RTI cuts costs after earnings fall

By Don Shilling

Lower earnings pushed down RTI’s stock price.

RTI International Metals is looking to trim overtime and nonessential maintenance work at its Niles plant after reporting lower earnings.

Cost-cutting measures are being adopted throughout the company’s operations as the boom in the titanium market has slowed, Dawne Hickton, RTI vice chairman and chief executive, said Tuesday on a conference call with analysts and media.

The RTI Niles plant, which used to be known as RMI Titanium, won’t need to produce as much titanium this year as previously planned, Hickton said. The plant has about 360 hourly workers, including about 40 who were hired in the past two years to fill increasing orders.

Business has been so slow that up to 30 workers have been laid off for one- to two-week periods at various times the past two months, said Todd Waddell, president of Local 2155 of the United Steelworkers of America. Some parts of the mill remain busy, however, he said.

RTI had planned to hire 10 to 15 workers this year, but Waddell said he doubted that would happen.

RTI said the delay of Boeing’s 787 Dreamliner plane has disrupted the titanium market. The new plane was to be launched last year, but it still hasn’t taken flight because of various production issues.

The delay has led to an increase of titanium that is available on the market, which has pushed down prices, Hickton said.

RTI, which recently moved its corporate offices from Weathersfield Township to Moon Township near Pittsburgh, cited the Dreamliner delay as a reason for its lower earnings.

RTI posted earnings of 81 cents a share, or $18.6 million, down from 90 cents a share, or $21 million, in the same quarter last year.

Analysts on average were expecting earnings of 84 cents a share for the second quarter, Reuters news service said.

RTI stock fell 9 percent Tuesday and nearly matched its 52-week low of $28.32, which was reached earlier this month. The stock lost $3.03 to close at $29.11. The stock has traded as high as $85.20 in the past year.

Sales increased to $159.8 million in the second quarter, up from $154 million in the same period last month.

Analysts asked RTI executives if they are considering scaling back new plants in Mississippi and Virginia that are under construction. Hickton said company officials still believe demand will be there for those plants. The plants are to be ready in 2010, which is the start of two long-term supply contracts that RTI has with aircraft makers, she said.

The long-term demand for titanium remains strong, she said. Aircraft makers still have long backlogs for planes, mostly from carriers outside the U.S., she said.

In the meantime, results for RTI will be lower than expected this year, Hickton said. The company will ship between 14 million and 15 million pounds this year, down from earlier expectations of between 17 million and 18 million pounds.

Also, it is projecting operating income — revenue from daily operations minus expenses — to be 20 percent to 25 percent lower this year than last year. In its first-quarter conference call, executives predicted a decline of 5 percent to 10 percent this year.

RTI employs 1,400 at 18 locations worldwide.

shilling@vindy.com