- Increase in net cash of
$14.0 million during the first quarter. Strong total liquidity of approximately$161.3 million with cash atDecember 31, 2020 of$61.3 million and approximately$100.0 million available on the credit facility.
- First quarter net revenues of
$72.2 million compared to net revenues of$108.5 million for the same period of fiscal 2020 driven by lower volumes due to the continued impact of the COVID-19 global pandemic most pronounced in the aerospace industry. First quarter net loss of$(8.0) million , or$(0.65) per diluted share, compared to net income of$3.3 million , or$0.26 per diluted share, for the same period of fiscal 2020.
- Backlog of
$145.1 million atDecember 31, 2020 , a decrease of 5.3% from$153.3 million atSeptember 30, 2020 . - Capital investment in the first quarter of
$1.1 million and forecast for capital spending in fiscal 2021 of$10.0 million . - Regular quarterly cash dividend of
$0.22 per outstanding share of the Company’s common stock declared.
“As we continue to navigate through the business impacts caused by the pandemic, our liquidity remains strong with cash generation this quarter of
1st Quarter Results
Net Revenues. Net revenues were
Cost of Sales. Cost of sales was
Gross Profit. As a result of the above factors, gross profit was
Selling, General and Administrative Expense. Selling, general and administrative expense was
Research and Technical Expense. Research and technical expense was
Operating Income/(Loss). As a result of the above factors, operating loss in the first quarter of fiscal 2021 was
Nonoperating retirement benefit expense. Nonoperating retirement benefit expense was
Income Taxes. Income tax benefit was
Net Income/(Loss). As a result of the above factors, net loss in the first quarter of fiscal 2021 was
Volumes, Competition and Pricing
Significantly lower produced and shipped volume continued to be the primary issue impacting the Company’s financial results in the first quarter of fiscal 2021. Demand for the Company’s products has been negatively impacted across all of the Company’s major end markets due to the widespread impact of the COVID-19 global pandemic. Many of the Company’s customers are in a cash preservation mode which has also resulted in conservative order entry trends. Elevated inventory throughout the supply chain, particularly in aerospace, contributed to lower order entry. In addition, the first quarter of any fiscal year is typically impacted by lower volumes due to the holidays, maintenance schedules and customers managing their calendar year-end balance sheets.
Volume shipped in the first quarter of fiscal 2021 was 2.8 million pounds, a reduction of 1.4 million pounds, or 33.9%, from the same period last year and a 5.2% reduction sequentially from the fourth quarter of fiscal 2020. The aerospace market was the most impacted market with a 1.4 million, or 60.7%, volume decrease from the same period last year and a 20.8% decrease sequentially from the fourth quarter of fiscal 2020. Volume shipped into the chemical processing market decreased 0.2 million pounds, or 23.7%, due to COVID-19 impacts noted above, but was offset by increased volume of 0.2 million pounds shipped into other markets for flue-gas desulphurization applications. Shipments in the industrial gas turbine market were relatively flat compared to the same period last year. The industrial gas turbine market was impacted by COVID-19, however this impact was mitigated by increases in market share. Due to abnormally low levels of production during the first quarter, the Company directly expensed a portion of fixed overhead costs of
The product average selling price per pound in the first quarter of fiscal 2021 was
Gross Profit Margin Trend Performance
The significant drop in volumes resulting from the COVID-19 pandemic compressed margins significantly in the first quarter of fiscal 2021 to 1.4%. The Company continues to face the industry-wide challenge of reducing spending commensurate with reductions in production volume in the current environment. In the first quarter, the Company charged
Backlog
The Company has continued to experience low order entry levels attributable primarily to the global COVID-19 pandemic and its unprecedented impact on the economy, significant supply chain inventory reductions, the significant drop in the oil prices, along with the disruption in the aerospace supply chain caused by the year-long grounding of the Boeing 737 MAX. Backlog was
Capital Spending
During the first three months of fiscal 2021, capital investment was
Working Capital
Controllable working capital, which includes accounts receivable, inventory, accounts payable and accrued expenses, was
Liquidity
The Company had cash and cash equivalents of
Net cash provided by operating activities in the first three months of fiscal 2021 was
Net cash used in investing activities was
Net cash used in financing activities was
Refinancing of Credit Facility
On
Dividend Declared
On
Guidance
The Company continues to experience market uncertainty due to the COVID-19 global pandemic. While visibility is still unclear, conversations with customers as well as recent order entry trends lead the Company to believe that its first quarter volume and revenue are at or near the bottom of this unprecedented downturn. Earnings for the second quarter cannot be estimated during this time of market and economic unpredictability, low volumes and unfavorable fixed cost absorption. The Company expects to continue its solid liquidity throughout fiscal 2021 and to be favorably positioned for the recovery.
