UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 19, 2015
Wesco Aircraft Holdings, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE |
|
001-35253 |
|
20-5441563 |
(State or Other Jurisdiction of Incorporation) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
24911 Avenue Stanford
Valencia, California 91355
(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number, including area code: (661) 775-7200
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On November 19, 2015, Wesco Aircraft Holdings, Inc. (the Company) announced its financial results for the fiscal year and quarter ended September 30, 2015. The full text of the press release issued by the Company in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K. Following the publication of this earnings release, the Company hosted an earnings call on which its financial results for the fiscal year and quarter ended September 30, 2015 were discussed. The investor presentation materials used for the call are attached as Exhibit 99.2 hereto.
On November 19, 2015, the Company posted the materials attached as Exhibits 99.1 and 99.2 on its website (www.wescoair.com).
The information in this Current Report on Form 8-K (including Exhibits 99.1 and 99.2) is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
|
Description |
|
|
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99.1 |
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Press Release, issued by the Company on November 19, 2015 |
|
|
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99.2 |
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Investor Presentation Materials for the Earnings Conference Call |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 19, 2015 |
WESCO AIRCRAFT HOLDINGS, INC. |
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|
|
|
|
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By: |
/s/ Richard J. Weller |
|
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Richard J. Weller Executive Vice President and Chief Financial Officer |
3
EXHIBIT INDEX
Exhibit Number |
|
Description |
|
|
|
99.1 |
|
Press Release, issued by the Company on November 19, 2015 |
|
|
|
99.2 |
|
Investor Presentation Materials for the Earnings Conference Call |
4
Exhibit 99.1
![](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361mm01i001.jpg)
Wesco Aircraft Holdings Reports Results for
Fiscal 2015 Fourth Quarter and Year
Significant Fourth Quarter Actions Set Stage for Future Performance
VALENCIA, Calif., November 19, 2015 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 fourth quarter and year ended September 30, 2015.
Fiscal 2015 Fourth Quarter Highlights
· Net sales of $369.7 million, down nine percent (seven percent, excluding foreign exchange)
· Fourth quarter actions taken to reduce costs
· Inventory and goodwill value analyzed and adjusted
· Net loss of $214.0 million, or $2.21 per diluted share, primarily due to unusual or non-recurring items, including inventory adjustments, goodwill impairment, and restructuring and other costs
· Unusual or non-recurring items and non-GAAP adjustments totaled $240.5 million, or $2.48 per diluted share
· Adjusted net income of $26.5 million, or $0.27 per diluted share
· Adjusted EBITDA of $46.0 million, or 12.4 percent of net sales
· Free cash flow at 198 percent of adjusted net income; paid down debt by $50 million
Dave Castagnola, president and chief executive officer, said, Our fiscal 2015 fourth quarter results reflect the end of a transitional period for Wesco, in which we stabilized the business, took action to improve future performance, generated robust cash flow and paid down debt. We steadied sales and costs sequentially in the fourth quarter and aligned the company around our market growth channels. We see these changes as driving increased business and an improved outlook for fiscal 2016.
Fiscal 2015 Fourth Quarter Results
Net sales in the fiscal 2015 fourth quarter were $369.7 million, compared to $408.2 million in the prior-year fourth quarter and $368.7 million in the fiscal 2015 third quarter. Organic sales adjusted for the impact of foreign currency movements decreased seven percent in the fiscal 2015 fourth quarter compared to the prior-year period, primarily due
to the end of a large commercial hardware contract on March 31, 2015, as previously disclosed.
The company recorded a net loss in the fiscal 2015 fourth quarter of $214.0 million, or $2.21 per diluted share, primarily due to unusual or non-recurring items discussed below. Adjusted net income was $26.5 million, or $0.27 per diluted share, compared to $29.7 million, or $0.30 per diluted share, in the same period last year. The decrease in adjusted net income primarily reflects the decline in organic sales and changes to the mix of products and services sold, offset by realized and unrealized foreign exchange gains in other income associated with certain transactions.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the fiscal 2015 fourth quarter were $46.0 million, compared with $58.0 million in the same period last year and $42.6 million in the previous quarter.
Free cash flow was $52.4 million in the fiscal 2015 fourth quarter, compared with $48.6 million in the same period last year and $32.6 million in the fiscal 2015 third quarter.
Unusual or Non-recurring Items and Non-GAAP Adjustments
Unusual or non-recurring items and non-GAAP adjustments in the fiscal 2015 fourth quarter totaled $366.1 million on a pre-tax basis ($240.5 million, or $2.48 per diluted share, net of income taxes). Unusual or non-recurring items consisted of an adjustment to reduce the value of inventory, impairment of goodwill, and restructuring and other costs.
In the fiscal 2015 fourth quarter, the company revised its methodology for excess and obsolete inventory provisioning to align with a shift in management philosophy, which resulted in an increase in the inventory provision of $91.3 million. The change in philosophy reflects the evolution of Wescos business model from a distributor servicing fluctuating demand to primarily an integrated supply chain service provider servicing demand through long-term contracts and focused forecast consumption. The company recorded the non-cash adjustment in cost of sales in its consolidated statement of operations.
The company performed an impairment test in conjunction with its annual assessment of the value of goodwill and intangible assets. The test indicated that the estimated fair value of the companys North American hardware business was less than its carrying value, reflecting managements reduced sales and earnings outlook. This resulted in a pre-tax non-cash impairment charge of $263.8 million in the fiscal 2015 fourth quarter.
In addition, the company recorded pre-tax restructuring charges and other costs of $6.0 million, primarily due to actions taken in the fourth quarter to reduce costs, including headcount reductions and facility consolidations, as well as integration costs.
Non-GAAP adjustments include amortization of intangible assets and deferred financing costs of $4.0 million and $1.1 million, respectively. The company has provided a
2
reconciliation of GAAP to non-GAAP results in the tables that accompany this press release.
