Wesco Aircraft Q4 Results Miss View, Issues Weak Outlook; CFO Hann To Retire

(RTTNews) - Aerospace-parts supplier Wesco Aircraft Holdings Inc. (WAIR) on Thursday reported an 18 percent decline in profit for the fourth quarter from last year, as higher revenues that include the Haas acquisition were offset by an increase in expenses and lower margins.

The results for the quarter missed analysts' expectations and the company also forecast financial results for fiscal 2015 below Street estimates. Further, Wesco Aircraft said that Chief Financial Officer Gregory Hann has informed of his plan to retire, effective March 31, 2015.

Randy Snyder, chairman and chief executive officer of Wesco Aircraft, said, "Our shortfall in results for the fiscal 2014 fourth quarter was primarily driven by not achieving our ambitious sales targets that were in part based on strong business indicators in June and July, in addition to higher than expected inventory reserves recorded at year-end."

Valencia, California-based Wesco Aircraft's net income for the fourth quarter declined to $24.65 million or $0.25 per share from $29.97 million or $0.31 per share in the year-ago period.

Excluding one-time items, adjusted net earnings for the quarter were $0.30 per share, compared to $0.33 per share in the prior-year period. On average, nine analysts polled by Thomson Reuters estimated earnings of $0.37 per share for the quarter. Analysts' estimates typically exclude special items.

The decrease in net earnings for the quarter was primarily due to lower operating margins and higher interest expense as a result of the Haas acquisition financing, partially offset by growth in sales.

However, net sales for the quarter surged 74 percent to $408.17 million from $234.34 million in the same period last year. Analysts had a consensus revenue estimate of $411.76 million for the quarter.

External sales in the North America segment increased 72 percent, while Rest of World external sales increased 83 percent. The increase in sales were driven mainly by the Haas acquisition, as well as growth across the company's customer base resulting from the continued ramp-up of recently awarded contracts, scope expansion on existing contracts, and new contract wins.

Selling, general and administrative expenses for the quarter surged 98 percent to $71.63 million, while interest expense more than doubled to $9.82 million.

For fiscal 2014, Wesco Aircraft's net income was $102.10 million or $1.05 per share, down from $104.81 million or $1.09 per share in the prior year. Adjusted net income for the year was $1.24 per share, compared to $1.22 per share in the prior year.

Net sales for the year surged 50 percent to $1.36 billion from $901.61 million last year.

Street expected the company to earn $1.31 per share for the year on revenues of $1.36 billion.

For fiscal 2015, Wesco Aircraft forecasts earnings in a range of $1.14 to $1.24 per share, adjusted earnings of $1.30 to $1.40 per share, and revenues of $1.625 billion to $1.675 billion. Analysts expect earnings of $1.55 per share for the year on revenues of $1.68 billion.

Snyder said, "We believe Wesco Aircraft remains well positioned to take advantage of strong OEM build rates and an expanding MRO market. We will be equally focused on achieving better performance through realizing expense synergies from our combined operations, which provide the market with a bundled solution."

In a separate statement, Wesco Aircraft said that Gregory Hann, executive vice president and chief financial officer, has informed the company's board of directors of his plan to retire, effective March 31, 2015.

To ensure an orderly transition, Hann will continue to serve as Wesco Aircraft's CFO until a replacement can be found, and will remain an employee of the company until March 31, 2015. Thereafter, Hann will serve as a consultant to the company for one year.

Wesco Aircraft said it has retained a leading executive search firm to conduct a nationwide search to assist with the placement of a new CFO.

Hann has served as executive vice president and CFO since joining Wesco Aircraft in 2009. During his tenure as CFO, net sales more than doubled to $1.4 billion. Wesco Aircraft also completed the acquisition of Haas Group in fiscal 2014, the largest acquisition in the company's history.

WAIR closed Thursday's trading at $17.14, up $0.27 or 1.60 percent on a volume of 569,043 shares,