Wesco Aircraft Holdings, Inc. (NYSE: WAIR), a leading provider
of comprehensive supply chain management services to the global
aerospace industry, today announced results for its fiscal 2015
third quarter ended June 30, 2015.
Fiscal 2015 Third Quarter Highlights
- Net sales were $368.7 million, a
decrease of seven percent compared to the third quarter of fiscal
2014.
- Organic sales fell four percent,
adjusted for the impact of foreign currency movements.
- Diluted earnings per share were $0.17
compared to $0.29 in the fiscal 2014 third quarter; adjusted
diluted earnings per share were $0.22, compared to $0.34 in the
fiscal 2014 third quarter.
- Adjusted earnings before interest,
taxes, depreciation and amortization (EBITDA) were $42.6 million,
compared to $63.2 million in the third quarter of fiscal 2014.
- Free cash flow was $32.6 million,
compared to $31.4 million in the fiscal 2014 third quarter.
Fiscal 2015 Third Quarter Results
Net sales in the fiscal 2015 third quarter were $368.7 million,
compared to $395.6 million in the prior-year period. Organic sales
adjusted for the impact of foreign currency movements decreased
four percent in the fiscal 2015 third quarter compared to the
prior-year period. The decrease in adjusted organic sales was
primarily due to a large commercial hardware contract that
concluded on March 31, 2015, as previously disclosed.
Net income in the fiscal 2015 third quarter was $16.5 million,
or $0.17 per diluted share. Adjusted net income was $21.3 million,
or $0.22 per diluted share, compared to $33.0 million, or $0.34 per
diluted share in the same period last year. The change primarily
reflects the decline in adjusted organic sales and higher selling,
general and administrative expenses. In addition, other expense,
net increased by $4.0 million due to realized and unrealized
foreign exchange losses associated with certain transactions.
Dave Castagnola, president and chief executive officer, said,
“The decline in sales is almost entirely due to the large
commercial contract we had previously identified and the impact of
currency. We are working on opportunities to improve sales growth
through new business wins and expanding scope with existing
customers. We are aligning sales resources around programs and
channels that are expected to drive our growth, better capture
synergies in our combined offering and improve our overall
performance.”
Castagnola continued, “As we work through this period of
transition, we are addressing higher selling, general and
administrative costs through an acceleration of the integration of
Haas and Wesco. We are sizing our business according to current
sales levels and aligning our structure to support activities in
the future. We are taking specific actions starting in our fiscal
2015 fourth quarter, which we believe will deliver greater
stability and set a foundation for sustained results in fiscal 2016
and beyond. Cash flow remains strong; we will continue to be
prudent in how we invest that cash as we implement our plans.”
Fiscal 2015 Year-to-Date Results
Net sales in the first nine months of fiscal 2015 were $1.1
billion, an increase of 19 percent compared to $947.7 million in
the prior-year period. The net sales increase was driven primarily
by the Haas acquisition.
Wesco Aircraft’s organic sales (excluding the Haas acquisition)
decreased seven percent in the fiscal 2015 year-to-date period,
compared to the same period last year. Net sales in the first nine
months of fiscal 2014 also included a $26.4 million one-time
pull-forward sale related to the contract with the large commercial
customer discussed above, as well as a $6.4 million settlement
related to the termination of a separate contract. Additionally,
foreign currency movements negatively impacted sales in the first
nine months of fiscal 2015 by two percent. Excluding these factors,
organic sales were down one percent.
Net income in the first nine months of fiscal 2015 was $59.3
million, or $0.61 per diluted share. Adjusted net income in the
fiscal 2015 year-to-date period was $74.1 million, or $0.76 per
diluted share, compared to $90.9 million, or $0.93 per diluted
share in the same period last year.
Adjusted EBITDA in the first nine months of fiscal 2015 was
$146.2 million, compared to $162.1 million in the first nine months
of fiscal 2014.
Conference Call Information
Wesco Aircraft will hold a conference call to discuss its fiscal
2015 third quarter results at 2:00 P.M. PDT (5:00 P.M. EDT) today,
August 6, 2015. The conference call can be accessed by dialing
888-771-4371 (domestic) or 847-585-4405 (international) and
entering passcode 40304776.
The conference call will be simultaneously broadcast on Wesco
Aircraft’s Investor Relations website (http://ir.wescoair.com).
