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

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

  *Net revenues of $123.6 million and net income of $5.3 million, or $0.43
    per diluted share, for the three months ended June 30, 2013, compared to
    net revenues of $141.6 million and net income of $13.7 million, or $1.11
    per diluted share, for the same period of fiscal 2012.
  *Capital investments of $10.9 million in the third quarter of fiscal 2013,
    which brings year-to-date capital investment to $33.7 million.
  *Backlog of $189.6 million at June 30, 2013, a decrease of 8.4% from $207.0
    million at March 31, 2013.
  *Regular quarterly cash dividend of $0.22 per outstanding share of the
    Company's common stock declared.

KOKOMO, Ind., Aug. 8, 2013 (GLOBE NEWSWIRE) -- Haynes International, Inc.
(Nasdaq:HAYN), a leading developer, manufacturer and marketer of
technologically advanced high-performance alloys (the "Company"), today
reported financial results for the third quarter of fiscal 2013. The Company
also announced that its Board of Directors declared a regular quarterly cash
dividend of $0.22 per outstanding share of common stock payable September 16,
2013 to stockholders of record at the close of business on September 3, 2013.

"Market conditions continued to soften during the third quarter, leading to
lower revenues, fewer pounds sold and reduced pricing compared to the second
quarter of 2013. We believe that customers are continuing the process of
inventory de-stocking in the supply chain. Shorter mill lead times and
reductions in nickel prices served to encourage customers to delay order
entry. As a result, backlog has declined and transactional service center
business is increasingly competing with mill-direct orders, leading to lower
profitability," said Mark Comerford, President and Chief Executive Officer.
"We do not anticipate a near-term pick-up in demand, and thus expect that net
income for the fourth quarter of 2013 will be lower than net income in the
third quarter of 2013. Currently, we are adjusting to the lower volume levels
by managing production schedules, reducing spending and deferring
non-strategic capital projects. Our key capital projects are progressing well
with completion of those expansion projects expected by the end of fiscal 2014
which we believe will position us well for the expected long-term growth in
our key markets."

Quarterly Results

Net Revenues. Net revenues were $123.6 million in the third quarter of fiscal
2013, a decrease of 12.7% from $141.6 million in the same period of fiscal
2012.  Volume was 5.5 million pounds in the third quarter of fiscal 2013, a
decrease of 3.0% from 5.7 million pounds in the same period of fiscal
2012.The aggregate average selling price was $22.31 per pound in the third
quarter of fiscal 2013, a decrease of 10.0% from $24.79 per pound in the same
period of fiscal 2012.Average selling price decreased due to lower raw
material prices, a lower-value product mix, a higher level of competition and
reduced customer demand as a result of uncertain economic conditions.The
Company's consolidated backlog was $189.6 million at June 30, 2013, a decrease
of 8.4% from $207.0 million at March 31, 2013.This decrease reflects a 16.0%
decrease in backlog pounds partially offset by a 9.0% increase in backlog
average selling price.

Other Revenue. Other revenue was $1.9 million in the third quarter of fiscal
2013, a decrease of 51.4% from $3.9 million in the same period of fiscal 2012.
The decrease is due to lower toll conversion and lower miscellaneous sales
driven by weaker customer demand.

Cost of Sales. Cost of sales was $105.0 million, or 84.9% of net revenues, in
the third quarter of fiscal 2013 compared to $109.2 million, or 77.1% of net
revenues, in the same period of fiscal 2012. Cost of sales in the third
quarter of fiscal 2013 decreased by $4.2 million as compared to the same
period of fiscal 2012 primarily due to lower volume.

Gross Profit. As a result of the above factors, gross profit was $18.6
million for the third quarter of fiscal 2013, a decrease of $13.8 million, or
42.6%, from the same period of fiscal 2012. Gross profit as a percentage of
net revenue was 15.1% in the third quarter of fiscal 2013 as compared to 22.9%
in the same period of fiscal 2012.

