Amid News of Split, B/E Aerospace Finds Its Groove
FEATURES
From FIN?s Stock Review of B/E Aerospace:
In 2008 B/E Aerospace Inc. completed acquisition of Honeywell’s aerospace fastener distribution business, Honeywell Consumable Solutions, for $1.06 billion, transforming B/E Aerospace into one of the largest distributors of aerospace fasteners in the world.
“The integration of Honeywell’s distribution business with ours is expected to be an important driver of margin expansion and earnings growth for B/E Aerospace over the next three years,” stated B/E Aerospace CEO Amin Khoury. “The combined businesses are expected to generate more than 50% of B/E Aerospace’s operating earnings beginning in 2009, and to steadily increase the distribution segment’s percentage contribution to B/E Aerospace’s operating earnings.”
B/E’s new segment, Consumables Management, provides logistics services OEMs, airlines, repair shops, flight service centers and distributors, as well as distributing aerospace fasteners.
As part of the deal, B/E signed a 30-year contract to become Honeywell’s exclusive licensee to sell fasteners, seals and other products, as well as supplying Honeywell’s production facilities.
B/E Aerospace reported Consumables Management segment revenue – primarily aerospace fasteners – jumped 36.5% to $426.7 million in the second quarter of 2014. The Consumables business delivered “high single-digit organic revenue growth.” On a pro-forma basis as though all acquisitions had been completed on January 1, 2013, CMS revenue growth was 12%. Q2 operating earnings rose 27.7% to $78.3 million, and operating margin was 18.4%.
During the first six months of 2014, Consumables revenue gained 24.1% to $793.3 million. On a pro-forma basis as though all acquisitions had been completed on January 1, 2013, revenue growth was 8.3%. Operating earnings improved 18.4% to $149.3 million, and operating margin was 18.8%.
During the second quarter, B/E Aerospace completed the Vision Oil Tools transaction and two additional bolt-on transactions for an aggregate purchase price of approximately $256 million in cash. These results are reported as part of the consumables management segment.
In June B/E Aerospace announced its decision to separate its businesses into two independent, publicly traded companies — one manufacturing aircraft cabin interior equipment, and the second focused on distribution, logistics and technical services for the aerospace and energy services markets.
B/E Aerospace plans to separate the businesses via a tax-free distribution to shareholders, with shareholders holding shares in two independent and publicly traded companies.
One of those would be Services Co., which would distribute aerospace fasteners, consumables and logistics services to the airline and aerospace industries. Services include inventory management and replenishment, creative and differential supply chain solutions, packaging and bar-coding, parts kitting, quality assurance testing and purchasing assistance programs.
On a pro-forma basis, Services Co. had $1.64 billion in revenues and EBITDA (excluding transaction expenses) of approximately $365 million, representing 22.8% of revenues, for the trailing 12 months ending March 31, 2014, as adjusted for all recent acquisitions as if they had been made as of January 1, 2013.
Service Co. facilities include a 62,000 sq ft manufacturing facility in Bridgeport, WV, along with seven distribution centers in the U.S, two in Germany, two in the UK, and one in France.
B/E Aerospace said it plans to file its Form 10 Registration Statement with the Securities and Exchange Commission in September of 2014, and expects to distribute the shares of Services Co. to shareholders by the end of March 2015.
B/E Aerospace stock saw an uptake in Q2 share value as a result of the planned split, with shares gaining 6.6% to $92.49 after declining in the opening quarter of 2014, according to the FIN Fastener Stock Index.
Headquartered in Wellington, FL, B/E Aerospace designs, develops and manufactures a broad range of products for both commercial aircraft and business jets. B/E Aerospace manufactured products include aircraft cabin seating, lighting systems, oxygen systems, food and beverage preparation and storage equipment, galley systems, and modular lavatory systems. The company also provides cabin interior reconfiguration, program management and certification services. Web: beaerospace.com
Editor’s Note: For a summary of each of the past six years of B/E Aerospace, CLICK HERE.
Related Stories:
• Alcoa Fastener Segment Achieves “Best-Ever” Results
• MSC Direct Achieves Strong Sales Growth Despite “Soft Pricing”
• China Rod Imports Take Another Hit
• Carpenter Technology Reports Rising Titanium Demand
There are no comments at the moment, do you want to add one?
Write a comment