Following the live webcast, a replay will be available on the
company’s website for one year. A telephonic replay also will be
available approximately two hours after the conference call and may
be accessed by dialing 888-843-7419 (domestic) or 630-652-3042
(international) and entering passcode 40304776. The telephonic
replay will be available until August 13, 2015 at 11:59 P.M.
PDT.
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 one of the world’s broadest inventories of aerospace
products, comprised of more than 600,000 active SKUs, including
hardware, bearings, tools, electronic components, machined parts
and chemicals. Wesco Aircraft has more than 2,700 employees across
86 locations in 19 countries.
To learn more about Wesco Aircraft, visit our website at
www.wescoair.com. Follow Wesco Aircraft on LinkedIn at
https://www.linkedin.com/company/wesco-aircraft-corp.
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, (iii)
unusual or non-recurring items and (iv) the tax effect of items (i)
through (iii) above calculated using an assumed effective tax
rate.
Adjusted basic earnings per share represents basic earnings per
share calculated using adjusted net income as opposed to net
income.
Adjusted diluted earnings per share represents diluted earnings
per share 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 and (iv) unusual or non-recurring items.
Organic sales represent total net sales less net sales
attributable to Haas Group, which was acquired in February
2014.
Free cash flow represents cash from operations less purchases of
property and equipment.
Wesco Aircraft utilizes and discusses adjusted net income,
adjusted basic earnings per share, adjusted diluted earnings per
share, adjusted EBITDA, organic sales and free cash flow, which are
non-GAAP measures management uses to evaluate the company’s
business, because it believe these measures assist investors and
analysts in comparing the company’s performance across reporting
periods on a consistent basis by excluding items that management
does not believe are indicative of core operating performance.
Wesco Aircraft believes these metrics are used in the financial
community, and the company presents these metrics to enhance
understanding of its operating performance. Readers should not
consider adjusted EBITDA and adjusted net income as alternatives to
net income, determined in accordance with GAAP, as an indicator of
operating performance. Adjusted net income, adjusted basic earnings
per share, adjusted diluted earnings per share, adjusted EBITDA,
organic sales and free cash flow are not measurements of financial
performance under GAAP, and these metrics may not be comparable to
similarly titled measures of other companies. See Exhibits 4 and 5
for reconciliations of adjusted net income, adjusted basic earnings
per share, adjusted diluted earnings per share, adjusted EBITDA and
organic sales to the most directly comparable financial measures
calculated and presented in accordance with GAAP.
Forward Looking Statements
This press release contains forward-looking statements
(including within the meaning of the Private Securities Litigation
Reform Act of 1995) concerning Wesco Aircraft Holdings,
Inc. These statements may discuss goals, intentions and
expectations as to future plans, trends, events, results of
operations or financial condition, or otherwise, based on current
beliefs of management, as well as assumptions made by, and
information currently available to, management. In some cases,
readers can identify forward-looking statements by the use of
forward-looking terms such as “aim,” “anticipate,” “believe,”
“plan,” “could,” “would,” “should,” “estimate,” “expect,”
“forecast,” “future,” “guidance,” “intend,” “may,” “will,”
“possible,” “potential,” “predict,” “project” or similar words,
phrases or expressions. These forward-looking statements are
subject to various risks and uncertainties, many of which are
outside the company’s control. Therefore, the reader should
not place undue reliance on such statements.
Factors that could cause actual results to differ materially
from those in the forward-looking statements include: general
economic and industry conditions; conditions in the credit markets;
changes in military spending; risks unique to suppliers of
equipment and services to the U.S. government; risks associated
with the company’s long-term, fixed-price agreements that have no
guarantee of future sales volumes; risks associated with the loss
of significant customers, a material reduction in purchase orders
by significant customers or the delay, scaling back or elimination
of significant programs on which the company relies; the company’s
ability to effectively compete in its industry; the company’s
ability to effectively manage its inventory; the company’s ability
to successfully integrate the acquired business of Haas Group Inc.
in a timely fashion; failure to realize anticipated benefits of the
combined operations; risks relating to unanticipated costs of
integration; the company’s suppliers’ ability to provide it with
the products the company sells in a timely manner, in adequate
quantities and/or at a reasonable cost; the company’s ability to
maintain effective information technology systems; the company’s
ability to retain key personnel; risks associated with the
company’s international operations, including exposure to foreign
currency movements; fluctuations in the company’s financial results
from period-to-period; risks associated with assumptions the
company makes in connection with its critical accounting estimates
(including goodwill) and legal proceedings; the company’s ability
to establish and maintain effective internal control over financial
reporting; environmental risks; risks related to the handling,
transportation and storage of chemical products; the company’s
dependence on third-party package delivery companies; risks related
to the aerospace industry and the regulation thereof; risks related
to the company’s indebtedness; and other risks and
uncertainties.
