WAIR Wesco Aircraft Holdings Inc

Wesco Aircraft Holdings, Inc. (“Wesco Aircraft” or the “Company”) (NYSE: WAIR), a leading provider of comprehensive supply chain management services to the global aerospace industry, today announced results for its fiscal fourth quarter and fiscal year end on September 30, 2013.

Highlights

• Fourth quarter revenue of $234.3 million, up 10.5%, a record for the Company, as compared to the prior year period
• Fourth quarter Net Income of $30.0 million, with Diluted Earnings Per Share (“EPS”) of $0.31, Adjusted Net Income of $31.7 million and Adjusted Diluted EPS of $0.33
• Fiscal year 2013 revenue was $901.6 million, up 16.2% compared to $776.2 million in the prior year
• Fiscal year 2013 Net Income of $104.8 million, Diluted EPS of $1.09, Adjusted Net Income of $116.5 million and Adjusted Diluted EPS of $1.22

Fiscal 2013 Fourth Quarter Results

Revenue for the fiscal fourth quarter was $234.3 million, a new Company record, showing an increase of 10.5% compared to $212.2 million in the prior year period. The increase in the North America segment was 9.8% over the prior year. Wesco again demonstrated strong international growth during the quarter with revenues in the Rest of World segment increasing by 22.7% compared to the prior year. In the fourth quarter, ad hoc, JIT and LTA sales as a percentage of net sales represented 39%, 28% and 33% of sales, respectively.

Net Income for the fourth quarter of fiscal 2013 was $30.0 million, resulting in Diluted EPS of $0.31. This compared to $27.0 million or $0.28 per share in the prior year period. The increase in Net Income was due to sustained growth in commercial activity in North America, rapid growth in Rest of World commercial sales and expansion of MRO sales. Adjusted EBITDA for the fourth quarter 2013 was $53.0 million, a 15.5% increase, compared to $45.9 million in the fourth quarter of 2012. Adjusted Net Income was $31.7 million, resulting in Adjusted Diluted EPS of $0.33, compared to $27.4 million, or $0.29 per share, in the prior year period.

Randy Snyder, Wesco Aircraft’s Chairman, President and Chief Executive Officer said, “Wesco Aircraft has again proven its ability to perform and grow as shown in our 2013 fiscal year performance. We are proud of our accomplishments this year. We have won significant business that will fuel our growth going forward. Our MRO business has made great progress and is beginning to penetrate a very promising aftermarket. We have continued to focus on expanding our relationships and market share through our commitment to customer service and quality. This commitment continues to drive Wesco Aircraft’s value proposition to our customers as we partner with them to lower cost and reduce their inventory by outsourcing the supply chain management of component parts, which has real value and flows to their bottom line. Through our focus, I am confident we will continue to create value for our customers and shareholders as we move ahead into our next fiscal year.”

Full Year Fiscal 2013

Revenue for the full year fiscal 2013 was $901.6 million, an increase of 16.2% compared to $776.2 million in 2012. During fiscal 2013, ad hoc, JIT and LTA sales as a percentage of net sales represented 40%, 27% and 33%, respectively, compared to 38%, 26% and 36%, respectively, for fiscal 2012.

Net Income for fiscal 2013 was $104.8 million, resulting in Diluted EPS of $1.09. This compared to $92.2 million or Diluted EPS of $0.96 in fiscal 2012. Adjusted EBITDA in fiscal 2013 was $197.9 million as compared to $172.7 million in fiscal year 2012. Adjusted Net Income was $116.5 million, resulting in Adjusted Diluted EPS of $1.22, a 23.2% increase, compared to $95.1 million, or $0.99 per share, in the prior year.

Financial Outlook

Based on our current outlook and strong momentum, Wesco Aircraft expects full year revenues for fiscal year 2014 of between $975 million to $1.01 billion, representing a growth rate of approximately 8.1% to 12.0% over 2013 results. We believe that this above market growth will be driven by strong demand and execution in the commercial OE and MRO segments, while military revenues remain relatively flat. Diluted EPS and Adjusted Diluted EPS are expected to be in the range of $1.25 to $1.31 and $1.31 to $1.37, respectively. These EPS estimates are based on estimated 2014 fiscal year averages of 95.4 million basic shares and 97.2 million diluted shares. The effective tax rate is expected to be approximately 34% to 35%.

Conference Call Information

The Company will hold a conference call to discuss its fourth quarter 2013 results at 5:00 p.m. Eastern Time this afternoon. A live webcast of the call and accompanying slides may be accessed over the Internet from the Company's Investor Relations website at ir.wescoair.com. The conference call also is available by dialing 888-771-4371 (domestic) or 847-585-4405 (international) and entering passcode 36024812.

A replay of the live conference call will be available approximately one hour after the call. The replay will be available on the Company's website or by dialing 888-843-7419 (domestic) or 630-652-3042 (international) and entering the replay passcode 36024812. The replay will be available on the Company’s website for one year and by telephonic replay until 11:59 p.m. Pacific Time, November 28, 2013.

