RTI expects flat sales; stock price drops 12 percent

By Don Shilling

Revised sales and earnings forecasts sends RTI’s stock into a spin.

PITTSBURGH — RTI International Metals posted slightly higher first-quarter earnings but toned down expectations for the rest of this year and next year.

While questioning company executives on a conference call Tuesday, analyst Gautam Khanna said RTI’s “story is changing a bit from rapid growth to a holding pattern.”

The company, which posted record earnings and sales last year, expects sales to be flat this year and next year. Operating income — revenue from daily operations minus expenses — is expected to be down 5 percent to 10 percent this year and at about the same level in 2009, she said.

Two months ago, RTI said it expected sales to go up at least 15 percent this year and operating income to rise at least 7 percent.

The revised prediction didn’t sit well with Wall Street. RTI stock dropped to its lowest level since October 2006. It was down $5.80, or 12 percent, Tuesday to close at $42.08.

The stock briefly crossed $100 a share last April but has been declining since.

Dawne Hickton, RTI vice chairman and chief executive, said the company revised its outlook for 2008 and 2009 because Boeing has delayed the launch of its new aircraft, the 787, for which RTI provides titanium parts.

Boeing said earlier this month that the plane will debut in the third quarter of this year instead of the fourth. In addition, Boeing now plans to build 25 of the 787s in 2009, down from 109. The plane, which was to be introduced last year, has been delayed before.

RTI has been expanding its mills, including the RMI Titanium mill in Weathersfield Township. It previously said it was expecting to ship between 17 million and 18 million pounds of titanium this year and between 22 million and 23 million pounds in 2009.

Hickton said Tuesday that the forecast for this year’s shipments has been cut to between 15.5 million and 16.5 million pounds.

She stressed, however, that the company’s outlook for 2010 and beyond looks bright. Aircraft makers still have long backlogs and worldwide demand for planes is growing, she said. She added that the domestic fleet of planes is aging, as seen recently when a large number of flights were grounded after mechanical inspections.

Hickton noted that RTI has long-term supply contracts that will take up nearly 80 percent of its mill shipments once they are in full swing. RTI has a $2 billion contract to provide titanium for the military’s Joint Strike Fighter program through 2020. It also has a $1.1 billion contract to provide titanium for new aircraft being developed by Airbus.

For the first quarter of this year, RTI earned $22.2 million, or 96 cents a share, compared with $22.1 million, or 95 cents a share, in the same quarter last year. Sales last quarter were $150.6 million, compared with $145.6 million in the first quarter of 2007.

RTI this month moved its senior executives to Moon Township, Pa., from Weathersfield. The remaining corporate offices and RMI mill in Weathersfield employ more than 400.

shilling@vindy.com