Wesco Aircraft Holdings Inc., the world’s leading provider of comprehensive supply chain management services to the global aerospace industry, announced results for its fiscal 2016 second quarter.

Fiscal 2016 Second Quarter Highlights

* Net sales of $376.7 million, down 2.3 percent

* Net sales excluding currency effects of $382.9 million, down 0.7 percent

* Net income of $23.5 million, or $0.24 per diluted share

* Adjusted net income of $28.0 million, or $0.29 per diluted share

* Adjusted EBITDA of $50.8 million, or 13.5 percent of net sales

Dave Castagnola, president and chief executive officer, said, “Fiscal 2016 second quarter results demonstrate consistent execution across our business. Sales excluding the impact of currency movements and the previously disclosed large commercial contract were slightly higher than the second quarter of last year, led by growth in contract revenue. Continuing with our focus on growing sales, we renewed long-term contracts with scope expansion and signed new business in the quarter. These wins are expected to drive incremental sales growth in the second half of fiscal 2016 and into fiscal 2017 and 2018.

“Our supply chain management strategies continue to be developed and implemented; as we better align material acquisition to demand forecasts, we are strengthening materials management, demand planning and strategic sourcing activities. The cost reduction actions taken at the end of fiscal 2015 and our ongoing focus on efficiencies again led to lower selling, general and administrative expenses. We also paid down an additional $25 million in debt in the second quarter.”

Fiscal 2016 Second Quarter Results

Net sales in the fiscal 2016 second quarter were $376.7 million, compared with $385.6 million in the prior-year second quarter. Net sales excluding the impact of foreign currency movements decreased 0.7 percent in the second quarter of fiscal 2016, compared to the same period last year. Net sales were 1.4 percent higher, excluding currency effects and a net negative impact from the previously disclosed large commercial contract that ended on March 31, 2015 and sales in the fiscal 2016 second quarter that were related to this contract. The increase was primarily due to mid-single-digit growth in contract revenue, partially offset by a mid-single-digit decline in ad hoc sales. Higher contract revenue was principally due to content on commercial programs.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the fiscal 2016 second quarter were $50.8 million, lower than $54.8 million in the same period last year, primarily due to a decrease in gross profit, partially offset by a reduction in selling, general and administrative (SG&A) expense.

Gross profit decreased 6.2 percent in the second quarter of fiscal 2016, compared with the same period last year, principally due to the impact of the large commercial contract discussed above and foreign currency movements.

SG&A expense in the fiscal 2016 second quarter decreased 5.9 percent compared to the same period last year, primarily due to lower people costs, professional fees, facility costs, bad debt expense and the impact of foreign currency movements. SG&A expense as a percent of net sales was 16.2 percent in the second quarter, compared with 16.8 percent in the same period last year.

Adjusted EBITDA was 13.5 percent of net sales in the fiscal 2016 second quarter, compared with 14.2 percent in the same period last year.

Adjusted diluted earnings per share of $0.29 in the second quarter of fiscal 2016 was unchanged from the prior-year second quarter. Net income and earnings per share were impacted by the same items affecting adjusted EBITDA discussed above, offset by lower income tax expense. The company’s effective tax rate in the second quarter of fiscal 2016 was reduced by a favorable mix of taxable income across jurisdictions and discrete tax items.

Fiscal 2016 Year to Date Results

Net sales in the six months ended March 31, 2016 were $736.6 million, compared with $759.3 million in the same period of the prior year. Net sales excluding the impact of foreign currency movements decreased 1.3 percent.

Adjusted EBITDA in the six months ended March 31, 2016 was $96.4 million, compared with $103.6 million in the same period last year. The decline was primarily due to lower gross profit, partially offset by a reduction in SG&A expense. Adjusted EBITDA was 13.1 percent of net sales in the first six months of fiscal 2016, compared with 13.6 percent in the same period last year.

Adjusted diluted earnings per share was $0.53 in first six months of fiscal 2016, compared to $0.54 in the same period last year.

Free cash flow was $7.6 million in the six months ended March 31, 2016, compared with $46.6 million in the same period last year. The decline was primarily due to the timing of inventory purchases, revenue, tax payments and capital expenditures.

Fiscal 2016 Outlook

The company’s fiscal 2016 goals are reaffirmed. Net sales are expected to grow at a low-single-digit pace; contract sales are expected to deliver greater growth in the business, offsetting the previously disclosed decline from the large commercial contract. Cost savings of $25.0 million to $30.0 million are expected to remain the primary driver of the company’s EBITDA margin improvement target of approximately 100 basis points. Finally, free cash flow is anticipated to exceed 100 percent of net income.

About Wesco Aircraft

Wesco Aircraft is the world’s leading distributor and provider of comprehensive supply chain management services to the global aerospace industry, based on annual sales. The company’s services range from traditional distribution to the management of supplier relationships, quality assurance, kitting, just-in-time delivery and point-of-use inventory management. The company believes it offers one of the world’s broadest portfolios of aerospace products, including chemical, electrical and C-class hardware and comprised of more than 565,000 active SKUs.

To learn more about Wesco Aircraft, visit our website at www.wescoair.com.