Good day, ladies and gentlemen, and welcome to the Haynes International, Inc., Second Quarter Fiscal 2021 Financial Results Call. All lines have been placed on a listen-only mode and the floor will be opened for questions and comments following the presentation.

[Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, David Van Bibber. Sir, the floor is yours..

Thank you, very much for joining us today. With me today are Mike Shor, President and CEO of Haynes International, and Dan Maudlin, Vice President and Chief Financial Officer. Before we get started, I would like to read a brief cautionary note regarding forward-looking statements.

This conference call contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities and Exchange Act of 1934. The words believe, anticipate, plan, and similar expressions are intended to identify forward-looking statements.

Although we believe our plans and intentions and expectations regarding or suggested by such forward-looking statements are reasonable, such statements are subject to a number of risks and uncertainties, and we can provide no assurances such plans, intentions, or expectations will be achieved.

Many of these risks are discussed in detail in the company's filings with the Securities and Exchange Commission, in particular, Form 10-K for the fiscal year ended September 30, 2020. The company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

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

Thanks, Dave. Good morning, everyone. The pandemic's impact over the last twelve months has been difficult on our business and on our families. I am proud of our entire team. They have worked together to guide us through the challenges we faced and to position Haynes very well for the future. We believe better times are ahead for our company.

We now believe that for Haynes, Q1 of Fiscal 2021 appears to be the bottom as far as the pandemic's impact on us and that Q2 represents the beginning of our recovery. Our key metrics showed good progress when comparing Q2 to Q1.

The most intriguing part of the progress we've made to-date is that the commercial aerospace market has not yet recovered and will most likely not have a significant incremental improvement impact on our business until late this calendar year.

This means that the improvement shown in Q2 has been based on our continued relentless focus on cost reduction, on maintaining our prices for our high-value products throughout the downturn and on sequential growth in the quarter, led by market share gain in our IGT business.

We look forward to seeing the rebound in Aerospace and the incremental impact that a return of meaningful Aerospace market growth is expected to have on our business. I'd like to now highlight the progress that our team has made in the second quarter.

First, our revenue for the quarter was $82.1 million, exceeding the revenue of Q1 by $9.9 million or 13.7%. Our share gain in IGT came through loud and clear in the quarter with sequential IGT volume increasing 33% and sequential IGT revenue increasing 17.7%. Our gross margin was 10.2%, up 880 basis points from Q1.

This was accomplished despite shipping just 3.5 million pounds in our second quarter. As noted previously, our costs are down; coverage of our fixed cost has improved; our selling prices are stable; and we've grown our IGT market share.

As I've said in the past, we've improved our gross margins from when we experienced high-single-digit and low-double-digit gross margins in 2017 and 2018 to an average of 18% gross margins in January and February of 2020.

When our markets and volumes eventually improve to our 2018 and 2019 levels, given our alloy and application innovation success, our unique manufacturing facilities, our distribution system and cutting capability and our outstanding sales and customer service, I look at the 18% achieved in early calendar year 2020 as a new starting point for our future.

While our operating income was still negative for the quarter, it improved sequentially by $5.8 million driven by all of the factors that I've already mentioned. We continue to believe that our break-even point, given the work of our team over the past two years has been reduced by at least 20%.

Our Q2 results show that despite our very low volumes, we've made real progress compared to two or three years ago. Our sequential EBITDA was improved by $5.9 million in Q2 with a positive quarterly EBITDA of $2.2 million for the quarter.

After seven of the prior nine months produced negative EBITDA, we were positive in each month of this past year – excuse me, of this past quarter. As far as backlog, our Q2 backlog is showing signs of leveling off, down a total of $4.3 million for the quarter with Aerospace down $4.2 million. It's very interesting to review the book-to-bill data.

The overall revenue book-to-bill stabilized in the quarter and was 1.0, with a negative Aero trend still evident. For the quarter, Aero was 0.9; CPI was 0.9; and IGT was 1.1. For the first six months of the year, book-to-bill revenue data shows the total of 0.9 with Aero at 0.7 and all other markets at 1.0 or greater.

As Aerospace is expected to return towards the end of this calendar year, we have a possible opportunity to see growth in each of our three core markets. Finally, we generated $8.6 million in net cash in Q2 and have now generated cash, despite our COVID-related losses for four consecutive quarters.

Since April of 2020, when we pivoted our team to a focus on emphasis on responsible inventory reduction and cash generation, we've reduced our inventory by 4.6 million pounds or 20.7% and we finished the quarter with a cash balance of $69.8 million.

