Executive Summary

Record first-quarter revenue of $147.4M and diluted EPS of $0.60; gross margin compressed to 16.8% by a $5.7M nickel/cobalt headwind and a three-week outage at the Kokomo 4‑high hot rolling mill .
Demand strength persisted in Aerospace (+13.7% revenue YoY) and Industrial Gas Turbine (+36.0% YoY); total shipments rose 3.9% YoY to 4.73M lbs while product ASP rose 6.0% to $29.81/lb .
Backlog ended at $448.8M (+9.9% YoY), with backlog pounds at ~13.8M; operating cash flow inflected positive to $17.0M in Q1, and revolver balance declined to $108.9M .
Management guided Q2 revenue and earnings higher vs. Q1 despite continued nickel price headwinds; Board declared a $0.22 quarterly dividend payable March 15, 2024 .
A proposed acquisition by North American Stainless (Acerinox S.A. subsidiary) for $61.00/share cash provides a pending corporate catalyst; closing subject to shareholder and regulatory approvals .

What Went Well and What Went Wrong

What Went Well

Aerospace and IGT demand drove a first-quarter revenue record; CEO: “The continued strength of our aerospace and industrial gas turbine markets resulted in record first quarter revenue” .
Pricing and mix actions lifted product ASP to $29.81/lb (+6.0% YoY); Aerospace ASP +15.4% YoY, CPI ASP +7.3% YoY .
Operating cash flow turned positive ($17.0M); revolver reduced by $5.9M in the quarter, improving liquidity (remaining availability ~$91.1M) .
Backlog increased year over year (+$40.6M to $448.8M), supported by Aerospace and IGT strength .

What Went Wrong

Raw material price declines (nickel/cobalt) created a $5.7M gross margin headwind, compressing margin by ~380 bps in Q1; adjusted gross margin 20.6% vs. 21.6% LY .
A three-week outage at the Kokomo 4‑high hot rolling mill delayed shipments and hurt margins; may impact Q2 shipments with recovery expected in 2H FY24 and into FY25 .
SG&A increased $1.5M YoY, driven in part by ~$0.5M FX losses; interest expense rose $0.7M YoY on higher revolver usage and rates .
CPI and Other Markets revenues fell YoY due to mix management away from lower-margin commodity alloys and outage-related impacts (CPI −8.5%, Other Markets −21.8%) .

Financial Results

P&L and Margin Trend (prior two quarters vs. current)

Metric	Q3 2023	Q4 2023	Q1 2024
Revenue ($USD Millions)	$143.9	$160.6	$147.4
Diluted EPS ($)	$0.68	$1.02	$0.60
Gross Profit Margin (%)	18.1%	18.5%	16.8%
Adjusted Gross Margin (%)	19.2%	20.9%	20.6%

Segment Breakdown (Net Revenues)

Market Revenue ($USD Millions)	Q3 2023	Q4 2023	Q1 2024
Aerospace	$77.5	$81.8	$73.3
Chemical Processing (CPI)	$17.7	$23.0	$20.8
Industrial Gas Turbine (IGT)	$28.1	$34.2	$35.4
Other Markets	$13.4	$14.6	$11.5
Total Product Revenue	$136.6	$153.6	$141.0
Other Revenue	$7.3	$7.0	$6.3
Total Net Revenues	$143.9	$160.6	$147.4

Shipments and Pricing KPIs

KPI	Q3 2023	Q4 2023	Q1 2024
Total Shipments (M lbs)	4.43	4.87	4.73
Product ASP ($/lb)	$30.87	$31.56	$29.81
Total ASP incl. Other ($/lb)	$32.51	$33.00	$31.15
Backlog ($USD Millions)	$468.1	$460.4	$448.8
Backlog (M lbs)	14.63	14.64	13.76
Revolver Balance ($USD Millions)	N/A	$114.8	$108.9

Guidance Changes

Metric	Period	Previous Guidance (as of Q4 2023)	Current Guidance (as of Q1 2024)	Change
Revenue/Earnings	Q1 FY2024 vs. Q4 FY2023	Q1 revenue/earnings higher YoY but lower vs. Q4 FY2023	N/A	Maintained (context-specific)
Revenue/Earnings	Q2 FY2024 vs. Q1 FY2024	N/A	Q2 revenue and earnings expected higher vs. Q1 despite nickel headwinds	Raised (sequential)
Capex	FY2024	$25–$35M planned	$25–$35M planned (reiterated)	Maintained
Dividend	Next Quarter	Regular quarterly dividend policy	$0.22 per share declared; payable Mar 15, 2024	Maintained (declared)
Tax Rate	Ongoing	Effective tax rate expected 21–22%	No update provided; Q1 effective 18.2% reported	Maintained expectation (reported varies)

Earnings Call Themes & Trends

Note: The Q1 FY2024 earnings call was cancelled due to the proposed acquisition; current-period themes are drawn from the press release and 10‑Q .

