Precision Castparts Corp.
) reported financial results for the third quarter of fiscal 2013
with earnings from continuing operations of $2.32 per share
missing the Zacks Consensus Estimate of $2.48 by 6.5%.
However, earnings were up 8.9% year over year primarily driven
by contributions from recent acquisitions, profits in commercial
aerospace production and stable demand for industrial gas turbine
Total revenue grew 13.4% year over year to $2.0 billion from
$1.8 billion in the prior-year quarter, primarily driven by
accretive acquisitions in the recent past. The company reported
revenue growth across three of its operating segments, which
primarily contributed to the top-line growth.
Investment Cast Products
revenue grew 6.8% year over year to $612.4 million. Revenue
growth was primarily driven by the segment's aerospace OEM
business that is associated with current commercial aircraft
production rates and future ramp up in aircraft build
These factors are expected to be the growth catalysts for the
next 6 months. On the power side, the IGT division reported
revenue growth of more than 20% over the prior-year period,
attributable to strong spares sales and robust OEM activity.
revenue grew 8.5% year over year to $833.2 million. The increase
was driven by the dynamics in the commercial aerospace. Further,
the 29,000-ton forging press in Houston returned to operation,
however, as expected, it continues to produce sub-optimal runs to
meet specific customer requirements, thereby resulting in further
inefficiencies from increased press set-ups, the use of outside
services and rerouting parts.
In the oil and gas market, Forged Products revenue increased
approximately 30%. Forged products segment established a firm
base for production and shipping process for downhole casing with
deliveries gradually increasing throughout the quarter and
expected to grow through fiscal 2014.
revenue increased a robust 32.1% year over year to $597.4
million. This segment reported strong organic growth in the
commercial aerospace with a 13% increase on a year-over-year
basis. This reflects Airframe Products' presence across all major
large commercial aircraft platforms.
The segment's core fastener production rates continue to ramp
at a slow pace while the aerostructures businesses are showing
solid increase in both sales and operating income. The recent
acquisitions made by the company are providing Airframe Products
with new capabilities and capacity, all of which will benefit
both customers and the segment with the higher volume flow.
Consolidated operating income surged 13.1% year over year to
$520.6 million (25.5% of sales) in the reported quarter. This
represents an increase from $457.8 million (25.5% of sales) in
the comparable prior-year quarter.
Exiting the quarter, Precision Castparts had a cash balance of
$483.3 million, which was down 30.8% from $483.3 million as of
April 1, 2012. The decline was primarily attributable to higher
working capital requirements.
As of December 31, 2012, Precision Castparts had total debt of
$3.8 billion versus $208.2 as of April 1, 2012. The significant
increase in debt was due to the acquisitions. Total capital
expenditure incurred by the company in the quarter amounted to
The Board of Directors approved a $750 million program to
repurchase shares of PCP's common stock, effective immediately,
continuing through June 30, 2015.
Concurrent with the earnings release, the company provided
outlook for the year ahead. Base commercial aerospace is expected
to grow in the coming 12 to 14 months, driven primarily by Boeing
787 ramp up.
Furthermore, IGT is also showing good momentum in its
aftermarket backlog as the company is shipping out large
quantities of nickel-based, severe service tubular product over
the upcoming four quarters. The company expects its major end
markets to drive organic growth.
Precision Castparts has a Zacks Rank #3 (Hold), while its
) carries a Zacks Rank #2 (Buy),
Jardine Strategic Holdings
) has a Zacks Rank #1 (Strong Buy), and
Carlisle Companies Incorporated
) has a Zacks Rank #2 (Buy).
CARLISLE COS IN (CSL): Free Stock Analysis
(JSHLY): ETF Research Reports
PRECISION CASTP (PCP): Free Stock Analysis
WORTHINGTON IND (WOR): Free Stock Analysis
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