About Wesco Aircraft

Wesco Aircraft is one of the world's largest distributors and providers of comprehensive supply chain management services to the global aerospace industry. The Company’s services range from traditional distribution to the management of supplier relationships, quality assurance, kitting, just-in-time delivery and point-of-use inventory management. The Company believes it offers the world’s broadest inventory of aerospace parts, comprised of more than 525,000 different stock keeping units, including hardware, bearings, tools, electronic components and machined parts. Wesco Aircraft has more than 1,300 employees across 42 locations in 12 countries.

Non-GAAP Financial Information

“Adjusted Net Income” represents Net Income before: (i) amortization of intangible assets, (ii) amortization or write-off of deferred financing costs and original issue discount, or OID, (iii) Carlyle Acquisition related non-cash stock-based compensation expense, (iv) unusual or non-recurring items and (v) the tax effect of items (i) through (iv) above calculated using an assumed effective tax rate.

“Adjusted Basic EPS” represents Basic EPS calculated using Adjusted Net Income as opposed to Net Income. “Adjusted Diluted EPS” represents Diluted EPS calculated using Adjusted Net Income as opposed to Net Income.

“Adjusted EBITDA” represents Net Income before: (i) income tax provision, (ii) net interest expense, (iii) depreciation and amortization, (iv) Carlyle Acquisition related non-cash stock-based compensation expense and (v) unusual or nonrecurring items.

Wesco utilizes and discusses Adjusted Net Income, Adjusted Basic EPS, Adjusted Diluted EPS and Adjusted EBITDA, which are non-GAAP measures our management uses to evaluate our business, because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. We believe these metrics are used in the financial community, and we present these metrics to enhance investors’ understanding of our operating performance. You should not consider Adjusted EBITDA and Adjusted Net Income as an alternative to Net Income, determined in accordance with GAAP, as an indicator of operating performance. Adjusted Net Income, Adjusted Basic EPS, Adjusted Diluted EPS and Adjusted EBITDA are not measurements of financial performance under GAAP, and these metrics may not be comparable to similarly titled measures of other companies. See below for a reconciliation of Adjusted Net Income, Adjusted Basic EPS, Adjusted Diluted EPS and Adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Forward–Looking Statements

This news release contains forward-looking statements within the meaning of federal security regulations. Such forward-looking statements include the discussion of the Company’s business strategies and the Company’s expectations concerning future financial results. In some cases, you can identify forward-looking statements by terminology such as “guidance,” “may,” “will,” “could,” “should,” “forecasts,” “expects,” “intends,” “plans,” “anticipates,” “projects,” “outlook,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “preliminary,” or the negative of these terms or other comparable terminology. Although the Company believes that such forward-looking statements are reasonable, it cannot assure you that any forward-looking statements will prove to be correct. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: the condition of the aerospace industry; reductions in military spending; business risks associated with the loss of a significant customer; the Company’s failure to compete successfully in a highly competitive global industry; risks associated with the Company’s rapid expansion; supply-chain risk; the Company’s dependence on complex information technology, the Company’s dependence on key personnel; and other risks and uncertainties associated with our business as described in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company undertakes no obligation to update or revise forward-looking statements after the day of the release as a result of new information, future events or developments except as required by law.

ExhibitsExhibit 1: Consolidated Statements of Income (Unaudited)Exhibit 2: Condensed Consolidated Balance Sheets (Unaudited)Exhibit 3: Condensed Consolidated Statements of Cash Flows (Unaudited)Exhibit 4: Non-GAAP Financial Information (Unaudited)

 

Exhibit 1

  Wesco Aircraft Holdings, Inc. Consolidated Statements of Income (UNAUDITED) (In thousands, except for per share data)           Three Months Ended Fiscal Year Ended

September 30, 2013

 

September 30, 2012

September 30, 2013

 

September 30, 2012

  Net sales $234,339 $212,162 $901,608 $776,206 Cost of sales 149,339     133,219   579,309     492,636   Gross profit 85,000 78,943 322,299 283,570 Selling, general and administrative expenses 36,120     36,507   141,497     124,738   Income from operations 48,880 42,436 180,802 158,832 Interest expense, net (4,430 ) (6,465 ) (25,178 ) (24,646 ) Other expense, net 833     (1,140 ) 2,003     (524 ) Income before provision for income taxes 45,283 34,831 157,627 133,662 Provision for income taxes (15,311 )   (7,850 ) (52,815 )   (41,487 ) Net income $29,972     $26,981   104,812     $92,175     Net income per share: Basic $0.32     $0.29   $1.12     $1.00   Diluted $0.31     $0.28   $1.09     $0.96     Weighted average shares outstanding: Basic 94,178 92,779 93,285 92,058 Diluted 96,631 96,183 95,844 95,712    

Exhibit 2

  Wesco Aircraft Holdings, Inc. Condensed Consolidated Balance Sheets (UNAUDITED) (In thousands)    