Fiscal 2015 Full-Year Results
Net sales in fiscal 2015 were $1,497.6 million, an increase of 10.5 percent compared to $1,355.9 million in fiscal 2014. The net sales increase was driven primarily by the Haas acquisition, offset by the impact of currency movements.
Wesco Aircrafts organic sales (excluding the Haas acquisition) decreased seven percent in fiscal 2015. Net sales in fiscal 2014 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. In addition, foreign currency movements negatively impacted sales in fiscal 2015 by two percent. Excluding these factors, organic sales declined three percent.
Net loss in fiscal 2015 was $154.7 million, or $1.60 per diluted share, primarily due to unusual or non-recurring items and non-GAAP adjustments, which are detailed in the tables that accompany this press release. Adjusted net income in fiscal 2015 was $100.6 million, or $1.04 per diluted share, compared with $120.7 million, or $1.24 per diluted share in fiscal 2014.
Adjusted EBITDA in fiscal 2015 was $192.2 million, compared with $220.2 million in fiscal 2014. Free cash flow was $131.6 million in fiscal 2015, compared with $43.2 million recorded in fiscal 2014.
The company revised its presentation of certain personnel costs directly associated with service contracts by reclassifying them from selling, general and administrative expenses to cost of sales, consistent with industry practice. These personnel costs totaled $24.1 million in fiscal 2015 and $15.4 million in fiscal 2014. The reclassification had no impact on the companys income from operations, net income or EBITDA.
Fiscal 2016 Outlook
Castagnola continued, We are transforming Wesco to better reflect our position as one of the worlds largest providers of supply chain management services to top-tier global companies. We have aggressively built a strong foundation; we have established Wescos vision, goals, and culture, validated our value proposition, taken significant actions to improve our performance, and initiated Policy Deployment throughout the entire company to better align our goals and improvement targets. Our focus now is to sustain and build upon this foundation, by developing a more performance-based culture that delivers consistent profitable growth of products and services, margin improvement and enhanced earnings, robust cash flow and higher return on equity.
For fiscal 2016, we expect the underlying business to achieve above-market expansion across our three market channels, yielding low single-digit growth by offsetting declines we had previously disclosed in fiscal 2015. Fourth-quarter 2015 actions are expected to generate net cost savings of $25 million to $30 million in fiscal 2016. We anticipate
3
EBITDA margin improvement of approximately 100 basis points in fiscal 2016, primarily through cost reductions and some sales leverage, and free cash flow that exceeds 100 percent of net income.
Conference Call Information
Wesco Aircraft will hold a conference call to discuss its fiscal 2015 fourth quarter and full-year results at 2:00 P.M. PST (5:00 P.M. EST) today, November 19, 2015. The conference call can be accessed by dialing 888-771-4371 (domestic) or 847-585-4405 (international) and entering passcode 41135938.
The conference call will be simultaneously broadcast on Wesco Aircrafts Investor Relations website (http://ir.wescoair.com).
Following the live webcast, a replay will be available on the companys 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 41135938. The telephonic replay will be available until November 26, 2015 at 11:59 P.M. PST.
About Wesco Aircraft
Wesco Aircraft is one of the worlds largest distributors and providers of comprehensive supply chain management services to the global aerospace industry. The companys 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 worlds broadest portfolios of aerospace products, including chemical, electrical and C-class hardware and comprised of more than 575,000 active SKUs.
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 cost of sales represents cost of sales less the $91.3 million non-cash inventory adjustment the company took during the quarter ended September 30, 2015 (the Q4 2015 Inventory Adjustment).
Adjusted gross profit represents gross profit plus the Q4 2015 Inventory Adjustment.
Adjusted selling, general and administrative expenses represents selling, general and administrative expenses less (i) restructuring and other costs and (ii) amortization of intangible assets.
Adjusted income from operations represents income from operations plus (i) the $263.8 million goodwill impairment the company took during the quarter ended September 30,
4
2015, (ii) the Q4 2015 Inventory Adjustment, (iii) restructuring and other costs and (iv) amortization of intangible assets.
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 cost of sales, adjusted gross profit, adjusted selling, general and administrative expenses, adjusted income from operations, 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 companys business, because it believe these measures assist investors and analysts in comparing the companys 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 cost of sales, adjusted gross profit, adjusted selling, general and administrative expenses, adjusted income from operations, 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 cost of sales, adjusted gross profit, adjusted selling, general and administrative expenses, adjusted income from operations, 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.
5
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, could, drive, estimate, expect, forecast, future, outlook, will, guidance, intend, plan, possible, potential, predict, project, should, target, would, or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the companys 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 companys 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 companys ability to effectively compete in its industry; the companys ability to effectively manage its inventory; the companys ability to fully integrate the acquired business of Haas and realize anticipated benefits of the combined operations; risks relating to unanticipated costs of integration; the companys 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 companys ability to maintain effective information technology systems; the companys ability to retain key personnel; risks associated with the companys international operations, including exposure to foreign currency movements; risks associated with assumptions the company makes in connection with its critical accounting estimates (including goodwill) and legal proceedings; the companys dependence on third-party package delivery companies; fuel price risks; the companys ability to establish and maintain effective internal control over financial reporting; fluctuations in the companys financial results from period-to-period; environmental risks; risks related to the handling, transportation and storage of chemical products; risks related to the aerospace industry and the regulation thereof; risks related to the companys 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 companys business, including those described in Wesco Aircrafts 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
6
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.
