Precision Castparts Corp. Reports Third Quarter Fiscal 2014 Earnings

Precision Castparts Corp. Reports Third Quarter Fiscal 2014 Earnings

                     Third Quarter Fiscal 2014 Highlights

  *Record EPS from continuing operations of $2.95 (diluted)
  *Record consolidated segment operating margins
  *Record cash generation
  *Completed acquisition of Permaswage

PORTLAND, Ore., Jan. 23, 2014 (GLOBE NEWSWIRE) -- Continuing to ship into
healthy end markets and to effectively leverage operational throughput,
Precision Castparts (NYSE:PCP) reported solid sales and earnings per share in
the third quarter of fiscal 2014, tempered by late-quarter customer schedule
shifts and fewer shipping days in the quarter.

Third Quarter Fiscal 2014 Financial Highlights

Precision Castparts (PCC) sales in the third quarter of fiscal 2014 were $2.36
billion, a 16 percent increase over sales of $2.03 billion a year ago,
reflecting approximately 1 percent organic growth excluding the impact of
contractual pass-through pricing and other changes in metal/revert pricing.
Consolidated segment operating income grew by 27 percent year over year,
rising to $659 million, or 28.0 percent of sales, compared to $518 million, or
25.5 percent of sales, in the same period last year. PCC reported a 27 percent
improvement in net income from continuing operations (attributable to PCC) in
the third quarter, generating $432 million, versus net income of $339 million
a year ago. For the quarter, earnings per share (EPS) from continuing
operations (attributable to PCC) were $2.95 (diluted, based on 146.5 million
shares of stock outstanding), compared to $2.31 (diluted, based on 146.8
million shares of stock outstanding.)

A full quarter of TIMET, Texas Honing, and Synchronous, along with the benefit
from several smaller acquisitions in the Forged Products and Airframe Products
segments, contributed to the growth in year-over-year sales.

Including discontinued operations, the Company's total net income
(attributable to PCC) for the third quarter of fiscal 2014 was $433 million,
or $2.96 per share (diluted).

Business Highlights

Investment Cast Products: Investment Cast Products sales totaled $609 million
in the third quarter, versus $613 million last year, and, despite this small
drop in sales, the segment increased operating income to $218 million, or 35.8
percent of sales this quarter, compared to $209 million, or 34.1 percent of
sales a year ago. Aerospace sales were up by approximately 2 percent, driven
by strong commercial demand, but tempered by decreased military and
regional/business jet demand.Commercial aerospace OEM production, which
accounts for more than 40 percent of the segment's sales, continues to be
robust and is expected to increase as the slope of aircraft build rates
ramps.On the power front, IGT sales of both OEM components and spares showed
an approximate 3 percent decline year over year.Contractual material
pass-through pricing for the segment decreased by approximately $2 million
over the past year, which also contributed to the decline in sales.From a
performance standpoint, Investment Cast Products continued to extract greater
value from some of the Company's most mature businesses by driving
efficiencies and focusing on key operating metrics.

Forged Products:Strongly driven by the addition of TIMET to the segment's top
line, Forged Products third-quarter sales improved year over year by 23
percent, increasing to $1,026 million in the quarter, versus $833 million in
the same period last year.Operating income grew by 51 percent to $261 million
in the quarter, or 25.4 percent of sales, compared to $173 million, or 20.8
percent of sales, a year ago.TIMET continues to flourish and is not only
growing in concert with the aerospace market, but has also gained additional
market share with key customers.Aerospace sales increased by approximately 32
percent year over year, driven primarily by TIMET, with stable base
sales.Similar to Investment Cast Products, component production schedules
continue to hold steady until the next aircraft build ramp.The segment also
continues to make good progress in power markets.Interconnect pipe sales grew
by approximately 52 percent year over year, with a backlog now standing at
nearly one year.Sales to the oil & gas market decreased slightly in the third
quarter of fiscal 2014, compared to very rapid growth in the same quarter a
year ago.The segment's three primary nickel-conversion mills saw alloy
selling prices decline by approximately $38 million, and lower prices for
revert and other alloys negatively impacted sales by approximately $8
million.Contractual material pass-through pricing fell year over year by
approximately $2 million.Operational performance in the Forged Products
segment significantly benefitted from solid improvements at TIMET, as well as
continued cost discipline across the base businesses.

Airframe Products:Airframe Products' sales improved by 23 percent year over
year, with sales increasing to $722 million in the third quarter of fiscal
2014 from $588 million the previous year.Operating income was $216 million,
or 29.9 percent of sales, in the third quarter, versus $178 million, or 30.3
percent of sales, in the same period last year.Segment aerospace sales were
up by 27% percent, with strong, single-digit base sales growth, along with the
addition of several acquisitions.Critical aerospace fastener and
aerostructure shipments are now closely tracking the current base commercial
build rates.In addition, fastener 787 shipments, now at an average of six
shipsets per month, are continuing to close the gap with aircraft production
schedules.Segment growth in aerospace sales will be tied to further ramps in
aircraft production.While lower-margin acquisitions exerted a moderate drag
on Airframe Products' year-over-year operating margins, the segment maintained
its daily attack on improving performance and delivered solid base operational
results, with incremental margins of more than 50 percent.

