PRESS RELEASE
FOR IMMEDIATE RELEASE: CONTACT:
Titanium Metals Corporation John A. St. Wrba
5430 LBJ Freeway, Suite 1700 Vice President and Treasurer
Dallas, Texas 75240 (972) 233-1700
TIMET REPORTS THIRD QUARTER 2006 RESULTS
DALLAS, TEXAS . . . October 30, 2006 . . . Titanium Metals Corporation
("TIMET" or the "Company") (NYSE: TIE) reported operating income of $84.6
million for the quarter ended September 30, 2006 compared to operating income of
$51.7 million for the quarter ended September 30, 2005, an increase of 64%. The
increase in operating income results primarily from increases in average selling
prices and sales volume, partially offset by increases in raw material costs.
The Company also reported net income attributable to common stockholders of
$52.7 million, or $0.29 per diluted share, for the quarter ended September 30,
2006, compared to net income attributable to common stockholders of $33.4
million, or $0.20 per diluted share, for the quarter ended September 30, 2005.
All per share amounts have been adjusted to reflect all stock splits completed
to date.
The Company's net sales increased 43% to $271.8 million during the third
quarter of 2006 compared to net sales of $190.0 million during the year-ago
period, due to increases in average selling price, sales volumes and favorable
product mix. Mill product average selling prices increased 37% and melted
product average selling prices increased 68% during the third quarter of 2006 as
compared to the year-ago period. While melted product shipments during the third
quarter of 2006 declined slightly as compared to the year ago period, these
declines were more than offset by increases in mill product shipments as TIMET's
product mix shifted toward an increased level of mill products that have higher
selling prices.
The Company's results for the nine months ended September 30, 2005 include
a $13.9 million non operating gain ($9.6 million, or $0.05 per diluted share,
net of income taxes) related to the previously reported sale of certain real
property and an aggregate $41.3 million, or $0.23 per diluted share ($5.7
million, or $0.03 per diluted share, in the third quarter 2005) income tax
benefit related to the reversal of the Company's deferred income tax asset
valuation allowance in the U.S. and the U.K.
Steven L. Watson, Vice Chairman and CEO, said, "TIMET maintained strong
sales volumes and operating margins during the third quarter of 2006, and we
continue to see strength in the long-term demand for our products. Sales
increased by 43% compared to the third quarter of 2005 while operating income
increased 64%. We achieved operating income margins of approximately 31%,
consistent with the second quarter 2006, despite continued volatility in certain
raw material and energy costs. Commentary and presentations from a variety of
industry participants, including customers of titanium metal, at the
International Titanium Association conference held in early October support our
view of a continuation of sustained growth in demand for titanium in the jet
engine, airframe, industrial, military and medical markets as well as emerging
markets. It is our belief that non-aerospace markets have the potential to
develop rapidly and provide additional opportunity for accelerating growth in
the titanium metals industry.
1 of 4
"We anticipate our full year 2006 sales revenue to range between $1.1
billion and $1.2 billion, and we believe full year operating income will be
between $350 million and $365 million. Our backlog was $1.0 billion at September
30, 2006, which increased from $860 million at June 30, 2006. We continue to
focus on expansion of our capacity at all stages of the production process in
response to the long-term outlook across all of our major end markets. Our
Henderson, Nevada VDP sponge capacity expansion project is scheduled to commence
commissioning near the end of 2006, and upon achieving full production levels,
our sponge production capacity will increase by approximately 47%. The expansion
of our Morgantown, Pennsylvania electron beam cold hearth melt capacity, which
will increase our total melt capacity by approximately 20% and our cold hearth
melt capacity by approximately 54%, is on schedule, and we anticipate meeting
our completion target of early 2008. This additional cold hearth melt capacity,
along with our scrap recycling facility in Morgantown, enhances our ability to
utilize scrap which we believe over the longer term, together with our increased
sponge capacity, should favorably impact our raw material costs in the future.
We are also in the process of pursuing additional capacity expansion
alternatives in melting and mill products conversion, which could provide a
significant increase in existing production capabilities. With our strong
balance sheet, liquidity and net debt of less than $30 million at September 30,
2006, we are well positioned to invest in our production capacity to the extent
necessary to capitalize on the projected increase in demand in all key sectors."
