HAYN - Earnings call transcript Q3 2019 | Haynes International Inc

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Operator

Good day, ladies and gentlemen, and thank you all for joining us for this Hayes International Inc.

Third Quarter Fiscal 2019 Results Call. [Operator Instructions] And now to get us started with opening remarks and introductions, I’m pleased to turn the floor to Controller and Chief Accounting Officer, Mr. David Van Bibber. Welcome, David.

David Van Bibber

for today. much very you joining us Thank With of Vice Haynes are Michael President and CEO Shor, President International; Chief Officer. me Financial today and and Dan Maudlin,

brief would Before and started, statements Section of Securities Private that the the This like Securities cautionary within contains note and forward-looking XXE of of to conference we of call regarding I XXXX. Exchange XXXX read meaning get are Litigation statements. forward-looking Act a Act the Reform

similar expressions and intended The to statements. words plan believe, forward-looking are identify anticipate,

update believe our discussed in be company by company’s the assurance in a no and XX, Form new XX-K we Many achieved. are reasonable, and with plans, Although ended uncertainties, regarding a or intentions risks result provide will no the Securities to or undertakes such such that information, XXXX. of statements these and such obligation suggested revise particular, of future number otherwise. the subject September are detail in and can events year publicly expectations any of fiscal plans, risks forward-looking or for whether forward-looking The as are Exchange Commission, filings intentions statements we expectations to statements or

turn over the that, With me let to Mike. call

Michael Shor

everyone. Thanks, International. an employee my Dave. of Good May one-year morning, Haynes was XX anniversary as

about because excited stated I’ve I’m Haynes. in believe I the to work our I in and the people can to because mean As the our of back past you, to improvement of came performance of company initiatives many what

cadence ownership accountability focus, improvement culture been areas the and report improve establish to has set targets, and our and yet of on to of over a progress process aggressive results. Our process emphasize realistic for straightforward, implement a year XX past

have our a have center initiatives we in the initiatives meaningful across our significant our in overall state initiatives Year-to-date, In safety around key rate. we number seen OSHA improvement underway. improvement now operating proactive performance all the facilities, of a recordable of first, company. five an areas: following Our drop

and by five with plate face, improvement our volume flat past alloys and corrosion installed high tube, applications. they continuing increased additions leading solve cold-finish customers proprietary directly and along volumes to to capacity Second, to of and work issues temperature with over special effectively the utilizing users end the our the years

Third, differentiated price reductions bottom cost of competency our IT mix. across process to significant core this line our the and ways all of increases five, And in high-value further portion facilities. service. through Fourth, Finding enhance investments. customer our

enough. fast Progress in never eyes my is

the of significant very company. about future However, made I am progress We’ve our the optimistic in third quarter.

before, about As results with comments and I’ve planning could what quarter. better think and from bottom expecting third to observations QX. talking we’ve our now I’ll forward line. said A hit moved been I in stages have our to the start few the about it

us planned flow We improvement orders had which the issues, in We held place testing product sequential short-term and this improvement on in show encountered actually some volume but back. revenue. to and

fiscal XXXX On we last fiscal QX in and of versus revenue improvement year, the significant bright volume to QX of side, XXXX. saw compared

Beyond quarter, signs profitability that, flow. saw especially cash positive the to very and during we related

and The gross percentage in details quarter XX% a of follows: about finished first, net and as averaged XX.X%. are margin May as revenue at June we the

at line QX our QX. to versus way this XXXX results. comparing XXXX The show bottom fiscal Next, initiatives fiscal are XX look our best is beginning to

revenue $X.X million volumes quarter a less QX slightly had third than leading average lower price The slightly and with QX. pound, per selling to lower

million income However, gross million. QX had increase $X.X margin dollars of $X.X and net more an in

was product to level of this in despite This sells now produced quarter to through margins expected product cobalt the continue net of centers. outage portion of the XX XXXX best that second service higher in third when income headwinds company has quarters in this startup. a to high-cost and These compressed third our was related fiscal margin quarters. in cold-finishing In addition, sold the costs during in the and $X.X income are being is the furnace and seen production net fourth related million our quarter

or gas as in despite Also, lack it the our project and the few base unique area, I’ve in our IGT we improved performance past, efforts in have top as noted from in Again, special seen orders. materialize the the significant past before, large if years – very special of planning. any projects this over will back of is reductions we’ve the the said market industrial turbine bounces underway on be

for flow, P&L. improved the for approximately an quarter driven million $XX generated by we cash As in cash

