RTI International Metals, Inc., (NYSE: RTI), released results today for the first quarter of 2010.
“Until we see a sustainable increase in production for commercial aircraft and the Joint Strike Fighter, our overall operating environment will be difficult and challenge RTI's ability to be meaningfully profitable.”
First Quarter 2010 Results
- Net sales for the first quarter were $107.9 million
- First quarter operating income was $11.7 million
- Net income for the first quarter was $11.4 million
- Included in revenue and operating income is $15.4 million from Airbus related to 2009
- Titanium mill product shipments totaled 2.2 million pounds at an average realized price of $19.35 per pound for the quarter
- Cash and short-term investments at March 31, 2010 were $104.0 million
During the first quarter, RTI and Airbus resolved its 2009 volume shortfall in the amount of $15.4 million. This amount is included in net sales and has no additional cost of sales associated with it. With this additional revenue, net sales for the first quarter were $107.9 million. For the quarter, the Company reported net income of $11.4 million, or $0.38 per diluted share. For the first quarter of 2009, the Company reported a net loss of $1.5 million, or $0.06 per diluted share, on net sales of $106.1 million.
During the quarter, cash from operations was a negative $9.8 million while capital expenditures were $7.6 million. The balance sheet remained strong with $104.0 million of cash and short-term investments and no funded debt.
Titanium Group
For the first quarter of 2010 and including the impact of the $15.4 million Airbus resolution, the Titanium Group posted operating income of $15.0 million on sales of $62.6 million, including intersegment sales of $23.8 million. During the same period in 2009, the Titanium Group earned operating income of $4.2 million on net sales of $64.1 million, including intersegment sales of $33.8 million.
Mill product shipments for the first quarter were 2.2 million pounds at an average realized price of $19.35 per pound, compared to mill product shipments of 2.7 million pounds in the first quarter of 2009 at an average realized price of $22.22 per pound. The decline in pricing was driven by a continued high proportion of sales under long-term agreements to total sales with lower contract pricing versus the comparable period in 2009.
Fabrication Group
For the first quarter of 2010, the Fabrication Group posted an operating loss of $5.3 million on net sales of $28.6 million. Included in net sales was $4.2 million in prefunded nonrecurring engineering funds related to the 787 Dreamliner program. A corresponding amount was also included in cost of sales for the quarter. For the same period in 2009, the Fabrication Group had an operating loss of $7.2 million on net sales of $26.1 million.
The Group's operating loss reflects costs associated with its excess internal capacity, as well as operational challenges created by the ramp up of production well in advance of the receipt of revenues.
Distribution Group
For the first quarter of 2010, the Distribution Group posted operating income of $2.0 million on net sales of $40.4 million. During the same period in 2009, the Distribution Group earned operating income of $2.2 million on net sales of $49.7 million.
Demand during the quarter was muted by both announced and anticipated production reschedules across commercial and defense aerospace platforms. Going forward, demand for titanium and nontitanium products appears to be improving even though producers continue to be reluctant to bring capacity on line, resulting in a somewhat more volatile pricing environment for titanium products and a significantly higher pricing environment for nickel-based alloys.
CEO Comment
Dawne S. Hickton, Vice Chairman, President and CEO commented, "The current outlook for the year reflects continuing challenges for our industry as the inventory overhang from the last two years remains as a major factor impacting the spot markets. Although we are starting to see the signs of recovery for next year, 2010 will be a challenge from both an operating and earnings perspective. Therefore, monitoring our expenses and managing our cash, which includes the $15.4 million paid by Airbus in early April, will continue to be a priority.
"Until we see a sustainable increase in production for commercial aircraft and the Joint Strike Fighter, our overall operating environment will be difficult and challenge RTI's ability to be meaningfully profitable."