RTI International Metals, Inc., (NYSE: RTI), released results today for
the third quarter of 2008 and nine months ended September 30, 2008.
-
Net sales for the third quarter were $150.6 million
-
Operating income for the third quarter was $17.8 million
-
Net income was $11.3 million for the third quarter or $0.49 per
diluted share
-
Cash and equivalents were over $290 million, debt was $242.7 million
and revolver availability was undrawn at $200 million
For the quarter ended September 30, 2008, the Company reported net sales
of $150.6 million compared to $163.4 million in the third quarter of
2007. The 7.8% decrease from the same quarter in the prior year was due
primarily to lower average realized sale prices on prime mill products
and the adverse impact caused by the temporary closure of the Company’s
three facilities in Houston, Texas, due to Hurricane Ike. Third quarter
net income was $11.3 million or $0.49 per diluted share in comparison to
$24.7 million or $1.06 per diluted share for the same period in the
prior year.
For the nine months ended September 30, 2008, the Company reported net
sales of $461.1 million, compared with net sales of $463.0 million for
the same period a year ago. For the nine-month period, the Company
reported net income of $52.1 million, or $2.26 per diluted share,
compared with net income of $67.7 million, or $2.92 per diluted share
for the same period a year ago.
Distribution Group
For the third quarter, net sales for the Distribution Group grew 9.2% to
$65.5 million versus $60.0 million in the same period a year ago. The
Distribution Group had operating income of $4.9 million, compared to
$9.9 million in the third quarter of 2007. The operating income decline
was primarily attributable to softening in prices for many specialty
metals and the impact of Hurricane Ike on our facility in Houston.
Year-to-date, the Group reported net sales of $197.4 million resulting
in operating income of $19.9 million compared with net sales of $182.0
million and operating income of $28.3 million from the same period in
the prior year.
Fabrication Group
Net sales for the Fabrication Group grew 2.6% for the third quarter to
$35.7 million versus $34.8 million in the same period a year ago. The
Group had operating income of $1.0 million, compared to $1.2 million in
the third quarter of 2007. This decline in operating income was largely
the result of the temporary closure of two facilities in Houston, Texas,
due to Hurricane Ike, largely offset by higher realized prices in
certain commercial aerospace programs. Year-to-date, the Fabrication
Group reported net sales of $106.8 million resulting in operating income
of $3.4 million compared with net sales of $96.5 million and operating
income of $4.6 million from the same period in the prior year.
Titanium Group
RTI’s Titanium Group posted operating income
of $11.9 million on sales of $85.3 million, including intersegment sales
of $35.9 million. This performance declined compared to the third
quarter of 2007 which had sales of $110.4 million, including
intersegment sales of $41.8 million, and operating income of $25.9
million. Mill product shipments for the third quarter were 3.4 million
pounds at an average realized price of $23.04 per pound. RTI’s
average realized price was 14% lower versus the same quarter in the
prior year, primarily due to the change in the sales mix and increased
sales related to long-term supply agreements.
For the first nine months of 2008, the Titanium Group posted operating
income of $58.7 million on sales of $283.5 million, including
intersegment sales of $126.6 million. For the same period in 2007,
operating income was $68.9 million on sales of $320.3 million, including
intersegment sales of $135.8 million. Mill product shipments for the
first nine months of 2008 were 11.2 million pounds at an average
realized price of $23.79 per pound compared to mill product shipments of
11.4 million pounds in 2007 at an average realized price of $26.32 per
pound.
CEO Comment
Vice Chairman and CEO Dawne S. Hickton commented, “At
the start of the quarter, we anticipated that our spot market business,
particularly for the Titanium and Distribution segments, would
experience significant weakness. However, this anticipated weakness
accelerated in September as a result of the industry–wide
impact of the recently settled Boeing strike and the effects of the
substantial deterioration in the global market generally. Although we
managed through this business climate relatively well, we were
unexpectedly impacted by Hurricane Ike as three of our facilities
located in Houston experienced temporary shutdowns delaying shipments
from the third quarter to the fourth quarter. Despite these issues, and
with higher costs in the Titanium Group, we still generated operating
income of $17.8 million.
“Notwithstanding the uncertain aerospace
environment, and in spite of the on-going global liquidity crisis, we
are well positioned to navigate this challenging climate with a very
strong balance sheet driven primarily by our $425.0 million refinancing
which closed on September 8th. As a result of
this refinancing and our operating cash flow, we have over $290.0
million in cash and another $200.0 million of revolving availability.
