"In our fourth quarter, we started to realize the solid benefits of a long-term plan for continued profitable growth," said Mark Donegan, chairman and chief executive officer of Precision Castparts. "We have focused on and have been diligent in acquiring the right assets over the last few years, and now those acquisitions have started to deliver on the value we anticipated. Our fourth quarter performance is only an initial data point on a long continuum for improved sales and earnings performance in the future.
"Timet is certainly a significant catalyst in achieving our long-term objectives. We are integrating Timet's businesses at a rapid pace, and we see multiple opportunities for growth and improvement well out into the future. It's a strong first step, but we are really just beginning to scratch the surface of this value-creating opportunity.
"The fourth quarter also showed how well positioned our base businesses are for further upside," said Donegan. "Commercial OEM build rates are solid, with additional acceleration as the 787 program moves from five aircraft per month to 10 by the end of the calendar year, and the 737 rate steps up again in early 2014. We have secured strong positions on the development engines for the new narrow-body platforms and will begin increasing shipments of that hardware starting in the second half of this fiscal year. Our power businesses are improving on several fronts. IGT spares sales have been strong and continue to present upside opportunity, and we are also participating in several upgrade programs, which will drive growth even in a flat OEM market. In addition, shipments of our oil & gas downhole casing continue, with several large contracts currently in the negotiation phase, and the international markets for our interconnect seamless pipe are slowly recovering.
"An unyielding focus on improving performance in all our manufacturing operations will always be what drives this business forward," said Donegan. "Over the past year, we completed 12 acquisitions, the vast majority with margins lower than the Company average, and our overall operating performance increased. Investment Cast Products continues to deliver strong incremental drop-through, and each improvement in operating margins establishes a new data point to beat. The Forged Products segment is benefitting from the fast-paced Timet integration, higher volumes moving across the 29K-ton press, and margin opportunities as future downhole casing production ramps. And, in Airframe Products, double-digit increases in core fastener volumes and aggressive cost management are generating solid incremental margins, and the integration of the new aerostructure acquisitions continues to accelerate. We continue to expect a steady and sustained improvement across our operations for the foreseeable future. The long-term prospects for Precision Castparts are truly exciting."
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