TIE ‘s Q3 $0.01 EPS was below the $0.03 EPS analysts’ consensus and my forecast of $0.05 EPS.

Revenues of $181 Million were 2% below my forecast, and 5% above analysts’ consensus.

Prices plummeted 20% from Q2 on Melt product, and increased 6% from Q2 on Mill product.

There is likely “mix” going on in the Mill increase (in the face of steadily declining market prices), perhaps reflecting a further shift toward high-priced rotating grades (principally sales to Rolls Royce), and away from lower-priced structural grades (principally sales to Boeing). The (remarkable !) 20% fall in Melt prices (from Q2) is likely too large to be explained by a “mix” shift; my guess is TIE dumped inventory - - which has been persistently excessive all year - - to clear the decks for a tough environment next year.

Tonnage was 3.6% below my forecast, but that included Melt tonnage 23% above my forecast (consistent with dumping inventory), and Mill tonnage 9% below my forecast (a bust, shipments-wise).

Gross margin was reported at 9.8%. Excluding benefits from currency effects, ***gross margin*** would have been ***8.7%*** - - way off from the 17.4% of the First Half, and from 24.7% in Q3 of 2008. I forecasted a gross margin of 15.8%. (Ok - - I said this forecasting stuff was getting really hard !)

Gross margin was a disaster, principally reflecting the apparent dumping of Melt tonnage at a price 20% below last Quarter. Consistent with dumping, Work in Progress and Finished Goods Inventories dropped precipitously by $37 Million (10%) in the Quarter. But Raw Materials inventory went up $3 Million (2%), likely reflecting stockpiling of contractually required minimum purchases of sponge in excess of present needs (as RTI reported yesterday).

Inventory remains about $100 Million higher than it should be for the Q3 level of sales. So reductions to more satisfactory levels could potentially throw off about another $100 Million of cash, if the market can take the material.

Cash increased by $37 Million in Q3 (with $34 Million of that from inventory reductions), and increased by $99 Million Year-to-Date - - to $144 Million. TIE also has undrawn bank lines for up to another $217 Million of cash, if needed (unlikely, I believe).