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Titanium Metals Corp. Reports Operating Results (10-Q)

August 08, 2012 | About:
10qk

10qk

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Titanium Metals Corp. (TIE) filed Quarterly Report for the period ended 2012-06-30.

Titanium Metals Corp has a market cap of $2.13 billion; its shares were traded at around $13.1161 with a P/E ratio of 19 and P/S ratio of 2. The dividend yield of Titanium Metals Corp stocks is 2.5%.

Highlight of Business Operations:

Financial overview. We reported net income attributable to TIMET stockholders of $30.2 million, or $0.17 per diluted share, in the second quarter of 2012 as compared to net income attributable to TIMET stockholders of $31.5 million, or $0.18 per diluted share, in the second quarter of 2011. We reported net income attributable to TIMET stockholders of $55.8 million, or $0.32 per diluted share, in the first half of 2012 as compared to net income attributable to TIMET stockholders of $60.4 million, or $0.34 per diluted share, in the first half of 2011. Our net income for the both 2012 periods is lower principally due to lower operating income resulting from the net effects of higher average selling prices and lower sales volumes of industrial-grade products in 2012. Additionally, operating income for the first half of 2011 was favorably impacted by a first quarter $10.6 million ($0.04 per diluted share, net of income taxes) gain on settlement of a claim to recover certain groundwater remediation costs attributable to a third-party manufacturing facility adjacent to our Henderson facility.

Net sales. Our net sales were $281.7 million for the second quarter of 2012 compared to net sales of $272.0 million for the second quarter of 2011. The increase in net sales was principally the result of increased average selling prices, partially offset by reduced volumes. Average selling prices increased 9% for melted products and 8% for mill products driven by annual adjustments under certain of our long-term agreements and a higher mix of aerospace products during the 2012 period. Reduced volumes of industrial product sales, which generally have project-oriented demand and sell at lower prices than more complex aerospace-grade products, contributed to increased average selling prices and decreased volumes for our mill products during the second quarter of 2012. A continuation of strong demand for our mill products within the commercial aerospace sector largely offset the effects of reduced sales volume of our industrial-grade mill products.

Cost of sales and gross margin. For the second quarter of 2012, our cost of sales was $220.7 million compared to $209.1 million for the second quarter of 2011. Cost of sales for the quarter ended June 30, 2012 increased primarily due to higher manufacturing costs associated with a higher proportion of more complex products. During the second quarter of 2011, we amended our retiree medical benefit plan for certain U.S. employees, which resulted in a curtailment gain of $2.1 million included as a reduction to cost of sales. See Note 11 to our Condensed Consolidated Financial Statements.

Net sales. Our net sales were $558.5 million for the first half of 2012 compared to net sales of $524.1 million for the first half of 2011. The increase in net sales was principally the result of increased average selling prices for melted and mill products, partially offset by reduced melted product volumes during the first half of 2012. Average selling prices increased 5% for melted products and 6% for mill products principally driven by annual adjustments under certain of our long-term agreements. Additionally, reduced volumes of industrial product sales, which generally have project-oriented demand and sell at lower prices than more complex aerospace-grade products, contributed to increased average selling prices and decreased volumes for our mill products during the first half of 2012. A continuation of strong demand for our mill products within the commercial aerospace sector largely offset the effects of reduced sales volume of our industrial-grade mill products.

Operating activities. Cash flow from operations is a primary source of our liquidity. Changes in pricing, production volume and customer demand, among other things, could significantly affect our liquidity. Trends in cash flows from operating activities, excluding changes in assets and liabilities, have generally been similar to the trends in operating income. Changes in assets and liabilities result primarily from the timing of production, sales and purchases. Changes in assets and liabilities tend to even out over time. However, period to period relative changes in assets and liabilities can significantly affect the comparability of cash flows from operating activities. Our cash from operating activities decreased $52.1 million, from $25.7 million used during the first six months of 2011 to $77.8 million used in the first six months of 2012 primarily due to the net effects of the following factors:

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