Expands Titanium Capabilities, Fastest Growing
Aerospace Metal;
Adds Advanced Manufacturing and Materials
Technologies
- Increases Alcoa’s 2014 pro forma
aerospace revenue by 13 percent to $5.6 billion
- Contributes $1.2 billion in revenue in
2019, up from $794 million that RTI generated in 2014 and 25
percent EBITDA margin in 2019, including synergies of $100
million
- Complements Alcoa’s titanium mid and
downstream value chain
- Positions Alcoa as a premier aerospace
solutions provider
- Furthers Alcoa’s transformation,
building its value-add portfolio for profitable growth
Lightweight metals leader Alcoa (NYSE: AA) today announced that
it has completed the acquisition of RTI International Metals, Inc.
(NYSE: RTI), a global leader in titanium and specialty metal
products and services for the aerospace, defense, energy and
medical device markets. The merger, announced on March 9, became
effective today.
Under the terms of the merger agreement, each share of RTI
common stock has been converted into the right to receive 2.8315
shares of Alcoa common stock, plus an amount of cash in lieu of
fractional shares of Alcoa common stock.
With RTI, Alcoa expands its reach into titanium—the world’s
fastest-growing aerospace metal—and adds advanced technologies and
materials capabilities for greater innovation power in aerospace
and beyond.
“Today, Alcoa takes its multi-material aerospace portfolio to
greater heights than ever before,” said Klaus Kleinfeld, Alcoa
Chairman and Chief Executive Officer. “By combining the talent and
advanced technology of RTI and Alcoa, we significantly increase
Alcoa’s aerospace market reach. Through this and our other
investments and innovations, we are positioning the Company to
capture even more profitable growth and create greater
sustainable value for our customers, employees and
shareholders.”
Alcoa expects RTI to contribute $1.2 billion in revenue in 2019,
up from $794 million that RTI generated in 2014, with 65 percent of
revenues supported by contracts over the next five years. RTI’s
profitability is expected to reach 25 percent EBITDA margin in
2019. Contracts that underpin RTI’s growth include the recently
announced contract with Airbus for finished titanium structural
supply parts for the new A350-1000 aircraft program. Under the
agreement, Alcoa will supply titanium parts for the fuselage, among
other components.
This transaction positions Alcoa to capitalize on strong growth
in the commercial aerospace sector. Alcoa expects global aerospace
sales growth of 8 to 9 percent in 2015. Projections for 2016 and
2017 sales growth have nearly doubled to 8 and 13 percent, from 4
to 5 percent and 6 percent, respectively, showing the ongoing
strength of the sector. Eighty percent of RTI’s revenues in 2014
were from the aerospace and defense industries. With RTI, Alcoa’s
2014 pro forma aerospace revenue increases by 13 percent to $5.6
billion.
RTI is being integrated as a standalone business unit into
Alcoa’s downstream Engineered Products and Solutions (EPS) segment.
The new business unit, called Alcoa Titanium & Engineered
Products (ATEP), will be led by Eric Roegner who has been named
President of ATEP, effectively immediately. In addition, Roegner
continues as Chief Operating Officer of Engineered Products and
Solutions with responsibility for ATEP and Alcoa Power and
Propulsion, and President of Alcoa Defense.
RTI’s titanium operations span midstream processes such as
melting, ingot casting, bloom, billet, plate and sheet production;
and downstream extrusions for aerospace, oil and gas applications,
high speed machining, and production of integrated subassemblies
primarily for aerospace. These capabilities complement Alcoa’s
titanium investment casting and forging capabilities, and enable a
value-creating closed titanium scrap loop.
RTI’s advanced manufacturing and materials technologies, such as
high-velocity machining, forming, extruding and parts assembly
operations, enable Alcoa to produce some of the largest, most
complex and finished aerospace components. RTI expands Alcoa’s
additive manufacturing capabilities to produce 3D-printed titanium,
specialty metals and plastic parts for aerospace, medical and
energy applications. RTI also grows Alcoa’s portfolio of
cutting-edge materials, including titanium-aluminides, increasingly
used to manufacture lightweight, aerodynamic jet engine parts for
next-generation jet engines.
Holders of RTI common stock whose shares are registered in their
names will be mailed a transmittal form with instructions on how to
exchange their RTI stock certificates for the merger consideration.
Shares of RTI common stock held in book-entry form will
automatically be exchanged for shares of Alcoa common stock in
book-entry form and cash to be paid instead of fractional shares of
Alcoa common stock.