Finally, teamwork. communication and

We’re the entire for need accountability dedication our communicating and and work, areas results our our employees. the engagement, has occurred Progress teamwork company. via focus of through hard and

details million than increase in higher pound the third the to again, associated X.X $XXX headwind margin alleviating of XX.X% revenues of the Net was this volumes. volume of our exceeding period the X.X% quarter XXXX. X The from fiscal on with therefore, million Now in XXXX. goal, in shift quarter quarter pounds, million $XXX.X the of fiscal same lower quarter. were year million the the period the of Volume same fiscal was XXXX, an

per up $XX.XX other about revenue, selling in year’s over per quarter inclusive price $XX.XX pound, last was of pound. Average our X.X% the

our aerospace during to markets. Finally, to let dollars backlog move key by that, the grow, me quarter backlog. growth With our our continued in X.X% driven up

from selling increase volume. the price same XX% increase pound per a aerospace represents the average in by at of quarter year our X.X% XX.X% million third a accounted offset XX.X% to XXXX. partially This Sales last due market to in in period of fiscal million the in revenue for $XX.X decrease $XX.X an of

increases the in the our transactional Earlier the previous gaining mix our business and customer short-term and this traction price for These in QX. and the year, agreements. issues increases quarter average we primarily prior below slightly the complexity same both was due of the of certain product XXXX Aerospace with fiscal flow are testing initiated price of aerospace and quarter period third and to in prices. renewed market are selling improving volume year

Demand in year the beat for fiscal the pace last is volume XXXX market year’s remained to on solid, company. record and high aerospace

XXX reduction the for cautiously As MAX, temporary production of we the in XXX rates MAX. the Boeing’s regarding remain optimistic

have not We reductions been notified customers. any orders by our of of

fiscal if our Boeing However, rate, not have further production an but or could likely prolonged shipping impact the are issues potentially XXX MAX until reduces on this XXXX. schedules,

show customers our QX with many be customers. backlog the conversations had at QX to saw sequentially the aerospace. I our increase continue dollars have during quality last on and I aerospace with built another the many that point recently X.X% aerospace with to We over impressed The by the was quarter. these relationships in years. of from Paris we

the pound chemical reduced of last in The million however, year. compared Sales period price offset in of a last selling for XX% $XX.X chemical average X.X% market Volume third from in revenue by quarter XX.X% slight the $XX.XX third year per volume. per the average to into processing of in which same a at This our was represents in a period increase XX.X% sales decrease the to due selling $XX.X was for average higher, industry same to price $XX.XX the in accounted million pound partially processing quarter. the the in lower-valued price. selling the decrease a increase products

which commodity pricing sales with margins. competitive, primarily and This lower reduction to is of typically highly due alloys, are lower

Our QX CPI decreased to the in during sequentially backlog QX dollars quarter. from X.X% by

million pound third our the at quarter of to increase Sales partially industrial This in volume XX% the an X.X%. $XX.X the The million in price resupply XXXX. material increase is last mix-related to a by medium-frame for an a small in builds, in from increase volume of period average combined of primarily attributable XX.X% the increase $XX.X accounted supply of chain. year selling into revenue in in gas offset represents and same an turbine decrease XX.X% with engine of market fiscal due of per to

in Demand continues weak. be market the to larger-frame turbines for energy the

of increased in and previous a concern has are volumes this third the remains years comparison well in there the shipped recovery volume year, these While to below volumes market. quarter in last regarding

offset the chain factors by in been As growth turbines demand share use move smaller growth weaker market to energy I opportunities for impacted demand To the and in for going these the large-frame supply a drivers potentially renewable forward, of meaningful many the gas Haynes last for potential reduction, technology. turbine in industrial the we call, see future. do outlined in involving inventory turbines has market

during from to QX sequentially XX.X% by quarter. QX IGT backlog the Our in decreased

same from Finally, markets and quarter an $XX.X our in $XX.X represents and XX% million period fiscal in This of revenue accounted XXXX. increase from the revenue third other the of XX.X% of primarily for other an of in toll driven fiscal in driven XX.X% by gas a the and combined revenue by volume X% with market, increase decrease conversion. markets’ oil other other of higher XXXX

markets sequentially in decreased from dollars by to Our backlog QX XX.X% quarter. during the other QX

With more detail it markets, now financial Dan on let the that for over details turn to me results. on our