###
Contact Information:
Jeff Misakian
Vice President, Investor Relations
661-362-6847
Jeff.Misakian@wescoair.com
7
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) |
8
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, 2015 |
|
September 30, 2014 |
|
September 30, 2015 |
|
September 30, 2014 |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
369,654 |
|
$ |
408,167 |
|
$ |
1,497,615 |
|
$ |
1,355,877 |
|
Cost of sales |
|
363,523 |
|
294,529 |
|
1,173,120 |
|
952,877 |
|
Gross profit |
|
6,131 |
|
113,638 |
|
324,495 |
|
403,000 |
|
Selling, general and administrative expenses |
|
68,510 |
|
65,522 |
|
267,089 |
|
219,066 |
|
Goodwill impairment charge |
|
263,771 |
|
|
|
263,771 |
|
|
|
(Loss) income from operations |
|
(326,150 |
) |
48,116 |
|
(206,365 |
) |
183,934 |
|
Interest expense, net |
|
(9,037 |
) |
(9,816 |
) |
(37,092 |
) |
(29,225 |
) |
Other income, net |
|
3,204 |
|
(146 |
) |
1,841 |
|
2,199 |
|
(Loss) income before income taxes |
|
(331,983 |
) |
38,154 |
|
(241,616 |
) |
156,908 |
|
Benefit (provision) for income taxes |
|
117,985 |
|
(13,507 |
) |
86,872 |
|
(54,806 |
) |
Net (loss) income |
|
$ |
(213,998 |
) |
$ |
24,647 |
|
$ |
(154,744 |
) |
$ |
102,102 |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(2.21 |
) |
$ |
0.25 |
|
$ |
(1.60 |
) |
$ |
1.06 |
|
Diluted |
|
$ |
(2.21 |
) |
$ |
0.25 |
|
$ |
(1.60 |
) |
$ |
1.05 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
97,042 |
|
96,770 |
|
96,955 |
|
95,951 |
|
Diluted |
|
97,042 |
|
97,884 |
|
96,955 |
|
97,606 |
|
The company revised its presentation of certain personnel costs associated with service contracts by reclassifying them from selling, general and administrative expenses to cost of sales, consistent with industry practice. These personnel costs totaled $6.4 million and $24.1 million in the fiscal 2015 fourth quarter and full year, respectively, compared with $6.1 million and $15.4 million in the comparable periods of fiscal 2014. The reclassification had no impact on income from operations, net income or EBITDA.
9
Exhibit 2
Wesco Aircraft Holdings, Inc.
Condensed Consolidated Balance Sheets (UNAUDITED)
(In thousands)
|
|
September 30, 2015 |
|
September 30, 2014 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
82,866 |
|
$ |
104,775 |
|
Accounts receivable, net |
|
253,348 |
|
301,668 |
|
Inventories |
|
701,535 |
|
754,400 |
|
Prepaid expenses and other current assets |
|
10,004 |
|
11,701 |
|
Income taxes receivable |
|
187 |
|
16,314 |
|
Deferred income taxes |
|
89,401 |
|
49,188 |
|
Total current assets |
|
1,137,341 |
|
1,238,046 |
|
Long-term assets |
|
883,632 |
|
1,174,228 |
|
Total assets |
|
$ |
2,020,973 |
|
$ |
2,412,274 |
|
|
|
|
|
|
|
Liabilities and Stockholders Equity |
|
|
|
|
|
Accounts payable |
|
$ |
149,615 |
|
$ |
159,608 |
|
Accrued expenses and other current liabilities |
|
38,896 |
|
31,596 |
|
Income taxes payable |
|
21,442 |
|
5,884 |
|
Capital lease obligations, current portion |
|
1,044 |
|
1,578 |
|
Long-term debt, current portion |
|
|
|
23,437 |
|
Total current liabilities |
|
210,997 |
|
222,103 |
|
Capital lease obligations, less current portion |
|
1,824 |
|
2,606 |
|
Long-term debt, less current portion |
|
952,906 |
|
1,079,219 |
|
Deferred income taxes |
|
30,693 |
|
113,218 |
|
Other liabilities |
|
6,980 |
|
2,838 |
|
Total long-term liabilities |
|
992,403 |
|
1,197,881 |
|
Total liabilities |
|
1,203,400 |
|
1,419,984 |
|
Total stockholders equity |
|
817,573 |
|
992,290 |
|
Total liabilities and stockholders equity |
|
$ |
2,020,973 |
|
$ |
2,412,274 |
|
10
Exhibit 3
Wesco Aircraft Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (UNAUDITED)
(In thousands)
|
|
Fiscal Year Ended |
|
|
|
September 30, 2015 |
|
September 30, 2014 |
|
Cash flows from operating activities |
|
|
|
|
|
Net (loss) income |
|
$ |
(154,744 |
) |
$ |
102,102 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities |
|
|
|
|
|
Depreciation and amortization |
|
27,726 |
|
21,402 |
|
Deferred financing costs |
|
4,354 |
|
3,300 |
|
Bad debt and sales return reserve |
|
354 |
|
965 |
|
Stock-based compensation |
|
7,891 |
|
5,507 |
|
Inventory reserves |
|
95,052 |
|
17,700 |
|
Goodwill impairment charge |
|
263,771 |
|
|
|
Excess tax benefit related to stock-based incentive plans |
|
(443 |
) |
(10,235 |
) |
Income from equity investment |
|
(596 |
) |
(141 |
) |
Deferred income taxes |
|
(127,035 |
) |
8,273 |
|
Other non-cash items |
|
3,491 |
|
(5,489 |
) |
Changes in assets and liabilities |
|
|
|
|
|
Accounts receivable |
|
43,841 |
|
(38,545 |
) |
Income taxes receivable |
|
16,036 |
|
19,003 |
|
Inventories |
|
(48,977 |
) |
(72,702 |
) |
Prepaid expenses and other assets |
|
1,250 |
|
5,799 |
|
Accounts payable |
|
(9,992 |
) |
3,099 |
|
Accrued expenses and other liabilities |
|
3,425 |
|
(8,830 |
) |
Income taxes payable |
|
15,768 |
|
2,481 |
|
Net cash provided by operating activities |
|
141,172 |
|
53,689 |
