Q2 2021 Haynes International Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the Haynes International Inc. Second quarter fiscal 2021 financial results call all of them.
And have been placed on a listen only mode and the floor will be open for questions and comments. Following the presentation. If you should require assistance throughout the conference. Please press star zero on your telephone keypad to reach a lot of operator.
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 21 E of the Securities and Exchange Act of the 1930 for the.
<unk> believe anticipate plan and similar expressions are intended to identify forward looking statements.
Although we believe our plans and intentions and expectations regarding.
And 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 assurance that such plans intentions or expectations will be achieved.
Many of these risks are discussed in detail and the company's filings with Securities and Exchange Commission and particular form 10-K for the fiscal year ended September 30 of 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 and with that let me turn the call over to Mike.
Thanks, Dave Good morning, everyone.
The pandemic impact over the last 12 months has been difficult on our business and on our families.
And I'm 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 'twenty, one appears to be the bottom as far as the pandemic impact on us and the Q2 represents the beginning of our recovery.
Our key metrics showed good progress when comparing Q2 to Q1 the.
And most intrigued and 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 improvements shown in Q2, Hasnt based and our continued relentless focus on cost reduction and maintaining our prices for our high value products throughout the downturn and all.
The sequential growth and the quarter led by market share gain and our IGT business.
Look forward to seeing the rebound and aerospace and the incremental impact of return of meaningful aerospace market growth is expected to happen and our business and.
And I'll highlight the progress of their 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 and IGT came through loud and clear and 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 three and a half million pounds and our second quarter as.
As noted previously our costs are down and coverage of our fixed cost hasn't has improved our selling prices are stable and we've grown or 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.
Look at the 18% achieved in early calendar year 2020, as the new starting point for our future.
While our operating income was still negative for the quarter improved sequentially by $5 $8 million driven by all of the factors that I've already mentioned.
We continue to believe that our breakeven point given the work of our team over the past two years has been reduced by at least 20%.
Our Q2 results show the despite our very low volumes, we've made real progress compared to two or three years ago.
Our sequential EBITDA 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 produce negative EBITDA, we were positive and each month of this past year excuse me of this past quarter as far as backlog, our Q2 backlog of showing signs of the leveling off down the 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 and the quarter and was 1.0.
With the negative air trend still evident for the quarter Aero was <unk> nine CPI was <unk> nine and IGT was $1 one per the first six months of the year book to Bill revenue data shows the total of <unk> nine with Arrow and <unk> seven and all other markets at 1.0 or greater.
As aerospace is expected to return toward the end of this calendar year.
We have of possible opportunities see growth in each of our three core markets.
Finally, we generated $8 $6 million and net cash and Q2 and of now generated cash despite our COVID-19 related losses for four consecutive quarters.
Since April of 'twenty, and 'twenty, when we pivoted our team to focus and emphasis on responsible inventory reduction and cash generation.
Of reduced our inventory by $4 6 million pounds or 27%.
And we finished the quarter with the cash balance of $69 $8 million.
Our conclusion from all of the list of this information is that our efforts to make fundamental improvements to our business and position Haynes well for the future.
We've had two overarching goal of since our team began our journey to sustained improvement first of rapid and significant increase in gross margin leading to the significant reduction and break even in our breakeven point that I've already noted and then.
As the pandemic potential business impact was evident.
Pivot to cash generation.
We have been successful and achieving our goals.
I'm 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 of Haynes employees.
It is important to note that we continued to operate below our breakeven point and our second quarter due to the low volume 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 and.
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.
And now a few comments on our markets.
It took a pandemic the hub the long aero growth cycle, the reduction and Aero demand continues to be the driver of our overall low business levels.
Year on year Aerospace volumes were down 47, 9% and Q2 of fiscal 'twenty one despite the 737 Max issues impacting the Q2 fiscal year 'twenty data.
We have confidence that more people will begin to fly again and that we will see market improvement as the year progresses.
Traveled a fair amount recently and I've experienced check and lines that are longer concourses that are full of people and planes that are at capacity.
These are all good signs that the recovery of 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.
And 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 of requesting that we have the manpower and capacity in place the handle this anticipated improvement.
Also.
The new 777, which has the late startup is now estimated the fly in 2023 when it does fly. This aircraft will have two haynes proprietary alloys on the GE <unk> engines powering and the.
And the Haynes alloys specced in our Haynes 244, our latest low thermal expansion and alloy that offers high temperature capabilities over current alloys, and Haynes 282, or a child and Cardinal alloy that provides a superior combination of fabric ability and high temperature strength over 718 alloy.
