Aerospace supply chain manager Wesco Aircraft at full throttle
For Wesco Aircraft Holdings Inc. in Valencia, it’s all about making the right connections.
And those connections with customers are helping keep many of the world’s civil, commercial and military aircraft safe in the air.
Wesco Aircraft manages supply chains for the aerospace industry and is one of the world’s biggest sellers and distributors of aerospace parts and components.
Its more than 525,000 parts and components include fasteners, fittings, nuts, bolts, bushings, clamps, collars, pins, screws and washers. It’s also an authorized distributor for just about every manufacturer of precision engineered aerospace bearings.
Lately, Wesco has been going full throttle. It posted record sales of $230.2 million for its fiscal third quarter ended June 30, an increase of 21.6% compared with the year-earlier period. Net income rose 30.6% to $29.5 million.
“During the quarter, we continued our strategy of pursuing new customers, selling new product lines to existing customers and gaining long-term relationships,” said Randy J. Snyder, Wesco’s chief executive.
“Contract signings and contract bid opportunities remained at a very high level, which will bode well for the future,” he noted.
Snyder’s father, Jack, founded the company in 1953 as a business dealing in scrap metal and hardware. Wesco wasn’t focused fully on aircraft parts and components until Randy Snyder took over as chief executive in 1977. He was named chairman in 2006.
In 2006, asset management firm Carlyle Group became a majority owner. Five years later, Wesco raised $315 million in an initial public offering, selling 21 million shares at $15 each.
The latest
In May, Wesco landed what it called a “milestone agreement” with French aircraft manufacturer Airbus to supply fasteners and hardware components to several production facilities.
Wall Street analysts said it was another sign of Wesco’s strong industry foundations.
“We remain believers in Wesco’s business model and customer value proposition and see upside to earnings from continued customer production growth, market share gains and realization of operating leverage,” said Ryan Merkel, an analyst with William Blair.
Accomplishments
Wesco is one of the few companies that didn’t see a decline in business during the global recession. Its sales growth slowed, but it continued to expand internationally.
Wesco now has 42 sales and stocking offices in 12 countries, including India.
The company has expanded worldwide under Randy Snyder.
In 1993, Wesco was awarded Boeing’s first “just in time” parts distributing contract. From there, the company broadened its parts distribution base, opening parts stocking locations in Alabama, Indiana, Missouri and Tennessee.
In 2004 and 2005, it opened sales facilities in Germany and Italy, adding to a European footprint that by then already included France and Britain. It expanded operations into China in 2010.
Last year, it opened a sales facility in India and acquired Toronto aerospace parts distributor Interfast Inc. for about $128 million, or $134 million Canadian.
Challenges
With weak to flat sales in its military business, Wesco has focused on drumming up business in the commercial and civilian aerospace sectors to keep growing.
“Our fiscal year 2013 plan foresaw a flat sales environment to our defense prime customer,” said Gregory A. Hann, Wesco Aircraft’s finance chief.
“We have, through our third quarter, experienced solid commercial growth, which propelled our 14% organic growth in both our second and third quarters of our fiscal year 2013,” Hann said.
Analysts
Most of the 13 analysts who follow Wesco like the company’s prospects.
Three analysts strongly recommend buying the stock, and two others have a regular buy recommendation on it. Seven analysts say investors should hold the stock. One rates the stock as underperforming.