Selling, General and Administrative Expense. Selling, general and
administrative expense was $9.8 million for the third quarter of fiscal 2013,
a decrease of $0.6 million, or 6.0%, from $10.4 million in the same period of
fiscal 2012 primarily due to reduced costs for incentive compensation
programs.Selling, general and administrative expenses as a percentage of net
revenues increased to 7.9% for the third quarter of fiscal 2013 compared to
7.3% for the same period of fiscal 2012 due to decreased revenues.

Research and Technical Expense. Research and technical expense was $0.9
million, or 0.7% of revenue, for the third quarter of fiscal 2013 compared to
$0.8 million, or 0.6% of revenue, for the third quarter of fiscal 2012.

Operating Income. As a result of the above factors, operating income in the
third quarter of fiscal 2013 was $8.0 million, a decrease of 62.3% compared to
operating income of $21.2 million in the same period of fiscal 2012.

Income Taxes. Income taxes were an expense of $2.7 million in the third
quarter of fiscal 2013, a decrease of $4.8 million from an expense of $7.5
million in the same period of fiscal 2012.The effective tax rate for the
third quarter of fiscal 2013 was 33.8%, compared to 35.3% in the same period
of fiscal 2012. The decrease in the tax rate was primarily due to the reversal
of certain tax reserves no longer required.

Net Income. As a result of the above factors, net income in the third quarter
of fiscal 2013 was $5.3 million, a decrease of $8.4 million, or 61.4%, from
net income of $13.7million in the same period of fiscal 2012.

Results for Nine Months Ended June 30, 2013

Net Revenues. Net revenues were $367.1 million in the first nine months of
fiscal 2013, a decrease of 14.5% from $429.3 million in the same period of
fiscal 2012, due to decreases in both volume and average selling price per
pound. Volume was 15.8 million pounds in the first nine months of fiscal
2013, a decrease of 8.7% from 17.3 million pounds in the same period of fiscal
2012.The aggregate average selling price was $23.22 per pound in the first
nine months of fiscal 2013, a decrease of 6.3% from $24.79 per pound in the
same period of fiscal 2012.Average selling price decreased due to reduced
customer demand, lower raw material prices, increased competition and
lower-value product mix.The Company's consolidated backlog was $189.6 million
at June 30, 2013, a decrease of 14.9% from $222.9 million at September30,
2012.The decline in backlog is due to the backlog pounds declining by 9.9%
combined with average selling price decreasing by 5.5% .

Other Revenue. Other revenue was $8.1 million in the first nine months of
fiscal 2013, a decrease of 28.9% from $11.4 million in the same period of
fiscal 2012 due to reduced levels of toll conversion and miscellaneous sales.

Cost of Sales. Cost of sales was $309.6 million, or 84.3% of net revenues, in
the first nine months of fiscal 2013 compared to $338.9 million, or 78.9% of
net revenues, in the same period of fiscal 2012.Cost of sales in the first
nine months of fiscal 2013 decreased by $29.3 million as compared to the same
period of fiscal 2012 due to lower volume and a lower-value product mix.

Gross Profit. As a result of the above factors, gross profit was $57.5
million for the first nine months of fiscal 2013, a decrease of $33.0 million,
or 36.4%, from the same period of fiscal 2012. Gross profit as a percentage of
net revenue was 15.7% in the first nine months of fiscal 2013 as compared to
21.1% in the same period of fiscal 2012.

Selling, General and Administrative Expense. Selling, general and
administrative expense was $29.0 million for the first nine months of fiscal
2013, a decrease of $1.9 million, or 6.1%, from $30.9 million in the same
period of fiscal 2012.Selling, general and administrative expense reductions
were primarily due to reduced costs for incentive compensation
programs.Selling, general and administrative expenses as a percentage of net
revenues increased to 7.9% for the first nine months of fiscal 2013 compared
to 7.2% for the same period of fiscal 2012 primarily due to decreased
revenues.

