Precision Castparts Corp. Reports Second Quarter Fiscal 2014 Earnings

Precision Castparts Corp. Reports Second Quarter Fiscal 2014 Earnings

                    Second Quarter Fiscal 2014 Highlights

  *Record sales of $2.36 billion
  *Record EPS (diluted) of $2.90 from continuing operations
  *Record consolidated segment operating margin of 27.5%

PORTLAND, Ore., Oct. 24, 2013 (GLOBE NEWSWIRE) -- Precision Castparts Corp.
(NYSE:PCP) delivered continued strong sales and earnings in the second quarter
of fiscal 2014, driven by solid commercial aerospace demand, steady recovery
in power markets, further top- and bottom-line contributions from TIMET, and
unrelenting focus on operational improvements in each of the Company's


Sales for the second quarter of fiscal 2014 set a record at $2.36 billion, an
increase of 23 percent over sales of $1.93 billion during the same period last
year, reflecting approximately 6 percent organic growth excluding the impact
of contractual pass-through pricing and other changes in metal/revert pricing.
Consolidated segment operating income showed a 30 percent year-over-year gain,
growing to $649 million in the second quarter of fiscal 2014 from $498 million
a year ago. In addition, net income from continuing operations (attributable
to PCC) improved by 28 percent, moving to $425 million in the quarter versus
net income of $332 million in the second quarter of fiscal 2013. Earnings per
share (EPS) from continuing operations (attributable to PCC) were $2.90
(diluted, based on 146.5 million shares outstanding), a 28 percent increase
over last year's $2.27 (diluted, based on 146.4 million shares outstanding).

Including discontinued operations, total net income (attributable to PCC) for
the second quarter of fiscal 2014 was $424 million, or $2.89 per share


Investment Cast Products

Sales for the Investment Cast Products segment totaled $608 million in the
second quarter of fiscal 2014, versus $612 million last year, with a 5 percent
year-over-year gain in operating income, moving to $219 million, or 36.0
percent of sales, compared to $209 million, or 34.2 percent of sales in the
second quarter of fiscal 2013. Contractual pass-through pricing declined by
approximately $3 million year over year.In the quarter, large commercial OEM
and spares sales grew by 10 percent and 4 percent, respectively, tempered by a
decline in regional/business jet and military spares activity.Going forward,
accelerated sales gains will be driven by further demand from production rate
step-ups on existing platforms, continued frequency of takeoffs and landings,
and the segment's increased penetration on the new development engines for
re-engined narrow-body aircraft platforms, which are scheduled to ramp up
quickly into full production.In addition, industrial gas turbine (IGT) OEM
and spares sales, basically flat year over year, still maintained very high
production levels.The segment continues to deliver record operating margins
by consistently implementing new initiatives to reduce costs and improve
productivity on steady, high-volume production.

Forged Products

Forged Products' sales increased by 39 percent year over year, growing to
$1.06 billion in the second quarter of fiscal 2014 from $762 million last
year.Second quarter results included a full quarter of Texas Honing and
TIMET.The segment improved year-over-year operating income by 65 percent,
delivering $258 million of operating income, or 24.3 percent of sales, in the
quarter, versus $156 million, or 20.5 percent of sales, a year ago.The
segment's three primary nickel conversion mills saw alloy selling prices
decline by approximately $37 million year over year, and lower prices for
revert and other alloys negatively impacted sales by an additional $17
million.Contractual pass-through pricing in the second quarter was
essentially flat compared to last year.For the quarter, Forged Products'
aerospace sales grew by approximately 47 percent compared to the same quarter
last year.The base businesses improved sales year over year, compounded by
the addition of a full quarter of TIMET.Similar to Investment Cast Products,
the segment is well-positioned to benefit from ramps in commercial aircraft
build rates and the acceleration of the new re-engining narrow-body
platforms.In the power market, sales also improved year over year by more
than 15 percent, driven by increased demand for downhole casing and
interconnect pipe.TIMET continued to outstrip the Company's initial
expectations, establishing an improved competitive position going
forward.Forged Products achieved these results during the quarter while also
successfully meeting the challenge of rebuilding the 29,000-ton forging press
in Houston on time and under budget.