"In this past quarter, we faced some unprecedented dynamics." said Mark
Donegan, chairman and chief executive officer of Precision Castparts
Corp."Customers significantly shifted delivery schedules very late in the
quarter.We could not control this unusual activity, but our operations could
and did respond to the reality as quickly and aggressively as possible.We
managed our cost base, drove operational efficiencies, and performed well.Our
customers have already begun to re-accelerate schedules in the new calendar
year, and our operations are meeting this demand with an even better cost

"The opportunities for improved operational performance run deeply throughout
our production facilities," Donegan said."TIMET is making exceptional
progress on all fronts: sales, cost take-out, efficiencies, revert
utilization; the list goes on.In addition, we still have in front of us the
benefits of downstream linkages and volume expansion.Our other acquisitions
are gaining traction and steadily contributing to our top and bottom line.And
the base operations continue to pick up market share and deliver cost
improvements quarter after quarter.With resumption of schedules at previous
levels, we believe that we are well-positioned for steady growth going

"We continue to build on a solid foundation of business in all of our major
markets," Donegan said."Our aerospace operations are supporting a
historically high commercial aircraft build rate, and, as the customers take
the rates to the next level, our sales should track that upward slope.In
addition, during the third quarter, we won additional market share on the new
narrow-body engine programs that will power the fleet for the next decade.In
the power world, IGT demand from the OEMs is stable, with upside from
significant share penetration on base programs and upgrades to the installed
base over the next year.The backlog for interconnect pipe has recovered to
healthy levels, with the increased construction of coal-fired power plants,
primarily in Asia.In the oil & gas market, we have shipped the bulk of our
large downhole casing orders and are poised to exploit this knowledge base to
secure long-term positions in the industry.

"During the quarter, we were hit harder than we have ever been before by
last-minute customer schedule shifts, and we do not expect to see them again
to this degree in the foreseeable future," Donegan said."We came to grips
with these late-quarter challenges immediately, and we dealt with them as
effectively as possible.Going forward, we see upside opportunities, and our
operations continue to deliver increased value on higher volumes.In addition,
our balance sheet is solid.We are generating strong cash flow from our
operations, and we continue to pursue additional acquisitions.While the work
and the focus and the discipline never end, we are poised to continue to
deliver strong results going forward."

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 to(877) 591-4959, Access Code: 8855050.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 8855050.

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 a market leader in manufacturing large, complex
structural investment castings, airfoil castings, forged components,
aerostructures and highly engineered, critical fasteners for aerospace
applications. In addition, the Company is a leading producer of airfoil
castings for the industrial gas turbine market. 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

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        Nine Months Ended
                          December 29, December 30, December 29, December 30,
                           2013         2012         2013         2012
Net sales                  $2,357     $2,034     $7,086     $5,927
Costs and expenses:                                            
Cost of goods sold         1,548       1,381       4,675       4,020
Selling and administrative 150         135         459         376
Interest expense           20          12          59          18
Interest income            (1)         (2)         (3)         (5)
Total costs and expenses   1,717       1,526       5,190       4,409
Income before income tax
expense and equity in      640         508         1,896       1,518
earnings of unconsolidated
Income tax expense         (206)       (167)       (611)       (503)
Equity in earnings of      —           (2)         1           1
unconsolidated affiliates
Net income from continuing 434         339         1,286       1,016
Net income (loss) from     1           (1)         12          (3)
discontinued operations
Net income                 435         338         1,298       1,013
Net income attributable to (2)         —           (5)         (1)
noncontrolling interests
Net income attributable to
Precision Castparts Corp.  $433       $338       $1,293     $1,012
Net income per common
share attributable to PCC                                      
shareholders – basic:
Net income per share from  $2.97      $2.32      $8.79      $6.98
continuing operations
Net income (loss) per
share from discontinued    0.01        —           0.08        (0.02)
Net income per share       $2.98      $2.32      $8.87      $6.96
Net income per common
share attributable to PCC                                      
shareholders – diluted:
Net income per share from  $2.95      $2.31      $8.73      $6.93
continuing operations
Net income (loss) per
share from discontinued    0.01        (0.01)      0.08        (0.02)
Net income per share       $2.96      $2.30      $8.81      $6.91
Weighted average common                                        
shares outstanding:
Basic                      145.3       145.8       145.7       145.5
Diluted                    146.5       146.8       146.7       146.5
                          Three Months Ended        Nine Months Ended
                          December 29, December 30, December 29, December 30,
                           2013         2012         2013         2012
Sales by Segment                                               
Investment Cast Products   $609       $613       $1,833     $1,845
Forged Products            1,026       833         3,152       2,448
Airframe Products          722         588         2,101       1,634
Total                      $2,357     $2,034     $7,086     $5,927
Segment Operating Income                                       
Investment Cast Products   $218       $209       $650       $624
Forged Products            261         173         786         524
Airframe Products          216         178         631         490
Corporate expense          (36)        (42)        (115)       (107)
Consolidated segment       659         518         1,952       1,531
operating income
Interest expense           20          12          59          18
Interest income            (1)         (2)         (3)         (5)
Income before income tax
expense and equity in      $640       $508       $1,896     $1,518
earnings of unconsolidated
^1Reported results for the three and nine months ended December 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)

                                                December 29, March 31,
                                                 2013         2013
Cash and Debt Balances                                       
Cash                                             $337       $280
Total Debt                                       $3,622     $3,807
Total PCC Shareholders' Equity                   $11,026    $9,783
Total Debt, as % of Total Capitalization         24.7 %       28.0 %
Working Capital Items^1                                      
Receivables, Net                                 $1,470     $1,507
Inventories                                      3,310       2,980
Accounts Payable                                 959         940
Total                                            $3,821     $3,547
                                                Three Months Ended
                                                December 29, December 30,
                                                 2013         2012
Selected Cash Flow Items^1                                   
Depreciation and Amortization                    $77        $52
Capital Expenditures                             $85        $78
Acquisitions of Businesses, Net of Cash Acquired $688       $3,108
                                                Three Months Ended
                                                December 29, December 30,
                                                 2013         2012
Sales by Market^1                                            
Aerospace                                        69 %         65 %
Power                                            18 %         21 %
General Industrial & Other                       13 %         14 %
^1 Reported results exclude discontinued operations.

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

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