Haynes International Inc has reported financial results for the third quarter of fiscal 2012. The company also announced that its board of directors declared a regular quarterly cash dividend of USD 0.22 per outstanding share of common stock payable September 17th 2012 to stockholders of record at the close of business on September 4th 2012.
Quarterly Results
Net Revenues: Net revenues were USD 141.6 million in the third quarter of fiscal 2012, a decrease of 1.1% from USD 143.1 million in the same period of fiscal 2011. Volume was 5.7 million pounds in the third quarter of fiscal 2012, a decrease of 7.4% from 6.2 million pounds in the same period of fiscal 2011. The aggregate average selling price was USD 24.79 per pound in the third quarter of fiscal 2012, an increase of 6.8% from USD 23.20 per pound in the same period of fiscal 2011. Average selling price increased due to a higher value product mix while volume decreased due to timing of project related business.
Cost of Sales: Cost of sales was USD 109.2 million, or 77.1% of net revenues, in the third quarter of fiscal 2012 compared to USD 117.8 million or 82.3% of net revenues, in the same period of fiscal 2011. Cost of sales in the third quarter of fiscal 2012 decreased by USD 8.6 million as compared to the same period of fiscal 2011 primarily due to lower volume.
Gross Profit: As a result of the above factors, gross margin was USD 32.4 million for the third quarter of fiscal 2012, an increase of USD 7.1 million from the same period of fiscal 2011. Gross margin as a percentage of net revenue increased to 22.9% in the third quarter of fiscal 2012 as compared to 17.7% in the same period of fiscal 2011. A contributing factor to this increase includes benefits gained from completed capital expenditure projects.
Selling, General and Administrative Expense: Selling, general and administrative expense was USD 10.4 million for the third quarter of fiscal 2012, a decrease of USD 0.3 million or 3.1% from USD 10.7 million in the same period of fiscal 2011 due to continued efforts to control costs. Selling, general and administrative expenses as a percentage of net revenues decreased to 7.3% for the third quarter of fiscal 2012 compared to 7.5% for the same period of fiscal 2011 primarily due to efforts to manage costs.
Research and Technical Expense: Research and technical expense was USD 0.8 million, or 0.6% of revenue, for the third quarter of fiscal 2012 as compared to USD 0.7 million or 0.5% of revenue, for the third quarter of fiscal 2011.
Operating Income: As a result of the above factors, operating income in the third quarter of fiscal 2012 was USD 21.2 million compared to operating income of USD 13.9 million in the same period of fiscal 2011.
Income Taxes: Income taxes were an expense of USD 7.5 million in the third quarter of fiscal 2012, an increase of USD 1.9 million from USD 5.5 million in the same period of fiscal 2011 due to higher pretax income generated in the third quarter of fiscal 2012. The effective tax rate for the third quarter of fiscal 2012 was 35.3% as compared to 39.7% in the same period of fiscal 2011. The prior year effective tax rate was higher due to Indiana enacting a corporate income tax rate decrease from 8.5% to 6.5%, causing additional income tax expense of USD 0.7 million, reflecting the company's estimate of the decrease in the deferred tax asset due to the lower tax rate.
Net Income: As a result of the above factors, net income in the third quarter of fiscal 2012 was USD 13.7 million, an increase of USD 5.3 million from net income of USD 8.4 million in the same period of fiscal 2011.
Results for nine months ended June 30th 2012
Net Revenues: Net revenues were USD 429.3 million in the first nine months of fiscal 2012, an increase of 10.5% from USD 388.6 million in the same period of fiscal 2011. Volume was 17.3 million pounds in the first nine months of fiscal 2012, an increase of 2.2% from 17.0 million pounds in the same period of fiscal 2011. The aggregate average selling price was USD 24.79 per pound in the first nine months of fiscal 2012, an increase of 8.2% from USD 22.92 per pound in the same period of fiscal 2011. Volume increased due to improved customer demand in the aerospace and land based gas turbine markets, while average selling price increased due to both improved customer demand in those markets and improved product mix.
Cost of Sales: Cost of sales was USD 338.9 million, or 78.9% of net revenues, in the first nine months of fiscal 2012 compared to USD 324.8 million, or 83.6% of net revenues, in the same period of fiscal 2011. Cost of sales in the first nine months of fiscal 2012 increased by USD 14.1 million, or 4.3%, as compared to the same period of fiscal 2011 due to higher volume and a higher cost product mix.
Gross Profit: As a result of the above factors, gross margin was USD 90.4 million for the first nine months of fiscal 2012, an increase of USD 26.6 million from the same period of fiscal 2011. Gross margin as a percentage of net revenue increased to 21.1% in the first nine months of fiscal 2012 as compared to 16.4% in the same period of fiscal 2011. A contributing factor to this increase includes benefits gained from completed capital expenditure projects.
Selling, General and Administrative Expense: Selling, general and administrative expense was USD 30.9 million for the first nine months of fiscal 2012, an increase of USD 0.9 million, or 3.0%, from USD 30.0 million in the same period of fiscal 2011. The increase was due to higher sales, marketing and personnel costs as a result of headcount additions and salary increases. Selling, general and administrative expenses as a percentage of net revenues decreased to 7.2% for the first nine months of fiscal 2012 compared to 7.7% for the same period of fiscal 2011.
Research and Technical Expense: Research and technical expense was USD 2.4 million, or 0.6% of revenue, for the first nine months of fiscal 2012, an increase of USD 0.1 million from USD 2.3 million, or 0.6% of net revenues, in the same period of fiscal 2011.
Operating Income: As a result of the above factors, operating income in the first nine months of fiscal 2012 was USD 57.1 million compared to USD 31.4 million in the same period of fiscal 2011.
Income Taxes: Income taxes were an expense of USD 19.9 million in the first nine months of fiscal 2012, an increase of USD 8.2 million from USD 11.7 million in the same period of fiscal 2011, due to higher pretax income generated in fiscal 2012. The effective tax rate for the first nine months of fiscal 2012 was 34.7%, compared to 37.0% in the same period of fiscal 2011. The effective tax rate for the third quarter of fiscal 2012 was 35.3%, compared to 39.7% in the same period of fiscal 2011. The prior year effective tax rate was higher due to Indiana enacting a corporate income tax rate decrease from 8.5% to 6.5%, causing additional income tax expense of USD 0.7 million reflecting our estimate of the decrease in the deferred tax asset due to the lower tax rate.
Net Income: As a result of the above factors, net income in the first nine months of fiscal 2012 was USD 37.3 million, an increase of USD 17.5 million, or 87.9%, from USD 19.9 million in the same period of fiscal 2011.
Mr Mark Comerford president & CEO of Haynes International said that "Our aerospace and land based gas turbine markets continue to demonstrate solid sales, order entry activity and backlog levels. Our chemical processing and other market categories are experiencing a reluctance by end users to commit to large project-related orders due to the economic turbulence around the world, thereby leading to a reduction in overall order backlog. The year-over-year and quarter-to-quarter improving performance in sales, gross margin and profitability is the result of our focused marketing effort, capital investments, new alloy development, initiation of operational improvement programs and focused cost management. Although the near term is difficult to forecast, we continue to enhance our capability to service the expected medium to long term increases in our customer demands for both transactional and large project business. We are undertaking capacity expansion projects, principally our investment of approximately $61.0 million in our Arcadia, Louisiana and Kokomo, Indiana facilities, in order to add tubular and flat product capacity for our key end markets and improve operating capabilities across our major manufacturing facilities."
Source - Haynes International
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