0001104659-19-045036.txt : 20190809 0001104659-19-045036.hdr.sgml : 20190809 20190809081329 ACCESSION NUMBER: 0001104659-19-045036 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20190809 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190809 DATE AS OF CHANGE: 20190809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Wesco Aircraft Holdings, Inc CENTRAL INDEX KEY: 0001378718 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-HARDWARE [5072] IRS NUMBER: 205441563 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35253 FILM NUMBER: 191011386 BUSINESS ADDRESS: STREET 1: 24911 AVENUE STANFORD CITY: VALENCIA STATE: CA ZIP: 91355 BUSINESS PHONE: 661-775-7200 MAIL ADDRESS: STREET 1: 24911 AVENUE STANFORD CITY: VALENCIA STATE: CA ZIP: 91355 FORMER COMPANY: FORMER CONFORMED NAME: Wesco Holdings Inc DATE OF NAME CHANGE: 20061019 8-K 1 a19-16865_28k.htm 8-K

 

 

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): August 9, 2019

 


 

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)

 

Registrant’s 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))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading Symbol

 

Name of Each Exchange on Which Registered

Common Stock, par value $0.001 per share

 

WAIR

 

New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 


 

Item 2.02                                           Results of Operations and Financial Condition.

 

On August 9, 2019, Wesco Aircraft Holdings, Inc. (the “Company”) announced its financial results for the fiscal quarter ended June 30, 2019. 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.

 

The information in this Current Report on Form 8-K (including Exhibit 99.1) 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

 

 

 

99.1

 

Press Release, issued by the Company on August 9, 2019

 

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.

 

 

WESCO AIRCRAFT HOLDINGS, INC.

 

 

 

 

 

Date: August 9, 2019

By:

/s/ Kerry A. Shiba

 

 

Kerry A. Shiba

 

 

Executive Vice President and Chief Financial Officer

 

3


EX-99.1 2 a19-16865_2ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Wesco Aircraft Holdings Reports

Fiscal 2019 Third Quarter Results

 

VALENCIA, Calif., August 9, 2019 — Wesco Aircraft Holdings, Inc. (NYSE: WAIR), one of the world’s leading distributors and providers of comprehensive supply chain management services to the global aerospace industry, today announced results for its fiscal 2019 third quarter ended June 30, 2019.

 

Fiscal 2019 Third Quarter Highlights

 

·                  Net sales of $442.4 million, up 7.8 percent

 

·                  Net income of $14.1 million, or $0.14 per diluted share

 

·                  Adjusted net income(1) of $22.7 million, or $0.23 per diluted share

 

·                  Adjusted earnings before interest, taxes, depreciation and amortization(1) (EBITDA) of $45.2 million, or 10.2 percent of net sales

 

·                  Net cash provided by operating activities of $55.7 million

 

Todd Renehan, chief executive officer, commented, “Robust sales growth continued in the fiscal 2019 third quarter, primarily driven by higher sales under long-term contracts for both chemical and hardware products. This growth reflects continued strong performance in the Americas, which is our largest segment, and was achieved despite a decline in our EMEA region. Cash from operating activities increased significantly in the third quarter, primarily due to further improvements in inventory management and our continued focus on working capital.

 

“I’m pleased with our Americas performance, where we have continued to grow sales in a healthy market while increasing the pace of operational improvements associated with Wesco 2020. Concerning EMEA, we have taken action and made leadership changes to address its weaker performance. We’re encouraged to see signs of progress in certain leading indicators, including a significant increase in quoting activity and bookings. However, due to long supply chain lead times, we expect that it will take some time for these increased activity levels to translate into improved operating results.”

 


 

Renehan continued, “We executed Wesco 2020 footprint optimization initiatives in the third quarter at our most aggressive pace to-date, as we further developed multi-product distribution centers and transferred inventory from older single-product warehouses. As these activities are completed, the associated temporary costs are expected to decline significantly. Based on our continued progress to-date, we remain confident in our ability to achieve our target of at least $30 million in pre-tax run-rate savings from Wesco 2020.”

 

Fiscal 2019 Third Quarter Consolidated Results

 

Net sales of $442.4 million in the fiscal 2019 third quarter increased 7.8 percent compared with $410.4 million in the same period last year, of which 2.7 percentage points resulted from sales related to contract liability claims totaling $21.7 million and $10.8 million in the third quarter of fiscal 2019 and 2018, respectively. Sales under long-term contracts increased, led by higher chemical revenue and, to a lesser degree, by hardware. Ad-hoc sales were slightly lower year-over-year, primarily due to a decline in EMEA sales.

