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Wesco Projects Strong Q1, Plans to Buy Hass - Analyst Blog

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Wesco Aircraft Holdings, Inc. ( WAIR ) provided preliminary fiscal first quarter 2014 results. The company pointed out that prolonged holiday shutdowns and vacations by a number of its prime customers led to an adjusted earnings hit of 2 cents per share in the first quarter. The company is scheduled to report its fiscal first quarter 2014 results on Feb 5.

Wesco Aircraft expects revenue in the first quarter fiscal 2014 to come in a band of $223 million to $227 million, up 5.6% to 7.5% year over year. Adjusted earnings for the quarter are expected in the range of 26-28 cents, up from the year-ago figure of 25 cents. In spite of one less working day this quarter, the company performed well on the back of robust revenues.

Wesco Aircraft is also active on the acquisition front. The company along with the first quarter preliminary results announced it would acquire Haas Group Inc. for $550 million in cash from certain investment funds affiliated to The Jordan Company, L.P.

Headquartered in West Chester, Pa., Haas is the foremost global provider of chemical supply chain management ("CSCM") solutions to the commercial aerospace, airline, military, energy, and other markets. It has generated $573.5 million in revenue in 2012 and has 35 distribution hubs and forward stocking locations around the globe.

Wesco Aircraft Holdings, based in Valencia, Calif., distributes and provides supply chain management services to the aerospace industry in North America and around the world. The company's services include traditional distribution, management of supplier relationships, quality assurance, kitting, just-in-time delivery, and point-of-use inventory management.

Hence, this transaction, which is subject to customary closing conditions, will help Wesco Aircraft to cut costs and comply with ever more complex regulatory requirements for chemical usage. Wesco will also gain access to Haas' proprietary IT system ("tcmIS") that interfaces directly with customer and supplier enterprise resource planning systems.

This alliance is expected to expand Wesco Aircraft's customer base significantly, going forward. This will boost its top line. The company expects the takeover to be accretive to earnings upon successful completion.

Wesco Aircraft has reaffirmed its top-line guidance for fiscal 2014 in the range of $975 million to $1.01 billion, which reflects an increase of 8.1%-12.0% from fiscal 2013 results. Adjusted earnings per share are also maintained in the range of $1.31 to $1.37 and the effective tax rate is expected in the vicinity of 34% to 35% for fiscal 2014.

Wesco Aircraft has a Zacks Rank #2 (Buy). Other well-placed companies in the space include Engility Holdings, Inc. ( EGL ), Embraer SA ( ERJ ) and Lockheed Martin Corp. ( LMT ). While Engility Holdings sports a Zacks Rank #1 (Strong Buy), Embraer and Lockheed Martin carry a Zacks Rank #2 (Buy).

ENGILITY HLDGS (EGL): Free Stock Analysis Report

EMBRAER AIR-ADR (ERJ): Free Stock Analysis Report

LOCKHEED MARTIN (LMT): Free Stock Analysis Report

WESCO AIRCRAFT (WAIR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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