“With our strong balance sheet, we are
prepared to support our expansion projects to meet the contractual
commitments to our customers, and to support our strategic plan to grow
our value-added businesses, and provide long-term value to our
shareholders. We continue to stay true to our original strategic plan
and are focusing our efforts on capitalizing on the enormous growth
opportunities over the next decade within the commercial aerospace
industry.”
Outlook
In light of the current economic uncertainties and the overall
short-term softening in demand for titanium, we are delaying our
expansion projects by up to one year and now expect them to be
operational in 2011 to mirror current market demand. We anticipate that
the majority of our capital expenditures related to these facilities
will occur in late 2009 and throughout 2010.
We continue to expect mill product shipments for 2008 to range between
14 and 15 million pounds and total sales that are slightly lower than
2007. However, as a result of the current softening in demand, and the
continued uncertainty as we head toward year-end, we are reducing our
operating income guidance for 2008 to approximately 35% to 40% below
2007.
Conference Call Information
NOTE: RTI International Metals, Inc. has scheduled a conference call for
Tuesday, November 4, 2008, at 11:00 a.m., Eastern Time, to discuss this
press release. To participate in the call, please dial toll free
(USA/Canada) 877-261-8992 or (International) 847-619-6548 a few minutes
prior to the start time and specify the RTI International Metals
Conference Call. Replay of the call will be available until 11:59 p.m.,
Eastern Time, on Tuesday, November 11, 2008, by dialing (USA/Canada)
888-843-8996 or (International) 630-652-3044 and Digital Pin Code
23015206.
Forward Looking Statement
The statements in this release relating to matters that are not
historical facts are forward-looking statements that may involve risks
and uncertainties. These include, but are not limited to, the impact of
global events on the commercial aerospace industry, actual build-rates
and content per aircraft for commercial and military aerospace programs,
military spending and continued support for the Joint Strike Fighter
program, global economic conditions, the competitive nature of the
markets for specialty metals, the ability of the Company to obtain an
adequate supply of raw materials, the outcome of U.S. Custom’s
investigation of the Company’s duty drawback
claims, the successful completion of our capital expansion projects, and
other risks and uncertainties included in the Company’s
filings with the Securities and Exchange Commission. Actual results can
differ materially from those forecasted or expected. The information
contained in this release is qualified by and should be read in
conjunction with the statements and notes filed with the Securities and
Exchange Commission on Forms 10-K and 10-Q, as may be amended from time
to time.
Company Description
RTI International Metals®,
headquartered in Pittsburgh, Pennsylvania, is a leading U.S. producer of
titanium mill products and fabricated metal components for the global
market. Through its various subsidiaries, RTI manufactures and
distributes titanium and specialty metal mill products, extruded shapes,
formed parts and engineered systems for aerospace, industrial, defense,
energy, chemical and consumer applications for customers around the
world. To learn more about RTI International Metals, Inc., visit our
website at www.rtiintl.com.
|
|
|
|
RTI INTERNATIONAL METALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
150,615
|