 

Gross profit was $105.9 million in the third quarter of fiscal 2019, compared with $104.2 million in the fiscal 2018 third quarter. The increase in gross profit was principally driven by higher sales volume, partially offset by a decline in gross margin. Gross margin overall reflects a decline in EMEA, as well as lower margins on certain liability claim sales and a higher concentration of pass-through chemical revenue. These negative factors were partially offset by lower net excess and obsolete and other inventory related charges.

 

Selling, general and administrative (SG&A) expenses totaled $83.4 million in the fiscal 2019 third quarter, an increase of $8.5 million compared with the same period last year. The company incurred more cost to support the increase in sales volume, as well as a heavier phase of Wesco 2020 execution. SG&A expenses in the fiscal 2019 third quarter included temporary costs of $10.6 million related to Wesco 2020, compared with $7.5 million in the same period last year.

 

SG&A expenses were 18.8 percent of net sales in the fiscal 2019 third quarter, compared with 18.3 percent in the same period last year. Excluding temporary Wesco 2020 costs noted above, SG&A expenses as a percent of net sales were approximately 16.4 percent in the fiscal 2019 third quarter, consistent with the same period last year.

 

Income from operations totaled $22.5 million, or 5.1 percent of net sales, in the fiscal 2019 third quarter, compared with $29.3 million, or 7.1 percent of net sales, in the same period last year. The decline in income from operations primarily reflects higher SG&A expenses, partially offset by higher gross profit.

 

Income tax benefit of $7.4 million in the fiscal 2019 third quarter primarily was due to a $9.2 million reversal of the one-time tax imposed on accumulated earnings and profits of foreign operations

 

2


 

associated with enactment of the Tax Cuts and Jobs Act in fiscal 2018. The reversal primarily was driven by higher utilization of foreign tax credits against the company’s U.S. tax liability.

 

The company assessed the fair value of its equity method investment in a chemicals joint venture in China. The assessment determined that the estimated fair value of the joint venture was less than its carrying value, reflecting reduced sales and earnings and resulting in a pre-tax non-cash impairment charge of $3.0 million ($2.3 million net of income tax benefit) in the third quarter of fiscal 2019.

 

Net income was $14.1 million, or $0.14 per diluted share, in the fiscal 2019 third quarter. Net income in the fiscal 2018 third quarter was $10.8 million, or $0.11 per diluted share.

 

Adjusted net income(1) in the fiscal 2019 third quarter was $22.7 million, or $0.23 per diluted share, compared with $20.1 million, or $0.20 per diluted share, in the same period last year.

 

Adjusted EBITDA(1) in the fiscal 2019 third quarter was $45.2 million, compared with $44.5 million in the same period last year. Adjusted EBITDA margin(1) was 10.2 percent, compared with 10.8 percent in the same period last year.

 

Adjustments to arrive at adjusted net income(1) and adjusted EBITDA(1) include special items, among other things. In the third quarter of fiscal 2019, special items totaled $19.1 million and consisted of consulting fees of $5.8 million, inventory adjustments of $5.2 million and other costs of $5.1 million associated with the company’s Wesco 2020 initiative, as well as the impairment charge discussed above. In the third quarter of fiscal 2018, special items totaled $7.6 million and consisted primarily of consulting fees of $5.6 million and other costs of $1.9 million associated with Wesco 2020.

 

Net cash provided by operating activities totaled $55.7 million in the fiscal 2019 third quarter, an increase of $38.9 million compared with $16.8 million in the same period last year. The increase primarily reflects lower inventory purchases and net changes in other working capital items, most notably accounts receivable and accounts payable, that reflect better management of business growth and timing.

 

Free cash flow(1) was $47.2 million in the fiscal 2019 third quarter, an increase of $31.5 million compared with $15.7 million in the same period last year.

 

Fiscal 2019 Outlook

 

The company continues to expect net sales in fiscal 2019 to increase at a mid-to-high single-digit percentage rate compared with fiscal 2018. The company also continues to expect higher sales volume and Wesco 2020 benefits to drive a high-single-digit percentage increase in adjusted EBITDA in fiscal 2019.

