Precision Castparts Corp. (PCC) is established under the laws of State of Oregon and is headquartered in Portland, Oregon. The Company’s common stock is registered and listed on the New York Stock Exchange under the ticker “PCP”.
Precision Castparts Corp. is a leading producer of complex metal products and components. The Company offers high quality forgings, investment castings and fastener Systems / fasteners for application in industrial gas turbine and aerospace. Precision Castparts Corp. also serves general industrial, armament, automotive and medical applications with its investment casting and forging products. The Company offers nickel alloys and cobalt alloys for use in aerospace, oil and gas, chemical processing and pollution control industries. Its fasteners are used in general industrial and automotive markets. The Company’s specialty alloys, metal processing solution and waxes find application in investment casting industry.
Precision Castparts Corp. refiner plates and screen cylinders are used by the paper and pulp industry. The Company also provides ThixoFormed and metal-injection-molded parts to automotive markets.
Precision Castparts has historically done a number of acquisitions adding to the internal growth of the Company. In February 2007, Precision Castparts Corp. completed acquisition Cherry Aerospace for $300.4 million in cash from Acument Global Technologies, Inc. Cherry Aerospace manufactures aerospace blind bolts and rivets and employs nearly 500 people at its site in Santa Ana, California. Further in the same month, the Company acquired GSC Foundries, Inc. for $77.1 million in cash. GSC manufactures steel and aluminum structural investment castings for applications in aerospace, medical and energy markets, and employs employs nearly 375 people in Ogden, Utah.
Earlier in May 2006, Precision Castparts Corp acquired Special Metals Corporation, which manufactures high-performance super alloys and nickel-based alloys. These alloys are primarily used in production of forged components for critical application such as in gas turbines. All these acquisitions have a strategic fit into the current plan of Precision Castparts Corp. and is expected to expanding the Company’s market position and product portfolio.
The Company also focuses on internal growth and has expanded its manufacturing capacity including the titanium facility of PCC Structurals, isothermal forging press at Wyman-Gordon, DS furnaces at PCC Airfoils and a rotary forging machine at SMC. These projects are expected to add nearly $145 million in net sales in 2008.
The company sells its products and components in four major market sectors: power generation, aerospace, automotive and general industrial. Aerospace accounted for 53% of total net sales, followed by Power Generation with 21% of net sales, General Industrial with 20% of net sales and Automotive with 6% of net sales.
General Electric as a customer accounted for majority of the Company’s sales with 11.4% of total sales.
However, this proportion was much lower compared to the previous year when GE accounted for16.8% of the Company’s total sales.
As at April 1, 2007, the Company employed nearly 19,800 people, including nearly 8,500 people in the Investment Cast Products business, 4,700 people in the Forged Products business and 6,600 people in the Fasteners segment.
Financial Performance. The Company’s worldwide net sales increased 52.4% to $5,361 million in 2006 from $3,518 million in 2005. Precision Castparts Corp.’s earnings before income tax increased 79.2% to $921 million in 2006 from $514 million in 2005. The Company’s profit before tax margin improved to 17.2% in 2006 from 14.6% in 2005. The Company’s net income increased 80.6% to $633 million in 2006 from $350.5 million in 2005. Precision Castparts Corp.’s net income margin also increased to 11.8% in 2006 from 10.0% in 2005.
The Company’s positive results were primarily driven by good performance of Special Metals Corporation, a recent acquisition by Precision Castparts corp.; by strong market conditions in the Company’s power generation and aerospace markets; and by Precision Castparts’ relentless focus on operational improvements and cost reduction across all of its operations.
Outlook for 2007. The Company expects an increase of 10%-15% in net sales in 2008 over 2007. The Company order backlog as of April 1, 2007 was $4,764.8 million. The Company expects to convert approximately 80% of the backlog into sales in fiscal 2008.
The Company has organized itself into three different operating segments: Investment Cast Products, Forged Products and Fasteners products.
Investment Cast Products. The Company’s Investment Cast Products segment includes its subsidiaries PCC Airfoils, PCC Structurals and Specialty Materials and Alloys Group. The segment produces investment castings for industrial gas turbine engines, aircraft engines, airframes and medical prostheses.
The segment accounted for nearly 34% of the Company’s total net sales in 2007 fiscal year.
Forged Products. The Company is one of the leading producers of forged components for applications in the power generation and aerospace markets. The aerospace customers of this segment are largely also served by Investment Cast Products segment. The segment accounted for nearly 43% of the Company’s total net sales in 2007 fiscal year.
Fastener Products. The Company has gained significant presence in highly engineered fastener systems, fasteners and precision components through the acquisition of SPS Technologies. The segment accounted for nearly 23% of the Company’s net sales in 2007 fiscal year.