Titanium and Boeing Extend Deal - Analyst Blog
July 14 2011 - 11:52AM
Zacks
Titanium Metals
Corporation (TIE)
announced that it has extended its titanium supply agreement
with The Boeing
Company (BA) through December 31,
2018.
In November
last year, Titanium entered into a long-term supply agreement with
Boeing, which was scheduled to expire on December 31, 2015. As per
the agreement, the company will continue to provide, among other
things, mutual annual purchase and supply commitments, the
extension of the global titanium scrap recycling program and the
utilization of the TIMET Global Service Center Network.
Through its
focused efforts over the past few years, Titanium has included
significant capacity and flexibility to its operations, increasing
its ability to respond to future industry growth and demand.
Through these efforts and this agreement, the company continues to
be a key supplier and strategic partner in Boeing's current and
future programs.
In May 2011,
Titanium released its results for the first quarter of 2011. The
company reported net earnings of $28.9 million or 16 cents per
share in the first quarter of 2011, surpassing the Zacks Consensus
Estimate of 14 cents and increasing from the prior-year earnings of
$16.7 million or 9 cents per share.
Quarterly
revenues of $252 million increased 15.9% year over year, beating
the Zacks Consensus Estimate of $232 million. The rise in sales was
attributable to an increase in product volumes and higher average
selling prices. Improved demand for titanium products in the
commercial aerospace and industrial sectors led to the increase in
volumes.
Cost of
sales jumped by 13.4% over the prior-year quarter to $203.8
million.
Titanium
Metals faced increased demand in the industrial sector as
infrastructure and chemical projects were reinvigorated by the
global economic recovery. The company expects this trend to
continue in 2011 and also plans to drive efficiency through process
technology and cost-reduction initiatives.
Based in
Delaware, Titanium Metals is a leading worldwide producer of
titanium metal products.
Titanium
Metals has been successful over the last several years in
establishing significant flexibility and cost advantages in its
entire manufacturing process. The company’s fiscal discipline and
industry experience have allowed it to manage its production rates
and costs effectively while investing capital conservatively and
maintaining a strong, debt-free balance sheet.
Titanium
Metals’ financial strength and operating flexibility put it in a
good position to take advantage of opportunities that strengthen
and expand its presence in key markets.
The company
competes with Allegheny Technologies
Inc. (ATI) and
RTI
International Metals Inc. (RTI).
We maintain
a Neutral recommendation on Titanium. Currently, it holds a Zacks
#3 Rank (Hold).
ALLEGHENY TECH (ATI): Free Stock Analysis Report
BOEING CO (BA): Free Stock Analysis Report
RTI INTL METALS (RTI): Free Stock Analysis Report
TITANIUM METALS (TIE): Free Stock Analysis Report
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