QUOTE AND NEWS
DailyFinance  May 21  Comment 
New Solution Delivers Customized and Co-Branded Sales Tools and Collateral Directly to Partner Sales RepsBURLINGTON, MA -- (Marketwired) -- 05/21/14 -- and Orlando, FL Today at the SiriusDecisions Summit 2014, TIE Kinetix (EURONEXT AMSTERDAM:...
DailyFinance  Apr 10  Comment 
BURLINGTON, MA -- (Marketwired) -- 04/10/14 -- TIE Kinetix (EURONEXT AMSTERDAM: TIE), a software-as-a-service (SaaS) provider of integration brokerage, E-Commerce and channel marketing solutions, today announced that it has been positioned...
MarketWatch  Apr 3  Comment 
An Evercore Group, LLC former senior managing director has pleaded guilty to insider trading and making false statements, said Preet Bharara, the United States Attorney for the Southern District of New York in a press release. Frank Perkins Hixon,...
DailyFinance  Apr 3  Comment 
BURLINGTON, MA -- (Marketwired) -- 04/03/14 -- TIE Kinetix (Euronext Amsterdam: TIE), a Software-as-a-Service provider of E-Commerce and Channel Marketing solutions, today announced that analyst firm SiriusDecisions released a vendor brief...
DailyFinance  Mar 11  Comment 
BURLINGTON, MA -- (Marketwired) -- 03/11/14 -- TIE Kinetix, (EURONEXT AMSTERDAM: TIE), a Software-as-a-Service (SaaS) provider of E-Commerce and Channel Marketing solutions, today announced the release of the Smart PDF Connect solution as...
The Hindu Business Line  Feb 25  Comment 
eMERG in partnership with TIE Hubli, the Karnataka Chamber of Commerce and Industry, Hubli, and the Belgaum Chambers of Commerce will hold a meet on ‘Opportunities to be a preferred vendor to Gove...
The Hindu Business Line  Nov 17  Comment 
IISc Bangalore has been awarded the TiE Kerala Rolling Trophy in White Knight Business Plan Competition jointly organised by TIE Kerala and IIM-Kozhikode. The winners will participate in the regio...
Cloud Computing  Oct 23  Comment 
TIE Kinetix (EURONEXT AMSTERDAM: TIE), a Software-as-a-Service provider of E-Commerce and Channel Marketing solutions, today announced that Unify, formerly Siemens Enterprise Communications, utilized its Content Syndication Platform to ensure that...
Cloud Computing  Sep 24  Comment 
TIE Kinetix, (EURONEXT AMSTERDAM: TIE) a Software-as-a-Service provider of E-Commerce and Channel Marketing solutions, today announced that it has been selected by Infor, a leading provider of business application software, to help distribute...
Cloud Computing  Jun 26  Comment 
eCoast, a provider of comprehensive channel marketing strategies for demand generation campaigns, today announced that they selected TIE Kinetix as their preferred solution provider of content syndication solutions for their customers. TIE Kinetix...




 

Titanium Metals (NYSE:TIE) is a U.S. based producer of raw and processed titanium products. Historically, titanium, a corrosion-resistant, light, strong, and relatively expensive metal, has been used in aerospace products such as airplane wing supports and jet engines, as well as in armor plating, chemical plants, and pollution control. TIE produces three categories of products: titanium sponge (spongy-looking pure metal used as a raw material), melted titanium and titanium alloys (slabs of metal), and mill titanium (the final processed product). It is also the largest U.S. producer of titanium sponge. The company earned $750 million in net sales and $161 million in net income in 2009.[1]

The company is highly dependent on the aerospace industry. TIE's long-term agreements with aerospace customers, including Boeing Company (BA), Rolls-Royce, and their parts suppliers account for 55% of revenue. Airlines will replace their aging fleets in the next few years, and Boeing expects to sell over 1000 of its new 787 Dreamliner model within the next 5 years. While TIE's long term contracts lick in future revenue they also increase the company's exposure to fluctuations in titanium prices. The nature of their contracts prevents the company from fully passing through increases in the costs of raw materials. TIE’s price for melted titanium has increased in each of the last two years due to demand outstripping supply.

