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The Portland, Oregon-based company's third quarter net income attributable to Precision Castparts shareholders decreased to $207.3 million or $1.46 per share from $269.3 million or $1.91 per share in the same period last year. The company took a pre-tax impairment charge of $11.6 million for the quarter, related to certain assets of discontinued operations.
On average, sixteen analysts polled by Thomson Reuters expected the company to earn $1.63 per share for the quarter. Analysts' estimates typically exclude special items.
The company that serves aerospace, power generation, and general industrial markets recorded total net income from continuing operations of $218.3 million or $1.54 per share, down from $265.1 million or $1.88 per share in the year ago quarter.
Precision Castparts operating income for the quarter was $337.0 million or 25.9% of sales, compared to $404.1 million or 22.5% of sales a year ago.
Quarterly sales declined to $1.302 billion from $1.799 billion in the prior year period. Analysts estimated revenues of $1.39 billion for the quarter.
Precision Castparts said the year-over-year sales decline reflected the negative effects of foreign exchange of approximately $29 million, lower material pass-through of approximately $37 million, and lower selling prices of external alloys at the company's three primary mills of approximately $62 million.
Segment wise, the company's Investment Cast Products sales declined to $447.4 million from $612.0 million a year ago. This segment generated operating income of $136.0 million for the quarter, compared to $156.1 million for the year ago period.
Forged Products segment faced strong downward pressures as sales plunged to $516.7 million from $781.1 million a year ago. Sales for the segment were negatively impacted by lower contractual material pass-through pricing and lower selling prices of external alloy sales from the segment's three primary mills. Continued inventory destocking reduced year-over-year aerospace sales for the segment by more than 30% and general industrial sales in excess of 40%. Operating income and margins were $120.0 million or 23.2% of sales for the quarter, compared to $153.1 million or 19.6% of sales a year ago.
Fastener Products sales dipped to $338.0 million from $405.6 million last year. Destocking at OEMs and distributors negatively impacted aerospace sales by approximately 10% year over year. In addition, weak economic conditions caused a year-over-year decline in general industrial/automotive sales of approximately 20%. Operating margins improved with operating margins of 32.5% on operating income of $109.8 million, compared to operating margins of 29.2% on operating income of $118.5 million a year ago.
For the year-to-date period, the company reported net income of $447.7 million or $3.16 per share, down from $545.1 million or $3.87 per share in the corresponding period last year. Net sales declined to $2.682 billion from $3.609 billion a year ago.
The company's cash on hand was $743 million with a debt of $260 million at the end of the first two quarters.
Providing an update on the acquisition of Carlton, the company said it closed the deal just after the conclusion of the second quarter and expects the acquisition to drive top-and bottom-line results going forward.
Mark Donegan, chairman and chief executive officer, said,"From a top-line perspective, overall sales declines seem to be bottoming out in the second quarter. Aerospace destocking is slowing, and our schedules show that we are closing the gap between orders and aircraft build rates."
In addition, the company said oil and gas and chemical processing orders are getting some traction and showing gradual sales upside in the third and fourth fiscal quarters.
PCP is trading at $99.76, down $5.00 or 4.77%, on a volume of about 1.12 million shares. For the 52-week period, the stock moved in a range between $47.08 and $105.07 on a three month average volume of about 1.22 million shares.
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