscal 2012, particularly in commodity type alloys in mill-direct
project business. 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.

If market conditions improve, pricing competition in the high-performance
alloy industry may begin to ease in future quarters. The Company continues to
respond to this competition by increasing emphasis on service centers,
offering value-added services, improving its cost structure and focusing on
delivery times and reliability.

Guidance

Management currently expects that net income for the third quarter of fiscal
2013 may be lower than net income for the second quarter as it is expected to
continue to be unfavorably impacted by weaker pricing similar to that
experienced during the first and second quarters. Visibility in the
marketplace remains poor and based upon continued economic uncertainty, level
of bookings to date and feedback from key customers, management does not
anticipate any significant recovery during the third quarter of fiscal 2013.

Earnings Conference Call

The Company will host a conference call on Friday, May 3, 2013 to discuss its
results for the quarter ended March 31, 2013. 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, May 3, 2013    Dial-In Numbers: 877-407-8033 (Domestic)
Time:  9:00 a.m. Eastern Time                   201-689-8033 (International)
      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, May
3, 2013 at 11:00 a.m. ET, through 11:59 p.m. ET on Monday, June 3, 2013. To
listen to the replay, please dial:

Domestic:       877-660-6853
International:   201-612-7415
                
Replay Access:  Conference: 413370

A replay of the Webcast will also be available at www.haynesintl.com until
April 3, 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.

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.

                                                              
                                      Schedule 1                         

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

                                     Three Months Ended Six Months Ended
                                      March 31,         March 31,
                                     2012      2013     2012     2013
                                                              
Net revenues                         $158,882  $129,201 $287,733 $243,501
Cost of sales                        124,347   109,117  229,707  204,643
Gross profit                         34,535    20,084   58,026   38,858
Selling, general and administrative   10,687    9,414    20,503   19,225
expense
Research and technical expense       814       852      1,579    1,710
Operating income                    23,034    9,818    35,944   17,923
Interest income                      (33)      (25)     (95)     (54)
Interest expense                     24        17       50       34
Income before income taxes           23,043    9,826    35,989   17,943
Provision for income taxes           7,892     3,390    12,395   5,672
Net income                          $15,151   $6,436   $23,594  $12,271
Net income per share:                                          
Basic                               $1.24     $0.52    $1.93    $1.00
Diluted                             $1.23     $0.52    $1.92    $0.99
                                                              
Dividend declared per common share   $0.22     $0.22    $0.44    $0.44


                                                                   
                                                                   
Schedule 2
HAYNES INTERNATIONAL,INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share data)
                                                                   

                                                      September30, March 31,
                                                       2012          2013
ASSETS                                                              
Current assets:                                                     
Cash and cash equivalents                             $46,740       $48,011
Accounts receivable, less allowance for doubtful       100,631       86,454
accounts of $1,249 and $1,158 respectively
Inventories                                           263,236       262,715
Income taxes receivable                               4,153         3,329
Deferred income taxes                                 9,933         9,749
Other current assets                                  1,532         2,306
Total current assets                                  426,225       412,564
Property, plant and equipment, net                    124,652       141,743
Deferred income taxes—long term portion               68,255        67,165
Prepayments and deferred charges                      1,777         1,820
Intangible assets, net                                6,017         5,809
Total assets                                          $626,926      $629,101
LIABILITIES AND STOCKHOLDERS' EQUITY                                
Current liabilities:                                                
Accounts payable                                      $37,471       $38,103
Accrued expenses                                      15,157        14,278
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        75,946
Long-term obligations (less current portion)          980           980
Deferred revenue (less current portion)               32,829        31,579
Non-current income taxes payable                      339           339
Accrued pension and postretirement benefits           215,487       213,412
Total liabilities                                     325,828       322,256
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 12,287,790 and 12,332,992 outstanding at
September30, 2012 and March 31, 2013,respectively)
Preferred stock, $0.001 par value (20,000,000 shares   ––            ––
authorized, 0 shares issued and outstanding)
Additional paid-in capital                            236,751       238,555
Accumulated earnings                                  163,426       170,274
Treasury stock, 0 shares at September 30, 2012 and     ––            (505)
9,993 shares at March 31, 2013
Accumulated other comprehensive loss                  (99,091)      (101,491)
Total stockholders' equity                            301,098       306,845
Total liabilities and stockholders' equity            $626,926      $629,101

                                                                  
                                                                  
                                                                  Schedule 3
HAYNES INTERNATIONAL,INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
                                                                  

                                                          Six Months Ended
                                                           March 31,
                                                          2012     2013
Cash flows from operating activities:                              
Net income                                                $23,594  $12,271
Adjustments to reconcile net income to net cash provided           
by (used in) operating activities:
Depreciation                                              6,092    6,437
Amortization                                              216      208
Pension and post-retirement expense - U.S. and U.K.       7,848    8,067
Stock compensation expense                                1,042    712
Excess tax benefit from option exercises and restricted    (1,122)  (494)
stock vesting
Deferred revenue                                          (1,250)  (1,250)
Deferred income taxes                                     1,449    656
Loss on disposal of property                              65       135
Change in assets and liabilities:                                  
Accounts receivable                                       (4,612)  12,917
Inventories                                               (23,200) (1,669)
Other assets                                              (298)    (827)
Accounts payable and accrued expenses                     1,602    19
Income taxes                                              5,772    1,966
Accrued pension and postretirement benefits               (10,565) (10,090)
Net cash provided by operating activities                 6,633    29,058
                                                                  
Cash flows from investing activities:                              
Additions to property, plant and equipment               (12,690) (22,731)
Net cash used in investing activities                    (12,690) (22,731)
                                                                  
Cash flows from financing activities:                              
Dividends paid                                            (5,397)  (5,423)
Proceeds from exercise of stock options                   1,599    598
Payment for purchase of treasury stock                    ––       (505)
Excess tax benefit from option exercises and restricted    1,122    494
stock vesting
Net cash used in financing activities                     (2,676)  (4,836)
                                                                  
Effect of exchange rates on cash                          60       (220)
Increase (decrease) in cash and cash equivalents          (8,673)  1,271
                                                                  
Cash and cash equivalents, beginning of period            60,062   46,740
Cash and cash equivalents, end of period                  $51,389  $48,011


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

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