Dan Maudlin

Thank you, Mike.

traction. increasing improving gaining profitability and on is focus Our volumes

represents were as margin fiscal of up fiscal dollars are income XX.X% XXXX, fiscal $X.X This gross shipped For gross up million. to solid XX.X% In percentage sales our net period year. last first is up to of and of rates. dollars XXXX, nine are compared and months of same the net compared XXXX third growth quarter margin a was the year volume XX.X% X.X%, the sales net

pushing These to mentioned, the profitability efforts highest quarters. primarily headwinds net to compared in is costs. volumes, items. our following the XX are to prices This plan keep and year quarter, we increase improving this performance Partially income reduce Mike continuous, the improve and our higher. included progress which in As last efforts our represents three traction margin were offsetting during and level to

market to caused quarter. in third the into in of is quarter, cobalt continue margin decline compression the which expected dramatic the First, the price a fourth

our with steep, or for customer can risk, attempt our are minimize especially center decline timing a customer with our fast longer to cycles of our be versus commodity production our agreements the transactional with is pricing to and when structured inventory. melt While cost products shipments mechanisms, service misalignment there pricing price out

from of produced These Second, higher the cold-finish times caused sales compression run of in in including and European product and of yield through quarter impacts had compressed by the when slower a fiscal outage. third margins and costs, service higher during and product are production sell the upgrade which startup-type continued portion our second costs the of centers. quarters continue this fourth margins expected to the XXXX scrap

which project $X.X third XXXX, quarter sequentially quarter was in of QX $X.X was fiscal year. last higher the of revenue lower third however, million special Third, than the fiscal is $X.X of XXXX, million million to compared

year’s this approximately Overall, special strategic headwinds to lower dollars last Of shipments XX% as drove lower million alleviate margins. had which are this QX. P&L. we QX alloy, in margin by to were we to an progress million gross commodity-grade improve, special projecting compared in quarter’s increase about project we forward, $X.X initiatives to margin a and expect these additional $X.X percentage both as in gross projects This from sales, continue margin favorably to of dollars impact our year’s and volumes

Moving the down million including research costs, $XX.X XXXX. quarter fiscal were the third technical P&L, and of in SG&A,

SG&A of the is lower by normal than a period last and combined year’s $X.X million. which place special transition, acquisition than was SG&A higher two impacted $X.X strategic an with the million of attempted the cost cost same that took related to of This CEO year. items Last

million and to full $XX expect be including A, $XX SG& research to XXXX year fiscal technical We approximately of million. costs,

the on of Non-operating year was last expense prior XX/XX/XXXX. $X.X year’s retirement L compared valuation benefit driven QX at by favorable million P& to $XXX,XXX

as our valuation at determines the up XXXX be discount We to at coming which levels. look forward rates potential the concerned we are used expense at XX/XX/XXXX,

approximately to rates discount paid annuitization as On getting and this portion premiums lower would the funding have the by back small-balance pensioners. savings. PBGC a year’s favorable the due potentially current less pension percentage higher The expense, year’s of actions a we note, next such increase of taken, plan $XXX,XXX

first fiscal foreign quarters the discrete be Our expected XXXX nine that related tax to tax the months to rate due to rate were The higher tax lower to QX for last the options a higher than slightly which of due quarter realized. credits vested is forfeited. stock was item XX.X%, is for

tax offset these last tax benefit above items, details, impact higher adjustments on Last as reform year. year, see the in stemming you thus, to this year non-GAAP income noted special a to the from the The release. of we measures third incurred act. related the or these SG&A last net zero the benefit impact cost back table netting refer tax near in quarter, of reconciliation of results to To I press the

of quarter in the since at for Backlog at the to expecting is solid income backlog increased of next $XXX.X fourth net P&L, the is million the our June expects XXXX. as focus XX, per XXXX highest diluted initiatives in $X.X results the continued levels, slightly was quarter related a earnings QX higher to improvements. higher off million quarter company finish to company for fiscal XXXX. gain fiscal additional And which of to million additional revenue than $X.XX the business be and With quarter. pricing share. fourth an the third or and Outlook volume, XXXX The to $X.X fiscal traction quarter in level cost improving support

the by Liquidity. of in increase activities months first June during which nine the million Cash the quarter. of cash XXXX. $XX.X in a third provided at was $XX.X was XX, was the first million million fiscal $XX representing most year, months XXXX, operating nine of Net

