RTI Announces Third Quarter Results

RTI International Metals, Inc., (NYSE: RTI), released results today for the third quarter of 2009 and nine months ended September 30, 2009.

Third Quarter 2009 Results

• Net sales for the third quarter were $100.2 million
• Operating income for the third quarter was $2.0 million
• Excluding charges of $5.7 million associated with the Company’s debt repayment, earnings before taxes for the third quarter were $0.9 million
• Earnings before taxes were a $4.8 million loss for the third quarter.

For the third quarter, the Company reported net sales of $100.2 million, compared to $150.6 million in the third quarter of 2008. Including charges of $5.7 million associated with the Company’s debt repayment plus a tax expense of $3.9 million, the Company reported a net loss of $8.7 million, or $0.35 per diluted share, in the current quarter in comparison to net income of $11.3 million, or $0.49 per diluted share, for the same period in the prior year. The third quarter 2009 results were negatively affected primarily by lower trade shipments and average realized selling prices for titanium mill products, the impact from lower production utilization in the Fabrication Group, the continued weakness in commercial aerospace demand, and charges related to the repayment of its outstanding debt during the quarter.

During the third quarter, the Company repaid $242.8 million of its outstanding bank indebtedness and thereby incurred finance-related charges of $5.7 million. At the end of the third quarter, the Company had $124.7 million of cash and cash equivalents and an undrawn revolving credit facility of $200 million.

For the nine months ended September 30, 2009, the Company reported net sales of $310.7 million, compared with net sales of $461.1 million for the same period last year. For the nine-month period, the Company reported a net loss of $10.0 million, or $0.42 per diluted share, compared with net income of $52.1 million, or $2.26 per diluted share for the same period a year ago. Year-to-date results also include finance-related charges of $5.7 million as well as charges of $2.5 million associated with the U.S. Customs’ investigation related to the Company’s previously filed duty drawback claims.

NOTE: Reconciliations of non-GAAP financial measures are provided in the appendix.

Titanium Group

For the third quarter of 2009, the Titanium Group had operating income of $1.0 million on sales of $54.4 million, including intersegment sales of $25.6 million. During the same period in 2008, this Group had operating income of $11.9 million on sales of $85.3 million, including intersegment sales of $35.9 million. Mill product shipments for the third quarter were 2.4 million pounds at an average realized price of $21.32 per pound compared to mill product shipments of 3.4 million pounds in the third quarter of 2008 at an average realized price of $23.04 per pound.

The decrease in average realized selling prices year-over-year was driven primarily by a larger portion of total sales under long-term agreements and continued lack of spot market business, driven by lower end-market demand, as well as the excess titanium inventory in the commercial aerospace supply chain.

During the first nine months of 2009, the Titanium Group posted operating income of $7.4 million on sales of $180.9 million, including intersegment sales of $94.6 million. For the same period in 2008, operating income was $58.7 million on sales of $283.5 million, including intersegment sales of $126.6 million. Mill product shipments for the first nine months of 2009 were 7.8 million pounds at an average realized price of $21.95 per pound compared to mill product shipments of 11.2 million pounds in 2008 at an average realized price of $23.79 per pound.

Fabrication Group

Net sales for the Fabrication Group declined during the third quarter to $27.3 million versus $35.7 million for the same period a year ago. This Group had an operating loss of $0.5 million, compared to operating income of $1.0 million in the third quarter of 2008. The Fabrication Group continues to be impacted by the ongoing delays in the production of the Boeing 787, resulting in lower utilization, and by a slowdown in orders from its energy customers. Year-to-date, the Fabrication Group reported net sales of $79.9 million resulting in an operating loss of $14.2 million compared with net sales of $106.8 million and operating income of $3.4 million from the same period the previous year.

Distribution Group

For the third quarter, net sales for the Distribution Group were $44.1 million compared to $65.5 million for the same period a year ago. This Group had operating income of $1.4 million compared to $4.9 million in the third quarter of 2008. The operating income decline was primarily attributable to lower demand in the commercial aerospace market, as well as the overall global economy. Year-to-date, the Distribution Group reported net sales of $144.5 million resulting in operating income of $6.4 million compared with net sales of $197.4 million and operating income of $19.9 million from the same period in the prior year.

