Wesco Aircraft Holdings Reports Results for Fiscal Second Quarter 2013

Wesco Aircraft Holdings Reports Results for Fiscal Second Quarter 2013

VALENCIA, Calif.--(BUSINESS WIRE)-- Wesco Aircraft Holdings, Inc. ("Wesco Aircraft" or the "Company") (NYS: WAIR) , a leading provider of comprehensive supply chain management services to the global aerospace industry, today announced results for its fiscal second quarter ended March 31, 2013.

Highlights

  • Revenue for the quarter of $225.9 million, up 24.0% (approximately 14% organic) compared to the prior year

  • Net Income of $29.4 million, with Diluted Earnings Per Share ("EPS") of $0.31

  • Adjusted Net Income of $31.2 million, up 50.3% compared to the prior year, with Adjusted Diluted EPS of $0.33

  • Full year 2013 guidance increased for revenue with a range of $880.0 million to $900.0 million and Adjusted Diluted EPS increased and expected to be in the range of $1.17 to $1.21


Fiscal 2013 Second Quarter Results

Revenue for the second fiscal quarter was $225.9 million, an increase of 24.0% compared to $182.1 million in the prior year period. The increase in the North America segment external sales was 21.8%, which was mainly driven by growth across the Company's customer base and the Interfast acquisition. Wesco again demonstrated strong international growth during the quarter with external sales in the Rest of World segment increasing by 32.9% compared to the prior year period. Overall, organic sales increased approximately 14% compared to the prior year. In the second quarter, Ad hoc, JIT and LTA sales as a percentage of net sales represented 41%, 25% and 34%, respectively, compared to 40%, 23% and 37%, respectively, for the same period last year.

Net Income for the second quarter was $29.4 million, resulting in Diluted EPS of $0.31. This compares to $19.7 million or $0.21 in Diluted EPS in the prior year period. Adjusted Net Income was $31.2 million and Adjusted Diluted EPS was $0.33 in the second quarter of 2013 as compared to $20.8 million or $0.22 per share in the prior year period. The increases in Diluted EPS and Adjusted Diluted EPS were primarily the result of higher sales partially offset by higher selling, general and administrative expenses. Adjusted EBITDA for the period was $51.6 million as compared to $38.3 million for the same period in 2012.

Wesco Aircraft's Chairman, President and Chief Executive Officer, Randy Snyder said, "Our first half of the year results were very strong relative to last year and we are ahead of our expectations as well. In addition, we continue to experience high levels of activity in bookings, scope additions to our existing contracts, and contract signings with new customers. This activity adds to our confidence for the rest of the year and fuels our optimism for the future. The Interfast integration continues to go well. Our entry into the MRO market space and the roll out of our MRO e-Commerce platform has been well received. None of this would be possible without our strong customer relationships, the support of our suppliers and the dedicated efforts of the best employees in the business."

First Six Months of Fiscal 2013

Revenue for the first six months of fiscal 2013 was $437.0 million, an increase of 16.6% compared to $374.7 million in the prior year period. On a year-to-date basis, Ad hoc, JIT and LTA sales as a percentage of net sales represented 40%, 26%, and 34%, respectively, compared to 38%, 27%, and 35%, respectively, for the first six months of fiscal 2012.

Net Income for the period was $47.8 million and Adjusted Net Income was $55.3 million. Net Income resulted in Diluted EPS of $0.50 and Adjusted Net Income resulted in Adjusted Diluted EPS of $0.58. This compared to Net Income of $42.9 million or Diluted EPS of $0.45 and Adjusted Net Income of $45.1 million or for Diluted EPS of $0.47 in the prior year period. Adjusted EBITDA on a year-to-date basis was $95.2 million as compared to $85.7 million in 2012.

Financial Outlook

Based on performance for the first half of the fiscal year, and on continued strong sales and quoting activity, Wesco Aircraft is increasing its guidance for fiscal 2013 and expects full year revenues to be between $880.0 million and $900.0 million, representing growth of approximately 13% to 16% over 2012 results. Adjusted Diluted EPS is now expected in the range of and $1.17 to $1.21, an increase of 18% to 22% compared to the prior year.

Conference Call Information

Wesco Aircraft will also hold a conference call to discuss its second quarter results at 5:00 p.m. EDT on April 29, 2013. The conference call can be accessed by dialing 888-771-4371 (domestic) or 847-585-4405 (international). Participants will need to enter passcode 34657384.

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 will also be available approximately one hour after the conference call and may be accessed by dialing 888-843-7419 (domestic) or 630-652-3042 (international) and entering passcode 34657384. The telephonic replay will be available until 11:59 pm PDT May 6, 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 one of the world's broadest inventory of aerospace parts, comprised of more than 500,000 different stock keeping units, including hardware, bearings, tools, electronic components and machined parts. Wesco Aircraft has more than 1,200 employees across 41 locations in 12 countries.

To learn more about Wesco Aircraft, visit our website at www.wescoair.com.

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 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 and (iv) unusual or non-recurring items.