generation a nine period it expenditures. cash. levels Thus, that months controlling combined rising volumes spending notable Capital is million driven to would year. Also XXXX. is a cash the capital rising profitability in by reducing in sales are contributing revenue cash of $X.X cash This first generating was this was I rising generation fiscal point of and inventory with consume believe we

full The better levels the forecast for of year lowered we fiscal to for line spending. pace with million, the our capital which up is previously from XXXX approximately reported $XX spending of

are improvement profitability we to on committed as we execution higher conclusion, continuing In to to push our related strategic initiatives. focus

the and future of in visibility as navigate to the demand. aerospace global uncertainty We noted as trade lack above well continue headwinds

making back you. as However, focus discussion in on and progress profitability we with Mike, notable steady over what forward. can are we I will we move improvement turn control, we to the now

Michael Shor

beginning It’s difficult we enthusiastic the a our to results few and on Dan. for let’s we’re work the initial the of company. you, the that, With efforts, to our Thank employees, are call of profitability open the show but years for holds based about Haynes, what our Jim, been future very questions. of

Company. Operator Edward & first to [Operator We’ll Instructions] go Sidoti with Marshall

Edward Marshall

guess would quarter? the that on the maybe be QX. do first end question put anticipate of the I the some could costs cobalt effects the and same would around production startup, Just in cost fourth in numbers on – and comment potentially question you higher And if you QX from then the

Michael Shor

Okay.

general. in Let me talk this about

margin the this way One say about answer that heard very million. it – on the is from are Dan cost is going difficult of and impact but is cobalt impact in is the type quarter-on-quarter, that cold-finish exact to things of I’ll them the as you would same broad and put in $X.X projects’ year-on-year to to first, special the a an to range would $X.X I startup, give number us million. I flat

– they’re you all number they because large, we I all that. give so – or I an in have minus But plus significant impact. all very would I and can’t they’re a say So – really exact don’t I front, have

have that, gross keep is been focused the issue been end part gross and From we if flat will And we since can for margin margin see, what Ed, most believe of here cobalt by on the just going percent, behind what focused issue is we everything cold-finish the the us continue QX. on and it’s to on percent. both be that we I I’ve

think lagged last aware, I everyone margin our – any the there’s think don’t gross years, two percent. we I have Now is in fully segment

about going not with goal segment Our happen changes. overnight. segment It from to that us under front we a year Hopefully, initiatives we It of in there I’ve the getting volume of is going to headwind But We XX simple. there. believe be while. want question. step move now over pretty as is continued cost, worst in continued not us about a from to far best to lot our is have your talked positives, talking our answered a issues continued these pricing, been and out for I we’ve

Edward Marshall

issues, And more I to you interim to will I ignored, around on you’re not are what is saying although kind important showing you you’re think a this the basis did. the consistent of that that, sum you due could gross of operational The simply if up progress think and continue. that anticipate noise. is kind – margin I just stuff

Michael Shor

correct. these fiscal to, the headwinds That’s throughout we improve percent We’ve margin anticipate year. gross despite still able headwinds, been that will have QX, continuing. but our We in

Dan Maudlin

continuous gradual to Yes. as process, the but be And We pushing up higher. year. just going it’s keep a a pushing increase move we throughout the and it’s margin

Edward Marshall

you management culture when returns, how curious Now, the early, of embraced part has or success start explain kind the but come? best about still you And – that they think of will adopt it’s about employee they’ve some formula do is how And if they – organizations maybe seeing Mike, still think I the teams maybe to ongoing, I’m new new kind could culture? this to could – there’s the base the more shift. talk you’re it’s how see of you that

Michael Shor

of well, I And all all won’t a employees think tell up, employees show – them are basis. with quarterly meet on getting say going on everyone I do, and we do meet are then you some We for with invited. we’re invited. focusing amount positive. for first – a you’re results, you very setting enthusiasm I but that’s do been the accountability you all what – when I setting and to direction, goals it, has will you in think, both say essence, employees

our those each I good past, – about not but this very continuing I where mentioned I be we just everyone probably through it a XXth we and Ed. management the in details basis believe, have a and a that We’ve that. talk XX about it. of get the XX the lot table, fully know, I we’re I that pushed to day bought comes – don’t exception on team we the initiatives, And on I’ve meet get details regular I organization. from and only every got reports, in, feel go through but now I around of me, believe are. month it Not to ask that on focus my

I we momentum. we’re to feel just great where would and I are, gain beginning about So say

