PORTLAND, Ore., July 26, 2012 (GLOBE NEWSWIRE) — Precision Castparts Corp. (NYSE:PCP) continued to deliver solid sales and earnings performance, tempered by the effect of an outage of the 29,000-ton forging press in Houston, Texas, toward the end of the first quarter.

First Quarter Fiscal 2013 Financial Highlights

Precision Castparts Corp. (PCC) improved year-over-year sales by 17.6 percent in the first quarter of fiscal 2013, with sales of $1.97 billion compared to $1.68 billion last year. Consolidated segment operating income in the first quarter increased by 22.9 percent year over year, growing to $515.5 million, or 26.2 percent of sales, versus $419.5 million, or 25.0 percent of sales in the same period a year ago. Net income from continuing operations (attributable to PCC) totaled $344.0 million in the first quarter, compared to $285.6 million in the first quarter of fiscal 2012. Earnings per share from continuing operations (attributable to PCC) in the quarter were $2.35 (diluted, based on 146.4 million shares outstanding), versus earnings per share from continuing operations (attributable to PCC) of $1.97 (diluted, based on 145.1 million shares outstanding) last year.

Including discontinued operations, Precision Castparts’ net income (attributable to PCC) for the first quarter of fiscal 2013 totaled $341.7 million, or $2.33 per share (diluted).

Business Highlights

Investment Cast Products: The Investment Cast Products segment, which provides the clearest line of sight into trends in aerospace and industrial gas turbine end markets, improved year-over-year sales by 9 percent in the first quarter of fiscal 2013, with $619.7 million in the quarter, compared to $568.8 million a year ago. Segment operating income totaled $206.1 million, or 33.3 percent of sales, versus last year’s segment operating income of $187.1 million, or 32.9 percent of sales. In the first quarter, contractual material pass-through pricing was approximately $19.2 million, compared to $18.3 million a year ago. Increased base production rates at the OEMs, further ramps in the 787 program, and solid aftermarket demand propelled aerospace sales, which were 11 percent higher year over year and also continued to show moderate sequential improvement. For the segment’s industrial gas turbine (IGT) business, spares strength served as the primary driver for sales, with more than 23 percent growth year over year, while OEM backlogs continued to increase as well. Investment Cast Products delivered another quarter of strong performance through its unyielding focus on achieving daily cost reductions in every one of its manufacturing operations.

Forged Products: Sales in the first quarter of fiscal 2013 grew approximately 13 percent, moving to $857.2 million from $758.5 million last year, and the segment improved its operating income to $195.6 million, or 22.8 percent of sales, compared to segment operating income of $156.5 million, or 20.6 percent of sales, a year ago. A full quarter of KLAD, Rollmet, Tru-Form, and RathGibson, as well as a small contribution from Dickson/Aerocraft, were included in the first quarter results. Contractual material pass-through pricing was essentially flat with last year, and the decreasing cost of nickel dropped the selling price of external alloy products from the segment’s three primary mills by approximately $10 million year over year. Forged Products aerospace sales increased by approximately 20 percent in the quarter, spurred by OEM build schedules, solid 787 demand, and the benefit of acquisitions. Deliveries of oil and gas market products improved by approximately 35 percent year over year and continue to build through this fiscal year. During the first quarter, an unplanned outage of the 29,000-ton press in Houston impacted both sales and operating income for the last three weeks of production in the quarter, with the repairs expected to extend roughly five weeks into the second quarter. Despite this unanticipated headwind, the segment delivered strong operating performance in the first quarter by effectively leveraging higher volumes across its high fixed-cost base and continually optimizing metal utilization and yields.

Fastener Products: Sales for Fastener Products increased by approximately 42 percent in the first quarter of fiscal 2012, rising to $492.8 million from $348.0 million last year, which included a full quarter of Primus and a partial quarter of sales from Centra. Segment operating income was $146.2 million, or 29.7 percent of sales, compared to segment operating income of $106.8 million, or 30.7 percent of sales, in the same quarter a year ago. Base critical aerospace fastener sales showed more than 15 percent growth year over year due to base aircraft production increases, slowly improving 787 orders, and heightened distribution activity, and the segment’s aerostructures businesses, including the newer acquisitions, are seeing steady top-line improvement as well. Operationally, the base aerospace fastener businesses are starting to drop through solid incremental margins as larger volumes are leveraged across much improved cost structures, and the aerostructures operations are performing beyond initial expectations and driving their margins higher.

“Our aerospace and power end markets look very solid right now, and, based on what has been announced by our customers and new opportunities we see over the next few years, our growth will continue upward at a steady pace,” said Mark Donegan, chairman and chief executive officer of Precision Castparts Corp. "On the aerospace front, the main drivers will be increased narrow-body and wide-body aircraft deliveries and higher 787 build rates. All of our segments are now building airframe and engine components relatively in sync with current base production, and Fastener Products orders for the 787 program are gradually aligning with build rates.

“We are well-established in our power end markets as well,” Donegan said. "The high availability and low cost of natural gas, along with hotter weather, continues to spark our IGT aftermarket sales, as utilities and independent power producers place more demand on the installed base. In addition, we are starting to see some increased orders from OEMs, which, while not at the rates of the mid-2000s, is an encouraging sign. Our oil and gas business will steadily build with the delivery of the Saudi Aramco and ADNOC orders through the back half of this fiscal year and into the next, and we have several other significant projects in the pipeline. The interconnect pipe market remains stable, with sales upside in the latter half of the year.

“Our acquisition strategy continued to bear fruit in the first quarter,” Donegan said. "We are focusing very strongly on building out our aerostructures platform by consolidating some very attractive properties in what is a very fragmented market. To that end, we acquired Centra Industries during the quarter and announced the addition of Klune and certain Heroux Devtek assets. All of these businesses extend our reach into the aerostructures market, offering us new capabilities and significant opportunities for synergies across our product portfolio. Wyman-Gordon and SPS Technologies demonstrated our ability to establish a beachhead in an industry and progress aggressively forward, and we are confident that these aerostructures businesses will give us the same traction. In addition, the Heroux-Devtek industrial operations will enable Forged Products to do more of its own machining, a capability that otherwise would have required a sizeable capital investment. In addition, we acquired Dickson Testing and Aerocraft Heat Treating during the quarter. We will integrate these businesses and leverage their capabilities across our operations, as well as continue to grow their presence in the aerospace component market worldwide. Looking forward, we are pursuing additional acquisition candidates to enhance shareholder value over the long haul.

“Along the way, we will face some major headwinds,” Donegan said. "Our 29,000-ton forging press in Houston had an unplanned outage late in the quarter, which will extend about five weeks into the second quarter. These repairs, along with the planned 50,000-ton press rebuild in Grafton, Massachusetts, and the normal scheduled maintenance of the other forged complexes for approximately two weeks, will impact sales, absorption, and incremental expenses during the second quarter. We are dealing with these challenges directly and quickly putting them behind us, with a return to business as usual by the third quarter.

“All of our businesses are well-positioned for the future; the long-range growth prospects for the top- and bottom-line are solid,” Donegan said. “We continue to drive all of our operations to perform better than they did the day before and to deliver the results shareholders expect from Precision Castparts.”