Airframe Products

Total Airframe Products' sales for the second quarter of fiscal 2014 were $693
million, increasing by 25 percent over sales of $553 million a year
ago.Second quarter results included a full quarter of Synchronous, Klune, and
Progressive, compared to a partial quarter of Klune and Progressive in the
same period last year.Despite absorbing multiple, lower-margin acquisitions,
the segment reported a 27 percent year-over-year gain in operating income,
improving to $210 million, or 30.3 percent of sales, versus $166 million, or
30.0 percent of sales, in the second quarter of fiscal 2013.Sales of critical
aerospace fasteners, which improved slightly year over year, continue to lag
the current commercial aircraft build rates, particularly on the Boeing 787
program, a situation that is expected to resolve moving into early fiscal
2015.On the aerostructures side of the business, aerospace sales increased by
66 percent year over year.The sales improvement was driven by a low
double-digit increase in the base businesses, along with a strong contribution
from acquisitions; further sales growth is anticipated as aircraft build
schedules ramp.From a performance point of view, the segment is successfully
moving higher volumes over an improving cost structure and is rapidly
integrating new acquisitions into the overall operations.Airframe Products
anticipates the closure of the Permaswage acquisition in the third quarter of
fiscal 2014.

"Our businesses are poised to seize the opportunities we have created and to
meet or exceed our expectations," said Mark Donegan, chairman and chief
executive officer of Precision Castparts Corp."The current and future
prospects for further growth in the commercial aerospace market are
solid.Along with our strong positions on every major production aircraft
platform, we have increased our content on the new development engine
programs.We are also being asked by many of the OEMs to move further across
the value stream, linking many of our capabilities and offering more
integrated product packages.In addition, we continue to compete aggressively
to gain share across our entire portfolio.

"Our position in power end markets is also well-established.Industrial gas
turbines are expected to be a favored source of power generation, which should
yield solid upside for spares sales going forward, and we are closely involved
with various OEMs on new and retrofit designs, which are expected to roll out
over the next couple of years.The demand for interconnect pipe, particularly
to supply coal projects in China and India, is recovering rapidly, with strong
demand over the next two years.We are also in active discussions with oil &
gas customers on sizeable, downhole projects with potential for significant
sales expansion going forward.As always, we are dedicated to driving all this
increased production volume efficiently across our assets to deliver the
highest returns possible.

"At this moment in time, the opportunities for this Company are better than
ever," Donegan said."Our position on current high-production commercial
aircraft is solid.We have increased the quantity and value of components in
the new development engines.As we planned, we are very close to achieving a
good balance between our interconnect pipe and oil & gas
production.Interconnect orders are currently recovering at a strong rate,
which will lead to a sustained sales trajectory moving forward, and we are on
the verge of significant oil & gas orders that will establish a solid base
load for our forging operations.In addition, our recent acquisitions are
delivering tremendous sales and earnings growth, with more expected to come,
and our solid balance sheet enables us to pursue a strong list of candidate
companies to further expand and strengthen our market position and deliver
greater shareholder value in the years ahead."

Precision Castparts is hosting a conference call to discuss the above
financial results today at 7:00 a.m. Pacific Time.

NOTE: The presentation charts are immediately available on the Company's web

Individuals interested in monitoring the webcast should paste the following
address into their browser for access to the live conference link:

This link will provide both audio and video through the Internet
connection.You may use the following link to check your computer system's
compatibility any time prior to the call:

For Webcast assistance, please dial (888) 569-3848 or (719) 785-6626.

Those interested in asking questions following the earnings presentation must
dial in for audio access to888-417-8525, Access Code: 3009119.Dial *0 for
technical assistance with dial-in access.In order to assure the conference
begins in a timely manner, please dial in 10 to 15 minutes prior to the
scheduled start time.

You may also gain access to the webcast through Precision Castparts Corp.'s
corporate website:

Following the conference call, you may replay the conference by calling (888)
203-1112 or (719) 457-0820; the replay pass code is 3009119.

Precision Castparts Corp. is a worldwide, diversified manufacturer of complex
metal components and products.It serves the aerospace, power, and general
industrial markets.PCC is the market leader in manufacturing large, complex
structural investment castings, airfoil castings, forged components and highly
engineered, critical fasteners for aerospace applications. The Company is
also the leading producer of airfoil castings for the industrial gas turbine
market. In addition, PCC manufactures extruded seamless pipe, fittings,
forgings, and clad products for power generation and oil & gas applications;
commercial and military airframe aerostructures; and metal alloys and other
materials to the casting, forging, and other industries.

Information included within this press release describing the projected growth
and future results and events constitutes forward-looking statements, within
the meaning of the Private Securities Litigation Reform Act of 1995. Actual
results in future periods may differ materially from the forward-looking
statements because of a number of risks and uncertainties, including but not
limited to fluctuations in the aerospace, power generation, and general
industrial cycles; the relative success of our entry into new markets;
competitive pricing; the financial viability of our significant customers; the
concentration of a substantial portion of our business with a relatively small
number of key customers; the impact on the Company of customer or supplier
labor disputes; demand, timing and market acceptance of new commercial and
military programs, including the Boeing 787; the availability and cost of
energy, raw materials, supplies, and insurance; the cost of pension and
postretirement medical benefits; equipment failures; product liability claims;
relations with our employees; our ability to manage our operating costs and to
integrate acquired businesses in an effective manner, including the ability to
realize expected synergies; the timing of new acquisitions; misappropriation
of our intellectual property rights; governmental regulations and
environmental matters; risks associated with international operations and
world economies; the relative stability of certain foreign currencies; the
impact of adverse weather conditions or natural disasters; the availability
and cost of financing; and implementation of new technologies and process
improvements. Any forward-looking statements should be considered in light of
these factors. We undertake no obligation to update any forward-looking
information to reflect anticipated or unanticipated events or circumstances
after the date of this document.