The foregoing list of factors is not exhaustive. The reader
should carefully consider the foregoing factors and the other risks
and uncertainties that affect the company’s business, including
those described in Wesco Aircraft’s Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
other documents filed from time to time with the Securities and
Exchange Commission. All forward-looking statements included
in this news release (including information included or
incorporated by reference herein) are based upon information
available to the company as of the date hereof, and the company
undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Exhibits:
Exhibit 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 5: Non-GAAP Financial Information – Organic Sales
(Unaudited)
Exhibit 1
Wesco Aircraft Holdings, Inc. Consolidated
Statements of Income (UNAUDITED) (In thousands, except for per
share data)
Three Months Ended Nine Months
Ended
June 30,2015
June 30, 2014
June 30, 2015
June 30, 2014
Net sales $368,706 $395,628 $1,127,962 $947,710 Cost of
sales 259,393 274,093 791,843
649,028 Gross profit 109,313 121,535 336,119 298,682
Selling, general and administrative expenses 73,136
68,852 216,334 162,864 Income from
operations 36,177 52,683 119,785 135,818 Interest expense, net
(9,335 ) (9,354 ) (28,054 ) (19,409 ) Other income (expense), net
(2,402 ) 1,571 (1,363 ) 2,345 Income
before provision for income taxes 24,440 44,900 90,368 118,754
Provision for income taxes (7,961 ) (16,128 ) (31,113 )
(41,300 ) Net income $16,479 $28,772
$59,255 $77,454 Net income per share:
Basic $0.17 $0.30 $0.61 $0.81
Diluted $0.17 $0.29 $0.61
$0.79 Weighted average shares outstanding: Basic
97,004 96,580 96,925 95,675 Diluted 97,964 97,938 97,818 97,511
Exhibit 2
Wesco Aircraft Holdings, Inc. Condensed
Consolidated Balance Sheets (UNAUDITED) (In thousands)
June 30, 2015
September 30, 2014
Assets Cash and cash equivalents $82,073 $104,775
Accounts receivable, net 272,288 301,668 Inventories 801,972
754,400 Other current assets 15,638 28,015 Deferred income taxes
49,183 49,188 Total current assets 1,221,154 1,238,046 Long-term
assets 1,149,224 1,174,228 Total assets $2,370,378 $2,412,274
Liabilities and Stockholders’ Equity Accounts payable
$157,443 $159,608 Other current liabilities 29,563 31,596 Income
taxes payable 12,392 5,884 Capital lease obligations—current
portion 1,213 1,578 Long-term debt—current portion 35,156 23,437
Total current liabilities 235,767 222,103 Capital lease obligations
1,895 2,606 Long-term debt 967,750 1,079,219 Deferred income taxes
112,717 113,218 Other long-term liabilities 4,081 2,838 Total
long-term liabilities 1,086,443 1,197,881 Total liabilities
1,322,210 1,419,984 Total stockholders’ equity 1,048,168 992,290
Total liabilities and stockholders’ equity $2,370,378 $2,412,274
Exhibit 3
Wesco Aircraft Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (UNAUDITED)
(In thousands)
Nine Months Ended June 30, 2015
June 30, 2014 Cash flows from operating
activities Net income $59,255 $77,454 Adjustments to reconcile
net income to net cash provided by (used in) operating activities
Amortization of intangible assets 11,987 8,099 Depreciation 7,828
6,094 Amortization of deferred financing costs 3,262 2,057 Bad debt
and sales return reserve 3,559 849 Non-cash foreign currency
exchange (3,887 ) (2,951 ) Non-cash stock-based compensation 7,017
4,411 Income from equity investment (424 ) (46 ) Excess tax benefit
related to stock options exercised (290 ) (10,137 ) Deferred income
tax provision 7 4,143 Gain on fixed asset disposals (13 ) - Changes
in assets and liabilities Accounts receivable 18,694 (38,482 )
Inventories (50,229 ) (51,727 ) Prepaid expenses and other assets
(299 ) (826 ) Income taxes receivable 12,716 21,266 Accounts
payable 8,338 (8,617 ) Accrued expenses and other liabilities (383
