RTI International Metals to Acquire Remmele Engineering INVESTOR PRESENTATION JANUARY 10, 2012 Exhibit 99.1 |
Safe Harbor The information in this presentation, including accompanying oral comments, includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and is subject to the safe harbor created by that Act. These statements, which represent the Company’s expectations or beliefs concerning various future events, include statements concerning future revenues, EBITDA, synergies, strategy, earnings and liquidity associated with continued growth in various market segments, cost reductions expected from various initiatives, our contemplated acquisition and other events. Because such forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, the impact of global events on the commercial aerospace industry, ultimate titanium content per copy and actual aircraft build rates for new commercial and military aircraft programs, global economic conditions, the competitive nature of the markets for specialty metals, availability and pricing of raw materials, the successful completion of our capital expansion projects, the ability to successfully acquire and integrate Remmele Engineering and other acquisitions; 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. For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the documents that the Company has filed or furnished with the Securities Exchange Commission, including its quarterly reports on Form 10-Q, its most recent annual report on Form 10-K, its current reports on Form 8-K and its proxy statement. All subsequent forward-looking statements attributable to RTI or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. RTI is not under any obligation to, and expressly disclaims any obligation to, update or alter any forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise. 2 |
Agenda Key Transaction Terms Remmele Engineering Overview Strategic & Financial Rationale Full Year 2011 Update Combined Company Benefits Q&A 3 |
Key Transaction Terms 4 RTI is acquiring Remmele Engineering, a privately held company, in a transaction currently valued at $182.5 million, with approximately $164.5 million in cash and the assumption of $18.0 million in debt Purchase price is approximately ~8.3x 2011 EBITDA Purchase price is approximately ~7.4x 2012 EBITDA* The transaction will be financed from existing cash reserves If the transaction would have closed December 31, 2011, RTI’s cash, cash equivalents and highly liquid investments would have totaled approximately $165 million Expected to be immediately accretive to RTI’s EPS, before the inclusion of the benefit from the anticipated cost or revenue synergies Remmele Engineering’s key senior leadership will remain with and continue to lead the organization Transaction currently expected to close during 1Q 2012, subject to customary closing conditions, including receipt of applicable regulatory approvals *2012 EBITDA RTI management estimate STRUCTURE FINANCING FINANCIAL BENEFITS LEADERSHIP CONDITIONS/TIMING |
Remmele Engineering Overview Attractive financial profile with strong margins o 2011 Sales - $125.9 million* • Aerospace & Defense ($74.9 million) • Medical ($51.0 million) Long-term, blue-chip, customer relationships Well established contract manufacturer for medical device makers Highly experienced management team with significant bench strength Opportunity for strategic capital investments to increase potential *Estimated, Unaudited 5 2011 A&D Sales by End Market 2011 Medical Sales by End Market Well-respected manufacturer of machined products serving the aerospace & defense and medical device segments Minimally Invasive Surgery 47% Spine 22% Vascular 6% Urology 11% Other 5% Drug Infusion 9% Military 15% Radar 29% Space 7% Comm'l Aero 49% |
Strategic & Financial Rationale Overview 6 • Accelerates RTI’s downstream strategy in the aerospace and defense sector • Enhances ability to adapt to future needs of customers • Provides entry into attractive new end markets • Transforms profile of Fabrication Segment Acquisition is consistent with the objectives RTI has set out when capital raising – to be in a position to take advantage of growth opportunities |
Accelerates RTI’s downstream strategy in the aerospace and defense sector Expands RTI’s precision machining and collaborative engineering capabilities in the A&D market o Remmele Engineering - $70 million current backlog, $200 million LTAs over seven years Highly respected supplier of finished engineered products to aerostructures, radar and space markets Improves scale and capabilities of manufacturing base, providing opportunities to bid on additional contracts Acquisition repositions RTI to adapt to evolving defense landscape A&D – Key growth drivers: o Increase in commercial air travel o Industry need to reduce operating / fuel costs through more efficient aircraft 7 RTI expects to leverage Remmele Engineering’s collaborative engineering processes and resources across the RTI enterprise, bringing tremendous benefits to its aerospace and defense customers |
Enhances ability to adapt to future needs of customers Remmele Engineering has long standing relationships with many of RTI’s key A&D customers, such as Boeing and Lockheed Martin; adding RTI’s manufacturing expertise and investment will help Remmele Engineering accelerate the combined opportunities to provide advanced solutions for these customers A&D customers increasingly looking for US-based partners that can provide a more complete offering of titanium products and services alongside best-in-class engineering design Remmele Engineering will provide RTI with an advanced manufacturing platform with a demonstrated record of collaborative engineering and customer partnering o Original Equipment Manufacturers (OEMs) increasingly depend on US-based contract manufacturers as a way to decrease manufacturing costs and improve production capabilities o Contract manufacturers are a cost effective solution for OEMs to manufacture products that require highly specialized capabilities or supplementary production capacity 8 |
Provides entry into attractive new end markets Remmele Engineering’s strong position in medical engineering and precision machining of titanium provides access to fast-growing medical device market Medical segment provides steady returns and real diversification Technical capabilities required for medical are different than those needed in A&D Remmele Engineering’s Top Medical Device sub-segments include: o Minimally invasive surgery o Spine o Urology 9 Medical device industry poised for growth at annual rate of ~6% from 2011-2016* Key drivers include: o Aging US population, number of physician visits, increasing rate of obesity o Greater need for cost-efficient solutions to address pressures faced by medical industry, specifically with regard to Medicare and Medicaid funding o New medical devices / new treatments o Regulatory considerations * Source: IBIS World 24 27 23 28 35 42 48 60 65 68 71 76 82 55 -7% 9% 7% 6% 5% 7% 8% 16% -14% 25% 22% 13% 19% 11% 0 15 30 45 60 75 90 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 $, bn -20% -10% 0% 10% 20% 30% 40% % Growth Revenue % Growth Medical Device (OEMs) Growth Trends (1) |
Transforms profile of Fabrication Segment Machining operations will fill out a capability need for RTI Fabrication Remmele Engineering’s fabrication capabilities include: precision machining, integrated assembly, program management and engineering support Remmele Engineering’s capabilities complement RTI’s current capabilities such as advance forming, precision production, hot forming, superplastic forming, and thermal-mechanical hot working Fabrication segment growth will increase opportunities and reduces cyclical volatility Improves sustainable operating profile 10 Fabrication 31% Titanium Distribution Fabrication 46% Titanium Distribution RTI Sales Today Pro-forma Sales |
Full Year 2011 Update 11 Estimated Mill Product Volume ~14.6 million pounds 2011 Net Sales $520-$535 million Cash and Liquid Securities at End of Year ~$330 million |
Combined Company Benefits Enhances leadership position as an integrated, value-add titanium manufacturer in the A&D segment Transaction builds on RTI’s core strength in titanium manufacturing and is expected to enhance our engineering and precision machining capabilities o Combination will offer superior engineering support and capabilities o Medical engineering processes and expertise can be used to enhance what RTI does currently on the aerospace side Fulfills the demand from customers looking to identify strategic partners in the supply chain Strong cultural alignment: Both companies share a commitment to excellent customer service and best-in-class manufacturing Transaction expected to be immediately accretive and will leave ample liquidity to pursue further growth opportunities 12 |
Q&A 13 |