The application of these two proprietary alloys into the GE <unk> engine shows the past the present and the future core strength of our company.
That is the proven ability to innovate and develop alloys for tomorrow is 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're expecting lighter shipments and the second half of fiscal 'twenty. One as a result of COVID-19 impacting impacted ordering patterns and prior quarters. However, we're 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.
One of IGT, we are seeing and improvement in this area for four reasons first Haynes 282 continues to gain market applications in both new and existing turbines next we've 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 of core value for Haynes, and we had no recordable injuries and any of our facilities and 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.
Of and excellent cadence of communications and meetings across our operations to help reinforce our safety culture.
Next on COVID-19, 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 and energy conservation programs, which has helped us reduce energy demand by about $1 $6 million of year.
We're now conducting studies of 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, but I'd like to stress here Haynes is of 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're very proud to have had the air alloy Haynes 230 used on the sky Crane that lowered perseverance onto the surface of Mars and February the alloy use of the Sky Crane thrusters was selected for its excellent combination of high temperature strength and environmental resistance properties. The use of Haynes two <unk>.
And here is just another example of one of the most significant facts. It tells the story of our company and that is that over 50% of what we sell was invented by us and that's both the great story and given our continued focus on alloy application and process innovation, a great indicator of what the future may have.
And 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 and the U S. Roughly one year ago vol.
Volume and all four of our market segments and.
Improved sequentially with total volume improving 26, 1%.
It seems we may have come off the bottom of this COVID-19 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 hold and we did $255 $7 million and revenue and.
The volume of $10 5 million pounds, that's an annualized run rate of $511 million and revenue and 21 million pounds.
Returning to that type of run rate would likely require support by a meaningful recovery and the aerospace market, which we believe will begin late in calendar year 'twenty one.
This quarter sales to the aerospace market accounted for 37% of our revenue and 36 million. This is an increase of 25% sequentially from Q1, but a decrease of 48% from the same period last year, the significant year over year reduction and 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 and 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 and special project revenue most of which is reflected and chemical processing was $4 8 million per million dollars, which is $780000 lower than the first quarter of last year and $1 7 million lower than the same period last.
Year.
The backlog dollars and CPI decreased by four 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 initiatives continues to help volumes, however volumes can still be lumpy quarter to quarter.
Backlog dollars and 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 and this is an increase of 22% sequentially from Q1 and an increase of also of 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 the decrease of 22% sequentially from Q1, and the 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 and overall volume from two eight to $3 5 million pounds resulted in an 880 basis point gross margin expansion and the second quarter to 10, 2%.
This improvement includes the reduction and the direct charge from $5 9 million and the first quarter to $2 8 million and the second quarter of fiscal 'twenty, one with a better absorption of overhead costs.
Also contributing to the margin expansion was our continued diligent cost reduction efforts.
In addition of 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 the continued inventory reductions during the quarter, we reduced inventory by $9 4 million, making it of $19 3 million reduction.
And this and inventory this fiscal year and $53 5 billion reduction since this time last year.
And 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% of gross margins and January and February right before the pandemic impacted our results.
Our expectation that when volumes recover to those levels, we can resume our margin improvement strategy.
Now back to Q2 of the fiscal 'twenty one P&L.
SG&A, including research and technical expense was $12 1 million and 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 and incentive compensation accruals and foreign currency losses.
Two additional points to finish off the P&L, one as I've mentioned before our non operating retirement benefit expense and 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 health care spending as we have been active.
Managing our retiree health care costs and on the pension side higher than expected return on plan assets last fiscal year.
Looking to our next end of year evaluation 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% and the second quarter of fiscal 'twenty, one as compared to 21 and 2% sequentially. In Q2, this reduction relates to certain non deductible compensation accruals.
This lower effective tax rate isn't favorable due to the pretax loss.
As a result.
Excuse me and 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 the outlook for next quarter.
The reduction and 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 is expected that the upcoming third quarter of fiscal 'twenty, one revenue and earnings will be similar to the second quarter of fiscal 'twenty one.
The company expects continued solid liquidity throughout the fiscal 'twenty, one and the favorably positioned for the recovery.
Moving to backlog and.
Backlog appears to be leveling out at $140 9 million at March 31, 21, a decrease of $4 3 million or two 9% from the $1 $45 1 million at December 31, 2020 backup.
Backlog pounds at March 31, 21 increased sequentially.
During the first quarter of fiscal 'twenty, one by <unk>, 3% as compared to December 31 2020.
Liquidity.
We increased cash by $8 6 million and the second quarter, making it and $22 million increase of this fiscal year and a $47 4 million increase and net cash since this time last year.