Our conclusion from all of this information is that our efforts to make fundamental improvements to our business have positioned Haynes well for the future. We've had two overarching goals since our team began our journey to sustain the improvement.

First, a rapid and significant increase in gross margin, leading to the significant reduction in our break-even point that I've already noted; and then, as the pandemic's potential business impact was evident, a pivot to cash generation. We have been successful in achieving our goals.

I am proud of our entire team and their focus on what's important to our shareholders, for their ongoing pursuit of a safe work environment, and for the teamwork shown by all Haynes employees. It's important to note that we continued to operate below our break-even point in our second quarter due to the low volumes sold.

The positive news is that given our Q2 results, as already noted, we believe that we will achieve profitability at a much lower volume than in the past. However, given lead times and current bookings, we expect Q3 revenues and earnings to be about the same as Q2. We expect to begin to see Aerospace bookings growth later in calendar 2021.

As stated on last quarter's call, the aerospace recovery will likely be gradual, but we believe that this market will return to pre-pandemic levels, with single-aisle aircraft leading the way. Now a few comments on our markets. It took a pandemic to halt the long aero growth cycle.

The reduction in aero demand continues to be the driver of our overall low business levels. Year-on-year, aerospace volumes were down 47.9% in Q2 of Fiscal 2021, despite the 737 MAX issues impacting the Q2 fiscal year 2020 data. We have confidence that more people will begin to fly again, and that we will see market improvement as the year progresses.

I've traveled a fair amount recently and have experienced check-in lines that are longer, concourses that are full of people, and planes that are at capacity. These are all good signs that the recovery in domestic revenue passenger miles has begun. Passengers through U.S.

TSA checkpoints have increased with domestic passenger traffic now approaching 60% of 2019 levels. Obviously, single-aisle planes will lead the way here with international travel lagging. We believe LEAP engine builds have bottomed out.

External data shows that the expected number of builds this year will be at or above 850 engines and is projected to increase rapidly from there. Monthly LEAP engine build rates are now estimated to approach 2019 levels by the end of 2022.

It's honestly refreshing to hear our contacts in the industry requesting that we have the manpower and capacity in place to handle this anticipated improvement. Also, the new 777, which has a delayed start-up is now estimated to fly in 2023. When it does fly, this aircraft will have two Haynes proprietary alloys on the GE9X engines powering it.

The Haynes alloys spec'd in our HAYNES 244, our latest low-thermal expansion alloy that offers high-temperature capabilities over current alloys and HAYNES 282, our age-hardenable alloy that provides a superior combination of fabricability and high-temperature strength over 718 alloy.

The application of these two proprietary alloys into the GE9X engine shows the past, the present, and the future core strength of our company, that is the proven ability to innovate and to develop alloys for tomorrow's difficult and demanding nickel- and cobalt-based high-temperature and corrosion applications.

As far as our CPI market, our quote and order activity is up. Specific to special projects, we are expecting lighter shipments in the second half of fiscal 2021 as a result of COVID-impacted ordering patterns in prior quarters. However, we are beginning to see more funding for special projects in this market and higher quote activity.

As the economy continues to open back up, we expect this positive trend to continue. On IGT, we are seeing an improvement in this area for four reasons. First, HAYNES 282 continues to gain market applications in both new and existing turbines. Next, we have gained market share from an OEM.

Third, one of our long-term customers has gained share and finally, there is general improvement in this market. A few additional points before I hand this over to Dan. Safety continues to be a core value for Haynes. We had no recordable injuries in any of our facilities in March.

We've continued to train and educate our employees, as well as invest in our facilities to provide everyone a safe work environment. We have an excellent cadence of communications and meetings across our operations to help reinforce our safety culture. Next, on COVID, our work on protecting our employees is far from complete.

Throughout the pandemic, we've continued to inform and educate our employees on the ways to keep themselves, their families and our workplace safe, and we continue to make – to take many actions to deal with the challenges brought on by the pandemic.

As new information is gained and access to vaccines continues to increase, we will continue to assess the changes we need to make throughout our operations. Related to ESG, Haynes has always been conscious of our environmental impact and we are actively working to reduce our carbon footprint.

Over the past few years, we have made investments of over $2 million in energy conservation programs, which has helped us reduce energy demand by about $1.6 million a year. We are now conducting studies in each of our manufacturing locations to further our energy conservation journey.

