Commercial Aerostructure Titanium Demand Back to the Future?

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1 Commercial Aerostructure Titanium Demand Back to the Future? Dawne S. Hickton Vice Chairman, President & CEO RTI International Metals, Inc. October 8, 2012

2 and the Future Economic Outlook Aerospace Specific Drivers Titanium Specific Drivers Titanium Future 1

3 World Economies: What have the Experts Predicted? % Change in GDP Economic expert predictions yet to be correct World GDP Est 2007/2010 Actual Est e 2013e Source: IMF World Economic Outlook 2

4 World Economies: What have the Experts Predicted? % Change in GDP US GDP Est 2007/2010 Actual Est e 2013e Source: IMF World Economic Outlook 3

5 World Economies: What have the Experts Predicted? 16 China GDP % Change in GDP Est 2007/2010 Actual Est e 2013e Source: IMF World Economic Outlook 4

6 World Economies: What have the Experts Predicted? % Change in GDP European Union GDP e 2013e 0 1 Est 2007/2010 Actual Est 2012 Source: IMF World Economic Outlook 5

7 Global Economic Risk Factors Eurozone Middle East US Election 2012 Sequestration 6

8 and the Future Economic Outlook Aerospace Specific Drivers Titanium Specific Drivers Titanium Future 7

9 Future of Passenger Travel: Demography as Destiny Rising middle class in developing regions Average increase in passenger traffic of 4.7% per year through 2031 Passenger traffic has doubled every 15 years Asia-Pacific Region to lead world traffic by % of total RPKs Source: Airbus Global Market Forecast

10 Risk Factors to Growth Remote meetings Airport security Higher airline ticket prices Availability of qualified pilots 9

11 Fleet Age: Driver of Demand % of Fleet 20 Years or older 44% 39% 22% 15% 15% Source: Airline Monitor 10

12 Fleet Age: Future Aircraft Retirements New Aircraft Provide Operational Advantages Higher efficiency engines Lighter weight aircraft Lower noise pollution New electronics Retirements Over the next 20 years, the airline industry will need 34,000 new airplanes, of which 41 percent will replace older, less efficient airplanes; 59 percent of the new deliveries will reflect growth in emerging markets and evolving business models. Boeing Current Market Outlook

13 Future of New Programs: When Will They Drive Demand? 350 XWB 2014 CSeries neo C 919 MS MAX 2017 Source: Airline Monitor July

14 Aircraft Deliveries: Delivery Forecasts Have Yet to be Correct Projected Vs. Actual Deliveries 2010 Boeing /0 Airbus / /12 30/13 Total to Date /yr. 40/yr. Source: Airline Monitor, Boeing and Airbus 13

15 Future of Aircraft Financing: Will the Money Be There? Access to capital markets Airline earnings under pressure Airline capacity discipline Source: Wells Fargo Securities, Bank of America. 14

16 and the Future Economic Outlook Aerospace Specific Drivers Titanium Specific Drivers Titanium Future 15

17 Buy-Weight Evolution What is the Future of the Buy-to-Fly Ratio? 230k 180k 250k 150k Pounds in thousands Note: Buy-weight for airframe only, no engine or fastener content 16

18 Competitive Threats Aluminum Lithium Near Net Shapes Composite Materials Additive Manufacturing 17

19 Supply Chain Integration Tier 4 Mill product forging, extrusions, and castings Tier 3 Machining and detail part manufacturing Tier 2 Assembly, major detail part manufacturing, and minor systems integration Tier 1 Major assembly, design, and major systems integration Consolidation in the supply chain likely to accelerate: PCC/Primus, ATI/Ladish, RTI/Remmele 18

20 and the Future Economic Outlook Aerospace Specific Drivers Titanium Specific Drivers Titanium Future 19

21 Commercial Aerostructure Titanium Demand CAGR, 14.1% Pounds (in MMs) e 2013e 2014e 2015e 2016e Source: RTI estimates, including fastener stock; October

22 Safe Harbor The information in this presentation, including oral comments, includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and is subject to the safe harbor created by that Act. Because such forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, the impact of global events on the commercial aerospace industry, ultimate titanium content per copy and actual aircraft build rates for new commercial and military aircraft programs, global economic conditions, the competitive nature of the markets for specialty metals, availability and pricing of raw materials, the successful completion of our capital expansion projects, and other risks and uncertainties included in the Company s filings with the Securities and Exchange Commission. Actual results can differ materially from those forecasted or expected. Additional information concerning such factors is contained from time to time in the Company s Securities and Exchange Commission filings, copies of which can be obtained from the Company or the SEC. 21

23 Commercial Aerostructure Titanium Demand Back to the Future? Dawne S. Hickton Vice Chairman, President & CEO RTI International Metals, Inc. October 8, 2012