The financial information contained in this release is subject to future
correction and revision and the filing of the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 2006 with the Securities and Exchange
Commission ("SEC") and should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's most recent
reports on Form 10-K and Form 10-Q filed with the SEC.
The statements contained in this release that are not historical facts are
forward-looking statements that represent management's beliefs and assumptions
based on currently available information. Forward-looking statements can
generally be identified by the use of words such as "believes," "intends,"
"may," "will," "looks," "should," "could," "anticipates," "expects" or
comparable terminology or by discussions of strategies or trends. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it cannot give any assurance that these expectations
will prove to be correct. Such statements by their nature involve substantial
risks and uncertainties that could significantly affect expected results. Actual
future results could differ materially from those described in such
forward-looking statements, and the Company disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Among the factors that
could cause actual results to differ materially are the risks and uncertainties
discussed in this release, including risks and uncertainties in those portions
referenced above and those described from time to time in the Company's filings
with the SEC which include, but are not limited to, the cyclicality of the
commercial aerospace industry, the performance of aerospace manufacturers and
the Company under their long-term agreements, the existence or renewal of
2 of 4
certain long-term agreements, the difficulty in forecasting demand for titanium
products, global economic and political conditions, global productive capacity
for titanium, changes in product pricing and costs, the impact of long-term
contracts with vendors on the ability of the Company to reduce or increase
supply, the possibility of labor disruptions, fluctuations in currency exchange
rates, fluctuations in the market price of marketable securities, control by
certain stockholders and possible conflicts of interest, uncertainties
associated with new product or new market development, the availability of raw
materials and services, changes in raw material prices and other operating costs
(including energy costs), possible disruption of business or increases in the
cost of doing business resulting from terrorist activities or global conflicts
and other risks and uncertainties. Should one or more of these risks materialize
(or the consequences of such a development worsen), or should the underlying
assumptions prove incorrect, actual results could differ materially from those
forecasted or expected.
TIMET, headquartered in Dallas, Texas, is a leading worldwide producer of
titanium metal products. Information on TIMET is available on its website at
www.timet.com.
o o o o o
3 of 4
TITANIUM METALS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share and product shipment data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------------------- -----------------------------
2006 2005 2006 2005
---------------- ------------ ------------- ------------
Net sales $ 271.8 $ 190.0 $ 859.6 $ 529.0
Cost of sales 174.0 134.3 547.2 396.4
---------------- ------------- ---------- -------------
Gross margin 97.8 55.7 312.4 132.6
Selling, general, administrative and development expense 17.2 13.3 49.8 38.6
Other income, net 4.0 9.3 10.7 14.1
---------------- ------------- ---------- -------------
Operating income 84.6 51.7 273.3 108.1
Interest expense 0.8 1.1 2.4 2.7
Other non-operating income (expense), net 0.6 1.4 (0.8) 17.5
---------------- ------------- ----------- -------------
Income before income taxes and minority interest 84.4 52.0 270.1 122.9
Income tax expense 28.6 14.4 94.7 4.9
Minority interest in after tax earnings 1.6 1.3 6.2 3.4
---------------- ------------- ----------- -------------
Net income 54.2 36.3 169.2 114.6
Dividends on Series A Preferred Stock 1.5 2.9 5.4 9.5
---------------- ------------- ----------- -------------
Net income attributable to common stockholders $ 52.7 $ 33.4 $ 163.8 $ 105.1
================ ============= =========== =============
Earnings per share attributable to common stockholders:
Basic $ 0.33 $ 0.26 $ 1.07 $ 0.82
Diluted $ 0.29 $ 0.20 $ 0.92 $ 0.63
Weighted average shares outstanding:
Basic 161.1 131.1 152.9 128.9
Diluted 184.2 182.1 183.8 181.5
Melted product shipments:
Volume (metric tons) 1,275 1,345 4,280 4,120
Average selling price ($ per kilogram) $ 38.95 $ 23.15 $ 36.45 $ 18.70
Mill product shipments:
Volume (metric tons) 3,150 2,940 10,575 9,380
Average selling price ($ per kilogram) $ 59.75 $ 43.60 $ 56.80 $ 39.85
4 of 4