Sales, earnings down for RTI

By Don Shilling

RTI is delaying the construction of plants in Mississippi and Virginia.

The weakening economy led to lower third-quarter sales and earnings at RTI International Metals.

The Pittsburgh-based company, which employs more than 400 at an office and titanium mill in Weathersfield Township, said Tuesday that it earned $11.3 million in the third quarter, compared with $24.7 million in the same quarter last year. Sales for the third quarter were $150.6 million, down from $163.4 million a year ago.

Despite a strong day on Wall Street, RTI stock fell $1.63, or 10 percent, Tuesday to close at $15.05. The stock was trading at more than $76 last December.

RTI said it lost some production at three plants in Texas because of Hurricane Ike, but a softening of the titanium market also is hurting the company.

Dawne Hickton, RTI vice chairman and chief executive, said during a conference call with analysts that the recent downturn in the economy will hurt company profits. In July, she projected that operating income — revenue from daily operations minus expenses — would be 20 percent to 25 percent lower this year. Now, she is expecting the drop to be 35 percent to 40 percent.

She said executives still think 2009 will be profitable but wouldn’t go into any more detail.

She said in July that mill shipments would total between 14 million and 15 million pounds this year. She said Tuesday that the final figure would be closer to 14 million pounds. Earlier in the year, shipments were expected to be more than 17 million pounds.

As demand growth slows, RTI is pushing back construction of two new plants. A new titanium sponge plant in Mississippi will be pushed back one year, and a new rolling mill in Virginia will be delayed six months. Both are expected to start up in 2011.

Hickton said pushing back the start-up dates will delay the spending of $100 million. RTI still will spend about $50 million on maintenance projects at existing plants and about $150 million on expenses related to the new plants, she said.

She stressed, however, that long-term sales trends look good for RTI. The company has long-term supply agreements to provide titanium for Airbus, a commercial aircraft maker, and for the military’s new F-35 joint strike fighter. It also is producing titanium parts for Boeing’s new 787 plane.

Hickton said RTI’s orders are running almost twice as high as the last time the company faced a downturn in the industry.

As announced in the July conference call, Hickton said executives are looking at all parts of the business for cost reductions.

shilling@vindy.com