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Metal alloys maker Haynes International Inc. (HAYN - Snapshot Report) posted third-quarter fiscal 2013 (ended Jun 30, 2013) earnings of 43 cents per share, edging past the Zacks Consensus Estimate by a penny. Profit tumbled roughly 61% year over year to $5.3 million hurt by a double-digit fall in sales.
 
Revenues dipped 12.7% year over year to $123.6 million, hit by weak market conditions, lower average selling prices and reduced sales volume. Shorter mill lead times and lower nickel prices led customers to delay order entry during the quarter, resulting in lower backlog. Sales missed the Zacks Consensus Estimate of $126 million.
 
Volume fell 3% year over year to 5.5 million pounds in the reported quarter. Average selling price slipped 10% year over year to $22.31 per pound in the quarter on account of reduced raw material prices, unfavorable product mix, increased competition and weak demand. 
 
Haynes’ consolidated backlog was $189.6 million at the end of the quarter, down 8.4% sequentially, reflecting a 16% fall in backlog pounds. The sequential reduction in the backlog stemmed from lower order entry volumes and a change in mix of products in the backlog. Destocking in the supply chain continues to cause lower order entry volumes.
 
Gross margin fell to 15.1% from 22.9% a year ago, impacted by lower value product mix and lower volume. Operating income slid 62% over the prior-year quarter to $8 million.
 
Haynes exited the quarter with cash and cash equivalents of $43.6 million, down 15% year over year. Long-term debt declined 27% year over year to $0.98 million. 
 
Moving ahead, Haynes expects net income for the fourth quarter to be below the level achieved in the third due to lower order entry volume and pricing. The company sees net income to continue to be affected by weak volume and pricing as seen in the second and third quarters. Haynes does not expect a recovery in the fourth quarter given weak market visibility, uncertain economic environment and level of booking to date. 
 
Haynes is also delaying capital spending on non-strategic projects given its current lower business volumes. It has cut its capital expenditure guidance for fiscal 2013 to roughly $48 million from $70 million. Haynes spent roughly $10.9 million in the reported quarter, taking its capital investment for the first nine months to around $33.7 million. It anticipates capital spending of roughly $50 million in fiscal 2014.
 
Founded in 1912, Haynes makes corrosion-resistant alloys for aerospace, chemical processing, gas turbine and other industries. It specializes in manufacturing nickel and cobalt-based alloys in sheet, coil and plate forms. 
 
Haynes retains a Zacks Rank #5 (Strong Sell).
 
Other companies in the metal fabrication industry having favorable Zacks Rank are NSK Ltd. (NPSKY), NN Inc. (NNBR - Snapshot Report) and Northwest Pipe Co. (NWPX - Snapshot Report). All of them hold a Zacks Rank #1 (Strong Buy).

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