Strong total liquidity of $169 8 million with cash at March 31st at $69 8 million and $100 million available on the Undrawn credit facility.
Capital spending during the first six months of fiscal 'twenty, one was $2 1 million.
Expecting to spend approximately $10 million for the full fiscal year with a higher pace of Capex and the second half of the year.
And.
<unk> 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 supported 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 costs 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 of available we have the flexibility to improve with the anticipated recovery of demand and 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 and our company with that operator, let's open the call up the questions.
Thank you the floor is now open for question and if you do have a question. Please press star one on the telephone keypad at this time.
The fees will be taken and the order day wherever you see if at any time of your question has to the answer you can remove yourself from the queue by pressing one again, ladies and gentlemen, if you do have a question. Please press star one on your telephone keypad at this time.
Our first question comes from Steve Ohara with Sidoti and company. Please state your question.
Yes, hi, good morning, Thanks for taking the question.
Sure no problem.
I guess just and.
Quickly on the it looked like gas prices declined in the quarter.
The average pricing sequentially.
And and just when I think about raw material costs, you noted higher raw material costs I think was.
It was the benefit to margin.
And raw material costs, and I think you've gone up kind of across the board.
Does that I guess I'm, just trying to figure out how that jives with the pricing going down.
And the quarter.
Steve pricing is not necessarily and indication of mix.
Or for that matter of profitability.
What happened obviously as we were being hit with significant direct charges because of our fixed costs and a lack of volume.
We continue to go after some business, which would allow us to absorb some of those costs and our plant so it.
To me, it's more of a mix than anything else, which is.
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 and we feel real good about where that's going and I can add on to that as well. If you look at the kind of the detail by market you can see that our other market is really where there was a pretty large decrease and.
And the average selling price and Theres really mix related within that other markets category. There is simple.
The gas this authorization projects for example that we had shipments on this quarter, which you know thats of certain alloy that has a lower average selling price. So from a mix point of view certainly.
And the incremental increase in volume that we got which was very beneficial obviously, the revenue and to margins with better better absorption from.
Our mix of point of view, the that was a bit of a.
A headwind just related to that incremental volume being slightly lower valued alloys and some cases.
I'm sorry.
Just add back in what we were very cautious off and what we are.
<unk> did very well in my mind through the downturn is and the high value of portion of our mix there were no reductions and our selling prices through this so what we did to pursue volume is obviously more and the CPI side get aggressive on some of the transactional business when needed, but overall as far as pricing going forward, we feel great about where we are LTA is and what the key.
The ability is going forward.
And also mentioned and you had brought up raw materials raw material and nickel, obviously up and cobalt and nickel being the bigger impact and that was kind of of moderate tailwind for us, we have escalators and de escalators and our contracts and try to offset that as much as we can but it was a tailwind.
The 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 a million dollar improvement and and 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.
And just maybe on the out of period costs and they came down a lot and the quarter.
Volumes ticked up.
Is there and expectation going forward for those.
And then does that.
Does that help cost of goods sold going forward and make you know 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, yes, the the direct charge is.
It's going to keep margins, where they should be what it is it's not really out of period costs at all its fixed related cost that we incur in the quarter and normally at maybe capitalize them and into inventory and as the inventory sold it so its recognized and cost of sales. However, when your volume is so low.
And you cant capitalize that much per pound. So those have to be kind of a direct charge to the P&L rather than capitalized in inventory. So its not out of period cost necessarily and it's not unusual costs.
The kind of normal related mostly fixed type costs that you can't vary with volume. So that is expected to reduce as volume improves the more volume we get the more of that goes down and dimension diminishes.
Until it goes to zero.
Okay, and then lastly, yes very very much.
And then lastly, just would you guys with the.
The potential infrastructure Bill I mean is that something you guys of benefit from or not really and what parts of the your industries might benefit.
And thank the benefit as an indirect benefit with.
With the infrastructure Bill more jobs more travel more energy use and the ability for for obviously is to take advantage of commercial aircraft travel continues to move forward. So it took 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.
Cedric assets.
That goes into adhesive that goes into paints that goes into things that you know that general improvement and the economy and infrastructure will be helpful for us so and indirect impact for sure.
Okay.
Thanks, and I'll jump back in queue.
Thanks, Steve.
Again, ladies and gentlemen, if you would like to ask a question. Please press star one. Our next question comes from Michael and the shock with Keybanc. Please state your question.
Hey, Mike and Dan Good morning.
Im wondering Mike how are you.
Good.
First I just wanted to ask on and labor.
Wanted to get your take on how much of the head count reductions you expect to bring back when volumes improve and.
