UPDATE -- Precision Castparts Corp. Reports Third Quarter Fiscal 2011 Earnings

• Consolidated segment operating income margin of 24.3 percent
• EPS from continuing operations of $1.80 (diluted)
• Total debt of $236.9 million and cash of $822.8 million

PORTLAND, Ore., Jan. 27, 2011 (GLOBE NEWSWIRE) -- Precision Castparts Corp. (NYSE:PCP) achieved solid operating performance in the third quarter of fiscal 2011 on the strength of improved aerospace and general industrial sales and a continued focus on daily production disciplines.

Third Quarter Fiscal 2011 Highlights

Total sales for Precision Castparts Corp. (PCC) increased 16.5 percent in the third quarter of fiscal 2011 over the same period a year ago, climbing to $1.59 billion of sales from last year's $1.36 billion. Consolidated segment operating income for the quarter showed a 9.2 percent increase over a year ago, improving to $386.9 million, or 24.3 percent of sales, versus $354.4 million, or 26.0 percent of sales in the third quarter of fiscal 2010. Net income from continuing operations (attributable to PCC) was $258.7 million for the third quarter of fiscal 2011, or $1.80 per share (diluted, based on 144.1 million shares outstanding), compared to net income from continuing operations (attributable to PCC) of $228.6 million, or $1.61 per share (diluted, based on 142.3 million shares outstanding) last year. Including discontinued operations, net income (attributable to PCC) was $1.78 per share (diluted), versus $1.64 per share (diluted) a year ago. 

Investment Cast Products. Investment Cast Products sales grew 18.3 percent year over year, increasing to $537.7 million in the third quarter, compared to sales of $454.7 million in the third quarter of fiscal 2010. Aerospace sales within the segment were approximately 30 percent higher than last year. After almost a year and a half, customer destocking appears to have come to an end, and aerospace component production schedules have aligned with aircraft build rates, driving higher volumes and better operating leverage. As in the second quarter, industrial gas turbine (IGT) sales were relatively flat year over year, although aftermarket activity continued to show some sequential improvement. Driven by aerospace growth and strong productivity improvements, segment operating income in the quarter increased by 24.2 percent over last year, reaching $170.8 million this quarter, or 31.8 percent of sales, versus $137.5 million, or 30.2 percent of sales, a year ago. Contractual material pass-through pricing rose by approximately $3 million year over year to approximately $13 million in the third quarter of fiscal 2011. 

Forged Products. Forged Products sales for the third quarter totaled $708.5 million, a 20.7 percent increase over sales of $587.0 million in the same period a year ago. In this segment, deliveries to commercial aerospace customers also matched up to aircraft production rates, signaling an apparent end to customer destocking; aerospace sales improved by approximately 25 percent over last year's third quarter. In addition, general industrial sales increased by almost 50 percent year over year, due to both improving world economies and market share gains. These gains were offset by a 30 percent decline in high margin seamless pipe sales. By the end of the fourth quarter, shipments to India and China will begin to increase and then build through fiscal 2012 as new construction projects in these countries get underway. Contractual material pass-through pricing decreased year over year, offset by an increase in selling prices of external alloys sales from the segment's three primary mills, positively impacting Forged Products' third quarter sales by approximately $18 million. The segment's operating income grew by 4.0 percent year over year, moving to $141.8 million, or 20.0 percent of sales for the quarter, compared to $136.4 million, or 23.2 percent of sales, in the third quarter of fiscal 2010. Subsequent to the end of the third quarter, PCC acquired an additional one percent equity interest in the Chengde joint venture, bringing the Company's total ownership to 50 percent. 

Fastener Products.  In the third quarter of fiscal 2011, sales for Fastener Products increased by 6.6 percent over last year, growing to $344.1 million from sales of $322.9 million a year ago. Aerospace sales grew by approximately 5 percent year over year, primarily due to increasing share in new product families, along with aerospace OEM orders coming into line with aircraft build rates and slightly improved aftermarket activity. In addition, Fastener Products' general industrial sales were 15 percent higher than last year's third quarter sales.   Distributor demand for aerospace fasteners is holding steady but showing minimal signs of traction; as of today, these schedules are expected to accelerate by the second quarter of fiscal 2012.   The segment's operating income was $104.8 million, or 30.5 percent of sales, in the quarter, versus operating income of $105.8 million, or 32.8 percent of sales, in the third quarter of fiscal 2010. 

"We seem to have finally put destocking behind us and closed the gap between our casting and forging orders and aircraft build rates," said Mark Donegan, chairman and chief executive officer of Precision Castparts Corp. "From this point, the commercial aerospace operations of those two businesses should track fairly closely to aircraft delivery schedules. General industrial sales have also made a strong contribution to our year-over-year sales growth, and, with additional opportunities for further market penetration, should continue to provide modest sequential upside.