Precision Castparts Corp. ( PCP - Analyst Report ) reported financial results for the third quarter of fiscal 2013 with earnings from continuing operations of $2.32 per share missing the Zacks Consensus Estimate of $2.48 by 6.5%.

However, earnings were up 8.9% year over year primarily driven by contributions from recent acquisitions, profits in commercial aerospace production and stable demand for industrial gas turbine spares.

Revenue Details

Total revenue grew 13.4% year over year to $2.0 billion from $1.8 billion in the prior-year quarter, primarily driven by accretive acquisitions in the recent past. The company reported revenue growth across three of its operating segments, which primarily contributed to the top-line growth.

Segment Results

Investment Cast Products revenue grew 6.8% year over year to $612.4 million. Revenue growth was primarily driven by the segment's aerospace OEM business that is associated with current commercial aircraft production rates and future ramp up in aircraft build schedules.

These factors are expected to be the growth catalysts for the next 6 months. On the power side, the IGT division reported revenue growth of more than 20% over the prior-year period, attributable to strong spares sales and robust OEM activity.

Forged Products revenue grew 8.5% year over year to $833.2 million. The increase was driven by the dynamics in the commercial aerospace. Further, the 29,000-ton forging press in Houston returned to operation, however, as expected, it continues to produce sub-optimal runs to meet specific customer requirements, thereby resulting in further inefficiencies from increased press set-ups, the use of outside services and rerouting parts.

In the oil and gas market, Forged Products revenue increased approximately 30%. Forged products segment established a firm base for production and shipping process for downhole casing with deliveries gradually increasing throughout the quarter and expected to grow through fiscal 2014.

Airframe Products revenue increased a robust 32.1% year over year to $597.4 million. This segment reported strong organic growth in the commercial aerospace with a 13% increase on a year-over-year basis. This reflects Airframe Products' presence across all major large commercial aircraft platforms.

The segment's core fastener production rates continue to ramp at a slow pace while the aerostructures businesses are showing solid increase in both sales and operating income. The recent acquisitions made by the company are providing Airframe Products with new capabilities and capacity, all of which will benefit both customers and the segment with the higher volume flow.

Profit

Consolidated operating income surged 13.1% year over year to $520.6 million (25.5% of sales) in the reported quarter. This represents an increase from $457.8 million (25.5% of sales) in the comparable prior-year quarter.

Balance Sheet

Exiting the quarter, Precision Castparts had a cash balance of $483.3 million, which was down 30.8% from $483.3 million as of April 1, 2012. The decline was primarily attributable to higher working capital requirements.

As of December 31, 2012, Precision Castparts had total debt of $3.8 billion versus $208.2 as of April 1, 2012. The significant increase in debt was due to the acquisitions. Total capital expenditure incurred by the company in the quarter amounted to $78.3 million.

Share Repurchase

The Board of Directors approved a $750 million program to repurchase shares of PCP's common stock, effective immediately, continuing through June 30, 2015.

Outlook

Concurrent with the earnings release, the company provided outlook for the year ahead. Base commercial aerospace is expected to grow in the coming 12 to 14 months, driven primarily by Boeing 787 ramp up.

Furthermore, IGT is also showing good momentum in its aftermarket backlog as the company is shipping out large quantities of nickel-based, severe service tubular product over the upcoming four quarters. The company expects its major end markets to drive organic growth.

Precision Castparts has a Zacks Rank #3 (Hold), while its competitors Worthington Industries ( WOR - Snapshot Report ) carries a Zacks Rank #2 (Buy), Jardine Strategic Holdings Ltd. ( JSHLY ) has a Zacks Rank #1 (Strong Buy), and Carlisle Companies Incorporated ( CSL - Snapshot Report ) has a Zacks Rank #2 (Buy).