|
Cash flows from investing activities |
|
|
|
|
|
Purchases of property and equipment |
|
(9,614 |
) |
(10,517 |
) |
Acquisition of business, net of cash acquired |
|
(250 |
) |
(560,986 |
) |
Net cash used in investing activities |
|
(9,864 |
) |
(571,503 |
) |
Cash flows from financing activities |
|
|
|
|
|
Proceeds from issuance of long-term debt |
|
|
|
565,000 |
|
Repayments of long-term debt |
|
(149,750 |
) |
(30,344 |
) |
Financing fees |
|
|
|
(10,161 |
) |
Repayment of capital lease obligations |
|
(1,511 |
) |
(1,338 |
) |
Excess tax benefit related to stock-based incentive plans |
|
443 |
|
10,235 |
|
Net proceeds from issuance of common stock |
|
823 |
|
9,643 |
|
Settlement on restricted stock tax withholding |
|
(701 |
) |
|
|
Net cash (used in) provided by financing activities |
|
(150,696 |
) |
543,035 |
|
Effect of foreign currency exchange rates on cash and cash equivalents |
|
(2,521 |
) |
838 |
|
Net increase (decrease) in cash and cash equivalents |
|
(21,909 |
) |
26,059 |
|
Cash and cash equivalents, beginning of period |
|
104,775 |
|
78,716 |
|
Cash and cash equivalents, end of period |
|
$ |
82,866 |
|
$ |
104,775 |
|
11
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, 2015 |
|
September 30, 2014 |
|
September 30, 2015 |
|
September 30, 2014 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Cost of Sales |
|
|
|
|
|
|
|
|
|
As reported |
|
$ |
363,523 |
|
$ |
294,529 |
|
$ |
1,173,120 |
|
$ |
952,877 |
|
Inventory adjustment |
|
(91,280 |
) |
|
|
(91,280 |
) |
|
|
As adjusted |
|
$ |
272,243 |
|
$ |
294,529 |
|
$ |
1,081,840 |
|
$ |
952,877 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Gross Profit |
|
|
|
|
|
|
|
|
|
As reported |
|
$ |
6,131 |
|
$ |
113,638 |
|
$ |
324,495 |
|
$ |
403,000 |
|
Inventory adjustment |
|
91,280 |
|
|
|
91,280 |
|
|
|
As adjusted |
|
$ |
97,411 |
|
$ |
113,638 |
|
$ |
415,775 |
|
$ |
403,000 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Selling, General and Administrative Expenses |
|
|
|
|
|
|
|
|
|
As reported |
|
$ |
68,510 |
|
$ |
65,522 |
|
$ |
267,089 |
|
$ |
219,066 |
|
Restructuring and other costs |
|
(5,998 |
) |
(2,862 |
) |
(13,923 |
) |
(12,645 |
) |
Amortization of intangible assets |
|
(3,961 |
) |
(4,537 |
) |
(15,948 |
) |
(12,636 |
) |
As adjusted |
|
$ |
58,551 |
|
$ |
58,123 |
|
$ |
237,218 |
|
$ |
193,785 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Income from Operations |
|
|
|
|
|
|
|
|
|
As reported |
|
$ |
(326,150 |
) |
$ |
48,116 |
|
$ |
(206,365 |
) |
$ |
183,934 |
|
Goodwill impairment |
|
263,771 |
|
|
|
263,771 |
|
|
|
Inventory adjustment |
|
91,280 |
|
|
|
91,280 |
|
|
|
Amortization of intangible assets |
|
3,961 |
|
4,537 |
|
15,948 |
|
12,636 |
|
Restructuring and other costs |
|
5,998 |
|
2,862 |
|
13,923 |
|
12,645 |
|
As adjusted |
|
$ |
38,860 |
|
$ |
55,515 |
|
$ |
178,557 |
|
$ |
209,215 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income |
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(213,998 |
) |
$ |
24,647 |
|
$ |
(154,744 |
) |
$ |
102,102 |
|
Goodwill impairment |
|
263,771 |
|
|
|
263,771 |
|
|
|
Inventory adjustment |
|
91,280 |
|
|
|
91,280 |
|
|
|
Amortization of intangible assets |
|
3,961 |
|
4,537 |
|
15,948 |
|
12,636 |
|
Amortization of deferred financing costs |
|
1,092 |
|
1,242 |
|
4,354 |
|
3,299 |
|
Restructuring and other costs |
|
5,998 |
|
2,862 |
|
13,923 |
|
12,645 |
|
Adjustments for tax effect |
|
(125,639 |
) |
(3,546 |
) |
(133,961 |
) |
(10,005 |
) |
Adjusted Net Income |
|
$ |
26,465 |
|
$ |
29,742 |
|
$ |
100,571 |
|
$ |
120,677 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Basic Earnings Per Share |
|
|
|
|
|
|
|
|
|
Weighted-average number of basic shares outstanding |
|
97,042 |
|
96,770 |
|
96,955 |
|
95,951 |
|
Adjusted Net Income Per Basic Shares |
|
$ |
0.27 |
|
$ |
0.31 |
|
$ |
1.04 |
|
$ |
1.26 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Diluted Earnings Per Share |
|
|
|
|
|
|
|
|
|
Weighted-average number of diluted shares outstanding |
|
97,042 |
|
97,884 |
|
96,955 |
|
97,606 |
|
Adjusted Net Income Per Diluted Shares |
|
$ |
0.27 |
|
$ |
0.30 |
|
$ |
1.04 |
|
$ |
1.24 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA and Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(213,998 |
) |
$ |
24,647 |
|
$ |
(154,744 |
) |
$ |
102,102 |
|
(Benefit) provision for income taxes |
|
(117,985 |
) |
13,507 |
|
(86,872 |
) |
54,806 |
|
Interest and other, net |
|
9,037 |
|
9,816 |
|
37,092 |
|
29,225 |
|
Depreciation and amortization |
|
7,911 |
|
7,209 |
|
27,726 |
|
21,402 |
|
EBITDA |
|
(315,035 |
) |
55,179 |
|
(176,798 |
) |
207,535 |
|
Goodwill impairment |
|
263,771 |
|
|
|
263,771 |
|
|
|
Inventory adjustment |
|
91,280 |
|
|
|
91,280 |
|
|
|
Restructuring and other costs |
|
5,998 |
|
2,862 |
|
13,923 |
|
12,645 |
|
Adjusted EBITDA |
|
$ |
46,014 |
|
$ |
58,041 |
|
$ |
192,176 |
|
$ |
220,180 |
|
12
Exhibit 5
Wesco Aircraft Holdings, Inc.