 

3


 

Conference Call

 

In light of the previously announced merger agreement pursuant to which the company is to be acquired by an affiliate of Platinum Equity Advisors LLC (the “Merger Agreement”), the earnings conference call scheduled for today, Friday, August 9, 2019, at 5:30 a.m. PDT (8:30 a.m. EDT) will no longer take place. For more information about the Merger Agreement, please see the press release filed as Exhibit 99.1 to the company’s Current Report on Form 8-K filed earlier today, which can also be found on the company’s Investor Relations website at http://ir.wescoair.com.

 

About Wesco Aircraft

 

Wesco Aircraft is one of the world’s leading 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, chemical management services, third-party logistics or fourth-party logistics and point-of-use inventory management. The company believes it offers one of the world’s broadest portfolios of aerospace products, including C-class hardware, chemicals and electronic components and comprised of more than 550,000 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.

 

Footnotes

 


(1) Non-GAAP financial measure — see the tables following this press release for reconciliations of GAAP to non-GAAP results.

 

Non-GAAP Financial Information

 

Adjusted net income represents net income before: (i) amortization of intangible assets, (ii) amortization or write-off of deferred debt issuance costs, (iii) special items and (iv) the tax effect of items (i) through (iii) above calculated using an estimated 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) special items.

 

Adjusted EBITDA margin represents adjusted EBITDA divided by net sales.

 

4


 

Free cash flow represents net cash used in operating activities 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, adjusted EBITDA margin and free cash flow, which are non-GAAP measures management uses to evaluate the company’s business, because it believes 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 the company’s 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, adjusted EBITDA margin 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 tables following this press release for reconciliations of adjusted net income, adjusted basic earnings per share, adjusted diluted earnings per share, adjusted EBITDA, adjusted EBITDA margin and free cash flow to the most directly comparable financial measures calculated and presented in accordance with GAAP.

 

Additional Information About the Acquisition and Where to Find It

 

This communication contains information regarding the proposed merger (the “Merger”) of Wesco Aircraft Holdings, Inc., a Delaware corporation (“Wesco Aircraft”), and Wolverine Merger Corporation, a Delaware corporation (“Merger Sub”) and a direct wholly owned subsidiary of Wolverine Intermediate Holding II Corporation, a Delaware corporation (“Parent”), pursuant to the terms of that certain Agreement and Plan of Merger, dated as of August 8, 2019, by and among Wesco Aircraft, Parent and Merger Sub (the “Merger Agreement”).

 

Parent and Merger Sub are indirect subsidiaries of funds managed and advised by Platinum Equity Advisors, LLC. A special meeting of the stockholders of Wesco Aircraft will be announced as promptly as practicable to seek stockholder approval in connection with the proposed Merger. Wesco Aircraft expects to file with the Securities and Exchange Commission (“SEC”) a proxy statement and other relevant documents in connection with the proposed Merger between Wesco Aircraft and Merger Sub. The definitive proxy statement will be sent or given to the stockholders of Wesco Aircraft and will contain important information about the proposed transaction and related matters. INVESTORS AND STOCKHOLDERS OF WESCO AIRCRAFT ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY

 

5


 

WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT WESCO AIRCRAFT, PARENT, MERGER SUB AND THE MERGER. Investors may obtain a free copy of these materials (when they are available) and other documents filed by Wesco Aircraft with the SEC at the SEC’s website at www.sec.gov, at Wesco Aircraft’s website at www.wescoair.com or by sending a written request to Wesco Aircraft Holdings, Inc., 24911 Avenue Stanford, Valencia, California 91355, Attention: Executive Vice President, Chief Legal and Human Resources Officer.

 

Participants in the Solicitation

 

Wesco Aircraft and its directors, executive officers and certain other members of management and employees may be deemed to be participants in soliciting proxies from its stockholders in connection with the Merger.  Information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of Wesco Aircraft’s stockholders in connection with the Merger will be set forth in Wesco Aircraft’s definitive proxy statement for its special stockholder meeting. Additional information regarding these individuals and any direct or indirect interests they may have in the Merger will be set forth in the definitive proxy statement when it is filed with the SEC in connection with the Merger. Information relating to the foregoing can also be found in Wesco Aircraft’s definitive proxy statement for its 2019 Annual Meeting of Stockholders (the “Annual Meeting Proxy Statement”), which was filed with the SEC on December 14, 2018. To the extent that holdings of Wesco Aircraft’s securities have changed since the amounts set forth in the Annual Meeting Proxy Statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC.

