Global Fastener News

2004 FIN – Precision Castparts Corp. Shopping for More Fastener Firms

April 13
00:00 2015

October 13, 2004 FIN – Precision Castparts Corp. will sell its Fluid Management Products segment to focus on the fastener industry.

The announcement comes less than a year after PCC acquired Jenkintown, PA-based fastener manufacturer SPS Technologies for about $893 million.
”As we have developed and applied a strategic framework for profitable growth in the years ahead, the pump and valve businesses do not fit with our core competencies and strategic objectives,’” CEO Mark Donegan explained.
The move reflects PCCs goal of making critical parts in highly engineered operations. Two-thirds of the companys $2.2 billion in annual revenues comes from manufacturing large parts for jet engines and gas-turbine engines.
Donegan credited the fluid management businesses for helping to bolster PCCs earnings and cash flow over the past three years, adding stability at a time when our core markets were experiencing unprecedented downturns.
“Now, however, as our aerospace and power generation markets begin to recover, and the SPS operations continue to deliver strong results ahead of expectations, we feel that it is the appropriate time to divest these assets,”’ Donegan noted. ”Our goal is to redeploy the sale proceeds from pumps and vales in value-added acquisitions.”
Donegan said PCC is already pursuing several potential candidates that “fit squarely within our core competencies.’”
PCC will classify the fluid products segment as discontinued operations and take a one-time charge of $245 million during the second quarter of fiscal 2005. Donegan said the divesture would immediately help the companys bottom line.
The fluid segment sale will reduce the companys 15,700-member global workforce by 1,700 workers, most of whom are based in Brookshire, TX.
Donegan said the Portland, OR-based corporation sees a solid future in fasteners and other critical application parts.
“Fiscal 2005 is shaping up to be a very strong year,’” Donegan explained. “Significant market share gains and healthy after-market sales in our core aerospace and industrial gas turbine markets, coupled with continued, solid performance in our SPS operations, are driving increased sales and operating margins.”’
Following the divesture, PCC will report its results in four segments.
In early 2004, PCC reorganized portions of SPS. The SPS Specialty Materials & Alloys group joined the Investment Cast Products segment. It is headquartered at the Muskegon, MI-based Cannon Muskegon alloys operation and continues to be headed by Joe Snowden.
The Aerospace Fasteners and Engineered Fasteners groups now comprise the new Fastener Products segment with about $550 million in annual sales. Steve Hackett, who formerly managed the PCC small structurals casting operations, heads this business.
The Precision Tool Group, formerly part of Engineered Fasteners, was switched to the Industrial Products segment, which makes tooling for fastener machinery. Dennis Konkol, who is based in Waukesha, WI, will continue to head up Industrial Products.  ©2004/2015 Fastener Industry News.
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SPS Pushes PCC Sales Up 69%

SPS helped push Precision Castparts sales up 69% to $697.5 million during the second quarter of fiscal 2005. Overall net income from continuing operations more than doubled to $57.2 million.
Fastener products sales during the quarter totaled $165.1 million, with operating income of $21.4 million.
PCC reported the fastener segment saw dramatic improvement in operating margins quarter over quarter, increasing from mid-single digits to 13%. Aerospace aftermarket sales remain strong, offsetting lower automotive sales as a result of shutdowns at the Big Three automakers during their transition to the new 2005 models.
“While SPS continues to outperform the companys original estimates since being acquired & the year-over-year decrease in margin percentage principally reflects the earnings impact of the lower-margin SPS businesses being included in the current quarter, coupled with increased raw material costs at the companys casting and forging operations,’” PCC said in a written statement.
For the first six months of fiscal 2005 fastener sales were $329.2 million, while operating profit equaled $38 million.
Overall sales for the first six months of fiscal 2005 jumped 65.3% to $1.36 billion, with a net loss of $129.4 million, compared with net income of $48.8 million during the first half of fiscal 2004. ©2004/2015 Fastener Industry News.
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