|
|
$
|
163,412
|
|
|
$
|
461,092
|
|
|
$
|
463,015
|
|
|
Cost and expenses:
|
|
|
|
|
|
|
Cost of sales
|
|
|
113,492
|
|
|
|
109,716
|
|
|
|
322,708
|
|
|
|
310,448
|
|
|
|
Selling, general, and administrative expenses
|
|
|
18,723
|
|
|
|
16,343
|
|
|
|
54,829
|
|
|
|
49,562
|
|
|
|
Research, technical, and product development expenses
|
|
|
555
|
|
|
|
403
|
|
|
|
1,590
|
|
|
|
1,255
|
|
|
Operating income
|
|
|
17,845
|
|
|
|
36,950
|
|
|
|
81,965
|
|
|
|
101,750
|
|
|
|
Other expense
|
|
|
551
|
|
|
|
(1,035
|
)
|
|
|
(129
|
)
|
|
|
(1,940
|
)
|
|
|
Interest income
|
|
|
799
|
|
|
|
1,179
|
|
|
|
2,172
|
|
|
|
3,626
|
|
|
|
Interest expense
|
|
|
(979
|
)
|
|
|
(386
|
)
|
|
|
(1,595
|
)
|
|
|
(898
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
18,216
|
|
|
|
36,708
|
|
|
|
82,413
|
|
|
|
102,538
|
|
|
|
Provision for income taxes
|
|
|
6,964
|
|
|
|
12,016
|
|
|
|
30,311
|
|
|
|
34,823
|
|
|
Net income
|
|
$
|
11,252
|
|
|
$
|
24,692
|
|
|
$
|
52,102
|
|
|
$
|
67,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
Basic
|
|
$
|
0.49
|
|
|
$
|
1.08
|
|
|
$
|
2.28
|
|
|
$
|
2.96
|
|
|
|
Diluted
|
|
$
|
0.49
|
|
|
$
|
1.06
|
|
|
$
|
2.26
|
|
|
$
|
2.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
22,838,900
|
|
|
|
22,953,981
|
|
|
|
22,881,457
|
|
|
|
22,913,824
|
|
|
|
Diluted
|
|
|
22,915,541
|
|
|
|
23,198,387
|
|
|
|
23,007,236
|
|
|
|
23,167,023
|
|
|
|
|
RTI INTERNATIONAL METALS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
ASSETS
|
|
2008
|
|
2007
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
290,031
|
|
|
$
|
107,505
|
|
|
|
Receivables, less allowance for doubtful accounts of $471 and $613
|
|
|
99,090
|
|
|
|
102,073
|
|
|
|
Inventories, net
|
|
|
304,176
|
|
|
|
296,559
|
|
|
|
Deferred income taxes
|
|
|
20,160
|
|
|
|
12,969
|
|
|
|
Other current assets
|
|
|
7,291
|
|
|
|
2,951
|
|
|
|
Total current assets
|
|
|
720,748
|
|
|
|
522,057
|
|
|
Property, plant, and equipment, net
|
|
|
236,212
|
|
|
|
157,355
|
|
|
Goodwill
|
|
|
49,910
|
|
|
|
50,769
|
|
|
Other intangible assets, net
|
|
|
15,680
|
|
|
|
17,476
|
|
|
Deferred income taxes
|
|
|
14,074
|
|
|
|
6,059
|
|
|
Other noncurrent assets
|
|
|
2,402
|
|
|
|
1,568
|
|
|
|
Total assets
|
|
$
|
1,039,026
|
|
|
$
|
755,284
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
56,727
|
|
|
$
|
46,666
|
|
|
|
Accrued wages and other employee costs
|
|
|
18,439
|
|
|
|
22,028
|
|
|
|
Billings in excess of costs and estimated earnings
|
|
|
36,429
|
|
|
|
21,573
|
|
|
|
Current portion of long-term debt
|
|
|
1,433
|
|
|
|
1,090
|
|
|
|
Current liability for post-retirement benefits
|
|
|
2,660
|
|
|
|
2,660
|
|
|
|
Current liability for pension benefits
|
|
|
-
|
|
|
|
5,962
|
|
|
|
Other accrued liabilities
|
|
|
18,911
|
|
|
|
16,171
|
|
|
|
Total current liabilities
|
|
|
134,599
|
|
|
|
116,150
|
|
|
Long-term debt
|
|
|
241,267
|
|
|
|
16,506
|
|
|
Noncurrent liability for post-retirement benefits
|
|
|
31,837
|
|
|
|
31,019
|
|
|
Noncurrent liability for pension benefits
|
|
|
3,796
|
|
|
|
8,526
|
|
|
Deferred income taxes
|
|
|
69
|
|
|
|
69
|
|
|
Other noncurrent liabilities
|
|
|
6,514
|
|
|
|
7,230
|
|
|
|
Total liabilities
|
|
|
418,082
|
|
|
|
179,500
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
Common stock, $0.01 par value; 50,000,000 shares authorized;
23,681,510 and 23,610,746 shares issued; 22,997,636 and 23,105,708
shares outstanding
|
|
|
237
|
|
|
|
236
|
|
|
|
Additional paid-in capital
|
|
|
306,386
|
|
|
|
302,075
|
|
|
|
Treasury stock, at cost; 683,874 and 505,038 shares
|
|
|
(16,891
|
)
|
|
|
(7,801
|
)
|
|
|
Accumulated other comprehensive loss