Topic	Previous Mentions (Q3 FY2023)	Previous Mentions (Q4 FY2023)	Current Period (Q1 FY2024)	Trend
Raw material (nickel/cobalt) impact	Headwinds building through FY2023; adjusted margin focus	Q4 headwind $3.7M; adjusted margins ~21% for six quarters	Q1 headwind $5.7M; adjusted margin 20.6%	Continued headwinds; slightly worse in Q1
Aerospace demand	Strong; proprietary alloys gaining acceptance	Aerospace 50.9% of Q4 sales; record annual aerospace revenue	Aerospace revenue +13.7% YoY; ASP +15.4%	Robust; pricing power sustained
IGT demand	Growing applications; HAYNES 282 adoption	Record quarterly IGT revenue; +21.9% seq	IGT revenue +36.0% YoY; volumes +31.3%	Strong growth; share gains
CPI mix management	Prioritizing higher-margin alloys/projects	Mix shift away from commoditized CPI	CPI revenue −8.5% YoY; ASP +7.3%	Intentional downshift in low-margin CPI
Lead times & backlog	Backlog near record; lead times long	Book-to-bill ≥1.0 in Aero/IGT	Backlog $448.8M; lead times reduced on some products affecting ordering	Backlog high; some lead-time normalization
Bottleneck/capex upgrades	Ongoing capacity debottlenecking	Planned A&K line upgrade in Q1 to improve reliability	Q1 outage at 4‑high mill; capex $25–$35M reiterated	Reliability focus continuing
Cash flow & revolver	Expect FY2024 operating cash inflow	Expect revolver decline in FY2024	Q1 CFO $17.0M; revolver down to $108.9M	Improving liquidity trajectory
M&A/regulatory	N/A	N/A	$61/share cash merger agreement with Acerinox S.A. subsidiary; customary approvals pending	New strategic catalyst

Management Commentary

CEO Michael L. Shor: “The continued strength of our aerospace and industrial gas turbine markets resulted in record first quarter revenue… While the continuing raw material headwinds from falling nickel prices will impact the second quarter, we continue to focus on what has and will continue to differentiate us, and we remain optimistic about continued strong demand and improving operational momentum through the balance of the year.” .
Q4 FY2023 margin focus (context): “Our fourth quarter is now the sixth consecutive quarter where our calculated raw material neutral gross margin was approximately 21% or better.” .

Q&A Highlights

Note: Q1 call was cancelled. Key themes from Q4 call Q&A:

Raw Material Headwinds: Nickel decline expected to worsen headwinds into Q1–Q2 due to lag effects (~6 months) and scrap cycle; adjusted margins mitigate impact .
Capacity & Reliability Upgrades: A&K line upgrade planned to improve flow between 4‑high mill and finishing; addressing cold-finished flat reliability bottlenecks .
Backlog and Lead Times: Backlog sustained by aero engine build growth (e.g., LEAP engines), with customers securing positions in long-lead items .
CPI Mix Management: Steering capacity away from low-end commodity CPI alloys, focusing on higher-value proprietary/specialty applications .

Estimates Context

S&P Global consensus estimates for Q1 FY2024 (EPS and revenue) were unavailable for HAYN via our SPGI interface due to missing mapping; as a result, comparisons to Wall Street consensus could not be performed at this time [GetEstimates error].

Key Takeaways for Investors

Demand remains strong in Aerospace and IGT, supporting pricing power and shipment volumes; product ASP rose 6.0% YoY and IGT revenue grew 36% YoY .
Near-term margin pressure from nickel declines is material ($5.7M headwind in Q1), but adjusted margins remain ~21% normalized, highlighting underlying profitability resilience .
Liquidity improving with positive operating cash flow ($17.0M) and revolver paydown; capex plan ($25–$35M) targets reliability/capacity without stressing balance sheet .
Q2 guidance is constructive (higher revenue/earnings vs. Q1 despite headwinds), with shipment catch-up from the Q1 mill outage expected later in FY24/FY25 .
Strategic optionality: proposed $61/share cash merger provides a pending catalyst subject to approvals; interim operations continue to execute on margin and cash priorities .
Watch drivers: nickel price trajectory (margin), aero engine build cadence (volume), CPI mix discipline (margin), and execution on reliability upgrades (flow/absorption) .

HAYNES INTERNATIONAL INC (HAYN)·Q1 2024 Earnings Summary