About Alcoa Aerospace
Alcoa has been aggressively growing its aerospace business as
part of the Company’s broader transformation. In 2014, Alcoa
completed the acquisition of global jet engine component leader
Firth Rixson and in March of this year, finalized the acquisition
of TITAL, a leading manufacturer of titanium and aluminum
structural castings for aircraft engines and airframes. Alcoa also
recently announced investments to expand jet engine parts
production in Indiana and Virginia, opened the
world’s largest aluminum-lithium facility in Indiana, and
in Michigan, plans to expand its coatings capabilities for jet
engine components after a $22 million investment in Hot Isostatic
Pressing (HIP). In addition, the Company announced plans to install
advanced aerospace plate manufacturing capabilities in Iowa.
In 2014 the Company announced supply deals exceeding $2 billion
with Boeing and Pratt & Whitney, which included the
world’s first forging for an aluminum fan blade for Pratt &
Whitney’s PurePower® jet engines. The PurePower engine will be
used to power some of the world’s highest volume aircraft,
including the next-generation Airbus A320neo.
About Alcoa
A global leader in lightweight metals technology, engineering
and manufacturing, Alcoa innovates multi-material solutions that
advance our world. Our technologies enhance transportation, from
automotive and commercial transport to air and space travel, and
improve industrial and consumer electronics products. We enable
smart buildings, sustainable food and beverage packaging,
high-performance defense vehicles across air, land and sea, deeper
oil and gas drilling and more efficient power generation. We
pioneered the aluminum industry over 125 years ago, and today, our
more than 60,000 people in 30 countries deliver value-add products
made of titanium, nickel and aluminum, and produce
best-in-class bauxite, alumina and primary aluminum products. For
more information, visit www.alcoa.com, follow @Alcoa on
Twitter at www.twitter.com/Alcoa and follow us on Facebook at
www.facebook.com/Alcoa.
Forward-Looking
Statements
This release contains statements that relate to future events
and expectations and as such constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include those containing such
words as “anticipates,” “believes,” “could,” “estimates,”
“expects,” “forecasts,” “intends,” “may,” “outlook,” “plans,”
“projects,” “seeks,” “sees,” “should,” “targets,”
“will,” “would,” or other words of similar meaning. All
statements that reflect Alcoa’s expectations, assumptions or
projections about the future other than statements of historical
fact are forward-looking statements, including, without limitation,
statements regarding Alcoa’s portfolio transformation, Alcoa’s
plans, objectives, expectations and intentions relating to the
acquisition of RTI International Metals, Inc. (RTI), the
acquisition’s expected contribution to revenues, earnings and
EBITDA and expected cost savings, and Alcoa’s expansion of its
aerospace market reach through titanium capabilities and other
investments and innovations. These statements reflect beliefs and
assumptions that are based on Alcoa’s perception of historical
trends, current conditions, and expected future developments, as
well as other factors management believes are appropriate in the
circumstances. Forward-looking statements are not guarantees of
future performance and are subject to risks, uncertainties, and
changes in circumstances that are difficult to predict. Important
factors that could cause actual results to differ materially from
those expressed or implied in the forward-looking statements
include: (a) deterioration in global economic and financial
market conditions generally; (b) unfavorable changes in the
markets served by Alcoa, including the commercial aerospace market;
(c) increases in the costs of raw materials;
(d) political, economic, and regulatory risks in the countries
in which Alcoa operates or sells products, including unfavorable
changes in laws and governmental policies, civil unrest, imposition
of sanctions, expropriation of assets, or other events beyond
Alcoa’s control; (e) the risk that RTI will not be integrated
successfully or such integration may be more difficult,
time-consuming or costly than expected; (f) the possibility
that certain assumptions with respect to RTI could prove to be
inaccurate; (g) Alcoa’s inability to realize expected benefits, as
planned and by targeted completion dates, from the RTI acquisition
(including achieving the expected levels of synergies, revenue
growth, or EBITDA margin improvement); (h) the loss of key
employees, customers, suppliers and other business relationships of
Alcoa or RTI as a result of the acquisition; (i) the effect of
an increased number of Alcoa shares outstanding as a result of the
acquisition of RTI; (j) the impact of potential sales of Alcoa
common stock issued in the RTI acquisition; and (k) the other
risk factors summarized in Alcoa’s Form 10-K for the year ended
December 31, 2014, Forms 10-Q for the quarters ended
March 31, 2015 and June 30, 2015, and other reports filed
with the Securities and Exchange Commission. Alcoa disclaims any
obligation to update publicly any forward-looking statements,
whether in response to new information, future events or otherwise,
except as required by applicable law. Market projections are
subject to the risks discussed above and other risks in the
market.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150723005783/en/
AlcoaInvestor Contact:Nahla Azmy,
212-836-2674Nahla.Azmy@alcoa.comorMedia Contact:Christa Bowers,
212-836-2605Christa.Bowers@alcoa.com
Arconic (NYSE:ARNC)
Historical Stock Chart
From Feb 2024 to Mar 2024
Arconic (NYSE:ARNC)
Historical Stock Chart
From Mar 2023 to Mar 2024