Edward Marshall

backlog. look in to The I sneak progress. question That’s I forward Great. hear. Last to We about just seeing have, if good could the one

pricing. plate might initiative that good Some in that get backlog been might maybe just you, know going sense as sense despite volumes I how of to a today. get much have going. that’s the of and on progress to what’s kind a – I’m I And in so for just an to be plate volumes, the want

Michael Shor

We it. play seeing plate it to focused is on growth else, in dead. everything over Like roll no are going – because and one we’re is

continue about in we that. can going on to to that A increase So how little but to and concern could to mean to as bit the focus continue to what grow, continuing continue grow. much what we’ll take in well, as us – of do it’s we tariffs China far

as making progress say but as incremental would we’re I far slow So steady plate growth.

Operator

[Operator Olin the We’ll Longbow Instructions] from Chris Research. of our with next question take line

Chris Olin

Mike, success. on congratulations the early

Michael Shor

Chris. Thank Long way to you, go.

Chris Olin

like to long-term I at market gen, two pound guess able had the views that, sense time how you don’t a get Haynes stay was to essentially And on the there’s lot trends power a of basis? question second does position consistent a businesses, do on some global the hold guess to I X-million Haynes’ you’ve share got that of look I Haynes years? study upside above its I And whole within Yes. within kind about over your to now I non-aerospace feel three the level there. the past that markets.

customers, markets target? So new any could you new end

Michael Shor

Okay.

talk this. share, As I far obviously, would as we say, about

memory, the power frames from market but is generation discussed XX% is I’m large peak the well between from and Our periods, That’s a share been XXXX, down fairly volume XXXX, not down also XXXX, doing from energy. XXXX, issue. this significantly renewable that

Again, there. we in level what we even And is I much about a I take is incremental just go at it’s as doesn’t time. maintaining to so to a as and doing are, there sales feel than noted my been. good, have, about one Maintaining take about So good going to get I feel we it’s comments, level "Here, Haynes, I real is far do But it." low for good lower trying to say, it’s going business where feel as though what feel team good out us. no continue some business after at share. our

concerned, growing pace. CPI as far growing, slower it’s is me, but at it’s As a to

This at and the off forward. it’s moving bottom least it’s year

special get our it through tracking track come will much we’ve more it the believe say business would increase pretty projects next believe and to CPI. year, our We’re I our belt. because I significantly, got for I will back special CPI to projects under

that to I And quite on is the them, projects. all some this dealt like it’s got we what special frankly, just year. of with also like I but aren’t which ones be the side, commodity

at let two asked second. those feel I’m very aerospace, see forward. a certainly about move in about side just of me where we I in feel sure I look I XX%, numbers, not cold-finish and with plate, the flats pounds tubing good about capacity real open about on When all as but I X% for So you aerospace and up going those. moving. are. that feel good. forward very talk we you year-to-date about in up revenue still good our

So progress. making

We are had far us. nice a gas, As a as gain but and flat in gas. going pieces for oil think and of in other and there lot not I oil products bits markets,

move us applications. marketing on So will an that’s needle We’ve going the – for new look we beyond move application got but that entire group to and greatly. marketing nothing that, to works continue

yes, $XXX take time in. happening fill now effort damn we’ve in X what’s it’s it. to feel spent to and I good and that. good as good pounds, far about thing feel feel volume advantage million bring of our I already I the in As million about that capital,

Dan Maudlin

quarter X in substantially outage that it our we the we X.XXX then million But Drever in outage, exceeded goal, we million it so QXof to subsequent In had below fourth set the we be pretty this quarter. with September, of our year. last in or X.XXX $X which cold-finish kind million. QX hit this, the and was we when And guided million two quarters, in

that so from So to expect it’s get of volumes here, we out improve good to that volume we guidance gave low way. headwind also the

Michael Shor

let sure sneak comment more because it, about in we’ve very alluded we’ve me not it, this detail but And just in given I’m one I’m here to excited and in the past.

