Precision Castparts Corp
) reported financial results for the second quarter of fiscal
2013, with earnings from continuing operations of $2.28 per share
missing the Zacks Consensus Estimate of $2.35 by 2.9%.
However, earnings were up 11.8% year over year. Earnings were
primarily driven by contributions from recent acquisitions,
profits in commercial aerospace production and stable demand for
industrial gas turbine spares.
Total revenue grew 8.4% year over year to $1.93 billion
compared with $1.78 billion in the prior-year quarter, primarily
driven by accretive acquisitions done by the company in the
recent past. The company reported revenue growth in two out of
its three operating segments which contributed to the top line
growth. However, the downtime in the company's Forged Products
segment partially offset the top line growth.
Investment Cast Products
revenue grew 6.8% year over year to $612.4 million. Revenue
growth was primarily attributable to the steady ramp up of the
Boeing 787 activity. Moreover, the Industrial gas turbine
sales grew 17% year over year, primarily driven by higher spares
revenue declined 4.7% year over year to $761.2 million. The
decline was primarily attributable severe downtime in the
segments press. During the quarter, the segment witnessed repairs
to its 29,000 ton press in Houston, because of which there were
delays in meeting specific customer demands.
In addition, the segment reported delays to the re-build of
its 50,000 ton press in Grafton. Last but not the least the
segment also had to complete repairs in the principal Carlton
Although the 29,000 ton press at Houston and the 50,000 ton
press at Grafton are the primary volume churners for the company,
the delays did not impact any of Precision Castpatrs major
During the quarter, Precision Castparts renamed its Fasteners
. The segment name was changed to better reflect the combination
the segment carries of fasteners and the aerospace products.
revenue increased a robust 35.8% year over year to $556.9
Organic aerospace sales grew 15% year over year, driven by
stable increase of commercial backlogs and further closing of the
gap between 787 fastener orders and the current Boeing production
rate. Further, the acquisition of Primus, Centra Industries and
Klune Industries also drove the segment revenue.
Consolidated operating income surged 13.6% year over year to
$498.4 million (25.8% of sales) in the reported quarter. This
represents an increase from $439.1 million (24.6% of sales) in
the comparable prior-year quarter.
Exiting the quarter, Precision Castparts had a cash balance of
$193 million which was down 72.3% compared to $698.7 million as
on April 1, 2012. The decline is primarily attributable to higher
working capital requirements.
As on September 30, 2012, Precision Castparts had total debt
of $666 million increasing 220% versus $208.2 as on April 1,
2012. The significant increase in debt is due to the
acquisitions. Total capital expenditure incurred by the company
in the quarter amounted to $64.2 million.
Concurrent with the earnings release, the company provided
outlook about its performance in the year ahead. Base commercial
aerospace is expected to grow in the coming 12 to 14
months, driven primarily by Boeing 787 ramp up.
Futhermore, 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, which faces stiff competition from
Mueller Industries Inc.
), has a Zacks Rank of #4, implying a short-term Sell rating on
MUELLER INDS (MLI): Free Stock Analysis
PRECISION CASTP (PCP): Free Stock Analysis
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