LOS ANGELES RTI International Metals Inc. anticipates higher-than-forecast first-quarter operating results now that a logjam in duty-drawback payments has been broken.
The Pittsburgh-based titanium producer, fabricator and distributor said April 11 it anticipates first-quarter operating earnings in a range of $14 million to $16 million. Earlier this year, RTI said that, despite its expectations for a strong 2013, some "early softness" could result in operating earnings of less than $10 million.
RTI will recover approximately $4 million in import duties under the companys duty-drawback program, which previously were expected to be recovered later in 2013.
Duty drawbacks are commonly employed by domestic companies to recapture duties paid on imports as an offset against exports to overseas customers. However, a significant portion of the payments RTI is receiving is thought to be related to an investigation by U.S. Customs and Border Protection regarding $7.6 million in drawback claims involving the companys sponge imports that were originally disclosed in 2007.
At the time, RTI said its earnings would be affected by an inquiry into an unidentified licensed broker who was being investigated for "filing false claims on behalf of customers, including RTI" (amm.com, July 25, 2007). The investigation also covered claims on behalf of a number of other U.S. importers whose products were later exported after downstream conversion.
The reimbursement disclosed by RTI indicated to some observers that Customs has not only begun to clear some of the old backlog created by the probe, but that it also will begin processing claims "on a more timely basis."
Meanwhile, RTI said its revised forecast doesnt include what vice chairwoman, president and chief executive officer Dawne S. Hickton called the "anticipated disposition of two small, non-titanium businesses." She said the planned selloff reflects RTIs "focus on our downstream, engineered titanium products and services."
Hickton would only say the operations in question involve "noncore businesses that we are in the process of considering for divestiture."
Another factor that wasnt included in the updated forecast is the impact of a voluntary early retirement program, which the company said is "consistent with our desire to drive costs out of the business."
Together, the "negative impact" of the divestitures and added retirement costs are expected to be in a range of $4 million to $6 million, a portion of which might be reported as a discontinued operation, RTI said.