CEO Comment

Vice Chairman, President and CEO Dawne S. Hickton commented, “As we look toward the end of 2009, we still have not seen a pickup in demand nor do I expect to see demand improve until the end of 2010 at the earliest. The production delays associated with the 787 Dreamliner continue to stress our Company, particularly in the Fabrication Group. The Distribution Group, which has the best visibility into the market among our three segments, continues to see depressed spot market activity with somewhat volatile pricing. As was the case in the prior quarters of 2009, our long-term customer agreements and ability to manage expenses allow us to operate profitably in our Titanium and Distribution segments.

“Given the continued uncertainty in the commercial aerospace market, the resulting reduced cash flows relative to our expectations, as well as our desire to be positioned to be opportunistic in our organic growth initiatives, particularly in the Fabrication Group, we elected to recalibrate our balance sheet by raising common equity and paying off $242.8 million of bank debt. We now have substantial financial flexibility with no funded debt, over $124 million in cash and cash equivalents and an undrawn $200 million revolving credit facility.”

Conference Call Information

To participate in today’s call at 11 a.m. Eastern Time, please dial toll free (USA/Canada) 800-446-2782 or (International) 847-413-3235 a few minutes prior to the start time and specify the RTI International Metals’ Conference Call.

Replay Information

Replay of the call will be available one hour after the conference ends and remains accessible until Tuesday, November 17, 2009, at 11:59 p.m., Eastern Time. To listen to the replay, dial (USA/Canada) 888-843-8996 or (International) 630-652-3044 and enter passcode #25587585.

Forward Looking Statement

The statements in this release relating to matters that are not historical facts are forward-looking statements that may involve risks and uncertainties. These include, but are not limited to, the impact of global events on the commercial aerospace industry, actual build-rates, production schedules and content per aircraft for commercial and military aerospace programs, military spending and continued support for the Joint Strike Fighter program, the impact from Boeing 787 production delays, global economic conditions, the competitive nature of the markets for specialty metals, the ability of the Company to obtain an adequate supply of raw materials, long-term contracts, the successful completion of our capital expansion projects, the current delay and potential further delay, idling, abandonment or impairment and other risks and uncertainties included in the Company’s filings with the Securities and Exchange Commission. Actual results can differ materially from those forecasted or expected. The information contained in this release is qualified by and should be read in conjunction with the statements and notes filed with the Securities and Exchange Commission on Forms 10-K and 10-Q, as may be amended from time to time.

Company Description

RTI International Metals^®, headquartered in Pittsburgh, Pennsylvania, is one of the world’s largest producers of titanium mill products and a global supplier of fabricated titanium and specialty metal components for the international market. Through its various subsidiaries, RTI manufactures and distributes titanium and specialty metal mill products, extruded shapes, formed parts and engineered systems for commercial aerospace, defense, energy, industrial, chemical, and consumer applications for customers around the world. To learn more about RTI International Metals, Inc., visit our website at www.rtiintl.com.

RTI INTERNATIONAL METALS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share amounts)
							Three Months Ended								Nine Months Ended
							September 30,								September 30,
							2009				2008				2009				2008
Net sales							$	100,247			$	150,615			$	310,655			$	461,092
Cost and expenses:
	Cost of sales							82,426				113,492				263,047				322,708
	Selling, general, and administrative expenses							15,384				18,723				46,526				54,829
	Research, technical, and product development expenses							466				555				1,493				1,590
Operating income (loss)								1,971				17,845				(411	)			81,965
	Other income (expense)							252				551				2,006				(129	)
	Interest income							257				799				1,325				2,172
	Interest expense							(7,231	)			(979	)			(12,007	)			(1,595	)
Income (loss) before income taxes								(4,751	)			18,216				(9,087	)			82,413
	Provision for income taxes							3,901				6,964				899				30,311
Net Income (loss)							$	(8,652	)		$	11,252			$	(9,986	)		$	52,102
Earnings per share:
	Basic						$	(0.35	)		$	0.49			$	(0.42	)		$	2.26
	Diluted						$	(0.35	)		$	0.49			$	(0.42	)		$	2.26
Weighted-average shares outstanding:
	Basic							24,643,301				22,838,900				23,588,555				22,881,457
	Diluted							24,643,301				22,915,541				23,588,555				23,007,236

