Wesco Aircraft Misses on Q3 Earnings & Revenues, Guides Low

Zacks

Wesco Aircraft Holdings, Inc. (WAIR) reported third-quarter fiscal 2014 adjusted earnings of 34 cents per share, missing the Zacks Consensus Estimate of 36 cents by 5.6%. However, quarterly earnings increased 9.7% year over year primarily on the back of higher sales. This was partially offset by an increase in interest expenses due to the financing of the Haas Group Inc. acquisition.

Net Revenue

In the fiscal third quarter, Wesco Aircraft’s net revenues of $395.6 million lagged the Zacks Consensus Estimate of $406 million by 2.6%. On a year-over-year basis, the top line soared 71.9% mainly due to strong sales in North America and Rest of World, the acquisition of Haas Group Inc., possibilities of expansion of existing contracts and winning of new contracts.

Despite missing the earnings and revenue estimates, shares of Wesco Aircraft edged up 0.4% on Aug 4 following the year-over-year revenue upside.

Operational Highlights

In the quarter under review, Wesco Aircraft incurred $274.1 million as cost of sales, up 84.8% from $148.3 million a year ago.

Selling, general and administrative expenses in the reported quarter surged 92.5% year over year to $68.9 million.

The company’s interest expense was $9.4 million compared with $4.7 million a year ago.

Wesco Aircraft reported quarterly adjusted earnings before interest tax, depreciation and amortization (:EBITDA) of $63.2 million, up 27.2% year over year.

Financial Condition

As of Jun 30, 2014, Wesco Aircraft had cash and cash equivalents of $80.4 million compared with $78.7 million as of Sep 30, 2013.

Long-term debt as of Jun 30, 2014 was $1,097.5 million, up from $568 million at the end of fiscal 2013.

During the first nine months of fiscal 2014, cash from operating activities was $2.4 million compared with $56.9 million in the prior-year period.

Guidance

Wesco Aircraft updated its fiscal 2014 revenues and earnings guidance based on its fiscal-year–to-date performance.

The company narrowed its top-line guidance for fiscal 2014 to $1.35–$1.38 billion from the previous projection of $1.33–$1.38 billion. The estimate reflects growth of 50%–53% over fiscal 2013 results.

Wesco Aircraft reduced its adjusted earnings guidance for fiscal 2014 to $1.30–$1.33 per share from its earlier estimate of $1.33–$1.38 per share due to current market margin activity. The current projection shows a rise of 7%–9% over prior-year earnings.

Other Releases

The Boeing Company (BA) reported adjusted second-quarter 2014 earnings of $2.42 per share, beating the Zacks Consensus Estimate by 19.8%.

Embraer SA’s (ERJ) second-quarter 2014 earnings of 70 cents per American Depository Shares (ADS) beat the Zacks Consensus Estimate of 63 cents by 11.1%.

Lockheed Martin Corp. (LMT) reported second quarter 2014 earnings of $2.76 per share, comfortably surpassing the Zacks Consensus Estimate of $2.66 by 3.8%.

Zacks Rank

Wesco Aircraft currently has a Zacks Rank #4 (Sell).

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