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.
Alcoa
Investor Contact:
Nahla Azmy, 212-836-2674
Nahla.Azmy@alcoa.com
or
Media Contact:
Christa Bowers, 212-836-2605
Christa.Bowers@alcoa.com