NEW YORK Specialty alloys producer Haynes International Inc. reported strong results in its fiscal second quarter, buoyed by rising interest from the oil and gas markets and increased sales of higher-margin alloys.
Haynes posted net income of nearly $15.2 million in the three months ended March 31, more than double earnings in the same period last year, on revenue that rose 14.2 percent to $158.9 million.
"The energy market has been doing great for us," president and chief executive officer Mark Comerford said during the companys second-quarter earnings call.
Haynes also has started benefiting from a move toward higher-end products. "For example, the $25 million or $30 million that was spent on upgrading cold-finishing (in 2008) has returned upwards of $100 million worth of revenue," Comerford said, and the company is considering adding more capacity to support strong growth in its end markets. "Were looking at specific areas where the markets are expected to grow and how we can support them," he said.
Capacity utilization is at about 80 to 85 percent, vice president and chief financial officer Marcel Martin said during the conference call. He pegged the companys maximum production at 27 million to 28 million pounds annually.
Kokomo, Ind.-based Haynes shipped 6.5 million pounds of material during its fiscal second quarter1.6 percent more than a year earlierwhile the average sale price rose 12.4 percent to $24.54 per pound.
While demand remains steady, customers have recently shown caution in placing longer-term orders due to falling nickel prices. "Weve got some customers who are saying Weve got some (longer-term) orders that were going to place, but were holding off," Comerford said. "Right now, the environment is very transactional."
However, Comerford said that the company remains bullish on its end markets in the longer-term. "If you look at aerospace in 14 and 15, the build rates are there," he said.
The companys backlog stood at $264.2 million at the end of March, a slight increase from $261.8 million three months earlier, according to the companys earnings report.
Haynes expects net income in its fiscal third and fourth quarters to approximate the results in the fiscal second quarter, "without the inclusion of the $1.1 million net income carryover" due to material that was produced in the fiscal first quarter but shipped in the fiscal second quarter.