Precision Castparts Corp. (PCP) reported its first quarter 2015 results, missing on both earnings and revenue projections by consensus. Earnings came in a t $3.32 per share, missing the target of $3.35 while revenue came in at $2.53 billion, missing the target of $2.60 billion. The stock reacted by falling nearly 6 percent the day of the earnings report. Despite missing the target, all three operating segments for the company reported strong revenue growth.
In their investment cast products segment, revenues increased 1% year over year, being offset by about $5 million in contractual material pass-through pricing. There was a decline in military and regional aerospace of roughly 8% in the past, which started to move back up in Q1 by about 1%. In their forged products segment, revenues rose about 3%, driven by the increase in regional/business jet sales while military and large commercial sales remained relatively flat. Oil and gas shipments dropped 9% for the quarter, despite interconnect pipe sales surging 50%. Airframe products saw the greatest increase of all the division, surging 18% year over year. The segment saw an improvement in consumer orders, with shipments and demand both increasing. Increased volume that is tied into acquisitions will need to be focused on in the future, leveraging operation execution to meet increasing customer demand. PCP’s cash increased about 3.3% to $373 million, while their debt level stood at $3.9 billion.
Looking forward, the company has stressed 787 components as being crucial to their success, with those components being established as a stronghold. The commercial airplane sector is expected to be an area of growth, while PCP will continue to utilize its vertical integration in its processes. PCP has continued to maintain its strong relationships with its partners and will continue to do so going forward, mitigating the risk involved with them. The acquisition of TIMET should continue to benefit the company through its internal processes, creating more efficiency. Despite the fact that PCP missed earnings, our investment thesis is still intact and our position remains strong.