Precision Castparts Corp.'s press releases are available on the Internet at
Globe Newswire's website – or PCC's home page at If you wish to be removed from this list, please reply

(Unaudited; in millions, except per share data)

                           Three Months Ended           Six Months Ended
                            September 29,  September 30, September  September
                           2013           2012          29,        30,
                                                         2013       2012
Net sales                   $2,362       $1,927      $4,729   $3,893
Costs and expenses:                                              
Cost of goods sold          1,557         1,308        3,127     2,639
Selling and administrative  156           121          309       241
Interest expense            19            3            39        6
Interest income             (1)           (1)          (2)       (3)
Total costs and expenses    1,731         1,431        3,473     2,883
Income before income tax
expense and equity in       631           496          1,256     1,010
earnings of unconsolidated
Income tax expense          (205)         (164)        (405)     (336)
Equity in earnings of       —             1            1         3
unconsolidated affiliates
Net income from continuing  426           333          852       677
Net (loss) income from      (1)           —            11        (2)
discontinued operations
Net income                  425           333          863       675
Net income attributable to  (1)           (1)          (3)       (1)
noncontrolling interests
Net income attributable to
Precision Castparts Corp.   $424         $332        $860     $674
Net income per common share
attributable to PCC                                              
shareholders – basic:
Net income per share from   $2.92        $2.29       $5.82    $4.65
continuing operations
Net (loss) income per share
from discontinued           (0.01)        —            0.08      (0.01)
Net income per share        $2.91        $2.29       $5.90    $4.64
Net income per common share
attributable to PCC                                              
shareholders – diluted:
Net income per share from   $2.90        $2.27       $5.78    $4.62
continuing operations
Net (loss) income per share
from discontinued           (0.01)        —            0.08      (0.01)
Net income per share        $2.89        $2.27       $5.86    $4.61
Weighted average common                                          
shares outstanding:
Basic                       145.5         145.4        145.8     145.3
Diluted                     146.5         146.4        146.8     146.4
                           Three Months Ended           Six Months Ended
                            September 29,  September 30, September  September
                           2013           2012          29,        30,
                                                         2013       2012
Sales by Segment                                                 
Investment Cast Products    $608         $612        $1,224   $1,232
Forged Products             1,061         762          2,126     1,615
Airframe Products           693           553          1,379     1,046
Total                       $2,362       $1,927      $4,729   $3,893
Segment Operating Income                                         
Investment Cast Products    $219         $209        $432     $415
Forged Products             258           156          525       351
Airframe Products           210           166          415       312
Corporate expense           (38)          (33)         (79)      (65)
Consolidated segment        649           498          1,293     1,013
operating income
Interest expense            19            3            39        6
Interest income             (1)           (1)          (2)       (3)
Income before income tax
expense and equity in       $631         $496        $1,256   $1,010
earnings of unconsolidated
^1Reported results for the three and six months ended September 30, 2012 have
been restated for discontinued operations.
^2Operating income represents earnings before interest, income tax expense,
and equity in earnings of unconsolidated affiliates.

(Unaudited; in millions)

                                                September 29, March 31,
                                                 2013          2013
Cash and Debt Balances                                        
Cash                                             $269        $280
Total Debt                                       $3,558      $3,807
Total PCC Shareholders' Equity                   $10,513     $9,783
Total Debt, as % of Total Capitalization         25.3 %        28.0 %
Working Capital Items^1                                       
Receivables, Net                                 $1,531      $1,507
Inventories                                      3,189        2,980
Accounts Payable                                 815          940
Total                                            $3,905      $3,547
                                                Three Months Ended
                                                September 29, September 30,
                                                 2013          2012
Selected Cash Flow Items^1                                    
Depreciation and Amortization                    $70         $48
Capital Expenditures                             $94         $64
Acquisitions of Businesses, Net of Cash Acquired $169        $582
                                                Three Months Ended
                                                September 29, September 30,
                                                 2013          2012
Sales by Market                                               
Aerospace                                        67 %          65 %
Power                                            17 %          19 %
General Industrial & Other                       16 %          16 %
^1 Reported results exclude discontinued operations.

CONTACT: Jay Khetani, Vice President of Investor Relations
         (503) 946-4700

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