Haynes International — Q1 FY2016 Earnings Presentation
26 slides from Haynes International's earnings presentation, February 2016
Slide 1: Investor Presentation
Investor Presentation 1 st Q t r. F Y 1 6 ( 1 2 / 3 1 / 2 0 1 5 ) Dan Maudlin Vice President of Finance and Chief Financial Officer
Slide 2: Haynes International, Inc.
Haynes International, Inc. The information contained in this presentation, and in the oral statements made as part of the presentation, may include “forward‐ looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and ex
Slide 3: We operate in the specialty high-performance alloy market
We operate in the specialty high‐performance alloy market Nickel‐and cobalt‐based high‐performance alloys • Primarily flat product producer • Specialty high‐performance alloy flat product sector is 200 million lbs versus a total metals market in excess of a billion tons • U.S. producer supplying pro
Slide 4: Our products
Our products We are an innovative, market‐leading producer of high‐performance nickel‐ and cobalt‐based alloys used in corrosion and high‐temperature applications. Revenue by Alloy Application (FY2015) Revenue by Alloy Product Forms (FY 2015) Flat Product High‐ (sheet, plate, 24% temperature coil) A
Slide 5: We have a unique business model
We have a unique business model • Manufacturing support at mill level Net Revenues by Route to Market (FY 2015) • Distribution through service centers • Cultivate closer customer relationships to Direct to Customer help customers solve technical issues Sales 23% • Increase value‐added capabilities •
Slide 6: Global presence facilitates superior customer service
Global presence facilitates superior customer service • Our locations are well positioned to supply value‐added services to both existing and emerging areas of growth • Only high‐performance alloy manufacturer operating its own service centers with locations in North America, Europe and Asia Our Fac
Slide 7: We have exposure to diverse set of worldwide markets
We have exposure to diverse set of worldwide markets Geographic diversity of sales offsets risk of regional performance • Approximately 41% of net revenues are to customers outside of the U.S. • International sales / growth through strategic positioning of service and sales centers Market diversity
Slide 8: Aerospace is our largest market
Aerospace is our largest market • Commercial airplane build rates are the primary driver of OEM demand • Commercial aerospace backlogs are at record levels • MRO market provides a recurring base of business which is increasing • Global passenger air traffic projected annual growth rate: 4.9%(1); Glo
Slide 9: Aerospace market trends
Aerospace market trends Solid Potential for both Short‐term and Long‐term Outlook • Airbus & Boeing have a combined backlog • The commercial aircraft fleet is expected to of more than12,000 aircraft (~8 years).(1) grow an average 3.6% per year and double in size from 21,600 aircraft today to 43,560
Slide 10: Our alloys are used in a strong suite of Aerospace applications
Our alloys are used in a strong suite of Aerospace applications Hot Section rings, seals, cases HAYNES® 214®, 242®, 263, 282®, 625, 718, HASTELLOY® X and Waspaloy alloys Diagram by Jeff Dahl used courtesy of http://en.wikipedia.org/wiki/Turbojet under GNU Free Documentation License v.1.2 Combustors
Slide 11: Chemical Processing Industry
Chemical Processing Industry • Large, existing North American, Asian and European markets driving a base MRO business • Demand largely follows GDP growth however global chemical industry growth will be led by US low prices for natural gas and natural gas liquids • The American Chemistry Council repo
Slide 12: Chemical processing applications and alloys
Chemical processing applications and alloys HASTELLOY® C-22® alloy for centrifuge pharmaceutical processing HASTELLOY® G-35® and G-30® alloys for phosphoric acid evaporators HASTELLOY® B‐3® and C‐276 alloys in acetic acid plant HASTELLOY® C‐2000® alloy reactor for pharmaceutical processing 1st Qtr.