Non-GAAP Financial Information (UNAUDITED)
(In thousands)
|
|
Three Months Ended |
|
|
|
|
|
Fiscal Year Ended |
|
|
|
|
|
|
|
September 30, 2015 |
|
September 30, 2014 |
|
Increase / (Decrease) |
|
Percent Change |
|
September 30, 2015 |
|
September 30, 2014 |
|
Increase / (Decrease) |
|
Percent Change |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net sales |
|
$ |
369,654 |
|
$ |
408,167 |
|
$ |
(38,513 |
) |
-9.4 |
% |
$ |
1,497,615 |
|
$ |
1,355,877 |
|
$ |
141,738 |
|
10.5 |
% |
Haas net sales |
|
|
|
|
|
|
|
|
|
242,661 |
|
|
|
242,661 |
|
|
|
Consolidated organic sales |
|
369,654 |
|
408,167 |
|
(38,513 |
) |
-9.4 |
% |
1,254,954 |
|
1,355,877 |
|
(100,923 |
) |
-7.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-time demand pull forward |
|
|
|
|
|
|
|
|
|
|
|
(26,440 |
) |
26,440 |
|
|
|
Contract settlement |
|
|
|
|
|
|
|
|
|
|
|
(5,890 |
) |
5,890 |
|
|
|
Currency effects |
|
8,883 |
|
|
|
8,883 |
|
|
|
25,359 |
|
|
|
25,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted organic sales |
|
$ |
378,537 |
|
$ |
408,167 |
|
$ |
(29,630 |
) |
-7.3 |
% |
$ |
1,280,313 |
|
$ |
1,323,547 |
|
$ |
(43,234 |
) |
-3.3 |
% |
13
Exhibit 99.2
Fiscal 2015 Fourth Quarter Earnings Conference Call and Webcast November 19, 2015 Jeff Misakian VP Investor Relations 661-362-6847 Jeff.Misakian@wescoair.com
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi001.gif)
Wesco Aircraft Private & Proprietary Visit www.wescoair.com Agenda Introduction Company Overview & Business Highlights Financial Overview Q&A Session Jeff Misakian Vice President, Investor Relations Dave Castagnola President and Chief Executive Officer Rick Weller Executive Vice President, Chief Financial Officer 2 Wesco Aircraft - Investor Relations All Closing Remarks Dave Castagnola President and Chief Executive Officer
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi002.gif)
Wesco Aircraft Private & Proprietary Visit www.wescoair.com Disclaimer This presentation contains forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning Wesco Aircraft Holdings, Inc. (Wesco Aircraft or the Company) and other matters. 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, such management. Forward-looking statements may be accompanied by words such as aim, anticipate, believe, could, drive, estimate, expect, forecast, future, outlook, target, will, guidance, intend, plan, possible, potential, predict, project, should, would or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Companys control. Therefore, you 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 Companys 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 Companys ability to effectively compete in its industry; the Companys ability to effectively manage its inventory; the Companys ability to fully integrate the acquired business of Haas and realize anticipated benefits of the combined operations; risks relating to unanticipated costs of integration; the Companys 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 Companys ability to maintain effective information technology systems; the Companys ability to retain key personnel; risks associated with the Companys international operations, including exposure to foreign currency movements; risks associated with assumptions the Company makes in connection with its critical accounting estimates (including goodwill) and legal proceedings; the Companys dependence on third-party package delivery companies; fuel price risks; the Companys ability to establish and maintain effective internal control over financial reporting; fluctuations in the Companys financial results from period-to-period; environmental risks; risks related to the handling, transportation and storage of chemical products; risks related to the aerospace industry and the regulation thereof; risks related to the Companys indebtedness; and other risks and uncertainties. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the Companys business, including those described in the Companys 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 presentation (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. The Company utilizes and discusses Adjusted Cost of Sales, Adjusted Gross Profit, Adjusted Selling, General and Administrative Expenses, Adjusted Income from Operations, Adjusted Net Income, Adjusted EBITDA, Adjusted Basic EPS, Adjusted Diluted EPS, Organic Sales and Free Cash Flow, which are non-GAAP measures its management uses to evaluate its business, because the Company believes they assist investors and analysts in comparing its performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. The Company believes these metrics are used in the financial community, and the Company presents these metrics to enhance investors understanding of its 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 Cost of Sales, Adjusted Gross Profit, Adjusted Selling, General and Administrative Expenses, Adjusted Income from Operations, Adjusted Net Income, Adjusted EBITDA, Adjusted Basic EPS, Adjusted Diluted EPS, 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 the Appendix for a reconciliation of Adjusted Cost of Sales, Adjusted Gross Profit, Adjusted Selling, General and Administrative Expenses, Adjusted Income from Operations, Adjusted Net Income, Adjusted EBITDA, Adjusted Basic EPS, Adjusted Diluted EPS and Organic Sales to the most directly comparable financial measures calculated and presented in accordance with GAAP. 3 Wesco Aircraft - Investor Relations
