Titanium Repurchases Shares

Titanium Metals Corporation(TIE) announced the purchase of 600,000 shares of its common stock. The shares were purchased at a price of $13.8305 per share exclusive of commissions.

Few days back, the company also repurchased 600,000 shares of its common stock at an average price of $13.6492 per share (exclusive of commissions).

Recently, the company released its financial results for the second quarter of 2011. Titanium reported net earnings of $31.5 million or 18 cents per share in the second quarter of 2011, surpassing the Zacks Consensus Estimate of 16 cents and increasing from the prior-year earnings of $19.0 million or 11 cents per share.

Quarterly revenues of $272 million increased 28.3% year over year, beating the Zacks Consensus Estimate of $267 million. Increased sales were driven by a rise in sales volumes for both melted and mill products, primarily reflecting improved demand for titanium products in the commercial aerospace sector.

Cost of sales jumped 22.1% over the prior-year quarter to $209.1 million. As a percentage of sales, costs plunged 76.9% in the reported quarter from 80.8% in the year-ago quarter. For the second quarter of 2011, gross profit was $62.9 million compared with $40.8 million in the second quarter of 2010, reflecting higher sales volume and the related efficiencies resulting from greater utilization of its manufacturing capacity, as demand continues to improve.

Selling, general, and administrative expense also increased 16.7% year over year to $16.8 million.

Operating income in the reported quarter spiked significantly by 74% to $46.5 million. Increased manufacturing activity, together with Titanium’s ongoing focus on cost control, contributed to improved operating income versus the prior year.

Melted product shipments of 1,790 metric tons increased 37.2% from last year’s shipments of 1,305 metric tons. Average selling price moved down slightly from $20.70 per kilogram to $20.65 per kilogram. Milled products shipments of 4,220 metric tons also surged 33.1% from 3,170 metric tons and product prices plunged to $51.15 per kilogram from $53.10 per kilogram in the second quarter of 2010.

Titanium Metals faced increased demand in the industrial sector as infrastructure and chemical projects were reinvigorated by the global economic recovery. The company expects this trend to continue in 2011. Titanium also expects to drive efficiency through process technology and cost reduction initiatives.

Delaware-based Titanium Metals is the leading worldwide producer of titanium metal products.

Titanium Metals has been successful over the last several years in establishing significant flexibility and cost advantages in its entire manufacturing process. The company’s fiscal discipline and industry experience have allowed it to manage its production rates and costs effectively while investing capital conservatively and maintaining a strong, debt-free balance sheet. The company’s financial strength and operating flexibility position it to take advantage of opportunities for strengthening and expanding its presence in key markets.

The company competes with Allegheny Technologies Inc. (ATI - Analyst Report) and RTI International Metals, Inc. (RTI - Snapshot Report).

We maintain our Neutral recommendation on Titanium. Currently, the company holds a Zacks #2 Rank (Buy).