Monday, high-performance nickel-and cobalt-based alloy producer Haynes International Inc. (HAYN) reported a decline in the first-quarter net income from the year-ago period primarily due to lower revenues and higher cost of sales.
The Kokomo, Indiana-based company reported a decline in the first quarter net income to $4.52 million or $0.38 per share from $13.84 million or $1.16 per share in the corresponding quarter last year. On average, three analysts polled by Thomson Reuters estimated earnings of $0.58 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter decreased 8.1% to $134.30 million from $146.08 million in the comparable period last year.
Mark Comerford, President and CEO of Haynes said, ''Lower pricing and demand, combined with the impact of working through our high cost inventories resulted in a disappointing first quarter of fiscal 2009. Although these results are unfavorable, cash flow remained positive in the quarter, resulting in debt being reduced to zero. Indicators in our key markets are telling us that this environment will continue through fiscal 2009, so we are also working closely with our customers to help them take advantage of business opportunities, as well as carefully managing our own production schedules and operations to adjust to the lower demand expected over the next few quarters.''
Provision for income taxes for the quarter declined to $2.48 million from $9.0 million in the similar period last year. The decline was attributed to lower pretax income.
Cost of sales for the first quarter of fiscal 2009 increased to $115.55 million from $111.87 million in the prior-year similar period.
Net cash provided by operating activities was $13.9 million in the first quarter of fiscal 2009 compared to $11.5 million in the same period of fiscal 2008.
The company's consolidated backlog decreased by $29.5 million or 12.9% to $199.7 million at December 31, 2008 from $229.2 million at September 30, 2008.
During the quarter, Haynes and Wachovia Capital Finance Corp. entered into a second Amended and Restated Loan and Security Agreement with an effective date of November 18, 2008, which amended and restated the revolving credit facility between Haynes and Wachovia dated August 31, 2004. Among other items, the Amended Agreement extends the maturity date of the U.S. revolving credit facility to September 30, 2011, increases the margin included in the interest rate from 1.5% per annum to 2.25% per annum, permits Haynes to pay dividends and repurchase common stock if certain financial metrics are met, and eliminates the EBITDA covenant. The maximum revolving loan amount under the Amended Agreement continues to be $120.0 million.
On January 16, 2009, Haynes announced restructuring measures to save costs that include reducing its worldwide workforce by 12% and implementing a salary freeze for salaried employees. As a result of these personnel reductions, the company estimates an annualized savings to cost of goods sold to be approximately $8.4 million, with an impact in fiscal 2009 of approximately $5.3 million, net of severance expense.
Commenting on the outlook for fiscal 2009 and forward, Comerford said, ''In the short-term, because of the continuing credit crisis and the global recession, we expect a slow-down in our shipments."
The company expects to maintain profitability for the fiscal year 2009 although results are anticipated to be significantly below those seen in recent years.
Haynes closed Monday's trading at $19.69, down $0.97 or 4.70% on a volume of 105,984 shares on the Nasdaq.
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