Titanium Metals Reports In line - Analyst Blog
March 01 2012 - 3:30AM
Zacks
Titanium Metals
Corporation (TIE) reported net earnings of $28.6 million
or 16 cents per share in the fourth quarter of 2011, in line with
the Zacks Consensus Estimate. However, the results were ahead of
the prior-year earnings of $23.3 million or 13 cents per share.
In fiscal 2011, net earnings were
$114.0 million or 64 cents per share, up significantly from $80.6
million or 45 cents per share in fiscal 2010.
Revenues
Quarterly revenues of $258.7
million increased 19.1% year over year. However, the results missed
the Zacks Consensus Estimate of $276 million. The year-over-year
increase was driven by a rise in sales volumes for both melted and
mill products, primarily reflecting improved demand for titanium
products in the commercial aerospace sector as well as increased
shipments of industrial products.
In fiscal 2011, net sales were
$1,045.2 million versus $857.2 million in fiscal 2010.
Costs and
Margins
Cost of sales increased 20.8% over
the prior-year quarter to $201.3 million. As a percentage of sales,
costs increased 77.8% in the reported quarter from 76.7% in the
year-ago quarter. For the fourth quarter of 2011, gross profit was
$57.4 million compared with $50.6 million in the fourth quarter of
2010, reflecting higher sales volume.
Selling, general, and
administrative expense also increased 5.3% year over year to $15.9
million.
Operating income in the reported
quarter increased by 31.3% year over year to $44.5 million. Higher
sales volume, including the impact of the increase in sales of
industrial products, contributed to improved operating income
versus the prior year.
Shipments
Melted product shipments of 1,325
metric tons decreased 8.6% from last year’s shipments of 1,450
metric tons. Average selling price increased from $20.95 per
kilogram to $23.05 per kilogram. However, milled products shipments
of 3,985 metric tons surged 25.5% year over year from 3,175 metric
tons and product prices moved down to $52.60 per kilogram from
$54.15 per kilogram in the fourth quarter of 2010.
Outlook
Titanium Metals witnessed increased
demand in mill products through the year. The company’s commercial
aerospace customers significantly increased their purchasing
activity due to build rates for legacy and next generation models
and replenishment and growth of inventory to support the
anticipated increase in future aircraft deliveries.
The company expects demand to
remain strong for the remainder of the year and 2012, in line with
the industry’s estimated timelines for fleet replacement and
aircraft production.
Delaware-based Titanium Metals is
the 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.
During the fourth quarter of 2011,
Titanium Metals acquired certain assets, intellectual property and
know-how in order to enhance its production capacities and
capabilities while extending its product technology.
To meet the growing demand for
complex, high-temperature alloys utilized more extensively in new
generation aircraft engines, the company has commissioned the
addition of a plasma cold hearth melt furnace at its facility in
Morgantown, Pennsylvania, which is expected to be completed in
2013.
We believe the company’s fiscal
discipline and industry experience has allowed it to manage its
production rates and costs effectively while investing capital
conservatively and maintaining a strong, debt-free balance
sheet. The company’s financial strength and operating
flexibility position it well to take advantage of opportunities for
strengthening and expanding its presence in key markets.
The company competes with
Allegheny Technologies Inc. (ATI) and RTI
International Metals, Inc. (RTI).
We maintain our Neutral
recommendation on Titanium. Currently, it holds a Zacks #3 Rank
(Hold).
ALLEGHENY TECH (ATI): Free Stock Analysis Report
RTI INTL METALS (RTI): Free Stock Analysis Report
TITANIUM METALS (TIE): Free Stock Analysis Report
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