 

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 “ability,” “address,” “begin,” “complete,” “continue,” “develop,” “drive,” “execute,” “expect,” “grow,” “improve,” “indicator,” “initiative,” “may,” “outlook,” “progress,” “recovery,” “target,” “will” 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 these forward-looking statements include, but are not limited to, the following: the company’s inability to consummate the Merger

 

6


 

within the anticipated time period, or at all, due to any reason, including the failure to obtain stockholder approval to adopt the Merger Agreement, the failure to obtain required regulatory approvals or the failure to satisfy the other conditions to the consummation of the Merger; the failure by Parent or Merger Sub to obtain the necessary debt and equity financing arrangements set forth in the commitment letters received in connection with the Merger; the risk that the Merger Agreement may be terminated in circumstances requiring the company to pay a termination fee of approximately $39 million; the risk that the Merger disrupts the company’s current plans and operations or diverts management’s attention from its ongoing business; the effect of the announcement of the Merger on the company’s ability to retain and hire key personnel and maintain relationships with its customers, suppliers and others with whom it does business; the effect of the announcement of the Merger on the company’s operating results and business generally; the amount of costs, fees and expenses related to the Merger; the risk that the company’s stock price may decline significantly if the Merger is not consummated; the nature, cost and outcome of any litigation and other legal proceedings, including any such proceedings related to the Merger and instituted against the company and others; 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 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; risks associated with the company’s long-term, fixed-price agreements that have no guarantee of future sales volumes; the company’s ability to effectively manage its inventory; 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, while also meeting the company’s customers’ quality standards; the company’s ability to maintain effective information technology systems and effectively implement its new warehouse management system; the company’s ability to successfully execute and realize the expected financial benefits from its “Wesco 2020” initiative; the company’s ability to retain key personnel; risks associated with the company’s international operations, including exposure to foreign currency movements; changes in trade policies; risks associated with assumptions the company makes in connection with its critical accounting estimates (including goodwill, excess and obsolete inventory and valuation allowance of the company’s deferred tax assets) and legal proceedings; changes in U.S. income tax law; the company’s dependence on third-party package delivery companies; fuel price risks; fluctuations in the company’s 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 company’s indebtedness; and other risks and uncertainties.

 

7


 

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.

 

###

 

Contact Information:

 

Jeff Misakian

Vice President, Investor Relations

661-362-6847

Jeff.Misakian@wescoair.com

 

8


 

Wesco Aircraft Holdings, Inc.

Consolidated Statements of Income (UNAUDITED)

(In thousands, except share data)

 

 

 

Three Months Ended
June 30,

 

Nine Months Ended
June 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Net sales

 

$

442,374

 

$

410,359

 

$

1,264,159

 

$

1,163,633

 

Cost of sales

 

336,504

 

306,162

 

951,200

 

859,277

 

Gross profit

 

105,870

 

104,197

 

312,959

 

304,356

 

Selling, general and administrative expenses

 

83,368

 

74,869

 

238,539

 

217,260

 

Income from operations

 

22,502

 

29,328

 

74,420

 

87,096

 

Interest expense, net

 

(12,878

)

(12,717

)

(38,180

)

(36,520

)

Other (expense) income, net

 

(630

)

239

 

(1,161

)

391

 

Income before income taxes and equity method investment impairment charge

 

8,994

 

16,850

 

35,079

 

50,967

 

Benefit (provision) for income taxes

 

7,377

 

(6,096

)

(405

)

(25,587

)

Income before equity method investment impairment charge

 

16,371

 

10,754

 

34,674

 

25,380

 

Equity method investment impairment charge, net of income taxes

 

(2,257

)

 

(2,257

)

 

Net income

 

$

14,114

 

$

10,754

 

$

32,417

 

$

25,380

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.14

 

$

0.11

 

$

0.33

 

$

0.26

 

Diluted

 

$

0.14

 

$

0.11

 

$

0.32

 

$

0.26

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

99,647,188

 

99,180,632

 

99,586,122

 

99,137,710

 

Diluted

 

100,205,475

 

99,739,217

 

100,029,458

 

99,396,613

 

 

9


 

Wesco Aircraft Holdings, Inc.