Earnings Conference Call
The Company will host a conference call on
To participate, please dial the teleconferencing number shown below five minutes prior to the scheduled conference time.
Date: | Dial-In Numbers: | 888-506-0062 (Domestic) | ||
Time: | 973-528-0011 (International) |
A live Webcast of the conference call will be available at www.haynesintl.com.
For those unable to participate, a teleconference replay will be available from
Replay: | 877-481-4010 (Domestic) 919-882-2331 (International) |
Conference Pin: | 39576 |
A replay of the Webcast will also be available for one year at www.haynesintl.com.
About
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 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 2021 and beyond, overall volume and pricing trends, cost reduction strategies and their anticipated results, capital expenditures, dividends and the impact of COVID-19 on the economy, demand for our products and our operations, including the measures taken by governmental authorities to address it, which may precipitate or exacerbate other risks and/or uncertainties. 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, including our expectations of the impact of the recent COVID-19 pandemic. 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. Some, but not all, of these risks are described in Item 1A. of Part 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended
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 per share data)
Three Months Ended | ||||||||||
2019 | 2020 | |||||||||
Net revenues | $ | 108,453 | $ | 72,177 | ||||||
Cost of sales | 89,710 | 71,190 | ||||||||
Gross profit | 18,743 | 987 | ||||||||
Selling, general and administrative expense | 11,507 | 9,733 | ||||||||
Research and technical expense | 882 | 787 | ||||||||
Operating income (loss) | 6,354 | (9,533 | ) | |||||||
Nonoperating retirement benefit expense | 1,700 | 359 | ||||||||
Interest income | (14 | ) | (4 | ) | ||||||
Interest expense | 251 | 304 | ||||||||
Income (loss) before income taxes | 4,417 | (10,192 | ) | |||||||
Provision for (benefit from) income taxes | 1,149 | (2,165 | ) | |||||||
Net income (loss) | $ | 3,268 | $ | (8,027 | ) | |||||
Net income (loss) per share: | ||||||||||
Basic | $ | 0.26 | $ | (0.65 | ) | |||||
Diluted | $ | 0.26 | $ | (0.65 | ) | |||||
Weighted Average Common Shares Outstanding | ||||||||||
Basic | 12,460 | 12,493 | ||||||||
Diluted | 12,502 | 12,493 | ||||||||
Dividends declared per common share | $ | 0.22 | $ | 0.22 |
Schedule 2
HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share data)
2020 | 2020 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 47,238 | $ | 61,263 | |||||
Accounts receivable, less allowance for doubtful accounts of | 51,118 | 40,380 | |||||||
Inventories | 246,124 | 236,313 | |||||||
Income taxes receivable | 3,770 | 4,221 | |||||||
Other current assets | 3,285 | 3,946 | |||||||
Total current assets | 351,535 | 346,123 | |||||||
Property, plant and equipment, net | 159,819 | 156,942 | |||||||
Deferred income taxes | 30,551 | 32,096 | |||||||
Other assets | 8,974 | 8,531 | |||||||
4,789 | 4,789 | ||||||||
Other intangible assets, net | 5,056 | 5,920 | |||||||
Total assets | $ | 560,724 | $ | 554,401 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 17,555 | $ | 18,063 | |||||
Accrued expenses | 14,757 | 14,134 | |||||||
Income taxes payable | — | 277 | |||||||
Accrued pension and postretirement benefits | 3,403 | 3,403 | |||||||
Deferred revenue—current portion | 2,500 | 2,500 | |||||||
Total current liabilities | 38,215 | 38,377 | |||||||
Long-term obligations (less current portion) | 8,509 | 8,436 | |||||||
Deferred revenue (less current portion) | 12,829 | 12,204 | |||||||
Deferred income taxes | 2,131 | 2,222 | |||||||
Operating lease liabilities | 1,719 | 1,622 | |||||||
Accrued pension benefits (less current portion) | 105,788 | 103,467 | |||||||
Accrued postretirement benefits (less current portion) | 90,032 | 90,182 | |||||||
Total liabilities | 259,223 | 256,510 | |||||||
Commitments and contingencies | — | — | |||||||
Stockholders’ equity: | |||||||||
Common stock, | 13 | 13 | |||||||
Preferred stock, | — | — | |||||||
Additional paid-in capital | 257,583 | 258,642 | |||||||
