PORTLAND, Oregon – July 22, 2008 – Driven by strong demand in each of its primary end markets and continued operational improvements, Precision Castparts Corp. (NYSE:PCP) achieved record sales and earnings in the first quarter of fiscal 2009.

First Quarter FY2009 Financial Highlights

In the first quarter of fiscal 2009, sales totaled $1.83 billion, an 11.2 percent increase over first quarter sales of $1.65 billion last year.  Net income from continuing operations also improved significantly year over year, jumping to $274.9 million this year, compared to $224.1 million a year ago, and generating earnings per share of $1.95 (diluted, based on 140.8 million shares outstanding), an increase of 21.1 percent over earnings per share of $1.61 (diluted, based on 139.6 million shares outstanding) in the first quarter of fiscal 2008. 

Including discontinued operations, Precision Castparts’ net income for the first quarter of fiscal 2009 was $275.8 million, or $1.96 per share (diluted). 

Business Highlights

Investment Cast Products:  The segment posted record sales in the first quarter of fiscal 2009 and achieved unprecedented operating margins through cost reductions, improved productivity, and effective leverage.  Total sales for Investment Cast Products, propelled by solid aerospace OEM and aftermarket shipments and significant industrial gas turbine (IGT) sales growth, were $597.7 million, a 17.3 percent improvement over last year’s first quarter sales of $509.4 million.  Contractual material pass-through pricing during the quarter accounted for approximately $27.5 million of sales, $1.3 million higher than last year.  Year over year, operating income increased by 26.3 percent, hitting a record $151.0 million this year, or 25.3 percent of sales, compared to $119.6 million, or 23.5 percent of sales in the first quarter of fiscal 2008.  The segment’s product lines are well-positioned on all aerospace production programs going forward, and IGT volume is at an all-time high, with first quarter 2009 sales in the Company’s two major IGT plants increasing 20.4 percent over last year.

Forged Products: Forged Products’ sales improved 5.6 percent year over year, setting a record of $816.5 million in the first quarter of fiscal 2009, versus sales of $773.5 million a year ago.  Contractual material pass-through pricing added approximately $84.1 million to first quarter fiscal 2009 sales, compared to $77.5 million last year.  Lower selling prices of external alloy sales from the segment’s three primary mills, combined with increased intercompany sales, negatively impacted sales in the quarter by approximately $50 million versus a year ago.  Operating income for the segment increased 7.8 percent to $182.8 million, or 22.4 percent of sales, in this fiscal year’s first quarter, compared to $169.5 million, or 21.9 percent of sales last year.  Steady demand for OEM and aftermarket components on all major aerospace platforms, along with a greater than 50 percent growth in seamless pipe sales year over year, drove Forged Products sales.  The backlog for extruded pipe now stands at more than $900 million.  Sales opportunities for nickel alloy mill forms to non-aerospace markets continue to increase as well.  The results for the first quarter of fiscal 2009 include Caledonian Alloys Group, which was acquired in July 2007. 

Fastener Products: Continued strong growth of its commercial aerospace critical fastener business fueled Fastener Products sales in the first quarter, with an intense focus on production efficiencies and solid leverage driving the segment to new highs in operating margins. Total segment sales in the first quarter of fiscal 2009 were $420.7 million, a 14.5 percent improvement over sales of $367.4 million a year ago.  Operating income increased 32.7 percent year over year, achieving a record $114.9 million, or 27.3 percent of sales, this year, versus $86.6 million, or 23.6 percent of sales, in the first quarter of fiscal 2008.  Aerospace sales increased 18.5 percent year-over-year, and the demand for critical aerospace fasteners from OEM and aftermarket customers continues to be strong, with further market share opportunities available.

“Our aerospace business continues to see strong and steady demand across the base OEM and aftermarket programs,” said Mark Donegan, chairman and chief executive officer of Precision Castparts Corp.  “With our significant content on the 787 and A380 platforms, we would also expect growth to accelerate as these schedules ramp up to full production.  In addition, we have further opportunities to grow our market position, especially in our fastener business.  And, as we grow, we will continue to leverage sales through greater efficiencies and improved performance across our operations.

“On the power front, IGT demand is putting significant pressure on our manufacturing facilities, and that will continue for the next several quarters until our new facilities come on line,” Donegan said.  “International markets are currently driving this heightened level of activity, but North America is expected to need additional capacity in the future.  Our extruded pipe business, which supports both coal and natural gas installations, is also operating at historically high levels.  Sales in the first quarter increased more than 50 percent over last year, while the backlog now exceeds $900 million.

“Overall, we see solid demand from our core customers for the rest of the year,” Donegan said.  “Our relentless focus on operational efficiencies will continue.  However, it is worth noting once again that our Forged Products operation will be affected by scheduled downtime of its major forging equipment in the second quarter, reducing sales and impacting earnings due to lost leverage.

“Our balance sheet will enable us to capture the right opportunities for continued profitable growth as they arrive,” Donegan said.  “Timing and valuation, tempered with patience and discipline, will, in the end, produce the best long-term value for our shareholders.”

Precision Castparts Corp. is hosting a conference call to discuss the financial results above today at 7:00 a.m. Pacific Daylight Time.  The dial-in information for audio access to (888) 601.3884 or (913)-312.0967, Access Code: 9475224.  Dial *0 for technical assistance.  In order to assure the conference begins in a timely manner, please dial in five to ten minutes prior to the scheduled start time.
Individuals interested in monitoring the webcast should paste the following address into their browser for access to the live conference link: http://www.investorcalendar.com/IC/CEPage.asp?ID=128406.  Access can also be gained through Precision Castparts Corp.’s corporate website:  http://www.precast.com/PCC/CorpPres.html.

Download Fiscal Year 2009 Q1 financials (PDF format).

Precision Castparts Corp. is a worldwide, diversified manufacturer of complex metal components and products.  It serves the aerospace, power generation, automotive, and general industrial and other markets.  PCC is the market leader in manufacturing large, complex structural investment castings, airfoil castings, and forged components used in jet aircraft engines and industrial gas turbines.  The Company is also a leading producer of highly engineered, critical fasteners for aerospace, automotive, and other markets and supplies metal alloys and other materials to the casting and forging industry.

Information included within this press release describing projected growth and future results and events constitutes forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995.  Actual results in future periods may differ materially from the forward-looking statements because of a number of risks and uncertainties, including but not limited to fluctuations in the aerospace, power generation, automotive, and other general industrial cycles; the relative success of the Company’s entry into new markets; competitive pricing; the financial viability of the Company’s significant customers; the availability and cost of materials, energy, supplies, insurance, and pension benefits; equipment failures; relations with the Company’s employees; the Company’s ability to manage its operating costs and to integrate acquired businesses in an effective manner; governmental regulations and environmental matters; risks associated with international operations and world economies; the relative stability of certain foreign currencies; and implementation of new technologies and process improvement.  Any forward-looking statements should be considered in light of these factors.  The Company undertakes no obligation to publicly release any forward-looking information to reflect anticipated or unanticipated events or circumstances after the date of this document.

Contact:
Dwight E. Weber
503-417-4855