Valencia-based aircraft parts distributor Wesco Aircraft Holdings Inc. released first-quarter earnings Thursday that matched Wall Street expectations of 25 cents per share.

Fiscal 2016 First Quarter Highlights:

* Net sales of $359.8 million, down four percent
* Net sales excluding currency effects of $366.1 million, down two percent
* Net income of $20.6 million, or $0.21 per diluted share
* Adjusted net income of $24.2 million, or $0.25 per diluted share
* Adjusted EBITDA of $45.6 million, or 12.7 percent of net sales

[Wesco] – Dave Castagnola, president and chief executive officer, said: “Fiscal 2016 first quarter results reflect progress in all areas of our business. Sales in the quarter were adversely impacted by the conclusion in fiscal 2015 of a large commercial contract that was previously disclosed, as well as currency movements. Excluding these items, sales were approximately three percent higher than the first quarter of last year due to growth in contract revenue. Sales activities continue to advance; we have renewed long-term contracts with increased business, and more opportunities are in the pipeline. While these wins are primarily expected to benefit fiscal 2017 and 2018, they also are a key part of our sales growth strategy in fiscal 2016.

“Actions taken under our cost reduction plan yielded a significant reduction in selling, general and administrative expenses in the fiscal 2016 first quarter compared to the same period last year. We are delivering on our plan to take out costs, while driving productivity improvements throughout the company. Our site and supply consolidation activities are on schedule; we have closed or consolidated 12 facilities, with more planned this year as we reposition the company for efficiency and growth, and to better serve our customers. In addition, we continue to make headway with activities designed to improve inventory management and cash flow, while better aligning our future investments with the needs of our customers.”

Fiscal 2016 First Quarter Results

Net sales in the fiscal 2016 first quarter were $359.8 million, compared to $373.7 million in the prior-year first quarter. Net sales excluding the impact of currency movements decreased two percent in the fiscal 2016 first quarter, primarily due to sales of approximately $19 million in the fiscal 2015 first quarter under a large commercial hardware contract that ended on March 31, 2015, as previously disclosed. Excluding the impact of this contract and currency, sales were approximately three percent higher in the fiscal 2016 first quarter due to growth in several commercial and military contracts.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the fiscal 2016 first quarter were $45.6 million, compared with $48.8 million in the same period last year. The decline was primarily due to a decrease in gross profit, partially offset by a reduction in selling, general and administrative expenses (SG&A).

Gross profit was nine percent lower in the first quarter of fiscal 2016, compared to the same period last year, principally due to the impact of the large commercial contract discussed above and foreign currency movements.

SG&A in the fiscal 2016 first quarter decreased 11 percent compared to the same period last year, primarily due to lower personnel and related expenses resulting from the company’s cost reduction plan. SG&A as a percent of sales was 16.5 percent in the first quarter compared to 17.8 percent in the same period last year.

Adjusted EBITDA was 12.7 percent of net sales in the fiscal 2016 first quarter, compared to 13.1 percent in the same period last year.

Adjusted diluted earnings per share of $0.25 in the first quarter of fiscal 2016 was consistent with the same period last year. Adjusted diluted earnings per share were impacted by the same items discussed above in adjusted EBITDA, offset by lower income tax and interest expense. The company’s effective tax rate in the first quarter of fiscal 2016 was reduced by a favorable mix of taxable income across jurisdictions and discrete tax items. Interest expense was lower as a result of debt repayments over the past year.

Free cash flow was $9.5 million in the fiscal 2016 first quarter, compared with $10.0 million in the same period last year.

Fiscal 2016 Outlook

Castagnola added, “We continue to expect the underlying business to achieve above-market expansion through focused sales activities, offsetting declines previously disclosed to yield low single-digit net sales growth in fiscal 2016. We remain on track to achieve cost savings of $25 million to $30 million, which we expect to be the primary driver of our EBITDA margin improvement target of approximately 100 basis points in fiscal 2016. We also continue to expect free cash flow to exceed 100 percent of net income.”

About Wesco Aircraft

Wesco Aircraft is one of the world’s largest distributors and providers of comprehensive supply chain management services to the global aerospace industry. 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 570,000 active SKUs.

To learn more about Wesco Aircraft, visit our website at www.wescoair.com. Follow Wesco Aircraft on LinkedIn at https://www.linkedin.com/company/wesco-aircraft-corp.