RTI Announces Delay in Filing 2Q Financial Results
PITTSBURGH -- RTI International Metals, Inc. has notified the Securities and Exchange Commission that it will be delayed in filing its financial results for the second quarter of 2013.
The delay is due to the previously announced and ongoing review related to a correction of the accounting methodology that impacts the timing of revenue recognition related to certain energy market projects, the company said.
RTI operates a titanium mill in Niles, Ohio.
RTI’s energy market projects generate less than 10% of the Company’s consolidated net sales, according to the announcement issued early this morning.
Here is text from RTI’s news release:
Company management and RTI’s independent accounting firm, PricewaterhouseCoopers LLP are in the process of evaluating the impact of the correction. The Company will complete the review and file its second quarter Form 10-Q as soon as practicable.
Following a periodic review by the Public Company Accounting Oversight Board (“PCAOB”) of the independent audit conducted by PwC of RTI’s financial statements, the Company determined that, due to the evolving nature of the energy work performed and related contractual arrangements, a portion of RTI’s energy market projects should be accounted for using the “percentage-of-completion” method. This differs from the method previously utilized by the Company on these projects, whereby project revenue and cost of sales were recognized upon completion of individual components of the projects. As a result of this correction, the Company is also evaluating whether any required reallocation of revenues and cost of sales between historical reporting periods would be deemed material, thereby requiring restatement of the applicable historical reported financial results.
The correction of the Company’s revenue recognition methodology for these contracts will have no impact on the total revenues, profitability or cash flows to be realized by the affected energy market projects. As previously disclosed in the Company’s second quarter 2013 preliminary financial results press release issued on July 30, 2013, the cumulative effect of the correction was estimated to result in an increase in net sales of approximately $18.2 million and an offsetting adjustment to cost of sales of approximately $18.6 million. Based on the results of the ongoing review, the current estimate for such a cumulative correction is an increase in net sales of approximately $15.6 million and an offsetting adjustment to cost of sales of approximately $16.1 million.
“RTI is working carefully and diligently with all parties concerned to ensure we implement the appropriate revenue recognition accounting methods for our energy market projects completely and accurately. Even though our energy market projects currently only generate less than ten percent of consolidated net sales, this detailed review involves approximately 20 past and current contracts. As such, we will invest the necessary time to make sure we get the review right,” Dawne Hickton, Vice Chair, CEO and President of RTI International Metals, said. “It is important to note – as we discussed recently in our quarterly conference call – that this accounting issue is isolated to the timing of revenue recognition among historical reporting periods. We are confident that this will have no impact on total contract revenues or income related to these affected projects.
“Most importantly, our underlying business prospects remain unchanged. In that regard, I am confident in reaffirming guidance for full year 2013 sales approaching and possibly exceeding $775 million, total mill product shipments approaching 16.5 million pounds, and full year operating income likely reaching the higher end of a range between $65 million and $75 million,” Ms. Hickton concluded, noting that the achievement of the upper end of the operating income full year guidance range is subject to the completion of the review of the timing of the energy market revenues.
Subject to the completion of the ongoing review, RTI currently intends to report final financial results for the three- and six- months ended June 30, 2013, and comparative periods, including revenues and cost of sales associated with these energy market projects on an as-corrected basis, by applying the percentage-of-completion revenue recognition accounting method to these certain energy market projects from the date of each project’s inception, rather than recording the cumulative effect of the correction solely in the quarter ended June 30, 2013. On this basis, RTI’s current estimate for total preliminary net sales for the three- and six-month periods ended June 30, 2013 is approximately $201 million and approximately $391 million, respectively, and preliminary operating income for the three- and six-month periods ended June 30, 2013 is approximately $20.3 million and $32.7 million, respectively.
SOURCE: RTI International Metals Inc.
Published by The Business Journal, Youngstown, Ohio.
CLICK HERE to subscribe to our free daily email headlines and to our twice-monthly print edition.