Accumulated earnings | 120,943 | 110,134 | |||||||
(2,437 | ) | (2,675 | ) | ||||||
Accumulated other comprehensive loss | (74,601 | ) | (68,223 | ) | |||||
Total stockholders’ equity | 301,501 | 297,891 | |||||||
Total liabilities and stockholders’ equity | $ | 560,724 | $ | 554,401 |
Schedule 3
HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months Ended | |||||||||
2019 | 2020 | ||||||||
Cash flows from operating activities: | |||||||||
Net income (loss) | $ | 3,268 | $ | (8,027 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||
Depreciation | 4,752 | 4,807 | |||||||
Amortization | 51 | 116 | |||||||
Pension and post-retirement expense - | 3,437 | 2,040 | |||||||
Change in long-term obligations | (12 | ) | 7 | ||||||
Stock compensation expense | 734 | 1,059 | |||||||
Deferred revenue | (625 | ) | (625 | ) | |||||
Deferred income taxes | (84 | ) | (1,983 | ) | |||||
Change in assets and liabilities: | |||||||||
Accounts receivable | 11,941 | 11,684 | |||||||
Inventories | (19,983 | ) | 13,289 | ||||||
Other assets | (206 | ) | (270 | ) | |||||
Accounts payable and accrued expenses | 4,207 | (1,246 | ) | ||||||
Income taxes | 1,761 | (178 | ) | ||||||
Accrued pension and postretirement benefits | (2,213 | ) | (2,220 | ) | |||||
Net cash provided by (used in) operating activities | 7,028 | 18,453 | |||||||
Cash flows from investing activities: | |||||||||
Additions to property, plant and equipment | (2,296 | ) | (1,127 | ) | |||||
Net cash used in investing activities | (2,296 | ) | (1,127 | ) | |||||
Cash flows from financing activities: | |||||||||
Dividends paid | (2,760 | ) | (2,795 | ) | |||||
Proceeds from exercise of stock options | 422 | — | |||||||
Payment for purchase of treasury stock | (198 | ) | (238 | ) | |||||
Payment for debt issuance cost | — | (980 | ) | ||||||
Payments on long-term obligation | (40 | ) | (67 | ) | |||||
Net cash used in financing activities | (2,576 | ) | (4,080 | ) | |||||
Effect of exchange rates on cash | 425 | 779 | |||||||
Increase (decrease) in cash and cash equivalents: | 2,581 | 14,025 | |||||||
Cash and cash equivalents: | |||||||||
Beginning of period | 31,038 | 47,238 | |||||||
End of period | $ | 33,619 | $ | 61,263 |
Quarterly Data
The unaudited quarterly results of operations of the Company for the most recent five quarters are as follows.
Quarter Ended | ||||||||||||||||||||||||
(dollars in thousands) | 2019 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||||||
Net revenues | $ | 108,453 | $ | 111,563 | $ | 80,576 | $ | 79,938 | $ | 72,177 | ||||||||||||||
Gross profit margin | 18,743 | 19,296 | 2,639 | 3,954 | 987 | |||||||||||||||||||
Gross profit margin % | 17.3 | % | 17.3 | % | 3.3 | % | 4.9 | % | 1.4 | % | ||||||||||||||
Net income (loss) | 3,268 | 4,068 | (8,097 | ) | (5,717 | ) | (8,027 | ) | ||||||||||||||||
Net income (loss) per share: | ||||||||||||||||||||||||
Basic | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Diluted | ( | ) | ( | ) | ( | ) |
Sales by Market
The unaudited revenues, pounds shipped and average selling price per pound of the Company for the three months ending
Three Months Ended | ||||||
2019 | 2020 | |||||
Net revenues (in thousands) | ||||||
Aerospace | $ | 58,843 | $ | 24,555 | ||
Chemical processing | 16,712 | 15,256 | ||||
Industrial gas turbines | 13,763 | 13,967 | ||||
Other markets | 11,875 | 12,779 | ||||
Total product revenue | 101,193 | 66,557 | ||||
Other revenue | 7,260 | 5,620 | ||||
Net revenues | $ | 108,453 | $ | 72,177 | ||
Shipments by markets (in thousands of pounds) | ||||||
Aerospace | 2,303 | 904 | ||||
Chemical processing | 788 | 601 | ||||
Industrial gas turbines | 825 | 798 | ||||
Other markets | 306 | 489 | ||||
Total shipments | 4,222 | 2,792 | ||||
Average selling price per pound | ||||||
Aerospace | $ | 25.55 | $ | 27.16 | ||
Chemical processing | 21.21 | 25.38 | ||||
Industrial gas turbines | 16.68 | 17.50 | ||||
Other markets | 38.81 | 26.13 | ||||
Total product (product only; excluding other revenue) | 23.97 | 23.84 | ||||
Total average selling price (including other revenue) | $ | 25.69 | $ | 25.85 |
Contact: | |
Vice President of Finance and Chief Financial Officer | |
765-456-6102 |
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