Titanium production is a global business and over the last decade, TIE has faced increasing competition from foreign manufacturers. VSMPO-Avisma, one of TIE's major competitors, is based in Russia and benefits from lower production costs due to its larger economies of scale and lower wage costs. TIE's competitive disadvantage has been partly offset by its lower transportation costs --it is the only titanium producer with major production in the United States-- and its exemption from the 15% tariff levied on imported titanium. Both the U.S. and Japan seem to favor the repeal of this trade policy, however.

Company Overview

TIE is a vertically integrated company and controls its production process from ore extraction to the distribution of its processed titanium products. Melted (ingots and slabs) and mill (bars, plates, and sheets) titanium comprise roughly 90% of its revenue. Its main customers are in the commercial aerospace, military, and industrial sectors, comprising all but a few percent of total revenue.

Business Growth

FY 2009 (ended December 31, 2009)[1]

  • Net sales fell 37% to $750 million.
  • Net income fell 45% to $161 million.

Trends and Forces

  • Worldwide changes in raw titanium prices: Increases in titanium prices cut into TIE’s net income because its large mill product business depends on raw titanium purchased from other titanium suppliers. TIE has a 1 billion USD backlog of orders due to long manufacturing times, and the price of raw titanium when it begins the manufacturing process can change from the price of raw titanium it anticipates when it signs a contract with its customers. In the past year, TIE did not expect titanium prices to increase four-fold and thus could not pass on its increased costs to its customers. Also, when prices are high for a prolonged period, some manufacturers substitute titanium with cheaper metals, which further reduces TIE’s net income.
  • Health of commercial aerospace industry: TIE depends more on the aerospace industry than does the average titanium producer. sales to companies in the commercial aerospace sector accounted for 67% of TIE’s mill products and 46% of the titanium industry’s mill products. Revenue generated from sales to aerospace companies was 60% of total revenue in 2009.[2][3] Since 2001, the aerospace industry has faltered due to a combination of high oil prices, decrease in U.S. air travel after the weakening of the U.S. economy, and significant debt in individual companies. TIE’s cyclical revenues correspond to the cyclical strength and weakness of the commercial aerospace industry.
  • Long-term agreements: TIE has entered into LTAs through 2017 with several major customers, including Boeing and Rolls Royce, which shields it from both the positive and the negative effects of shocks to the price of raw titanium.[4] Also, Boeing expects over 1000 orders for its new 787 Dreamliner model, so TIE stands to profit from Boeing’s increased demand for titanium and titanium-alloy components of its aircraft.

Competition

TIE competes with domestic and international titanium producers on the basis of price and variety of products offered to its customers, and also with producers of metals such as steel and aluminum alloys that could be used as substitutes for titanium. More processed goods command higher prices, and the quality of titanium demanded is fairly inflexible in the aerospace market, the largest market for titanium. TIE’s main competitors for business from commercial aerospace companies are RTI International Metals (RTI), Allegheny Technologies (ATI), and Russia-based VSMPO-Avisma, the largest titanium supplier worldwide. All four companies have secured contracts with Boeing and will be supplying titanium for the production of the 787 Dreamliner. TIE's competitors also produce steel, aluminum, and other alloys in addition to titanium products.

The amount of competition that TIE faces from foreign companies, in particular from VSMPO-Avisma, will depend on the outcome of a tariff negotiation. The U.S. and Japanese governments both favor the elimination of titanium tariffs, which TIE opposes. If these tariffs were repealed, TIE would be exposed to increased competition of scale from VSMPO-Avisma even within the U.S., where it has its largest manufacturing facilities.

References

  1. 1.0 1.1 TIE 2009 10-K "Selected Financial Data" pg. 10
  2. TIE 2009 10-K pg 5
  3. TIE 2009 10-K pg. 7
  4. TIE 2009 10-K pg. 7
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