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi003.gif)
Wesco Aircraft Private & Proprietary Visit www.wescoair.com 4Q15 Summary 4 Financial Highlights 4Q15 4Q14 Fiscal 2015 Fiscal 2014 Net sales $369.7 $408.2 $1,497.6 $1,355.9 Adjusted EBITDA 46.0 58.0 192.2 220.2 Adjusted net income 26.5 29.7 100.6 120.7 Adjusted diluted EPS 0.27 0.30 1.04 1.24 In millions (except per share data) Wesco Aircraft - Investor Relations Q4 2015 reflects end of transition period Large addressable market; strong competitive position Aligned organization for more efficient growth Significant actions taken to improve performance Generated robust cash flow; paid down debt
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi004.gif)
Sales stabilized sequentially More robust planning process Expected future growth through three channels: Strategic customers multiple opportunities Regional sales improve win rates MRO increase penetration Fiscal 2016: Above-market underlying expansion Yields low single-digit growth by offsetting previously disclosed declines 5 Sales Overview Wesco Aircraft - Investor Relations Wesco Aircraft Private & Proprietary Visit www.wescoair.com
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi005.gif)
Aligned cost structure; stabilized SG&A Substantially completed integration of Haas and Wesco Expected cost savings of $25-30 million in fiscal 2016 through: Headcount reductions Facility consolidations Lower addressable spend New facility structure enhances performance Improved efficiency and material management Supports future growth plans Continues outstanding service and delivery performance 6 Cost Overview Wesco Aircraft - Investor Relations Wesco Aircraft Private & Proprietary Visit www.wescoair.com
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi006.gif)
Comprehensive inventory analysis Developing demand management strategy Links sales, procurement, operations planning Drive improved material cost and working capital SIOP forecast based on build and refurbishment rates Adjusted inventory value in Q4 2015 7 Inventory Overview Wesco Aircraft - Investor Relations Wesco Aircraft Private & Proprietary Visit www.wescoair.com
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi007.gif)
4Q15 net sales decline of 9% FX impact of ~$9 million** Organic sales down 7%** due to large commercial contract that ended March 31, as previously disclosed Rest of business stable 4Q 2015 ad hoc/contract split consistent year/year Wesco Aircraft Private & Proprietary Visit www.wescoair.com 4Q15 FY15 Financial Results 8 * Fiscal 2015 data includes full quarter and year results from acquisition of Haas Group Inc.; fiscal 2014 results includes full quarter and seven months of Haas. ** See appendix for reconciliation of organic sales. Wesco Aircraft - Investor Relations Net Sales ($M) * $408.2 $369.7 $1,355.9 $1,497.6 Q4 2014 Q4 2015 Fiscal 2014 Fiscal 2015
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi008.gif)
9 4Q15 Adjustments and Charges Wesco Aircraft - Investor Relations Wesco Aircraft Private & Proprietary Visit www.wescoair.com Change in E&O methodology to consumption-based model Support evolution to integrated supply chain services SIOP: forecast based on build/refurbishment rates Inventory adjustment: $91M (non-cash) Business assessment evaluation of growth profile Annual test consistent with reduced sales and earnings Goodwill impairment: $264M (non-cash) Primarily severance and lease termination costs Restructuring and integration costs: $6M
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi009.gif)
Wesco Aircraft Private & Proprietary Visit www.wescoair.com 4Q15 FY15 Financial Results Q4 2015 adjusted EPS decline reflects: Lower sales and mix Offset by other income and taxes Q4 2015 adjusted EBITDA margin of 12.4%, 180 bps lower year/year due to: Lower sales, mix and $4M inventory shrink adjustment Higher SG&A as percent of sales Offset by FX gain in other income Revised presentation of labor costs directly associated with service contracts, consistent with industry practice; no impact on EPS or EBITDA 10 * Fiscal 2015 data includes full quarter and year results from acquisition of Haas Group Inc.; fiscal 2014 results includes full quarter and seven months of Haas. Wesco Aircraft - Investor Relations Adjusted Diluted EPS * Adjusted EBITDA ($M) *
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi010.gif)
Adjusted EBITDA ($M) * Net Sales ($M) * Wesco Aircraft Private & Proprietary Visit www.wescoair.com 4Q15 FY15 Segments: North America 11 Net sales decrease of 6% in Q4 2015 Due to large customer contract Rest of segment increased slightly Q4 2015 adjusted EBITDA margin of 11.4% declined 360 bps year/year Lower volume, mix Inventory shrink adjustment Wesco Aircraft - Investor Relations * Fiscal 2015 data includes full quarter and year results from acquisition of Haas Group Inc.; fiscal 2014 results includes full quarter and seven months of Haas. $47.6 $34.2 $176.0 $155.2 Q4 2014 Q4 2015 Fiscal 2014 Fiscal 2015 $317.5 $299.0 $1,030.5 $1,198.2 Q4 2014 Q4 2015 Fiscal 2014 Fiscal 2015
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi011.gif)