And do you have a rough ballpark of maybe where volumes need to you need to be before you start bringing some of that labor back.
Sure.
On the salaried side when we went through the reductions you went through there are obviously always extremely difficult to go through and.
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.
And we've right sized and we feel very good about debt on the production side in particular in Kokomo, we have begun to bring back production and maintenance employees, we have seen.
Great activity and our backlog both or of bookings excuse me and February and March and in fact also in April and so with that we want to be prepared I believe one of the keys and this industry going forward. The short lead times customers don't want excess of inventory and so what we're doing is we're bringing back as the people that we.
Need and particular in the 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 we.
<unk>.
It wasn't easy and particular in Arcadia with the ice and the storms that they felt but our team did an outstanding job down there of making sure. The number one they kept our employees safe kept him 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 and that region, So and I would say non issue for us.
Okay, and then lastly, just wanted to get your take what you've been seeing on the Max platform and in terms of order activity activity.
Obviously, it's still early innings and the ramp but have you seen any pick up just given Max is about 8% of normalized volumes.
We.
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 and 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.
And at this point it appears by the end of 2022 calendar year that.
The one b, obviously, the 737 engine from leap the <unk> engine will be back to 20 engines of month, which is.
20 engines of month, which of weak a weak excuse me.
Which is getting.
US back to 2019 levels. So when you look at the TSA numbers they are coming back very strong.
And there's always hoping to get over 1 million passengers a day through TSA and now we're rarely see below one two and one three so.
We believe that.
Engine production.
On the leap, which has obviously single aisle will come back very strong and be back when the weekly basis to where it was and 19 and 22 and of course, we're at the beginning of this process. So we expect to see orders mid 'twenty one to support that so optimistic and thrilled the customers are pushing us to make sure we get the low lead times that we need.
Need to support them.
Great. Thank you.
And <unk>.
Okay. Our next question comes from Steve Ohara of please state your question.
Yeah, Hi, thanks for taking the follow up sure.
Just.
I just wanted to see if.
I understood correctly and in terms of the volumes going forward I mean is it safe to assume.
Where you stand right now.
The volumes improve sequentially.
And 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 and 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 and our guidance, we expect Q3 to be similar to Q.
Two as far as our results, including our revenues.
Do expect to see and we have seen some bookings increase and we expect that to continue to grow as you move forward member of our aerospace business and our 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.
Ship, which is why that'll move out towards the later in the year, Dan and I'll cover the and on cash and that's my favorite subject. We monitor. This every every day and very proud of our strategy of when we pivoted the cash how much we've been able to generate as I mentioned since the pandemic again, we've generated $47 4 million.
<unk>.
A number of nearly $70 million and the balance sheet now and going forward we're expecting.
As we mentioned kind of sequentially.
Revenue and 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 theres going to be some.
Investment and working capital that will be required we're going to do that very carefully and try to.
And make that a pretty consistent cash across the quarters, but we want to grow with that topline and we want to grow with demand and if that takes some investment of working capital to get there than we can do that but we'll be very careful about and unexpected to be pretty pretty flat across the next couple of quarters.
Okay great.
And then and I mean.
You said.
Think of 2019 levels by <unk>.
2023 in terms of the.
Production for the engines and and how.
Well, the leap engine and and.
How soon so if you expect a recovery, let's say if we get back to 2019 levels in 2023.
And what's the typical time period for.
And that to start to hit your books and.
And.
I mean, I think the inventories pretty lean and the channel.
Would that make it earlier than typical or are people and maybe a little more cautious given what we've gone through.
I think we've got to divide this into airframe.
We supply titanium and moving.
And then engine for us and the other side airframe, there seems to continue to be and we on airframe for us it is single aisle, but.
If there is excess inventory and that supply chain and we expect that to continue.
Towards the till until towards the end of the calendar year.
Given what we're seeing and hearing more than seeing and both from our customers. We do believe we will begin to see improvements as we move throughout this year.
And they certainly there will be some caution there because of what we've all been through for the past year, but we.
And we have seen increased bookings and January I'm, sorry in February and March where we've seen the same thing now in April and we expect that to continue to tick up so mid year and beyond and we do begin to see that and prove and start to chop into that 48% year on year decrease we saw and aerospace.
Okay.
Thank you very much sure.
Again, ladies and gentlemen, if you would like to ask the question. Please press star one on your telephone keypad at this time the whole while we poll for questions.
Okay. It doesn't look like we have any further incoming questions I like to kind of the floor back over to Mike shore 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 and stay safe. Thank you.
Thank you. This concludes today's conference call. Thank you for your participation you may disconnect. Your lines of this time and have a great day.
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