RTI INTERNATIONAL METALS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except share and per share amounts)
									September 30,				December 31,
ASSETS									2009				2008
Current assets:
	Cash and cash equivalents								$	124,733			$	284,449
	Receivables, less allowance for doubtful accounts of $605 and $2,260									66,265				79,778
	Inventories, net									271,738				274,330
	Deferred income taxes									25,577				29,456
	Other current assets									8,073				11,109
	Total current assets									496,386				679,122
Property, plant, and equipment, net										305,272				271,062
Goodwill										49,401				47,984
Other intangible assets, net										14,136				13,196
Deferred income taxes										30,611				15,740
Other noncurrent assets										1,602				2,099
	Total assets								$	897,408			$	1,029,203
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable								$	43,032			$	54,422
	Accrued wages and other employee costs									10,744				20,452
	Unearned revenue									20,249				22,352
	Current portion of long-term debt									-				1,375
	Current liability for post-retirement benefits									2,632				2,632
	Current liability for pension benefits									121				121
	Other accrued liabilities									21,342				18,167
	Total current liabilities									98,120				119,521
Long-term debt										86				238,550
Noncurrent liability for post-retirement benefits										31,520				30,732
Noncurrent liability for pension benefits										24,625				26,535
Deferred income taxes										154				154
Other noncurrent liabilities										7,310				11,777
	Total liabilities									161,815				427,269
Commitments and Contingencies
Shareholders’ equity:
	Common stock, $0.01 par value; 50,000,000 shares authorized; 30,715,403 and 23,688,010 shares issued; 30,021,089 and 23,004,136 shares outstanding									307				237
	Additional paid-in capital									438,547				307,604
	Treasury stock, at cost; 694,314 and 683,874 shares									(16,979	)			(16,891	)
	Accumulated other comprehensive loss									(33,632	)			(46,352	)
	Retained earnings									347,350				357,336
	Total shareholders’ equity									735,593				601,934
	Total liabilities and shareholders’ equity								$	897,408			$	1,029,203

RTI INTERNATIONAL METALS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)
							Nine Months Ended
							September 30,
							2009				2008
Cash provided by operating activities (including depreciation and amortization of $15,985 and $14,891 for the nine months ended September 30, 2009 and 2008, respectively)							$	16,738			$	53,155
Cash used in investing activities								(63,362	)			(88,815	)
Cash provided by (used in) financing activities								(114,743	)			218,986
	Effect of exchange rate changes on cash and cash equivalents							1,651				(800	)
	Increase (decrease) in cash and cash equivalents							(159,716	)			182,526
	Cash and cash equivalents at beginning of period							284,449				107,505
	Cash and cash equivalents at end of period						$	124,733			$	290,031

RTI INTERNATIONAL METALS, INC. AND SUBSIDIARIES Selected Operating Segment Information (Unaudited) (In thousands)
				Three Months Ended								Nine Months Ended
				September 30,								September 30,
				2009				2008				2009				2008
Net sales:
	Titanium Group			$	28,853			$	49,367			$	86,280			$	156,868
	Intersegment sales				25,586				35,931				94,615				126,599
		Total Titanium Group net sales			54,439				85,298				180,895				283,467
	Fabrication Group				27,334				35,731				79,885				106,795
	Intersegment sales				15,986				17,125				44,561				62,692
		Total Fabrication Group net sales			43,320				52,856				124,446				169,487
	Distribution Group				44,060				65,517				144,490				197,429
	Intersegment sales				598				642				1,863				1,760
		Total Distribution Group net sales			44,658				66,159				146,353				199,189
	Eliminations				42,170				53,698				141,039				191,051
		Total consolidated net sales		$	100,247			$	150,615			$	310,655			$	461,092
Operating income (loss):
	Titanium Group before corporate allocations			$	3,591			$	16,138			$	15,066			$	68,825
	Corporate allocations				(2,569	)			(4,210	)			(7,713	)			(10,112	)
		Total Titanium Group operating income			1,022				11,928				7,353				58,713
	Fabrication Group before corporate allocations			$	1,898			$	3,695			$	(6,968	)		$	10,913
	Corporate allocations				(2,394	)			(2,713	)			(7,185	)			(7,511	)
		Total Fabrication Group operating income (loss)			(496	)			982				(14,153	)			3,402
	Distribution Group before corporate allocations			$	3,349			$	7,200			$	12,101			$	26,107
	Corporate allocations				(1,904	)			(2,265	)			(5,712	)			(6,257	)
		Total Distribution Group operating income			1,445				4,935				6,389				19,850
		Total consolidated operating income		$	1,971			$	17,845			$	(411	)		$	81,965

RTI INTERNATIONAL METALS, INC. AND SUBSIDIARIES GAAP to Non-GAAP Reconciliation (Unaudited) (In thousands)
				Three Months Ended September 30, 2009
Income (loss) before income taxes - GAAP				$	(4,751	)
Finance-related charges					5,623
Income before income taxes - Non-GAAP				$	872