Rti International Metals Inc. has a market cap of $831.6 million; its shares were traded at around $28.45 with a P/E ratio of 102.3 and P/S ratio of 2.1. RTI is in the portfolios of Arnold Schneider of Schneider Capital Management, Jeremy Grantham of GMO LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:An increase of 57% in shipments of prime mill products to our trade customers, offset by a 31% decrease in the average realized selling prices of these products, resulted in a $2.1 million increase in the Titanium Groups net sales. The decrease in average realized selling prices was primarily due to the increased mix of lower priced forged products and the continued high proportion of sales under long-term agreements with lower contract pricing versus the comparable period in the prior year. A strengthening in ferro-alloy demand from the specialty steel industry resulted in an additional $1.3 million increase in net sales.
The decrease in the Titanium Groups gross profit was primarily related to lower average realized selling prices which reduced gross profit by $3.3 million. This decrease was largely offset by a higher margin sales mix which increased gross profit by $2.3 million, and higher volume which increased gross profit by $0.6 million. Additionally, gross profit at the Titanium Group was favorably impacted by $0.2 million due to higher ferro-alloy demand.
Research, Technical, and Product Development Expenses. Research, technical, and product development expenses were $0.8 million and $0.5 million for the three months ended September 30, 2010 and 2009, respectively. This spending reflects our continued focus on productivity and quality enhancements to our operations.
Other Income (Expense). Other income (expense) for the three months ended September 30, 2010 and 2009 was $(0.5) million and $0.3 million, respectively. Other income (expense) consists primarily of foreign exchange gains and losses from our international operations and fair value adjustments related to our foreign currency forward contracts.
Interest Income and Interest Expense. Interest income for the three months ended September 30, 2010 and 2009 was $0.1 million and $0.3 million, respectively. The decrease in interest income was principally related to lower returns on invested cash, as well as lower overall cash balances, compared to the prior year period. Interest expense was $0.3 million and $7.2 million for the three months ended September 30, 2010 and 2009, respectively. The decrease in interest expense was primarily attributable to the decrease in our long-term debt compared to the prior year as a result of the payoff of our $225 million term loan in September 2009. In addition, interest expense in 2009 included a $4.9 million charge for the termination of our interest rate swap agreements and a $0.8 million write-off of deferred financing fees as a result of the payoff of our $225 million term loan.
Provision for Income Taxes. We recognized a provision for federal, state and foreign income taxes of $13.9 million and $3.9 million related to pretax losses of $2.9 million and $4.8 million for the three months ended September 30, 2010 and 2009, respectively.
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