U.S. Fastener Stock Companies Gather Steam

11/12/2013 2:41:00 PM
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U.S. Fastener Stock Companies Gather Steam

Public companies with fastener holdings achieved favorable gains in the third quarter of 2013, with both revenues and profits showing strength amid strong aerospace and automotive demand.

Those results capped a strong showing in the FIN Fastener Stock Index, which nearly doubled its growth rate in the third quarter of 2013, gaining 8.7% from July to September as compared to 3.9% by an index of related industrial stocks.

During the first nine months of 2013 the FINdex gained 25.1%, besting a 16.6% gain by an index of related industrial stocks.

Precision Castparts Corp. reported Total Airframe Products’ sales, including fasteners, increased 25% to $693 million for the second quarter of fiscal 2014. Fiscal Q2 results included a full quarter of Synchronous, Klune, and Progressive, compared to a partial quarter of Klune and Progressive in the same period last year.

Despite absorbing multiple lower-margin acquisitions, the segment reported a 27% year-over-year gain in operating income, improving to $210 million, or 30.3% of sales, versus $166 million, or 30% of sales.

“Sales of critical aerospace fasteners, which improved slightly year over year, continue to lag the current commercial aircraft build rates, particularly on the Boeing 787 program, a situation that is expected to resolve moving into early fiscal 2015,” PCC stated.

PCC said its Airframe Products segment is “successfully moving higher volumes over an improving cost structure and is rapidly integrating new acquisitions into the overall operations.”

Airframe Products anticipates the closure of the Permaswage acquisition in the third quarter of fiscal 2014.

“At this moment in time, the opportunities for this Company are better than ever,” stated CEO Mark Donegan. “Our position on current high-production commercial aircraft is solid. We have increased the quantity and value of components in the new development engines.”

Six-month Airframe Products revenue grew 32% to $1.38 billion, with profit up 33% to $415 million.

B/E Aerospace reported revenues in its Consumables Management segment (CMS), primarily fasteners, increased 7.3% to $317.4 million in the third quarter of 2013, while operating earnings, adjusted to exclude AIT costs of $6.9 million, rose 11% to $65.7. Q3 adjusted operating margin was 20.7%, an increase of 70 basis points as compared with the prior year period.

“CMS pro forma aftermarket revenues and bookings, giving effect to acquisitions as if they occurred on January 1, 2012, increased at a double-digit rate during the quarter. CMS pro forma revenues increased 5.3% exclusive of sales to its defense and business jet customers,” the company stated.

On a GAAP basis, operating earnings, including AIT costs of $6.9 million, were $58.8 million and increased 7.7% and were 18.5% of sales.

During Q3 B/E Aerospace initiated an expansion of its consumables management segment into the oil and gas services industry via the $75 million acquisition of Blue Dot, a provider of parts distribution, rental equipment, and on-site services. The company plans to provide products and services to remote drilling sites.

Nine-month CMS revenue gained 10.1% to $956.8 million, with operating earnings up 14.2% to $184.9 million. Operating margin of 19.3% expanded 70 basis points.

ITW reported Automotive OEM organic revenues, including fasteners, increased 11.5% to $589 million, with strong growth across all regions. By comparison, worldwide auto builds increased 4%. Automotive OEM operating margins rose 200 basis points to 21.1%. Q3 Automotive OEM operating income was $124 million.

In the first nine months of 2013 Automotive OEM revenues gained 9.7% to $1.79 billion, with operating income of $367 million.

Construction Products organic revenues, including fasteners, increased 3.3% to $440 million due to 9.3% organic revenue growth in North America. Operating margins improved 250 basis points to 16.2%. Operating income was $71 million in Q3.

Nine-month Construction Products revenues fell 0.6% to $1.29 billion, with operating income of $180 million.

Anixter International reported “significant improvement in sales and profitability” in its OEM Supply segment, including results from Anixter Fasteners. OEM Supply sales increased 9.3% to $224.7 million in the third quarter of 2013. Organic sales increased 8.5%.

By region, OEM Supply sales in North America rose 1% to $94 million, while sales in Europe increased 12.3% to $112.1 million and Emerging Market sales improved 32% to $18.6 million.

Q3 OEM Supply operating income rose to $8.4 million compared to adjusted operating income of $0.3 million in the year ago quarter and compares to $5.7 million in the previous quarter. Operating margin of 3.7% compares to adjusted operating margin of 0.2% in the prior year quarter and 2.4% in the second quarter of 2013.

Nine-month OEM Supply sales fell 2.5% to $687.8 million, led by a 7.2% drop in North America sales.

Stanley Black & Decker reported third quarter Engineered Fastening organic growth was relatively flat in the face of a difficult equipment sales comparison, even as organic fastener volume was up 6%.

