LOS ANGELES RTI International Metals Inc. logged a net loss in the fourth quarter, due in part to uncertainty over the impact of new U.S. federal health-care regulations on the medical device business.
The Pittsburgh-based titanium producer, fabricator and distributor took a noncash charge of $18 million for goodwill and other intangible asset impairments for the three months ended Dec. 31, citing "operational issues" and the "impact of uncertainty in the medical device market associated with recent changes and rollout of U.S. health-care law and regulations," the company said in its earnings report Feb. 27.
A 2.3-percent federal excise tax on medical devices is part of the health-care legislation affecting RTI, it said.
RTIs medical device unit, which represents less than 8 percent of the companys total revenue in 2013, "will be a source of growth over time," vice chairwoman, president and chief executive officer Dawne S. Hickton said in a statement.
The companys fourth-quarter operational performance, excluding the impairment charge, "exceeded our full-year revenue and operating income expectations," she said, noting that titanium seat track shipments for Chicago-based Boeings 787 Dreamliner ended the year at a rate of 10 shipsets per month, with full-year and equivalent shipments for the year reaching 78 ship sets vs. total shipments of 44 in 2012.
RTI, which built a new facility at its RTI Claro unit in Montreal in 2007 to produce the seat tracks, had reached a first-ever profitable month on that program in the second quarter (amm.com, July 31). RTIs Houston extrusion facility also supports the seat track program.
RTIs medical device business is part of its New Brighton, Minn.-based RTI Remmele unit, which was purchased in 2012 for $182 million (amm.com, Feb. 15, 2012). In addition to fabricated products in the aerospace and defense markets, the Remmele acquisition was seen as giving RTI greater access to the market for medical titanium and devices, where it had a limited presence. RTI partners with medical device original equipment manufacturers in the production of implants, devices and disposable instruments, according to the companys website.
RTIs titanium segment recorded net sales of $78.2 million in the quarter, down 7.7 percent from $84.7 million in the year-ago quarter due to lower prime mill product trade shipments and "certain European service center defense program volumes," partially offset by a "favorable" product mix. However, the segments operating income for the fourth quarter was up 3.5 percent to $13.7 million, aided by favorable raw material prices.