Research and Technical Expense. Research and technical expense was $2.6
million, or 0.7% of revenue, for the first nine months of fiscal 2013 compared
to $2.4million, or 0.6% of net revenues, in the same period of fiscal 2012.

Operating Income. As a result of the above factors, operating income in the
first nine months of fiscal 2013 was $25.9 million, a decrease of 54.6%
compared to operating income of $57.1 million in the same period of fiscal
2012.

Income Taxes. Income taxes were an expense of $8.4 million in the first nine
months of fiscal 2013, a decrease of $11.5 million from $19.9 million in the
same period of fiscal 2012.The effective tax rate for the first nine months
of fiscal 2013 was 32.3%, compared to 34.7% in the same period of fiscal
2012.The decrease in the effective tax rate was primarily due to the reversal
of certain tax reserves no longer required and a change in 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 nine
months of fiscal 2013 was $17.6 million, a decrease of $19.8 million, or
52.9%, from net income of $37.3million in the same period of fiscal 2012.

Volumes, Competition and Pricing

The Company continues to experience lower volumes, lower nickel prices and
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.With reduced mill-direct lead times,
downward pressure on prices for service center transactional business also
continues to occur.The lower volumes processed through the mill also reduce
absorption of fixed costs resulting in additional margin compression. Cost
reduction efforts are being implemented along with careful review of
discretionary spending.

Gross Profit Margin Performance

The third quarter of fiscal 2013 revenue and gross profit was lower than the
second quarter of fiscal 2013, including a decline in the gross profit margin
percentage. Net revenues decreased by $5.6 million from the second quarter of
fiscal 2013, volume decreased by 0.04 million pounds and net income decreased
by $1.1 million. Average selling price per pound continues to be negatively
impacted by lower nickel prices, increased competition and lower value mix.

Backlog

Backlog was $189.6 million at June 30, 2013, a decrease of approximately $17.4
million, or 8.4%, from $207.0 million at March 31, 2013.The backlog dollars
declined during the third quarter of fiscal 2013 due to a 16.0% decrease in
backlog pounds for the quarter, partially offset by a 9.0% increase in backlog
average selling price.The reduction in the backlog during the third quarter
resulted from reduced order entry volumes and a change in mix of products in
the backlog.

Management believes that destocking continues in the supply chain causing
lower order entry volumes. In addition, customers continue to exercise caution
in making purchases due to the decreasing cost of nickel.The backlog for the
land-based gas turbine and chemical processing markets declined in the third
quarter of fiscal 2013. The backlog for the aerospace market was comparable to
that of the third quarter of fiscal 2013.

Capital Investment

Even though the markets in which the Company participates are currently
experiencing a period of lower demand, 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
its strategy regarding the previously announced capital investment projects in
line with plans to meet the expected long-term growth requirements of those
target markets.

An initiative has been implemented that is designed to delay spending on
non-strategic projects.Each planned capital project has been analyzed to
determine if, given the Company's current lower business volumes, the timing
of project execution is proper. As a result of this analysis, the forecasted
capital expenditures have been reduced from $70 million to approximately $48
million for fiscal year 2013. Capital investment in the third quarter of
fiscal 2013 was approximately $10.9 million, which brings capital investment
to approximately $33.7 million for the first nine months of fiscal 2013. The
forecasts for capital investment in fiscal 2013 and fiscal 2014 are
approximately $48.0 million and $50.0 million, respectively.

The actual and planned capital investments of approximately $123.9 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 increased volume and quality
improvements.

Working Capital

Controllable working capital, which includes accounts receivable, inventory,
accounts payable and accrued expenses, was $299.3 million at June 30, 2013, a
decrease of $12.0 million or 3.8% from $311.2 million at September 30, 2012.
This decrease of $12.0 million resulted from accounts receivable decreasing by
$10.4 million and inventory decreasing by $7.4 million partially offset by
accounts payable and accrued expenses decreasing by $5.8 million from the end
of the fourth quarter of fiscal 2012. Improvement is expected in working
capital as a percentage of net revenues in the fourth quarter of fiscal 2013
primarily driven by expected further decreases in inventory.