This information is being used to develop additional energy conservation programs, capital investments and our long-term goals and objectives. And finally, there is one point that I've talked about in the past that I'd like to stress here.

Haynes has a 109 year history of innovation, alloy and application development, and outstanding sales and customer service. Our most recent example of our company's outstanding history with alloy and application development is the Mars Rover.

We are very proud to have added our alloy, HAYNES 230, used on the sky crane that lowered Perseverance onto the surface of Mars in February. The alloy used for the sky crane thrusters was selected for its excellent combination of high-temperature strength and environmental resistance properties.

The use of HAYNES 230 here is just another example of one of the most significant facts that tells the story of our company and that is, that over 50% of what we sell was invented by us. That's both a great story and, given our continued focus on alloy, application and process innovation, a great indicator of what the future may hold for our company.

With that, I'll hand the call over to Dan..

Thank you, Mike. Our total volume shipped of 3.5 million pounds this quarter was the best quarterly volume since the pandemic began in the U.S. roughly one year ago. Volume in all four of our market segments improved sequentially with total volume improving 26.1%.

It seems we may have come off the bottom of this COVID-driven downturn from a volume perspective and we welcome the start of a recovery. As a reminder, our volume at the beginning of the pandemic was already being impacted by the Boeing 737 MAX production halt.

If you go back and look at the second half of fiscal 2019, prior to both the pandemic and the 737 MAX production halt, we did $255.7 million in revenue and volume of 10.5 million pounds. That's an annualized run rate of $511 million in revenue and 21 million pounds.

Returning to that type of runrate would likely required support by a meaningful recovery in the aerospace market, which we believe will begin late in calendar year 2021. This quarter, sales to the aerospace market accounted for 37% of our revenue at $30.6 million.

This is an increase of 25% sequentially from Q1, but a decrease of 48% from the same period last year. This significant year-over-year reduction in aerospace demand continues to be the main cause of our low overall volume levels, which lowers our margins. These margin challenges are expected to continue to alleviate when aerospace volumes improve.

Backlog dollars in aerospace decreased sequentially from Q1 to Q2 by 5% and down 44% year-over-year. Sales to the chemical processing market accounted for 18% of our revenue at $15.1 million. This is flat sequentially from Q1 and a decrease of 5% from the same period last year.

Special project revenue, most of which is reflected in Chemical Processing, was $4.8 million, which is $780,000 lower than the first quarter of last year and $1.7 million lower than the same period last year. Backlog dollars in CPI decreased by 4.2% Q2 to Q1 and down 6% year-over-year.

Sales to the industrial gas turbine market accounted for 20% of our revenue at $16.4 million. This is an increase of 18% sequentially from Q1 and relatively flat versus the same period last year. Our share gain initiative continues to help volumes. However, volumes can still be lumpy quarter-to-quarter.

Backlog dollars in Industrial Gas Turbines increased sequentially from Q1 to Q2 by 12% and down 9% year-over-year. Sales to other markets accounted for 19% of our revenue, at $15.5 million. This is an increase of 22% sequentially from Q1 and an increase of also 22% from the same period last year.

Backlog dollars decreased sequentially by 5%, but was up 21% year-over-year. Other revenue accounted for 5% of our revenue at $4.4 million. This is a decrease of 22% sequentially from Q1 and a decrease of 38% from the same period last year, which was primarily due to total customers that have exposure to the aerospace industry.

The sequential improvement in overall volume, from 2.8 million to 3.5 million pounds, resulted in an 880 basis point gross margin expansion in the second quarter to 10.2%.

This improvement includes the reduction in the direct charge from $5.9 million in the first quarter to $2.8 million in the second quarter of fiscal 2021 with better absorption of overhead costs. Also contributing to the margin expansion was our continued diligent cost reduction efforts.

In addition, our raw material increases provided a moderate tailwind to margins this quarter of roughly $1 million, but this is likely to neutralize next quarter. Overall, this margin expansion occurred despite continued inventory reductions.

During the quarter, we reduced inventory by $9.4 million making it a $19.3 million reduction in inventory this fiscal year and $53.5 million reduction since this time last year.

To once again go back and look at the beginning of the pandemic, we were just beginning to gain traction on our gross margin improvement where we averaged 18% gross margins in January and February right before the pandemic impacted our results.

It's our expectation that when volumes recover to those levels, we can resume our margin improvement strategy. Now back to Q2 of fiscal 2021's P&L. SG&A, including research and technical expense was $12.1 million in the second quarter, as compared to last year's second quarter of $11.8 million.

