Including discontinued operations, Precision Castparts' net income (attributable to PCC) for the third quarter of fiscal 2013 totaled $338.0 million, or $2.30 per share (diluted).
Investment Cast Products:
Investment Cast Products grew year-over-year sales by 5 percent in the third quarter of fiscal 2013, increasing to $612.6 million from $582.1 million a year ago. The segment's aerospace OEM business continues to be aligned with current commercial aircraft production rates; future ramps in aircraft build schedules will serve as the catalyst for increased aerospace growth approximately six months in advance of these step-ups. On the power side, IGT sales grew more than 20 percent over the same quarter last year, driven by strong spares sales and solid OEM activity. The segment continued to deliver strong performance across its production facilities, delivering incremental margins in excess of 50 percent. Third quarter operating income of $209.2 million, or 34.1 percent of sales, marked an 8 percent improvement over operating income of $193.0 million, or 33.2 percent of sales, last year. Contractual material pass-through pricing for Investment Cast Products was relatively flat year over year.
Total sales for Forged Products in the third quarter increased by 9 percent, climbing to $833.2 million, versus sales of $768.0 million in the same period last year. This segment is driven by the same basic commercial aerospace dynamics as Investment Cast Products. The 29,000-ton forging press in Houston has returned to operation but, as anticipated, continues to produce sub-optimal runs to meet specific customer requirements, resulting in further inefficiencies from increased press set-ups, the use of outside services, and rerouting parts. The business still faces delinquencies on high pressure turbine discs of more than $30 million, which should be purged out of the system over the next two quarters. In the oil and gas market, Forged Products increased sales by more than 30 percent. The segment has established a solid production and shipping process for downhole casing, with deliveries steadily improving throughout the quarter and into fiscal 2014. The segment reported operating income of $173.8 million, or 20.9 percent of sales, in the third quarter, compared to operating income of $172.1 million, or 22.4 percent of sales, last year, due primarily to inefficiencies associated with meeting short-cycle customer demand on the 29,000-ton forging press and increased volume of downhole casing, which currently carries lower margins due to embedded learning curve costs. Contractual material pass-through pricing was relatively flat year over year, and selling prices of metal at the segment's three primary mills were approximately $11 million lower than a year ago.
Airframe Products' third quarter sales showed a year-over-year improvement of 32 percent, accelerating to $597.4 million, compared to sales of $452.3 million in last fiscal year's third quarter. The segment delivered strong organic growth in commercial aerospace with a 13 percent increase over last year, reflecting Airframe Products' solid position on all major large commercial aircraft platforms. The segment's core fastener production rates continue to ramp steadily, with effective leverage of these higher volumes, and the aerostructures businesses are showing solid gains in both sales and operating income. By driving productivity and machine utilization improvements, the base aerostructures operations are opening up significant untapped capacity, and the recent acquisitions are providing Airframe Products with new capabilities and capacity, all of which will benefit both the customers and the segment as higher volumes flow over these fixed assets. The segment's operating income increased by 43 percent in the third quarter to $180.1 million, or 30.1 percent of sales, versus $125.7 million, or 27.8 percent of sales last year, including the impact from the results of lower-margin acquisitions.
"Each of the segments had its own unique operational profile during the third quarter," said Mark Donegan, chairman and chief executive officer of Precision Castparts Corp. "Investment Cast Products, which is solidly positioned on all major commercial aircraft programs, is producing at the currently published production rates and continues to leverage this throughput very effectively. Future rate increases will drive this segment's growth, along with any acceleration in the commercial aftermarket and the IGT market. Airframe Products showed solid year-over-year aerospace growth, with strong leverage as critical aerospace fastener volumes continued to accelerate after an extended period of destocking. We are continuing to open up latent capacity in our base aerostructures businesses through improved productivity and machine utilization. In addition, our recent acquisitions bring us not only new capabilities but also production assets from which we will use the same operating models to extract even more capacity, enabling us to deliver greater value to customers and shareholders as volumes increase. Finally, Forged Products fought a tough uphill battle in the quarter to recover from the outage of one of its primary fixed assets during the first and second quarter. To support sub-optimal production runs, the Houston aerospace operations faced continued inefficiencies throughout the quarter and must still work through significant delinquencies before production moves at a more normalized rate. However, in the process, we lost no orders, and we are committed to keeping up with our customers' expectations. We are also now producing the large downhole casing orders in meaningful quantities, with these early shipments bearing the burden of initial development costs. These production rates will continue to accelerate into fiscal 2014, and interconnect pipe sales are beginning to improve as well.