Liquidity

During the first nine months of fiscal 2013, the Company's primary sources of
liquidity were cash on-hand and cash from operations, as detailed below.At
June 30, 2013, the Company had cash and cash equivalents of $43.6 million
compared to cash and cash equivalents of $46.7 million at September 30, 2012.

Net cash provided by operating activities was $38.2 million in the first nine
months of fiscal 2013 compared to net cash provided by operating activities of
$14.0 million in the same period of fiscal 2012.Items contributing to the
difference include cash provided by lower inventory of $5.5 million versus
$41.4 million of cash used by inventory in the same period of fiscal 2012.
Cash provided by operations was unfavorably impacted by the reduction in net
income to $17.6 million from $37.3 million in the same period of fiscal 2012.
Net cash used in investing activities was $33.7 million in the first nine
months of fiscal 2013 compared to $17.1 million in the first nine months of
fiscal 2012 as a result of higher capital expenditures.Net cash used in
financing activities was $7.5 million in the first nine months of fiscal 2013
compared to $5.3 million in the first nine months of fiscal 2012. Cash used in
financing activities included dividend payments of $8.1 million during the
first nine months of fiscal 2012 and 2013.

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 June 30, 2013,
the Company had cash of $43.6 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.

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 September 16, 2013 to stockholders of record at
the close of business on September 3, 2013. The dividend cash pay-out is based
on the current number of shares outstanding and is expected to be
approximately $2.7 million per quarter, or approximately $10.8 million on an
annualized basis.

Subsequent Event

On July 2, 2013, the membership of United Steelworkers Local 2958 (USW)
ratified a five-year agreement covering approximately 505 employees at the
Company's Kokomo, Indiana plant and Lebanon, Indiana service center.The new
agreement succeeded a three-year agreement that ran through June 30, 2013.

Guidance

Due to the recent lower order entry volumes and pricing, management currently
expects that net income for the fourth quarter of fiscal 2013 to be lower than
the net income for the third quarter of fiscal 2013. Net income is expected to
continue to be unfavorably impacted by lower volumes and weaker pricing
similar to that experienced during the second and third 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 a recovery during the fourth quarter of fiscal
2013.

Earnings Conference Call

The Company will host a conference call on Friday, August 9, 2013 to discuss
its results for the quarter ended June 30, 2013.Mark Comerford, President and
Chief Executive Officer, and Daniel Maudlin, 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: Friday, August 9, 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,
August 9, 2013 at 11:00 a.m. ET, through 11:59 p.m. ET on Monday, September 9,
2013. To listen to the replay, please dial:

Domestic:    877-660-6853
International: 201-612-7415
             
Conference ID: 418428

A replay of the Webcast will also be available at www.haynesintl.com until
July 9, 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, each as amended. 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 Form 10-Q 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, including, without limitation those risk factors set forth in
Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 2012. 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.

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 Nine Months Ended
                                June 30,          June 30,
                               2012      2013     2012     2013
                                                        
Net revenues                   $141,574  $123,587 $429,307 $367,088
Cost of sales                  109,185   104,982  338,892  309,625
Gross profit                   32,389    18,605   90,415   57,463
Selling, general and            10,382    9,761    30,885   28,986
administrative expense
Research and technical expense 835       853      2,414    2,563
Operating income               21,172    7,991    57,116   25,914
Interest income                (57)      (29)     (152)    (83)
Interest expense               19        18       69       52
Income before income taxes     21,210    8,002    57,199   25,945
Provision for income taxes     7,478     2,705    19,873   8,377
Net income                     $13,732   $5,297   $37,326  $17,568
Net income per share:                                    
Basic                          $1.12     $0.43    $3.05    $1.43
Diluted                        $1.11     $0.43    $3.03    $1.42
                                                        
Dividend declared per common    $0.22     $0.22    $0.66    $0.66
share
                                                                         

                                                               
                                                               Schedule 2
                                                               
HAYNES INTERNATIONAL,INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share data)
                                                               
