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Haynes Q4 Earnings Fall, Shares Down

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Metal alloys maker Haynes International, Inc. (HAYN) posted fourth-quarter fiscal 2013 (ended Sep 30, 2013). earnings of 32 cents per share, flat with the Zacks Consensus Estimate, but down 69% from $1.04 in the year ago quarter. Profit fell roughly 69% year over year to $4 million hurt by a double-digit fall in sales. Haynes’ shares dropped as much as around 3% in the trading session following the announcement.

For the full year, Haynes posted earnings of $1.74 per share, a decline of 57% from $4.07 per share posted a year ago.

Revenues fell 23% year over year to $115.7 million in the fourth quarter, hit by weak market conditions, lower average selling prices and reduced sales volume. Sales missed the Zacks Consensus Estimate of $123 million. For the full year, sales declined 16.7% year over year to $482.7 million.
Volume contracted 10% year over year to 21 million pounds in fiscal 2013. Average selling price narrowed 7.4% year over year to $22.94 per pound in fiscal 2013 on account of reduced raw material prices, lower volume of conversion sales, increased competition and weak demand.
Haynes’ consolidated backlog was $166.6 million as of Sep 30, 2013, down 25.3% year over year. The reduction in the backlog stemmed from lower order entry volumes, due to continued destocking in the supply chain.
Gross margin contracted to 15.3% in fiscal 2013 from 20.9% a year ago, impacted by pricing competition, higher-cost inventory in cost of sales and unfavorable absorption of fixed costs. Operating income fell 58.4% year over year to $32 million in fiscal 2013.

Haynes exited the year with cash and cash equivalents of $68.3 million, down 46.3% year over year. Long-term debt declined 21.7% year over year to $0.8 million. Capital expenditure in fiscal 2013 was $41.6 million.
Moving ahead, Haynes remains optimistic about the growth potential of the aerospace, land-based gas turbine and chemical processing markets, and will continue to implement its capital spending projects to meet long-term growth requirements of these target markets.

For the first quarter of fiscal 2014, the company does not expect an increase in demand and thus intends to undergo maintenance at its manufacturing facilities over the holidays. As a result, Haynes expects revenues to drop sequentially in the first quarter and incur a net loss.

The company projects capital spending in fiscal 2014 to be about $57 million.

Founded in 1912, Haynes makes corrosion-resistant alloys for aerospace, chemical processing, gas turbine and other industries. It specializes in manufacturing nickel and cobalt-based alloys in sheet, coil and plate forms.
Haynes carries a Zacks Rank #3 (Hold).
Companies in the metal fabrication industry having a more favorable Zacks Rank are NSK Ltd. (NPSKY), NN Inc. (NNBR) and Dynamic Materials Corp. (BOOM). All of them hold a Zacks Rank #1 (Strong Buy).

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Read the Full Research Report on NNBR
Read the Full Research Report on NPSKY

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