Wesco Aircraft Holdings (WAIR) Tops Q1 EPS by 1c, Revenues Beat

January 31, 2019 4:20 PM

Wesco Aircraft Holdings (NYSE: WAIR) reported Q1 EPS of $0.17, $0.01 better than the analyst estimate of $0.16. Revenue for the quarter came in at $395.3 million versus the consensus estimate of $390.1 million.

Todd Renehan, chief executive officer, commented, “Fiscal 2019 first quarter results reflect solid top-line growth in all products and services and ongoing execution of our Wesco 2020 initiatives. Our Americas business, which represented 81 percent of total net sales, performed very well in the first quarter, with strong sales growth and improved operating margin. This was partially offset by one-time costs of $8 million supporting Wesco 2020 execution and weaker results in our EMEA business. Based upon our strong execution in the Americas, I’m confident in our ability to address the challenges in EMEA and improve its profit generation by the end of the year.”

The company’s Americas segment reported net sales growth of 11 percent. Operating income in the Americas increased 15 percent, reflecting higher gross profit, partially offset by an increase in expenses to support growth and Wesco 2020 execution. The EMEA segment reported a net sales decline of 4 percent. Operating income in EMEA decreased $2.7 million, or 52 percent, due to a decline in sales and gross profit, which reflects lower pricing on certain contract renewals, volume discounts earned and less volume at some customers.

Renehan continued, “As anticipated, we consumed cash from operating activities in the fiscal 2019 first quarter to support our growing business, which included direct support of a large multiyear customer contract renewal that was completed at the end of the first quarter. Excluding this investment, inventory growth was lower than in the first quarter of last year. We continue to expect that improvements in inventory management will drive an increase in cash from operations in fiscal 2019 compared to fiscal 2018.”

Renehan added, “We’re executing Wesco 2020 initiatives at an aggressive pace, consolidating single-use warehouse facilities into multi-commodity distribution centers, closing sales offices and reducing headcount further. As expected, Wesco 2020 benefits to the bottom line were minimal in the first quarter as execution timing for key elements of our initiatives are scheduled for later in the year. We expect benefits to increase as we progress through the year. We continue to believe Wesco 2020 will generate annualized pre-tax benefits of at least $30 million, with full realization during fiscal 2020. Although temporary operating cost support for the execution of Wesco 2020 will continue to precede benefits, we are confident that these temporary costs will decline significantly by the end of the year.”

Fiscal 2019 Outlook

The company continues to expect net sales in fiscal 2019 to increase at a mid-single-digit percentage pace compared to fiscal 2018. In addition, higher sales volume, Wesco 2020 benefits and expense leverage are expected to drive a high-single-digit percentage increase in adjusted EBITDA .

For earnings history and earnings-related data on Wesco Aircraft Holdings (WAIR) click here.

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