This year-over-year increase was mainly due to changes in incentive compensation accruals and foreign currency losses.

Two additional points to finish out the P&L, one, as I've mentioned before, our non-operating retirement benefit expense in the P&L was lower by $1.3 million this quarter, as compared to the same period last year due to our favorable actuarial valuation driven by lower retiree healthcare spending, as we've been actively managing our retiree healthcare cost and, on the pension side, higher than expected return on plant assets last fiscal year.

Looking to our next end of year valuation, current view on potential rising discount rates points towards a potential additional reduction next fiscal year; and number two, our effective tax rate was 17.3% in the second quarter of fiscal 2021, as compared to 21.2% sequentially in Q2.

This reduction relates to certain non-deductible compensation accruals. This lower effective tax rate is unfavorable due to the pre-tax loss. As a result – excuse me, all of this resulted in a net loss for the quarter, narrowing to $3.6 million, compared to the $8 million in Q1.

As far as outlook for next quarter, the reduction in aerospace demand continues to be the main driver of the company's overall lower sales levels. The company believes that the aerospace market will begin to show meaningful incremental improvement late this calendar year.

Therefore, it's expected that the upcoming third quarter of fiscal 2021 revenue and earnings will be similar to the second quarter of fiscal 2021. The company expects continued solid liquidity throughout fiscal 2021 and be favorably positioned for the recovery.

Moving to backlog, backlog appears to be leveling out at $140.9 million at March 31, 2021, a decrease of $4.3 million or 2.9% from the $145.1 million at December 31, 2020. Backlog pounds at March 31, 2021 increased sequentially during the first quarter of fiscal 2021 by 0.3%, as compared to December 31, 2020.

Liquidity, we increased cash by $8.6 million in the second quarter, making a $22 million increase this fiscal year and a $47.4 million increase in net cash since this time last year. Strong total liquidity of $169.8 million with cash at March 31 at $69.8 million and $100 million available on the undrawn credit facility.

Capital spending during the first six months of fiscal 2021 was $2.1 million. We are still expecting to spend approximately $10 million for the full fiscal year with a higher pace of CapEx in the second half of the year. In conclusion, it is encouraging to see our financial results beginning to improve.

As we've mentioned, the anticipated recovery will likely be somewhat gradual and would likely require support by a meaningful aerospace recovery, which is expected to begin late this calendar year. We've worked hard to manage through this downturn and we will work equally hard as the recovery begins.

This includes carefully investing working capital and carefully managing cost as activity levels increase with the goal of earning more than our cost of capital. With nearly $70 million of cash on the balance sheet and the full credit line available, we have the flexibility to improve with the anticipated recovery of demand in the markets we serve.

Mike, with that, I'll now turn the discussion back over to you..

Thanks, Dan. Our team is encouraged by both the direction and the potential for our business. I want to thank all of you for your continued interest in our company. With that, operator, let's open the call up to questions..

[Operator Instructions] Our first question comes from Steve O'Hara with Sidoti & Company. Please state your question..

Yes. Hi. Good morning. Thanks for taking the question..

Sure. No problem..

I guess just quickly on the – it looked like prices declined in the quarter, average pricing, I guess, sequentially. And I am just – when I think about raw material costs, you noted higher raw material cost, I think was a benefit to margin and raw material cost, I think, have gone up kind of across the board.

How does that – I guess I am just trying to do that how that jives with the pricing going down in the quarter..

Steve, pricing is not necessarily an indication of mix or for that matter of profitability. What happened obviously, is we were being hit with significant direct charges because of our fixed cost and our lack of volume. We continue to go after some business, which would allow us to absorb some of those costs in our plants.

So we - to me, it's more of a mix than anything else, which is what caused the price to go down. But overall, we feel really good about what's happening. And in fact, when you look at the gross margin, given the lack of aerospace, we feel real good about where that's going..

Yes. And I can add on to that, as well. If you look at kind of the detail by market, you can see that our other market is really where there was a pretty large decrease in the average selling price. And there is really mix related within that other markets category.

There is some flue gas desulfurization projects for example, that we had shipments on this quarter, which that's a certain alloy that has a lower average selling price. So, from a mix point of view, certainly, the incremental increase in volume that we got, which was very beneficial obviously, to revenue and to margins with better absorption.

From a mix point of view, that was a bit of a headwind just related to that incremental volume being slightly lower-valued alloys in some cases..