) (11,279 ) Income taxes payable 6,715 2,140
Net cash provided by operating activities 83,853
2,448
Cash flows from investing
activities Purchases of property and equipment (4,650 ) (7,900
) Acquisition of business, net of cash acquired (250 )
(560,445 ) Net cash used in investing activities (4,900 )
(568,345 )
Cash flows from financing
activities Proceeds from issuance of long-term debt - 565,000
Repayment of long-term debt (99,750 ) (5,250 ) Financing fees -
(10,161 ) Repayment of capital lease obligations (1,216 ) (947 )
Excess tax benefit related to stock options exercised 290 10,137
Proceeds from exercise of stock options 785
9,205 Net cash (used in) provided by financing activities
(99,891 ) 567,984 Effect of foreign currency
exchange rates on cash and cash equivalents (1,764 )
(369 ) Net increase (decrease) in cash and cash equivalents (22,702
) 1,718 Cash and cash equivalents, beginning
of period 104,775 78,716 Cash and cash
equivalents, end of period $82,073 $80,434
Exhibit 4
Wesco Aircraft Holdings,
Inc. Non-GAAP Financial Information (UNAUDITED) (In
thousands, except for per share data)
Three Months
Ended Nine Months Ended
June 30, 2015
June 30, 2014
June 30, 2015
June 30, 2014
EBITDA & Adjusted EBITDA Net income $16,479
$28,772 $59,255 $77,454 Provision for income taxes 7,961 16,128
31,113 41,300 Interest and other, net 9,335 9,354 28,054 19,409
Depreciation and amortization 6,553 6,913
19,815 14,192 EBITDA 40,328
61,167 138,237 152,355 Unusual or
non-recurring items (1) 2,266 2,003 7,924
9,783 Adjusted EBITDA $42,594
$63,170 $146,161 $162,138
Adjusted Net Income Net income $16,479 $28,772 $59,255
$77,454 Amortization of intangible assets 3,987 4,011 11,987 8,099
Amortization of deferred financing costs 1,104 887 3,262 2,056
Unusual or non-recurring items (1) 2,266 2,003 7,924 9,783
Adjustments for tax effect (2,580 ) (2,647 ) (8,322 )
(6,459 ) Adjusted Net Income $21,256 $33,026
$74,106 $90,933
Adjusted Basic
Earnings Per Share Weighted-average number of basic shares
outstanding 97,004 96,580 96,925
95,675 Adjusted Net Income Per Basic Shares $0.22
$0.34 $0.76 $0.95
Adjusted Diluted Earnings Per Share Weighted-average number
of diluted shares outstanding 97,964 97,938
97,818 97,511 Adjusted Net Income Per Diluted
Shares $0.22 $0.34 $0.76 $0.93
(1) Unusual and non-recurring items in the
third quarter and year-to-date period of fiscal 2015 consisted of
integration and other related expenses of $1,936 and $6,498,
respectively, as well as expenses related to business realignment
of $330 and $1,426, respectively. Unusual and non-recurring items
in the third quarter and year-to-date period of fiscal 2014
consisted of integration and other related expenses of $1,357 and
$8,863, respectively, and expenses related to business realignment
of $646 and $920, respectively.
Exhibit 5
Wesco Aircraft
Holdings, Inc. Non-GAAP Financial Information
(UNAUDITED) (In thousands)
Three Months Ended
Nine Months Ended
June 30, 2015
June 30, 2014
Increase / (Decrease)
Percent Change
June 30, 2015
June 30, 2014
Increase / (Decrease)
Percent Change
Consolidated
Consolidated net sales $ 368,706 $ 395,628 $ (26,922 ) -6.8 % $
1,127,962 $ 947,710 $ 180,252 19.0 % Haas net sales -
- - 242,661 -
242,661 Consolidated organic sales 368,706
395,628 (26,922 ) -6.8 % 885,301
947,710 (62,409 ) -6.6 % One-time
demand pull forward - - - - (26,440 ) 26,440 Contract settlement -
- - - (6,377 ) 6,377 Currency effects 9,744 - 9,744 16,476 - 16,476
Adjusted
organic sales $ 378,450 $ 395,628 $ (17,178 ) -4.3 % $
901,777 $ 914,893 $ (13,116 ) -1.4 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150806006455/en/
Wesco Aircraft Holdings, Inc.Jeff MisakianVice President,
Investor Relations661-362-6847Jeff.Misakian@wescoair.com
Wesco Aircraft (NYSE:WAIR)
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