Precision Castparts Corp. (PCP) released Q3-09 results Tuesday. Total Q3-09 sales were $1,614.7 million, down 3.2% from Q3-08 sales of $1,668.2 million. Q3-09 sales in the Investment Cast Products and Forged Products segments were significantly impacted by the lengthy Boeing strike, with a lesser impact to the Fastener Products segment.

While Boeing (BA) aircraft production rates are resuming, PCP does not expect recovery to pre-strike levels in its fiscal '09 fourth quarter.

Consolidated segment operating income in Q3-09 was $374.6 million, or 23.2 percent of sales, versus $371.9 million, or 22.3 percent of sales in Q3-08, thus overcoming the leverage lost from the Boeing strike. Q3-09 net income from continuing operations totaled $236.8 million, or $1.69 per diluted share (we had projected $1.70), which includes $0.05 per diluted share related to restructuring and asset impairment charges; Q3-09 net income from continuing operations was $241.2 million, or $1.72 per diluted share.

PCP took a tax-effected restructuring and asset impairment charge of $7.9 million, primarily associated with severance costs, during Q3-09. The Company had been hiring for substantial aerospace growth into fiscal 2010, whereas future demand appears to be flattening out, particularly in the casting and forging aerospace businesses.

Including discontinued operations, Q3-09 net income was $1.70 per diluted share. Because of the non-core nature of two automotive fastener operations, coupled with further erosion in the U.S. automotive market, PCP decided to reclassify these two businesses as discontinued operations during the quarter.

In the third quarter of fiscal 2009, PCP closed on three acquisitions: Airdrome, Fatigue Technology, and Hackney Ladish. Airdrome and Fatigue Technology now operate as Fastener Products businesses, while Hackney Ladish has been incorporated into the Forged Products segment. Sales and operating income for these operations from the dates of acquisition are included in Q3-09 results.

According to the Company, Q4-09 includes four additional manufacturing days, with the associated leverage and further cost takeout opportunities; otherwise, the fourth quarter looks very similar to the one just completed.

PCP will continue to be adversely affected by the lingering effects of the Boeing strike, with a state of normalcy probably not returning until the first quarter of fiscal 2010. In addition, the Company will be confronted with the full effects of a major press outage in Houston, including further production inefficiencies, requalification costs at other Wyman-Gordon facilities, and lost leverage.

However, it does appear that that the Company will have this vital press back up and running by the end of the current fiscal year. Also, the Company is anticipating the ramp-up of Boeing 787 production, which will begin six to nine months in advance of initial aircraft deliveries, currently scheduled for the first quarter of calendar-year 2010 (each 787 is worth over $5 million in revenues to PCP); if Boeing can get 787 deliveries up to the 5/week, for which its Everett WA plant is facilitated, it would contribute at least $1.25 billion to PCP's annual sales.

PCP's debt balance was $312.3 million at the end of the third quarter of fiscal 2009, and cash totaled $276.9 million. PCP's debt to total capitalization is now 6.3 percent. Zacks has a Hold opinion on PCP.