Wesco Aircraft 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

Certain information in this news release contains forward-looking statements with respect to the Company's financial condition, results of operations or business or its expectations or beliefs concerning future events. Such forward-looking statements include the discussions of the Company's business strategies and the Company's expectations concerning future operations, revenues, earnings per share, margins, profitability, liquidity and capital resources. 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. Such forward-looking statements involve risks, uncertainties, estimates and assumptions that may cause the Company's actual results, performance or achievements to be materially different than those set forth in this news release. Additional information relating to factors that may cause actual results to differ from the Company's forward-looking statements can be found in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2012, as supplemented by the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2012. 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.

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 1

Wesco Aircraft Holdings, Inc.

Consolidated Statements of Income (UNAUDITED)

(In thousands, except for per share data)

Three Months Ended

Six Months Ended

March 31, 2013

March 31, 2012

March 31, 2013

March 31, 2012

Net sales

$

225,862

$

182,143

$

437,033

$

374,697

Cost of sales

144,554

118,068

281,625

237,350

Gross profit

81,308

64,075

155,408

137,347

Selling, general and administrative expenses

34,896

27,710

69,621

55,903

Income from operations

46,412

36,365

85,787

81,444

Interest expense, net

(4,691

)

(5,831

)

(16,068

)

(12,345

)

Other expense, net

1,889

(519

)

1,734

(541

)

Income before provision for income taxes

43,610

30,015

71,453

68,558

Provision for income taxes

(14,222

)

(10,292

)

(23,639

)

(25,657

)

Net income

$

29,388

$

19,723

$

47,814

$

42,901

Net income per share:

Basic

$

0.32

$

0.21

$

0.52

$

0.47

Diluted

$

0.31

$

0.21

$

0.50

$

0.45

Weighted average shares outstanding:

Basic

92,889

91,769

92,699

91,482

Diluted

95,634

95,621

95,404

95,298

Exhibit 2

Wesco Aircraft Holdings, Inc.

Condensed Consolidated Balance Sheets (UNAUDITED)

(In thousands)

March 31, 2013

September 30, 2012

Assets

Cash and cash equivalents

$

53,885

$

60,856

Accounts receivable, net

146,380

130,013

Inventories

592,765

557,216

Other current assets

47,617

53,944

Deferred income taxes

32,264

32,872

Total current assets

872,911

834,901

Long-term assets

697,160

702,515

Total assets

$

1,570,071

$

1,537,416

Liabilities and Stockholders' Equity

Accounts payable

$

88,479

$

79,940

Other current liabilities

17,761

19,788

Income taxes payable

5,880

2,078

Long-term debt—current portion

15,563

-

Capital lease obligations—current portion

1,076

593

Total current liabilities

128,759

102,399

Long-term debt

585,937

626,000

Capital lease obligations

1,038

205

Deferred income taxes

61,177

55,445

Total Long-term liabilities

648,152

681,650

Total liabilities

776,911

784,049

Total stockholders' equity

793,160

753,367

Total liabilities and stockholders' equity

$

1,570,071

$

1,537,416

Exhibit 3

Wesco Aircraft Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (UNAUDITED)

(In thousands)

Six Months Ended

March 31, 2013

March 31, 2012

Cash flows from operating activities

Net income

$

47,814

$

42,901

Adjustments to reconcile net income to net cash provided by operating activities

Amortization of intangible assets

3,309

1,845

Depreciation

2,410

2,786

Amortization of deferred financing costs

6,367

1,600

Bad debt and sales return reserve

(441

)

(368

)

Non-cash foreign currency exchange

557

100

Non-cash stock-based compensation

1,875

691

Excess tax benefit related to stock options exercised

(1,005

)

(1,778

)

Change in value of derivative

-

(1,329

)

Deferred income tax provision

6,320

4,017

Loss on fixed asset disposal

-

349

Changes in assets and liabilities

Accounts receivable

(22,218

)

(10,099

)

Income taxes receivable

11,099

(3,024

)

Inventories

(36,486

)

(18,073

)

Prepaid expenses and other assets

(4,023

)

(2,575

)

Accounts payable

14,347

14,856

Accrued expenses and other liabilities

(1,945

)

(5,156

)

Income taxes payable

4,013

784

Net cash provided by operating activities

31,993

27,527

Cash flows from investing activities

Purchases of property and equipment

(1,189

)

(1,192

)

Proceeds from sale of equipment

-

2,759

Net cash provided by (used in) investing activities

(1,189

)

1,567

Cash flows from financing activities

Proceeds from issuance of long-term debt

625,000

-

Repayments of long-term debt

(649,500

)

(25,000

)

Financing fees

(7,274

)

-

Repayment of capital lease obligations

(654

)

(1,037

)

Excess tax benefit related to stock options exercised

1,005

1,778

Proceeds from exercise of stock options

2,994

4,782

Purchase of Treasury Stock

(8,452

)

(0

)

Net cash used in financing activities

(36,881

)

(19,477

)

Effect of foreign currency exchange rates on cash and cash equivalents

(894

)

100

Net increase (decrease) in cash and cash equivalents

(6,971

)

9,717

Cash and cash equivalents, beginning of period

60,856

45,525

Cash and cash equivalents, end of period

$

53,885

$

55,242

Exhibit 4

Wesco Aircraft Holdings, Inc.

Non-GAAP Financial Information (UNAUDITED)

(In thousands, except for per share data)

Three Months Ended

Six Months Ended