September 30, 2013

September 30, 2012

  Assets Cash and cash equivalents $78,716 $60,856 Accounts receivable, net 155,944 130,013 Inventories, net 630,264 558,466 Other current assets 28,314 53,944 Deferred income taxes 39,671 32,872 Total current assets 932,909 836,151 Long-term assets 698,243 701,265 Total assets 1,631,152 $1,537,416   Liabilities and Stockholders’ Equity Accounts payable $98,934 $79,940 Other current liabilities 21,047 19,788 Income taxes payable 2,953 2,078 Capital lease obligations—current portion 1,184 593 Total current liabilities 124,118 102,399 Long-term debt 568,000 626,000 Capital lease obligations 1,414 205 Deferred income taxes 72,184 55,445 Total Long-term liabilities 641,598 681,650 Total liabilities 765,716 784,049 Total stockholders’ equity 865,436 753,367 Total liabilities and stockholders’ equity $1,631,152 $1,537,416    

Exhibit 3

  Wesco Aircraft Holdings, Inc. Condensed Consolidated Statements of Cash Flows (UNAUDITED) (In thousands)     Fiscal Year Ended

September 30, 2013

 

September 30, 2012

Cash flows from operating activities Net income $104,812 $92,175 Adjustments to reconcile net income to net cash provided by operating activities Amortization of intangible assets 6,599 4,427 Depreciation 4,781 5,536 Amortization of deferred financing costs 7,788 2,803 Bad debt and sales return reserve 411 (218 ) Non-cash foreign currency exchange (322 ) 436 Non-cash stock-based compensation 3,395 1,626 Excess tax benefit related to stock options exercised (6,879 ) (21,476 ) Change in value of derivative - (1,703 ) Deferred income tax provision 9,941 20,616 Loss on fixed asset disposal - 331 Changes in assets and liabilities Accounts receivable (26,972 ) (21,802 ) Income taxes receivable 35,952 (18,022 ) Inventories (72,563 ) (32,344 ) Prepaid expenses and other assets (3,335 ) (2,431 ) Accounts payable 19,330 21,836 Accrued expenses and other liabilities 1,071 1,833 Income taxes payable 820     946   Net cash provided by operating activities 84,829     54,569   Cash flows from investing activities Purchases of property and equipment (7,882 ) (7,310 ) Proceeds from sale of equipment - 2,782 Acquisition of business, net of cash acquired -     (131,894 ) Net cash used in investing activities (7,882 )   (136,422 ) Cash flows from financing activities Proceeds from issuance of long-term debt 625,000 95,000 Repayments of long-term debt (683,000 ) (25,000 ) Financing fees (7,274 ) - Repayment of capital lease obligations (1,146 ) (1,984 ) Excess tax benefit related to stock options exercised 6,879 21,476 Proceeds from exercise of stock options 9,895 7,377 Purchase of Treasury Stock (8,452 )   (0 ) Net cash provided by (used in) financing activities (58,098 )   96,869   Effect of foreign currency exchange rates on cash and cash equivalents (989 )   315   Net increase in cash and cash equivalents 17,860     15,331   Cash and cash equivalents, beginning of period 60,856     45,525   Cash and cash equivalents, end of period $78,716     $60,856      

Exhibit 4

  Wesco Aircraft Holdings, Inc. Non-GAAP Financial Information (UNAUDITED) (In thousands, except for per share data)         Three Months Ended Fiscal Year Ended

September 30, 2013

 

September 30, 2012

September 30, 2013

 

September 30, 2012

  EBITDA & Adjusted EBITDA Net income $29,972 $26,981 $104,812 $92,175 Provision for income taxes 15,311 7,850 52,815 41,487 Interest and other, net 4,430 6,465 25,178 24,646 Depreciation and amortization 2,885     3,062   11,380     9,963   EBITDA 52,598     44,358   194,185     168,271   Unusual or non-recurring items 391     1,525   3,675     4,476   Adjusted EBITDA $52,989     $45,883   $197,860     $172,747     Adjusted Net Income Net income $29,972 $26,981 $104,812 $92,175 Amortization of intangible assets 1,647 1,658 6,599 4,427 Amortization of deferred financing costs 630 601 7,787 2,803 Unusual or non-recurring items 391 (301 ) 3,675 375 Adjustments for tax effect (936 )   (1,514 ) (6,339 )   (4,682 ) Adjusted Net Income $31,704     $27,425   $116,534     $95,098     Adjusted Basic Earnings Per Share Weighted-average number of basic shares outstanding 94,178     92,779   93,285     92,058   Adjusted Net Income Per Basic Shares $0.34     $0.30   $1.25     $1.03     Adjusted Diluted Earnings Per Share Weighted-average number of diluted shares outstanding 96,631     96,183   95,844     95,712   Adjusted Net Income Per Diluted Shares $0.33     $0.29   $1.22     $0.99  

Wesco Aircraft Holdings, Inc.Mark Davidson, Investor Relations661-802-5090Mark.Davidson@wescoair.com