|
|
|
(22,531
|
)
|
|
|
(20,367
|
)
|
|
|
Retained earnings
|
|
|
353,743
|
|
|
|
301,641
|
|
|
|
Total shareholders’ equity
|
|
|
620,944
|
|
|
|
575,784
|
|
|
|
Total liabilities and shareholders’
equity
|
|
$
|
1,039,026
|
|
|
$
|
755,284
|
|
|
|
|
|
RTI INTERNATIONAL METALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
|
|
2008
|
|
2007
|
|
Cash provided by operating activities (including depreciation and
amortization of $14,891 and $11,130 for the nine months ended
September 30, 2008 and 2007, respectively)
|
|
$
|
53,155
|
|
|
$
|
13,675
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) investing activities
|
|
|
(88,815
|
)
|
|
|
40,381
|
|
|
|
|
|
|
|
|
|
Cash provided by financing activities
|
|
|
218,986
|
|
|
|
3,447
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(800
|
)
|
|
|
(1,194
|
)
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
|
|
182,526
|
|
|
|
56,309
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
107,505
|
|
|
|
40,026
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
290,031
|
|
|
$
|
96,335
|
|
|
|
|
|
|
|
|
RTI INTERNATIONAL METALS, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
Titanium Group
|
|
$
|
49,367
|
|
|
$
|
68,603
|
|
|
$
|
156,868
|
|
|
$
|
184,461
|
|
|
|
Intersegment sales
|
|
|
35,931
|
|
|
|
41,808
|
|
|
|
126,599
|
|
|
|
135,808
|
|
|
|
|
Total Titanium Group net sales
|
|
|
85,298
|
|
|
|
110,411
|
|
|
|
283,467
|
|
|
|
320,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fabrication Group
|
|
|
35,731
|
|
|
|
34,789
|
|
|
|
106,795
|
|
|
|
96,475
|
|
|
|
Intersegment sales
|
|
|
17,125
|
|
|
|
17,528
|
|
|
|
62,692
|
|
|
|
54,103
|
|
|
|
|
Total Fabrication Group net sales
|
|
|
52,856
|
|
|
|
52,317
|
|
|
|
169,487
|
|
|
|
150,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Group
|
|
|
65,517
|
|
|
|
60,020
|
|
|
|
197,429
|
|
|
|
182,079
|
|
|
|
Intersegment sales
|
|
|
642
|
|
|
|
862
|
|
|
|
1,760
|
|
|
|
3,213
|
|
|
|
|
Total Distribution Group net sales
|
|
|
66,159
|
|
|
|
60,882
|
|
|
|
199,189
|
|
|
|
185,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations
|
|
|
53,698
|
|
|
|
60,198
|
|
|
|
191,051
|
|
|
|
193,124
|
|
|
|
|
Total consolidated net sales
|
|
$
|
150,615
|
|
|
$
|
163,412
|
|
|
$
|
461,092
|
|
|
$
|
463,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income:
|
|
|
|
|
|
|
|
|
|
|
Titanium Group before corporate allocations
|
|
$
|
16,138
|
|
|
$
|
28,691
|
|
|
$
|
68,825
|
|
|
$
|
77,565
|
|
|
|
Corporate allocations
|
|
|
(4,210
|
)
|
|
|
(2,799
|
)
|
|
|
(10,112
|
)
|
|
|
(8,716
|
)
|
|
|
|
Total Titanium Group operating income
|
|
|
11,928
|
|
|
|
25,892
|
|
|
|
58,713
|
|
|
|
68,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fabrication Group before corporate allocations
|
|
|
3,695
|
|
|
|
3,457
|
|
|
|
10,913
|
|
|
|
11,698
|
|
|
|
Corporate allocations
|
|
|
(2,713
|
)
|
|
|
(2,244
|
)
|
|
|
(7,511
|
)
|
|
|
(7,080
|
)
|
|
|
|
Total Fabrication Group operating income
|
|
|
982
|
|
|
|
1,213
|
|
|
|
3,402
|
|
|
|
4,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Group before corporate allocations
|
|
|
7,200
|
|
|
|
11,535
|
|
|
|
26,107
|
|
|
|
33,643
|
|
|
|
Corporate allocations
|
|
|
(2,265
|
)
|
|
|
(1,690
|
)
|
|
|
(6,257
|
)
|
|
|
(5,360
|
)
|
|
|
|
Total Distribution Group operating income
|
|
|
4,935
|
|
|
|
9,845
|
|
|
|
19,850
|
|
|
|
28,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated operating income
|
|
$
|
17,845
|
|
|
$
|
36,950
|
|
|
$
|
81,965
|
|
|
$
|
101,750
|
|
RTI International Metals, Inc.
Richard E. Leone, 330-544-7622
Manager
- Investor Relations
rleone@rtiintl.com