“The integration of Infastech continues to progress as planned and is on track to deliver its planned synergies,” the company stated.

Overall Industrial segment sales, including fasteners, rose 25% to $771 million in Q3, with unit volumes increased approximately 4%. Pricing was flat for the quarter. Q3 profit grew 15.4% to $109.2 million.

Nine-month Industrial segment sales, including fasteners, rose 19% to $2.27 billion, with profit declined 2% to $307.5 million.

Carpenter Technology reported sales dropped 7% to $498.6 million in the first quarter of fiscal 2014.

“The sales decline can be attributed to the continued Aerospace and Energy supply chain adjustments that impacted near- term order activity of premium and ultra-premium products,” the company stated. “This was partly offset by higher volumes of materials sold into the Transportation and Industrial & Consumer markets.”

Fiscal first-quarter operating income fell 11% to $55.8 million.

Aerospace and Defense segment sales declined 6% to $182.9 million, despite “solid year-over-year growth in titanium fastener demand.”

Simpson Manufacturing reported net sales, including fasteners, increased 13.8% to $195.9 million for the third quarter of 2013. Net income jumped 54% to $20 million.

Q3 North America sales increased 14.7% to $157.3 million, whiles sales in Europe gained 6.3% to $33.9 million and Asian sales rose 57% to $4.5 million.

Net sales to contractor distributors, dealer distributers and lumber dealers increased in Q3, while gross profit improved to $90.2 million.

Simpson said U.S. steel prices increased slightly during the third quarter. The company expects steel prices to continue to increase moderately during the remainder of the year.

Nine-month sales increased 6.5% to $546 million, primarily due to increased sales in North America. Net income rose 20% to $43.3 million.

North America net sales increased 8.6% to $444.8 million during the opening nine months of 2013, with sales Europe decreasing 4.6% to $89.9 million, primarily due to exiting the heavy-duty mechanical anchor business, the region’s economic conditions, lower sales volumes and lower selling prices. Sales in Asia grew 33% to $10.6 million.

TriMas Corp. reported third quarter sales in its Aerospace & Defense segment (consists of Monogram Aerospace Fasteners, Martinic Engineering and NI Industries) increased 27.5% to $26.54 million due to the acquisition of Martinic Engineering and higher sales levels in the blind bolt fastener product lines, partially offset by a decrease in sales from the defense business.

Q3 Aerospace & Defense segment operating profit remained flat, while the related margin percentage decreased primarily due to additional selling, general and administrative costs in support of growth initiatives and acquisitions, as well as new equipment and plant ramp-up costs in the legacy aerospace business.

TriMas said it “continues to invest in this segment by developing and marketing highly-engineered products for aerospace applications, as well as managing existing defense contracts.”

Q3 sales in TriMas’ Energy segment (consists of Lamons including South Texas Bolt & Fitting, CIFAL, Gasket Vedações Técnicas and Wulfrun) increased 4.9% to $47.7 million due to the results of the recent acquisitions and higher sales levels from the international branches.

Q3 Energy segment operating profit dropped 61% to $1.45 million as manufacturing productivity was more than offset by the impact of weaker refinery shutdown activity, which resulted in a less favorable product mix shift towards standard gaskets and bolts, and higher selling, general and administrative expenses in support of branch expansion and acquisitions.

Nucor Corp. reported Cold Finished Steel segment sales, including Nucor Fastener, declined 4% to 113,000 tons in the third quarter of 2013.

Overall Q3 net sales increased 6% to $4.94 billion in Q3 compared with $4.67 billion in the second quarter of 2013 and increased 3% compared with $4.80 billion in the third quarter of 2012.

Average sales price per ton increased slightly from the second quarter of 2013 and decreased 4% from the third quarter of 2012. Total tons shipped to outside customers were 6,166,000 tons in the third quarter of 2013, a 6% increase over the second quarter of 2013 and a 7% increase over the third quarter of 2012.

Third quarter downstream steel products shipments to outside customers decreased 4% from the third quarter of 2012 and increased 2% over the second quarter of 2013.

Nine-month Cold Finished Steel segment sales fell 7% to 359,000 tons.

Overall consolidated net sales decreased 5% to $14.16 billion in the first nine months of 2013. Total tons shipped to outside customers increased 1% over the first nine months of 2012, while average sales price per ton fell 6%.

The average scrap and scrap substitute cost per ton used in the third quarter of 2013 was $372, a decrease of 1% from $377 in the second quarter of 2013 and a decrease of 2% from $380 in the third quarter of 2012. ©2013 GlobalFastenerNews.com

U.S. Fastener Stock Companies Gather Steam

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