Precision Castparts Corp. (PCP) reported earnings per share from continuing operations of $1.66 for the fourth quarter of 2010, below the Zacks Consensus Estimate of $1.71.
In the fourth quarter, sales for Precision Castparts Corp. totaled $1.4 billion, versus sales of $1.6 billion in the same quarter a year ago.
Segment Details
Investment Cast Products: In the fourth quarter, this segment generated sales of $466.9 million, compared to sales of $536.4 million in the same period a year ago. Segment sales included contractual material pass-through pricing of approximately $11.1 million, versus $11.8 million in the fourth quarter of fiscal 2009.
Forged Products: Forged Products sales totaled $640.3 million in the most recent quarter, versus sales of $678.0 million a year ago. Contractual material pass-through pricing during the quarter accounted for approximately $60.9 million of the segment’s total sales, compared to $88.0 million in the fourth quarter of fiscal 2009.
Fastener Products: For the fourth quarter of fiscal 2010, total sales for Fastener Products were $333.6 million, versus sales of $385.6 million a year ago. Despite this sales decrease, segment operating margins increased to 32.5 percent of sales on $108.4 million of operating income in the fourth quarter from 30.9 percent of sales on $119.3 million in the same period last year.
The company had $112.4 million of cash at year end, with debt balance dropping to $250.0 million, even as it paid off all the debt incurred to acquire two businesses in fiscal 2010.
In fiscal 2010, sales were $5.5 billion, a 19.3% decrease from total sales of $6.8 billion in fiscal 2009, due to aerospace and industrial gas turbine (IGT) customer de-stocking and weakness in general industrial and other markets.
Because of the complexity of the manufacturing process and the application of proprietary technologies, PCP is currently one of the few manufacturers that can consistently produce the largest, complex, structural investment castings in quantities sufficient to meet customers’ quality and delivery requirements.
Its emphasis on low-cost, high-quality products with a timely delivery has enabled it to become the leading supplier of structural and airfoil castings for jet aircraft and IGT engines and to expand into the structural airframe and armament markets. The commercial aerospace market cycle is a critical determinant of demand for precision investment casting products.
Large jet aircraft engines are manufactured by a small number of suppliers, including General Electric (GE), Pratt & Whitney (a division of United Technologies Co., UTX), Rolls-Royce and several joint ventures. As a result, it is believed that a high level of customer service and strong, long-term customer relationships will continue to be important to achieving corporate goals.
PCP has been supplying castings for jet engines to GE for more than 40 years, and has been supplying Pratt & Whitney with castings for more than 30 years for its military and commercial jet engines. In addition, PCP has supplied small structural investment castings to Rolls-Royce for approximately 25 years and large structural castings for approximately 20 years, most recently for use in its Trent series of jet aircraft engines. As PCP has been able to cast larger and more complex parts, manufacturers of large jet aircraft engines have made increasing use of its structural castings.
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