Condensed Consolidated Balance Sheets (UNAUDITED)

(In thousands)

 

 

 

June 30,
2019

 

September 30,
2018

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

$

45,418

 

$

46,222

 

Accounts receivable, net

 

333,446

 

283,775

 

Inventories

 

879,565

 

884,212

 

Prepaid expenses and other current assets

 

18,110

 

15,291

 

Income taxes receivable

 

2,602

 

2,017

 

Total current assets

 

1,279,141

 

1,231,517

 

Long-term assets

 

557,042

 

557,959

 

Total assets

 

$

1,836,183

 

$

1,789,476

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Accounts payable

 

$

216,400

 

$

180,494

 

Accrued expenses and other current liabilities

 

52,569

 

42,767

 

Income taxes payable

 

4,111

 

2,295

 

Capital lease obligations, current portion

 

1,877

 

2,205

 

Short-term borrowings and current portion of long-term debt

 

58,000

 

74,000

 

Total current liabilities

 

332,957

 

301,761

 

Capital lease obligations, less current portion

 

1,475

 

2,329

 

Long-term debt, less current portion

 

759,712

 

771,777

 

Deferred income taxes

 

3,507

 

2,803

 

Other liabilities

 

12,440

 

18,337

 

Total liabilities

 

1,110,091

 

1,097,007

 

Total stockholders’ equity

 

726,092

 

692,469

 

Total liabilities and stockholders’ equity

 

$

1,836,183

 

$

1,789,476

 

 

10


 

Wesco Aircraft Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (UNAUDITED)

(In thousands)

 

 

 

Nine Months Ended
June 30,

 

 

 

2019

 

2018

 

Cash flows from operating activities

 

 

 

 

 

Net income

 

$

32,417

 

$

25,380

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities

 

 

 

 

 

Depreciation and amortization

 

21,327

 

21,909

 

Amortization of deferred debt issuance costs

 

3,914

 

4,300

 

Stock-based compensation expense

 

7,418

 

6,286

 

Net inventory provision

 

(1,555

)

10,976

 

Equity method investment impairment charge

 

2,966

 

 

Deferred income taxes

 

(24

)

523

 

Other non-cash items

 

(324

)

(175

)

Subtotal

 

66,139

 

69,199

 

Changes in assets and liabilities

 

 

 

 

 

Accounts receivable

 

(50,321

)

(47,008

)

Inventories

 

6,219

 

(76,884

)

Other current and long-term assets

 

(7,058

)

2,603

 

Accounts payable

 

33,400

 

9,122

 

Other current and long-term liabilities

 

935

 

23,903

 

Net cash provided by (used in) operating activities

 

49,314

 

(19,065

)

Cash flows from investing activities

 

 

 

 

 

Purchase of property and equipment

 

(16,481

)

(4,009

)

Net cash used in investing activities

 

(16,481

)

(4,009

)

Cash flows from financing activities

 

 

 

 

 

Proceeds from short-term borrowings

 

57,000

 

67,500

 

Repayment of short-term borrowings

 

(73,000

)

(41,000

)

Repayment of borrowings and capital lease obligations

 

(17,094

)

(17,207

)

Debt issuance costs

 

 

(1,900

)

Net cash paid for activities related to stock-based incentive plans

 

(405

)

(63

)

Net cash (used in) provided by financing activities

 

(33,499

)

7,330

 

Effect of foreign currency exchange rate on cash and cash equivalents

 

(138

)

(293

)

Net decrease in cash and cash equivalents

 

(804

)

(16,037

)

Cash and cash equivalents, beginning of period

 

46,222

 

61,625

 

Cash and cash equivalents, end of period

 

$

45,418

 

$

45,588

 

 

11


 

Wesco Aircraft Holdings, Inc.

Non-GAAP Financial Information - Adjusted Net Income and

Adjusted Earnings Per Share (UNAUDITED)

(Dollars in thousands, except share data)

 

 

 

Three Months Ended
June 30,

 

Nine Months Ended
June 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Adjusted Net Income

 

 

 

 

 

 

 

 

 

Net income

 

$

14,114

 

$

10,754

 

$

32,417

 

$

25,380

 

Amortization of intangible assets

 

3,732

 

3,714

 

11,197

 

11,141

 

Amortization of deferred debt issuance costs

 

1,306

 

1,389

 

3,915

 

4,300

 

Special items (1)

 

19,122

 

7,574

 

37,337

 

15,079

 

Adjustments for tax effect (2)

 

(15,543

)

(3,283

)

(22,361

)

918

 

Adjusted net income

 

$

22,731

 

$

20,148

 

$

62,505

 

$

56,818

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings Per Share

 

 

 

 

 

 

 

 

 

Weighted-average number of basic shares outstanding

 

99,647,188

 

99,180,632

 

99,586,122

 

99,137,710

 

Adjusted net income per basic share

 

$

0.23

 

$

0.20

 

$

0.63

 

$

0.57

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

Weighted-average number of diluted shares outstanding

 

100,205,475

 

99,739,217

 

100,029,458

 

99,396,613

 

Adjusted net income per diluted share

 

$

0.23

 

$

0.20

 

$

0.62

 

$

0.57

 

 


(1)              Special items in the third quarter of fiscal 2019 consisted of consulting fees of $5.8 million, inventory adjustments of $5.2 million and other costs of $5.1 million associated with the company’s Wesco 2020 initiative, as well as an equity method investment impairment charge of $3.0 million. Special items in the third quarter of fiscal 2018 consisted primarily of consulting fees of $5.6 million and other costs of $1.9 million associated with Wesco 2020.