I am sorry. Let me just add back in. What we were very cautious of and what we did very well in my mind through the downturn is in the high-value portion of our mix there were no reductions in our selling prices through this. So what we did to pursue volume is obviously more on the CPI side, get aggressive on some transactional business when needed.

But overall, as far as pricing going forward, we feel great about where we are LTAs and what the capability is going forward..

Yes. And I'll also mention, you had brought up raw materials, raw material, nickel, obviously up and cobalt, but nickel being the bigger impact and that was kind of a moderate tailwind for us. We have escalators and de-escalators on our contracts and try to offset that as much as we can. But it was a tailwind to margins of around $1 million, roughly.

And I think I mentioned in my prepared remarks that nickel has come back down. So that's probably going to neutralize next quarter. But it was a small, maybe $1 million, improvement in margin. The big thing is the volume and the lower direct charge and the better absorption of those fixed costs..

Okay. That's very helpful. Yes, very. Just maybe on the out-of-period costs, I mean, they came down a lot in the quarter, volumes ticked up.

Is there an expectation going forward for those? And then, does that help cost of goods sold going forward and make kind of margins a little bit better than they normally would be or does that keep margins kind of where they should be going forward, because of these costs?.

The direct charge is going to keep margins where they should be. What it is, it's not really out-of-period cost at all. It's fixed related costs that we incur in the quarter and normally that maybe capitalized them into inventory and as the inventory is sold, it's recognized in cost of sales.

However, when your volume is so low, you can't capitalize that much per pound. So, those have to be kind of direct-charged to the P&L rather than capitalized in inventory. So it's not out-of-period cost necessarily, and it's not unusual cost. It's kind of normal related, mostly fixed type cost that you can't vary with volume.

So that is expected to reduce as volume improves. The more volume we get, the more that goes down and diminishes until it goes to zero..

Okay. And then lastly, yes very, very much.

And then lastly, just would you guys – with the potential infrastructure build, is that’s something that you guys would benefit from or not really? In what parts of your industries might benefit?.

I think the benefit is an indirect benefit with the infrastructure build more jobs, more travel, more energy use and the ability for obviously, us to take advantage as commercial aircraft travel continues to move forward.

So, to us, because of the nature of our alloys, which are for severe corrosion applications and high-temperature applications, not necessarily directly, but I would say indirectly, I think everyone will benefit..

And especially, things like the base chemicals going into housing and different things like, our applications for acetic acid, that goes into adhesives, that goes into paints, that goes into things that a general improvement in the economy and infrastructure will be helpful for us. So, an indirect impact, for sure..

Okay. Thanks. I’ll jump back in queue. .

Thanks, Steve..

[Operator Instructions] Our next question comes from Michael Leshock, with KeyBanc. Please state your question..

Hey, Mike and Dan. Good morning..

Good morning, Mike.

How are you?.

Good. First, I just wanted to ask on labor. Wanted to get your take on how much of the headcount reductions you expect to bring back when volumes improve.

And do you have a rough ballpark of maybe where volumes need to be before you start bringing some of that labor back?.

Sure. On the salaried side, when we went through the reductions, we went through they are obviously always extremely difficult to go through and we will do our best to make sure that when we bring back, it will be at a relatively slow pace on the salaried side. We've right-sized and we feel very good about that.

On the production side, in particular, in Kokomo, we have begun to bring back production and maintenance employees. We have seen great activity in our backlog both or – bookings, excuse me in February and March and in fact, also in April. And so, with that, we want to be prepared.

I believe one of the keys in this industry going forward is short lead times.

Customers don't want excessive inventory and so, what we are doing is we're bringing back the people that we need in particular, in our primary operations to ensure that we can maintain shorter lead times and maintain what we call our supermarket, which is our high-volume, high-moving intermediate stock of very popular grades.

So, we don't have everyone back. But we have begun the process of bringing people back, my hope is that we get to the point we bring everyone back as our volume continues to improve..

Got it. That's helpful. And then what impact did you see from winter storms? I know your Arcadia facility was down for a bit.

But did that cause anything to be pushed into the current quarter?.

No. It wasn't easy, in particular, in Arcadia with the ice and the storms that they felt, but our team did an outstanding job down there of making sure, number one; they kept our employees safe; kept them off the roads; and then brought them back to work and caught up. So, we feel very good about that.

No real impact either from the customers we serve in that region. So, I would say not an issue for us..

