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Thursday, Mar 28, 2024

Wesco Wobbles After Underwhelming Quarter

The share price of Wesco Aircraft Holdings Inc. took a nosedive the day after the company reported adjusted earnings that missed Wall Street expectations but beat on revenue. Shares in the Valencia aircraft parts and supply chain services provider closed down more than 13 percent on Nov. 16 to $9.77. The price continued to fall even after that, settling at $8.85 on Nov. 20. Wesco reported fiscal fourth quarter adjusted net income of $18.2 million (18 cents a share) on revenue of nearly $407 million for the quarter ending Sept. 30. Analysts on average expected earnings of 21 cents on revenue of $378 million, according to Thomson Financial Network. Still, Wesco management was upbeat about the results. “Our performance is a testimony to the hard work of our Wesco team and our customers’ continued recognition of the value proposition we offer,” Chief Executive Todd Renehan said in a conference call with analysts to discuss the results. “Higher sales volumes in the fourth quarter helped drive profit improvement relative to the same period last year.” Key to the company’s financial future is the Wesco 2020 plan announced in May. The plan will enhance service and reduce costs by aligning the company’s footprint with its customer and supply base; refine the organizational structure to drive greater accountability, reduce management layers and eliminate duplication; and invest in automation and business tools for more effective inventory management. “We deepened our execution of Wesco 2020 initiatives in the fourth quarter and expect to accelerate this further in fiscal 2019,” Renehan said in the conference call. In a research note released after the quarterly results, Michael Ciarmoli, an analyst with SunTrust Robinson Humphrey, said that given what management has said about Wesco 2020, the new fiscal year will likely be a transitional one. Top-line revenue growth has already been impacted by operating model changes in the plan although margins, earnings and cash flow are still lacking, he added. “In the coming year, management will continue to optimize its footprint, which should include relocating inventory, implementing a new warehouse management system, building out its existing distribution centers, implementing a new sales inventory and operations planning, procurement and pricing processes,” Ciarmoli wrote in the note.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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