Slide 13: Land-based gas turbine market
Land‐based gas turbine market • Over the next 10 years, an estimated 17,680 gas turbines (excluding microturbines) are forecast to be built at a value of almost $256.7 Billion.(1) • Continued emphasis on increased efficiency and reduced emissions require higher operating temperatures and more advanc
Slide 14: Land-based gas turbine applications and alloys
Land‐based gas turbine applications and alloys HAYNES ® HR‐120 ® and 230® alloys for micro‐turbines HAYNES® 263 alloy transition section for hot gas path HAYNES® 230® alloy hot gas casing HASTELLOY® X alloy combustor can 1st Qtr. FY2016 13
Slide 15: Emerging technologies applications and alloys
Emerging technologies applications and alloys HASTELLOY® C‐22HS® alloy for oil and gas production Photograph courtesy of SolarReserve ©2013 – Used by permission HAYNES® alloys enable advanced concentrated solar power plants to provide environmentally clean and efficient electricity into the evening
Slide 16: Leader in developing new alloys and identifying new applications
Leader in developing new alloys and identifying new applications • Competitive advantage • Industry leader in developing new high‐performance alloys • Since 2003, our technical programs have yielded eight new proprietary alloys. • We have new alloys under development • New applications represent pot
Slide 17: Strong relationships across broad blue-chip customer base
Strong relationships across broad blue‐chip customer base • Customers are industry leaders with proven, sustainable business models • Supply chain initiatives, service center support and value‐added service • Provide new products, material solutions, technical support, forming and fabrication know‐h
Slide 18: Manufacturing high-performance superalloys
Manufacturing high‐performance superalloys • Superalloys demand a longer and more complex multi‐stage manufacturing process than commodity stainless grades and carbon steels • Certain alloys may undergo 40 or more distinct stages of production • Tight controls • We are one of the few manufacturers w
Slide 19: Our manufacturing process
Our manufacturing process Basic Steps Product Form Melt/ Forgings/ Tubular/ Forging Billet Bar/Wire Fittings Re‐melt All products go through melt and re‐melt Round/long products go through forging 4‐Hi Rolling Plate Mill/Reheat Furnaces Hot rolling process for sheet and plate (other than finishing)
Slide 20: Capital improvements are expected to yield substantial benefits
Capital improvements are expected to yield substantial benefits • Growth Capital Strategic Capital Spending Projects • Tubular revenue ‐ $50.0 million plus Fiscal Years 2012 through 2015 • Flat product – 4.0 million pounds Process Projects $MM • Gross margin percentage improvement of 200 to 400 basi
Slide 21: Financial overview and strategy
Financial overview and strategy • Strong financial position with flexibility to fund growth • Capacity and margin expansion potential • Built strong balance sheet with positive cash flow • New capital programs designed to increase capacity and expand margin • $57.5 million of cash including restrict
Slide 22: Quarter-over-quarter P&L trends
Quarter‐over‐quarter P&L trends Trend of Quarterly Profitability for Fiscal 2012 (dollars in millions) Dec 31, 2011 Mar 31, 2012 Jun 30, 2012 Sep 30, 2012 • Q1–Q2 FY14: Reduced FY 2012 demand and selling Net Revenues $128.9 $158.9 $141.6 $ 150.2 $579.6 prices due to nickel Gross Profit Margin $ 23.5
Slide 23: Financial performance
Financial performance Net Revenues Operating Income $600.0 $579.6 $80.0 $76.9 $542.9 $70.0 $500.0 $482.7 $487.6 $455.4 $60.0 $400.0 $381.5 $49.3 $50.0 $47.5 $300.0 $40.0 $32.0 $30.0 $200.0 $20.0 $15.5 $95.1 $100.0 $10.0 $5.0 $0.9 $0.0 $0.0 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014
Slide 24: Liquidity
Liquidity Sources of Cash Haynes International Inc. Liquidity Cash From Operations Cash Revolver Debt • Cash at December 31, 2015 of $57.5 million ($MM) including restricted cash $80.0 • Revolver debt of zero $73.4 $68.3 • Cash provided by operations was $10.1 $70.0 million for first quarter of FY20
Slide 25: Strong balance sheet
Strong balance sheet Remained revolver debt free with continued investment in capital expenditures (in millions) Summary Balance Sheet 9/30/11 9/30/12 9/30/13 9/30/14 9/30/15 12/31/15 Cash (including Restricted) $ 60.1 $ 46.7 $ 68.3 $ 45.9 $ 49.0 $ 57.5 Accounts Receivable 87.7 100.6 82.6 72.4 75.6
Slide 26: We are positioned for long-term growth
We are positioned for long‐term growth • We are a market leader in the specialty high‐performance alloy market • Serving diverse geographic and end markets with long‐term relationships with our broad blue‐chip customer base • Our unique business model facilitates strong customer service and retentio
Haynes International — Q1 FY2016 Earnings Presentation on 6ix