TIE kicks ass, stock drops 10%
TIE wsa not scheduled to release earnings today, but they did.
TIE kicked ass again
* Sales up 43% to $272M
* Earnings up 45% YoY. If you back out last year's one time $0.03 per share tax credit, the actual increase was ~70%
Some exciting things reported were:
1. Sales prices increased: 37% for mill products and 68% for melted titanium.
Product mix shifted away from mill and towards the higher priced melted titanium.
2. Backlog increased to $1B (another 15% since last quarter)
3. Expansion is on target. The Nevada plant comes on line this year and will increase sponge production almost 50%. There is another expansion coming on line in early 2008, but that's too far out to matter right now.
The airbus problems do have an impact if Boeing does not expand production. That is, if 300 planes can be sold each year but Boeing only manufactures 150, then demand is unmet and titanium demand slips. I think Boeing will announce expansions, it's the smart thing to do.
Stock drops 4% in after hours
First of all, the stock has had a significant run-up: from 22 to 33 in 3 months. A pullback after earnings is more the norm than the exception (of course, I try to find the exceptions).
Secondly, the idea that they missed earnings is absurd. ONLY 1 ANALYST COVERS THIS STOCK. That is meaningless.
Third, they are down on 20,000 shares in afterhours. Wait for tomorrow.
Fourth, ATI also reported similarly: sales up strong, prices rising, and demand stronger than ever. The market turned against cyclicals already, despite the ongoing strength (Alcoa, Nucor, etc). Titanium is not your ordinary commodity and will definitely buck the trend.
It is made in volume by only 5 companies in the world (OPEC is jealous). More importantly: titanium is used in 3 huge growth industries that are immune to an economic slowdown:
1. Military. The US government is using more titanium in weapons. Tanks, submarines, planes - you name it, the amount of consumption is surging.
2. Airplanes. The economy could plunge, and China and India and the Arab countries still want airplanes.
3. Oil drilling. The rise of offshore oil drilling demands more titanium pipes.
Last year they expected to see 2006 earnings of ~$272M. They expect to hit ~$365M.
The key issue going forward is capacity constraint. (I am surprised that they need 2 years to expand their plant, but I don't know what is required.) The 45% (or 70%) growth is quite exciting, but looks low for TIE after the last few years. That's where the supply can help, but it's simply too far out.
HOWEVER, their earnings did decelerate and I didn't hear good explanations (cost of raw materials increased). That may contribute to a drop in price - the perception that things are winding down.
TIE kicked ass again
* Sales up 43% to $272M
* Earnings up 45% YoY. If you back out last year's one time $0.03 per share tax credit, the actual increase was ~70%
Some exciting things reported were:
1. Sales prices increased: 37% for mill products and 68% for melted titanium.
Product mix shifted away from mill and towards the higher priced melted titanium.
2. Backlog increased to $1B (another 15% since last quarter)
3. Expansion is on target. The Nevada plant comes on line this year and will increase sponge production almost 50%. There is another expansion coming on line in early 2008, but that's too far out to matter right now.
The airbus problems do have an impact if Boeing does not expand production. That is, if 300 planes can be sold each year but Boeing only manufactures 150, then demand is unmet and titanium demand slips. I think Boeing will announce expansions, it's the smart thing to do.
Stock drops 4% in after hours
First of all, the stock has had a significant run-up: from 22 to 33 in 3 months. A pullback after earnings is more the norm than the exception (of course, I try to find the exceptions).
Secondly, the idea that they missed earnings is absurd. ONLY 1 ANALYST COVERS THIS STOCK. That is meaningless.
Third, they are down on 20,000 shares in afterhours. Wait for tomorrow.
Fourth, ATI also reported similarly: sales up strong, prices rising, and demand stronger than ever. The market turned against cyclicals already, despite the ongoing strength (Alcoa, Nucor, etc). Titanium is not your ordinary commodity and will definitely buck the trend.
It is made in volume by only 5 companies in the world (OPEC is jealous). More importantly: titanium is used in 3 huge growth industries that are immune to an economic slowdown:
1. Military. The US government is using more titanium in weapons. Tanks, submarines, planes - you name it, the amount of consumption is surging.
2. Airplanes. The economy could plunge, and China and India and the Arab countries still want airplanes.
3. Oil drilling. The rise of offshore oil drilling demands more titanium pipes.
Last year they expected to see 2006 earnings of ~$272M. They expect to hit ~$365M.
The key issue going forward is capacity constraint. (I am surprised that they need 2 years to expand their plant, but I don't know what is required.) The 45% (or 70%) growth is quite exciting, but looks low for TIE after the last few years. That's where the supply can help, but it's simply too far out.
HOWEVER, their earnings did decelerate and I didn't hear good explanations (cost of raw materials increased). That may contribute to a drop in price - the perception that things are winding down.
posted by Andrew at
9:03 PM
2 Comments:
TIE is sinking. I guess market was expecting more from them this time. They need to ramp up the production as the demand is still there. The stock should go up in the long term.
Maybe tie is a good buy @26..Once BA starts moving,maybe that's the time to be long on TIE.
After results "AA" dropped to 26+ and now it is near 29.alcan moved up too..
I hope Ben will not give a surprise by increasing the interest rates one time in december to get rid of inflation.
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