(TIE) Titanium Metals and Boeing Extend Deal

Titanium Metals Corporation (TIE) announced that it has extended its titanium supply agreement with The Boeing Company (BA) through December 31, 2018.

In November last year, Titanium entered into a long-term supply agreement with Boeing, which was scheduled to expire on December 31, 2015. As per the agreement, the company will continue to provide, among other things, mutual annual purchase and supply commitments, the extension of the global titanium scrap recycling program and the utilization of the TIMET Global Service Center Network.

Through its focused efforts over the past few years, Titanium has included significant capacity and flexibility to its operations, increasing its ability to respond to future industry growth and demand. Through these efforts and this agreement, the company continues to be a key supplier and strategic partner in Boeing’s current and future programs.

In May 2011, Titanium released its results for the first quarter of 2011. The company reported net earnings of $28.9 million or 16 cents per share in the first quarter of 2011, surpassing the Zacks Consensus Estimate of 14 cents and increasing from the prior-year earnings of $16.7 million or 9 cents per share.

Quarterly revenues of $252 million increased 15.9% year over year, beating the Zacks Consensus Estimate of $232 million. The rise in sales was attributable to an increase in product volumes and higher average selling prices. Improved demand for titanium products in the commercial aerospace and industrial sectors led to the increase in volumes.

Cost of sales jumped by 13.4% over the prior-year quarter to $203.8 million.

Titanium Metals faced increased demand in the industrial sector as infrastructure and chemical projects were reinvigorated by the global economic recovery. The company expects this trend to continue in 2011 and also plans to drive efficiency through process technology and cost-reduction initiatives.

Based in Delaware, Titanium Metals is a leading worldwide producer of titanium metal products.

Titanium Metals has been successful over the last several years in establishing significant flexibility and cost advantages in its entire manufacturing process. The company’s fiscal discipline and industry experience have allowed it to manage its production rates and costs effectively while investing capital conservatively and maintaining a strong, debt-free balance sheet.

Titanium Metals’ financial strength and operating flexibility put it in a good position to take advantage of opportunities that strengthen and expand its presence in key markets.

The company competes with Allegheny Technologies Inc. (ATI) and RTI International Metals Inc. (RTI).

We maintain a Neutral recommendation on Titanium. Currently, it holds a Zacks #3 Rank (Hold).

ALLEGHENY TECH (ATI): Free Stock Analysis Report

BOEING CO (BA): Free Stock Analysis Report

RTI INTL METALS (RTI): Free Stock Analysis Report

TITANIUM METALS (TIE): Free Stock Analysis Report

Zacks Investment Research

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