                                             September30, 2012 June 30, 2013
ASSETS                                                          
Current assets:                                                 
Cash and cash equivalents                    $46,740            $43,566
Accounts receivable, less allowance for
doubtful accounts of $1,249 and $1,181        100,631            90,243
respectively
Inventories                                  263,236            255,788
Income taxes receivable                      4,153              2,325
Deferred income taxes                        9,933              9,354
Other current assets                         1,532              1,996
Total current assets                         426,225            403,272
Property, plant and equipment, net           124,652            147,982
Deferred income taxes—long term portion      68,255             63,658
Prepayments and deferred charges             1,777              1,878
Intangible assets, net                       6,017              5,705
Total assets                                 $626,926           $622,495
LIABILITIES AND STOCKHOLDERS' EQUITY                            
Current liabilities:                                            
Accounts payable                             $37,471            $30,740
Accrued expenses                             15,157             16,014
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             70,319
Long-term obligations (less current portion) 980                980
Deferred revenue (less current portion)      32,829             30,954
Non-current income taxes payable             339                ––
Accrued pension and postretirement benefits  215,487            205,784
Total liabilities                            325,828            308,037
Commitments and contingencies                ––                 ––
Stockholders' equity:                                           
Common stock, $0.001 par value (40,000,000
shares authorized, 12,287,790 and 12,342,585
shares issued, and 12,287,790 and 12,332,592  12                 12
outstanding at September30, 2012 and June
30, 2013,respectively)
Preferred stock, $0.001 par value (20,000,000
shares authorized, 0 shares issued and        ––                 ––
outstanding)
Additional paid-in capital                   236,751            239,040
Accumulated earnings                         163,426            172,858
Treasury stock, 0 shares at September 30,     ––                 (505)
2012 and 9,993 shares at June 30, 2013
Accumulated other comprehensive loss         (99,091)           (96,947)
Total stockholders' equity                   301,098            314,458
Total liabilities and stockholders' equity   $626,926           $622,495

                                                              
                                                              Schedule 3
HAYNES INTERNATIONAL,INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
                                                              
                                                                           
                                                      Nine Months Ended
                                                       June 30,
                                                      2012     2013
Cash flows from operating activities:                          
Net income                                            $ 37,326 $ 17,568
Adjustments to reconcile net income to net cash        
provided by (used in) operating activities:
Depreciation                                          9,366    9,975
Amortization                                          319      312
Pension and post-retirement expense - U.S. and U.K.   11,784   12,094
Stock compensation expense                            1,559    1,197
Excess tax benefit from option exercises and           (1,147)  (494)
restricted stock vesting
Deferred revenue                                      (1,875)  (1,875)
Deferred income taxes                                 2,057    2,250
Loss on disposal of property                          167      183
Change in assets and liabilities:                              
Accounts receivable                                   5,975    9,072
Inventories                                           (41,436) 5,500
Other assets                                          595      (567)
Accounts payable and accrued expenses                 1,123    (4,502)
Income taxes                                          4,031    2,633
Accrued pension and postretirement benefits           (15,880) (15,155)
Net cash provided by operating activities             13,964   38,191
                                                              
Cash flows from investing activities:                          
Additions to property, plant and equipment            (17,134) (33,650)
Net cash used in investing activities                 (17,134) (33,650)
                                                              
Cash flows from financing activities:                          
Dividends paid                                        (8,101)  (8,136)
Proceeds from exercise of stock options               1,635    598
Payment for purchase of treasury stock                ––       (505)
Excess tax benefit from option exercises and           1,147    494
restricted stock vesting
Net cash used in financing activities                 (5,319)  (7,549)
                                                              
Effect of exchange rates on cash                      (227)    (166)
Increase (decrease) in cash and cash equivalents      (8,716)  (3,174)
                                                              
Cash and cash equivalents, beginning of period        60,062   46,740
Cash and cash equivalents, end of period              $ 51,346 $ 43,566
                                                                           

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

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