The Golden Boy is in danger of losing his Fortune 400 Richest Person status as his fortune is at risk with TIE. The Golden Boy, of course, is Harold Simmons the Chairman of Titanium Metals. Today's RTI earnings data told the tale that confirmed to me that TIE will miss Q4 earnings, so I have added to my existing puts by doubling down on the position (Mar22.5).I expect TIE to report $0.34/share when it reports sometime in the next 9 days, missing analyst expectations by $0.02 (which was already lowered significantly last quarter).
RTI exceeded their numbers for Q4 as reported by In-Play: 7:10AM RTI Intl Metals beats by $0.04, reports revs in-line; guides FY08 revs in-line (RTI) 54.23 : Reports Q4 (Dec) earnings of $1.08 per share, $0.04 better than the First Call consensus of $1.04; revenues rose 13.9% year/year to $163.8 mln vs the $164.1 mln consensus. Co issues in-line guidance for FY08, sees FY08 revs of $720-$752 mln vs. $731.70 mln consensus. For 2008, we expect mill product shipments to range between 17 - 18 mln pounds at an average realized price lower than that experienced in 2007. We also expect sales to increase 15 - 20% and operating income to increase 7 - 12% versus 2007."
The problem with this earnings release is that RTI's titanium pricing has a multi-quarter lag to TIE's titanium prices, providing little insight into TIE's numbers. However, with back channel chatter that TIE has completed its annual Long Term Pricing Agreements (LTA) with their major customers for 2008 at prices significantly below their 2007 prices and with the erosion of spot market pricing for sponge and scrap, last year's numbers will be unsustainable for 2008.
While the supply/demand imbalance problem may be short lived as the 787 finally ramps up in 2009, I think that 2008 will be the year that wasn't for TIE longs.
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