Titanium Metals Corporation is an integrated producers of titanium sponge melted and mill products. They are the only integrated producer with major titanium production facilities in both the United States and Europe. Titanium Metals Corp. has a market cap of $1.39 billion; its shares were traded at around $7.68 with a P/E ratio of 8.9 and P/S ratio of 1.2.
Highlight of Business Operations:Net sales. Our net sales were $203.4 million for the first quarter of 2009 compared to net sales of $293.7 million for the first quarter of 2008. The 31% decrease in net sales was principally the result of lower average selling prices and reduced volumes in the first quarter of 2009 compared to the same period in 2008. Average selling prices decreased 14% for melted products and 10% for mill products from the first quarter of 2008 to the first quarter of 2009, and product shipment volumes decreased 42% for melted products and 18% for mill products over these same periods. In addition to competitive pricing pressures resulting from lower demand for titanium products, declines in raw material costs, primarily titanium scrap, have also contributed to lower selling prices for certain products under long-term customer agreements, due in part to raw material indexed pricing adjustments included in certain of these agreements. Although we believe long-term global demand trends for titanium are favorable, recent adjustments in production schedules for Boeing and Airbus, delays in the development of the Boeing 787 and a weak global economy are expected to continue to impact customer inventory levels, product demand and product selling prices until global economic conditions improve and commercial aerospace production schedules stabilize.
Gross margin. For the first quarter of 2009, our gross margin was $39.4 million as compared to $81.1 million for the first quarter of 2008, reflecting primarily decreases in the average selling prices and volumes for our melted and mill products. Additionally, the favorable impacts on our gross margins from declining raw material costs, primarily titanium scrap, were largely offset by higher per-unit overhead costs resulting from lower production volumes.
Operating income. Our operating income for the first quarter of 2009 was $26.4 million compared to $62.8 million for the same period of 2008, reflecting primarily the decline in gross margin.
Operating activities. Cash flow from operations is considered a primary source of our liquidity. Changes in pricing, production volume and customer demand, among other things, could significantly affect our liquidity. Cash provided by operating activities decreased $34.1 million, from $59.0 million for the first three months of 2008 to $24.9 million for the first three months of 2009. The net effects of the following significant items contributed to the overall decrease in cash provided by operating activities:
Investing activities. Cash flows used in our investing activities decreased from $50.4 million in the first three months of 2008 to $5.2 million in the first three months of 2009. Our capital expenditures were $35.6 million during the first three months of 2008 compared to $8.1 million in 2009. Capital projects and other significant investing activities include the following:
Read the The complete Report