Kokomo Tribune; Kokomo, Indiana

Local News

May 6, 2013

Haynes going through a down year

Alloys manufacturer hurt by price declines.

Haynes International reported quarterly earnings were down more than 18 percent from the second quarter of 2012 as the Kokomo-based alloys manufacturer struggles through a downturn in demand for aerospace-related products.

“The current economic environment for our products is somewhat muted and visibility is very poor,” Haynes CEO Mark W. Comerford said in a conference call Friday. “Whereas our second fiscal quarter was better than the first fiscal quarter with land-based gas turbines, chemical processing and our other market showing a sequential increase, we were still negatively impacted as customers continue to be very conservative.”

Comerford cited issues with the global economy and declining commodities prices as factors in the quarter, as the company’s price per pound revenues fell.

Haynes net revenue in the second quarter of 2013 came in at $129.2 million, down 18.7 percent from last year’s $158.9 million. Net income in the quarter was $6.4 million, down 57.9 percent from fiscal year 2012’s $15.2 million.

Company officials said a slowdown in orders from the aerospace industry contributed to the downturn, as revenues from the sector, which is 38 percent of Haynes’ business, were down over 20 percent from last year.

Revenues from the chemical and land-based gas turbine industries increased from the first quarter, and Comerford noted that 2012 had been a record year in the land-based gas turbine sector.

Comerford and Haynes Chief Financial Officer Daniel W. Maudlin said they expect the downturn to be temporary, and said the company is still on schedule for expansion projects in Kokomo and Arcadia, La., to come online in early 2015. The company is expanding production capacity for flat-rolled products in Kokomo and for tubular products in Arcadia.

Both officials indicated a drop in nickel prices may have prompted some customers to put off restocking Haynes products in hopes of discounts.

“We believe this period of uncertainty, low visibility and sluggish consumer demand is temporary. As we navigate through this period, we continue to focus on the long-term demand drivers and growth potential of our markets. When the economy recovers, we feel we are well positioned to capitalize on those future opportunities,” Comerford said.

“People are being rewarded right now for putting off purchasing by the fact that nickel keeps going lower. ... People are playing a little bit of a nickel game right now, and that’s where we’ve expressed a lot of concern to people that you can’t keep doing this. We can’t just turn the faucet on and off.”

According to Maudlin, net income in the third quarter may be lower than net income for the second quarter.

Haynes stock was trading up slightly Friday, at $46.94, after dipping close to a 52-week low in early trading. Net income for the second quarter was $6.4 million, or $.52 per diluted share, compared to the net income of $15.2 million, or $1.23 per diluted share, in last year’s second quarter. Haynes (HAYN) is traded on the NASDAQ exchange.

Scott Smith can be reached at 765-454-8569 or at scott.smith@kokomotribune.com.

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