As the we now proprietary aerospace engine. alloy we talk being of neo, the business and look development. business, in this development flying the core forward – application alloy & competencies Pratt have Whitney proprietary about XXXX the on We AXXX a

a flying Bombardier former have & the XXXX is Pratt We C alloy on Series. the engine, which Whitney proprietary on AXXX

And alloy & in Pratt have proprietary XXXX, We have XXXX now soon, we’ll late into the the engine. proprietary on Whitney GEXX. applications serviced two spec-ed

better development, alloy on. got think we’re about it’s this talk we’ve to much making this – nice about. talk It’s with good things going I to is progress stuff. So Look,

Chris Olin

in be Okay. be see be about I potentially inventory any that squeeze the would Good. because would it make there. issue it disruption, And business from that assumed the versus second, about answer And how at going want you to all, it like It kind – of I Boeing pushback it? would’ve Haynes you you’re it to and then understand the to XXX sure to nickel in that sounds I understand was XXXX sure you hitting. and how would of think when want if not about tubing hit titanium think customers. business? it risk think I does I Helpful Or seeing issue. make just the earlier the

Michael Shor

nothing. We’ve Okay. seen

obviously, of spent with his all. Air lot a efforts this. in and – of any customers I backlogs a talking order Show, spend at change Marty not through Paris our about the seen time team, at significant we of We’ve and lot Losch have We time the

basically not get current at plan orders continue to We levels. but to only

see at would Chris. releases, But XXXX. there we same reductions point, the something reading happen even that if all this that until would don’t are the We’re happen, beyond out anything

We happen. all not would obviously that hope

full and airframe Our looking we titanium asked customers make not do table, you exposure stop. chain what us tell ahead. have – they they’ve tubing, told is sure on hands us on steam can our They’re supply beating and can saying is with they their the fill of obviously I to literally have

same very We’ve that’s has And same nickel. and spot segment all obviously, in calls story. thing. else basically say So same the the everyone I on talked would the a listened at this about. good that other in

Dan Maudlin

that And by the That aerospace. remarks is in our number was prepared backlog Mike had over one in quarter improved X.X%.

seeing So we’re certainly the things. some strength on aerospace of side

Chris Olin

could you. just was color business. there. just tubing margins going or And that, I was you Arcadia, assets, focus of kind I those on give the of the sense finally it on back to wondering on because Got in doubt, any areas possibly one circling you saw an going of – was the got if you were tubing efficiencies. opportunity on what’s to

Michael Shor

Arcadia Sure. down a times I’m Thanks few question. in the for a year.

by – potential, with saying progress are. also day full day we’ve down our Dan We say some significant the but reached we’re bad start have have they where some We over months. going I’ll there. sessions would good involved, seeing not months, had full in positive I old full we days

in consistent seeing are months that We facility. of improvement

in we record tubing investment, we production XXXX, for increases volume. should Because a again for XXXX. and year year-on-year tell investment, the to more. push We and exceed And continue that be. continue the – exceed I to it since of last as saw that year in will we’ll and see you should productivity more we

should original committed very Board that XXXX. which full we potential in is heavy, had improve Directors volume capital Our of us in the request allow to backlog to our the about to

going. feeling good where about So real that’s

Chris Olin

translated And that the Good up at Okay. all? don’t like could you how improvement suppose number margin stuff. the in frame successes, I gross

Michael Shor

I’d to no, say have prepared this not for point, at that.

Dan Maudlin

Correct. disclose some margins Yes, cases, don’t we typically segment. by or track, even in

one segment. We’re

Operator

next Michael We’ll Please Capital. Leshock go ahead. from with KeyBanc take question our

is open line Your sir.

Michael Leshock

morning. Good

well, and pretty were slightly then question more year-over-year. complex you alloy issues a on a up And called – up Just aerospace timing volumes than temporary were first were down product sales mix. out they

you that if whether wondering Just not or could detail more should on little that talk recur. timing in issue and a

Michael Shor

issues the to were We We the I comments, the talked most we I my – faced expect about be I a and orders surprised think there. us – point important bit. is it how higher, in

improve business. incrementally forward So we we this including should which expect continue growth to cold-finish as flat in the move to area, aerospace, show our in

Michael Leshock

traction near there talked you about in Are in further then And term? increases the increases gaining price Okay. for room aerospace. there

Michael Shor

The our majority so contracts increase our contracts, saw January of significant we are January contracts. in

we So move that our and not we to out of through But to get QX. quality product as center our again, believe add but the only our value how product customer. service level the that we through product, continue the we into and should the

ways So to take for and provide. forward. advantage look of the value moving this on will that starting Pretty that. continue much to do that continue we and for to We we’ll X/X we look We did ways it. needed do of to year,

Michael Leshock

it that’s Got thanks. from it, me

Operator

Ed And Go next will Marshall again. once a from Instructions] we take [Operator follow-up ahead sir.