Net Sales ($M) * Adjusted EBITDA ($M) * Wesco Aircraft Private & Proprietary Visit www.wescoair.com 4Q15 FY15 Segments: Rest of World 12 Net sales decrease of 22% in Q4 2015: Large customer contract ~12 points Currency ~10 points** Q4 2015 adjusted EBITDA margin of 16.7%, primarily due to currency FX-adjusted ~13%, 100 bps higher year/year, due to: Lower spend, offset by Reduced volume, mix * Fiscal 2015 data includes full quarter and year results from acquisition of Haas Group Inc.; fiscal 2014 results include full quarter and seven months of Haas. ** See appendix for reconciliation of organic sales. Wesco Aircraft - Investor Relations $90.7 $70.6 $325.4 $299.4 Q4 2014 Q4 2015 Fiscal 2014 Fiscal 2015 $10.4 $11.8 $44.1 $37.0 Q4 2014 Q4 2015 Fiscal 2014 Fiscal 2015
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi012.gif)
Wesco Aircraft Private & Proprietary Visit www.wescoair.com Financial Summary 13 * Cash provided by operating activities less purchases of property & equipment Wesco Aircraft - Investor Relations (Dollars in Millions) Sept 30, 2015 June 30, 2015 Sept 30, 2014 At period end: Cash and cash equivalents $82.9 $82.1 $104.8 Net inventory 701.5 802.0 754.4 Total debt 952.9 1,002.9 1,102.7 Total stockholders equity 817.6 1,048.2 992.3 Quarter ended: Free cash flow* 52.4 32.6 48.6 Adjusted net income 26.5 21.3 29.7 Cash flow conversion 198% 154% 163%
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi013.gif)
Fiscal 2016 Target Commentary Low single-digit growth Underlying growth ahead of market; stronger 2H $25-30M savings Reductions in headcount, sites and spend ~100 basis point improvement Primarily SG&A reductions Exceed 100% Primary usage to pay down debt Interest expense $35-40M; cap-ex $10-15M ~$10M of SG&A savings from non-recurring items 14 Fiscal 2016 Outlook Net Sales Growth SG&A Reduction EBITDA Margin FCF Conversion Wesco Aircraft - Investor Relations Other Assumptions Wesco Aircraft Private & Proprietary Visit www.wescoair.com
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi014.gif)
Transforming Wesco Built a strong foundation Developing a more performance-based culture Greater accountability Deliver results Concluding Remarks 15 Wesco Aircraft Private & Proprietary Visit www.wescoair.com
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi015.gif)
Wesco Aircraft Private & Proprietary Visit www.wescoair.com APPENDIX 16
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi016.gif)
Wesco Aircraft Private & Proprietary Visit www.wescoair.com Non-GAAP Financial Information Adjusted Cost of Sales represents Cost of Sales less the $91.3 million non-cash inventory adjustment we took during the quarter ended September 30, 2015 (the Q4 2015 Inventory Adjustment). Adjusted Gross Profit represents Gross Profit plus the Q4 2015 Inventory Adjustment. Adjusted Selling, General and Administrative Expenses represents Selling, General and Administrative Expenses less (i) restructuring and other costs and (ii) amortization of intangible assets. Adjusted Income from Operations represents Income from Operations plus (i) the $263.8 million goodwill impairment we took during the quarter ended September 30, 2015, (ii) the Q4 2015 Inventory Adjustment, (iii) restructuring and other costs and (iv) amortization of intangible assets. 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. 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 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. 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 Cost of Sales, Adjusted Gross Profit, Adjusted Selling, General and Administrative Expenses, Adjusted Income from Operations, Adjusted Net Income, Adjusted EBITDA, Adjusted Basic EPS, Adjusted Diluted EPS, Organic Sales and Free Cash Flow, 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 Cost of Sales, Adjusted Gross Profit, Adjusted Selling, General and Administrative Expenses, Adjusted Income from Operations, Adjusted Net Income, Adjusted EBITDA, Adjusted Basic EPS, Adjusted Diluted EPS, 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 following slides for a reconciliation of Adjusted Cost of Sales, Adjusted Gross Profit, Adjusted Selling, General and Administrative Expenses, Adjusted Income from Operations, Adjusted Net Income, Adjusted EBITDA, Adjusted Basic EPS, Adjusted Diluted EPS, and Organic Sales to the most directly comparable financial measures calculated and presented in accordance with GAAP. 17 Wesco Aircraft - Investor Relations
![GRAPHIC](http://www.sec.gov/Archives/edgar/data/1378718/000110465915080253/g236361moi017.gif)
Non-GAAP Financial Information 18 Wesco Aircraft - Investor Relations Wesco Aircraft Private & Proprietary Visit www.wescoair.com September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 Adjusted Cost of Sales As reported $363,523 $294,529 $1,173,120 $952,877 Inventory adjustment (91,280) - (91,280) - As adjusted $272,243 $294,529 $1,081,840 $952,877 Adjusted Gross Profit As reported $6,131 $113,638 $324,495 $403,000 Inventory adjustment 91,280 - 91,280 - As adjusted $97,411 $113,638 $415,775 $403,000 Adjusted Selling, General and Administrative Expenses As reported $68,510 $65,522 $267,089 $219,066 Restructuring and other costs (5,998) (2,862) (13,923) (12,645) Amortization of intangible assets (3,961) (4,537) (15,948) (12,636) As adjusted $58,551 $58,123 $237,218 $193,785 Adjusted Income from Operations As reported ($326,150) $48,116 ($206,365) $183,934 Goodwill impairment 263,771 - 263,771 - Inventory adjustment 91,280 - 91,280 - Amortization of intangible assets 3,961 4,537 15,948 12,636 Restructuring and other costs 5,998 2,862 13,923 12,645 As adjusted $38,860 $55,515 $178,557 $209,215 Three Months Ended Fiscal Year Ended Wesco Aircraft Holdings, Inc. (In thousands, except for per share data) Non-GAAP Financial Information (UNAUDITED)
