NEW YORK Titanium Metals Corp. (Timet) saw net income and sales fall in the third quarter compared with the same period last year as a rise in average selling prices only partially offset a drop in overall shipment volumes, the company said.
Dallas-based Timet, which last week announced its proposed acquisition by Precision Castparts Corp. (PCC) (amm.com, Nov. 9), recorded net income of $18.6 million for the three months ended Sept. 30, down 25.6 percent from $25 million a year earlier, on sales that slipped 1.8 percent to $257.7 million from $262.5 million.
The companys lower earnings were partially the result of lower industrial product sales by volume, even as it continued to report strong demand for mill products for the commercial aerospace sector, Timet said.
"The commercial aerospace sector is poised for sustained growth over the next several years as announced production rates for next-generation airframes and engines are achieved. Record backlogs for commercial aircraft manufacturers reflect the demand for global fleet replacement and expansion, which will drive significant titanium demand for our business for years to come," president and chief executive officer Bob OBrien said in a statement.
"To position ourselves for the expected demand growth under these platforms as the global fleet expands, we have several capital projects in progress to increase melt capacity and capability and to improve efficiency at facilities in the U.S. and abroad, with completion expected to coincide with the significant ramp-up of production," he added.
Timet reported melted product shipments of 1,300 tonnes in the third quarter, down from 1,565 tonnes in the same year-ago period. This was even as mill product shipments rose slightly to 3,965 tonnes from 3,955 tonnes in the same comparison.
Last week, Portland, Ore.-based PCC announced it entered into a definitive agreement to acquire Timet for $16.50 per share in a cash deal valued at about $2.9 billion.
"Timet will provide us with the titanium capability that has always been a key missing piece of our overall product portfolio," PCC chairman and chief executive officer Mark Donegan said in a statement. "Timets melting expertise and PCCs forging and conversion assets are a complementary strategic fit."
The boards of directors for both companies have each unanimously approved the multibillion-dollar transaction.
Under the terms of the deal, PCC will launch a tender offer to acquire 100 percent of Timets outstanding common stock by Nov. 20, the companies said.