open. is line Your

Edward Marshall

rates kind to overall of think the materially talk ultimately, I that – The – amount if it’s maybe supply forward, might we might MAX. kind months? channel, XXX a Thanks. but or Obviously, the want you for think guess, then be have frame was from move maybe on the how growth measures but I you your a small It’s I production piece of quick of might the change could just and through just aerospace understand kind out based on the stop comments current you change program. if smaller volumes, inventory do say, say, you of XX just one. chain, I planning And your can measures? I what think in precautionary that of the

Michael Shor

CFMXX could Sure, be further, in discussion Ed. of week, engines about that can is last top our to with for recently they’re What or capability LEAP-XB customers. fact the is if in-depth something capacity this. on theirs on best that And I stay – we an talking us slow that would this way of engines very, you is, manufacturer what as to close like to And with down that we or example, to other they’re pair. very as tell – engine is if be moved to had manufacturing

So talking that’s there. type the of about we’re thing

previously, the because I AXXX XXX, more by going including we metal we than proprietary talked do alloys of We into – the about way, have the proprietary into the stuff. the

So that help would there.

side, On far just could look where of we for continue would so much have we demand tubing as or that product aerospace to for as tubing outside the titanium go. even that alternatives airframe titanium pent-up

Edward Marshall

a material being the in you see I one way So risk short to other it or medium-term, the guess? don’t

Michael Shor

excess Certainly short we going right. see not That’s the excess did happens it’s see the drastic in impact we’re can not supply If not we’re exactly impact to from build everyone in do We then rate, term. chain. and inventory more the getting on that see. Obviously, – with the based customers, the looking. something chain supply we pulls the

But see now. we what thing good next XXX for very happens with a right all us to to wait MAX. that’s have the So

Edward Marshall

can complete would – you define I change what be? redesign? or, mean are referring a halt production to in And a say, is you drastic a

Michael Shor

– of as to watch that we have what But in as carefully which the to leave up there. happens I’ll forward. manufacture we the it all and taken really have just this, able been to we go one drop has of whether as us been place have Boeing far

Edward Marshall

Great, thanks gentlemen.

Operator

next, And Chris we another Olin. you. from follow-up Thank have coming

Chris Olin

the significantly one all? activity Sorry, transactional was above your going the I does nickel to $X potentially just forgot commodity positive that business I ask there, and change or order within at question. transactional activity with curious momentum

Michael Shor

We watching up patterns. they we’re to – you with very now So is and somebody and human know nickel it’s something up, right in what order nature little." getting and up early we But as I’m are going Not off nickel goes Chris, when goes what go that tend "You we’re now, far quote hold ready for – to says nickel Yes. too history, tell. it a people where when watching happens off. hold to is what? order see carefully to – says; my

So watch we’ll carefully. that

Dan Maudlin

Yes.

an think we transactional. as when occurring that get got what I ship QX, we and is can And – the we quarter. order in do now that of We a than much that’s define it was we shorter it this somewhat lead in sales track out that service quarter XX.X% so to as XX.X%. XX And our within mill was transactional center. days, time our last compared of is quarter,

a that a and certainly an see us. did the we XX% overall, rise margins But We’ll and is tick low. not of Obviously, continues, to good So it expansion around. tick we if that however, does. see nickel. down, down. hope does that’s nickel That we rise that in in for move is we’re a number did attributing have too

Chris Olin

across you And announced Was it just lastly, the board? products? aerospace just then increases. price Or was for that

Michael Shor

internally – which is we XX% said beyond didn’t what to we pursued that’s product that’s going but value and what Chris, have announcement, official truly high aggressively our guess or actually done but price about where we an is mix, believe did our we’ve and we is what differentiated, of is where aggressively out we said aerospace, best put increases. – No. we’re are and our

about I’d it’s say So product. our half

Chris Olin

Thanks, again. Okay.

Operator

we And additionally remarks. from team any group. Instructions] for I’ll back it the have our to [Operator closing no leadership turn or signals

Michael Shor

you forward interest Thanks, for for Thank again today, a you, updating time look support Have weekend. and next your Jim. company. thank our and good to of everyone, quarter. your you We

Operator

your meeting, you Ladies and for do and conclude gentlemen, does thank this today’s participation. we all

you we your hope that may disconnect day. lines, and your You now enjoy

Haynes International (HAYN) 3 Aug 192019 Q3 Earnings call transcript