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Non-GAAP Financial Information 19 Wesco Aircraft - Investor Relations Wesco Aircraft Private & Proprietary Visit www.wescoair.com Adjusted Net Income Net (loss) income ($213,998) $24,647 ($154,744) $102,102 Goodwill impairment 263,771 - 263,771 - Inventory adjustment 91,280 - 91,280 - Amortization of intangible assets 3,961 4,537 15,948 12,636 Amortization of deferred financing costs 1,092 1,242 4,354 3,299 Restructuring and other costs 5,998 2,862 13,923 12,645 Adjustments for tax effect (125,639) (3,546) (133,961) (10,005) Adjusted Net Income $26,465 $29,742 $100,571 $120,677 Adjusted Basic Earnings Per Share Weighted-average number of basic shares outstanding 97,042 96,770 96,955 95,951 Adjusted Net Income Per Basic Shares $0.27 $0.31 $1.04 $1.26 Adjusted Diluted Earnings Per Share Weighted-average number of diluted shares outstanding 97,042 97,884 96,955 97,606 Adjusted Net Income Per Diluted Shares $0.27 $0.30 $1.04 $1.24 EBITDA and Adjusted EBITDA Net (loss) income ($213,998) $24,647 ($154,744) $102,102 (Benefit) provision for income taxes (117,985) 13,507 (86,872) 54,806 Interest and other, net 9,037 9,816 37,092 29,225 Depreciation and amortization 7,911 7,209 27,726 21,402 EBITDA (315,035) 55,179 (176,798) 207,535 Goodwill impairment 263,771 - 263,771 - Inventory adjustment 91,280 - 91,280 - Restructuring and other costs 5,998 2,862 13,923 12,645 Adjusted EBITDA $46,014 $58,041 $192,176 $220,180 September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 Three Months Ended Fiscal Year Ended Wesco Aircraft Holdings, Inc. (In thousands, except for per share data) Non-GAAP Financial Information (UNAUDITED)
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Non-GAAP Financial Information 20 Wesco Aircraft - Investor Relations Wesco Aircraft Private & Proprietary Visit www.wescoair.com September 30, 2015 September 30, 2014 Increase / (Decrease) Percent Change September 30, 2015 September 30, 2014 Increase / (Decrease) Percent Change Consolidated Consolidated net sales $369,654 $408,167 ($38,513) -9.4% $1,497,615 $1,355,877 $141,738 10.5% Haas net sales - - - 242,661 - 242,661 Consolidated organic sales 369,654 408,167 (38,513) -9.4% 1,254,954 1,355,877 (100,923) -7.4% One-time demand pull forward - - - - (26,440) 26,440 Contract settlement - - - - (5,890) 5,890 Currency effects 8,883 - 8,883 25,359 - 25,359 Adjusted organic sales $378,537 $408,167 ($29,630) -7.3% $1,280,313 $1,323,547 ($43,234) -3.3% North America North America net sales $299,008 $317,506 ($18,498) -5.8% $1,198,201 $1,030,511 $167,690 16.3% Haas North America net sales - - - 184,590 - 184,590 North America organic sales 299,008 317,506 (18,498) -5.8% 1,013,611 1,030,511 (16,900) -1.6% Contract settlement - - - - (5,890) 5,890 Contract Transition from Rest of World 9 - 9 (27,916) - (27,916) Adjusted North America organic sales $299,017 $317,506 ($18,489) -5.8% $985,695 $1,024,621 ($38,926) -3.8% Rest of World Rest of World net sales $70,645 $90,661 ($20,016) -22.1% $299,414 $325,366 ($25,952) -8.0% Haas Rest of World net sales - - - 58,071 - 58,071 Rest of World organic sales 70,645 90,661 (20,016) -22.1% 241,343 325,366 (84,023) -25.8% One-time demand pull forward - - - - (26,440) 26,440 Contract Transition to North America (9) - (9) 27,916 - 27,916 Currency effects 8,883 - 8,883 25,359 - 25,359 Adjusted Rest of World organic sales $79,519 $90,661 ($11,142) -12.3% $294,618 $298,926 ($4,308) -1.4% Three Months Ended Fiscal Year Ended Wesco Aircraft Holdings, Inc. Non-GAAP Financial Information (UNAUDITED) (In thousands)
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Non-GAAP Financial Information 21 Wesco Aircraft - Investor Relations Wesco Aircraft Private & Proprietary Visit www.wescoair.com September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 Consolidated EBITDA & Adjusted EBITDA Net (loss) income ($213,998) $24,647 ($154,744) $102,102 (Benefit) provision for income taxes (117,985) 13,507 (86,872) 54,806 Interest and other, net 9,037 9,816 37,092 29,225 Depreciation and amortization 7,911 7,209 27,726 21,402 EBITDA (315,035) 55,179 (176,798) 207,535 Unusual or non-recurring items 361,049 2,862 368,974 12,645 Adjusted EBITDA $46,014 $58,041 $192,176 $220,180 North America EBITDA & Adjusted EBITDA Net (loss) income ($210,539) $17,230 ($164,047) $71,865 (Benefit) provision for income taxes (119,754) 13,262 (94,450) 47,459 Interest and other, net 7,895 8,400 32,912 25,836 Depreciation and amortization 6,854 5,962 23,548 18,317 EBITDA (315,544) 44,854 (202,037) 163,477 Unusual or non-recurring items 349,749 2,783 357,217 12,566 Adjusted EBITDA $34,205 $47,637 $155,180 $176,043 Rest of World EBITDA & Adjusted EBITDA Net (loss) income ($3,459) $7,417 $9,304 $30,237 Provision for income taxes 1,769 245 7,578 7,347 Interest and other, net 1,142 1,416 4,180 3,389 Depreciation and amortization 1,057 1,247 4,178 3,085 EBITDA 509 10,325 25,239 44,058 Unusual or non-recurring items 11,300 79 11,757 79 Adjusted EBITDA $11,809 $10,404 $36,996 $44,137 Wesco Aircraft Holdings, Inc. Non-GAAP Financial Information (UNAUDITED) (In thousands) Three Months Ended Fiscal Year Ended
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22 Wesco Aircraft Private & Proprietary Visit www.wescoair.com
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