 

Special items in the year-to-date period of fiscal 2019 consisted primarily of consulting fees of $13.5 million, inventory adjustments of $5.2 million and other costs of $15.2 million associated with Wesco 2020, as well as an equity method investment impairment charge of $3.0 million. Special items in the year-to-date period of fiscal 2018 consisted primarily of consulting fees of $11.4 million and other costs of $1.9 million associated with Wesco 2020, as well as the settlement of litigation and related fees of $1.3 million.

 

(2)              The adjustment for tax effect in the third quarter and year-to-date period of fiscal 2019 included a reversal of $9.2 million to the transition tax on unremitted foreign earnings recorded in fiscal 2018 under the Tax Cuts and Jobs Act. The tax provision for the transition tax previously recorded is included in the adjustment for tax effect in the year-to-date period of fiscal 2018.

 

12


 

Wesco Aircraft Holdings, Inc.

Non-GAAP Financial Information - EBITDA and Adjusted EBITDA (UNAUDITED)

(Dollars in thousands)

 

 

 

Three Months Ended
June 30,

 

Nine Months Ended
June 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

Net income

 

$

14,114

 

$

10,754

 

$

32,417

 

$

25,380

 

(Benefit) provision for income taxes (1)

 

(8,086

)

6,096

 

(304

)

25,587

 

Interest expense, net

 

12,878

 

12,717

 

38,180

 

36,520

 

Depreciation and amortization

 

7,162

 

7,368

 

21,327

 

21,909

 

EBITDA

 

26,068

 

36,935

 

91,620

 

109,396

 

Special items (2)

 

19,122

 

7,574

 

37,337

 

15,079

 

Adjusted EBITDA

 

$

45,190

 

$

44,509

 

$

128,957

 

$

124,475

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

10.2

%

10.8

%

10.2

%

10.7

%

 


(1)              (Benefit) provision for income taxes in the third quarter and fiscal year-to-date period of fiscal 2019 was adjusted to include the tax benefit of $0.7 million for the $3.0 million equity method investment impairment charge discussed in footnote 2 below.

 

(2)              Special items in the third quarter of fiscal 2019 consisted of consulting fees of $5.8 million, inventory adjustments of $5.2 million and other costs of $5.1 million associated with the company’s Wesco 2020 initiative, as well as an equity method investment impairment charge of $3.0 million. Special items in the third quarter of fiscal 2018 consisted primarily of consulting fees of $5.6 million and other costs of $1.9 million associated with Wesco 2020.

 

Special items in the year-to-date period of fiscal 2019 consisted primarily of consulting fees of $13.5 million,  inventory adjustments of $5.2 million and other costs of $15.2 million associated with Wesco 2020, as well as an equity method investment impairment charge of $3.0 million. Special items in the year-to-date period of fiscal 2018 consisted primarily of consulting fees of $11.4 million and other costs of $1.9 million associated with Wesco 2020, as well as the settlement of litigation and related fees of $1.3 million.

 

13


 

Wesco Aircraft Holdings, Inc.

Non-GAAP Financial Information - Free Cash Flow (UNAUDITED)

(Dollars in thousands)

 

 

 

Three Months Ended
June 30,

 

Increase

 

 

 

2019

 

2018

 

(Decrease)

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

55,715

 

$

16,844

 

$

38,871

 

Purchase of property and equipment

 

(8,485

)

(1,100

)

(7,385

)

Free cash flow

 

$

47,230

 

$

15,744

 

$

31,486

 

 

 

 

Nine Months Ended
June 30,

 

Increase

 

 

 

2019

 

2018

 

(Decrease)

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

$

49,314

 

$

(19,065

)

$

68,379

 

Purchase of property and equipment

 

(16,481

)

(4,009

)

(12,472

)

Free cash flow

 

$

32,833

 

$

(23,074

)

$

55,907

 

 

14


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