Precision Castparts Corp.
) reported financial results for the fourth quarter and fiscal
2013. Earnings for the quarter came in at $2.82 per share,
surpassing the Zacks Consensus Estimate of $2.77 by 1.8%.
Quarterly earnings were up 22.1% year over year from $2.31 in the
fourth quarter of 2012.
Profits were primarily driven by strong contributions from
recent acquisitions, profits in commercial aerospace production
and stable demand for industrial gas turbine spares.
Total revenue grew 25.3% year over year to $2.44 billion from
$2.0 billion in the prior-year quarter, primarily driven by
accretive acquisitions clinched in the recent past. The company
reported revenue growth across three of its operating segments,
which contributed to the top-line growth.
Investment Cast Products
revenues grew 5.5% year over year to $635.7 million. Revenue
growth was primarily driven by the segment's aerospace OEM
business that is associated with current commercial aircraft
production rates and future ramps in aircraft build schedules.
These factors are expected to be the catalyst for growth for
approximately six months, going forward. On the power side, the
IGT division reported revenue growth of more than 8% over the
prior-year period, attributable to strong spares sales and robust
revenues grew 30.8% year over year to $1.1 billion. The robust
increase in revenue was driven primarily by the Timet
acquisition, which was the largest driver of the sales growth in
the fourth quarter. In addition, throughput improved on the
29,000-ton press, which increased aerospace sales at the Houston
plant by about 25% quarter on quarter. Further, downhole casing
for the oil and gas market also continued to show a robust
shipping profile consequently for the second quarter.
revenues increased a robust 40.4% year over year to $685.1
million. This segment reported strong organic growth in
commercial aerospace with a 10% increase year over year. This
reflects Airframe Products' presence across all major large
commercial aircraft platforms. The segment's core fastener
production rates continued to climb at a sluggish pace, while the
aerostructures businesses are showing solid gains 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 given the higher volume flow.
Consolidated operating income surged 22.5% year over year to
$608.9 million (25.0% of sales) in the reported quarter. This
represents an increase from $497.0 million (25.5% of sales) in
the comparable prior-year quarter. Margins during the quarter
increased to 25.7% from 25.6% in the comparable prior-year
period. Margin growth was also driven by strong synergies from
the Timet acquisition.
Exiting the year, Precision Castparts had a cash balance of
$280.2 million, which was down 59.9% from $698.7 million as on
Apr 1, 2012. The decline is primarily attributable to
acquisitions, stock repurchases and debt repayments.
As on Mar 31, 2013, Precision Castparts had total debt of $3.8
billion versus $208.2 million as on April 1, 2012. The
significant rise in debts is due to the acquisitions. Total
capital expenditure incurred by the company in the quarter
amounted to $118.1 million.
Concurrent with the earnings release, the company provided an
outlook on its performance in the year ahead. Base commercial
aerospace is expected to grow in the coming 12 to 14 months,
driven primarily by the 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 #2 (Buy), which is a good
option at the moment. In addition, some other companies operating
in the same industry and which have a Zacks Rank #2 (Buy) are
Honeywell International Inc
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