Okay. Then lastly, just wanted to get your take what you've been seeing on the MAX platform in terms of order activity.

Obviously, it's still early innings in the ramp, but have you seen any pickup, just given MAX is about 8% of normalized volumes?.

We have had a increasing amount of communication with our customers who, number one are beginning to slowly place orders; number two, getting their places in line; and number three; as I mentioned related to the LEAP, beginning to make sure that we've got the manpower and capacity we need. The statement that I made in my script is very significant.

At this point, it appears by the end of 2022 calendar year that the 1B, obviously, the 737 engine from LEAP, the 1B engine will be back to 20 engines a month which is – yes, 20 engines a month which - a week – a week, excuse me, which is getting us back to 2019 levels. So, when you look at the TSA numbers, they are coming back very strong.

I mean, I was always hoping to get over 1 million passengers a day through TSA and now we rarely see below 1.2 million or 1.3 million. So, we believe that engine production on the LEAP, which is obviously single-aisle will come back very strong and be back on a weekly basis to where it was in 2019 in 2022.

And of course, we are at the beginning of this process. So we expect to see orders mid 2021 to support that. So, optimistic and thrilled. The customers are pushing us to make sure we've got the low lead times that we need to support them..

Great. Thank you..

Thank you..

Okay. Our next question comes from Steve O'Hara. Please state your question..

Yes. Hi. Thanks for taking the follow-up..

Sure..

I just want to see if I understood correctly, in terms of the volumes going forward, I mean, is it safe to assume where you stand right now, you should see volumes improve sequentially from here or at least not go down from here? And then, what about the cash on the balance sheet? What's the plan there? Or will that be used up as you invest in working capital?.

I'll talk first about the volume and then Dan will talk about the cash. Okay? As far as volumes, as we said in our guidance, we expect Q3 to be similar to Q2 as far as our results including our revenues. We do expect to see and we have seen some bookings increase and we expect that to continue to grow as we move forward.

Remember, our Aerospace business year-on-year is down 48%. And so, we do believe that's going to start to improve as we hit mid-year and beyond. But remember, bookings have to turn into manufactured product to ship, which is why that will move out toward later in the year. Dan will cover that..

And on cash, that's my favorite subject, we monitor this every day and very proud of our strategy of when we pivoted to cash, how much we've been able to generate, as I mentioned, since this pandemic began, we've generated $47.4 million. So, a number nearly $70 million on the balance sheet now.

Now going forward, we are expecting, as we mentioned, kind of sequentially revenue in the same neighborhood as Q2. So, as we start to look beyond and we think about the Aerospace ramp up later in the calendar year, there is going to be some investment in working capital that will be required.

We are going to do that very carefully and try to make that a pretty consistent cash across the quarters. But we want to grow with that top-line. We want to grow with demand and if that takes some investment of working capital to get there, then we can do that.

But we'll be very careful about it and expect it to be pretty flat across the next couple quarters..

Okay. Great. And then, I mean, you said, I think, 2019 levels by 2023 in terms of the production for the engines, and how - the LEAP engine.

And how soon – so do you expect a recovery? Let's say, if we get back to 2019 levels in 2023, I mean, what's a typical time period for that to start to hit your books? And I mean, I think the inventory is pretty lean in the channel.

Would that make it earlier than typical? Or are people maybe a little more cautious given what we've gone through?.

I think we've got to divide this into airframe, where we supply titanium tubing and then engine for us on the other side. Airframe there seems to continue to be and where we on airframe for us, it is single-aisle.

But, there is excess inventory in that supply chain and we expect that to continue towards the - until towards the end of the calendar year. Given what we are seeing and hearing more than seeing from our customers, we do believe we'll begin to see improvements as we move throughout this year.

Certainly, there will be some caution there, because of what we've all been through for the past year. But we have seen increased bookings in January – I am sorry in February and March. We've seen the same thing now in April and we expect that to continue to pick up.

So mid-year and beyond we do begin to see that improve and start to chop into that 48% year-on-year decrease we saw in aerospace..

Okay. Thank you very much..

Sure..

[Operator Instructions] Okay. It doesn't look like we have any further incoming questions. I would like to turn the floor back over to Mike Shor for closing remarks..

Okay. Thank you. Thank you, everyone for your time today, and thank you, for your interest and support of Haynes International. We do look forward to updating you again next quarter. Stay safe. Thank you..

Thank you. This concludes today’s conference call. Thank you for your participation. You may disconnect your lines at this time and have a great day..